AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

CLARCOR INC.,

PECO ACQUISITION COMPANY,

PERRY EQUIPMENT CORPORATION

AND

PECO MANAGEMENT, LLC

OCTOBER 17, 2007

TABLE OF CONTENTS

ARTICLE 1. MERGER			1
Section 1.1 The Merger			1
Section 1.2 Effect of the Merger			1
Section 1.3 Certificate of Incorporation and Bylaws			1
Section 1.4 Directors and Officers			2
Section 1.5 Closing and Effective Time of Merger			2
Section 1.6 Agreements to be Entered Into Concurrently with Merger Agreement			2
ARTICLE 2. CONVERSION OF SECURITIES			3
Section 2.1 Conversion of Capital Stock of Merger Sub			3
Section 2.2 Conversion of Capital Stock of the Company			3
Section 2.3 Adjustments to Share Consideration			5
Section 2.4 Post-Closing Merger Consideration Adjustment			5
Section 2.5 Required Withholding			8
Section 2.6 Dissenting Shares			8
Section 2.7 Tax Consequences			8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY			9
Section 3.1 Organization and Corporate Power			9
Section 3.2 Authority			9
Section 3.3 No Conflict			9
Section 3.4 Capitalization			10
Section 3.5 Financial Statements			11
Section 3.6 Absence of Undisclosed Liabilities			11
Section 3.7 Absence of Certain Events			12
Section 3.8 Real Property			13
Section 3.9 Assets; Tangible Personal Property			14
Section 3.10 Tax Matters			14
Section 3.11 Company Contracts			16
Section 3.12 Intellectual Property			18
Section 3.13 Employee Benefit Plans			20
Section 3.14 Litigation			24
Section 3.15 Compliance with Legal Requirements; Governmental Authorizations			24
Section 3.16 Labor Matters			25
Section 3.17 Insurance			25
Section 3.18 Affiliated Transactions			26
Section 3.19 Customers and Suppliers			26
Section 3.20 Officers and Directors			27
Section 3.21 Finders’ Fees			27
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB			27
Section 4.1 Organization and Corporate Power			27
Section 4.2 Authority			27
Section 4.3 No Conflict			28
Section 4.4 Capitalization			28
Section 4.5 SEC Reports			28
Section 4.6 Absence of Certain Developments			29

Section 4.7 Litigation			29
Section 4.8 Compliance with Legal Requirements; Governmental Authorizations			29
Section 4.9 Sufficient Funds			30
Section 4.10 Tax Matters			30
Section 4.11 Finders’ Fees			31
ARTICLE 5. COVENANTS			32
Section 5.1 Interim Operations of the Company and its Subsidiaries			32
Section 5.2 Access and Investigation			33
Section 5.3 Meeting of Shareholders			34
Section 5.4 Consents and Filings			35
Section 5.5 Publicity			36
Section 5.6 Notification			36
Section 5.7 Financial Statements			36
Section 5.8 Expenses			36
Section 5.9 Commercially Reasonable Efforts			37
Section 5.10 Litigation Support			37
Section 5.11 Financing Matters			37
Section 5.12 Technical Center			37
Section 5.13 PECO 401(k) Plan			38
Section 5.14 Outstanding Loans			38
Section 5.15 Environmental Policy			38
ARTICLE 6. CLOSING CONDITIONS			38
Section 6.1 Conditions to Obligations of the Parties to Consummate the Merger			38
Section 6.2 Additional Conditions to Obligations of Purchaser and Merger Sub			39
Section 6.3 Additional Conditions to Obligations of the Company			40
ARTICLE 7. TAX MATTERS			41
Section 7.1 Straddle Periods			41
Section 7.2 Responsibility for Filing Tax Returns			41
Section 7.3 Refunds and Tax Benefits			42
Section 7.4 Cooperation on Tax Matters			42
Section 7.5 Transfer Taxes			43
ARTICLE 8. TERMINATION			43
Section 8.1 Termination			43
Section 8.2 Effect of Termination			44
Section 8.3 Liquidated Damages			44
ARTICLE 9. INDEMNIFICATION			44
Section 9.1 Survival			44
Section 9.2 Indemnification and Reimbursement			45
Section 9.3 Indemnification and Reimbursement by Purchaser and Merger Sub			45
Section 9.4 Limitations on Indemnification and Reimbursement			46
Section 9.5 Procedure for Indemnification – Third Party Claims			47
Section 9.6 Procedure For Indemnification – Other Claims			48
Section 9.7 Treatment of Indemnity Payments			48
Section 9.8 Exclusive Remedy			48
ARTICLE 10. MISCELLANEOUS			48
Section 10.1 Notices			48
Section 10.2 Headings; Construction			50
Section 10.3 Severability			50

Section 10.4 Entire Agreement; No Modification			50
Section 10.5 Waiver			50
Section 10.6 Assignment; No Third Party Beneficiaries			51
Section 10.7 Governing Law			51
Section 10.8 Arbitration			51
Section 10.9 Counterparts and Signature			51
Section 10.10 Further Assurances			52
Section 10.11 Shareholder Representative			52

Index of the Disclosure Schedules

Company Disclosure Schedule

Section 3.1 – Organization and Corporate Power
Section 3.2 – Authority
Section 3.3 – No Conflict
Section 3.4 – Capitalization
Section 3.5 – Financial Statements
Section 3.6 – Absence of Undisclosed Liabilities
Section 3.7 – Absence of Certain Events
Section 3.8 – Real Property
Section 3.9 – Assets; Tangible Personal Property
Section 3.10 – Tax Matters
Section 3.11 – Company Contracts
Section 3.12 – Intellectual Property
Section 3.13 – Employee Benefit Plans
Section 3.14 – Litigation
Section 3.15 – Compliance with Legal Requirements; Governmental Authorizations
Section 3.16 – Labor Matters
Section 3.17 – Insurance
Section 3.18 – Affiliated Transactions
Section 3.19 – Customers and Suppliers
Section 3.20 – Officers and Directors
Section 3.21 – Finders’ Fees
Section 5.1 – Interim Operations

Purchaser Disclosure Schedule

Section 4.3 – No Conflict
Section 4.4 – Capitalization
Section 4.7 – Litigation

Index of Appendices
Appendix A – Defined Terms
Appendix B – Directors and Officers of Surviving Entity
Appendix C – Material Consents
Appendix D – Company Employees Executing Severance and Change of Control Agreements

Index of Exhibits

Exhibit A – Form of Escrow Agreement
Exhibit B – Form of Employment, Severance and Change of Control Agreement
Exhibit C – Letter of Transmittal
Exhibit D – Form of Subscription Agreement
Exhibit E – Form of Registration Rights Agreement

AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is entered into as of October 17, 2007, by and among CLARCOR Inc., a Delaware corporation (“ Purchaser ”), PECO Acquisition Company, a Delaware corporation and wholly-owned subsidiary of Purchaser (“ Merger Sub ”), Perry Equipment Corporation, a Texas corporation (the “ Company ”), and PECO Management, LLC, as the Shareholder Representative. Capitalized terms used herein are defined in the Sections of this Agreement referenced in Appendix A attached hereto.

RECITALS

      WHEREAS , the respective Boards of Directors of Purchaser, Merger Sub and the Company have each determined that the merger of the Company with and into Merger Sub (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement is advisable, fair to and in the best interests of their respective corporations and shareholders and have approved the Merger; and

      WHEREAS , as a condition and inducement to Purchaser to enter into this Agreement and incur the obligations set forth herein, concurrently with the execution and delivery of this Agreement, certain Shareholders of the Company are entering into a Shareholders Agreement, pursuant to which each such Shareholder has agreed, among other things, to vote (including by execution a written consent) the shares of the Company Common Stock held by such Shareholder in favor of approval of this Agreement, including the Merger;

      NOW, THEREFORE , in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1.
MERGER

      Section 1.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the relevant provisions of the Texas Business Corporation Act (the “ TBCA ”), and the Delaware General Corporation Law (the “ DGCL ”), at the Effective Time, the Company will merge with and into Merger Sub. At the Effective Time, the separate corporate existence of the Company will cease and Merger Sub will continue as the surviving entity of the Merger (the “ Surviving Entity ”).

      Section 1.2 Effect of the Merger . At the Effective Time, the effect of the Merger will be as provided in the TBCA and DGCL. Without limiting the generality of the foregoing, and subject to Article 5.06 of the TBCA and all applicable provisions of the DGCL, at the Effective Time, except as otherwise provided herein, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub will vest in the Surviving Entity, and all debts, liabilities and obligations of the Company and Merger Sub will become the debts, liabilities and obligations of the Surviving Entity.

      Section 1.3 Certificate of Incorporation and Bylaws . The certificate of incorporation of Merger Sub in effect immediately prior to the Effective Time will be the certificate of incorporation of the Surviving Entity, until duly amended in accordance with applicable law;

provided, however, that Article First of the certificate of incorporation of Merger Sub shall be amended effective as of the Effective Time to read as follows: “The name of the corporation is Perry Equipment Corporation.” The bylaws of Merger Sub in effect immediately prior to the Effective Time will be the bylaws of the Surviving Entity, until duly amended in accordance with applicable law; provided, however, that such bylaws will be amended to refer to the name of the Surviving Entity as “Perry Equipment Corporation.”

      Section 1.4 Directors and Officers . The directors and officers of the Surviving Entity immediately after the Effective Time shall be as set forth on Appendix B hereto, to serve, in both cases, until their successors shall have been elected and qualified or until otherwise provided by law and the certificate of incorporation and/or bylaws of the Surviving Entity.

      Section 1.5 Closing and Effective Time of Merger . The closing (the “ Closing ”) will take places at the offices of Greenberg Traurig, LLP, 2200 Ross Avenue, Suite 5200, Dallas, Texas 75201 at 10:00 a.m., central time, on the later of (a) December 3, 2007 or (b) the third Business Day following the satisfaction or waiver of the conditions precedent set forth in Article 6 (or on such other date or at such other location as mutually agreed to by Purchaser and the Company) (the “ Closing Date ”). In addition to the other actions contemplated hereunder, Merger Sub and the Company will cause Articles of Merger satisfying the requirements of the TBCA, in form mutually acceptable to Purchaser and the Company (the “ Texas Articles of Merger ”), and a Certificate of Merger satisfying the requirements of the DGCL, in form mutually acceptable to Purchaser and the Company (the “ Delaware Certificate of Merger ”), to be properly executed, verified and delivered for filing in accordance with the TBCA and DGCL, as applicable, on the Closing Date. The Merger will become effective upon the filing of both the Texas Articles of Merger with the Secretary of State of the State of Texas in accordance with the TBCA and the filing of the Delaware Certificate of Merger with the Secretary of State of Delaware in accordance with the DGCL, or at such later time which Purchaser and the Company will have agreed upon and designated in such filing in accordance with applicable law (the “ Effective Time ”).

      Section 1.6 Agreements to be Entered Into Concurrently with Merger Agreement . Concurrently with the execution and delivery of this Agreement, the persons below will execute and deliver the following agreements: (i) Restrictive Covenant Agreements, between CLARCOR and each of PECO Partners I, Ltd., PECO Partners II, Ltd., PECO Partners III, Ltd., Laine Perry, Leigh Perry Payne, Doris Perry McConnell and Mike McConnell, (ii) Consulting Agreements, between Merger Sub and each of Marney Dunman Perry, Jr. and Laine Perry, (iii) a release, between CLARCOR and each of PECO Partners I, Ltd., PECO Partners II, Ltd., PECO Partners III, Ltd., Laine Perry, Leigh Perry Payne, Doris Perry McConnell and Mike McConnell, (iv) a Shareholders Agreement, between CLARCOR and each of PECO Partners I, Ltd., PECO Partners II, Ltd., PECO Partners III, Ltd., Laine Perry and Doris Perry McConnell (the “ Shareholders Agreement ”), and (v) an acknowledgement letter, between CLARCOR and Merger Sub and Laine Perry. Pursuant to the terms of each of these agreements (other than the Shareholders Agreement), the parties thereto shall not have any rights or obligations pursuant to such agreements prior to Closing, and in the event that this Agreement is terminated for any reason whatsoever and the Closing does not occur, then such agreements shall automatically be terminated for all purposes without any action by the parties thereto and shall be void ab initio .

ARTICLE 2.
CONVERSION OF SECURITIES

      Section 2.1 Conversion of Capital Stock of Merger Sub . As of the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, Merger Sub, the Company or the respective shareholders thereof, each share of the capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into and become one fully paid and nonassessable share of common stock of the Surviving Entity.

      Section 2.2 Conversion of Capital Stock of the Company .

          (a) Cancellation of Treasury Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, Merger Sub, the Company or the respective shareholders thereof, all shares of the Company’s common stock, no par value (“ Company Common Stock ”), that are owned by the Company as treasury stock shall be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor.

          (b) Aggregate Merger Consideration . Subject to Section 2.6 , and prior to adjustment pursuant to Section 2.4 , the aggregate merger consideration payable for the issued and outstanding shares of Company Common Stock (the “ Merger Consideration ”) shall be $161,050,000 consisting of (i) 2,343,750 shares of common stock, par value $1.00 per share, of Purchaser (“ Purchaser Common Stock ”), (the “ Share Consideration ”), plus (ii) cash in an amount equal to $86,050,000 (the “ Base Cash Consideration ”), subject to adjustment as provided below, including, without limitation, the withholding of the Escrowed Shares and Escrowed Cash at Closing as contemplated by Section 2.2(g) , the adjustments to the Share Consideration at Closing contemplated by Section 2.3 based on changes to the Average Closing Price and adjustments to the Base Cash Consideration following the Closing as contemplated by Section 2.4 based on changes to the Adjusted Consolidated Net Working Capital. The issuance of the Purchaser Common Stock will not be registered, and the holders of Converted Company Shares receiving shares of Purchaser Common Stock will have registration rights pursuant to, and such holders will not be permitted to transfer such shares except in accordance with, the Registration Rights Agreement.

          (c) Per Share Merger Consideration . As of the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, Merger Sub, the Company or the respective shareholders thereof, each of the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) (all such shares, excluding the Dissenting Shares, the “ Converted Company Shares ”) shall be converted into the right to receive the following consideration:

          (i) for each Converted Company Share beneficially owned by the PECO Employees’ Stock Ownership Trust (the “ ESOP ”) and the estate of E. B. Cooper (the “ Cooper Estate ”), an amount in cash equal to the quotient of (A) the Aggregate Closing Merger Consideration Amount (as defined below), divided by (B) the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (the “ ESOP/Cooper Estate Per Share Cash Consideration ”), or

          (ii) for each Converted Company Share beneficially owned by all Shareholders (other than the ESOP and Cooper Estate) an amount equal to the quotient of (A) the Base Cash Consideration (less the aggregate amount of all cash paid to the ESOP and the

Cooper Estate pursuant to Section 2.2(c)(i) above) divided by (B) the number of shares of Company Common Stock outstanding immediately prior to the Effective Time, less the number of Converted Company Shares owned by the ESOP and the Cooper Estate (the “ General Per Share Cash Consideration ”); plus an amount equal to the quotient of (A) the Share Consideration (as adjusted at Closing pursuant to Section 2.3 hereof) divided by (B) the number of shares of Company Common Stock outstanding immediately prior to the Effective Time, less the number of Converted Company Shares owned by the ESOP and the Cooper Estate (the “ Per Share Stock Consideration ”) (the General Per Share Cash Consideration and Per Share Stock Consideration, collectively, the “ General Per Share Merger Consideration ”; the General Per Share Merger Consideration and ESOP/Cooper Estate Per Share Cash Consideration are collectively referred to herein as the “ Per Share Merger Consideration ”).

For purposes of this Agreement, the “ Aggregate Closing Merger Consideration Amount ” means (i) the total amount of the Base Cash Consideration, prior to adjustment following the Closing contemplated by Section 2.4 based on changes to the Adjusted Consolidated Net Working Capital, plus (ii) the product of (a) the number of shares of Purchaser Common Stock issued at Closing as part of the Merger Consideration, as adjusted pursuant to Section 2.3 , multiplied by (b) the Average Closing Price.

          (d) Cancellation of Company Common Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, Merger Sub, the Company or the respective shareholders thereof, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall cease to exist, all certificates for such stock shall be canceled and no shares of the Surviving Entity shall be exchanged therefor; provided , however , that each holder of Company Common Stock (other than a holder of Dissenting Shares) as of the Effective Time shall be entitled in accordance with Section 2.2(c) above, upon delivery of a letter of transmittal in the form attached hereto as Exhibit C and, other than the ESOP and Cooper Estate, a subscription agreement in the form attached hereto as Exhibit D and a registration rights agreement in the form attached hereto as Exhibit E (the “ Registration Rights Agreement ”), to the Per Share Merger Consideration multiplied by the number of issued and outstanding shares of Company Common Stock held by such holder (and it is acknowledged and agreed that, notwithstanding anything contained herein to the contrary, Purchaser will withhold the Per Share Merger Consideration payable to any such holder of Company Common Stock until such holder makes the deliveries set forth above). Notwithstanding any provision of this Agreement to the contrary, no fraction of a share of Purchaser Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of Company Common Stock who would otherwise be entitled to receive a fraction of a share of Purchaser Common Stock (after aggregating all fractional shares of Purchaser Common Stock that otherwise would be received by such holder) shall receive an amount of cash (rounded up to the nearest whole cent), without interest, equal to the product obtained by multiplying (i) such fraction, and (ii) the Average Closing Price.

          (e) Intentionally Omitted .

          (f) Payment of Merger Consideration . At the Closing, Purchaser will

          (i) pay the Base Cash Consideration, less the Escrowed Cash, by wire transfer of immediately available funds, to the Shareholder Representative, for the benefit of the holders of all Converted Company Shares; and

          (ii) deliver stock certificates evidencing the Share Consideration, less the Escrowed Shares, to the Shareholder Representative, for the benefit of the holders of all Converted Company Shares, other than the ESOP and Cooper Estate.

          (g) Escrowed Shares and Escrowed Cash . At the Closing, Purchaser shall deliver to the escrow agent under the Escrow Agreement, for deposit into an escrow fund on behalf of all the holders of Converted Company Shares (other than the ESOP and Cooper Estate), $6,000,000 of the Base Cash Consideration (the “ Escrowed Cash ”), plus a portion of the Share Consideration (the “ Escrowed Shares ”) that has an aggregate value, based on the Average Closing Price, equal to $10,000,000 (rounded to the nearest whole share) of the Merger Consideration (collectively, the “ Escrow Fund ”). The Escrowed Shares shall be held by the escrow agent under the Escrow Agreement as nominee for the holders of Converted Company Shares (other than the ESOP and Cooper Estate). The Escrow Fund will be distributed by such escrow agent to the Shareholder Representative, for the benefit of the holders of Converted Company Shares (other than the ESOP and Cooper Estate), and/or the Purchaser, pursuant to the terms of the Escrow Agreement.

      Section 2.3 Adjustments to Share Consideration . The Share Consideration payable at Closing shall, if applicable, be adjusted as follows:

     (a) In the event the Average Closing Price is less than $31.25, the number of shares (rounded to the nearest whole share) of Purchaser Common Stock to be included in the Share Consideration shall be increased by (a) 2,343,750, multiplied by (b) the amount by which $31.25 exceeds the Average Closing Price and then divided by (c) the Average Closing Price.

     (b) In the event the Average Closing Price is greater than $32.75, the number of shares (rounded to the nearest whole share) of Purchaser Common Stock to be included in the Share Consideration shall be decreased by (a) 2,343,750, multiplied by (b) the amount by which the Average Closing Price exceeds $32.75 and then divided by (c) the Average Closing Price.

     (c) For purposes of this Agreement, “ Average Closing Price ” shall mean the average closing price of the Purchaser Common Stock on the New York Stock Exchange for the ten consecutive trading days ending with the fifth complete trading day ending immediately prior to the Closing Date.

      Section 2.4 Post-Closing Merger Consideration Adjustment .

          (a) Closing Date Balance Sheet and Closing Date Net Working Capital Calculation . Within 60 days following the Closing Date, Purchaser shall prepare and deliver to the Shareholder Representative a consolidated balance sheet of the Company and its Subsidiaries as of the Closing Date (the “ Closing Date Balance Sheet ”) and a calculation of the Adjusted Consolidated Net Working Capital of the Company and its Subsidiaries as of the Closing Date (the “ Closing Date Net Working Capital Calculation ”). The Closing Date Balance Sheet shall be prepared in accordance with United States generally accepted accounting principles (“ GAAP ”), applied on a basis consistent with the Reference Balance Sheet. Immediately following the Closing, Purchaser and the Shareholder Representative will conduct an inventory of the Company’s inventory for purposes of identifying the inventory of the Company and its Subsidiaries as of the Closing Date and the value of such inventory for purposes of preparing the Closing Date Balance Sheet and the Closing Date Net Working Capital Calculation. Purchaser and the Shareholder Representative will each designate one or more representative(s) to conduct such inventory. The Shareholder Representative and its accountants shall be entitled to review the Closing Date Balance Sheet and the Closing Date Net

Working Capital Calculation, and any working papers, trial balances and similar materials relating to the Closing Date Balance Sheet and the Closing Date Net Working Capital Calculation prepared by Purchaser, the Company or their respective accountants. The Company shall also provide the Shareholder Representative and its accountants with timely access, during normal business hours, to Purchaser’s and the Company’s relevant employees and outside accountants, properties, books and records to the extent involved with or related to the preparation of the Closing Date Balance Sheet and the Closing Date Net Working Capital Calculation.

          (b) Adjusted Consolidated Net Working Capital . As used in this Agreement, “ Adjusted Consolidated Net Working Capital ” shall mean the current assets of the Company as of the Closing Date, less the current liabilities of the Company as of the Closing Date, each as set forth on the Closing Date Balance Sheet, plus (a) the amount of all capital expenditures incurred or expended by the Company from June 1, 2007 through the Closing Date (including, but not limited to, the amount of all capitalized amounts incurred or expended by the Company from June 1, 2007 through the Closing Date in connection with the implementation of the ERP system by Oracle/Lucidity) and (b) to the extent not otherwise included as an addition to the Adjusted Consolidated Net Working Capital pursuant to clause (a) above, all out-of-pocket costs incurred or expended by the Company at the written request of Purchaser after the date of this Agreement through the Closing Date (to the extent not already reimbursed by Purchaser pursuant to Section 5.8 ) (but excluding any costs arising in connection with actions required to be taken by the Company and its Subsidiaries pursuant to the terms of this Agreement).  For the avoidance of doubt, the Closing Date Balance Sheet and the Adjusted Consolidated Net Working Capital shall (i) include all Indebtedness under the Company Credit Facilities (whether or not repaid simultaneously with the Closing) as current liabilities of the Company, and (ii) include the payment of any bonuses to employees of the Company as permitted by Section 5.1(b)(ii) . In determining the Adjusted Consolidated Net Working Capital, the parties will apply foreign exchange rates as published in the Wall Street Journal on the Closing Date.

          (c) Time Period for Objection . If, within 30 days following delivery of the Closing Date Balance Sheet and the Closing Date Net Working Capital Calculation, the Shareholder Representative has not given Purchaser written notice of its objection to the Closing Date Net Working Capital Calculation (which notice shall state in reasonable detail the basis of the Shareholder Representative’s objection), then the Purchaser’s Closing Date Net Working Capital Calculation shall be binding and conclusive on the parties for all purposes hereunder.

          (d) Resolution by Independent Accountants . If the Shareholder Representative gives Purchaser such notice of objection within the 30-day period, and if the Shareholder Representative and Purchaser fail to resolve the issues outstanding with respect to the Purchaser’s Closing Date Net Working Capital Calculation within 30 days of Purchaser’s receipt of the Shareholder Representative’s objection notice, the Shareholder Representative and Purchaser shall submit the issues remaining in dispute to a nationally recognized certified public accounting firm mutually selected by the Shareholder Representative and Purchaser that has not performed accounting, tax or audit services for Purchaser, Merger Sub, the Company or any of their respective Affiliates during the past three years (the “ Independent Accountants ”), for resolution in accordance with the terms of this Agreement. If issues are submitted to the Independent Accountants for resolution, (A) the Shareholder Representative and Purchaser shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the

disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss issues with the Independent Accountants; (B) the determination by the Independent Accountants, as set forth in a notice to be delivered to both the Shareholder Representative and Purchaser within 30 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be used in calculation of the Closing Date Net Working Capital Calculation; and (C) the Shareholders and Purchaser will each bear half of the fees and costs of the Independent Accountants for such determination.

          (e) Adjustment to Merger Consideration . Within three Business Days after the Closing Date Net Working Capital Calculation becomes binding and conclusive pursuant to the provisions of this Section, the following payments shall be made:

          (i) If the amount of the Closing Date Net Working Capital Calculation is less than $16,850,000, then the Shareholders shall pay Purchaser an amount equal to the difference pursuant to wire transfer instructions provided in writing by Purchaser.

          (ii) If the amount of the Closing Date Net Working Capital Calculation is more than $16,850,000, then Purchaser shall pay to the Shareholder Representative, for the benefit of the holders of all Converted Company Shares, an amount equal to the difference pursuant to wire transfer instructions provided in writing by the Shareholder Representative.

          (f) Post-Closing Payments .

          (i) Notwithstanding anything contained in this Agreement to the contrary, the Shareholder Representative shall withhold from the Base Cash Consideration otherwise payable by the Shareholder Representative to the Shareholders pursuant to Section 2.2(f)(i) above, an amount at least equal to an amount, if any, estimated in good faith, after consultation with Purchaser, by the Chief Financial Officer of the Company that may be payable by the Shareholders to Purchaser pursuant to Section 2.4(e)(i) until the Closing Date Net Working Capital Calculation has become binding and conclusive pursuant to Section 2.4 and, if a payment is actually owed to Purchaser pursuant to Section 2.4(e)(i) , such payment has been made in full to Purchaser. The Shareholder Representative shall promptly provide written notice to Purchaser of the amount, if any, that the Shareholder Representative withheld from the Base Cash Consideration otherwise payable to the Shareholders in accordance with the immediately preceding sentence.

          (ii) After making any payment that is owed by the Shareholders to Purchaser pursuant to Section 2.4(e)(i) or after receiving any payment that is owed by Purchaser to the Shareholders pursuant to Section 2.4(e)(ii) , the Shareholder Representative, shall distribute to the Shareholders on a pro rata basis in proportion to the number of Converted Company Shares held by such Shareholders all amounts then held by the Shareholder Representative, on behalf of the Shareholders.

          (g) Treatment for Tax Purposes . Any payments made under this Section 2.4 shall be treated by the Purchaser, the Company and holders of Converted Company Shares as an adjustment to the Merger Consideration for tax purposes, unless a final determination (which shall

include the execution of a Form 870-AD or successor form) with respect to such payment causes any such payment not to be treated as an adjustment to the Merger Consideration for tax purposes.

      Section 2.5 Required Withholding . Purchaser and the Surviving Entity shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement such amounts as it may be required to deduct and withhold therefrom under the Code or under any provision of state, local or foreign Tax laws or under any other applicable Legal Requirements. To the extent such amounts are so deducted or withheld, the amount of such consideration shall be treated for all purposes under this Agreement as having been paid to the Person to whom such consideration would otherwise have been paid.

      Section 2.6 Dissenting Shares.

          (a) Dissenting Shares . Notwithstanding anything to the contrary contained in this Agreement, if Purchaser has waived the condition precedent set forth in Section 6.2(o) with respect to any Shareholder who has made a demand for appraisal of such Shareholder’s shares of Company Common Stock in accordance with the TBCA (any such shares being referred to as “ Dissenting Shares ” until such time that such Shareholder fails to perfect or otherwise loses such holder’s appraisal rights under the TBCA with respect to such shares), the Dissenting Shares held by such Shareholder shall not be converted into or represent the right to receive Merger Consideration at Closing in accordance with Section 2.3 , but shall be entitled only to such rights as are granted by the TBCA to a holder of Dissenting Shares. Subject to Section 6.2(o) , Purchaser shall be responsible to the holders of Dissenting Shares as required by the TBCA; provided, that, subject to Section 2.6(b) , Purchaser shall retain any amounts that would otherwise be paid to a holder of Dissenting Shares pursuant to Sections 2.3 and 2.4 .

          (b) Loss of Status as Dissenting Shares . If any Dissenting Shares shall lose their status as such (through failure to perfect or otherwise), then, as of the later of the Effective Time or the date of loss of such status, such shares shall automatically be converted into and shall represent only the right to receive Merger Consideration in accordance with Sections 2.3 and 2.4 , without interest thereon, upon surrender of the stock certificate formerly representing such shares.

          (c) Cooperation . If Purchaser has waived the condition precedent set forth in Section 6.2(o) with respect to any Shareholder who has made a demand for appraisal of such Shareholder’s shares of Company Common Stock in accordance with the TBCA, the Company shall give Purchaser: (i) prompt notice of any such written demand for appraisal received by the Company prior to the Effective Time pursuant to the TBCA, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the TBCA that relate to such demand; and (ii) the opportunity to participate in all negotiations and Proceedings with respect to any such demand, notice or instrument. The Company shall not make any payment or settlement offer prior to the Effective Time with respect to any such demand, notice or instrument unless Purchaser has given its written consent to such payment or settlement offer.

      Section 2.7 Tax Consequences . The parties hereto intend for the Merger to constitute a reorganization within the meaning of Section 368(a)(1)(A) and (a)(2)(D) of the Code. The parties hereto adopt this Agreement as a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g).

ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the corresponding sections or subsections of the Company Disclosure Schedule (the “ Company Disclosure Schedule ”), the Company hereby represents and warrants to Purchaser and Merger Sub as follows:

      Section 3.1 Organization and Corporate Power . The Company and each Subsidiary of the Company is a corporation or limited liability company duly organized or formed, validly existing, and in good standing under the laws of the jurisdiction of its organization or formation, with full corporate or limited liability company power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to execute and deliver this Agreement and perform its obligations hereunder. The Company and each Subsidiary of the Company is duly qualified to do business and is in good standing in every domestic or foreign jurisdiction in which its ownership of property or the conduct of businesses as now conducted requires it to qualify. Each jurisdiction in which the Company or any Subsidiary of the Company is qualified to do business is listed on Section 3.1 of the Company Disclosure Schedule. Complete and accurate copies of the organizational documents of the Company and each Subsidiary of the Company have been delivered to Purchaser.

      Section 3.2 Authority . This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies. Upon the execution and delivery by the Company of each of the documents and instruments to be executed and delivered by the Company at Closing pursuant to Section 6.2 (collectively, the “ Company Closing Documents ”), each of the Company’s Closing Documents will constitute the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by bankruptcy laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies. The Company has the right, power, authority and capacity to execute and deliver this Agreement and the Company Closing Documents and to perform its obligations under this Agreement and the Company Closing Documents, and such action has been duly authorized by all necessary corporate or other organizational action by the Company (subject to, in the case of the Company, the approval of this Agreement by the Shareholders following the date hereof). The Company’s Board of Directors has determined that the Merger is advisable, fair to and in the best interests of the Company and its Shareholders and has resolved to recommend to the Shareholder that they vote in favor of approving and adopting this Agreement and the Merger.

      Section 3.3 No Conflict .

          (a) Except for the applicable requirements of the HSR Act, the filing of the Texas Articles of Merger and the Delaware Certificate of Merger or as set forth on Section 3.3 of the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation or performance of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of any provision of the organizational documents of the Company or any Subsidiary of the Company, (ii) contravene, conflict with, or result in a violation of any Legal Requirement, or any Order of any

Governmental Authority, to which the Company or any Subsidiary of the Company is subject, (iii) cause the Company or any of its Subsidiaries to become subject to, or to become liable for, the payment of any Tax; (iv) breach any provision of, give any Person the right to declare a default or exercise any remedy under, accelerate the maturity or performance of or payment under, or cancel, terminate, or modify any, Material Company Contract, or (v) result in the creation or imposition of any material Encumbrance upon any of the assets of the Company or any Subsidiary of the Company.

          (b) Except for the applicable requirements of the HSR Act, the filing of the Texas Articles of Merger and the Delaware Certificate of Merger or as set forth on Section 3.3 of the Company Disclosure Schedule, neither the Company, any Subsidiary of the Company is or will be required to give any notice to or obtain any consent or approval from (i) any Governmental Authority, or (ii) any party to any Material Company Contract in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

      Section 3.4 Capitalization .

          (a) Section 3.4 of the Company Disclosure Schedule sets forth the number of authorized and issued and outstanding shares of each class of capital stock of the Company (including treasury shares), the name of each record holder of such shares of the Company’s capital stock and the number of shares of such class of the Company’s capital stock held by each such record holder. The capital stock of the Company has not been issued in violation of, and is not subject to, any preemptive or subscription rights or rights of first refusal. All of the issued and outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable. The issued and outstanding shares of capital stock of the Company set forth on Section 3.4 of the Company Disclosure Schedule are held by the holders of records reflected in Section 3.4 of the Company Disclosure Schedule, free and clear of any Encumbrances.

          (b) Section 3.4 of the Disclosure Schedule sets forth a true and complete list of (i) each Subsidiary of the Company, listing for each Subsidiary its name, the name of the Company or Subsidiary of the Company holding an ownership interest in such Subsidiary, the percentage of stock or other equity interest of such Subsidiary owned by the Company or a Subsidiary of the Company, and (ii) all other Persons in which the Company or any Subsidiary of the Company owns, of record or beneficially, any direct or indirect equity or other similar interest or any right (contingent or otherwise) to acquire the same, listing for each Person its name, the name of the Company or Subsidiary holding an ownership interest in such Person. The capital stock or other equity interests of each Subsidiary of the Company has not been issued in violation of, and is not subject to, any preemptive or subscription rights or rights of first refusal. All of the shares of each Subsidiary of the Company that is a corporation are validly issued, fully paid and nonassessable. The Company and/or the Subsidiaries are the record and beneficial owner of all of the outstanding shares or other equity interests of each Subsidiary of the Company, free and clear of any Encumbrances, except Encumbrances granted pursuant to the Company Credit Facilities.

          (c) Except pursuant to the terms of the ESOP, there are (i) no outstanding obligations, options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any kind relating to the capital stock or other equity interests of the Company or any Subsidiary of the Company, or securities convertible or exchangeable into capital stock or other equity interests of the Company or any Subsidiary of the Company, or obligating the Company or any Subsidiary of the Company to issue or sell any shares of capital stock of, or any other equity

interests in, the Company or any Subsidiary of the Company, (ii) no outstanding contractual obligations of the Company or any Subsidiary of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or other equity interests or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person, or (iii) no voting trusts, stockholder agreements, registration rights agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the capital stock or other equity interests of the Company or any Subsidiary of the Company.

      Section 3.5 Financial Statements .

     (a) The Company has delivered to Purchaser copies of the following financial statements, copies of which are attached as Section 3.5 of the Company Disclosure Schedule: (i) the audited consolidated financial statements of the Company and its Subsidiaries as of May 31, 2007, 2006 and 2005, including the balance sheet and the related statements of operations, statements of changes in stockholders’ equity and statements of cash flows of the Company and its Subsidiaries as of and for the fiscal years then ended, including in each case the notes thereto, together with the report of the independent certified public accounting firm set forth therein (the “ Audited Financial Statements ”; the balance sheet of the Company and its Subsidiaries as of May 31, 2007, the “ Reference Balance Sheet ”; the date of the Reference Balance Sheet, the “ Reference Balance Sheet Date ”) and (ii) unaudited financial statements of the Company and its Subsidiaries as of August 31, 2007, including the balance sheet and the related statement of operations of the Company and its Subsidiaries as of and for the three-months then ended (such financial statements, together with the financial statements to be delivered pursuant to Section 5.7 below, the “ Unaudited Financial Statements ”) (the Audited Financial Statements and the Unaudited Financial Statements, collectively, the “ Financial Statements ”). The Financial Statements referred to above have been, and the Financial Statements to be delivered pursuant to Section 5.7 below will be, prepared in accordance with GAAP consistently applied (except, in the case of the Unaudited Financial Statements, for the absence of footnotes (that, if presented, would not differ materially from those included in the Audited Financial Statements) and normal recurring year end adjustments (the effect of which will not, individually or in the aggregate, be material)). The Financial Statements referred to above fairly present, and the Financial Statements to be delivered pursuant to ASection 5.7 below will fairly present, in all material respects the financial position of the Company and its Subsidiaries and the results of operations and changes in financial position and cash flows as of the dates and for the periods specified. The Financial Statements referred to above have been, and the Financial Statements to be delivered pursuant to Section 5.7 below will be, prepared in accordance with the books and records of the Company and its Subsidiaries. The Company and its Subsidiaries have given Purchaser access to their true, correct and complete books and records and accounts, which accurately and fairly reflect, in reasonable detail, the activities of the Company and its Subsidiaries in all material respects.

     (b)  Section 3.5 of the Company Disclosure Schedule sets forth (a) with respect to each pending capital expenditure project of the Company or its Subsidiaries estimated to involve expenditures of more than $100,000, (i) the nature or purpose of such project and (ii) the total amount of capital expenditure estimated to be made, and (b) the aggregate amount of all capital expenditures incurred or expended from June 1, 2007 through August 31, 2007 (whether in connection with such pending capital expenditure projects or otherwise).

      Section 3.6 Absence of Undisclosed Liabilities . Except as disclosed in Section 3.6 of the Company Disclosure Schedule, and except for liabilities or obligations (i) that are reflected in,

accrued, reserved against or otherwise described in the Reference Balance Sheet, (ii) that are current liabilities and were incurred after the date of the Reference Balance Sheet in the ordinary course of business and consistent with past practice, or (iii) arising pursuant to the terms of contracts or agreements of the Company or any Subsidiary of the Company entered into in the ordinary course of business consistent with past practice that are not required to be reflected as liabilities on a balance sheet (or disclosed in the notes thereto) prepared in accordance with GAAP, neither the Company nor any Subsidiary of the Company has any material liabilities or obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable.

      Section 3.7 Absence of Certain Events . Since the Reference Balance Sheet Date, there has not been any Company Material Adverse Effect. Since the Reference Balance Sheet Date, the Company and its Subsidiaries has conducted their business in the ordinary course of business consistent with past practice. Except as set forth on Section 3.7 of the Company Disclosure Schedule or as contemplated by this Agreement, from the Reference Balance Sheet Date through the date of this Agreement, neither the Company nor any Subsidiary of the Company has:

          (a) (i) issued, sold, repurchased, redeemed or acquired any shares of capital stock or other equity interests, or granted or entered into any rights, warrants, options, agreements or commitments with respect to the issuance of such capital stock or such equity interests, except pursuant to the terms of the ESOP; (ii) declared, set aside or paid any dividend or other distribution (whether in cash, securities or property or other combination thereof) in respect of any shares of capital stock or other equity interest of such entity, or (iii) adjusted, split, combined, subdivided or reclassified any shares of capital stock or other equity interest of such entity;

          (b) granted any increase in the base compensation of, or paid any bonuses or other compensation to, any of their officers and employees outside the ordinary course of business;

          (c) adopted, amended, or increased the payments or benefits under, any Employee Benefit Plan in any material respect;

          (d) entered into, amended, terminated, or assigned any Material Company Contract;

          (e) acquired inventory, assets or other properties outside of the ordinary course of business;

          (f) sold, leased, or otherwise disposed of any assets or properties other than (i) sales of inventory in the ordinary course of business, and (ii) dispositions of obsolete equipment or unsaleable inventory in the ordinary course of business;

          (g) made any loans or advances to any Person, except for advances to employees of the Company or its Subsidiaries for expenses incurred in the ordinary course of business;

          (h) incurred, assumed or guaranteed any Indebtedness (including, without limitation, entered into any guarantees in favor of any Person guaranteeing obligations of such Person, or caused any letter of credit to be issued for the account of the Company or any Subsidiary of the Company), but excluding guarantees and letters of credit issued pursuant to and money borrowed under the Company Credit Facilities;

          (i) permitted or allowed any of the assets of the Company to be subject to any Encumbrance other than any Permitted Encumbrance;

          (j) cancelled, waived, settled or comprised any Proceeding disclosed in Section 3.14 of the Company Disclosure Schedule;

          (k) cancelled, compromised, waived or released any right or claim (or series of related rights and claims) either involving more than $100,000 or outside the ordinary course of business;

          (l) made any change in connection with its accounts payable or accounts receivable terms, systems, policies or procedures;

          (m) experienced any damage, destruction or loss (whether or not covered by insurance) to any of its assets in excess of $100,000;

          (n) made any material change in its accounting or tax methods; or

          (o) entered into any agreement, whether oral or written, to do any of the foregoing.

      Section 3.8 Real Property .

          (a) Section 3.8 of the Company Disclosure Schedule sets forth a (i) correct street address and tax parcel identification number of each parcel of real property in which the Company or any Subsidiary of the Company holds an ownership interest (the “ Owned Real Property ”) and (ii) list of all real property leases to which the Company or any Subsidiary of the Company is a party (whether as a (sub)lessor, (sub)lessee, guarantor or otherwise) (the “ Company Real Property Leases ”), street address, approximate rentable square footage and monthly rent with respect to the Company Real Property Leases (the real property leased by the Company (as a lessee or sublessee), the “ Leased Real Property ”; the Owned Real Property and Leased Real Property, collectively, the “ Real Property ”). Except for the Owned Real Property and the Company Real Property Leases identified in Section 3.8 of the Company Disclosure Schedule, neither the Company nor any Subsidiary of the Company owns any interest (fee, leasehold or otherwise) in any real property, and neither the Company nor any Subsidiary of the Company has entered into any leases, arrangements, licenses or other agreements relating to the use, occupancy, sale, option, disposition or alienation of all or any portion of the Owned Real Property. The Company and its Subsidiaries enjoy peaceful and undisturbed possession of the Real Property. The Company and its Subsidiaries hold all riparian, mineral, oil and gas rights with respect to the Owned Real Property.

          (b) Except as set forth in Section 3.8 of the Company Disclosure Schedule, the Company and its Subsidiaries own good and marketable title to the Owned Real Property, and a valid leasehold interest in the Leased Real Property, free and clear of any Encumbrances other than Permitted Encumbrances.

          (c) The use of the Real Property by the Company and its Subsidiaries for the purposes for which it is currently being used conforms in all material respects to all applicable public and private restrictions, fire, safety, zoning and building laws and ordinances, laws relating to the disabled, and other applicable Legal Requirements. There are no pending or, to the Knowledge of

Company, threatened, eminent domain, condemnation, zoning, or other Proceedings affecting the Real Property that would result in the taking of all or any part of the Real Property or that would prevent or hinder the continued use of the Real Property as currently used in the conduct of the business of the Company and its Subsidiaries. The Real Property has adequate rights of access to dedicated public ways and is served by water, electric, sewer, telephone, gas and other necessary services appropriate for the operation of the business of the Company and its Subsidiaries at such location.

          (d) All Improvements located on the Real Property are in compliance in all material respects with all applicable Legal Requirements (including those pertaining to public and private restrictions, fire, safety, zoning and building laws and ordinances, and laws relating to the disabled).

          (e) (i) True and complete copies of (i) all deeds or leases, as the case may be, existing title insurance policies, surveys, appraisals, specifications and plans of or pertaining to each parcel of Real Property, (ii) all instruments, agreements and other documents evidencing, creating or constituting any Encumbrances with respect to the Real Property and (iii) any reports, studies, analyses, tests or monitoring, to the Knowledge of the Company, possessed or initiated by the Company pertaining to Hazardous Materials or the Release thereof at the Mineral Wells Premises or concerning compliance by the Company or any other Person for whose conduct it is or may be held responsible, with Environmental Laws relating to the Mineral Wells Premises, have been delivered or made available to Purchaser.

      Section 3.9 Assets; Tangible Personal Property .

          (a) The Company has good and valid title to, or a valid and enforceable right to use under a Company Contract, all property and assets (whether tangible or intangible) used or held for use by the Company or any Subsidiary of the Company in connection with their business, including all such assets reflected in the Reference Balance Sheet or acquired since the Reference Balance Sheet Date, free and clear of all Encumbrances other than (i) Permitted Encumbrances, and (ii) Encumbrances set forth on Section 3.9 of the Company Disclosure Schedule.

          (b) Section 3.9 of the Company Disclosure Schedule sets forth all items of machinery, equipment, furniture, and other tangible personal property (other than inventory) with an initial, nondepreciated book value of at least $50,000. All tangible personal property (including all books and records) used by the Company and its Subsidiaries in the operation of their business is in the possession of the Company or its Subsidiaries. The Company and its Subsidiaries are not in possession of any inventory not owned by the Company or its Subsidiaries, including goods already sold, excluding any item that has a book value of less than $50,000.

      Section 3.10 Tax Matters.

          (a) The Company and each Subsidiary of the Company have timely filed all Tax Returns required to have been filed, other than any such Tax Returns in respect of which the Company or any Subsidiary of the Company is currently the beneficiary of any extension of time within which to file any such Tax Returns as disclosed on Section 3.10 of the Company Disclosure Schedule. All such Tax Returns were correct and complete in all material respects.

          (b) The Company has timely paid all Taxes due to any Governmental Authority. All Taxes that the Company is or was required by applicable Legal Requirements to withhold or collect have been withheld or collected, and, to the extent required, have been properly paid on a timely basis to the appropriate Governmental Authority. There is an adequate accrual in the Financial Statements in accordance with GAAP for all Taxes of the Company and its Subsidiaries that were not yet due or payable as of the date of such Financial Statements.

          (c) No examination or audit of any Tax Return of the Company or any Subsidiary of the Company by any taxing authority, court or other Governmental Authority is currently in progress or, to the Knowledge of the Company, threatened. No assessment or other Proceeding by any taxing authority, court or other Governmental Authority is pending, or to the Knowledge of the Company, threatened, with respect to the Taxes or Tax Returns of the Company or any Subsidiary of the Company. There is no dispute or claim concerning (i) any liability of the Company or any Subsidiary of the Company for additional Taxes, or (ii) any obligation of the Company or any Subsidiary of the Company to file Tax Returns or pay Taxes in any jurisdiction in which it does not file Tax Returns or pay Taxes, either (x) claimed or raised by any Governmental Authority in any written notice or communication provided to the Company or any Subsidiary, or (y) as to which the Company has Knowledge. Neither the Company nor any Subsidiary of the Company has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency which waiver or extension is in effect as of the Closing Date.

          (d) Except with respect to the Affiliated Group of which the Company is the common parent, neither Company nor any of its Subsidiaries (i) has been a member of an Affiliated Group or (ii) has liability for the Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. Neither the Company nor any Subsidiary of the Company is a party to any Tax allocation agreement, Tax sharing agreement, or Tax indemnity agreement. Except as set forth in Section 3.10 of the Disclosure Schedule, neither the Company nor any Subsidiary of the Company is a “foreign person” for purposes of Section 1445 of the Code.

          (e) None of the assets of the Company or any Subsidiary of the Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code. Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

          (f) Neither the Company nor any Subsidiary of the Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any installment sale or open transaction disposition made on or prior to the Closing Date or prepaid amount received on or prior to the Closing Date. Neither the Company nor any Subsidiary of the Company has (i) agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar Legal Requirement or (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar Legal Requirement with respect to the Company or its Subsidiaries.

          (g) The Company is not an S corporation as defined in Code Section 1361.

          (h) Neither the Company nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported

or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code.

          (i) Neither the Company nor any of its Subsidiaries has participated in, or otherwise made a filing with respect to, any “reportable transaction” within the meaning of Treasury Regulations §1.6011-4(b).

          (j) Section 3.10 sets forth all Tax grants, abatements or incentives granted or made available by any Governmental Authority for the benefit of the Company or its Subsidiaries, and any conditions Known to the Company relating to the continued availability of such Tax grants, abatements or incentives to the Company and its Subsidiaries, or events or circumstances otherwise Known to the Company which could impair the ability of the Surviving Entity and its Subsidiaries to utilize such Tax grants, abatements or incentives following the Closing.

      Section 3.11 Company Contracts .

          (a) Section 3.11 of the Company Disclosure Schedule lists as of the date of this Agreement each of the following Company Contracts, excluding the Real Property Leases (such Company Contracts, together with the Real Property Leases and any other Company Contracts having a value per contract, or involving payments by or to the Company or any Subsidiary of the Company, of at least (x) $50,000 during any twelve-month period, or (y) $100,000 in the aggregate, the “ Material Company Contracts ”):

          (i) any Company Contract entered into outside the ordinary course of business having a value per contract, or involving payments by or to the Company or any Subsidiary of the Company, of at least (x) $50,000 during any twelve-month period, or (y) $100,000 in the aggregate;

          (ii) any contract or agreement entered into outside the ordinary course of business with a Material Customer or Material Supplier involving at least (x) $50,000 during any twelve-month period, or (y) $100,000 in the aggregate;

          (iii) any joint venture, partnership or other similar agreement involving co-investment with a third party to which the Company or any Subsidiary of the Company is a party;

          (iv) any contract or agreement involving the sale of any assets of the Company or any Subsidiary of the Company, or the acquisition of any assets of any Person by the Company or any Subsidiary of the Company in any business combination transaction (whether by merger, sale of stock, sale of assets or otherwise);

          (v) any note, indenture, loan agreement, credit agreement, security agreement, financing agreement, or other evidence of Indebtedness relating to the borrowing of money by the Company or any Subsidiary of the Company, any guarantee made by the Company or any Subsidiary of the Company in favor of any Person guaranteeing obligations of such Person, or any letter of credit issued for the account of the Company or any Subsidiary of the Company (other than any letters of credit or guarantees issued under or pursuant to the Company Credit Facilities in the ordinary course of business);

          (vi) any employment or consulting agreement between the Company or any of its Subsidiaries and any of the employees or consultants of the Company or any of its Subsidiaries that (A) obligates the Company or any of its Subsidiaries to make annual cash payments in an amount exceeding $50,000 or make any cash payments to any Person in the event of a termination of such Person’s employment or consulting arrangement with the Company or any of its Subsidiaries or on account of the transactions contemplated by this Agreement; or (B) contain non-competition provisions for the benefit of the Company or any of its Subsidiaries from an employee or an independent consultant;

          (vii) any contract or agreement with any Governmental Authority entered into outside the ordinary course of business involving at least (x) $50,000 during any twelve-month period, or (y) $100,000 in the aggregate (excluding contracts or agreements covered by clauses (i) or (ii) of this Section 3.11(a) );

          (viii) any collective bargaining agreement or contract with any labor union;

          (ix) any contract or agreement containing covenants that in any way purport to restrict the business activity of the Company or any Subsidiary of the Company or limit the freedom of the Company or any Subsidiary of the Company to engage in any line of business or to compete with any Person;

          (x) any material IP License;

          (xi) any other Company Contract that is otherwise material to the Company and its Subsidiaries, taken as a whole; and

          (xii) each amendment, supplement, and modification in respect of any of the foregoing.

          (b) Except as set forth in Section 3.11 of the Company Disclosure Schedule:

          (i) Each Material Company Contract is valid and binding and in full force and effect.

          (ii) The Company and its Subsidiaries and, to the Knowledge of the Company, each other party to each Material Company Contract is, and since January 1, 2004, has been, in material compliance with all applicable terms and requirements of each Material Company Contract.

          (iii) Since January 1, 2004, neither the Company nor any Subsidiary of the Company has given to, or received from, any other party to any Material Company Contract, any written notice or communication regarding any actual or alleged breach of or default under any Material Company Contract by the Company or any Subsidiary of the Company or any other party to such Material Company Contract.

          (c) True and complete copies of each Company Contract listed in Section 3.11 of the Company Disclosure Schedule have been delivered or made available to Purchaser.

      Section 3.12 Intellectual Property .

          (a) As used herein : (i) “ Intellectual Property ” means all domestic and foreign (A) registered and unregistered trademarks, service marks, trade names, Internet domain names, designs, logos, slogans and other distinctive indicia of origin, together with goodwill, registrations and applications relating to the foregoing (“ Trademarks ”); (B) patents and pending patent applications, invention disclosure statements, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations, and any extensions thereof, any counterparts claiming priority therefrom and like statutory rights (“ Patents ”) and (C) registered and unregistered copyrights (including those in Software), rights of publicity and all registrations and applications to register the same (“ Copyrights ”); and (D) confidential information and technology, including without limitation, know-how, inventions, processes, formulae, algorithms, models and methodologies (“ Trade Secrets ”); (ii) “ IP Licenses ” means all Company Contracts pursuant to which the Company or any Subsidiary of the Company has acquired any rights in or to any Intellectual Property, or licenses and agreements pursuant to which the Company or any Subsidiary of the Company has licensed, sublicensed or transferred the right to use any Intellectual Property, including without limitation, license agreements, settlement agreements and covenants not to sue, excluding any of the foregoing that relates to “off the shelf” computer programs; and (iii) “ Software ” means all computer programs, including without, limitation, any and all software implementations of algorithms, models and methodologies whether in source code or object code form, databases and compilations, including any and all electronic data and electronic collections of data, all documentation, including user manuals and training materials, related to any of the foregoing and the content and information contained on any Web site, except for “off-the-shelf” computer programs.

          (b) Section 3.12 of the Company Disclosure Schedule sets forth, for the Intellectual Property owned by the Company and its Subsidiaries, a complete and accurate list of all domestic and foreign federal, state and/or provincial: (i) Patents issued or pending; (ii) Trademark registrations and applications for registration (including without limitation, Internet domain name registrations) and material unregistered Trademarks; and (iii) all registered Copyrights and material unregistered Copyrights.

          (c) Section 3.12 of the Company Disclosure Schedule lists all (i) material Software that is owned by the Company and its Subsidiaries, (ii) IP Licenses pursuant to which rights in or to Intellectual Property owned by the Company or its Subsidiaries are granted to any Person (“ Out-Licenses ”), and (iii) IP Licenses pursuant to which the Company and its Subsidiaries are granted rights in or to the Intellectual Property of any Person (“ In-Licenses ”), provided that Section 3.12 of the Company Disclosure Schedule shall not include “click-wrap” or “shrink-wrap” agreements or agreements contained in “off-the-shelf” Software or the terms of use or service for any Web site.

          (d) The Company and/or its Subsidiaries: (i) is the sole owner of all right, title and interest in or to all Intellectual Property that it uses in the operation of its businesses as currently conducted, free and clear of all Encumbrances; or (ii) possesses a valid and enforceable In-License to possess, use and exploit Intellectual Property owned by another Person in a manner that allows Company and/or its Subsidiaries to operate its businesses as presently conducted, free and clear of all Encumbrances (collectively, “ Company Intellectual Property ”). The possession and use of the Company Intellectual Property described in the foregoing subpart (i), and, to the Knowledge of the Company, the possession and use of the Company Intellectual Property described in the foregoing

subpart (ii), does not, infringe, misappropriate, violate or otherwise interfere or conflict with the rights of any Person.

          (e) All Trademark registrations and applications for registration, Patents issued or pending and Copyright registrations and applications for registration, owned or paid for by the Company and its Subsidiaries, are valid and subsisting, in full force and effect and have not lapsed, expired or been abandoned or withdrawn, and are not the subject of any opposition filed with the United States Patent and Trademark Office or any other intellectual property registry anywhere in the world. All necessary registration, maintenance and renewal fees in connection with such Intellectual Property have been made and all necessary documents and certificates in connection with such Intellectual Property have been timely filed with the applicable patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of Company and its Subsidiaries maintaining sole ownership of such Intellectual Property and benefiting from all available protections for such Intellectual Property in the applicable jurisdiction. The Company and its Subsidiaries are not barred from seeking patents on material potentially patentable inventions by “on-sale” or similar bars to patentability or by failure to apply for a patent on such inventions within the time required. Section 3.12 of the Company Disclosure Schedule describes in detail all actions (including without limitation the nature of the action, the basis for any refusal, and the status of any response to such action) and payments that must be made in the six (6) month period following the Closing Date in connection with the application, registration, perfection, preservation or maintenance of such Intellectual Property. The Company and its Subsidiaries have complied with all applicable disclosure requirements and have not committed any fraudulent act in the application for registration and maintenance of any Intellectual Property of the Company Intellectual Property.

          (f) Except as set forth in Section 3.12 of the Company Disclosure Schedule:

          (i) no claims, or to the Knowledge of the Company, threat of claims, have been asserted against the Company or any of its Subsidiaries, claiming that the Company Intellectual Property infringes, misappropriates, violates or otherwise interferes or conflicts with the rights of any Person, or challenging the validity, enforceability or ownership of the Company Intellectual Property;

          (ii) the conduct of the businesses of the Company and its Subsidiaries does not infringe, misappropriate, violate or otherwise interfere or conflict with the rights of any Person;

          (iii) to the Knowledge of the Company, no Person is infringing, misappropriating, violating or otherwise interfering or conflicting with any Company Intellectual Property;

          (iv) no settlement agreements, consents, judgments, orders, forbearances to sue or similar obligations exist that limit or restrict the Company’s or its Subsidiaries’ rights in and to any Company Intellectual Property;

          (v) no Out-License contains an exclusive grant of rights in or to Intellectual Property, and no material In-License allows the licensor to terminate such license without cause;

          (vi) the Company and its Subsidiaries have taken commercially reasonable measures to protect the confidentiality of their Trade Secrets, including without limitation, preventing any Person from accessing Trade Secrets without first obtaining a written agreement of non-disclosure and non-use from such Person adequate to maintaining ownership of the Trade Secrets;

          (vii) the consummation of the transactions contemplated hereby will not result in the loss or impairment of the Company’s and its Subsidiaries’ exclusive ownership rights, or right to use, any of the Company Intellectual Property or create an obligation to pay any royalties or other amounts to any Person in excess of the amounts payable prior to the Closing, nor will such consummation require the consent of any Person in respect of any Company Intellectual Property. Each item of Company Intellectual Property will be available for use by the Surviving Entity at and following the Closing; and

          (viii) to the extent that any work, invention, material or other Intellectual Property has been developed or created, in whole or part, by any employee of the Company or its Subsidiaries, or any other Person on behalf of or otherwise during their performance of services for Company or its Subsidiaries, the Company or its Subsidiaries have obtained sole ownership of all intellectual property rights in such work, invention, material or other Intellectual Property.

      Section 3.13 Employee Benefit Plans .

          (a) Section 3.13 of the Company Disclosure Schedule contains a true and complete list of all employment, consulting, executive compensation, bonus, deferred compensation, incentive compensation, stock purchase, stock option or other equity-based, retention, change in control, severance or termination pay, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plans, programs, agreements or arrangements, and each other fringe or other employee benefit plan, program, agreement or arrangement (including any “employee benefit plan”, within the meaning of Section 3(3) of ERISA), sponsored, maintained or contributed to or required to be contributed to by the Company, any Subsidiary of the Company or by any ERISA Affiliate thereof for the benefit of any employee or former employee of the Company or any Subsidiary of the Company, or any beneficiaries thereof, or with respect to which the Company or any Subsidiary of the Company may have any liability or obligation (the “ U.S. Employee Benefit Plans , and collectively with the International Employee Benefit Plans, the “ Employee Benefit Plans ”).

          (b) Section 3.13 of the Company Disclosure Schedule contains a true and complete list of all current Excess International Employee Benefits which the Company or any of its Subsidiaries provides or is obligated by oral or written agreement to provide to any International Employee, or the beneficiaries or dependents of any International Employee and a brief description of any such oral agreement. “ Excess International Employee Benefits ” means any International Employee Benefits that are in excess of the minimums mandated by (i) any collective bargaining agreement set forth in Section 3.17 of the Company Disclosure Schedule or (ii) applicable Legal Requirements, and “ Required International Employee Benefits ” means International Employees Benefits that are mandated by any such collective bargaining agreement or applicable Legal Requirements. “ International Employee ” means any current or former director, officer, employee or manager of any Subsidiary of the Company that is incorporated or established under the laws of a jurisdiction other than the United States or the political subdivisions thereof, including any

individuals who serve or served in any such capacity on a temporary or expatriate basis. “ International Employee Benefits ” means any bonus, incentive, compensation, profit sharing, retirement, pension, insurance, disability, death benefit, medical, dental or vision insurance or expense reimbursement, stock bonus, stock option, stock purchase, stock equivalent bonus, savings, deferred compensation, consulting, severance pay or termination pay, vacation pay, child-care, maternity/paternity, legal services, supplemental or excess benefit, housing assistance, moving expense reimbursement, educational assistance, welfare or other employee benefits or fringe benefits, payable or owing to any International Employee to which any International Employee may be entitled, but excluding those provided under U. S. Employee Benefit Plans. “ International Employee Benefit Plan ” means any plan, program, regime or contract pursuant to which the Company or any of its Subsidiaries provides any International Employee Benefits.

     (c) Each U.S. Employee Benefit Plan is and has been maintained and administered in all material respects in compliance with its terms and with the applicable requirements of ERISA, the Code and any other applicable Legal Requirements. Each International Employee Benefit Plan is and has been maintained and administered in all material respects in compliance with its terms and with all applicable Legal Requirements. The Company and its Subsidiaries have timely paid all contributions, premiums and expenses due and payable to or in respect of each Employee Benefit Plan under the terms thereof and in accordance with applicable Legal Requirements. Neither the Company, any Subsidiary of the Company, nor, to the Knowledge of the Company, any other Person, has engaged in any transaction with respect to any Employee Benefit Plan that would subject the Company, any Subsidiary of the Company or Purchaser to any material Tax or penalty (civil or otherwise) imposed by applicable Legal Requirements (including, in the case of U.S. Employee Benefit Plans, by ERISA or the Code).

     (d) Except as set forth in Section 3.13 of the Company Disclosure Schedule, neither the Company, any Subsidiary of the Company, nor any ERISA Affiliate (i) maintains, sponsors, contributes to, is actually or contingently liable for (directly or indirectly) or (ii) has ever maintained, sponsored, contributed to, or been actually or contingently liable (directly or indirectly) for any Employee Benefit Plan that is or was a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA or a plan that is or was subject to Section 412 of the Code or Title IV of ERISA (collectively, “ Title IV Plan ”).

     (e) The Company, any Subsidiary of the Company, and any ERISA Affiliate have paid all amounts due to the Pension Benefit Guaranty Corporation (the “ PBGC ”) pursuant to Section 4007 of ERISA.

     (f) Neither the Company, any Subsidiary of the Company, nor any ERISA Affiliate has ceased operations at any facility or have withdrawn from any Title IV Plan in a manner that would subject the Company, any Subsidiary of the Company, and any ERISA Affiliate to any liability under Sections 4062(e), 4063, or 4064 of ERISA.

     (g) Neither the Company, any Subsidiary of the Company, nor any ERISA Affiliate has filed a notice of intent to terminate any Employee Benefit Plan or have adopted any amendment to treat an Employee Benefit Plan as terminated. The PBGC has not instituted Proceedings to treat any Title IV Plan as terminated. No event has occurred or circumstances exists that may constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan.

     (h) No amendment has been made, or is reasonably expected to be made, to any Title IV Plan that has required or could require the provision of security under Section 307 of ERISA or Section 401(a)(29) of the Code.

     (i) The actuarial report for each Title IV Plan fairly presents the financial condition and the results of operations of each Title IV Plan in accordance with applicable law.

     (j) Since the last valuation date for each Title IV Plan, no event has occurred or circumstance exists that would increase the amount of benefits under any Title IV Plan or that would cause the excess of plan assets over benefit liabilities (as defined in Section 4001 of ERISA) to decrease, or the amount by which benefit liabilities exceed assets to increase.

     (k) No reportable event (as defined in Section 4043 of ERISA and in regulations issued thereunder) has occurred.

     (l) Neither the Company, any Subsidiary of the Company, nor any ERISA Affiliate, nor to the Knowledge of the Company, any other Person, has any liability to the PBGC under Title IV of ERISA.

     (m) Except as set forth in Section 3.13 of the Company Disclosure Schedule, none of the U.S. Employee Benefit Plans that are “welfare benefit plans,” within the meaning of Section 3(1) of ERISA, provide for continuing benefits or coverage after termination or retirement from employment, except for COBRA rights under a “group health plan” as defined in Section 4980B(g) of the Code and Section 607 of ERISA.

     (n) Each U.S. Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a determination letter from the Internal Revenue Service or is the subject of an opinion letter upon which the Company or its Subsidiaries may rely that it is so qualified and there are no facts or circumstances that would be reasonably likely to adversely affect the qualified status of any such U.S. Employee Benefit Plan.

     (o) Neither the Company, any of its Subsidiaries, any ERISA Affiliate, nor, to the Knowledge of the Company, any other Person, has engaged in a non-exempt prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any U.S. Employee Benefit Plan.

     (p) Except as set forth in Section 3.13 of the Company Disclosure Schedule, the consummation of the transactions contemplated hereby will not (i) result in an increase in or accelerate the vest