AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

among

THE STRIDE RITE CORPORATION,

PAYLESS SHOESOURCE, INC.

and

SAN JOSE ACQUISITION CORP.

Dated as of May 22, 2007

TABLE OF CONTENTS

 

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter called this “ Agreement ”), dated as of May 22, 2007, among The Stride Rite Corporation, a Massachusetts corporation (the “ Company ”), Payless ShoeSource, Inc., a Delaware corporation (“ Parent ”), and San Jose Acquisition Corp., a Massachusetts corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ,” the Company and Merger Sub sometimes being hereinafter collectively referred to as the “ Constituent Corporations ”).

RECITALS

WHEREAS, the respective boards of directors of each of Parent, Merger Sub and the Company have approved or adopted the merger of Merger Sub with and into the Company (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement and have declared advisable this Agreement; and

WHEREAS, the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE—I

DEFINITIONS AND TERMS

1.1. Certain Definitions.

As used in this Agreement, the following terms have the meanings set forth below:

“1998 Plan ” has the meaning set forth in Section 6.1.2(a).

“ 1998-D Plan ” has the meaning set forth in Section 6.1.2(a).

“ 2001 Plan ” has the meaning set forth in Section 6.1.2(a).

“ Acquisition Proposal ” means (i) any proposal or offer with respect to a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction involving the Company or any of its Significant Subsidiaries and (ii) any proposal or offer to acquire in any manner, directly or indirectly, 15% or more of the total voting power or of any class of equity securities of the Company or those of any of its Subsidiaries, or 15% or more of the consolidated total assets (including, without limitation, equity securities of its Subsidiaries) of the Company, in each case other than the transactions contemplated by this Agreement.

“ affiliate ” shall have the meaning assigned to such term in Rule 12b-2 under the Exchange Act.

“ Agreement ” has the meaning set forth in the Preamble.

“ Alternative Acquisition Agreement ” has the meaning set forth in Section 7.2(d)(iii).

“ Applicable Date ” means December 1, 2004.

“ Bank of America Credit Facility ” shall mean the financing arrangement with the Bank of America pursuant to the (i) Credit Agreement, dated September 16, 2005, among The Stride Rite Corporation, Stride Rite

Children’s Group, Inc., Bank of America, N.A., as Administrative Agent and Swing Line Lender, the other lenders from time to time party thereto, The Bank of New York and Sun Trust Bank, as Co-Syndications Agents, and Citizens Bank of Massachusetts, as Documentation Agent and Banc of America Securities, LLC as Sole Lead Arranger and Sole Book Manager, (ii) Guaranty Agreement, dated September 16, 2005, by and among The Stride Rite Corporation, Stride Rite Children’s’ Group, Inc., the other borrowers listed therein, the lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, and (iii) the letters of credit in the ordinary course of business between the Company and The Bank of New York and Bank of America, N.A.

“ Bankruptcy and Equity Exception ” means bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

“ beneficial ownership ” (and its correlative terms) shall have the meaning assigned to such term in Rule 13d-3 under the Exchange Act.

“ Benefit Plans ” has the meaning set forth in Section 6.1.9(a).

“ Board Approval ” has the meaning set forth in Section 6.1.3(b).

“ Board Determination ” has the meaning set forth in Section 7.2(c).

“ business day ” shall have the meaning assigned to such term in Rule 14d-1(g)(3) under the Exchange Act.

“ By Laws ” has the meaning set forth in Section 3.2.

“ Certificate ” has the meaning set forth in Section 5.1(a).

“ Change of Recommendation ” has the meaning set forth in Section 7.2(e).

“ Charter ” has the meaning set forth in Section 3.1.

“ Class 1 Company Representations and Warranties ” has the meaning set forth in Section 8.2(a).

“ Class 2 Company Representations and Warranties ” has the meaning set forth in Section 8.2(a).

“ Closing ” has the meaning set forth in Section 2.2.

“ Closing Date ” has the meaning set forth in Section 2.2.

“ Code ” has the meaning set forth in Section 6.1.9(b).

“ Common Stock ” means the common stock, par value $0.25 per share, of the Company.

“ Commitment Letters ” has the meaning set forth in Section 6.2.5.

“ Company ” has the meaning set forth in the Preamble.

“ Company Approvals ” has the meaning set forth in Section 6.1.4(a).

“ Company Awards ” has the meaning set forth in Section 5.3(d).

“ Company Board ” means the board of directors of the Company.

“ Company Disclosure Schedule ” has the meaning set forth in Section 6.1.

 

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“ Company Employees ” has the meaning set forth in Section 7.9

“ Company Labor Agreements ” has the meaning set forth in Section 6.1.16.

“ Company Stock Options ” has the meaning set forth in Section 5.3(a)(i).

“ Company Recommendation ” has the meaning set forth in Section 6.1.3(b).

“ Company Reports ” has the meaning set forth in Section 6.1.5(a).

“ Company Requisite Vote ” has the meaning set forth in Section 6.1.3(a).

“ Company Restricted Stock ” has the meaning set forth in Section 5.3(d).

“ Confidential Agreement ” has the meaning set forth in Section 1.1(a) of the Company Disclosure Schedule.

“ Confidentiality Agreement ” has the meaning set forth in Section 10.7.

“ Constituent Corporations ” has the meaning set forth in the Preamble.

“Contrac t” means agreement, lease, license, contract, note, mortgage, indenture, arrangement or other obligation.

“ Costs ” means costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities.

“ Dissenting Shareholders ” has the meaning set forth in Section 5.1.

“ Effect ” has the meaning set forth in the “Material Adverse Effect” definition in Section 1.1.

“ Effective Time ” has the meaning set forth in Section 2.3.

“ Employees ” has the meaning set forth in Section 6.1.9(a).

“ Encumbrance ” means any mortgage, lien, pledge, charge, security interest, easement or other restriction or title matter or encumbrance of any kind in respect of such asset but specifically excludes (i) specified encumbrances described in Section 1.1(b) of the Company Disclosure Schedule; (ii) encumbrances for current Taxes or other governmental charges not yet due and payable; (iii) mechanics’, carriers’, workmen’s, repairmen’s or other like encumbrances arising or incurred in the ordinary course of business and are reflected on or specifically reserved against or otherwise disclosed in the consolidated balance sheets included in the Company Reports; and (iv) other encumbrances that would not, individually or in the aggregate, reasonably be expected to materially impair the continued use, operation, value or marketability of the specific parcel of Owned Real Property to which they relate or the overall conduct of the business of the Company and its Subsidiaries as presently conducted.

“ Environmental Law ” means any federal, state, local or foreign statute, law, regulation, order, decree, permit, authorization or written requirement of any Governmental Entity relating to: (A) the protection of the environment, health and safety, or natural resources, (B) the handling, use, treatment, storage, disposal, release or exposure to any Hazardous Substance or (C) indoor air, employee exposure, wetlands, pollution, contamination or any injury to persons or property relating to any Hazardous Substance.

“ ERISA ” has the meaning set forth in Section 6.1.9(a).

“ ERISA Plan ” has the meaning set forth in Section 6.1.9(b).

 

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“ ERISA Affiliate ” has the meaning set forth in Section 6.1.9(c).

“ ESPP ” has the meaning set forth in Section 5.3(h).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Exchange Fund ” has the meaning set forth in Section 5.2(a).

“ Excluded Shares ” has the meaning set forth in Section 5.1(a).

“ GAAP ” has the meaning set forth in the Section 6.1.5(c).

“ Governmental Entity ” has the meaning set forth in Section 6.1.4(a).

“ Hazardous Substance ” means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum product or by product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, toxic mold or radon; and (C) any other substance which is the subject of regulatory action by any Governmental Entity pursuant to any Environmental Law.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Indemnified Parties ” has the meaning set forth in Section 7.11(a).

“ Insurance Policies ” has the meaning set forth in Section 6.1.18.

“ Intellectual Property ” means all (i) trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, Internet domain names, logos, symbols, trade dress, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same (collectively, “ Marks ”); (ii) inventions and discoveries, whether patentable or not, and all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues; (iii) Trade Secrets; (iv) published and unpublished works of authorship, whether copyrightable or not (including, without limitation, databases and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; and (v) all other intellectual property or proprietary rights.

“ Intellectual Property Contracts ” means all agreements concerning Intellectual Property to which the Company or its Subsidiaries are a party, including without limitation, license agreements, non-assertion agreements, settlement agreements, trademark coexistence agreements and trademark consent agreements.

“ IRS ” has the meaning set forth in Section 6.1.9(b).

“ IT Assets ” means the Company’s and the Subsidiaries’ computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation.

“ Knowledge ” means the actual (and not constructive or imputed) knowledge, after due inquiry, of those individuals set forth on Section 1.1(c) of the Company Disclosure Schedule.

“ Laws ” means any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Entity.

“ Leased Real Property ” has the meaning set forth in Section 6.1.12(b).

 

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“ Licenses ” means permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity.

“ Lien ” means any lien, charge, pledge, security interest, claim or other encumbrance.

“ Mark ” has the meaning set forth in the definition of “ Intellectual Property .”

“ Massachusetts Articles of Merger ” has the meaning set forth in Section 2.3.

“ Material Adverse Effect ” shall mean, with respect to the Company, a change, event or effect (an “ Effect ”) that has a material adverse effect on the business, operations, assets, liabilities, properties, results of operations, or financial condition of the Company and its subsidiaries, taken as a whole, other than (a) any Effect resulting from (i) general changes in the economy or financial markets of the United States or any other region outside of the United States to the extent they do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industries in which the Company and its subsidiaries conduct business, (ii) changes in general economic or business conditions (including the commencement or escalation of a war or material armed hostilities, acts of terrorism, or the occurrence of natural disasters) that generally affect industries in which the Company and its Subsidiaries conduct business to the extent they do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industries in which the Company and its subsidiaries conduct business, (iii) changes in GAAP, (iv) the announcement of this Agreement or pendency or consummation of the Merger, (v) the identity of the Parent, Merger Sub, or any of their Affiliates as the acquiror of the Company, (vi) the termination by any party to the Confidential Agreement of its relationship with the Company or any of its subsidiaries, or (vii) the termination by employees of their employment with the Company or any of its subsidiaries for reasons primarily relating to the announcement or pendency of this Agreement or (viii) threatened or actual reduction, suspension or termination by outsourced suppliers of their relationship with the Company or any of its subsidiaries so long as such reductions, suspensions or termination for all such suppliers collectively would not be reasonably likely to disrupt the procurement of a material portion of the Company and its Subsidiaries’ inventory or other supplies, or (b) any decline in the market price, or change in trading volume, of the capital stock of the Company (it being understood that the cause or causes underlying any such decline, change or failure may be deemed either alone or in combination with other events to constitute a Material Adverse Effect).

“ Material Contracts ” has the meaning set forth in Section 6.1.11(a).

“ MBCA ” has the meaning set forth in Section 2.1.

“ Merger ” has the meaning set forth in the Recitals.

“ Merger Consideration ” has the meaning set forth in Section 5.2(a).

“ Merger Sub ” has the meaning set forth in the Preamble.

“ Multiemployer Plan ” has the meaning set forth in Section 6.1.9(b).

“ NYSE ” has the meaning set forth in Section 6.1.5(b).

“ Non-U.S. Benefit Plans ” has the meaning set forth in Section 6.1.9(a).

“ Order ” has the meaning set forth in Section 8.1(c).

“ Option Consideration ” has the meaning set forth in Section 5.3(b).

“ Owned Real Property ” has the meaning set forth in Section 6.1.12(a).

 

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“ PBGC ” has the meaning set forth in Section 6.1.9(c).

“ Parent ” has the meaning set forth in the Preamble.

“ Parent Approvals ” has the meaning set forth in Section 6.2.3(a).

“ Parent Disclosure Schedule ” has the meaning set forth in Section 6.2.

“ Paying Agent ” has the meaning set forth in Section 5.2(a).

“ Pension Plan ” has the meaning set forth in Section 6.1.9(b).

“ Per Share Merger Consideration ” has the meaning set forth in Section 5.1(a).

“ Person ” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.

“ Preferred Stock ” has the meaning set forth in Section 6.1.2(a).

“ Proxy Statement ” has the meaning set forth in Section 7.3.

“ Real Property ” has the meaning set forth in Section 6.1.12(b).

“ Registered ” means issued by, registered with, renewed by or the subject of a pending application before any Governmental Entity or Internet domain name registrar.

“ Representatives ” means employees, investment bankers, attorneys, accountants and other advisors or representatives.

“ Required Cash Amount ” has the meaning set forth in Section 6.2.5.

“ Rights ” has the meaning set forth in Section 6.1.2(a).

“ Rights Agreement ” has the meaning set forth in Section 6.1.2(a).

“ Sarbanes-Oxley Act ” means the Sarbanes-Oxley Act of 2002.

“ Scheduled Intellectual Property ” has the meaning set forth in Section 6.1.17(a).

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Securities Laws ” means the applicable federal securities laws and the rules and regulations of the SEC thereunder.

“ Shareholders ” means the holders of the Shares.

“ Shareholders Meeting ” has the meaning set forth in Section 7.4.

“ Shares ” has the meaning set forth in Section 5.1(a).

“ Significant Subsidiary ” is as defined in Rule 1.02(w) of Regulation S-X promulgated pursuant to the Exchange Act.

 

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“ Stock Plans ” has the meaning set forth in Section 5.3(a)(i).

“ Subsidiary ” means any corporation, partnership, joint venture or other legal entity of which the Company or such other Person, as the case may be with respect to when such term is used (either alone or through or together with any other Subsidiary hereof), owns, directly or indirectly, stock or other equity interests the holders of which are generally entitled to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, joint venture or other legal entity.

“ Superior Proposal ” means an unsolicited bona fide Acquisition Proposal involving substantially all of the assets (on a consolidated basis) or more than 66-2/3% of the total voting power of the equity securities of the Company that the Company Board has determined in its good faith judgment, after taking into account all legal, financial and regulatory aspects of the proposal (including the likelihood of consummation) and the Person making the proposal, would result in a transaction more favorable to the Company’s shareholders from a financial point of view than the transaction contemplated by this Agreement.

“ Superior Proposal Notice ” has the meaning set forth in Section 7.2(c).

“ Surviving Corporation ” has the meaning set forth in Section 2.1.

“ Takeover Statute ” has the meaning set forth in Section 6.1.13.

“ Tax ” (including, with correlative meaning, the term “Taxes”) includes all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions.

“ Tax Return ” includes all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.

“ Termination Date ” has the meaning set forth in Section 9.1(b).

“ Termination Fee ” has the meaning set forth in Section 9.2(b).

“ Trade Secrets ” means rights under applicable trade secret Laws as are applicable to confidential information, trade secrets and know-how, including processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists.

“ Transactions ” means the Merger and the other transactions contemplated hereby.

“ U.S. Benefit Plans ” has the meaning set forth in Section 6.1.9(b).

1.2. Other Interpretive Provisions.

(a) The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(b) the terms defined in the singular have a comparable meaning when used in the plural, and vice versa;

(c) the terms “Dollars” and “$” mean United States Dollars;

(d) references herein to a specific Section, Subsection, Recital, Schedule or Exhibit shall refer, respectively, to Sections, Subsections, Recitals, Schedules or Exhibits of this Agreement;

(e) wherever the word “include,” “includes,” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation”;

 

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(f) references herein to any gender include each other gender;

(g) references herein to any Person include such Person’s heirs, executors, personal representatives, administrators, successors and assigns; provided, however, that nothing contained in this clause (g) is intended to authorize any assignment or transfer not otherwise permitted by this Agreement;

(h) references herein to a Person in a particular capacity or capacities exclude such Person in any other capacity;

(i) references herein to any contract or agreement (including this Agreement) mean such contract or agreement as amended, supplemented or modified from time to time in accordance with the terms thereof;

(j) with respect to the determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”;

(k) references herein to any Law or any license mean such Law or license as amended, modified, codified, reenacted, supplemented or superseded in whole or in part, and in effect from time to time;

(l) references herein to any Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise; and

(m) references herein to sections of the Code shall be construed to also refer to any successor sections.

ARTICLE—II

The Merger; Closing; Effective Time

2.1. The Merger.

Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 2.3), Merger Sub shall be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease. The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “ Surviving Corporation ”), and the separate corporate existence of the Company, with all its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger. The Merger shall have the effects specified in the Massachusetts Business Corporation Act (the “ MBCA ”).

2.2. Closing.

Unless otherwise mutually agreed in writing between the Company and Parent, the closing for the Merger (the “ Closing ”) shall take place at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York, at 9:00 A.M. on the first business day (the “ Closing Date ”) following the day on which the last to be satisfied or waived of the conditions set forth in ARTICLE VIII shall be satisfied or waived in accordance with this Agreement (other than conditions contemplated hereby to be satisfied at the Closing, it being understood and agreed that the Closing will be subject to the satisfaction or waiver of such conditions).

2.3. Effective Time.

As soon as practicable following the Closing, the Company and Parent shall cause Articles of Merger (the “ Massachusetts Articles of Merger ”) to be executed, acknowledged and delivered to the Office of the Secretary of State of the Commonwealth of Massachusetts for filing as provided in Section 11.06 of the MBCA. The Merger shall become effective at the time when the Massachusetts Articles of Merger have been received for filing by the Secretary of State of the Commonwealth of Massachusetts or at such later time as may be agreed by the parties in writing and specified in the Massachusetts Articles of Merger (the “ Effective Time ”).

 

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ARTICLE—III

Articles of Organization and By Laws of the Surviving Corporation

3.1. The Articles of Organization.

At the Effective Time, the articles of organization of the Company, as in effect immediately prior to the Effective Time, shall be amended and restated to read in their entirety as the articles of organization of Merger Sub as in effect immediately prior to the Effective Time read, and as so amended and restated, shall be the articles of organization of the Surviving Corporation (the “ Charter ”) until thereafter amended in accordance with the provisions thereof and as provided by applicable Law.

3.2. The By Laws.

At the Effective Time, the by laws of the Company, as in effect immediately prior to the Effective Time, shall be amended and restated to read in their entirety as the by laws of Merger Sub in effect immediately prior to the Effective Time read, and as amended and restated, shall be the by laws of the Surviving Corporation (the “ By Laws ”), until thereafter amended as provided therein or by applicable Law.

ARTICLE—IV

Directors and Officers of the Surviving Corporation

4.1. Directors.

The board of directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and the By Laws.

4.2. Officers.

The officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and the By Laws.

ARTICLE—V

Effect of the Merger on Capital Stock; Exchange of Certificates

5.1. Effect on Capital Stock.

At the Effective Time, as a result of the Merger and without any action on the part of the holder of any capital stock of the Company or Merger Sub:

(a) Merger Consideration . Each share of the Common Stock (a “ Share ” or, collectively, the “ Shares ”) issued and outstanding immediately prior to the Effective Time other than (i) Shares owned by Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent and Shares owned by the Company or any direct or indirect wholly owned subsidiary of the Company, and in each case not held on behalf of third parties, and (ii) Shares that are owned by shareholders (“ Dissenting Shareholders ”) who are entitled to demand and have made a demand for appraisal and who have otherwise perfected appraisal rights in accordance with the MBCA, not voted in favor of the Merger and have not withdrawn a demand for appraisal rights pursuant to Part 13 of the MBCA, if applicable (each, an “ Excluded Share ,” and

 

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collectively, “ Excluded Shares ”) shall be converted into the right to receive $20.50 per Share, without interest (the “ Per Share Merger Consideration ”). At the Effective Time, all of the Shares shall cease to be outstanding, shall be cancelled and shall cease to exist, and each certificate (a “ Certificate ”) formerly representing any of the Shares (other than Excluded Shares) shall thereafter represent only the right to receive the Per Share Merger Consideration, without interest.

(b) Cancellation of Excluded Shares . Each Excluded Share shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled without payment of any consideration therefor and shall cease to exist, subject to any rights the holder thereof may have under Section 5.2(f).

(c) Merger Sub . At the Effective Time, each share of common stock, par value $0.25 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock, par value $0.25 per share, of the Surviving Corporation.

5.2. Exchange of Certificates.

(a) Paying Agent . Prior to the time of the mailing of the Proxy Statement, Parent shall (i) designate, or cause to be designated, a bank or trust company that is reasonably acceptable to the Company (the “ Paying Agent ”), and (ii) enter into a paying agent agreement, in form and substance reasonably acceptable to the Company, with such Paying Agent to act as agent for the payment or exchange in accordance with this Article V of the Per Share Merger Consideration to the Shareholders. On or before the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent funds in an amount sufficient in the aggregate to make the payments contemplated by Section 5.1(a) (the “ Merger Consideration ”) of this Agreement, in accordance with the procedures set forth in this Agreement (such funds, the “ Exchange Fund ”). In the event the Exchange Fund shall be insufficient to make all such payments, Parent shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount that is equal to the deficiency in the amount of funds required to make such payments. 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 other purpose. Any amounts in excess of the Merger Consideration shall be promptly returned to Parent.

(b) Exchange Procedures . Promptly after the Effective Time (and in any event within three business days), the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of Shares (other than holders of Excluded Shares) (i) a letter of transmittal in customary form specifying that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof as provided in Section 5.2(e)) to the Paying Agent, such letter of transmittal to be in such form and have such other provisions as Parent and the Company may reasonably agree, and (ii) instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu thereof as provided in Section 5.2(e)) in exchange for the Per Share Merger Consideration. Upon surrender of a Certificate (or affidavit of loss in lieu thereof as provided in Section 5.2(e)) to the Paying Agent in accordance with the terms of such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor a cash amount in immediately available funds (after giving effect to any required tax withholdings as provided in Section 5.2(g)) equal to (x) the number of Shares represented by such Certificate (or affidavit of loss in lieu thereof as provided in Section 5.2(e)) multiplied by (y) the Per Share Merger Consideration, and the Certificate so surrendered shall forthwith be cancelled. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, a check for any cash to be exchanged upon due surrender of the Certificate may be issued to such transferee if the Certificate formerly representing such Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

(c) Transfers . From and after the Effective Time, there shall be no transfers on the stock transfer books of the Company of the Shares that were outstanding immediately prior to the Effective Time. If, after the

 

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Effective Time, any Certificate is presented to the Surviving Corporation, Parent or the Paying Agent for transfer, it shall be cancelled and exchanged for the cash amount in immediately available funds to which the holder thereof is entitled pursuant to this ARTICLE V.

(d) Termination of Exchange Fund . Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains unclaimed by the Shareholders of the Company for 180 days after the Effective Time shall be delivered to the Surviving Corporation. Any holder of Shares (other than Excluded Shares) who has not theretofore complied with this ARTICLE V shall thereafter look only to the Surviving Corporation for payment of the Per Share Merger Consideration (after giving effect to any required tax withholdings as provided in Section 5.2(g)) upon due surrender of its Certificates (or affidavits of loss in lieu thereof), without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the Paying Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws.

(e) Lost, Stolen or Destroyed Certificates . In the event 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 Parent, the posting by such Person of a bond in customary amount and upon such terms as may be required by Parent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Paying Agent will issue a check in the amount (after giving effect to any required tax withholdings) equal to the number of Shares represented by such lost, stolen or destroyed Certificate multiplied by the Per Share Merger Consideration.

(f) Appraisal Rights . No holder of Dissenting Shares who has perfected a demand for appraisal rights pursuant to the MBCA shall be entitled to receive the Per Share Merger Consideration with respect to the Shares owned by such Person unless and until such Person shall have effectively withdrawn or lost such Person’s right to appraisal under the MBCA. Each Dissenting Shareholder shall be entitled to receive only the payment provided by Part 13 of the MBCA with respect to Shares owned by such Dissenting Shareholder. The Company shall give Parent (i) prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law that are received by the Company relating to shareholders’ rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demand for appraisal under the MBCA. The Company shall not, except with the prior written consent of Parent or pursuant to a valid court order, voluntarily make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal of any such demands.

(g) Withholding Rights . Each of Parent and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, or any other applicable state, local or foreign Tax Law. To the extent that amounts are so withheld by the Surviving Corporation or Parent, as the case may be, such withheld amounts (i) shall be remitted by Parent or the Surviving Corporation, as applicable, to the applicable Governmental Entity, and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of Shares in respect of which such deduction and withholding was made by the Surviving Corporation or Parent, as the case may be.

5.3. Treatment of Stock Plans.

(a) Company Action . At or prior to the Effective Time, the Company, the Company Board and the compensation committee of the Company Board, as applicable, shall adopt any resolutions and take any actions which are necessary:

(i) to cause any unexercisable options to purchase Shares (“ Company Stock Options ”) granted under any stock option plans or other equity-related plans of the Company (the “ Stock Plans ”) to be accelerated and become exercisable in full effective immediately prior to the Effective Time;

 

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(ii) to effectuate the termination upon the Effective Time of all Company Stock Options outstanding at such time (without regard to the exercise price of such Company Stock Options); and

(iii) to cause, pursuant to the Stock Plans, each outstanding Company Stock Option to represent upon the Effective Time solely the right to receive, in accordance with this Section 5.3, a lump sum cash payment in the amount of the Option Consideration (as defined below), if any, with respect to such Company Stock Option and to no longer represent the right to purchase Company Common Stock or any other equity security of the Company, Parent, Merger Sub, the Surviving Corporation or any other person or any other consideration.

(b) Option Consideration . Each holder of a Company Stock Option shall receive from Parent or the Surviving Corporation, in respect and in consideration of each Company Stock Option so cancelled, as soon as reasonably practicable following the Effective Time (but in any event not later than 10 (ten) business days following the Effective Time; provided that the Company provides to Parent at the Closing an accurate and updated list of the Company Stock Options outstanding as of the Closing), an amount equal to the product of (i) the excess, if any, of (A) the Per Share Merger Consideration over (B) the exercise price per Share subject to such Company Stock Option, multiplied by (ii) the total number of Shares subject to such Company Stock Option (whether or not then vested or exercisable), without any interest thereon (the “ Option Consideration ”), which cash payment shall be treated as compensation and shall be net of any applicable federal or state withholding tax. In the event that the exercise price of any Company Stock Option is equal to or greater than the Per Share Merger Consideration, the Option Consideration for such Company Stock Option shall be zero and such Company Stock Option shall be cancelled and have no further force or effect.

(c) Instructions . As soon as practicable following the execution of this Agreement, the Company shall mail to each person who is a holder of Company Stock Options a letter describing the treatment of and payment for such Company Stock Options pursuant to this Section 5.3 and providing instructions for use in obtaining payment for such Company Stock Options. Parent shall at all times from and after the Effective Time maintain sufficient funds to satisfy its obligations to holders of Company Stock Options pursuant to this Section 5.3.

(d) Restricted Stock . At the Effective Time, each share of Company Common Stock that is subject to vesting and restrictions on transfer (“ Company Restricted Stock ”) and that is outstanding immediately prior to the Effective Time shall become at the Effective Time fully vested and free of restrictions on transfer and the holder thereof shall be entitled to receive the Per Share Merger Consideration subject to the terms and conditions of Article V hereof.

(e) Company Awards . Except as set forth on Section 5.3(e) of the Company Disclosure Schedule, at the Effective Time, each right of any kind, contingent or accrued, to acquire or receive Shares or benefits measured by the value of Shares, and each award of any kind consisting of Shares that may be held, awarded, outstanding, payable or reserved for issuance under the Stock Plans and any other Benefit Plans, other than Company Options (the “ Company Awards ”), shall be cancelled and no longer represent the right to acquire any Shares or other equity security of the Company, Parent, Merger Sub, the Surviving Corporation or any other person or any other consideration.

(f) Registration . If registration of any interests in the Stock Plans or other Benefit Plans is required under the Securities Act, Parent shall file with the SEC on the Effective Time a registration statement on Form S 8 with respect to such interests, and shall use its reasonable best efforts to maintain the effectiveness of such registration statement for so long as the relevant Stock Plans or other Benefit Plans, as applicable, remain in effect and such registration of interests therein continues to be required. As soon as practicable after the registration of such interests, as applicable, Parent shall deliver to the holders of Company Options and Company Awards appropriate notices setting forth such holders’ rights pursuant to the respective Stock Plans and agreements evidencing the grants of such Company Options and Company Awards, and stating that such Company Options and Company Awards and agreements have been assumed by Parent and shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 5.3 after giving effect to the Merger and the terms of the Stock Plans).

 

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(g) Adjustments to Prevent Dilution . In the event that the Company changes the number of Shares or securities convertible or exchangeable into or exercisable for Shares issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, issuer tender or exchange offer, or other similar transaction, the Per Share Merger Consideration shall be equitably adjusted.

(h) Employee Stock Purchase Plan . The Company shall amend the Company’s Amended and Restated Employee Stock Purchase Plan (the “ ESPP ”) to suspend any payroll deductions and the purchase of additional Shares immediately after the next regularly scheduled date on which Shares are purchased under the Company’s ESPP. The Company shall terminate the ESPP immediately prior to the Effective Time.

ARTICLE—VI

Representations and Warranties

6.1. Representations and Warranties of the Company.

The Company represents and warrants to Parent that the statements contained in this Section 6.1 are true and correct, except as set forth in the Company Reports (as defined in Section 6.1.5(a)) filed with the SEC on or prior to the date hereof (excluding, in each case, any disclosures set forth in any risk factor section and in any section relating to forward-looking statements to the extent they are cautionary, predictive or forward-looking in nature), or in the corresponding sections or subsections of the disclosure schedule (or any other section or subsection of the disclosure schedule, so long as its relevance to such other section or subsection is readily apparent on the face of the information so disclosed) delivered by the Company to Parent, a copy of which is attached hereto as Exhibit I (the “ Company Disclosure Schedule ”).

6.1.1 Organization, Good Standing and Qualification . Each of the Company and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has made available to Parent complete and correct copies of the Company’s and its Subsidiaries’ articles of organization and by laws or comparable governing documents, each as amended to the date hereof, and each as so delivered is in full force and effect. Section 6.1.1 of the Company Disclosure Schedule contains a correct and complete list of each jurisdiction where the Company and its Subsidiaries are organized and qualified to do business.

6.1.2 Capital Structure .

(a) The authorized capital stock of the Company consists of 135,000,000 Shares, of which 36,729,865 Shares were outstanding as of the May 21, 2007, and 1,000,000 shares of preferred stock, par value $1.00 per share (the “ Preferred Stock ”), of which no shares were outstanding as of the closing of business on the date hereof. Between May 21, 2007 and the execution of this Agreement, no Shares have been issued except pursuant to the exercise of Company Stock Options in accordance with the terms thereof. All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. Other than 5,766,126 Shares (reduced by any Shares issued pursuant to exercise of Company Stock Options in accordance with the terms thereof since May 21, 2007) reserved for issuance under the Company’s ESPP, the Company’s 1998 Long-Term Growth Incentive Plan (the “ 1998 Plan ”), the Company’s 1998 Non-Employee Director Stock Ownership Plan (the “ 1998-D Plan ”) and the Company’s 2001 Stock Option and Incentive Plan (the “ 2001 Plan ”), the Company has no Shares reserved for issuance. As of May 21, 2007, the Company had 5,766,126 Shares reserved for

 

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issuance under the ESPP, the 1998 Plan, the 1998-D Plan and the 2001 Plan. Section 6.1.2 of the Company Disclosure Schedule contains a correct and complete list of options, performance share awards subject to vesting and restricted stock under the Stock Plans, including the holder, date of grant, term, number of Shares and, where applicable, exercise price and vesting schedule, including whether the vesting will be accelerated by the execution of this Agreement or consummation of the Merger or by termination of employment or change of position following consummation of the Merger. Each of the outstanding shares of capital stock or other securities of each of the Company’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by the Company or by a direct or indirect wholly-owned Subsidiary of the Company, free and clear of any Lien except, where applicable, for director qualifying shares as required by applicable law in any foreign jurisdiction. Except as set forth above and except for the rights (the “ Rights ”) that have been issued pursuant to the Shareholder Rights Agreement, dated as of March 13, 2007, between the Company and Computershare Trust Company, N.A., as rights agent (the “ Rights Agreement ”), there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Upon any issuance of any Shares in accordance with the terms of the Stock Plans, such Shares will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any Liens. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the Shareholders of the Company on any matter.

(b) Section 6.1.2(b) of the Company Disclosure Schedule sets forth (i) each of the Company’s Subsidiaries and the ownership interest of the Company in each such Subsidiary, as well as the ownership interest of any other Person or Persons in each such Subsidiary and (ii) the Company’s or its Subsidiaries’ capital stock, equity interest or other direct or indirect ownership interest in any other Person other than securities in a publicly traded company held for investment by the Company or any of its Subsidiaries and consisting of less than 1% of the outstanding capital stock of such company. The Company does not own, directly or indirectly, any voting interest in any Person that requires an additional filing by Parent under the HSR Act.

(c) Each Company Option (i) was granted in compliance with all applicable Laws and all of the terms and conditions of the Company Stock Plan pursuant to which it was issued, (ii) that is currently outstanding and vested has an exercise price per share of Common Stock equal to or greater than the fair market value of a share of Common Stock on the date of such grant, (iii) that is currently outstanding and vested has a grant date identical to the date on which the Company Board or compensation committee actually awarded such Company Option, and (iv) qualifies for the tax and accounting treatment afforded to such Company Option in the Company’s Tax Returns and the Company Reports, respectively; except, in the case of clause (i), (ii) or (iii) above, for any failure to have such terms that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

6.1.3 Corporate Authority; Approval and Fairness .

(a) The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger, subject only to approval of this Agreement by the holders of two-thirds of the outstanding Shares entitled to vote on such matter at a shareholders’ meeting duly called and held for such purpose (the “ Company Requisite Vote ”). This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

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(b) The Company Board has adopted resolutions (i) approving, adopting and declaring advisable this Agreement and the Transactions and determining that the Merger and the other Transactions are fair to and in the best interests of the Company and the Shareholders in accordance with the provisions of the MBCA (collectively, the “ Board Approval ”) and (ii) recommending that the Shareholders adopt and approve this Agreement (the “ Company Recommendation ”). The Company Board has taken all action necessary to cause the Company not to be subject to any state takeover Law or similar Law that might otherwise apply to the Transactions.

(c) The Company Board has received the written opinion of its financial advisor, Goldman Sachs & Co., to the effect that the Per Share Merger Consideration to be received by the holders of the shares of Common Stock is fair from a financial point of view to such holders. It is agreed and understood that such opinion is for the benefit of the Company Board and may not be relied on by Parent or Merger Sub.

6.1.4 Governmental Filings; No Violations; Certain Contracts .

(a) Other than the filings and/or notices pursuant to Section 2.3 and under the HSR Act (the “ Company Approvals ”), no notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity (each a “ Governmental Entity ”), in connection with the execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the other Transactions, or in connection with the continuing operation of the business of the Company and its Subsidiaries following the Effective Time, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent or materially delay the consummation of the Transactions.

(b) The execution, delivery and performance of this Agreement by the Company do not, and the consummation of the Transactions will not, (i) constitute or result in a breach or violation of, or a default under, the articles of organization, by laws or the comparable governing instruments of the Company and any of its Subsidiaries, (ii) constitute or result in, with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) or a default under, the creation or acceleration of any obligations or the creation of a Lien on any of the assets of the Company or any of its Subsidiaries pursuant to any Contract binding upon the Company or any of its Subsidiaries or, assuming (solely with respect to performance of this Agreement and consummation of the Merger and the other Transactions) compliance with the matters referred to in Section 6.1.4(a), under any Law to which the Company or any of its Subsidiaries is subject or (iii) constitute or result in any change (adverse to the interests of the Company) in the rights or obligations of any party under any Contract binding on the Company or any of its Subsidiaries, except, in the case of clause (ii) or (iii) above, for any such breach, violation, termination, default, creation, acceleration or change that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect or prevent or materially delay the consummation to the Transactions. Section 6.1.4(b) of the Company Disclosure Schedule sets forth a correct and complete list of Material Contracts (as defined in Section 6.1.11(a)) pursuant to which consents or waivers are required prior to consummation of the Transactions (whether or not subject to the exception set forth with respect to clauses (ii) and (iii) above).

(c) Neither the Company nor any of its Subsidiaries is a party to or bound by any non-competition Contracts or any other Contract that purports to limit either the type of business in which the Company or its Subsidiaries (or, after giving effect to the Merger, Parent or its Subsidiaries) may engage or the manner or locations in which any of the Company or its Subsidiaries (or, after giving effect to the Merger, Parent or its Subsidiaries) may engage in any business, except for any limits that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, or prevent or materially delay the consummation to the Transactions.

 

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(d) The Company and its Subsidiaries are not creditors or claimants with respect to any debtors or debtor-in-possession subject to proceedings under chapter 11 of title 11 of the United States Code with respect to claims that, in the aggregate, constitute more than 25% of the gross assets of the Company and its Subsidiaries (excluding cash and cash equivalents).

6.1.5 Company Reports; Financial Statements; Sarbanes-Oxley Act .

(a) The Company has filed or furnished, as applicable, on a timely basis all forms, statements, certifications, reports and documents required to be filed or furnished by it with the SEC under the Exchange Act or the Securities Act since the Applicable Date (the forms, statements, reports and documents filed or furnished since the Applicable Date and those filed or furnished subsequent to the date hereof, including any amendments thereto, the “ Company Reports ”), except where the failure to so file or furnish would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company Reports, at the time of its filing or being furnished complied or, if not yet filed or furnished, will comply in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and any rules and regulations promulgated thereunder applicable to the Company Reports. As of their respective dates (or, if amended prior to the date hereof, as of the date of such amendment), the Company Reports did not, and any Company Reports filed or furnished with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading.

(b) The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the New York Stock Exchange (the “ NYSE ”).

(c) Each of the consolidated balance sheets included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly presents, in all material respects, or, in the case of Company Reports filed after the date hereof, will fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of its date and each of the consolidated statements of income, changes in shareholders’ equity (deficit) and cash flows included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents, or in the case of Company Reports filed after the date hereof, will fairly present the results of operations, retained earnings (loss) and changes in financial position, as the case may be, of such companies for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with U.S. generally accepted accounting principles (“ GAAP ”) consistently applied during the periods involved, except as may be noted therein.

(d) The Company has designed and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of financial reporting, and, to the Company’s Knowledge, such system is effective in providing such assurance. The Company (i) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and, to the Company’s Knowledge, such controls and procedures are effective in ensuring such disclosures and communications, and (ii) has disclosed, based on the most recent evaluation of its chief executive officer and its chief financial officer prior to the date hereof, to the Company’s auditors and the audit committee of the Company Board (and made summaries of such disclosures available to Parent) (A) (i) any significant deficiencies in the design or operation of internal control over financial reporting that would adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (ii) any material weakness in internal control over

 

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financial reporting, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company is in compliance in all material respects with all effective provisions of the Sarbanes-Oxley Act. The Company has made available to Parent any written reports and other material correspondence since the Applicable Date provided by the Company’s external auditors to the audit committee required or contemplated by listing standards of the NYSE, the audit committee’s charter or professional standards of the Public Company Accounting Oversight Board. Since the Applicable Date, to the Company’s Knowledge, no material complaints from any source regarding questionable accounting or auditing matters have been received by the Company. The Company has made available to Parent a summary of all complaints or concerns made since the Applicable Date through the Company’s whistleblower hot-line or equivalent system for receipt of employee concerns regarding possible violations of Law, which relate to financial reporting, internal controls and related matters.

(e) Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or Sections 302 and 906 of the Sarbanes Oxley Act and the rules and regulations of the SEC promulgated thereunder with respect to the Company Reports, and the statements contained in such certifications are true and correct. For purposes of this Section 6.1.5(e), “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act. Neither the Company nor any Company Subsidiary has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers within the meaning of Section 402 of the Sarbanes Oxley-Act.

(f) Neither the Company nor any of the Company Subsidiaries nor, to the Company’s Knowledge, any director, officer, or internal or external auditor of the Company or any of the Company Subsidiaries has received or otherwise had or obtained actual knowledge of any substantive and material complaint, allegation, assertion or claim, whether written or oral, that the Company or any of the Company Subsidiaries has engaged in questionable accounting or auditing practices. No current or former attorney representing the Company or any of the Company Subsidiaries has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the current Company Board or any committee thereof or to any current director or executive officer of the Company.

(g) To the Company’s Knowledge, no employee of the Company or any of the Company’s Subsidiaries has provided information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Laws described in Section 806 of the Sarbanes-Oxley Act by the Company or any of the Company Subsidiaries.

6.1.6 Information Supplied . None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the Proxy Statement will, at the date it is first mailed to the Company’s shareholders or at the time of the Company Shareholders Meeting, 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 Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information derived from Parent’s public SEC filings or supplied by Parent or Merger Sub for inclusion or incorporation by reference therein.

6.1.7 Absence of Certain Changes . Since December 1, 2006, the Company and its Subsidiaries have conducted their respective businesses in the ordinary and usual course of such businesses and there has not been:

(a) any change in the financial condition, properties, assets, liabilities, business or results of their operations or any circumstance, occurrence or development (including any adverse change with respect

 

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to any circumstance, occurrence or development on or prior to December 1, 2006) of which management of the Company has Knowledge which, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect;

(b) other than regular quarterly dividends on Shares of $.07 per Share, any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company or any of its Subsidiaries (except for dividends or other distributions by any direct or indirect wholly owned Subsidiary to the Company or to any wholly owned Subsidiary of the Company), or any repurchase, redemption or other acquisition by the Company or any of its Subsidiaries of any outstanding shares of capital stock or other securities of the Company or any of its Subsidiaries;

(c) any material change in any method of accounting or accounting practice by the Company or any of its Subsidiaries;

(d) (i) any increase in the compensation payable or to become payable to its officers or employees (except for increases in the ordinary course of business and consistent with past practice) or (ii) any establishment, adoption, entry into or amendment of any collective bargaining, bonus, profit sharing, thrift, compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except to the extent required by applicable Laws, including Section 409A of the Code; or

(e) any agreement to do any of the foregoing.

6.1.8 Litigation and Liabilities . Except as disclosed in the Company Reports filed prior to the date of this Agreement, there is no civil, criminal or administrative action, suit, proceeding, claim, arbitration, hearing or investigation pending or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries that, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect. There are no material judgments, orders or decrees outstanding against the Company or any of its Subsidiaries. Except as reflected or reserved against in the Company’s consolidated balance sheets (and the notes thereto), included in the Company Reports filed prior to the date hereof and for obligations or liabilities incurred in the ordinary course of business since December 1, 2006, there are no obligations or liabilities of the Company or any of its Subsidiaries, whether or not accrued, contingent or otherwise, except for those that, individually or in the aggregate, have not had, or are not reasonably likely to have, a Material Adverse Effect or prevent, materially delay or materially impair the consummation of the Transactions.

6.1.9 Employee Benefits .

(a) All benefit and compensation plans, contracts, policies or arrangements covering current or former employees of the Company and its subsidiaries (the “ Employees ”) and current or former directors of the Company, including, but not limited to, “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and deferred compensation, severance, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the “ Benefit Plans ”), other than Benefit Plans maintained outside of the United States primarily for the benefit of Employees working outside of the United States (such plans hereinafter being referred to as “ Non-U.S. Benefit Plans ”), are listed on Section 6.1.9(a) of the Company Disclosure Schedule, and each Benefit Plan which has received a favorable opinion letter from the Internal Revenue Service National Office, including any master or prototype plan, has been separately identified. True and complete copies of all Benefit Plans listed on Section 6.1.9(a) of the Company Disclosure Schedule, including, but not limited to, any trust instruments, insurance contracts and, with respect to any employee stock ownership plan, loan agreements forming a part of any Benefit Plans, and all amendments thereto have been provided or made available to Parent.

(b) All Benefit Plans, other than “multiemployer plans” within the meaning of Section 3(37) of ERISA (each, a “ Multiemployer Plan ”) and Non-U.S. Benefit Plans (collectively, “ U.S. Benefit Plans ”), are in compliance with ERISA, the Internal Revenue Code of 1986, as amended (the “ Code ”) and other applicable Laws in all material respects. Each U.S. Benefit Plan which is subject to ERISA

 

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(an “ ERISA Plan ”) that is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “ Pension Plan ”) intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service (the “ IRS ”), and the Company is not aware of any circumstances that would reasonably be expected to result in the loss of the qualification of such Plan under Section 401(a) of the Code. Any voluntary employees’ beneficiary association within the meaning of Section 501(c)(9) of the Code which provides benefits under a U.S. Benefit Plan has (i) received an opinion letter from the IRS recognizing its exempt status under Section 501(c)(9) of the Code and (ii) filed a timely notice with the IRS pursuant to Section 505(c) of the Code, and the Company is not aware of circumstances that would reasonably be expected to result in the loss of such exempt status under Section 501(c)(9) of the Code. Neither the Company nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that, assuming the taxable period of such transaction expired as of the date hereof, would subject the Company or any Subsidiary to a material tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of E