AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

by and among

XEROX CORPORATION

RG ACQUISITION I CORP.

and

GLOBAL IMAGING SYSTEMS, INC.

Dated as of April 1, 2007

 

 

TABLE OF CONTENTS

 

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (the “ Agreement ”), dated as of April 1, 2007, by and among Xerox Corporation, a New York corporation (the “ Parent ”), RG Acquisition I Corp., a Delaware corporation and a wholly owned subsidiary of the Parent (the “ Purchaser ”), and Global Imaging Systems, Inc., a Delaware corporation (the “ Seller ”).

Recitals

A. The boards of directors of each of the Purchaser, the Seller and the Parent have approved the acquisition of the Seller by the Parent on the terms and conditions set forth in this Agreement.

B. Pursuant to this Agreement, and subject to the terms and conditions set forth herein, the Purchaser has agreed to commence a tender offer (the “ Offer ”) to purchase all the Seller’s common stock, par value $0.01 per share (“ Seller Common Stock ”) at a price per share of $29.00 net to the selling stockholders in cash, without interest (such amount or any greater amount per share paid pursuant to the Offer being hereafter referred to as the “ Offer Price ”).

C. The board of directors of the Seller has (A) by unanimous vote of the directors (i) determined that this Agreement, the Offer and the Merger (as defined below) are advisable, and in the best interest of the Seller and its stockholders, (ii) approved the Offer and the merger of the Purchaser with and into the Seller, with the Seller as the surviving corporation (the “ Merger ” and, with the Offer and the other transactions contemplated hereby, the “ Transaction ”) in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”) and (iii) approved this Agreement and (B) is recommending that the Seller’s stockholders accept the Offer, tender their shares of Seller Common Stock into the Offer, approve the Merger and adopt this Agreement.

D. The parties desire to make certain representations, warranties and agreements in connection with the Transaction and to prescribe certain conditions to the Transaction.

Agreement

In consideration of the foregoing and the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I —THE OFFER

1.1 The Offer .

(a) Provided that this Agreement shall not have been terminated in accordance with Article IX hereof and none of the events set forth in Annex I hereto (the “ Tender Offer Conditions ”) shall have occurred and be continuing, on April 4, 2007 (or such other day as the parties shall agree in writing), the Parent shall cause the Purchaser (and the Seller shall cooperate with the Parent and the Purchaser) to commence (within the meaning of Rule 14d-2 of the Exchange Act) an offer to purchase all outstanding shares of Seller Common Stock at the Offer Price and shall use its reasonable best efforts to consummate the Offer, subject to the terms and conditions hereof and thereof. Subject to the terms and conditions of this Agreement and to the satisfaction or waiver of the Tender Offer Conditions, the Purchaser shall, and the Parent shall cause it to, promptly after the expiration of the Offer, accept for payment, and pay for (after giving effect to any required withholding Tax), all shares of Seller Common Stock validly tendered pursuant to the Offer and not withdrawn (the time and date of acceptance for payment, the “ Acceptance Date ”).

(b) The Purchaser expressly reserves the right, in its sole discretion, to waive, in whole or in part, any Tender Offer Condition or modify the terms of the Offer; provided , however , that without the prior written consent of the Seller, the Purchaser shall not decrease the Offer Price or change the form of consideration payable in the Offer, waive or amend the Minimum Condition (as defined in Annex I hereto), decrease the

 

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number of shares of Seller Common Stock sought to be purchased in the Offer, impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of shares of Seller Common Stock. The Offer shall remain open until 12:00 midnight, New York time, on the date that is twenty-five (25) Business Days after the commencement (determined pursuant to Rule 14d-1(g)(3) under the Exchange Act) of the Offer (the “ Expiration Date ”), unless the Purchaser shall have extended the period of time for which the Offer is open pursuant to, and in accordance with, the succeeding sentence or as may be required by applicable Laws or interpretations or positions of the Securities and Exchange Commission or its staff (the “ SEC ”), in which event the term “ Expiration Date ” shall mean the latest time and date as the Offer, as so extended, may expire; provided , however , that the Purchaser may, in its sole discretion, provide a subsequent offering period after the Expiration Date, in accordance with Rule 14d-11 under the Exchange Act. If on any then scheduled Expiration Date, any of the Tender Offer Conditions is not satisfied or waived by the Purchaser, the Purchaser may extend the Offer from time to time; provided , however , that, on such Expiration Date, (i) if the waiting period under the HSR Act or under any applicable foreign statutes or regulations applicable to the Offer or the Merger shall have not expired or been terminated, the Purchaser shall extend the Offer from time to time until the expiration or termination under the HSR Act or any other material applicable foreign statutes or regulations or (ii) if any of the Tender Offer Conditions set forth in paragraphs (a) or (b) of Annex I hereto shall have occurred and be continuing, the Purchaser shall extend the Offer from time to time in consecutive increments of up to five (5) Business Days each until the time such condition or conditions shall no longer exist or any of the matters described in such paragraphs (a) or (b) shall have become final and non-appealable; provided , further , however that the Purchaser shall not be required to extend the Offer beyond the Outside Date (defined in Section 9.1(b) below). Nothing contained in this paragraph shall affect any termination rights in Article IX. Subject to the terms of the Offer and this Agreement and the satisfaction of all the Tender Offer Conditions as of the Expiration Date, the Purchaser will accept for payment and pay for all shares of Seller Common Stock validly tendered and not validly withdrawn pursuant to the Offer promptly after the Expiration Date of the Offer.

(c) On the date of commencement of the Offer, the Parent and the Purchaser shall (i) file or cause to be filed with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the “ Schedule TO ”) with respect to the Offer which shall contain the offer to purchase and related letter of transmittal and summary advertisement and other ancillary documents and instruments required thereby pursuant to which the Offer will be made (collectively with any supplements or amendments thereto, the “ Offer Documents ”) and (ii) cause the Offer Documents to be disseminated to holders of Seller Common Stock. The Seller and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents prior to their filing with the SEC, and the Parent and the Purchaser shall give reasonable and good faith consideration to any comments made by Seller and their counsel. The Parent and the Purchaser agree to provide the Seller with (i) any comments or other communications, whether written or oral, that may be received from the SEC or its staff with respect to the Offer Documents promptly after receipt thereof and prior to responding thereto and (ii) a reasonable opportunity to provide comments on that response (to which reasonable and good faith consideration shall be given). If at any time prior to the Effective Time, any information relating to the Offer, the Merger, the Seller, the Parent, the Purchaser or any of their respective Affiliates, directors or officers, should be discovered by the Seller or the Purchaser which should be set forth in an amendment or supplement to the Offer Documents, so that the Offer Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be filed with the SEC and disseminated to the stockholders of the Seller, as and to the extent required by applicable Law or any applicable rule or regulation of any stock exchange. The Seller shall furnish to the Parent and the Purchaser all information concerning the Seller required by the Exchange Act to be set forth in the Offer Documents.

(d) The Parent shall provide or cause to be provided to the Purchaser on a timely basis the funds necessary to pay for any shares of Seller Common Stock that the Purchaser becomes obligated to purchase pursuant to the Offer and shall cause the Purchaser to fulfill its obligations under this Agreement.

 

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(e) The Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer to any holder of shares of Seller Common Stock such amounts as the Purchaser is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld and paid over to the appropriate Taxing authority by the Purchaser, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Seller Common Stock in respect of which such deduction and withholding was made by the Purchaser.

1.2 Seller Actions .

(a) The Seller shall, after affording the Parent a reasonable opportunity to review and comment thereon, file with the SEC and mail to the holders of shares of Seller Common Stock, as promptly as practicable on the date of the filing by the Parent and the Purchaser of the Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the “ Schedule 14D-9 ”) reflecting the recommendation of the Seller board of directors that holders of shares of Seller Common Stock tender their shares of Seller Common Stock pursuant to the Offer and shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9 will set forth, and the Seller hereby represents, that the Seller board of directors, at a meeting duly called and held at which a quorum was present throughout, has unanimously (i) determined and declared that this Agreement, the Transaction, and each of the Offer and the Merger, is advisable and in the best interests of the Seller and its stockholders, (ii) approved the Offer and this Agreement in accordance with the DGCL, (iii) recommended acceptance of the Offer, tender of the shares of Seller Common Stock into the Offer and adoption of this Agreement by the Seller Stockholders if such adoption is required by applicable Laws (together with the declarations in clause (i), the “ Seller Recommendations ”), and (iv) taken all other action necessary to render Section 203 of the DGCL inapplicable to each of the Offer and the Merger; provided , however , that the Seller Recommendations may be withdrawn, modified or amended only prior to the acceptance for payment of shares of Seller Common Stock pursuant to the Offer and in any case only to the extent permitted by Section 7.2. The Seller hereby consents to the inclusion in the Offer Documents of the Seller Recommendations. If at any time prior to the Effective Time, any information relating to the Offer, the Merger, the Seller, the Parent, the Purchaser or any of their respective Affiliates, directors or officers, should be discovered by the Seller or the Purchaser which should be set forth in an amendment or supplement to the Schedule 14D-9, so that the Schedule 14D-9 shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be filed with the SEC and disseminated to the stockholders of the Seller, as and to the extent required by applicable Law or any applicable rule or regulation of any stock exchange. The Parent, the Purchaser and their counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to their filing with the SEC, and the Seller shall give reasonable and good faith consideration to any comments made by the Parent, the Purchaser or their counsel. The Seller agrees to provide the Parent and the Purchaser with (i) any comments or other communications, whether written or oral, that may be received from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt thereof and prior to responding thereto and (ii) a reasonable opportunity to provide comments on that response (to which reasonable and good faith consideration shall be given).

(b) In connection with the Offer, the Seller will promptly furnish the Purchaser with mailing labels, security position listings, non-objecting beneficial owner lists and any available listing or computer list containing the names and addresses of the record holders of the shares of Seller Common Stock as of the most recent practicable date and shall furnish the Purchaser with such additional available information (including updated lists of holders of shares of Seller Common Stock and their addresses, mailing labels and lists of security positions and non-objecting beneficial owner lists) and such other assistance as the Purchaser or its agents may reasonably request in communicating the Offer to the Seller’s record and beneficial stockholders. Subject to the requirements of applicable Laws, and except for such steps as are necessary to disseminate the Offer Documents

 

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and any other documents necessary to consummate the Merger, the Parent, the Purchaser and their Affiliates, associates, agents and advisors, shall keep such information confidential and use the information contained in any such labels, listings and files only in connection with the Offer and the Merger and, should the Offer terminate or if this Agreement shall be terminated, will deliver to the Seller all copies of such information then in their possession.

1.3 Directors .

(a) Subject to compliance with applicable Laws and this Section 1.3, promptly upon the payment by the Purchaser of such number of shares of Seller Common Stock as represents at least a majority of the then-outstanding shares of Seller Common Stock pursuant to the Offer and from time to time thereafter, the Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Seller board of directors as is equal to the product of (x) the total number of directors on the Seller board of directors (determined after giving effect to the election of any additional directors pursuant to this sentence) multiplied by (y) the percentage that the aggregate number of shares of Seller Common Stock beneficially owned by the Purchaser or any of its Affiliates bears to the total number of shares of Seller Common Stock then outstanding, and the Seller shall, upon request of the Parent, promptly take all actions necessary to cause the Parent’s designees to be so elected or appointed (including, if necessary, seeking the resignations of one or more existing directors or increasing the size of the Seller board of directors) in compliance with applicable Law; provided , however , that the Parent shall be entitled to designate at least a majority of the directors on the Seller board of directors (as long as the Parent and its Affiliates beneficially own a majority of the outstanding shares of Seller Common Stock of the Seller); provided , further , that prior to the Effective Time, the Seller board of directors shall always have at least two members who are not officers, directors, employees or designees of the Purchaser or any of its Affiliates (“ Purchaser Insiders ”). If the number of directors who are not Purchaser Insiders is reduced below two prior to the Effective Time, the remaining director who is not a Purchaser Insider shall be entitled to designate a Person to fill such vacancy who is not a Purchaser Insider and who shall be a director not deemed to be a Purchaser Insider for all purposes of this Agreement.

(b) The Seller’s obligations to appoint the Parent’s designees to the Seller board of directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Seller shall promptly take all actions required pursuant to such Section and Rule in order to fulfill its obligations under this Section 1.3, including the mailing to the stockholders of an information statement (the “ Information Statement ”) containing the information required by such Section and Rule, as promptly as practicable following the mailing of the Schedule 14D-9 and shall include in the Information Statement such information with respect to the Seller and its officers and directors as is required under such Section and Rule in order to fulfill its obligations under this Section 1.3. The Parent will supply to the Seller any information with respect to itself and its officers, directors and Affiliates required by such Section and Rule.

(c) Following the election or appointment of the Parent’s designees pursuant to this Section 1.3 and prior to the Effective Time, (i) any amendment or termination of this Agreement by the Seller, any extension by the Seller of the time for the performance of any of the obligations or other acts of the Parent or the Purchaser or waiver of any of the Seller’s rights or any of the obligations of the Parent or the Purchaser hereunder which in each case would be reasonably likely to have an adverse effect on the minority stockholders of the Seller and (ii) any amendment, waiver or modification of this Section 1.3 or Section 7.5 , will require the consent of a majority of the directors of the Seller then in office who are not Purchaser Insiders (or the approval of the sole director if there shall only be one director then in office who is not a Purchaser Insider). Following the election or appointment of the Parent’s designees pursuant to this Section 1.3 and prior to the Effective Time, any actions with respect to the enforcement of this Agreement by the Seller shall be effected only be the action of a majority of the directors of the Seller then in office who are not Purchaser Insiders (or the approval of the sole director if there shall only be one director then in office who is not a Purchaser Insider) and such authorization shall constitute the authorization of the Seller board of directors and no other action on the part of the Seller, including any action by any other director of the Seller, shall be required to authorize.

 

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1.4 Top-Up Option.

(a) The Seller hereby grants to the Purchaser an irrevocable option (the “ Top-Up Option ”), exercisable only on the terms and conditions set forth in this Section 1.4 , to purchase at a price per share equal to the Offer Price paid in the Offer up to that number of newly issued shares of Seller Common Stock (the “ Top-Up Shares ”) equal to the lowest number of shares of Seller Common Stock that, when added to the number of shares of Seller Common Stock directly or indirectly owned by the Parent or the Purchaser at the time of exercise of the Top-Up Option, shall constitute one share more than 90% of the shares of Seller Common Stock outstanding immediately after the issuance of the Top-Up Shares (determined on a “fully diluted basis” (which assumes conversion or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof)); provided , however , that (i) the Top-Up Option shall not be exercisable for a number of shares of Seller Common Stock in excess of the shares of Seller Common Stock authorized and unissued at the time of exercise of the Top-Up Option and (ii) the Top-Up Option may not be exercised unless, following the time of acceptance by the Purchaser of shares of Seller Common Stock tendered in the Offer or after a subsequent offering period, eighty-five percent (85%) or more of the shares of Seller Common Stock shall be directly or indirectly owned by the Parent or the Purchaser. The Top-Up Option shall be exercisable once at any time following the Acceptance Date and prior to the earlier to occur of (a) the Effective Time and (b) the termination of this Agreement in accordance with its terms.

(b) The parties shall cooperate to ensure that the issuance and delivery of the Top-Up Shares comply with all applicable Law, including compliance with an applicable exemption from registration of the Top-Up Shares under the Securities Act. If the Purchaser wishes to exercise the Top-Up Option, the Purchaser shall give the Seller one Business Day prior written notice, specifying (i) the number of shares of Seller Common Stock directly or indirectly owned by the Parent at the time of such notice and (ii) a place and a time for the closing of such purchase. The Seller shall, as soon as practicable following receipt of such notice, deliver written notice to the Purchaser specifying, based on the information provided by the Purchaser in its notice, the number of Top-Up Shares. At the closing of the purchase of Top-Up Shares, the purchase price owed by the Purchaser to the Seller therefor shall be paid to the Seller (i) in cash, by wire transfer or cashier’s check or (ii) by issuance by the Purchaser to the Seller of a promissory note on terms reasonably satisfactory to the Seller.

ARTICLE II—THE MERGER

2.1 The Merger . Subject to the terms and conditions of this Agreement, in accordance with the DGCL, at the Effective Time, the Purchaser shall merge with and into the Seller. The Seller shall be the surviving corporation (the “ Surviving Corporation ”) in the Merger, and shall continue its corporate existence under the laws of the State of Delaware. Upon consummation of the Merger, the separate corporate existence of the Purchaser shall terminate.

2.2 Closing; Effective Time . The closing of the Merger (the “ Closing ”) will take place at 10:00 a.m., New York time, on a date to be specified by the parties, which shall be not later than the second Business Day after satisfaction or waiver of the conditions set forth in Article VIII , at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, unless another time, date or place is agreed to in writing by the Parent and the Seller; provided , however , that if all the conditions set forth in Article VIII shall not be satisfied or waived on such second Business Day, then the Closing shall take place on the first Business Day on which all such conditions shall be satisfied or waived. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”. As soon as practicable on or after the Closing Date, the parties shall duly execute a certificate of merger (the “ Certificate of Merger ”) that shall be filed with the Secretary of State of the State of Delaware. The Merger shall become effective at the Effective Time. The term “ Effective Time ” shall be the date and time when the Merger becomes effective as set forth in the Certificate of Merger.

2.3 Effects of the Merger . At and after the Effective Time, the Merger shall have the effects set forth in Section 259 of the DGCL.

 

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2.4 Certificate of Incorporation and Bylaws . The certificate of incorporation of the Seller shall be amended at the Effective Time to read in the form of Annex II hereto (which shall contain such provisions as are necessary to give full effect to the exculpation and indemnification provided for in Section 7.5 ) and, as so amended, shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided therein and in accordance with applicable Law. The bylaws of the Purchaser, as in effect immediately prior to the Effective Time (which shall contain such provisions as are necessary to give full effect to the exculpation and indemnification provided for in Section 7.5 ), shall be the bylaws of the Surviving Corporation, until thereafter amended as provided therein and in accordance with applicable Law.

2.5 Directors and Officers . The directors of the Purchaser immediately prior to the Effective Time shall become the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation. The officers of the Seller immediately prior to the Effective Time shall become the officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

2.6 Stockholders’ Meeting .

(a) If the adoption of this Agreement by the holders of Seller Common Stock is required by applicable Law in order to consummate the Merger, the Seller, acting through the Seller board of directors, shall, as promptly as reasonably practicable following the Acceptance Date, in accordance with applicable Law:

(i) establish a record date (which shall be as promptly as reasonably practicable following the Acceptance Date) for, duly call, give notice of, convene and hold a special meeting of its stockholders (the “ Special Meeting ”) for the purpose of considering and taking action upon this Agreement;

(ii) state in the notice of the Special Meeting that a resolution to adopt this Agreement will be considered at the Special Meeting;

(iii) prepare and file with the SEC a preliminary proxy statement relating to this Agreement and shall (A) use its reasonable best efforts to respond to any comments of the SEC with respect to the proxy statement and to cause the SEC to confirm that it has no comments or no further comments, as the case may be, on the proxy statement, (B) promptly notify the Parent upon the receipt of any comments from the SEC, or any request from the SEC for amendments or supplements to the proxy statement, and shall provide the Parent with copies of all correspondence relating to the proxy statement between it and its representatives, on the one hand, and the SEC, on the other hand, (C) prior to the filing of the proxy statement (or any amendment or supplement thereto) with the SEC or the dissemination thereof to the stockholders of the Seller, or responding to any comments of the SEC with respect thereto, provide the Parent a reasonable opportunity to review and comment on such document or response (including the proposed final version of such document or response) and give good faith consideration to the Parent’s comments on such document or response, (D) cause a definitive proxy statement (the “ Proxy Statement ”) to be mailed to its stockholders, (E) if at any time prior to the Special Meeting any information relating to the Transaction, the Seller, the Parent, the Purchaser or any of their respective Affiliates, directors or officers should be discovered by the Seller, the Parent or the Purchaser which should be set forth in an amendment or supplement to the Proxy Statement, so that the Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, file with the SEC and disseminate to the holders of Seller Common Stock an appropriate amendment or supplement describing such information, as and to the extent required by applicable Law or any applicable rule or regulation of any stock exchange and (F) use its reasonable best efforts to obtain the necessary approvals of the Merger and this Agreement by its stockholders;

(iv) subject to the fiduciary duties of the Seller board of directors, include in the Proxy Statement the Seller Recommendations that stockholders of the Seller vote in favor of the approval of this Agreement; and

(v) include in the Proxy Statement the opinions of the Seller’s Financial Advisors referred to in Section 5.21 .

 

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(b) The Parent agrees that it will vote, or cause to be voted, all of the shares of Seller Common Stock then owned by it, the Purchaser or any of its subsidiaries in favor of the approval of the Merger and of this Agreement.

2.7 Merger Without Meeting of Stockholders . Notwithstanding Section 2.6 , in the event that the Parent, the Purchaser or any other Subsidiary of the Parent shall acquire at least 90% of the outstanding shares of Seller Common Stock pursuant to the Offer or otherwise, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after the acceptance for payment of and payment for shares of Seller Common Stock by the Purchaser pursuant to the Offer without a meeting of stockholders of the Seller, in accordance with Section 253 of the DGCL.

ARTICLE III—EFFECT OF THE MERGER ON THE SELLER CAPITAL STOCK;

EXCHANGE OF SHARES

3.1 Conversion of Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of the capital stock of the Seller or capital stock of the Purchaser:

(a) Capital Stock of the Purchaser . Each share of the common stock of the Purchaser issued and outstanding immediately prior to the Effective Time shall continue as one fully paid and nonassessable share of common stock, $1.00 par value per share, of the Surviving Corporation.

(b) Cancellation of Certain Stock . All shares of Seller Common Stock that are owned by the Seller, and any shares of Seller Common Stock owned by the Parent or the Purchaser immediately prior to the Effective Time, shall be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor.

(c) Conversion of Seller Common Stock .

(i) Subject to Section 3.3 , each share of Seller Common Stock (other than (x) shares to be cancelled in accordance with Section 3.1(b) and (y) Dissenting Shares of Seller Common Stock (as defined in Section 3.4(a) ) issued and outstanding immediately prior to the Effective Time shall be automatically converted into the right to receive an amount in cash, without interest, equal to the Offer Price per share (the “ Merger Consideration ”). As of the Effective Time, all such shares of Seller Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate or evidence of shares held in book-entry form representing any such shares of Seller Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration upon surrender of such certificate in accordance with Section 3.3 , without interest.

(ii) The Parent and the Purchaser acknowledge that all shares of Seller Common Stock that are outstanding as of immediately prior to the Effective Time but are subject to vesting or other forfeiture restrictions or are subject to a right of repurchase by the Seller at a fixed purchase price (shares so subject, “ Seller Restricted Shares ”) granted under the Seller Stock Plans shall immediately vest and the restrictions associated therewith shall automatically be deemed waived as provided by the Seller Stock Plans at the Effective Time.

3.2 Seller Stock-Based Awards. (a) As soon as practicable following the date of this Agreement, the Seller board of directors (or, if appropriate, any committee thereof administering the Seller Stock Plans) shall adopt such resolutions or take such other actions as may be required to effect the following:

(i) adjust the terms of each outstanding Seller Stock Option, whether vested or unvested, as necessary to provide that such Seller Stock Option will become fully exercisable and may be exercised before the Effective Time at such applicable time or times as specified in the relevant Seller Stock Plan, and, at the Effective Time, each Seller Stock Option outstanding immediately prior to the Effective Time shall be canceled and the holder thereof shall then become entitled to receive, in full satisfaction of the rights of such holder with respect thereto, as soon as practicable following the Effective Time, a single lump-sum cash

 

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payment equal to the product of (A) the number of shares of Seller Common Stock for which such Seller Stock Option shall not theretofore have been exercised and (B) the excess, if any, of the Merger Consideration over the exercise price per share of such Seller Stock Option;

(ii) adjust the terms of all outstanding Seller Restricted Shares as necessary to provide that, as of the Effective Time, each Seller Restricted Share outstanding immediately prior to the Effective Time will be treated in accordance with Section 3.1(c)(ii) ; and

(iii) make such other changes to the Seller Stock Plans as the Seller and the Parent may agree are appropriate to give effect to the Merger.

(b) All amounts payable pursuant to Section 3.2(a) shall be subject to any required withholding of taxes and shall be paid without interest as soon as practicable following the Effective Time.

(c) Prior to the Closing Date, the Seller shall ensure that following the Effective Time no holder of a Seller Stock Option or Seller Restricted Share (or former holder of a Seller Stock Option or Seller Restricted Share) or any current or former participant in any Seller Stock Plan, Seller Benefit Plan or Seller Benefit Agreement shall have any right thereunder to acquire any capital stock of the Seller, the Surviving Corporation or their Subsidiaries or any other equity interest therein (including “phantom” stock or stock appreciation rights).

3.3 Exchange of Certificates . The procedures for exchanging outstanding shares of Seller Common Stock for the Merger Consideration are as follows:

(a) Paying Agent . Prior to the Effective Time, the Parent shall (i) designate, or cause to be designated, a bank or trust company that is reasonably acceptable to the Seller (the “ Paying Agent ”) and (ii) enter into a paying agent agreement, in form and substance reasonably acceptable to the Seller, with such Paying Agent to act as agent for the payment or exchange in accordance with this Article III of the Merger Consideration (such cash being referred to as the “ Exchange Fund ”). On or before the Effective Time, the Parent shall deposit with the Paying Agent the Exchange Fund for the benefit of the holders of Seller Common Stock. The Paying Agent shall make payments of the Merger Consideration out of the Exchange Fund in accordance with this Agreement. The Exchange Fund shall not be used for any unrelated other purpose.

(b) Exchange Procedures . As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of a certificate or certificates or evidence of shares held in book-entry form which immediately prior to the Effective Time represented outstanding shares of Seller Common Stock (the “ Certificates ”) whose shares were converted pursuant to Section 3.1(c) into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as the Parent may reasonably specify) and (ii) instructions for effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by the Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor cash equal to the Merger Consideration payable in respect of the shares of Seller Common Stock previously represented by such Certificate, and the Certificate so surrendered shall immediately be cancelled. In the event of a transfer of ownership of Seller Common Stock which is not registered in the transfer records of the Seller, payment may be made to a Person other than the Person in whose name the Certificate so surrendered is registered, if such Certificate is presented to the Paying Agent, accompanied by all documents reasonably required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 3.3 , each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration. No interest shall be paid or accrue on any cash payable upon surrender of any Certificate.

(c) No Further Ownership Rights in Seller Stock . The Merger Consideration delivered upon the surrender for exchange of Certificates in accordance with the terms hereof shall be deemed to have been delivered (and

 

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paid) in full satisfaction of all rights pertaining to such shares of Seller Common Stock, and from and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Seller Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be cancelled and exchanged as provided in this Article III .

(d) Termination of Exchange Fund . Any portion of the Exchange Fund which remains undistributed to the holders of Seller Common Stock nine months after the Effective Time shall be delivered to the Parent, upon demand, and any holder of Seller Common Stock who has not previously complied with this Section 3.3 shall, subject to Section 3.3(e) , thereafter look only to the Parent for payment of its claim for the Merger Consideration.

(e) No Liability . To the extent permitted by applicable Law, none of the Parent, the Purchaser, the Seller, the Surviving Corporation or the Paying Agent shall be liable to any holder of shares of Seller Common Stock delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration would otherwise escheat to or become the property of any Governmental Authority), any such Merger Consideration in respect thereof shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

(f) Investment of Exchange Fund . The Paying Agent shall invest any cash included in the Exchange Fund, as directed by the Surviving Corporation. Any net profit resulting from, or interest or income produced by, such investments, shall be payable to the Surviving Corporation.

(g) Withholding Rights . Each of the Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement (including any payments made in respect of the Dissenting Shares) to any holder of shares of Seller Common Stock, such amounts as it reasonably determines that it is required to deduct and withhold with respect to the making of such payment under the Code, or any other applicable provision of Law. To the extent that amounts are so withheld by the Surviving Corporation, the Parent or the Paying Agent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Seller Common Stock in respect of which such deduction and withholding was made by the Surviving Corporation, the Parent or the Paying Agent, as the case may be.

(h) Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof pursuant to this Agreement.

3.4 Appraisal Rights .

(a) Notwithstanding anything in this Agreement to the contrary, any shares of Seller Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by Seller Stockholders who, in accordance with Section 262 of the DGCL (the “ Appraisal Rights Provisions ”) (i) have not voted in favor of adopting and approving this Agreement, (ii) shall have demanded properly in writing appraisal for such shares, and (iii) have not effectively withdrawn, lost or failed to perfect their rights to appraisal (collectively, the “ Dissenting Shares ”), will not be converted as described in Section 3.1 , but at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, shall be cancelled and shall cease to exist and shall represent the right to receive only those rights provided under the Appraisal Rights Provisions; provided , however , that all shares of Seller Common Stock held by Seller Stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Seller Common Stock

 

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under the Appraisal Rights Provisions shall thereupon be deemed to have been canceled and to have been converted, as of the Effective Time, into the right to receive the Merger Consideration relating thereto, without interest, in the manner provided in Section 3.1 . Persons who have perfected statutory rights with respect to Dissenting Shares (the “ Dissenting Stockholders ”) as described above will not be paid as provided in this Agreement and will have only such rights as are provided by the Appraisal Rights Provisions with respect to such Dissenting Shares.

(b) The Seller shall give the Parent and the Purchaser prompt (and in any event within 10 days of receipt) notice of any demands received by the Seller for the exercise of appraisal rights with respect to shares of Seller Common Stock and the Parent shall have the right to direct all negotiations and proceedings with respect to such demands, subject, prior to the Effective Time, to consultation with the Seller. The Seller shall not, except with the prior written consent of the Parent, make any payment with respect to, or settle or offer to settle, any such demands.

(c) Each Dissenting Stockholder who becomes entitled under the Appraisal Rights Provisions to payment for Dissenting Shares shall receive payment therefor after the Effective Time from the Surviving Corporation (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Rights Provisions), and such shares of Seller Common Stock shall be canceled.

ARTICLE IV—REPRESENTATIONS AND WARRANTIES OF THE PARENT AND

THE PURCHASER

Parent and the Purchaser hereby jointly and severally represent and warrant to the Seller as follows:

4.1 Corporate Organization .

(a) The Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

(b) The Parent has all requisite corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted. The Parent is duly licensed or qualified to do business and is in corporate good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified and in good standing would not, either individually or in the aggregate, reasonably be expected to have a the Parent Material Adverse Effect. The certificate of incorporation and bylaws of the Parent, copies of which have previously been made available to the Seller, are true, complete and correct copies of such documents as currently in effect.

(c) The Purchaser was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. All of the issued and outstanding capital stock of the Purchaser is validly issued, fully paid and non-assessable and is owned, beneficially and of record, by the Parent, free and clear of any claim, lien, encumbrance or agreement with respect thereto. Except for obligations and liabilities incurred in connection with its incorporation and the transactions contemplated by this Agreement, the Purchaser has not and will not have incurred, directly or indirectly, any material obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person.

4.2 Authority; No Violation .

(a) Each of the Parent and the Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The adoption, execution and delivery of this Agreement to which the Parent or the Purchaser is a party and the approval of the consummation of the transactions contemplated hereby have been recommended by, and have been duly and validly adopted and

 

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approved by vote of the board of directors of each of the Parent and the Purchaser. No other corporate proceedings on the part of the Parent are necessary to authorize this Agreement or to consummate each of the Offer and the Merger. This Agreement has been duly and validly executed and delivered by the Parent and the Purchaser, and (assuming due authorization, execution and delivery by the Seller), constitutes the valid and binding obligations of the Parent and the Purchaser, enforceable against the Parent and the Purchaser in accordance with its terms.

(b) Assuming that all consents, authorizations, permits, waivers and approvals referred to in Section 5.4 of the Seller Letter have been obtained and all registrations, declarations, filings and notifications described in Section 5.4 of the Seller Letter have been made and any waiting periods thereunder have terminated or expired, neither the execution and delivery of this Agreement by the Parent, the consummation by the Parent of the transactions contemplated hereby nor the compliance by the Parent with the provisions of this Agreement will, (i) conflict with or violate any provision of the certificate of incorporation or other organizational document of like nature or bylaws of the Parent or the Purchaser or (ii) conflict with or violate any statute, law, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Parent or the Purchaser or by which any property or asset of the Parent or the Purchaser is bound or affected, except, with respect to (ii) above, for any such conflicts, violations, breaches or defaults which would not, either individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

4.3 Consents and Approvals . No consents, authorizations, orders, waivers or approvals of, or filings, declarations or registrations with, or notifications to any Governmental Authority are necessary in connection with (a) the execution and delivery by the Parent and the Purchaser of this Agreement, or (b) the consummation by the Parent and the Purchaser of each of the Offer, the Merger and the other transactions contemplated hereby or the compliance by the Parent and the Purchaser with the provisions of this Agreement, except (i) such consents, authorizations, orders, waivers, approvals, filings, declarations, notices and registrations the failure of which to obtain or make would not, either individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect and (ii) such consents, authorizations, waivers, approvals, filings, notices and registrations as are listed in Section 5.4 of the Seller Letter.

4.4 Broker’s Fees . Neither the Parent nor the Purchaser nor any of their respective officers, directors, employees or agents has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated by this Agreement for which the Seller would be liable (including Goldman Sachs & Co., which was engaged by the Parent in connection with the transactions contemplated by this Agreement).

4.5 Legal Proceedings . There is no claim, suit, action, proceeding or investigation of any nature pending or, to the knowledge of the Parent, threatened, against the Parent or any subsidiary of the Parent or challenging the validity or propriety of the transactions contemplated by this Agreement, which, if adversely determined, would, either individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

4.6 Available Funds . The Parent will have at each of the Acceptance Date and the date of the Effective Time, sufficient cash, available lines of credit or other sources of immediately available funds to enable it to pay the aggregate Offer Price and the aggregate Merger Consideration in full as well as to make all other required payments payable in connection with the transactions contemplated hereby.

4.7 Certain Compensation Arrangements . The parties acknowledge that certain payments have been made or are to be made and certain benefits have been granted or are to be granted according to certain employment compensation, severance and other employee benefit plan(s) to which the Parent is a party (the “ Parent Arrangement(s) ”) to certain holders of Seller Common Stock and other securities of the Seller (the “ Covered Securityholders ”). The Parent hereby represents and warrants that all such amounts payable under the Parent Arrangement(s) (i) are being paid or granted as compensation for past services performed, future services to be performed, or future services to be refrained from performing, by the Covered Securityholders (and matters incidental thereto) and (ii) are not calculated based on the number of shares tendered or to be tendered into the Offer by the applicable Covered Securityholder.

 

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4.8 Offer Documents; Proxy Statement; the Parent Information . The Parent and the Purchaser represent that the Offer Documents will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published, sent or given to the Seller Stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Parent or the Purchaser with respect to information supplied by the Seller in writing for inclusion in the Offer Documents.

(a) The information supplied by the Parent in writing for inclusion in the Proxy Statement (where and to the extent required by applicable Laws to consummate the Merger), will not, on the date the Proxy Statement is first mailed to stockholders of the Seller or at the time of the Special Meeting, contain any untrue statement of any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading at the time and in light of the circumstances under which such statement is made.

4.9 No Other Representations or Warranties . Except for the representations and warranties of the Parent or the Purchaser contained in this Article IV , none of the Parent, the Purchaser or any other Person on behalf of the Parent or the Purchaser makes any express or implied representation or warranty with respect to the Parent or the Purchaser or with respect to any other information provided to the Seller in connection with the transactions contemplated hereby. None of the Parent or the Purchaser or any other Person on behalf of the Parent or the Purchaser shall be held liable for any actual or alleged damage, liability or loss resulting from the distribution to the Seller, or the Seller’s use of, any such information, including any information, documents, projections, forecasts or other material made available to the Seller in expectation of the transactions contemplated by this Agreement, unless any such information is expressly included in a representation or warranty contained in this Article IV.

ARTICLE V—REPRESENTATIONS AND WARRANTIES OF THE SELLER

Except as set forth in the letter delivered by the Seller to the Parent and the Purchaser concurrently with the execution of this Agreement (the “ Seller Letter ”), which letter shall identify any exceptions to the representations, warranties and covenants contained in this Agreement (with specific reference to the particular Section or subsection to which such information relates; provided that an item disclosed in any Section or subsection shall be deemed to have been disclosed for each other Section or subsection of this Agreement to the extent the relevance is reasonably apparent on the face of such disclosure), the Seller hereby represents and warrants to the Parent and the Purchaser as follows:

5.1 Corporate Organization .

(a) The Seller is a corporation duly incorporated, validly existing and in good corporate standing under the laws of the State of Delaware. The Seller has all requisite corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted. The Seller is duly licensed or qualified to do business and is in corporate good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified and in corporate good standing would not, either individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. The certificate of incorporation and bylaws of the Seller, copies of which have previously been made available to the Parent, are true, complete and correct copies of such documents as currently in effect. The Seller has made available to the Parent complete and correct copies of the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the stockholders, the board of directors and each committee of the board of directors of the Seller and each of its subsidiaries held since January 1, 2004 through the date of this Agreement. The Seller has made available to the Parent complete and correct copies of all resolutions of the board of directors of the Seller, and each committee thereof, in respect of this Agreement, the Merger and the other transactions contemplated hereby.

 

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(b) Each of the Seller’s subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each of the subsidiaries has all requisite power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted. Each of the subsidiaries is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased, or operated by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified and in good standing would not, either individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

(c) The certificate of incorporation and bylaws or equivalent organizational documents of each of the Seller’s subsidiaries that currently has operations, copies of which have previously been made available to the Parent, are true, correct and complete copies of such documents as currently in effect.

5.2 Capitalization .

(a) The authorized capital stock of the Seller consists of 80,000,000 shares of Seller Common Stock and 20,000,000 shares of preferred stock, $0.01 par value per share (the “ Seller Preferred Stock ”). As of March 30, 2007, there were 50,243,460 shares of Seller Common Stock (of which 559,500 were Seller Restricted Shares) and no shares of Seller Preferred Stock issued and outstanding. As of March 30, 2007, there were 3,806,892 shares of Seller Common Stock and no shares of Seller Preferred Stock held in the treasury of the Seller. In addition, as of March 30, 2007, there were 1,019,860 shares of Seller Common Stock reserved and available for issuance under the Seller Stock Plans, of which 3,896,974 were subject to Seller Stock Options outstanding as of March 30, 2007, and 20,000 shares of Seller Common Stock were subject to Seller Stock Options outstanding as of the date hereof that were not granted under a Seller Stock Plan. The Seller has no shares of Seller Common Stock or Seller Preferred Stock reserved for issuance other than as described above. All issued and outstanding shares of Seller Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof except as required by law. Other than as set forth above, as of March 30, 2007, there were no outstanding shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller, any securities convertible into, exchangeable or exercisable for or representing the right to subscribe for, purchase or otherwise receive any shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller or any stock appreciation rights, “phantom” stock rights, performance units, rights to receive shares of Seller Common Stock on a deferred basis or other rights that are linked to the value of the Seller Common Stock or the value of the Seller or any part thereof granted by the Seller or any of its subsidiaries. Since March 30, 2007 through the date of this Agreement, there have been no issuances of shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller, any securities convertible into, exchangeable or exercisable for or representing the right to subscribe for, purchase or otherwise receive any shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller or any stock appreciation rights, “phantom” stock rights, performance units, rights to receive shares of Seller Common Stock on a deferred basis or other rights that are linked to the value of the Seller Common Stock or the value of the Seller or any part thereof granted by the Seller or any of its subsidiaries. Except for Seller Stock Options, neither the Seller nor any of its subsidiaries has or is bound by any outstanding subscriptions, options, warrants, calls, commitments, rights agreements or Contracts of any character calling for the Seller or any of its subsidiaries to issue, deliver or sell, or cause to be issued, granted, delivered or sold any shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller, any securities convertible into, exchangeable or exercisable for or representing the right to subscribe for, purchase or otherwise receive any shares of Seller Common Stock or Seller Preferred Stock or any other share of capital stock of, or equity or voting interests in, the Seller or any subsidiary of the Seller or any stock appreciation rights, “phantom” stock rights, performance units, rights to receive shares of Seller Common Stock on a deferred basis or other rights that are linked to the value of the

 

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Seller or any part thereof granted by the Seller or any of its subsidiaries or any shares of deferred stock, restricted stock awards, stock appreciation rights, “phantom” stock awards or other similar rights that are linked to the value of the Seller Common Stock or the value of the Seller or any part thereof, or obligating the Seller or any such Subsidiary to grant, extend or enter into any such subscriptions, options, warrants, calls, commitments, rights agreements or any other similar agreements. There are no outstanding contractual obligations of the Seller or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Seller or any of its subsidiaries or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any subsidiary of the Seller. Section 5.2(a) of the Seller Letter sets forth, with respect to each outstanding Seller Stock Option, (i) the name of each holder of such Seller Stock Option and an indication of whether such holder is a current employee of the Seller or its Subsidiaries, (ii) the date each such Seller Stock Option was granted, (iii) the number of shares of Seller Common Stock subject to each such Stock Option, (iv) the expiration date of each such Seller Stock Option, (v) the price at which each such Seller Stock Option may be exercised, (vi) whether or not each such Seller Stock Option was granted under a Seller Stock Plan and (vii) whether or not each such Seller Stock Option is intended to qualify as an “incentive stock option” under Code Section 422. Section 5.2(a) of the Seller Letter also sets forth, with respect to each outstanding Seller Restricted Share, (i) the name of each holder of such Seller Restricted Share and whether such holder is a current employee of the Seller or its Subsidiaries and (ii) the date each such Seller Restricted Share was granted. The form of award agreement pursuant to which each outstanding Seller Stock Option and Seller Restricted Share was granted is set forth in Section  5.2(a) of the Seller Letter. Except for the Seller Stock Options and Seller Restricted Shares set forth in Section 5.2(a) of the Seller Letter, there are no (A) shares of Seller Common Stock outstanding which are subject to vesting over time or upon the satisfaction of any condition precedent, or which are otherwise subject to any right or obligation of repurchase or redemption on the part of the Seller, (B) stock appreciation rights, “phantom” stock awards or other similar rights that are linked to the value of the Seller Common Stock or the value of the Seller or any part thereof, (C) outstanding rights of any person to receive Seller Common Stock under the Seller Stock Plans or otherwise, on a deferred basis or otherwise, and (D) outstanding rights of any person to receive Seller Preferred Stock, on a deferred basis or otherwise. All Seller Stock Options and Seller Restricted Shares may, by their terms, be treated in accordance with Section 3.2(a) . Each of the directors and the officers of the Seller listed on Section 5.2(a) of the Seller Letter have waived all rights to receive (by contract or otherwise) Seller Stock Options or Seller Restricted Shares during any period commencing March 30, 2007.

(b) Section 5.2(b) of the Seller Letter lists each of the Seller’s subsidiaries on the date of this Agreement and indicates for each such subsidiary as of such date: (i) the percentage and equity securities owned or controlled, directly or indirectly, by the Seller; and (ii) the jurisdiction and form of organization. All of the (x) issued and outstanding shares of capital stock of each of the subsidiaries of the Seller that are corporations are held, directly or indirectly, by the Seller and are validly issued, fully paid and nonassessable; (y) issued and outstanding partnership or membership interests of each of the subsidiaries of the Seller that are either limited liability companies or limited partnerships are held, directly or indirectly, by the Seller; and (z) shares or other ownership interests of each of the subsidiaries of the Seller are owned by the Seller, directly or indirectly free and clear of any claim, lien, Encumbrance or agreement with respect thereto. No subsidiary of the Seller owns any capital stock of the Seller.

(c) With respect to the Seller Stock Options, (i) each Seller Stock Option intended to qualify as an “incentive stock option” under Code Section 422 of the Code so qualifies, (ii) each grant of a Seller Stock Option was duly authorized no later than the date on which the grant of such Seller Stock Option was by its terms to be effective (the “ Grant Date ”) by all necessary corporate action, including, as applicable, approval by the Seller board of directors (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (iii) each such grant was made in accordance with the terms of the applicable Seller Stock Plan, the Exchange Act and all other applicable Laws and regulatory rules or requirements, including the rules of The NASDAQ Stock Market LLC and any other exchange on which Seller securities are traded, (iv) the per share exercise price of each Seller Stock Option was not less than the fair

 

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market value of a share of Seller Common Stock on the applicable Grant Date and (v) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Seller and disclosed in all of the Seller SEC Reports in accordance with the Exchange Act and all other applicable Laws. The Seller has not knowingly granted, and there is no and has been no policy or practice of the Seller of granting, Seller Stock Options prior to, or otherwise coordinating the grant of Seller Stock Options with, the release or other public announcement of material information regarding the Seller or its Subsidiaries or their results of operations or prospects.

(d) As of the date of this Agreement, except (x) as set forth on the balance sheet of the Seller as of December 31, 2006 included in the Seller SEC Reports, (y) for indebtedness owed by the Seller or one of its subsidiaries to the Seller or another of its subsidiaries and (z) guarantees by the Seller of indebtedness of any subsidiary of the Seller, neither the Seller nor any of its subsidiaries has any (A) indebtedness for borrowed money, (B) indebtedness evidenced by any bond, debenture, note, mortgage, indenture or other debt instrument or debt security, (C) accounts payable to trade creditors and accrued expenses not arising in the ordinary course of business, (D) amounts owing as deferred purchase price for the purchase of any property (other than ordinary course payment arrangement with suppliers) or (E) guarantees with respect to any indebtedness or obligation of a type described in clauses (A) through (D) above of any other Person (collectively, “ indebtedness ”). As of the date of this Agreement, except as set forth on the balance sheet of the Seller as of December 31, 2006 included in the Seller SEC Reports, there is no Encumbrance on any asset of the Seller or any of its subsidiaries that secures indebtedness.

5.3 Authority; No Violation .

(a) The Seller has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, including the Offer and the Merger, and to comply with the provisions of this Agreement, subject, in the case of the Merger, to the Seller Stockholder Approval. The approval, adoption, execution and delivery of this Agreement, the consummation by the Seller of the transactions contemplated hereby and the compliance by the Seller with the provisions of this Agreement have been duly authorized by all necessary corporate action on the part of the Seller, and no other corporate proceedings on the part of the Seller are necessary to authorize this Agreement, to comply with the terms of this Agreement or to consummate the transactions contemplated hereby, subject, in the case of the Merger, to the Seller Stockholder Approval. The board of directors of the Seller, at a meeting duly called and held at which all directors of the Seller were present, duly and unanimously adopted resolutions (i) determining and declaring that this Agreement, the Offer and the Merger and the other transactions contemplated hereby are advisable, and in the best interest of the Seller and its stockholders, (ii) approving the Offer and the Merger in accordance with the DGCL, (iii) approving this Agreement, (iv) recommending that the Seller Stockholders accept the Offer, tender their shares of Seller Common Stock into the Offer, approve the Merger and adopt this Agreement and (v) determining that each member of the Seller Compensation Committee approving any plan, program, agreement, arrangement, payment or benefit as an Employment Compensation Arrangement in order to satisfy the non-exclusive safe harbor under Rule 14d-10(d)(2) is an “independent director” within the meaning of Rule 4200(a)(15) of The NASDAQ Stock Market LLC (an “ Independent Director ”), which resolutions have not been rescinded, modified or withdrawn in any way. This Agreement has been duly and validly executed and delivered by the Seller and (assuming due authorization, execution and delivery by the Parent and the Purchaser) constitutes the valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms.

(b) Assuming that all consents, authorizations, permits, waivers and approvals referred to in Section 5.4 of the Seller Letter have been obtained and all registrations, declarations, filings and notifications described in Section 5.4 of the Seller Letter have been made and any waiting periods thereunder have terminated or expired, neither the execution and delivery of this Agreement by the Seller nor the consummation by the Seller of the transactions contemplated hereby, including the Offer and the Merger, nor the compliance by the Seller with the provisions of this Agreement, do or will (i) conflict with or violate any provision of the certificate of incorporation or other organizational document of like nature or the bylaws of the Seller or any of its subsidiaries, (ii) conflict with or

 

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violate any statute, law, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Seller or any of its subsidiaries or by which any property or asset of the Seller or any of its subsidiaries is bound or affected or (iii) result in any violation or breach of or any loss of any benefit under, or constitute a change of control or default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, result in the creation of a lien, security interest, charge or other Encumbrance upon any of the properties or assets of the Seller or any of its subsidiaries pursuant to, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, any Contract to which the Seller or any of its subsidiaries is a party as issuer, guarantor or obligor, or by which they or any of their respective properties or assets may be bound or affected, except, with respect to (iii) above, for any such conflicts, violations, breaches, defaults, rights, liens, security interests, charges, other Encumbrances or entitlements which would not, either individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

5.4 Consents and Approvals . No consents, authorizations, orders, waivers or approvals of, or filings, declarations or registrations with, or notifications to any Governmental Authority are necessary in connection with (a) the execution and delivery by the Seller of this Agreement, or (b) the consummation by the Seller of the transactions contemplated hereby, including the Offer and the Merger, or the compliance by the Seller with the provisions of this Agreement, except (i) such consents, authorizations, orders, waivers, approvals, filings, declarations, notices and registrations the failure of which to obtain or make would not, either individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect and (ii) such consents, authorizations, waivers, approvals, filings, notices and registrations as are listed in Section 5.4 of the Seller Letter.

5.5 Financial Statements . The Seller has made available to the Parent copies of the (i) audited consolidated balance sheets of the Seller and its subsidiaries as of March 31, 2006, March 31, 2005 and March 31, 2004, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the fiscal years 2004 through 2006, inclusive, accompanied by the audit report of Ernst & Young LLP, independent public accountants for the Seller, and (ii) the unaudited consolidated balance sheet of the Seller as of December 31, 2006 and the related unaudited consolidated statement of income, statement of changes in stockholders’ equity and statement of cash flows for the nine-month period ended December 31, 2006 (the “ Unaudited Balance Sheet ”). The March 31, 2006 audited consolidated balance sheet of the Seller and its subsidiaries and the Unaudited Balance Sheet (collectively, the “ Seller Balance Sheet ”) (including the related notes, where applicable) and the other financial statements of the Seller referred to in this Section 5.5 (including the related notes, where applicable) present fairly, in all material respects, and the 2006 Financial Statements (including the related notes) and the financial statements to be included in any reports or statements (including reports on Forms 10-Q and 10-K) to be filed by the Seller with the SEC after the date hereof will present fairly, in all material respects, the consolidated financial position and results of the consolidated operations and cash flows and changes in stockholders’ equity of the Seller and its subsidiaries for the respective fiscal periods or as of the respective dates therein set forth; and each of such statements (including the related notes, where applicable) has been and will be prepared in accordance with GAAP, except as otherwise set forth in the notes thereto (subject, in the case of unaudited interim statements, to normal year-end adjustments). Each of the consolidated financial statements of the Seller and its subsidiaries, including, in each case, the notes thereto, made available to the Parent comply, and the financial statements to be filed with the SEC by the Seller after the date hereof and the 2006 Financial Statements will comply, with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto.

5.6 Broker’s Fees . Neither the Seller nor any of its officers, directors, employees, or agents has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated by this Agreement, except for fees and commissions incurred in connection with the engagement of Morgan Stanley & Co. Incorporated and Wachovia Capital Markets, LLC (the “ Seller’s Financial Advisors ”) and for legal, accounting and other professional fees payable in connection with the transactions contemplated hereby, including the Transaction. True and complete copies of the engagement letters with Seller’s Financial Advisors have been provided to the Parent.

 

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5.7 Absence of Certain Changes or Events . Since March 31, 2006, (a) the Seller and each of its subsidiaries have conducted its respective business in the ordinary course consistent with their past practices, (b) except as expressly set forth in the Seller SEC Reports filed prior to the date of this Agreement, none of the Seller or any of its subsidiaries has taken any actions that if taken between the date hereof and the Effective Time would constitute a breach of any of clauses (a), (b)(B), (e), (j), (l), (n) or (p) of Section  6.1 and (c) there has not been any change, circumstance or event (including any event involving a prospective change) which has had, or would reasonably be expected to have, a Seller Material Adverse Effect. Since December 31, 2006, except as expressly set forth in the Seller SEC Reports filed prior to the date of this Agreement, none of the Seller or any of its subsidiaries has taken any actions that if taken between the date hereof and the Effective Date would constitute a breach of any of clauses (d)(i) through (v) of Section 6.1.

5.8 Legal Proceedings . There is no claim, suit, action, proceeding or investigation of any nature (each, a “ Proceeding ”) pending or, to the knowledge of the Seller, threatened, against the Seller or any of its subsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement, which if adversely determined would, either individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect. As of the date of this Agreement (a) there is no Proceeding pending or, to the knowledge of the Seller, threatened against the Seller or any of its subsidiaries seeking, or that is reasonably expected to involve, money damages in excess of $1,000,000, (b) the aggregate money damages that are sought, or are reasonably expected to be involved, in all Proceedings that are pending or, to the knowledge of the Seller, threatened against the Seller or any of its subsidiaries does not exceed $5,000,000 and (c) there is no material Proceeding pending or, to the knowledge of the Seller, threatened against the Seller or any of its subsidiaries that seeks injunction relief or specific performance. Neither the Seller nor any subsidiary nor any property or asset of the Seller or any subsidiary is subject to any continuing order of or consent decree, settlement agreement or similar agreement with any Governmental Authority or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority or arbitrator that is material.

5.9 Reports .

(a) Since January 1, 2004, the Seller and its subsidiaries have timely filed, and subsequent to the date hereof, will timely file, all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were and are required to be filed with (i) the SEC, including Forms 10-K, Forms 10-Q and Forms 8-K (collectively, the “ Seller SEC Reports ”) (and copies of all such Seller SEC Reports have been or will be delivered or otherwise made available by the Seller to the Parent) and (ii) any applicable state securities authorities (except, in the case of state securities authorities, no such representation is made as to filings which are not material) (all such reports, registrations and statements, together with any amendments thereto, are collectively referred to herein as the “ Seller Reports ”) and have paid all fees and assessments due and payable in connection with any of the foregoing. As of their respective dates, the Seller Reports complied and, with respect to filings made after the date of this Agreement, will at the date of filing comply, in all material respects, with all of the statutes, rules and regulations enforced or promulgated by the regulatory authority with which they were filed and did not contain and, with respect to filings made after the date of this Agreement, will not at the date of filing contain, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the Seller’s subsidiaries is required to file any form, report or other document with the SEC. The Seller is in compliance in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder applicable to it.

(b) The Seller has (i) designed and maintained disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material information relating to the Seller, including its consolidated subsidiaries, that is required to be disclosed by the Seller in the reports it files under the Exchange Act is made known to its principal executive officer and principal financial officer or other appropriate members of management as appropriate to allow timely decisions regarding required disclosure; (ii) designed and maintained a system of internal control over financial reporting (as defined in Rules 13a-15(f)

 

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and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including reasonable assurance (A) that transactions are executed in accordance with management’s general or specific authorizations and recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability and (B) regarding prevention or timely detection of any unauthorized acquisition, use or disposition of assets that could have a material effect on the Seller’s financial statements; (iii) with the participation of the Seller’s principal executive and financial officers, completed an assessment of the effectiveness of the Seller’s internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended March 31, 2006, and such assessment concluded that such internal controls were effective using the framework specified in the Seller’s Annual Report on Form 10-K for such year ended; and (iv) to the extent required by applicable Laws, disclosed in such report or in any amendment thereto any change in the Seller’s internal control over financial reporting that occurred during the period covered by such report or amendment that has materially affected, or is reasonably likely to materially affect, the Seller’s internal control over financial reporting.

(c) The Seller has disclosed, based on the most recent quarterly evaluation of internal control over financial reporting, to the Seller’s auditors and audit committee of the Seller board of directors (i) any significant deficiency or material weakness in the design or operation of internal control over financial reporting that is reasonably likely to adversely affect the Seller’s ability to record, process, summarize and report financial information, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Seller’s internal control over financial reporting. To the knowledge of the Seller, there are no material weaknesses in the design or operation of internal control over financial reporting that is reasonably likely to adversely affect the Seller’s ability to record, process, summarize and report financial information.

(d) There are no pending (i) formal or, to the knowledge of the Seller, informal investigations of the Seller by the SEC, (ii) to the knowledge of the Seller, inspections of an audit of the Seller’s financial statements by the Public Company Accounting Oversight Board or (iii) investigations by the audit committee of the Seller board of directors regarding any complaint, allegation, assertion or claim that the Seller or any of its subsidiaries has engaged in improper or illegal accounting or auditing practices or maintains improper or inadequate internal accounting controls.

(e) Neither the Seller nor any of its subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including any Contract relating to any transaction or relationship between or among the Seller and any of its subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Seller or any of its subsidiaries in the Seller’s or any of its subsidiaries published financial statements or other Seller SEC Reports.

5.10 Absence of Undisclosed Liabilities . Since March 31, 2006, except for those liabilities that are fully reflected or reserved against on the Seller Balance Sheet in accordance with GAAP and for liabilities incurred in the ordinary course of business consistent with past practice since March 31, 2006, neither the Seller nor any of its subsidiaries has incurred any obligation or liability (whether or not accrued and contingent or otherwise) that, either alone or when combined with all such liabilities, either individually or in the aggregate, is or would reasonably be expected to be material in relation to the Seller and its subsidiaries, taken as a whole.

5.11 Compliance with Applicable Laws and Reporting Requirements . The Seller and its subsidiaries hold all permits, licenses, variances, authorizations, exemptions, orders, registrations and approvals of all Governmental Authorities which are required for the operation of their respective businesses (the “ Seller Permits ”) and the Seller and each of the Subsidiaries is in compliance with the terms of the Seller Permits and all applicable Laws and regulations, except where the failure to so hold or comply, either individually or in the

 

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aggregate, is or would reasonably be expected to be material in relation to the Seller and its subsidiaries, taken as a whole. Except as expressly disclosed in the Seller SEC Reports filed prior to the date of this Agreement, the businesses of the Seller and its Subsidiaries are not being conducted in violation of any Law (including the Sarbanes-Oxley Act of 2002 and the USA PATRIOT Act of 2001), except for possible violations which, either individually or in the aggregate, are not or would not reasonably be expected to be material in relation to the Seller and its subsidiaries, taken as a whole. No investigation by any Governmental Authority with respect to the Seller or any of the Subsidiaries is pending or threatened, other than, in each case, those the outcome of which, individually or in the aggregate, would not reasonably be expected to be material in relation to the Seller and its subsidiaries, taken as a whole.

5.12 Taxes and Tax Returns .

(a) Each of the Seller and each of its Subsidiaries (referred to for purposes of this Section 5.12 , collectively, as the “ Seller Companies ”) has (i) timely filed (or had timely filed on its behalf) with the appropriate Governmental Authorities all material Tax Returns required to be filed by it (giving effect to all extensions), and all such Tax Returns are true, correct and complete in all material respects and (ii) timely paid (or had timely paid on its behalf) all material Taxes, whether or not reflected on a Tax Return, required to have been paid by it. The most recent financial statements contained in the Sellers’ filed SEC reports reflect an adequate reserve (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income), in accordance with GAAP, for all Taxes, whether or not yet due and payable, of the Seller Companies for all taxable periods and portions thereof through the date of such financial statements.

(b) There are no material liens for Taxes upon any property or assets of the Seller Companies, except for liens for Taxes not yet due or for Taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves, in accordance with GAAP, have been established.

(c) The Seller Companies have complied in all material respects with all applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including withholding of Taxes in connection with amounts paid or owing to any employee, former employee or independent contractor) and have duly and timely withheld and have paid over to the appropriate Governmental Authorities all material amounts required to be so withheld and paid over on or prior to the due date thereof under all applicable Laws.

(d) As of the date of this Agreement, no federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes or Tax Returns of the Seller Companies, and none of the Seller Companies has received a written notice of any material pending or proposed claims, audits or proceedings with respect to Taxes. The relevant statute of limitations is closed with respect to the federal income Tax Returns of the Seller Companies for all years through March 31, 2003.

(e) None of the Seller Companies has granted in writing any power of attorney which is currently in force with respect to any Taxes or Tax Returns.

(f) None of the Seller Companies has requested an extension of time within which to file any Tax Return which has not since been filed, and no currently effective waivers, extensions, or comparable consents regarding the application of the statute of limitations with respect to Taxes or Tax Returns have been given by or on behalf of the Seller Companies.

(g) None of the Seller Companies is party to or bound by or currently has any material liability under any agreement providing for the allocation, sharing or indemnification of Taxes.

(h) None of the Seller Companies has been included in any “consolidated,” “unitary” or “combined” Tax Return (other than Tax Returns which include only the Seller and any Seller Company) provided for under the laws of the United States, any foreign jurisdiction or any state or locality with respect to Taxes for any taxable year.

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(i) No claim has been made in writing by any Governmental Authorities in a jurisdiction where the Seller Companies do not file Tax Returns that any such entity is, or may be, subject to taxation by that jurisdiction.

(j) The Seller Companies have made available to the Parent copies of (i) all of their material income Tax Returns filed within the past three (3) years, (ii) all audit reports, letter rulings, technical advice memoranda and similar documents issued by a Governmental Authority within the past five (5) years relating to the federal, state, local or foreign Taxes due from or with respect to the Seller Companies, and (iii) any closing letters or agreements entered into by the Seller or any Seller Company with any Governmental Authorities within the past five (5) years with respect to Taxes.

(k) None of the Seller Companies has received any written notice of deficiency or assessment from any Governmental Authority for any material amount of Tax that has not been fully settled or satisfied.

(l) None of the Seller Companies has constituted either a “distributing corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code in the two years prior to the date of this Agreement (or will constitute such a corporation in the two years prior to the Effective Time) or which otherwise constitutes part of a “plan” or “series of related transactions” within the meaning of Section 355(e) of the Code in conjunction with the Offer and the Merger.

(m) None of the Seller Companies will be required to include in a Taxable period ending after the Effective Time Taxable income attributable to income that arose in a prior Taxable period but was not recognized for Tax purposes in any prior Taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code or comparable provisions of any Tax Law or for any other reason (including as a result of prepaid amounts or deferred revenue received on or prior to the Effective Time).

(n) None of the Seller Companies has participated in any “listed transaction”, as defined in Treasury Regulation Section 1.6011-4.

(o) To the knowledge of the Seller, Section 5.12(o) of the Seller Letter sets forth a list of all Seller Companies that have made elections under Section 1362 of the Code to be treated as S corporations for federal income Tax purposes or made similar elections under any comparable provisions of any applicable Tax Laws.

(p) There has been no change in ownership (within the meaning of Section 382(g) of the Code) of the Seller or any predecessor.

(q) Other than the Specified Parachute Payments (as defined below), no amount or other entitlement that could be received as a result of the transactions contemplated hereby (alone or in conjunction with any other event) by any “disqualified individual” (as defined in Code Section 280G(c) of the Code) with respect to the Seller will constitute an “excess parachute payment” (as defined in Code Section 280G(b)(1)). Section 5.12(q) of the Seller Letter sets forth, with respect to each disqualified individual with respect to the Seller who could receive any excess parachute payment (i) such person’s name, title and base amount (as defined in Code Section 280G(b)(3)) and (ii) a calculation of the aggregate present value of the “parachute payments” (as defined in Code Section 280G(b)(2)) such person could receive (collectively, the “ Specified Parachute Payments ”). No current or former director, officer, employee, independent contractor or consultant of the Seller or any of its subsidiaries (collectively, “ Seller Personnel ”) is entitled to any gross-up, make-whole or other additional payment from the Seller or any of its subsidiaries in respect of any tax (including federal, state, local and foreign income, excise and other taxes (including taxes imposed under Code Sections 280G or 409A)) or interest or penalty related thereto.

(r) To the knowledge of the Seller, Section 5.12(r) of the Seller Letter sets forth as of the most recent practicable date a list, by type of Tax, of each state in which the Seller Companies are (i) required to file a Tax Return relating to state income, franchise or sales or use Taxes o