The lack of an AutoResetEvent isn't a problem per se, but yes...

You need to synchronize access to _any_ data that could be accessed  
simultaneously by different threads.  If one thread may be trying to use  
Object1 at the same time that another thread is, that's potentially a  
problem.

In your example, if you could ensure that any time access to Object2 is  
synchronized, access to Object1 is also synchronized, that would be fine.  
For example, only ever using Object1 from within a lock on Object2.

Beware of locking on _both_ Object1 and Object2 independently, as this is  
a good way to create a deadlock situation.

Pete