Common use of Interim Operations Clause in Contracts

Interim Operations. From the date of this Agreement until the Closing Time, except as set forth in Section 5.1 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to: (a) conduct its business and operations only in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as to subsections (a), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise to do any of the foregoing.

Interim Operations. From Except as set forth on Schedule 5.08, since the date Interim Financial Statement Date: (a) the Business has been conducted by the Company only in the ordinary and usual course consistent with past practices; (b) there has not occurred any change, event or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect; (c) the Company has not: (i) paid, discharged or satisfied any claims, liabilities or obligations (absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary and usual course of this Agreement until business and consistent with past practice of liabilities and obligations incurred in the Closing Timeordinary and usual course of business and consistent with past practice; (ii) borrowed any amount or incurred or become subject to any other liabilities (absolute or contingent), other than trade payables in the ordinary course of business, except as set forth in Section 5.1 on Schedule 5.08(c)(ii); (iii) declared or made any payment or distribution of cash or other property to Seller or purchased or redeemed, or made any agreements to purchase or redeem, any of its equity securities; (iv) issued, delivered, sold, pledged or encumbered, or authorized, proposed or agreed to the issuance, delivery, sale, pledge or encumbrance of, any shares of capital stock or bonds or any other security (or any right to acquire such capital stock or other security, including options) of the Company Disclosure Schedule or as expressly contemplated by any of its Subsidiaries, or any right, options or warrants with respect thereto; (v) effected any recapitalization, reclassification or like change in the capitalization of the Company or any of its Subsidiaries, or declared or paid dividends on, or made other distributions in respect of, any of its capital stock, or issued or authorized the issuance of any other provision securities in respect of, in lieu of this Agreementor in substitution for shares of its capital stock, unless the Parent has consented in writing theretoor repurchased, redeemed or otherwise acquired, or modified or amended, any shares of capital stock of the Company shall, and shall cause each or any of its subsidiaries to:Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (avi) conduct canceled any debts owing to the Company or waived any claims or rights; (vii) sold, transferred, or otherwise disposed of, any of the Assets; (viii) disposed of, failed to take reasonable steps to protect, or permitted to lapse, any rights for the use of, any Intellectual Property, or disposed of, failed to take reasonable steps to protect, or disclosed to any Person any Proprietary Information or Confidential Information; (ix) made any change in any its business and operations only methods of accounting or accounting practices; (x) written off as uncollectible any notes or accounts receivable, other than in the ordinary course of business consistent with past practice; (bxi) use reasonable efforts made any capital expenditures or capital expenditure commitments in excess of $10,000 individually or $25,000 in the aggregate, except as set forth on Schedule 5.08(c)(xi); (xii) entered into any transaction or series of related transactions providing for payments by or to preserve intact the Company in excess of $25,000 in the aggregate, whether or not in the ordinary course of business; (xiii) made any change in the manner in which products or services have been developed or marketed; (xiv) had any labor dispute or received notice of any grievance with respect thereto; (xv) loaned or advanced any amount to, organizationor made any payments to or received any payments from, goodwillor sold, rightstransferred or leased any of its assets to, licensesany Affiliate, permits and franchises except in the ordinary course of business; (xvi) discharged or satisfied any Encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (xvii) made any change in the cash management or working capital management of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, than in the loss ordinary course of any of which would be reasonably likely to result in a Material Adverse Effect on the Companybusiness; (cxviii) use reasonable efforts (A) terminated, canceled or requested any material change in, or agreed to keep any material change in, any Subsisting Contract, or (B) entered into any contract which would constitute a Subsisting Contract as defined herein, other than in full force and effect adequate insurance coverage and maintain and keep its properties and assets the ordinary course of business consistent with past practices, in good repaireither case, working order and condition, normal wear and tear exceptedother than as set forth on Schedule 5.08(c)(xviii); (dxix) not amend or modify its respective charter or certificate of incorporationadopted, by-lawsagreed to adopt, or made any announcement regarding the adoption of (A) any new pension, retirement or other charter employee benefit plan, program or organization documentspolicy or (B) any amendment to any existing plan, policy or program; (exx) not authorize for issuanceincreased the compensation, issue, sell, grant, deliver, pledge bonuses or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares benefits of any class employee, officer, director, or series of capital stock consultant of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiariesSubsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority annual increases in the ordinary course of business consistent with past practicepractices at the regularly scheduled times, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of businessthan as set forth on Schedule 5.08(c)(xx); (jxxi) not incuramended or modified any of the organizational documents of the Company; (xxii) made any material election with respect to Taxes or made any change in any such election; (xxiii) made any change in its methods of accounting in effect at November 30, assume 2005, except as required by changes in GAAP as agreed to by the Company's independent public accountants or guarantee as required by applicable law; (xxiv) made any indebtedness for borrowed money charitable contributions or pledges, other than as set forth on Schedule 5.08(c)(xxiv); (including draw-downs xxv) settled any Legal Proceeding to which the Company is or was a party, other than as set forth on letters Schedule 5.08(c)(xxv); or (xxvi) suffered or lines agreed to take any of creditthe actions set forth in this subparagraph (c); (d) or issue or sell the Business has been conducted by the Company only in the ordinary and usual course consistent with past practices; (e) the Company has taken no steps to seek protection pursuant to any notesbankruptcy law, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities Seller has no reason to believe that any creditors of the Company or intend to initiate involuntary bankruptcy proceedings against the Company, and Seller has no knowledge of any of its subsidiaries or any options, warrants or rights fact which would reasonably lead a creditor to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiariesdo so; and (qf) except none of the Assets has suffered any damage, destruction or casualty loss (as to subsections (aa result of fire, explosion or otherwise), (b) and (c) of this Section 5.1, whether or not agree or commit in writing or otherwise to do any of the foregoingcovered by insurance.

Interim Operations. From Except as set forth on Schedule 5.08, since the date Interim Financial Statement Date: the Business has been conducted by the Company only in the ordinary and usual course consistent with past practices; there has not occurred any change, event or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect; the Company has not: paid, discharged or satisfied any claims, liabilities or obligations (absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary and usual course of this Agreement until business and consistent with past practice of liabilities and obligations incurred in the Closing Timeordinary and usual course of business and consistent with past practice; borrowed any amount or incurred or become subject to any other liabilities (absolute or contingent), other than trade payables in the ordinary course of business, except as set forth in Section 5.1 on Schedule 5.08(c)(ii); declared or made any payment or distribution of the Company Disclosure Schedule cash or as expressly contemplated by other property to Seller or purchased or redeemed, or made any other provision of this Agreementagreements to purchase or redeem, unless the Parent has consented in writing thereto, the Company shall, and shall cause each any of its subsidiaries to: (a) conduct its business and operations only in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the businessequity securities; issued, organizationdelivered, goodwillsold, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend pledged or modify its respective charter or certificate of incorporation, by-lawsencumbered, or other charter authorized, proposed or organization documents; (e) not authorize for agreed to the issuance, issuedelivery, sell, grant, deliversale, pledge or encumber or agree or commit to issueencumbrance of, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock or bonds or any other security (or any right to acquire such capital stock or other security, including options) of the Company or any of its subsidiaries Subsidiaries, or any other equity right, options or voting security warrants with respect thereto; effected any recapitalization, reclassification or equity or voting interest like change in the capitalization of the Company or any of its subsidiariesSubsidiaries, or declared or paid dividends on, or made other distributions in respect of, any securities convertible into or exercisable or exchangeable for any such shares, securities or interestsof its capital stock, or any options, warrants, calls, commitments, subscriptions issued or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose authorized the issuance of any other securities in respect of, in lieu of, of or in substitution for, for shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's capital stock, or (iii) repurchaserepurchased, redeem redeemed or otherwise acquireacquired, or agree modified or commit to repurchase, redeem or otherwise acquireamended, any shares of capital stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; canceled any debts owing to the Company or waived any claims or rights; sold, transferred, or otherwise modify disposed of, any of the terms Assets; disposed of, failed to take reasonable steps to protect, or permitted to lapse, any rights for the use of, any Intellectual Property, or disposed of, failed to take reasonable steps to protect, or disclosed to any Person any Proprietary Information or Confidential Information; made any change in any its methods of accounting or accounting practices; written off as uncollectible any notes or accounts receivable, other than in the ordinary course of business consistent with past practice; made any capital expenditures or capital expenditure commitments in excess of $10,000 individually or $25,000 in the aggregate, except as set forth on Schedule 5.08(c)(xi); entered into any transaction or series of related transactions providing for payments by or to the Company in excess of $25,000 in the aggregate, whether or not in the ordinary course of business; made any change in the manner in which products or services have been developed or marketed; had any labor dispute or received notice of any Company Stock Options grievance with respect thereto; loaned or advanced any amount to, or made any payments to or received any payments from, or sold, transferred or leased any of its assets to, any Affiliate, except in the ordinary course of business; discharged or satisfied any Encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; made any change in the cash management or working capital management of the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority in the ordinary course of business; (A) terminated, canceled or requested any material change in, or agreed to any material change in, any Subsisting Contract, or (B) entered into any contract which would constitute a Subsisting Contract as defined herein, other than in the ordinary course of business consistent with past practices, in either case, other than as set forth on Schedule 5.08(c)(xviii); adopted, agreed to adopt, or made any announcement regarding the adoption of (A) any new pension, retirement or other employee benefit plan, program or policy or (B) any amendment to any existing plan, policy or program; increased the compensation, bonuses or benefits of any employee, officer, director, or consultant of the Company or any of its Subsidiaries, other than annual increases in the ordinary course of business consistent with past practicepractices at the regularly scheduled times, not increase other than as set forth on Schedule 5.08(c)(xx); amended or modified any of the compensation payable organizational documents of the Company; made any material election with respect to Taxes or made any change in any such election; made any change in its methods of accounting in effect at November 30, 2005, except as required by changes in GAAP as agreed to become payable by the Company's independent public accountants or as required by applicable law; made any charitable contributions or pledges, other than as set forth on Schedule 5.08(c)(xxiv); settled any Legal Proceeding to which the Company is or was a party, other than as set forth on Schedule 5.08(c)(xxv); or suffered or agreed to take any of the actions set forth in this subparagraph (c); the Business has been conducted by the Company only in the ordinary and usual course consistent with past practices; the Company has taken no steps to seek protection pursuant to any directorsbankruptcy law, officers or employees Seller has no reason to believe that any creditors of the Company or intend to initiate involuntary bankruptcy proceedings against the Company, and Seller has no knowledge of any of its subsidiaries, or grant any severance or termination pay to, or enter into any employment or severance agreement with any director or officer fact which would reasonably lead a creditor to do so; and none of the Company Assets has suffered any damage, destruction or any casualty loss (as a result of its subsidiariesfire, explosion or establishotherwise), adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including covered by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as to subsections (a), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise to do any of the foregoinginsurance.

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth in Section 5.1 3.1 of the Company Western Disclosure Schedule or Letter, Western covenants and agrees as to itself and the Transferred Subsidiaries that, after the date hereof and prior to the Closing (unless Protection One shall otherwise approve in writing, and except as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, Stock Option Agreement and the Company shall, Option and shall cause each of its subsidiaries to:Voting Agreement): (a) conduct its business and operations only the businesses of the Transferred Subsidiaries shall be conducted in the ordinary and usual course of and, to the extent consistent therewith, Western shall cause the Transferred Subsidiaries to use all reasonable efforts to preserve their respective business consistent organizations intact and maintain their respective existing relations and goodwill with past practicecustomers, suppliers, distributors, creditors, lessors, employees and business associates; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of neither Western nor any of which would be reasonably likely to result in a Material Adverse Effect on the Company; its Subsidiaries shall (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliverdispose of, pledge or encumber or agree accelerate, modify, or commit to issue, sell, grant, deliver, pledge or encumber amend the terms of any shares of any class of, or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exchangeable or exercisable or exchangeable for any such shares, securities or interestsfor, or any options, warrants, calls, commitments, subscriptions commitments or rights of any kind to purchase acquire, any shares of any capital stock in any Transferred Subsidiary; (ii) amend the certificate of incorporation or acquire by-laws of any such shares, securities or interests Transferred Subsidiary; (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (iiii) split, combine or reclassify any the outstanding shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, Transferred Subsidiary; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any capital stock of the Company's stock, WestSec or Westar Security; (iiiv) repurchase, redeem or otherwise acquire, or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of capital stock or other equity or debt securities or equity interests of the Company any Transferred Subsidiary or any securities convertible into or exchangeable or exercisable for any shares of its subsidiaries; (g) not amend or otherwise modify the terms capital stock of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; Transferred Subsidiary; (hvi) other than regularly scheduled seniority increases in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets, real, personal or mixed (including, without limitation, leasehold interests and intangible assets and capital stock of any Transferred Subsidiary) of any Transferred Subsidiary or permit any 39 Transferred Subsidiary to incur or modify any material indebtedness or other liability; or (vii) permit any Transferred Subsidiary to make or authorize or commit for any capital expenditures or, by any means, permit any Transferred Subsidiary to make any acquisition of, or investment in, assets or stock of any other Person or entity, except for (A) acquisitions of security monitoring accounts in the ordinary course of business consistent with past practice, (B) other acquisitions of security monitoring accounts not increase to exceed $5,000,000 in the compensation payable or aggregate and (C) other capital expenditures not to become payable to any directors, officers or employees of exceed $500,000 in the Company or aggregate; (c) neither Western nor any of its subsidiariesSubsidiaries shall terminate, or 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 of its subsidiaries, or establish, adopt, enter into into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plans or increase the salary, wage, bonus or other compensation of any employees of any Transferred Subsidiary except grants, awards or increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit grants, awards or increases); (d) neither Western nor any of its Subsidiaries shall settle or compromise any material respect claims or take action litigation involving any Transferred Subsidiary or, except in the ordinary and usual course of business modify, amend or terminate any material Contracts to accelerate which a Transferred Subsidiary is party or waive, release or assign any material rights or benefits under any collective bargaining, 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 claims of any director, officer or employee of the Company of Transferred Subsidiary; (e) neither Western nor any of its subsidiariesSubsidiaries shall make any Tax election with respect to Taxes payable by any Transferred Subsidiary or permit any insurance policy naming any Transferred Subsidiary as a beneficiary or loss- payable payee to be cancelled or terminated except in the ordinary and usual course of business; (f) neither Western nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (g) neither it nor any of its Subsidiaries will authorize or enter into an agreement to do any of the fore going. (h) the business of Protection One and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, Protection One and its Subsidiaries shall use all reasonable efforts to preserve their respective business organizations intact and maintain their respective existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (i) not neither Protection One nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of, encumber or accelerate, modify, or amend the terms of any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of any capital stock of Protection One or any of its Subsidiaries; (ii) amend the certificate of incorporation or by-laws of Protection One or any of its Subsidiaries; (iii) split, combine or reclassify the outstanding shares of capital stock of Protection One or any of its Subsidiaries; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock other than dividends from Protection One's direct or indirect wholly-owned Subsidiaries and the dividend and other distributions referred to in the recitals to this Agreement; or (v) repurchase, redeem or otherwise acquire any shares of capital stock or agree to acquire any securities convertible into or exchangeable or exercisable for any shares of capital stock of Protection One or any of its Subsidiaries; (vi) other than in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets, real, personal or mixed (including, without limitation, leasehold interests and intangible assets and (including capital stock of any of Protection One's Subsidiaries) or incur or modify any material indebtedness or other liability; or (vii) make or authorize or commit for any capital expenditures or, by mergerany means, consolidationmake any acquisition of, or acquisition of stockinvestment in, equity securities assets or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets stock of any other person outside the ordinary course of business consistent with past practice Person or any interest in any real properties (whether or not in the ordinary course of business);entity, except for (jA) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines acquisitions of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except security monitoring accounts in the ordinary course of business consistent with past practice, (B) other acquisitions of security monitoring accounts not amendto exceed $5,000,000 in the aggregate and (C) other capital expenditures not to exceed $500,000 in the aggregate; (j) neither Protection One nor any of its Subsidiaries shall terminate, modify establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Protection One Compensation and Benefit Plans or increase the salary, wage, bonus or other compensation of any employees except grants, awards or increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit grants, awards or increases) except for the bonuses referred to in the recitals to this Agreement; (k) neither Protection One nor any of its Subsidiaries shall settle or compromise any material claims or litigation or, except in the ordinary and usual course of business modify, amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunderclaims; (pl) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or neither Protection One nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be cancelled or terminated except in the ordinary and usual course of business; (m) neither Protection One nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (qn) except as to subsections (a), (b) and (c) neither Protection One nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into an agreement to do any of the foregoing.

Interim Operations. From The Company covenants and agrees as to itself and its Subsidiaries that, after the date hereof and until the earlier to occur of the termination of this Agreement until pursuant to Article VIII and the Closing TimeEffective Time (unless Parent shall otherwise approve in writing, which approval in the case of clauses (c)(ii), (c)(iv), (c)(vi), (e), (f) and (k) below shall not be unreasonably withheld, delayed or conditioned and except as set forth otherwise permitted or required by this Agreement or described in Section 5.1 6.1 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to:Letter): (a) conduct the business of it and its business and operations only Subsidiaries shall be conducted in the ordinary course of business and consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; it shall not (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class or series of capital stock of the Company or owned by it in any of its subsidiaries Subsidiaries; (ii) amend or any other equity or voting security or equity or voting interest in propose to amend the Company Charter or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); Bylaws; (f) not (iiii) split, combine or reclassify any its outstanding shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, class thereof; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any of capital stock other than (A) dividends from its direct or indirect wholly-owned Subsidiaries to the Company's stock, or (iiiB) dividends payable on the Series C Preferred Shares pursuant to and in accordance with the existing terms thereof; or (v) repurchase, redeem or otherwise acquire, or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; (c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, its capital stock of any class (other equity or debt securities or equity interests than Common Shares issuable pursuant to Company Options outstanding on the date hereof under the Stock Plans as set forth in Section 5.1(b) of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of businessDisclosure Letter); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advancestransfer, loans lease, license, guarantee, sell, mortgage, pledge, dispose of, or encumber or suffer to exist any Encumbrance (except for Permitted Encumbrances) in respect of, any assets in excess of $250,000 in the aggregate other indebtedness than (A) sales of inventories (and/or licenses in connection therewith) in the ordinary course of business consistent with past practice and (B) dispositions of obsolete or worthless assets; (iii) incur any indebtedness for borrowed money other than borrowings (including issuance of letters of credit) and reborrowings under its or any of its Subsidiaries’ credit facilities, as such credit facilities are in an existence as of the date hereof without regard to any subsequent amendment or modification, that would at any given time cause the net funded amount of indebtedness outstanding under such credit facilities to be in excess of $4,000,000 in the aggregate amount not (the “Maximum Amount”); provided, however, that the Company may incur indebtedness under such credit facilities in excess of the Maximum Amount to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree the extent that the senior management of the Company reasonably determines that it is in the best interests of the Company to sell, lease, license, encumber or otherwise dispose of, any material properties or assets borrow such additional amounts in order to fund operations of the business of the Company and its subsidiaries taken as a wholeSubsidiaries in the ordinary course; and provided, further that prior to taking any actions permitted by the foregoing proviso the Company shall give Parent three Business Days’ prior written notice that it intends to take such actions; (iv) make or commit for any capital expenditures in the aggregate in excess of the Company’s budget for capital expenditures, in each case, for the applicable fiscal year; (v) loan, advance funds or make any investment in or capital contribution to any other Person other than to any Subsidiary; or (vi) acquire (by merger, consolidation, or acquisition of stock or assets) any Person; (ld) not authorize or make any capital expenditures (including except as required by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in Law, neither it nor any of its accounting Subsidiaries shall terminate, establish, adopt, enter into, amend or financial reporting (including tax accounting otherwise modify any Company Compensation and reporting) methodsBenefit Plans in a manner that would materially increase benefits thereunder or increase the salary, principles wage, bonus or practices, other compensation of any employees except salary increases as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except a result of employee promotions occurring in the ordinary course of business consistent with past practice, practices; (e) neither it nor any of its Subsidiaries shall (i) settle or compromise any material claims or litigation in excess of $250,000 in the aggregate other than (A) settlements and compromises in the ordinary course of business and (B) settlements and compromises of liabilities not amend, modify in excess of $500,000 reflected or terminate any Contract required to be listed reserved against on the financial statements included in Section 3.15 of the Company Disclosure Schedule Reports; or (ii) waive, release or assign any material rights or claims thereunderin excess of $250,000 in the aggregate other than in the ordinary course of business; provided, however, that the Company shall not settle any Governmental claims or proceedings if such settlement would result in suspension, debarment or injunctive relief that is material to the businesses of the Company and its Subsidiaries taken as a whole or that would otherwise materially affect Parent and its Affiliates; (pf) neither it nor any of its Subsidiaries shall make any material Tax election, change any annual Tax accounting period, adopt or change any material method of Tax accounting, extend or waive any applicable statute of limitations with respect to Taxes, enter into any closing agreement in respect of any material Tax claim, audit or assessment, surrender any right to claim a material Tax refund, offset or other reduction in a material Tax liability or settle or compromise any material Tax liability; (g) use commercially reasonable efforts to (i) preserve intact its business organization and goodwill, (ii) keep available the services of its present officers and key employees and (iii) preserve the goodwill and business relationships with customers, suppliers and others having business relationships with Company; (h) use commercially reasonable efforts to maintain with financially responsible insurance companies insurance on its tangible assets and its business in such amounts and against such risks and losses as are consistent with past practice; (i) not adopt a enter into any plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; andSubsidiaries (other than the transactions contemplated by this Agreement); (qj) not alter, through merger, liquidation, reorganization, restructuring or any other fashion, the corporate structure or ownership of any of Company’s Subsidiaries; (k) except as to subsections (a)required by GAAP or as recommended in writing by the Company’s independent auditors, (bi) and not revalue in any material respect any of its assets, including writing down the value of inventory or writing-off notes or accounts receivables other than in the ordinary course of business consistent with past practice, or (cii) change any method of this Section 5.1accounting or accounting principles or practice; (l) not (i) grant any material severance, not agree retention or commit termination pay to, or amend in writing any material respect any existing severance, retention or otherwise termination arrangement with, any current or former director, officer or employee of Company or any of its Subsidiaries, (ii) except to the extent required under Contracts existing as of the date hereof, increase in any material respect or accelerate in any material respect the payment or vesting of, any benefits payable under any existing severance, retention or termination pay policies or employment agreements, (iii) enter into or amend in any material respect any employment, consulting, deferred compensation or other similar agreement with any director, officer, consultant or employee of Company or any of its Subsidiaries or (iv) establish, adopt or amend (except as required by applicable law) any collective bargaining agreement, bonus, profit-sharing, thrift, pension, retirement, post-retirement medical or life insurance, retention, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any present or former director, officer or employee, or any beneficiaries thereof, of Company or any of its Subsidiaries; or (m) neither it nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing, or commit to any of the foregoing actions.

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth in Section 5.1 3.1 of the Company Western Disclosure Schedule or Letter, Western covenants and agrees as to itself and the Transferred Subsidiaries that, after the date hereof and prior to the Closing (unless Protection One shall otherwise approve in writing, and except as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, Stock Option Agreement and the Company shall, Option and shall cause each of its subsidiaries to:Voting Agreement): (a) conduct its business and operations only the businesses of the Transferred Subsidiaries shall be conducted in the ordinary and usual course of and, to the extent consistent therewith, Western shall cause the Transferred Subsidiaries to use all reasonable efforts to preserve their respective business consistent organizations intact and maintain their respective existing relations and goodwill with past practicecustomers, suppliers, distributors, creditors, lessors, employees and business associates; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of neither Western nor any of which would be reasonably likely to result in a Material Adverse Effect on the Company; its Subsidiaries shall (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliverdispose of, pledge or encumber or agree accelerate, modify, or commit to issue, sell, grant, deliver, pledge or encumber amend the terms of any shares of any class of, or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exchangeable or exercisable or exchangeable for any such shares, securities or interestsfor, or any options, warrants, calls, commitments, subscriptions commitments or rights of any kind to purchase acquire, any shares of any capital stock in any Transferred Subsidiary; (ii) amend the certificate of incorporation or acquire by-laws of any such shares, securities or interests Transferred Subsidiary; (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (iiii) split, combine or reclassify any the outstanding shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, Transferred Subsidiary; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any capital stock of the Company's stock, WestSec or Westar Security; (iiiv) repurchase, redeem or otherwise acquire, or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of capital stock or other equity or debt securities or equity interests of the Company any Transferred Subsidiary or any securities convertible into or exchangeable or exercisable for any shares of its subsidiaries; (g) not amend or otherwise modify the terms capital stock of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; Transferred Subsidiary; (hvi) other than regularly scheduled seniority increases in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets, real, personal or mixed (including, without limitation, leasehold interests and intangible assets and capital stock of any Transferred Subsidiary) of any Transferred Subsidiary or permit any Transferred Subsidiary to incur or modify any material indebtedness or other liability; or (vii) permit any Transferred Subsidiary to make or authorize or commit for any capital expenditures or, by any means, permit any Transferred Subsidiary to make any acquisition of, or investment in, assets or stock of any other Person or entity, except for (A) acquisitions of security monitoring accounts in the ordinary course of business consistent with past practice, (B) other acquisitions of security monitoring accounts not increase to exceed $5,000,000 in the compensation payable or aggregate and (C) other capital expenditures not to become payable to any directors, officers or employees of exceed $500,000 in the Company or aggregate; (c) neither Western nor any of its subsidiariesSubsidiaries shall terminate, or 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 of its subsidiaries, or establish, adopt, enter into into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plans or increase the salary, wage, bonus or other compensation of any employees of any Transferred Subsidiary except grants, awards or increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit grants, awards or increases); (d) neither Western nor any of its Subsidiaries shall settle or compromise any material respect claims or take action litigation involving any Transferred Subsidiary or, except in the ordinary and usual course of business modify, amend or terminate any material Contracts to accelerate which a Transferred Subsidiary is party or waive, release or assign any material rights or benefits under any collective bargaining, 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 claims of any director, officer or employee of the Company of Transferred Subsidiary; (e) neither Western nor any of its subsidiariesSubsidiaries shall make any Tax election with respect to Taxes payable by any Transferred Subsidiary or permit any insurance policy naming any Transferred Subsidiary as a beneficiary or loss-payable payee to be cancelled or terminated except in the ordinary and usual course of business; (f) neither Western nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (g) neither it nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. Except as set forth in Section 3.1 of the Protection One Disclosure Letter, Protection One covenants and agrees as to itself and its Subsidiaries that, after the date hereof and prior to the Closing (unless Western shall otherwise approve in writing, and except as otherwise expressly contemplated by this Agreement, the Stock Option Agreement and the Option and Voting Agreement): (h) the business of Protection One and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, Protection One and its Subsidiaries shall use all reasonable efforts to preserve their respective business organizations intact and maintain their respective existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (i) not neither Protection One nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of, encumber or accelerate, modify, or amend the terms of any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of any capital stock of Protection One or any of its Subsidiaries; (ii) amend the certificate of incorporation or by-laws of Protection One or any of its Subsidiaries; (iii) split, combine or reclassify the outstanding shares of capital stock of Protection One or any of its Subsidiaries; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock other than dividends from Protection One's direct or indirect wholly-owned Subsidiaries and the dividend and other distributions referred to in the recitals to this Agreement; or (v) repurchase, redeem or otherwise acquire any shares of capital stock or agree to acquire any securities convertible into or exchangeable or exercisable for any shares of capital stock of Protection One or any of its Subsidiaries; (vi) other than in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets, real, personal or mixed (including, without limitation, leasehold interests and intangible assets and (including capital stock of any of Protection One's Subsidiaries) or incur or modify any material indebtedness or other liability; or (vii) make or authorize or commit for any capital expenditures or, by mergerany means, consolidationmake any acquisition of, or acquisition of stockinvestment in, equity securities assets or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets stock of any other person outside the ordinary course of business consistent with past practice Person or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the sameentity, except for (iA) renewals acquisitions of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except security monitoring accounts in the ordinary course of business consistent with past practice, (B) other acquisitions of security monitoring accounts not amendto exceed $5,000,000 in the aggregate and (C) other capital expenditures not to exceed $500,000 in the aggregate; (j) neither Protection One nor any of its Subsidiaries shall terminate, modify establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Protection One Compensation and Benefit Plans or increase the salary, wage, bonus or other compensation of any employees except grants, awards or increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit grants, awards or increases) except for the bonuses referred to in the recitals to this Agreement; (k) neither Protection One nor any of its Subsidiaries shall settle or compromise any material claims or litigation or, except in the ordinary and usual course of business modify, amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunderclaims; (pl) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or neither Protection One nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be cancelled or terminated except in the ordinary and usual course of business; (m) neither Protection One nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (qn) except as to subsections (a), (b) and (c) neither Protection One nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into an agreement to do any of the foregoing.

Interim Operations. From The Company covenants and agrees as to itself and its Subsidiaries that, after the date of this Agreement until hereof and prior to the Closing TimeEffective Time (unless Parent shall otherwise approve in writing, which approval shall not be unreasonably withheld, and except as set forth in Section 5.1 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to: ): (a) conduct the business of it and its Subsidiaries shall be conducted in the ordinary and usual course consistent with past practices and, to the extent consistent therewith, it and its Subsidiaries shall use commercially reasonable efforts to preserve its business organization intact and operations only maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (b) it shall not, (i) issue, sell otherwise dispose of or subject to Lien (other than Permitted Liens) any of its Subsidiaries' Capital Stock owned by it; (ii) amend its charter, by-laws or, except for any amendment which will not hinder, delay or make more costly to Parent the Offer or the Merger; the Rights Agreement; (iii) split, combine or reclassify its outstanding shares of Capital Stock; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any Capital Stock other than the issuance of Rights in connection with the issuance of Capital Stock upon the exercise of Company Options; (v) repurchase, redeem or otherwise acquire or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its Capital Stock; or any securities convertible into or exchangeable or exercisable for any shares of its Capital Stock; or (vi) adopt a plan of complete or partial liquidation or dissolution, merger or otherwise restructure or recapitalize or consolidate with any Person other than Merger Sub or another wholly-owned Subsidiary of Parent; (c) neither it nor any of its Subsidiaries shall (i) authorize for issuance or issue, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its Capital Stock of any class or any Voting Debt (other than Shares issuable pursuant to Company Options outstanding on the date hereof, the grant of Company Options to newly hired employees in accordance with a benefit matrix previously provided to Parent and after notification of Parent and automatic grants of director stock options as mandated by the Company's First Amended 1988 Nonqualified Stock Option Plan for Outside Directors); (ii) other than in the ordinary and usual course of business consistent with past practices, transfer, lease, license, guarantee, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any other property or assets or incur or modify any material indebtedness or other liability (except for additional borrowings in the ordinary course under lines of credit in existence on the date hereof); (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits practices and franchises except for obligations 16 22 of Subsidiaries of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and incurred in the ordinary course of business; (iv) make any loans to any other persons having business dealings with them, the loss of any of which would be reasonably likely Person (other than to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock Subsidiaries of the Company or, customary loans or any of its subsidiaries or any other equity or voting security or equity or voting interest advances to employees in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance connection with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases business-related travel in the ordinary course of business consistent with past practicepractices); or (v) make any commitments for, not increase make or authorize any capital expenditures other than in amounts less than $150,000 individually and $3,000,000 in the compensation payable aggregate or, by any means, make any acquisition of, or investment in, assets or stock of any other Person; (d) except as may be required to become payable to any directorscomply with applicable law or by existing contractual commitments, officers or employees of the Company or neither it nor any of its subsidiaries, Subsidiaries shall (i) enter into any new agreements or grant commitments for any severance or termination pay to, or enter into any employment or severance agreement with any director or officer of the Company or with, any of its subsidiariesdirectors, officers or establish, adopt, enter into employees or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, consultants except for (ia) renewals specific arrangements with ten of existing bonds the Company's employees and letters one of credit its directors which have been previously disclosed to Parent and (b) reasonable severance payments made to employees in the ordinary course of business not to exceed $1,000,000 in the aggregate; and consistent with past practices, or (ii) advancesterminate, loans establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plan or increase or accelerate the salary, wage, bonus or other indebtedness compensation of any employees or directors (except for increases occurring in the ordinary and usual course of business, which shall include normal periodic performance reviews and related compensation and benefit increases, but not any general across-the-board increases) or consultants or pay or agree to pay any pension, retirement allowance or other employee benefit not required by any existing Compensation and Benefit Plan; (e) neither it nor any of its Subsidiaries shall, except as may be required as a result of a change in law or in GAAP, change any of the accounting principles or practices used by it; (f) neither it nor any of its Subsidiaries shall revalue in any respect any of its material assets, including writing down the value of inventory or writing-off notes or accounts receivable, other than in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; practices; (kg) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in neither it nor any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or Subsidiaries shall settle or compromise any material United States claims or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify litigation or terminate or materially amend or modify any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunder; claims; (ph) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or neither it nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated; and (qi) except as neither it nor any of its Subsidiaries shall take any action or omit to subsections (a), (b) take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (cj) neither it nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into any agreement to do any of the foregoing.

Interim Operations. From (a) The Parties agree during the period commencing on the date of this Agreement until through the Closing Time, except as set forth in Section 5.1 Date or termination of the Company Disclosure Schedule or Agreement under Article VIII (except as expressly contemplated by any other provision of this Agreement, unless including any Exhibits and Schedules hereto, or to the Parent has consented extent that the Parties shall otherwise agree in writing theretowriting), Stonepath and Seller will cause the Company shall, and shall cause each of its subsidiaries toCompany: (a1) conduct its business and operations only To carry on the Business in the ordinary course Ordinary Course of business consistent with past practice; (b) Business and Seller and Stonepath shall use all commercially reasonable efforts to preserve intact the business, its present business organization, goodwill, rights, licenses, permits keep available the services of its present officers and franchises of the Company employees and preserve its subsidiaries and maintain their existing relationships with customers, suppliers and other persons others having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company;it. (c2) use reasonable efforts Not to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (da) not amend purchase or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber redeem any shares of any class or series of its capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests stock; (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (ib) split, combine or reclassify any shares of its capital stock or issue or issue, authorize or propose the issuance of any other securities in respect of, in lieu of, of or in substitution for, for shares of its capital stock; (c) redeem, repurchase or otherwise acquire any shares of its capital stock; or (iid) in solely otherwise change its capitalization. (3) Except as contemplated by this Agreement, not to sell, issue, pledge, authorize or propose the case of the Company, declare, set aside sale or pay any dividends on, or make other distributions in respect issuance of, any of pledge or purchase or propose the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquirepurchase of, any shares of its capital stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options class or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiariessecurities convertible into, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any optionsrights, warrants or rights options to purchase or acquire acquire, any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans such shares or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000;convertible securities. (k4) not Not to amend its amended and restated articles of incorporation or its amended and restated bylaws. (5) Not to sell, lease, licensepledge, encumber or otherwise dispose of, of or agree to sell, lease, licensepledge, encumber or otherwise dispose of, any of its assets that are material properties to the Company's Business or any other assets except in the Ordinary Course of Business and in no event amounting in the aggregate to more than $50,000. (6) Not to incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities of the Company or guarantee any debt securities of others other than in the Ordinary Course of Business and its subsidiaries taken as a whole;in no event amounting in the aggregate to more than $25,000, except for indebtedness to the Laurus Master Fund Ltd. (l7) not authorize or Not to make any capital expenditures (including by lease) in excess of $1,000,000 25,000 in the aggregate aggregate. (8) Not to accelerate the collection of its accounts receivable or delay the payment of its accounts payable or other liabilities, in each case arising out of the operation of the Business in a manner which would be inconsistent with past practice. (9) Not to adopt or amend in any material respect any collective bargaining agreement or Employee Benefit Plan. (10) Except for (a) payment of bonuses (i) described in Stonepath's Schedules; (ii) included in the Financial Statements; or (iii) accrued for the Company months since the last Financial Statements, and all (b) wage increases or raises to non-officer or director employees, not to grant to any employees any increase in compensation or in severance or termination pay (other than pursuant to the agreements listed in Section 3.3 of its subsidiaries;Stonepath's Schedules), enter into any employment agreement with any employee, or grant, pay or accrue to an employee, any bonus or incentive compensation. (m11) not Not to acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or subdivision thereof, or make any material change in any investment by either purchase of its accounting stock or financial reporting (including tax accounting and reporting) methodssecurities, principles or practicescontributions to capital, property transfer or, except as may be required by GAAP in the Ordinary Course of Business, purchase of any property or applicable tax laws;assets, of any other individual or entity. (n12) not Not to make any material tax Material Tax election or settle or compromise any material United States or foreign tax Material Tax liability;. (o13) except Not to waive, release, grant or transfer any rights of material value or modify or change in any Material respect any Material Contract other than in the ordinary course Ordinary Course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder;Business. (p14) Not to take any action, or fail to take any action, that is not adopt a plan in the Ordinary Course of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as Business that is reasonably likely to subsections (a), (b) and (c) of this Section 5.1, not agree or commit result in writing or otherwise to do any of the foregoingrepresentations and warranties of Stonepath, Seller, and Company set forth in this Agreement becoming untrue in any Material respect. (15) To maintain in full force and effect all insurance coverages for its properties and assets substantially comparable to coverages existing on the date hereof. (16) Not to enter into, or modify, any contract with a Related Person. (17) To observe corporate governance procedures between it and ▇▇▇▇▇ ▇▇▇▇▇ (who oversees the Company and is also an investor and President of Purchaser), that may be necessary to avoid any conflict of interest arising from this Agreement.

Interim Operations. From During the period from the date of this Agreement until to the later of the Milestone or Option Closing TimeDate, except as set forth in Section 5.1 of with the Company Disclosure Schedule Purchasers' prior specific written consent or as expressly contemplated by any other provision of this Agreement, BSD, with respect to the BPH Business Assets, and the Company shall operate its business only in the ordinary and usual course consistent with past practices and to preserve intact its business organization and good will in all material respects. Additionally, during the period from the date of this Agreement to the later of the Milestone or Option Closing Date, BSD, with respect to the BPH Business Assets for items (xi), (xiv) and (xv) below and only with respect to those actions which materially affects the BPH Business Assets for all other items below, and the Company, will not to do any of the following (unless the Parent has consented otherwise expressly contemplated by this Agreement or permitted in writing theretoby the Purchasers): (i) amend its Certificate of Incorporation, any Certificate of Designation or By-Laws, as the Company shallcase may be; (ii) issue, and shall cause each sell or authorize for issuance or sale, shares of any class of its subsidiaries securities (including, but not limited to:, by way of stock split or dividend) or any subscriptions, options, warrants, rights or covertible securities, or enter into any agreements or commitments of any character obligating it to issue or sell any such securities; (aiii) conduct redeem, purchase or otherwise acquire, directly or indirectly, any shares of its business and operations only capital stock or any option, warrant or other right to purchase or acquire any such shares; (iv) declare or pay any dividend or other distribution (whether in cash, stock or other property) with respect to its capital stock; (v) voluntarily sell, transfer, surrender, abandon or dispose of any of its assets or property rights (tangible or intangible), other than in the ordinary course of business consistent with past practicepractices; (bvi) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of grant or make any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend mortgage or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company subject itself or any of its subsidiaries properties or assets to any other equity lien, charge or voting security or equity or voting interest in the Company or encumbrance of any of its subsidiarieskind, any securities convertible into or exercisable or exchangeable except liens for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as taxes not currently in effect)due; (fvii) not (i) splitcreate, combine incur or reclassify assume any shares of its stock liability or issue or authorize or propose the issuance of any other securities in respect ofindebtedness, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practicepractices; (viii) make or commit to make any capital expenditures exceeding in the aggregate Ten Thousand Dollars ($10,000.00); (ix) become subject to any guaranty; (x) grant any increase (outside the ordinary course of business consistent with past practices) in the compensation payable or to become payable to directors, not amendofficers or employees (including, modify without limitation, any such increase pursuant to any bonus, pension, profit-sharing or other plan or commitment); (xi) except as listed on Schedule 7.1, enter into any agreement which would be a Material Agreement, or amend or terminate any Contract required existing Material Agreement, which is outside the ordinary course of business consistent with past practices. With respect to be listed in Section 3.15 of the foregoing, the Company Disclosure Schedule or waive, release or assign BSD shall provide the Purchasers with a complete list of any material rights or claims thereundersuch Material Agreement not entered into in the ordinary course of business between the date hereof and the Closing Date; (pxii) not adopt alter the manner of keeping its books, accounts or records, or change in any manner the accounting practices therein reflected; (xiii) except as set forth on Schedule 7.1, enter into any commitment or transaction other than in the ordinary course of business consistent with past practices; (xiv) do any act, or omit to do any act which would cause a plan violation or breach of complete any of the representations, warranties or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization covenants of the Company or any of its subsidiaries; andBSD set forth in this Agreement; (qxv) except as to subsections take any action which has a material adverse effect on the condition (afinancial or otherwise), results of operations, assets, liabilities, properties, business or prospects of the Company or BPH Business Assets, or on employee, customer or supplier relations; (bxvi) and alter in any manner any existing working capital facilities; or (cxvii) of this Section 5.1agree, not agree or commit whether in writing or otherwise otherwise, to do any of the foregoing.

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth in Section 5.1 of the Company Disclosure Schedule or Schedule, the Company covenants and agrees as to itself and its Subsidiaries that, after the date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing and except as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to:): (a) conduct the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to preserve its business organization intact and operations only maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (b) it shall not (i) issue, sell, pledge, dispose of or encumber any capital stock owned by it in any of its Subsidiaries; (ii) amend its certificate of incorporation or bylaws; (iii) split, combine or reclassify its outstanding shares of capital stock; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock other than dividends from its direct or indirect wholly-owned Subsidiaries and other than in the case of the Company, regular quarterly cash dividends not in excess of $0.075 per Share; or (v) repurchase, redeem or otherwise acquire, except in connection with the Vastar Resources, Inc. Capital Accumulation Plan, or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; (c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class or any Voting Debt or any other property or assets (other than, in the case of the Company, Shares issuable pursuant to options outstanding on the date hereof under the Vastar Resources, Inc. Capital Accumulation Plan or the Stock Plans); (ii) other than in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets (including capital stock of any of its Subsidiaries) or incur or modify any material indebtedness or other liability (except for borrowings under the Company's (x) commercial paper program, (y) Credit Agreement, dated as of May 5, 1995, among the Company, the Banks which are parties thereto, the Co-Agents listed therein and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Agent, as amended to date and (z) uncommitted bank lines of credit, which in each case are in the ordinary course of business consistent with past practice; ); (biii) use reasonable efforts make or authorize or commit for any capital expenditures other than in the ordinary and usual course of business pursuant to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of calendar year 2000 capital appropriations/spending budgets set forth in the Company and its subsidiaries and maintain their existing relationships with customersDisclosure Schedule; or (iv) by any means, suppliers and make (except as contemplated by the Calendar Year 2000 Capital appropriations/spending budget set forth in the Company Disclosure Schedule) any acquisition of, or investment in, assets or stock of or other persons having business dealings with theminterest in, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear exceptedother Person or entity; (d) not neither it nor any of its Subsidiaries shall terminate, establish, adopt, enter into, make any new grants or awards under, amend or modify its respective charter otherwise modify, any Compensation and Benefit Plans or certificate of incorporationincrease the salary, by-lawswage, bonus or other charter or organization documentscompensation of any employees except increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit increases); (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or neither it nor any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiariesSubsidiaries shall file, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States claims or foreign tax liability; (o) litigation or, except in the ordinary and usual course of business consistent with past practicebusiness, not amendmodify, modify amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunderclaims; (pf) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or neither it nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be cancelled or terminated except in the ordinary and usual course of business; (g) neither it nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (qh) except as to subsections (a), (b) and (c) neither it nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into an agreement to do any of the foregoing.

Interim Operations. From The Company covenants and agrees as to itself and ------------------ its Subsidiaries that, after the date of this Agreement until hereof and prior to the Closing TimeEffective Time (unless Parent shall otherwise approve in writing, which approval shall not be unreasonably withheld or delayed, and except as set forth in Section 5.1 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to:): (a) conduct The business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use commercially reasonable efforts to preserve its business organization intact and operations only maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (b) It shall not, (i) issue, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any of its Subsidiaries' Capital Stock owned by it; (ii) amend its charter or bylaws, except for any amendment contemplated by this Agreement; (iii) split, combine or reclassify its outstanding shares of Capital Stock; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any Capital Stock; (v) repurchase, redeem or otherwise acquire or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its Capital Stock or any securities convertible into or exchangeable or exercisable for any shares of its Capital Stock; or (vi) adopt a plan of complete or partial liquidation or dissolution, merger or otherwise restructure or recapitalize or consolidate with any Person other than Merger Sub or another wholly-owned Subsidiary of Parent; (c) Neither it nor any of its Subsidiaries shall (i) authorize for issuance or issue, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its Capital Stock of any class or any Voting Debt (other than Shares issuable pursuant to Company Options outstanding on the date hereof); (ii) other than in the ordinary and usual course of business, transfer, lease, license, guarantee, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any other property or assets or incur or modify any material indebtedness or other liability (except for additional borrowings in the ordinary course under lines of credit in existence on the date hereof); (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except in the ordinary course of business and except for obligations of Subsidiaries of the Company incurred in the ordinary course of business; (iv) make any loans to any other Person (other than to Subsidiaries of the Company or, customary loans or advances to employees in connection with business-related travel in the ordinary course of business consistent with past practice; practices); or (bv) use reasonable efforts to preserve intact make any commitments for, make or authorize any capital expenditures other than in amounts less than $250,000 individually and $1,000,000 in the businessaggregate or, organizationby any means, goodwillmake any acquisition of, rightsor investment in, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss assets or stock of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear exceptedother Person; (d) not amend Except as may be required to comply with applicable law or modify its respective charter or certificate of incorporationby existing contractual commitments, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or neither it nor any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not Subsidiaries shall (i) split, combine enter into any new agreements or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible commitments for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or grant any severance or termination pay to, or enter into any employment or severance agreement with any director or officer of the Company or with, any of its subsidiariesdirectors, officers or establish, adopt, enter into employees or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, consultants except for (i) renewals of existing bonds and letters of credit reasonable severance payments made to employees in the ordinary course of business not to exceed $1,000,000 in the aggregate; and consistent with past practices, or (ii) advancesterminate, loans establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plan or increase or accelerate the salary, wage, bonus or other indebtedness compensation of any employees or directors (except for increases occurring in the ordinary and usual course of business, which shall include normal periodic performance reviews and related compensation and benefit increases, but not any general across-the-board increases) or consultants or pay or agree to pay any pension, retirement allowance or other employee benefit not required by any existing Compensation and Benefit Plan; (e) Neither it nor any of its Subsidiaries shall, except as may be required as a result of a change in law or in GAAP, change any of the accounting principles, practices or methods used by it; (f) Neither it nor any of its Subsidiaries shall revalue in any respect any of its material assets, including writing down the value of inventory or writing-off notes or accounts receivable, other than in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000practices; (kg) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in Neither it nor any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or Subsidiaries shall settle or compromise any material United States claims or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify litigation or terminate or materially amend or modify any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunderclaims; (ph) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or Neither it nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated; (i) Neither it nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (qj) except as to subsections (a), (b) and (c) Neither it nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into any agreement to do any of the foregoing.

Interim Operations. From Pursuant to the date of this Agreement until Merger Agreement, the Closing TimeCompany has agreed that, except as set forth expressly contemplated or provided by the Merger Agreement or agreed to in Section 5.1 writing by the Parent, prior to the time the directors of the Purchaser constitute a majority of the Company Disclosure Schedule or as expressly contemplated by any other provision of this AgreementBoard, unless (i) the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to: (a) conduct its business and operations only in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries shall be conducted only in the ordinary and maintain their existing relationships with customersusual course of business; (ii) the Company will not, suppliers and other persons having business dealings with themdirectly or indirectly, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (ca) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, transfer or pledge or encumber or agree or commit to issue, sell, grant, deliver, transfer or pledge any Shares or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries beneficially owned by it, either directly or any other equity indirectly; (b) amend its Certificate of Incorporation or voting security Bylaws or equity similar organizational documents; or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (ic) split, combine or reclassify the outstanding Shares or any shares of its outstanding capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case subsidiaries of the Company; (iii) neither the Company nor any of its subsidiaries shall, (a) declare, set aside or pay any dividends ondividend or other distribution payable in cash, stock or property with respect to its capital stock except for its regular quarterly cash dividend; (b) issue, sell, pledge, dispose of or encumber any additional shares of, or make other distributions in respect of, any of the Company's stocksecurities convertible into or exchangeable for, or (iii) repurchaseoptions, redeem warrants, calls, commitments or otherwise acquire, or agree or commit rights of any kind to repurchase, redeem or otherwise acquire, any shares of capital stock or other equity or debt securities or equity interests of any class of the Company or any of its subsidiaries; (g) not amend or otherwise modify , other than Shares reserved for issuance on the terms date thereof upon exercise of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable outstanding Rights pursuant to the holders thereof Rights Agreement or persons eligible for participation therein; issuances pursuant to the exercise of options outstanding on the date thereof; (hc) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets other than regularly scheduled seniority increases in the ordinary and usual course of business and consistent with past practice including, without limitation, certain sales of precious metal inventories; (d) incur or modify any material indebtedness or other material liability, other than in the ordinary and usual course of business and consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of provided that the Company may borrow money for use in the ordinary and usual course of business; or (e) redeem, purchase or otherwise acquire directly or indirectly any of its subsidiaries, or grant any severance or termination pay to, or enter into any employment or severance agreement with any director or officer capital stock other than redemption of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action outstanding Rights pursuant to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of Rights Agreement; (iv) neither the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or nor any of its subsidiaries shall modify, amend or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in terminate any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule agreements or waive, release or assign any material rights or claims thereunder; claims, except in the ordinary course of business and consistent with past practice; (pv) 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 cancelled or terminated without notice to the Parent, except in the ordinary course of business and consistent with past practice; (vi) neither the Company nor any of its subsidiaries shall: (a) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, except in the ordinary course of business and consistent with past practice; (b) make any material loans, advances or capital contributions to, or investments in, any other person (other than to subsidiaries of the Company), other than in the ordinary course of business and consistent with past practice; or (c) 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); (vii) neither the Company nor any of its subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (viii) 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); (ix) neither the Company nor any of its subsidiaries will, except as required by law, enter into, adopt, create or amend in any material respect or terminate any benefit plans maintained or contributed to by the Company or any of its subsidiaries; and (qx) except neither the Company nor any of its subsidiaries will make or agree to make any capital expenditure or capital expenditures other than capital expenditures in accordance with the Company's 1998 capital expenditure program or in the ordinary course of business consistent with past practice; (xi) neither the Company nor any of its subsidiaries will increase the compensation of any director, executive officer or other key employee of the Company or pay any benefit or amount not required by a plan, agreement, understanding or arrangement as to subsections (a), (b) and (c) in effect on the date of this Section 5.1Agreement to any such person; (xii) neither the Company nor any of its subsidiaries will cause a material change in investment policy or a material change in investment vehicles related to the assets in any pension plan, not other than actions taken in the ordinary course of business or that are consistent with or required by its fiduciary duties; (xiii) neither the Company nor any of its subsidiaries will take, or agree to commit to take, any action that would make any representation or commit warranty of the Company contained herein inaccurate in writing any material respect at, or otherwise as of any time prior to, the Effective Time (except for representations made as of a specific date); or (xiv) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoingforegoing actions.

Interim Operations. From the date of this Agreement until the Closing Time, except as set forth in Section 5.1 earlier of the Company Disclosure Schedule Funding Date or as expressly contemplated by any other provision the termination of this Agreement, unless the Parent has consented in writing theretoprior written consent of the Investors shall have been obtained, the Company shallcovenants and agrees that it will not do or agree or commit to do, and shall cause each or permit any of its subsidiaries toSubsidiaries to do or agree or commit to do, any of the following: (a) conduct amend the Company’s Certificate of Incorporation or bylaws or the certificate of incorporation or bylaws (or corresponding organizational documents) of any Company Subsidiaries, (b) incur or guarantee any additional Indebtedness except for (i) intercompany Indebtedness, (ii) borrowings under the Company’s credit facilities as in effect on the date of this Agreement and overnight borrowing in the ordinary course of business consistent with past practice. (c) repurchase, redeem, or otherwise acquire or exchange, directly or indirectly, any shares, or any securities convertible into any shares, of the capital stock of the company or any of its business Subsidiaries, or make any other distribution in respect of the Company’s capital stock, except for repurchases made in connection with any Benefit Plan or cash dividends on Common Stock not to exceed $0.01 per share for each fiscal quarter; (d) except for this Agreement, or pursuant to the exercise of stock options outstanding as of the date hereof and operations only pursuant to and in accordance with the Benefit Plans as in existence on the date hereof, issue, sell, pledge, encumber, authorize the issuance of, enter into any contract to issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit to become outstanding, any additional shares of Common Stock or any other capital stock of the Company or any Subsidiaries, or any stock appreciation rights, or any option, warrant, or other right in respect of the capital stock of the Company or any of its Subsidiaries; (e) adjust, split, combine or reclassify any capital stock of the Company or any of its Subsidiaries or issue or authorize the issuance of any other securities in respect of or in substitution for shares of Common Stock or any other capital stock of the Company or any of its Subsidiaries, or sell, lease, mortgage, permit any Lien (other than, in the case of the following subclause (ii), Permitted Liens that are not material individually or in the aggregate), or otherwise dispose of or otherwise encumber (i) any shares of capital stock of any Company Subsidiaries or (ii) any material asset other than in the ordinary course of business consistent with past practice; (bf) use reasonable efforts purchase any securities or make any material investment, either by purchase of stock or securities, contributions to preserve intact the businesscapital, organizationasset transfers, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss or purchase of any assets, in any Person other than a Company Subsidiary, or otherwise acquire direct or indirect control over any Person, other than in the ordinary course of which would be reasonably likely to result in a Material Adverse Effect on the Companybusiness consistent with past practice; (cg) use reasonable efforts (i) other than as required by the agreements executed in connection with this Agreement and identified on the Disclosure Schedule, grant any increase in compensation or benefits to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend the employees or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock officers of the Company or any of its subsidiaries or any Subsidiaries, except for merit-based salary increases for employees other equity or voting security or equity or voting interest than officers in the Company ordinary course in accordance with past practice; (ii) pay any (x) severance or termination pay or (y) any of its subsidiariesbonus, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (in either case other than issuances of Shares upon exercise of Company Stock Options granted prior to as required by written severance policies or written contracts in effect on the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares the ordinary course of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or business consistent with past practice; (iii) repurchase, redeem enter into or otherwise acquire, amend any severance agreements with employees or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests officers of the Company or any of its subsidiaries; Subsidiaries; (giv) not grant any increase in fees or other increases in compensation or other benefits to directors of the Company or any of its Subsidiaries except in the ordinary course of business consistent with past practice; or (v) waive any stock repurchase rights, accelerate, amend or otherwise modify change the terms period of exercisability of any Company Stock Options stock options or the Company Option Plansother equity rights or restricted stock, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible reprice any stock options or other equity rights granted under a Benefit Plan or authorize cash payments in exchange for participation thereinany stock options or other equity rights; (h) enter into or amend any employment contract between the Company or any of its Subsidiaries and any Person that the Company or such Subsidiary does not have the unconditional right to terminate without liability (other than regularly scheduled seniority increases liability for services already rendered); (i) adopt any new Benefit Plan or terminate or withdraw from, or make any change in or to, any Benefit Plans other than any such change that is required by law or that, in the opinion of counsel, is necessary or advisable to maintain the tax qualified status of any such plan, or make any distributions from such Benefit Plans, except as required by law, the terms of such Benefit Plans as in effect on the date hereof or in the ordinary course of business consistent with past practice; (j) make any significant change in any accounting methods or systems of internal accounting controls, except as required by GAAP; (k) make, change or revoke any material Tax election, (ii) change any of its methods of accounting for Tax purposes, (iii) settle or compromise any material Tax liability or any Tax disputes, claims, audits, examinations, or other proceedings, (iv) file any material amended Tax return or (v) enter into a “closing agreement” described in Section 7121 of the Code (or any corresponding or comparable provision of state, local or foreign Law); (l) commence any litigation other than in the ordinary course of business consistent with past practice, not increase or settle any litigation (i) involving any liability to the compensation payable Company or to become payable to any directors, officers of its Subsidiaries for money damages in excess of $500,000 or employees materially restricting or otherwise affecting the business or operations of the Company or any of its subsidiaries, Subsidiaries or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in relating to the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiariestransactions contemplated hereby; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amendenter into, modify modify, amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule Significant Agreement or waive, release release, compromise or assign any material rights or claims thereunderclaims; (n) enter into any new line of business or change in any material respect its lending, investment, risk and asset-liability management, interest rate or fee pricing with respect to depository accounts, hedging and other material banking or operating policies except as required by law or by rules or policies imposed by a Governmental Entity; (o) make or commit to make any capital expenditure, except (i) capital expenditures of the Company and its Subsidiaries in the ordinary course of business on information technology used in the ordinary course of business not exceeding $5,000,000; and (ii) capital expenditures of the Company and its Subsidiaries in the ordinary course of business (other than capital expenditures described in the foregoing clause (i)) not exceeding $3,000,000; (p) not adopt a plan of complete except as required by law or partial liquidationapplicable regulatory authorities, dissolutionmake any material changes in its credit administration policies or loan rating system, mergeror otherwise make any material changes to its policies and practices with respect to underwriting, consolidationpricing, restructuringoriginating, recapitalization acquiring, selling, servicing, or other reorganization of the Company buying or any of its subsidiaries; andselling rights to service, loans; (q) purchase or lease any real property in respect of any branch or other facility, or, without previously notifying and consulting with Investors, make any application to open, relocate or close, or open, relocate or close any branch or other facility; (r) sell, transfer or otherwise dispose of any property or assets that are, individually or in the aggregate, material, except as to subsections (a)for the sale of, in each case in the ordinary course of business, (bi) Small Business Administration Loans, (ii) OREO and (ciii) loans through the Mortgage Purchasing Department of the Bank; (s) without previously notifying and consulting with Investors, except for Loans or commitments for Loans that have previously been approved by the Bank prior to the date of this Section 5.1Agreement, not make or acquire any Loan or issue a commitment (or renew or extend an existing commitment) for any Loan relationship aggregating in excess of $1,000,000, or amend or modify in any material respect any existing Loan relationship, that would result in total credit exposure to the applicable borrower (and its affiliates) in excess of $1,000,000; (t) fail to comply with Regulatory Agreements or the C&D Order; or (u) agree to take, make any commitment to take, or commit adopt any resolutions of the Company’s Board of Directors in writing or otherwise to do support of, any of the foregoingactions prohibited by this Section 3.1.

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth in Section 5.1 Schedule 6.1, during the period from the date hereof and continuing until the earlier of the Company Disclosure Schedule termination of this Agreement pursuant to Article IX or the Closing, except as expressly provided in this Agreement or as expressly contemplated by any other provision of this Agreement, unless the Parent has may be consented to in writing thereto, the Company shall, and shall cause each of its subsidiaries to:by Parent (such consent not to be unreasonably withheld or delayed): (a) the Company and each of the Company Subsidiaries shall: (i) conduct its business and operations in the same manner as heretofore conducted, only in the ordinary course and in material compliance with all applicable Laws; (ii) pay its debts, taxes and other liabilities when due and perform other material obligations when due; and (iii) use commercially reasonable efforts to (A) preserve intact its present business organization, (B) except as provided in (f) below keep available the services of its present officers and employees and (C) preserve its relationships with customers, suppliers, distributors, licensors, licensees and other Persons with which it has significant business consistent with past practicedealings; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the no Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company;Subsidiary shall: (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep amend its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend Certificate of Incorporation or modify its respective charter Bylaws or certificate of incorporation, by-laws, or other charter or organization similar organizational documents; (eii) not authorize for issuance, issue, sell, granttransfer, deliverpledge, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class or series of its capital stock of the Company stock, or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interestsfor, or any options, warrants, calls, commitments, subscriptions commitments or rights of any kind to purchase acquire, any shares of any class or acquire any such shares, securities or interests series of its capital stock (other than issuances except for the issuance of Shares capital stock issuable upon the exercise of Company Stock Options granted prior to options outstanding as of the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effecthereof); (fiii) not set aside or pay any dividend or other distribution payable in cash, stock or property with respect to any shares of any class or series of its capital stock; (iiv) split, combine or reclassify any shares of its stock any class or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares series of its stock; or (v) redeem, (ii) in solely the case purchase or otherwise acquire directly or indirectly any shares of the Company, declare, set aside any class or pay any dividends on, or make other distributions in respect of, any series of the Company's its capital stock, or (iii) repurchase, redeem any instrument or otherwise acquire, security which consists of or agree or commit includes a right to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiariesacquire such shares; (gc) not amend neither the Company nor any Company Subsidiary shall: (i) incur or otherwise assume any Indebtedness, modify the terms of any Indebtedness or other liability; (ii) assume or guarantee the obligations of any other Person; (iii) enter into any "keep well" or other agreement to maintain any financial statement condition of any other Person (other than any Company Stock Options Subsidiary); or (iv) enter into any arrangement having the economic effect of any of the foregoing; provided, however, notwithstanding the foregoing, the Company Option Plans, the effect of which shall not be to make such terms more favorable restricted from incurring additional Indebtedness pursuant to the holders thereof or persons eligible for participation thereinterms of the Convertible Notes; (hd) other than regularly scheduled seniority increases neither the Company nor any Company Subsidiary shall make changes in the ordinary course of business consistent with past practicecompensation (including equity compensation, not increase the compensation whether payable in cash or otherwise) or benefits payable or to become payable to any directorsof their employees, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed but in Section 3.15 of no event which shall in the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunderaggregate exceed $250,000; (pe) neither the Company nor any Company Subsidiary shall hire any employees other than in the ordinary course of business consistent with past practice; provided, however, that no Company or Company Subsidiary shall hire any employee whose annual compensation would exceed $100,000 without the prior approval of Parent, which such approval shall not be unreasonably withheld or delayed; (f) neither the Company nor any Company Subsidiary shall terminate any of their employees other than in the ordinary course of business consistent with past practice without the prior approval of Parent, which such approval shall not be unreasonably withheld; provided, however, that if the Company or any Company Subsidiary shall terminate any of their employees prior to the Closing other than as directed by Parent, the Company shall pay all severance and other costs resulting from or arising out of such termination; (g) neither the Company nor any Company Subsidiary shall voluntarily permit any insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated; (h) neither the Company nor any Company Subsidiary shall adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization reorganization, or otherwise acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any Person or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to its business; (i) neither the Company nor any Company Subsidiary shall change in any material respect any of the accounting methods used by it unless required or permitted by GAAP; (j) no Company Subsidiary shall make or change any Tax election, change an annual accounting period, adopt or change any material Tax accounting method, file any amended Tax Return, enter into any closing agreement, settle or consent to any Tax claim, surrender any right to claim a refund of Taxes, or consent to the extension or waiver of the statutory period of limitations applicable to any material Tax claim; (k) neither the Company nor any Company Subsidiary shall voluntarily take, or agree to or commit to take, any action that would result in any of the conditions to the Closing set forth in Article VIII 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 Closing Date, or that would materially impair the ability of the parties hereto to consummate the Transactions in accordance with the terms hereof or materially delay such consummation; (l) neither the Company nor any Company Subsidiary shall enter into any material partnership arrangements, material joint software development agreements, material joint ventures or other material strategic alliances or material strategic collaborations, except, in any case, as such are terminable upon not more than thirty (30) days notice without material payment or penalty of any kind; (m) neither the Company nor any Company Subsidiary shall sell, lease, license, mortgage or otherwise encumber or dispose of any properties or assets which are material, individually or in the aggregate, to its business, except sales, licenses or other dispositions in the ordinary course of business consistent with past practice; (n) neither the Company nor any Company Subsidiary shall make any loans, advances or capital contributions to, or investments in, any other Person, other than loans or investments by the Company, or any Company Subsidiary, to or in the Company or any Company Subsidiary; (o) neither the Company nor any Company Subsidiary shall settle any claim, action or proceeding involving money damages, except to the extent subject to reserves reflected in the Financial Statements; (p) neither the Company nor any Company Subsidiary shall subject itself, or the Parent, to any non-compete on any of their respective businesses; (q) neither the Company nor any Company Subsidiary shall enter into any Contract the effect of which would be to grant to a third party following the Closing Date any actual or potential right of license to any of its Intellectual Property, except for non-exclusive licenses of Trademarks or Copyrights in the ordinary course of business consistent with past practice granted in connection with, or incidental to, the provision of services in the ordinary course of business consistent with past practice; (r) neither the Company nor any Company Subsidiary shall grant any exclusive rights with respect to any of its Intellectual Property; (s) neither the Company nor any Company Subsidiary shall enter into, modify or amend in a manner adverse in any material respect to such party any material Contract, terminate any material Contract, or waive, release or assign any material rights or claims under any material Contract; provided, however, that neither this covenant nor any other provision in this Agreement shall restrict the ability of the Company or any Company Subsidiary from entering into advertising or paid inclusion agreements, Internet search services agreements or agreements involving payments by the Company of its subsidiariesless than $75,000, in each such case, which are entered into in the ordinary course of business and consistent with past practice; and (qt) except as to subsections (a), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise neither the Company nor any Company Subsidiary shall enter into any Contract to do any of the foregoing.

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth on Schedule 5.07(a), since December 31, 2006: the Business has been conducted by the Seller in Section 5.1 the ordinary and usual course and in a manner consistent with past practice; with respect to the Business, the Seller has not: suffered any Material Adverse Effect; incurred any liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary and usual course of business and consistent with past practice and except for liabilities and obligations that have not, individually or in the aggregate, been material to the Business; increased, or experienced any change in any assumptions underlying or methods of calculating, any bad debt, contingency or other reserves; paid, discharged or satisfied any claims, liabilities or obligations (absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary and usual course of business and consistent with past practice of claims, liabilities and obligations reflected or reserved against in the Financial Statements or incurred in the ordinary and usual course of business and consistent with past practice; permitted or allowed any of the Company Disclosure Schedule Acquired Assets to be subjected to any Encumbrance (except Permitted Encumbrances); canceled any debt for borrowed money owing to the Seller or as expressly contemplated by waived any other provision of this Agreementmaterial claims or rights; sold, unless the Parent has consented in writing theretotransferred, the Company shallor otherwise disposed of, and shall cause each or transferred or granted any rights under any lease, license or agreement with respect to any of its subsidiaries to: (a) conduct its business and operations only assets, except pursuant to Customer Contracts entered into in the ordinary course of business consistent with past practice; (b) ; disposed of, failed to take reasonable steps to protect, or permitted to lapse, any rights for the use reasonable efforts of, the Intellectual Property, other than Incidental Intellectual Property, used in the Business; made any change in any method of accounting or accounting practice, except insofar as may be required by GAAP; made any single capital expenditure or future commitment in excess of $10,000 for additions to preserve intact property, plant, equipment or intangible capital assets, or made capital expenditures or future commitments in excess of $25,000 in the businessaggregate for additions to property, organizationplant, goodwillequipment or intangible capital assets; made any single capital expenditure or future commitment in excess of $10,000 for improvements, rightsupdates or fixes to its systems, licensesProducts or the development of new Software, permits and franchises or made aggregate capital expenditures or future commitments in excess of $25,000 for improvements, updates or fixes to its systems, Products or the development of new Software; made any material change in development, marketing or pricing policies relating to products or services of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties Business (whether or not in the ordinary and usual course of business); ; had any significant labor dispute or received written notice of any grievance; borrowed or agreed to borrow any funds; paid and/or declared any dividends (jother than in cash) with respect to its shares of capital stock, whether in shares of capital stock or other property; granted to any officer or employee any increase in compensation or benefits; paid any pension, retirement allowance or other employee benefit not incurrequired by any plan, assume policy or guarantee any indebtedness for borrowed money (including draw-downs program set forth on letters or lines of creditSchedule 5.20(a) or issue any employment agreement set forth on Schedule 5.20(a); adopted, agreed to adopt, or sell made any notes, bonds, debentures, debt instruments, evidences announcement regarding the adoption of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of any new pension, retirement or other employee benefit plan, program or policy, or (ii) any amendments to any existing bonds and letters of credit pension, retirement or other employee benefit plan, policy or program set forth on Schedule 5.20(a) unless otherwise required by applicable law; except as set forth in the Financial Statements, written off as uncollectible any notes or Accounts Receivable, other than in the ordinary course of business not business; changed its practice or policy with respect to exceed $1,000,000 collection of Accounts Receivable; or suffered or agreed to take any of the actions set forth in the aggregate; and this subparagraph (ii) advances, loans or other indebtedness in ). None of the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken Seller used in the Business have been affected in any way as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess result of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methodsfire, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization explosion or other reorganization of the Company casualty (whether or any of its subsidiaries; and (q) except as to subsections (anot covered by insurance), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise to do any of the foregoing.

Interim Operations. From Since December 31, 1994, there has not been any adverse change in the date condition (financial or otherwise), results of this Agreement until operations, assets, properties or business of Corporation or Kellenberger Inc. Neither Seller nor Corporation is aware of any c▇▇▇▇▇▇▇▇▇▇▇▇ which might result in any adverse change in the Closing Timecondition (financial or otherwise), except as set forth in Section 5.1 results of the Company Disclosure Schedule operations, assets, properties or as expressly contemplated by any other provision business of this AgreementCorporation or Kellenberger Inc. Since December 31, unless the Parent has consented in writing thereto, the Company shall, 1994: (i) Corporation and shall cause each of its subsidiaries to: (a) conduct its Kel▇▇▇▇▇▇▇▇▇ ▇▇c. have conducted their business and operations only in the ordina▇▇ ▇▇▇ ▇▇▇▇▇ course of business consistent with past practices and (ii) neither Corporation nor Kellenberger Inc. has done, agreed to do or suffered any of the fo▇▇▇▇▇▇▇: 2.7.1 Incurred or paid any obligations or liabilities, whether absolute, accrued, contingent or otherwise (including, without limitation, liabilities as guarantor or otherwise with respect to obligations of others) or made any expenditures or commitments for the acquisition of any asset or property, in each case other than in the ordinary and usual course of business consistent with past practice, or failed to pay or discharge when due any liabilities of which failure to pay or discharge has caused or will cause any loss or risk of loss to it or any of its assets or properties; 2.7.2 Transferred or otherwise disposed of any asset or property or entered into any agreement or other arrangement for any such transfer or disposition other than in the ordinary and usual course of business consistent with past practice; (b) use reasonable efforts 2.7.3 Mortgaged, pledged or subjected to preserve intact the businessany lien, organizationlease, goodwillsecurity interest, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, encumbrance or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or charge any of its subsidiaries assets or properties; 2.7.4 Suffered any damage, destruction or loss, whether or not covered by insurance, adversely affecting, either in any case or in the aggregate, any assets or properties or the financial condition or the business of Corporation or Kellenberger Inc. other than disclosed in Exhibits hereto; ▇.▇.▇ ▇▇rgiven, cancelled, modified or waived any debts or claims held by it or waived any other equity rights other than adjustments, write-offs or voting security or equity or voting interest compromises of accounts receivable in the Company ordinary and usual course of business; 2.7.6 Suffered any loss of employees that materially affects the assets or the business of Corporation or Kellenberger Inc.; 2.7.7 Suffered any change, materiall▇ ▇▇▇▇▇▇▇ ▇▇ Corporation or Kellenberger Inc., in its relationship with, or received notice of ▇▇▇ ▇▇▇▇▇▇ such change in its subsidiariesrelationship with, any securities convertible into lessors, lessees, customers, licensor, contractors or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect)suppliers; 2.7.8 Been affected by any suit, action or judicial proceeding or governmental investigation or inquiry not disclosed on Exhibit 2.8 hereof in a manner which is adverse to Corporation or Kellenberger Inc.; 2.7.9 Declared, set aside or paid an▇ ▇▇▇▇▇▇▇▇ ▇r other distribution (fwhether in cash or property) not (i) split, combine or reclassify with respect to any shares of its capital stock (or issue comparable equity interest), or authorize purchased, redeemed or propose otherwise acquired any of its capital stock (or comparable equity interest), or split, combined or reclassified any of its capital stock (or comparable equity interest), or contributed any assets or property to the issuance capital of any subsidiary; 2.7.10 Issued, sold or transferred any of its capital stock, notes or other securities or debt instruments or granted any options, warrants or other rights calling for the issue of any such securities or instruments; 2.7.11 Entered into or engaged in respect of, in lieu ofany transaction with, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside made any payment or pay any dividends on, or make other distributions in respect oftransfer to, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock its shareholders or other equity or debt securities or equity interests of the Company or any of its subsidiaries; Affiliates (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (hother than Kellenberger Inc.) other than regularly scheduled seniority increases in such Affiliates' capacities as em▇▇▇▇▇▇▇ ▇▇ ▇anagers pursuant to employment arrangements entered into in the ordinary course of business consistent with past practicefor services actually rendered and which do not involve extraordinary bonuses or other payments; 2.7.12 Introduced any new or significantly changed method of management, not increase the compensation payable operation or to become payable to any directors, officers or employees accounting in respect of the Company its business or any of its subsidiariesassets, properties or rights, which has had or could reasonably be expected to have a materially adverse effect on its condition (financial or otherwise), results of operations, assets, prospects or business; 2.7.13 Entered into, suffered any amendment to or terminated any contract to which it is a party or by which it is bound, which has had or could reasonably be expected to have a materially adverse effect on its condition (financial or otherwise), results of operations, assets, prospects or business; 2.7.14 Received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or could reasonably be expected to have a materially adverse effect on its condition (financial or otherwise), business, results of operations, assets or prospects; 2.7.15 Any other event or condition undisclosed to Purchaser which has had, or grant any severance reasonably could have, an adverse effect on its business, results of operations, condition (financial or termination pay to, or enter into any employment or severance agreement with any director or officer of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as to subsections (aotherwise), (b) and (c) of this Section 5.1, not agree assets or commit in writing or otherwise to do any of the foregoingprospects.

Interim Operations. From the date of this Agreement until the Closing Time, except as set forth in Section 5.1 earlier of the Company Disclosure Schedule Funding Date or as expressly contemplated by any other provision the termination of this Agreement, unless the Parent has consented in writing theretoprior written consent of the Investors shall have been obtained, the Company shallcovenants and agrees that it will not do or agree or commit to do, and shall cause each or permit any of its subsidiaries toSubsidiaries to do or agree or commit to do, any of the following: (a) conduct amend the Company’s Certificate of Incorporation or bylaws or the certificate of incorporation or bylaws (or corresponding organizational documents) of any Company Subsidiaries, (b) incur or guarantee any additional Indebtedness except for (i) intercompany Indebtedness, (ii) borrowings under the Company’s credit facilities as in effect on the date of this Agreement and overnight borrowing in the ordinary course of business consistent with past practice. (c) repurchase, redeem, or otherwise acquire or exchange, directly or indirectly, any shares, or any securities convertible into any shares, of the capital stock of the company or any of its business Subsidiaries, or make any other distribution in respect of the Company’s capital stock, except for repurchases made in connection with any Benefit Plan or cash dividends on Common Stock not to exceed $0.01 per share for each fiscal quarter; (d) except for this Agreement, or pursuant to the exercise of stock options outstanding as of the date hereof and operations only pursuant to and in accordance with the Benefit Plans as in existence on the date hereof, issue, sell, pledge, encumber, authorize the issuance of, enter into any contract to issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit to become outstanding, any additional shares of Common Stock or any other capital stock of the Company or any Subsidiaries, or any stock appreciation rights, or any option, warrant, or other right in respect of the capital stock of the Company or any of its Subsidiaries; (e) adjust, split, combine or reclassify any capital stock of the Company or any of its Subsidiaries or issue or authorize the issuance of any other securities in respect of or in substitution for shares of Common Stock or any other capital stock of the Company or any of its Subsidiaries, or sell, lease, mortgage, permit any Lien (other than, in the case of the following subclause (ii), Permitted Liens that are not material individually or in the aggregate), or otherwise dispose of or otherwise encumber (i) any shares of capital stock of any Company Subsidiaries or (ii) any material asset other than in the ordinary course of business consistent with past practice; (bf) use reasonable efforts purchase any securities or make any material investment, either by purchase of stock or securities, contributions to preserve intact the businesscapital, organizationasset transfers, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss or purchase of any assets, in any Person other than a Company Subsidiary, or otherwise acquire direct or indirect control over any Person, other than in the ordinary course of which would be reasonably likely to result in a Material Adverse Effect on the Companybusiness consistent with past practice; (ci) use reasonable efforts other than as required by the agreements executed in connection with this Agreement and identified on the Disclosure Schedule, grant any increase in compensation or benefits to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend the employees or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock officers of the Company or any of its subsidiaries or any Subsidiaries, except for merit-based salary increases for employees other equity or voting security or equity or voting interest than officers in the Company ordinary course in accordance with past practice; (ii) pay any (x) severance or termination pay or (y) any of its subsidiariesbonus, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (in either case other than issuances of Shares upon exercise of Company Stock Options granted prior to as required by written severance policies or written contracts in effect on the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares the ordinary course of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or business consistent with past practice; (iii) repurchase, redeem enter into or otherwise acquire, amend any severance agreements with employees or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests officers of the Company or any of its subsidiaries; Subsidiaries; (giv) not grant any increase in fees or other increases in compensation or other benefits to directors of the Company or any of its Subsidiaries except in the ordinary course of business consistent with past practice; or (v) waive any stock repurchase rights, accelerate, amend or otherwise modify change the terms period of exercisability of any Company Stock Options stock options or the Company Option Plansother equity rights or restricted stock, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible reprice any stock options or other equity rights granted under a Benefit Plan or authorize cash payments in exchange for participation thereinany stock options or other equity rights; (h) enter into or amend any employment contract between the Company or any of its Subsidiaries and any Person that the Company or such Subsidiary does not have the unconditional right to terminate without liability (other than regularly scheduled seniority increases liability for services already rendered); (i) adopt any new Benefit Plan or terminate or withdraw from, or make any change in or to, any Benefit Plans other than any such change that is required by law or that, in the opinion of counsel, is necessary or advisable to maintain the tax qualified status of any such plan, or make any distributions from such Benefit Plans, except as required by law, the terms of such Benefit Plans as in effect on the date hereof or in the ordinary course of business consistent with past practice; (j) make any significant change in any accounting methods or systems of internal accounting controls, except as required by GAAP; (k) make, change or revoke any material Tax election, (ii) change any of its methods of accounting for Tax purposes, (iii) settle or compromise any material Tax liability or any Tax disputes, claims, audits, examinations, or other proceedings, (iv) file any material amended Tax return or (v) enter into a “closing agreement” described in Section 7121 of the Code (or any corresponding or comparable provision of state, local or foreign Law); (l) commence any litigation other than in the ordinary course of business consistent with past practice, not increase or settle any litigation (i) involving any liability to the compensation payable Company or to become payable to any directors, officers of its Subsidiaries for money damages in excess of $500,000 or employees materially restricting or otherwise affecting the business or operations of the Company or any of its subsidiaries, Subsidiaries or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in relating to the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiariestransactions contemplated hereby; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amendenter into, modify modify, amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule Significant Agreement or waive, release release, compromise or assign any material rights or claims thereunderclaims; (n) enter into any new line of business or change in any material respect its lending, investment, risk and asset-liability management, interest rate or fee pricing with respect to depository accounts, hedging and other material banking or operating policies except as required by law or by rules or policies imposed by a Governmental Entity; (o) make or commit to make any capital expenditure, except (i) capital expenditures of the Company and its Subsidiaries in the ordinary course of business on information technology used in the ordinary course of business not exceeding $5,000,000; and (ii) capital expenditures of the Company and its Subsidiaries in the ordinary course of business (other than capital expenditures described in the foregoing clause (i)) not exceeding $3,000,000; (p) not adopt a plan of complete except as required by law or partial liquidationapplicable regulatory authorities, dissolutionmake any material changes in its credit administration policies or loan rating system, mergeror otherwise make any material changes to its policies and practices with respect to underwriting, consolidationpricing, restructuringoriginating, recapitalization acquiring, selling, servicing, or other reorganization of the Company buying or any of its subsidiaries; andselling rights to service, loans; (q) purchase or lease any real property in respect of any branch or other facility, or, without previously notifying and consulting with Investors, make any application to open, relocate or close, or open, relocate or close any branch or other facility; (r) sell, transfer or otherwise dispose of any property or assets that are, individually or in the aggregate, material, except as to subsections (a)for the sale of, in each case in the ordinary course of business, (bi) Small Business Administration Loans, (ii) OREO and (ciii) loans through the Mortgage Purchasing Department of the Bank; (s) without previously notifying and consulting with Investors, except for Loans or commitments for Loans that have previously been approved by the Bank prior to the date of this Section 5.1Agreement, not make or acquire any Loan or issue a commitment (or renew or extend an existing commitment) for any Loan relationship aggregating in excess of $1,000,000, or amend or modify in any material respect any existing Loan relationship, that would result in total credit exposure to the applicable borrower (and its affiliates) in excess of $1,000,000; (t) fail to comply with Regulatory Agreements or the C&D Order; or (u) agree to take, make any commitment to take, or commit adopt any resolutions of the Company’s Board of Directors in writing or otherwise to do support of, any of the foregoingactions prohibited by this Section 3.1.

Interim Operations. From The Company covenants and agrees that, after the date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing and except as otherwise expressly contemplated by this Agreement): (a) its business shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it shall use its reasonable best efforts to preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (b) it shall not (i) form or acquire (by means of this Agreement until transfer, purchase or otherwise) any Subsidiaries; (ii) amend its articles of incorporation or by-laws or amend, modify or terminate the Closing TimeStock Plans, except other than as expressly required hereunder (including, without limitation, as set forth in Section 5.1 6.10); (iii) split, combine or reclassify its outstanding shares of the Company Disclosure Schedule capital stock; (iv) declare, set aside or as expressly contemplated by pay any other provision of this Agreementdividend payable in cash, unless the Parent has consented stock or property in writing thereto, the Company shall, and shall cause each of its subsidiaries to: (a) conduct its business and operations only in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss respect of any of which would be reasonably likely to result in a Material Adverse Effect on the Companycapital stock; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; it shall not (di) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class of, or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exchangeable or exercisable or exchangeable for any such shares, securities or interestsfor, or any options, warrants, calls, commitments, subscriptions commitments or rights of any kind to purchase acquire, any shares of its capital stock of any class or acquire any such shares, securities Voting Debt or interests any other property or assets (other than issuances Shares issuable pursuant to options outstanding on the date hereof under the Stock Plans); (ii) other than in the ordinary and usual course of Shares upon exercise business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of Company Stock Options granted prior or encumber any other property or assets or incur or modify any other material liability or modify any current material indebtedness; (iii) make or authorize or commit for any expenditures (including capital expenditures and expenditures relating to the date use of this Agreement and disclosed pursuant Third-Party Intellectual Property Rights or the development, marketing or in-licensing of any products) or, by any means, make any acquisition of, or investment in, assets or stock of any other Person or entity in excess of (or reasonably likely to Section 3.2 result in expenditures in excess of) $100,000 or (iv) authorize or enter into any agreement or other commitment relating to directors, officers, employees and consultants the licensing of any of the Company in accordance with Company's products or the marketing by the Company Option of a third-party's products; (d) it shall not terminate, establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plans as currently or increase the salary, wage, bonus or other compensation or benefits of any employees except, in effectthe case of employees that are not executive officers or directors of the Company, increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit increases); (fe) it will not (ix) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, (y) split, combine or reclassify any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, of or in substitution for, for shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, capital stock or (iiiz) repurchasepurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, acquire any shares of capital stock or other equity or debt securities or equity interests of the Company or any other securities thereof (other than the acquisition of its subsidiariesshares surrendered in whole or partial satisfaction of the exercise price for any stock options outstanding on the date hereof and properly exercised in accordance with their terms) or any rights, warrants or options to acquire any such shares or other securities; (gf) it shall not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States claims or foreign tax liability; (o) litigation or, except in the ordinary and usual course of business consistent with past practicemodify, not amend, modify amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunderclaims; (pg) it shall not adopt make any Tax election or permit any insurance policy naming it as a plan beneficiary or loss-payable payee to be canceled or terminated except in the ordinary and usual course of complete business; (h) it shall continue to take all actions reasonably necessary in connection with the continued leasing or partial liquidationsubleasing of Building One, dissolutionbut shall not enter into any further agreements relating to the lease or sublease of such property; (i) it shall continue to take all actions reasonably necessary in connection with the valuation of and sale of equipment in Building One, merger, consolidation, restructuring, recapitalization but shall not enter into any agreements relating to the sale of any such equipment; (j) it shall not incur additional indebtedness; (k) it shall not take any action or other reorganization of the Company or omit to take any action that would cause any of its subsidiariesrepresentations and warranties herein to become untrue in any material respect; and (ql) except as to subsections (a), (b) and (c) of this Section 5.1, it will not agree authorize or commit in writing or otherwise enter into an agreement to do any of the foregoing.

Interim Operations. From Each of NationsRent and RSC covenants and agrees as to itself and its Subsidiaries that, after the date of this Agreement until hereof and prior to the Closing TimeEffective Time (unless the other party shall otherwise approve in writing, and except as set forth in Section 5.1 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, unless disclosed in its respective Disclosure Letter or required by applicable Law): 6. 1.1. the Parent has consented in writing thereto, the Company shall, business of it and its Subsidiaries shall cause each of its subsidiaries to: (a) conduct its business and operations only be conducted in the ordinary and usual course of business and, to the extent consistent with past practice; (b) therewith, it and its Subsidiaries shall use its best reasonable efforts to preserve its business organization intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their its existing relationships relations and goodwill with customers, suppliers suppliers, regulators, distributors, lessors, employees and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company;associates; 6. 1.2. it shall not (cA) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep amend its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, incorporation or by-laws, or other charter or organization documents; except that the certificate of incorporation and by-laws of RSC shall be amended as contemplated by the Charter Amendments and Section 5.1.15, respectively; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (iB) split, combine combine, subdivide or reclassify any its outstanding shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, ; (iiC) in solely the case of the Company, declare, set aside or pay any dividends ondividend or distribution payable in cash, stock or make other distributions property in respect of, of any capital stock (other than pursuant to the terms of the Company's stock, any Rights Plan (as defined in Section 6.1.3)); or (iiiD) repurchase, redeem or otherwise acquireacquire (other than Rights (as defined in Section 6.1.3) pursuant to any Rights Plan), or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of its capital stock or other equity any securities convertible into or debt securities exchangeable or equity interests exercisable for any shares of the Company or its capital stock; 6. 1.3. neither it nor any of its subsidiaries; Subsidiaries shall (gi) not amend issue, sell, pledge, dispose of or otherwise modify encumber any 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, its capital stock of any class (other than (w) shares of capital stock issuable pursuant to options outstanding on the date hereof under the NationsRent Stock Plans or RSC Stock Plans, pursuant to the applicable Stock Option Agreement, or pursuant to outstanding options or rights to acquire shares of capital stock described in Section 5.1.2.1 or 5.1.2.2, (x) additional options or rights to acquire shares of capital stock granted under the terms of any Company NationsRent Stock Options Plan or RSC Stock Plan, as the Company Option Planscase may be, as in effect on the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases date hereof in the ordinary course of business consistent the operation of such Stock Plan, (y) shares of capital stock issuable pursuant to the options or rights described in clause (x) and (z) pursuant to the terms of any stockholder rights protection plan adopted by NationsRent or RSC, as the case may be, after consultation with past practicethe other party (with respect to either party, not increase a "Rights Plan"); provided that (A) the compensation payable terms of any Rights Plan shall provide that none of (I) the acquisition by NationsRent or to become payable to any directorsRSC, officers as the case may be, of shares of RSC Common Stock or employees of the Company or any of its subsidiariesNationsRent Common Stock, or grant any severance or termination pay respectively, pursuant to, or enter into the exercise or performance by either Party of its rights or obligations under, the RSC Stock Option Agreement or the NationsRent Stock Option Agreement, (II) in the case of any employment such Rights Plan of RSC, the receipt or severance agreement with ownership by any Person of the shares of RSC Common Stock to be issued in the Merger, (III) the consummation of any of the other transactions contemplated hereby or by the Stock Option Agreements or (IV) the acquisition by any director or officer or any Person who may be deemed to be an "affiliate" of NationsRent or RSC (as determined under Section 6.12) of any shares of capital stock of NationsRent or RSC, as the case may be, issuable pursuant to any NationsRent Stock Options or RSC Stock Options, as the case may be, shall be deemed to cause or give rise to any distribution of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase capital stock of a Party to be issued pursuant to the applicable Rights Plan (in either case, the "Rights") or acquire to cause such Rights to become void, separable, distributable, unredeemable or exercisable; (B) neither RSC or NationsRent nor any officer, director, affiliate or associate of NationsRent or RSC (or any group comprised of such persons) shall be deemed to become an "acquiring person" or to meet any other similar definition of a Person which would (whether upon notice or lapse of time or both) cause any such Rights to become void, separable, distributable, unredeemable or exercisable as a result of the sametransactions contemplated hereby, except for by the Stock Option Agreements or by any acquisition referred to in clause (iA) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 above, individually or in the aggregate; (C) any such Rights Plan (and (iiany Rights issued thereunder) advancesadopted by RSC shall, loans or other indebtedness in by its own terms and without any further action on the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets part of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess board of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 directors of the Company Disclosure Schedule or waiveSurviving Corporation, release or assign any material rights or claims thereunder; terminate (pwithout payment) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization 60 days after the earlier of the Company or any of its subsidiaries; and (q) except as to subsections (a), (b) and (c) termination of this Section 5.1, not agree Agreement or commit in writing or otherwise to do any of the foregoing.A-16

Interim Operations. From the date of this Agreement until the Closing Time, except Except as set forth in Section 5.1 of the Company Disclosure on Schedule or as expressly contemplated by any other provision of this Agreement5.22, unless the Parent has consented in writing theretosince December 31, 2006, the Company shall, and shall cause each of its subsidiaries to: (a) conduct has conducted its business and operations only in the ordinary course of business consistent and in conformity with past practice;practice and has not, directly or indirectly: (ba) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of Discharged or satisfied any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-lawsmaterial Lien, or other charter paid or organization documents; satisfied any material Indebtedness or liability (eabsolute, accrued, contingent or otherwise) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to liabilities incurred since the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases Balance Sheet in the ordinary course of business consistent with past practiceand not in excess of $5,000, not increase individually or in the compensation payable aggregate. (b) Increased or established any reserve for Taxes or any other liability on its books or otherwise provided therefor, except as may have been required due to become payable to any directors, officers income or employees operations of the Company since the date of the Balance Sheet. (c) Mortgaged, pledged or subjected to any Lien any of its subsidiariesthe assets, tangible or grant intangible, which assets are material to the consolidated business or financial condition of the Company. (d) Sold or transferred any severance or termination pay to, or enter into any employment or severance agreement with any director or officer of the assets material to the business of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by mergerany patents, consolidation, trademarks or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice copyrights or any interest in patent, trademark or copyright applications), canceled any real properties (whether material debts or not claims or waived any material rights, except in the ordinary course of business);. (je) not incurExcept for this Agreement and any other agreement executed and delivered pursuant to this Agreement, assume or guarantee entered into any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or material transaction other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit than in the ordinary course of business not or permitted under this Agreement. (f) Issued any stock, bonds or any other debt or equity securities (including any options or warrants to exceed $1,000,000 in the aggregate; and (ii) advancespurchase any such stock, loans bond or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000;debt or equity security). (kg) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, Incurred any material properties Indebtedness, obligation or assets of the Company and its subsidiaries taken as a whole; liability (l) not authorize whether absolute, accrued, contingent or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (ootherwise) except in the ordinary course of business consistent with past practice. (h) Failed to discharge or satisfy any liability or Lien or pay or satisfy any Indebtedness, obligation or liability (whether absolute, accrued, contingent or otherwise), other than liabilities being contested in good faith and for which adequate reserves have been provided on the Balance Sheet. (i) Made or changed any Tax election, changed an annual accounting period, adopted or changed any Tax accounting method, filed any amended Tax return, entered into any closing agreement, settled any Tax claim or assessment relating to the Company, or consented to any extension or waiver of the limitation period applicable to any Tax claim or assessment. (j) Defaulted on any material obligation. (k) Granted any increase in the compensation or benefits of any Employee other than increases in accordance with past practice in an amount not amendexceeding 5% of the compensation paid to such Employee in 2006 or entered into any new, modify or terminate amended any existing, employment or severance agreement or arrangement with any of them. (l) Made any capital expenditure in excess of $10,000, individually or in the aggregate, or additions to property, plant and equipment used in its operations other than ordinary repairs and maintenance. (m) Laid off any of its Employees or incurred any obligation or liability for the payment of severance benefits. (n) Declared, paid, or set aside for payment any actual, constructive or deemed dividend or other distribution in respect of shares of its capital stock or other securities (including the Company Capital Stock), or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or other securities (including the Company Capital Stock), or agreed to do so. (o) Amended in any materially adverse respect or terminated any Contract required to be listed set forth in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder;5.13. (p) not adopt a plan Acquired or purchased any assets or the stock of complete any other person or partial liquidationentity, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization in each case that are material to the business of the Company Company, or merged with or into any of its subsidiaries; andother person or entity. (q) except Adopted any amendments to the Company Organizational Documents. (r) Accelerated or delayed collection of notes or accounts receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of business consistent with past practice or written off as uncollectible any of their accounts receivable or any portion thereof not reflected in the Balance Sheet. (s) Accelerated or delayed payment of any account payable or other liability of the Company beyond or in advance of its due date or the date when such liability would have been paid in the ordinary course of business consistent with past practice. (t) Made any material change to subsections its internal control over financial reporting, or identified or became aware of any fraud or any significant deficiency or material weakness in internal control over financial reporting. (a)u) Settled, released or forgiven any claim or litigation or waived any right thereto. (bv) and Paid any management fees or advisory fees to any Stockholder or Affiliate of the Company. (cw) of this Section 5.1, not agree Entered into any agreement or commit in writing or otherwise made any commitment to do any of the foregoing.

Interim Operations. From the date Execution Date until the earlier of Effective Time or the termination of this Agreement until the Closing Timepursuant to Article 7, except as set forth in Section 5.1 of the Company Disclosure Schedule 5.2 or as expressly contemplated by any other provision of this Agreementotherwise required herein, unless the Parent has consented in writing thereto, the Company shallshall not, and shall cause its officers, directors, employees, consultants and advisors to not (in each case without the written consent of its subsidiaries to:Parent): (a) conduct Take any action that would constitute a breach of its business representations and operations only in the ordinary course of business consistent with past practicewarranties; (b) use reasonable efforts Take any action that would prevent it from performing or cause it not to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and perform its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Companycovenants or closing conditions hereunder; (c) use reasonable efforts Enter into, become bound by, or permit any of the assets owned or used by it to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repairbecome bound by, working order and conditionany material Contract, normal wear and tear exceptedor amend, modify or terminate, or waive or exercise any material right or remedy or grant, transfer, license or assign any material right or material claims under, any material Contract (including any Intellectual Property Contract); (d) not Acquire, lease or license any right or other asset from any other Person or sell encumber, convey, assign, or otherwise dispose, encumber, pledge, grant or transfer, or lease or license or sublicense to any Person, or amend or modify its respective charter modify, any material right or certificate asset of incorporation, by-laws, Company or other charter interest therein (including with respect to Intellectual Property) or organization documentswaive or relinquish any material right or enter into any action that could materially change the value of Company without the prior consent of Parent; (e) not authorize for issuanceDeclare, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declareaccrue, set aside or pay any dividends on, dividend or make any other distributions distribution in respect of, of any shares of the Company's capital stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, reacquire any shares of capital stock or other equity or debt securities or equity interests distribute cash outside of the Company or Ordinary Course of Business; (f) Use the proceeds of any of bridge loans from its subsidiariesstockholders for any purpose other than for working capital for routine operating purposes (which may include Employee Payments included in the Adjustment Statement); (g) not amend Sell, issue, grant or otherwise modify authorize the terms of any Company Stock Options or the Company Option Planssale, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, issuance or grant of: (A) any severance capital stock or termination pay to, or enter into other security; (B) any employment or severance agreement with any director or officer of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stockcall, pension, retirement, deferred compensation, employment, termination, severance warrant or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree right to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness capital stock or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000security; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as to subsections (a), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise to do any of the foregoing.

Interim Operations. From During the Interim Period, the Company shall conduct its business in the ordinary course consistent with past practice and shall use its reasonable best efforts to preserve intact its and the Company Subsidiaries' business organizations and relationships with third parties and its present officers and employees. Without limiting the generality of the foregoing, from the date of this Agreement hereof until the Closing TimeDate, except as set forth in Section 5.1 of on Schedule 6.01, neither the Company Disclosure Schedule or as expressly contemplated by nor any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries toSubsidiary will: (a) conduct adopt or propose any change in its organizational documents; (b) issue, sell, pledge, dispose of or encumber any shares of its capital stock, or any securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, directly or indirectly, any shares of its capital stock or any other property or assets; (c) merge or consolidate with any other Person; (d) sell, lease, license, mortgage, pledge or otherwise dispose of or encumber any assets or property in an amount exceeding $25,000 in the aggregate, except pursuant to existing contracts or commitments which have been disclosed to Parent or in the ordinary course consistent with past practice; (e) make any commitments for, or make or authorize any capital expenditures outside the ordinary course of business and operations only consistent with past practice, or make any commitments for, or make or authorize any capital expenditures for capital equipment for use by the Company at its premises in excess of $10,000 individually or $25,000 in the aggregate, except pursuant to existing contracts or commitments which have been disclosed to the Buyer or in the ordinary course consistent with past practice; (f) by any means, make any acquisition of, or investment in, assets or stock of any other Person; (g) settle or compromise any material claims or litigation or, modify, amend or terminate any of the Material Contracts or waive, release or assign any material rights or claims; (h) permit any insurance policy naming the Company as a beneficiary or loss-payable payee to be canceled or terminated; (i) increase the compensation of any employee or amend any Benefit Plan in a manner which would increase benefits thereunder except in the ordinary course of business consistent with past practice; (bj) use reasonable efforts take any action or omit to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of take any of which action that would be reasonably likely to result in a Material Adverse Effect on likely, taking into account the Company; (c) use reasonable efforts 's current credit evaluation practices, to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of the Company or cause any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement representations and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or warranties herein to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend untrue in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregateadverse respect; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000;and (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule or waive, release or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; and (q) except as to subsections (a), (b) and (c) of this Section 5.1, not agree or commit in writing or otherwise to do any of the foregoing.

Interim Operations. From Pursuant to the date of this Agreement until Merger Agreement, the Closing TimeCompany has agreed that, except as set forth expressly contemplated or provided by the Merger Agreement or agreed to in Section 5.1 writing by Honeywell, prior to the time the directors of the Purchaser constitute a majority of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless Board (the Parent has consented in writing thereto"Board Appointment Date"), the business of the Company shalland its subsidiaries will be conducted only in the ordinary and usual course and to the extent consistent therewith, each of the Company and its subsidiaries will use its best reasonable efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees, creditors and business partners, and shall cause each (a) the Company will not, directly or indirectly, (i) issue, sell, transfer or pledge or agree to sell, transfer or pledge any treasury stock of the Company or any capital stock of any of its subsidiaries to: beneficially owned by it, except upon the exercise of employee stock options or other rights to purchase shares of Common Stock pursuant to the ESPP outstanding on January 26, 1997; (aii) conduct amend its certificate of incorporation or by-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or Preferred Stock or any outstanding capital stock of any of the subsidiaries of the Company; and (b) 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 other than dividends paid by subsidiaries of the Company to the Company or any of its subsidiaries in the ordinary course of business; (ii) issue, 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, other than shares reserved for issuance on January 26, 1997 pursuant to the exercise of Company Options outstanding on January 26, 1997; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other than in the ordinary and usual course of business and operations only 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; (iv) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (v) grant any increase in the compensation payable or to become payable by the Company or any of its subsidiaries to any of its executive officers or adopt any new or amend or otherwise increase or accelerate the payment or vesting of the amounts payable or to become payable under any existing bonus, incentive compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan, agreement or arrangement; (vi) enter into any employment or severance agreement with or, except in accordance with the existing written policies of the Company, grant any severance or termination pay to any officer, director or employee of the Company or any of its subsidiaries; (vii) permit any insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Honeywell, except in the ordinary course of business and consistent with past practice; (viii) enter into any contract or transaction relating to the purchase of assets other than in the ordinary course of business consistent with past practice; prior practices; (bix) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises change any of the Company and its subsidiaries and maintain their existing relationships with customersaccounting methods used by it unless required by generally accepted accounting principles ("GAAP"), suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock of neither the Company or nor any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, change any material tax election already made, adopt any material tax accounting method except in the ordinary course of business consistent with past practice, change any material tax accounting method unless required by GAAP, enter into any closing agreement, settle any tax claim or assessment or consent to any tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment; or (x) take any action with the intent of causing any of the conditions to the Offer set forth in Annex A to the Merger Agreement to not amendbe satisfied. No Solicitation. Pursuant to the Merger Agreement, modify the Company has agreed that neither the Company nor any of its subsidiaries will (and the Company will use its best efforts to cause its officers, directors, employees, representatives and agents, including, but not limited to, investment bankers, attorneys and accountants, not to), directly or terminate indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any Contract required information to, any corporation, partnership, person or other entity or group (other than Honeywell, any of its affiliates or representatives) concerning any proposal or offer to be listed in Section 3.15 acquire all or a substantial part of the business and properties of the Company Disclosure Schedule or waive, release any of its subsidiaries or assign any material rights or claims thereunder; (p) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization capital stock of the Company or any of its subsidiaries; and , whether by merger, tender offer, exchange offer, sale of assets or similar transactions involving the Company or any subsidiary, division or operating or principal business unit of the Company (qan "Acquisition Proposal"), except that the Company and the Company Board are not 20 23 prohibited from (i) taking and disclosing to the Company's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to the Company's stockholders as, in the good faith judgment of the Board, after receiving advice from outside counsel, is required under applicable law, provided that the Company may not, except as described below, withdraw or modify, or propose to subsections (a)withdraw or modify, (b) and (c) its position with respect to the Offer or the Merger or approve or recommend, or propose to approve or recommend, any Acquisition Proposal, or enter into any agreement with respect to any Acquisition Proposal. The Company also agreed to immediately cease any existing activities, discussions or negotiations with any parties conducted prior to the date of this Section 5.1, not agree or commit in writing or otherwise the Merger Agreement with respect to do any of the foregoing. The Merger Agreement provides that the Company, prior to the acceptance of Shares pursuant to the Offer, may furnish information concerning the Company and its subsidiaries to any corporation, partnership, person or other entity or group pursuant to appropriate confidentiality agreements, and may negotiate and participate in discussions and negotiations with such entity or group concerning an Acquisition Proposal if (i) such entity or group has on an unsolicited basis submitted a bona fide written proposal to the Company relating to any such transaction which the Company Board determines in good faith, after consulting with a nationally recognized investment banking firm, represents a superior transaction to the Offer and the Merger and (ii) in the opinion of the Company Board, only after receipt of advice from outside legal counsel, the failure to provide such information or access or to engage in such discussions or negotiations could reasonably be expected to cause the Company Board to violate its fiduciary duties to the Company's stockholders under applicable law (an Acquisition Proposal which satisfies clauses (i) and (ii) is referred to in the Merger Agreement as a "Superior Proposal"). The Company will within two business days following receipt of a Superior Proposal notify Honeywell of the receipt of the same. The Company will promptly provide to Honeywell any material non-public information regarding the Company provided to any other party which was not previously provided to Honeywell. At any time after two business days following notification to Honeywell of its intent to do so (which notification shall include the identity of the bidder and the material terms and conditions of the proposal) and if permitted to do so pursuant to the terms of the Merger Agreement, the Company Board may withdraw or modify its approval or recommendation of the Offer and may enter into an agreement with respect to a Superior Proposal, provided it shall concurrently with entering into such agreement pay or cause to be paid to Honeywell the Termination Fee (as defined below) plus any amount payable at the time for reimbursement of expenses pursuant to the Merger Agreement. If the Company has notified Honeywell of its intent to enter into an agreement with respect to a Superior Proposal in compliance with the preceding sentence and has otherwise complied with such sentence, the Company may enter into an agreement with respect to such Superior Proposal (with the bidder and on terms no less favorable than those specified in such notification) after the expiration of the initial two business day period without any further notification. Indemnification and Insurance. Pursuant to the Merger Agreement, for six years after the Effective Time, the Surviving Corporation (or any successor to the Surviving Corporation) shall indemnify, defend and hold harmless the present and former officers and directors of the Company and its subsidiaries and persons who become any of the forgoing prior to the Effective Time with respect to matters occurring at or prior to the Effective Time to the full extent required under Delaware law, the terms of the Company's Certificate of Incorporation or the By-laws, as in effect as of January 26, 1997 and, the terms of any indemnification agreement entered into with the Company prior to January 26, 1997. The Merger Agreement also provides that Honeywell or the Surviving Corporation will maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") for a period of not less than six years after the Effective Time, provided, that Honeywell may substitute therefor policies of substantially equivalent coverage and amounts containing terms no less favorable to such former directors or officers. Hone▇▇▇▇▇ ▇▇▇ also agreed that if the existing D&O Insurance expires, is terminated or cancelled during such period, Honeywell or the Surviving Corporation will use all reasonable efforts to obtain substantially similar D&O Insurance, but in no event will it be required to pay aggregate premiums for such insurance in excess of 150% of the aggregate premiums paid in 1996 on an annualized basis for such purpose (the "1996 Premium"). If Honeywell or the Surviving Corporation is unable to obtain the amount of D&O Insurance required for such aggregate premium, Honeywell or the Surviving Corporation has agreed to obtain as much insurance as can be obtained for an annual premium not in excess of 150% of the 1996 Premium.

Interim Operations. From the date of this Agreement until the Closing Time, except Meritus covenants and agrees as set forth in Section 5.1 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, to itself and shall cause each of its subsidiaries to:Subsidiaries that, after the date hereof and prior to the Effective Time (unless agreed to in this Agreement or as DSI may otherwise approve in advance and in writing): (a) conduct the business of it and its business and operations only Subsidiaries shall be conducted in the ordinary and usual course of and, to the extent consistent therewith, it and its Subsidiaries shall use their best efforts to preserve all business consistent organization intact and maintain all existing relations and goodwill with past practicecustomers, suppliers, distributors, marketing representatives, creditors, lessors, employees and business associates; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of neither it nor any of which would be reasonably likely to result in a Material Adverse Effect on the Company; its Subsidiaries shall (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class or series of capital stock of the Company owned by it or any of its subsidiaries or any other equity or voting security or equity or voting interest Subsidiaries in the Company or any of its subsidiaries, any securities convertible into Subsidiaries or exercisable other Affiliates; (ii) amend its certificate or exchangeable for any such shares, securities articles of incorporation or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests by-laws; (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (iiii) split, combine or reclassify any its outstanding shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, ; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any of the Company's stock, capital stock other than dividends from its direct or indirect wholly-owned Subsidiaries; or (iiiv) repurchase, redeem or otherwise acquire, except in connection with the payment of the exercise price of any option outstanding on the date hereof, or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of its capital stock or other equity any securities convertible into or debt securities exchangeable or equity interests exercisable for any shares of the Company or its capital stock; (c) neither it nor any of its subsidiaries; Subsidiaries shall (gi) not amend issue, sell, pledge, dispose of or otherwise modify the terms encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any Company Stock Options kind to acquire, any shares of its capital stock of any class or the Company Option Plansany other property or assets; (ii) purchase, the transfer, lease, sell, mortgage, pledge, dispose of or encumber any real property, or effect of which shall be to make such terms more favorable to the holders thereof any improvements or persons eligible for participation therein; expansions thereon; (hiii) other than regularly scheduled seniority increases the sale of inventory in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary and usual course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notespurchase, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advances, loans or other indebtedness in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; (k) not selltransfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any property or otherwise dispose assets (including capital stock of any of its Subsidiaries) or incur or modify any indebtedness or other liability; (iv) make or authorize or commit for any capital expenditures other than in the ordinary and usual course of business (as approved in advance by an authorized representative of DSI); or (v) by any means, make any acquisition of, or agree to sellinvestment in any business, lease, license, encumber through acquisition of assets or otherwise dispose of, stock of any material properties other Person or assets of the Company and its subsidiaries taken as a wholeentity; (ld) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP applicable law, and except as provided in Section 6.9 below, neither it nor any of its Subsidiaries shall terminate, establish, adopt, enter into, make any new grants or applicable tax lawsawards under, amend or otherwise modify, any Compensation and Benefit Plans or increase the salary, wage, bonus, severance, incentive or other compensation of any employees; (ne) not make neither it nor any material tax election or of its Subsidiaries shall settle or compromise any material United States claims or foreign tax liability; (o) except in the ordinary course of business consistent with past practicelitigation or enter into any Debt Contracts or Other Contracts or modify, not amend, modify amend or terminate any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its Debt Contracts or Other Contracts, or waive, release or assign any material rights or claims thereunderclaims; (f) neither it nor any of its Subsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated; (g) neither it nor any of its Subsidiaries shall take any action, other than reasonable and usual actions in the ordinary and usual course of business consistent with GAAP and with past practice, with respect to accounting policies or procedures; (h) neither it nor any of its Subsidiaries shall sell, transfer, assign or abandon any patents or trademarks which are owned or controlled directly or indirectly by Meritus or any of its Subsidiaries; (i) neither it nor any of its Subsidiaries shall license or otherwise encumber any patents or trademarks which are owned or controlled directly or indirectly by Meritus or any of its Subsidiaries; (j) neither it nor any of its Subsidiaries shall make any modification to employee or customer incentives or trade policies which would reasonably be expected to cause the Company's distributors or end-user customers to increase purchases above those levels normally required to meet their respective needs or cause an increase or decrease in the Company's inventories or Working Capital; (k) it and its Subsidiaries shall use their best efforts pay and discharge all debts, charges, taxes, assessments, contributions and governmental charges when and as due; (l) it and its Subsidiaries shall, at all times, comply in all material respects with all laws, rules, regulations, licenses, permits, approvals and orders of any federal, state or local government authority applicable to them; (m) neither it not its Subsidiaries shall make any expenditure or incur any obligation, without the prior written consent of DSI, which does not arise directly from the proper business expenses of it or its Subsidiaries; (n) it shall promptly notify DSI in writing of the details of any loss, damage, investigation, action, suit, proceeding, or claim relating to the business of it or its Subsidiaries or which will or might reasonably be expected to have an economic impact in excess of $10,000.00 on the business, properties, assets, goodwill or condition, financial or otherwise, of Meritus or its Subsidiaries; (o) it and its Subsidiaries shall keep proper books and records in which true and complete entries shall be made of all dealings or transactions of it and its Subsidiaries and Meritus shall furnish to DSI: (i) within fifteen (15) calendar days after the end of each calendar month, monthly unaudited financial statements (including balance sheets, statements of income and loss and statements of cash flow), with footnote disclosure information reasonably acceptable to DSI, and (ii) prior to the Effective Time, draft unaudited financial statements for the calender month preceding the Effective Time; (p) neither it not adopt its Subsidiaries shall enter into any Debt Contracts or Other Contracts other than in the ordinary course of business consistent with general past practice; (q) it and its Subsidiaries shall obtain DSI's prior written approval of any and all business decisions which have, or shall in the future have, a plan material effect on the business of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company Meritus or any of its subsidiariesSubsidiaries, and for purposes of this Section 6.1(q) only; "material effect" shall be defined as an economic effect of $20,000.00 or more; and (qr) except as neither it nor its Subsidiaries shall authorize or announce an intention to subsections (a), (b) and (c) do any of the actions prohibited in this Section 5.16.1, not agree or commit in writing enter into any contract, agreement, commitment or otherwise arrangement to do any of the foregoing.

Interim Operations. From The Company covenants and agrees as to itself and its Subsidiaries that, after the date of this Agreement until hereof and prior to the Closing TimeEffective Time (unless Parent shall otherwise approve in writing, which approval shall not be unreasonably withheld, and except as set forth in Section 5.1 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to: ): (a) conduct the business of it and its Subsidiaries shall be conducted in the ordinary and usual course consistent with past practices and, to the extent consistent therewith, it and its Subsidiaries shall use commercially reasonable efforts to preserve its business organization intact and operations only maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates; (b) it shall not, (i) issue, sell otherwise dispose of or subject to Lien (other than Permitted Liens) any of its Subsidiaries' Capital Stock owned by it; (ii) amend its charter, by-laws or, except for any amendment which will not hinder, delay or make more costly to Parent the Offer or the Merger; the Rights Agreement; (iii) split, combine or reclassify its outstanding shares of Capital Stock; (iv) declare, set aside or pay any dividend payable in cash, stock or property in respect of any Capital Stock other than the issuance of Rights in connection with the issuance of Capital Stock upon the exercise of Company Options; (v) repurchase, redeem or otherwise acquire or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its Capital Stock; or any securities convertible into or exchangeable or exercisable for any shares of its Capital Stock; or (vi) adopt a plan of complete or partial liquidation or dissolution, merger or otherwise restructure or recapitalize or consolidate with any Person other than Merger Sub or another wholly-owned Subsidiary of Parent; 17 23 (c) neither it nor any of its Subsidiaries shall (i) authorize for issuance or issue, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its Capital Stock of any class or any Voting Debt (other than Shares issuable pursuant to Company Options outstanding on the date hereof, the grant of Company Options to newly hired employees in accordance with a benefit matrix previously provided to Parent and after notification of Parent and automatic grants of director stock options as mandated by the Company's First Amended 1988 Nonqualified Stock Option Plan for Outside Directors); (ii) other than in the ordinary and usual course of business consistent with past practices, transfer, lease, license, guarantee, sell or otherwise dispose of or subject to any Lien (other than Permitted Liens) any other property or assets or incur or modify any material indebtedness or other liability (except for additional borrowings in the ordinary course under lines of credit in existence on the date hereof); (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except in the ordinary course of business consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits practices and franchises except for obligations of Subsidiaries of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and incurred in the ordinary course of business; (iv) make any loans to any other persons having business dealings with them, the loss of any of which would be reasonably likely Person (other than to result in a Material Adverse Effect on the Company; (c) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge or encumber any shares of any class or series of capital stock Subsidiaries of the Company or, customary loans or any of its subsidiaries or any other equity or voting security or equity or voting interest advances to employees in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance connection with the Company Option Plans as currently in effect); (f) not (i) split, combine or reclassify any shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, (ii) in solely the case of the Company, declare, set aside or pay any dividends on, or make other distributions in respect of, any of the Company's stock, or (iii) repurchase, redeem or otherwise acquire, or agree or commit to repurchase, redeem or otherwise acquire, any shares of stock or other equity or debt securities or equity interests of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases business-related travel in the ordinary course of business consistent with past practicepractices); or (v) make any commitments for, not increase make or authorize any capital expenditures other than in amounts less than $150,000 individually and $3,000,000 in the compensation payable aggregate or, by any means, make any acquisition of, or investment in, assets or stock of any other Person; (d) except as may be required to become payable to any directorscomply with applicable law or by existing contractual commitments, officers or employees of the Company or neither it nor any of its subsidiaries, Subsidiaries shall (i) enter into any new agreements or grant commitments for any severance or termination pay to, or enter into any employment or severance agreement with any director or officer of the Company or with, any of its subsidiariesdirectors, officers or establish, adopt, enter into employees or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of business); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, consultants except for (ia) renewals specific arrangements with ten of existing bonds the Company's employees and letters one of credit its directors which have been previously disclosed to Parent and (b) reasonable severance payments made to employees in the ordinary course of business not to exceed $1,000,000 in the aggregate; and consistent with past practices, or (ii) advancesterminate, loans establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plan or increase or accelerate the salary, wage, bonus or other indebtedness compensation of any employees or directors (except for increases occurring in the ordinary and usual course of business, which shall include normal periodic performance reviews and related compensation and benefit increases, but not any general across-the-board increases) or consultants or pay or agree to pay any pension, retirement allowance or other employee benefit not required by any existing Compensation and Benefit Plan; (e) neither it nor any of its Subsidiaries shall, except as may be required as a result of a change in law or in GAAP, change any of the accounting principles or practices used by it; (f) neither it nor any of its Subsidiaries shall revalue in any respect any of its material assets, including writing down the value of inventory or writing-off notes or accounts receivable, other than in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $1,000,000; practices; (kg) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) not authorize or make any capital expenditures (including by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in neither it nor any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except as may be required by GAAP or applicable tax laws; (n) not make any material tax election or Subsidiaries shall settle or compromise any material United States claims or foreign tax liability; (o) except in the ordinary course of business consistent with past practice, not amend, modify litigation or terminate or materially amend or modify any Contract required to be listed in Section 3.15 of the Company Disclosure Schedule its material Contracts or waive, release or assign any material rights or claims thereunder; claims; (ph) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or neither it nor any of its subsidiariesSubsidiaries shall make any Tax election or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated; and (qi) except as neither it nor any of its Subsidiaries shall take any action or omit to subsections (a), (b) take any action that would cause any of its representations and warranties herein to become untrue in any material respect; and (cj) neither it nor any of this Section 5.1, not agree its Subsidiaries will authorize or commit in writing or otherwise enter into any agreement to do any of the foregoing.. 18

Interim Operations. From The Company covenants and agrees that, after the date of this Agreement until hereof and prior to the Closing Time, Effective Time (unless Parent shall otherwise approve in writing and except as set forth in Section 5.1 6.01 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to:): (a) conduct its the business and operations only of the Company shall be conducted in the ordinary and usual course of business and, to the extent consistent therewith, the Company shall use its commercially reasonable efforts, consistent with past practicethe limitations of this Article VI, to preserve its business organization substantially intact and maintain its existing relations and goodwill with customers, suppliers, distributors, strategic partners, creditors, lessors, employees and business associates; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; shall not (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class or series of capital stock of owned by it; (ii) amend the Company Charter or any of its subsidiaries or any other equity or voting security or equity or voting interest in the Company or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests Bylaws; (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); (f) not (iiii) split, combine or reclassify any its outstanding shares of its stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, ; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any of the Company's capital stock, ; or (iiiv) repurchasepurchase, redeem or otherwise acquire, except for the acquisition of Company Common Shares from holders of Company Stock Options or agree warrants to purchase Company Common Shares in full or commit partial payment of the exercise price payable by such holder upon exercise of Company Stock Options or warrants to repurchasepurchase Company Common Shares, redeem to purchase or otherwise acquire, any shares of its capital stock or other equity any securities convertible into or debt securities exchangeable or equity interests of the Company or exercisable for any shares of its subsidiariescapital stock; (gc) the Company shall not amend (i) issue, sell, pledge, dispose of or otherwise modify the terms encumber any shares of its capital stock of any class or any Voting Debt or any other property or assets, or issue, sell, pledge, dispose of or encumber securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class or any Voting Debt or any other property or assets (other than Company Common Shares issuable pursuant to options outstanding on the date hereof under the Company Stock Options or the Company Option Plans, pursuant to warrants to purchase Company Common Shares outstanding on the effect date hereof, and upon conversion of which shall be the Series B Preferred Shares or under this Agreement); (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, abandon, cancel, surrender or allow to make such terms more favorable to the holders thereof lapse or persons eligible for participation therein; (h) expire or encumber any material property or material assets or business other than regularly scheduled seniority increases licenses of Company Products entered into in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of business; (d) the Company shall not restructure, recapitalize, reorganize or any completely or partially liquidate or adopt a plan of its subsidiaries, complete or grant any severance partial liquidation or termination pay to, or otherwise enter into any employment agreement or severance agreement with arrangement imposing material changes or restrictions on the operation of its assets, product lines or businesses, or its interests therein, or adopt resolutions providing for or authorizing any director or officer of the Company or any of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiariesforegoing; (e) the Company shall not acquire (i) not acquire by merging or agree to acquire (including, without limitation, by merger, consolidationconsolidating with, or acquisition by purchasing all or a substantial portion of stock, equity securities the assets of or interestsany stock of, or assets) by any other manner, any business or any corporation, partnership, joint venture, limited liability company, association or other business organization or division thereof thereof, or otherwise acquire (ii) any material assets or agree to acquire any assets businesses, except purchases of any other person outside inventory in the ordinary course of business consistent with past practice business; (f) except for the Rights Agreement, the Company shall not adopt or implement any stockholder rights plan, “poison pill” anti-takeover plan or other similar plan, device or arrangement that, in each case, is applicable to Parent or any interest of its Affiliates, nor shall it (i) exempt any person (other than Parent, MergerSub and their respective affiliates) from the provisions of Section 203 of the DGCL or any similar takeover laws, (ii) exempt any persons (other than Parent, MergerSub and their respective affiliates) from the provisions of any Takeover Statute or otherwise cause such restrictions not to apply, or (iii) amend or waive the Rights Agreement or redeem the Company Rights or take any action to render the Rights Plan or the Company Rights inapplicable to any party other than Parent or MergerSub, or agree to do any of the foregoing, in each case, unless such actions are taken concurrently with a termination by the Company of this Agreement, as in accordance with Article IX hereof; (g) the Company shall not (i) incur any real properties indebtedness for borrowed money or guarantee any such indebtedness of another Person (whether other than pursuant to equipment lease borrowings or not existing lines of credit in the ordinary course of business); , (jii) not incurissue, assume sell or guarantee amend any indebtedness for borrowed money (including draw-downs on letters debt securities or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness warrants or other rights to acquire any debt securities of the Company Company, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of its subsidiaries another Person or enter into any options, warrants or rights to purchase or acquire arrangement having the economic effect of any of the sameforegoing, except for (iiii) renewals make any loans, advances (other than routine travel advances to employees of existing bonds and letters of credit the Company in the ordinary course of business business, not to exceed exceeding $1,000,000 2,000 for any individual employee for any single trip and not exceeding $25,000 in the aggregate; and ) or capital contributions to, or investment in, any other Person, other than the Company, or (iiiv) advances, loans or other indebtedness than in the ordinary course of business consistent with past practice business, enter into any hedging agreement or other financial agreement or arrangement designed to protect the Company against fluctuations in an aggregate amount not to exceed $1,000,000commodities prices or exchange rates; (kh) not sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of, any material properties or assets of the Company and its subsidiaries taken as a whole; (l) shall not authorize or make any capital expenditures (including by lease) or other expenditures with respect to property, plant or equipment in excess of $1,000,000 20,000 in the aggregate aggregate, other than as set forth in the Company’s budget for capital expenditures previously made available to Parent or the Company and all specific capital expenditures disclosed in Section 6.01(h) of its subsidiariesthe Disclosure Schedule; (mi) the Company shall not make any material change changes in any of its accounting or financial reporting (including tax accounting and reporting) methods, principles or practices, except insofar as may be have been required by a change in GAAP or, except as so required, change any assumption underlying, or applicable tax lawsmethod of calculating, any bad debt, contingency or other reserve; (nj) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) the Company shall not, except in the ordinary course of business consistent with past practice, not enter into, renew, modify, amend, modify or terminate any Contract required to be listed in Section 3.15 of terminate, waive, delay the Company Disclosure Schedule or waiveexercise of, release or assign any material rights or claims under, any Company Material Contract or enter into, renew, modify, amend, terminate, waive, delay the exercise of, or release or assign any material rights or claims under, any confidentiality, standstill or similar agreement to which the Company is bound by or subject; (k) the Company shall not, except as required to comply with applicable Law (as in effect on the date hereof or hereafter) or agreements, plans or arrangements existing on the date hereof, (i) take any action with respect to, adopt, enter into, terminate or amend any employment (whether at will or otherwise), severance, change in control, bonus, retirement, retention, welfare, incentive or similar agreement, arrangement or benefit plan for the benefit or welfare of any current, prospective or former, director, officer, employee or consultant or any collective bargaining agreement (except for terminations of employment with non-executive employees for performance in the ordinary course of business), (ii) increase in any respect the compensation or fringe benefits of, or pay any bonus to, any director, officer, employee or consultant, (iii) amend or accelerate the payment, right to payment or vesting of any compensation or benefits, including any outstanding options or restricted stock awards, (iv) pay any benefit not provided for as of the date of this Agreement under any Company Benefit Plan, (v) 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 stock related awards, performance units or restricted stock, or remove existing restrictions in any benefit plans or agreements or awards made thereunder; (vi) take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan; or (vii) create any bonus plan or grant any bonuses in connection with the transaction contemplated by this Agreement. (l) the Company shall not make any written or oral communications to the employees of the Company pertaining to compensation or benefit matters that are affected by the transactions contemplated by this Agreement, unless the Company provides Parent with a copy of the intended communication, Parent has a reasonable period of time to review and comment on the communication, and Parent and the Company shall cooperate in providing any such mutually agreeable communication; (m) the Company shall not initiate, settle or compromise any material litigation, claim, grievance, charge or proceeding (other than as set forth in Section 6.01(m) of the Disclosure Schedule or in connection with the enforcement of the Company’s rights under this Agreement); (n) the Company shall not make or rescind any material Tax election, amend in any material request any Tax Return, change an accounting period, adopt or change an accounting method, settle or otherwise finally resolve any material Tax controversy, or permit any insurance policy naming it as a beneficiary or loss-payable payee to be cancelled or terminated except in the ordinary and usual course of business and provided that such action would not have the effect of increasing the Tax liability of the Company for any period ending as of Closing Date; (o) the Company shall not enter into any Customer Contract, end user, partnership, maintenance, professional services or reseller agreement or arrangement other than pursuant to a Company Standard Form Contract and it shall not enter into any Customer Contract with a discount exceeding the discount set forth in Schedule 6.01(o) of the Disclosure Schedule. (p) the Company shall not adopt a plan take any action that would reasonably be expected to result in any of complete the conditions to the Offer set forth in Annex I or partial liquidationany of the conditions to the Merger set forth in Article VIII not being satisfied or that would reasonably be expected to materially delay the consummation of, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization materially impair the ability of the Company to consummate, the Offer, the Merger, the Top-Up Option or any other transaction contemplated by this Agreement in accordance with the terms hereof; provided, however that the foregoing shall not prohibit the Company from taking any action permitted by Section 7.04 of its subsidiaries; andthis Agreement. (q) except the Company shall not authorize any of, or commit, resolve or agree, in writing or otherwise, to take, any of the foregoing actions. In connection with the continued operation of the Company, the Company will confer in good faith on a regular and frequent basis with one or more representatives of Parent, as requested by such representatives, designated to subsections (a), the Company regarding operational matters and the general status of ongoing operations and will notify Parent promptly of any event or occurrence that has had or may reasonably be expected to have a Company Material Adverse Effect or which could reasonably be expected to result in the failure of a condition set forth in paragraph (b) and or (c) of Annex I. The Company acknowledges that Parent does not waive any rights it may have under this Section 5.1, not agree or commit in writing or otherwise to do any Agreement as a result of the foregoingsuch consultation.

Interim Operations. From The Company covenants and agrees as to itself and its Subsidiaries that, after the date hereof and until the earlier to occur of the termination of this Agreement until pursuant to Article VIII and the Closing TimeEffective Time (unless Parent shall otherwise approve in writing, which approval in the case of clauses (c)(ii), (c)(iv), (c)(vi), (e), (f) and (k) below shall not be unreasonably withheld, delayed or conditioned and except as set forth otherwise permitted or required by this Agreement or described in Section 5.1 6.1 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless the Parent has consented in writing thereto, the Company shall, and shall cause each of its subsidiaries to:Letter): (a) conduct the business of it and its business and operations only Subsidiaries shall be conducted in the ordinary course of business and consistent with past practice; (b) use reasonable efforts to preserve intact the business, organization, goodwill, rights, licenses, permits and franchises of the Company and its subsidiaries and maintain their existing relationships with customers, suppliers and other persons having business dealings with them, the loss of any of which would be reasonably likely to result in a Material Adverse Effect on the Company; it shall not (ci) use reasonable efforts to keep in full force and effect adequate insurance coverage and maintain and keep its properties and assets in good repair, working order and condition, normal wear and tear excepted; (d) not amend or modify its respective charter or certificate of incorporation, by-laws, or other charter or organization documents; (e) not authorize for issuance, issue, sell, grantpledge, deliver, pledge or encumber or agree or commit to issue, sell, grant, deliver, pledge dispose of or encumber any shares of any class or series of capital stock of the Company or owned by it in any of its subsidiaries Subsidiaries; (ii) amend or any other equity or voting security or equity or voting interest in propose to amend the Company Charter or any of its subsidiaries, any securities convertible into or exercisable or exchangeable for any such shares, securities or interests, or any options, warrants, calls, commitments, subscriptions or rights to purchase or acquire any such shares, securities or interests (other than issuances of Shares upon exercise of Company Stock Options granted prior to the date of this Agreement and disclosed pursuant to Section 3.2 to directors, officers, employees and consultants of the Company in accordance with the Company Option Plans as currently in effect); Bylaws; (f) not (iiii) split, combine or reclassify any its outstanding shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its stock, class thereof; (iiiv) in solely the case of the Company, declare, set aside or pay any dividends ondividend payable in cash, stock or make other distributions property in respect of, of any of capital stock other than (A) dividends from its direct or indirect wholly-owned Subsidiaries to the Company's stock, or (iiiB) dividends payable on the Series C Preferred Shares pursuant to and in accordance with the existing terms thereof; or (v) repurchase, redeem or otherwise acquire, or agree or commit permit any of its Subsidiaries to repurchase, redeem purchase or otherwise acquire, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; (c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, its capital stock of any class (other equity or debt securities or equity interests than Common Shares issuable pursuant to Company Options outstanding on the date hereof under the Stock Plans as set forth in Section 5.1(b) of the Company or any of its subsidiaries; (g) not amend or otherwise modify the terms of any Company Stock Options or the Company Option Plans, the effect of which shall be to make such terms more favorable to the holders thereof or persons eligible for participation therein; (h) other than regularly scheduled seniority increases in the ordinary course of business consistent with past practice, not increase the compensation payable or to become payable to any directors, officers or employees of the Company or any of its subsidiaries, or 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 of its subsidiaries, or establish, adopt, enter into or amend in any material respect or take action to accelerate any material rights or benefits under any collective bargaining, 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 director, officer or employee of the Company of any of its subsidiaries; (i) not acquire or agree to acquire (including, without limitation, by merger, consolidation, or acquisition of stock, equity securities or interests, or assets) any corporation, partnership, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets of any other person outside the ordinary course of business consistent with past practice or any interest in any real properties (whether or not in the ordinary course of businessDisclosure Letter); (j) not incur, assume or guarantee any indebtedness for borrowed money (including draw-downs on letters or lines of credit) or issue or sell any notes, bonds, debentures, debt instruments, evidences of indebtedness or other debt securities of the Company or any of its subsidiaries or any options, warrants or rights to purchase or acquire any of the same, except for (i) renewals of existing bonds and letters of credit in the ordinary course of business not to exceed $1,000,000 in the aggregate; and (ii) advancestransfer, loans lease, license, guarantee, sell, mortgage, pledge, dispose of, or encumber or suffer to exist any Encumbrance (except for Permitted Encumbrances) in respect of, any assets in excess of $250,000 in the aggregate other indebtedness than (A) sales of inventories (and/or licenses in connection therewith) in the ordinary course of business consistent with past practice and (B) dispositions of obsolete or worthless assets; (iii) incur any indebtedness for borrowed money other than borrowings (including issuance of letters of credit) and reborrowings under its or any of its Subsidiaries' credit facilities, as such credit facilities are in an existence as of the date hereof without regard to any subsequent amendment or modification, that would at any given time cause the net funded amount of indebtedness outstanding under such credit facilities to be in excess of $4,000,000 in the aggregate amount not (the "Maximum Amount"); provided, however, that the Company may incur indebtedness under such credit facilities in excess of the Maximum Amount to exceed $1,000,000; (k) not sell, lease, license, encumber or otherwise dispose of, or agree the extent that the senior management of the Company reasonably determines that it is in the best interests of the Company to sell, lease, license, encumber or otherwise dispose of, any material properties or assets borrow such additional amounts in order to fund operations of the business of the Company and its subsidiaries taken as a wholeSubsidiaries in the ordinary course; and provided, further that prior to taking any actions permitted by the foregoing proviso the Company shall give Parent three Business Days' prior written notice that it intends to take such actions; (iv) make or commit for any capital expenditures in the aggregate in excess of the Company's budget for capital expenditures, in each case, for the applicable fiscal year; (v) loan, advance funds or make any investment in or capital contribution to any other Person other than to any Subsidiary; or (vi) acquire (by merger, consolidation, or acquisition of stock or assets) any Person; (ld) not authorize or make any capital expenditures (including except as required by lease) in excess of $1,000,000 in the aggregate for the Company and all of its subsidiaries; (m) not make any material change in Law, neither it nor any of its accounting Subsidiaries shall terminate, establish, adopt, enter into, amend or financial reporting (including tax accounting otherwise modify any Company Compensation and reporting) methodsBenefit Plans in a manner that would materially increase benefits thereunder or increase the salary, principles wage, bonus or practices, other compensation of any employees except salary increases as may be required by GAAP or applicable tax laws; (n) not make any material tax election or settle or compromise any material United States or foreign tax liability; (o) except a result of employee promotions occurring in the ordinary course of business consistent with past practice, practices; (e) neither it nor any of its Subsidiaries shall (i) settle or compromise any material claims or litigation in excess of $250,000 in the aggregate other than (A) settlements and compromises in the ordinary course of business and (B) settlements and compromises of liabilities not amend, modify in excess of $500,000 reflected or terminate any Contract required to be listed reserved against on the financial statements included in Section 3.15 of the Company Disclosure Schedule Reports; or (ii) waive, release or assign any material rights or claims thereunderin excess of $250,000 in the aggregate other than in the ordinary course of business; provided, however, that the Company shall not settle any Governmental claims or proceedings if such settlement would result in suspension, debarment or injunctive relief that is material to the businesses of the Company and its Subsidiaries taken as a whole or that would otherwise materially affect Parent and its Affiliates; (pf) neither it nor any of its Subsidiaries shall make any material Tax election, change any annual Tax accounting period, adopt or change any material method of Tax accounting, extend or waive any applicable statute of limitations with respect to Taxes, enter into any closing agreement in respect of any material Tax claim, audit or assessment, surrender any right to claim a material Tax refund, offset or other reduction in a material Tax liability or settle or compromise any material Tax liability; (g) use commercially reasonable efforts to (i) preserve intact its business organization and goodwill, (ii) keep available the services of its present officers and key employees and (iii) preserve the goodwill and business relationships with customers, suppliers and others having business relationships with Company; (h) use commercially reasonable efforts to maintain with financially responsible insurance companies insurance on its tangible assets and its business in such amounts and against such risks and losses as are consistent with past practice; (i) not adopt a enter into any plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; andSubsidiaries (other than the transactions contemplated by this Agreement); (qj) not alter, through merger, liquidation, reorganization, restructuring or any other fashion, the corporate structure or ownership of any of Company's Subsidiaries; (k) except as to subsections (a)required by GAAP or as recommended in writing by the Company's independent auditors, (bi) and not revalue in any material respect any of its assets, including writing down the value of inventory or writing-off notes or accounts receivables other than in the ordinary course of business consistent with past practice, or (cii) change any method of this Section 5.1accounting or accounting principles or practice; (l) not (i) grant any material severance, not agree retention or commit termination pay to, or amend in writing any material respect any existing severance, retention or otherwise termination arrangement with, any current or former director, officer or employee of Company or any of its Subsidiaries, (ii) except to the extent required under Contracts existing as of the date hereof, increase in any material respect or accelerate in any material respect the payment or vesting of, any benefits payable under any existing severance, retention or termination pay policies or employment agreements, (iii) enter into or amend in any material respect any employment, consulting, deferred compensation or other similar agreement with any director, officer, consultant or employee of Company or any of its Subsidiaries or (iv) establish, adopt or amend (except as required by applicable law) any collective bargaining agreement, bonus, profit-sharing, thrift, pension, retirement, post-retirement medical or life insurance, retention, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any present or former director, officer or employee, or any beneficiaries thereof, of Company or any of its Subsidiaries; or (m) neither it nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing, or commit to any of the foregoing actions.