AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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NATIONAL VISION INC | Vision Holding Corp., | Vision Acquisition Corp.,

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Georgia Date: 7/28/2005
Industry: Retail (Specialty) Law Firm: Weil, Gotshal & Manges LLP; Kilpatrick Stockton LLP Sector: Services

AGREEMENT AND PLAN OF MERGER, Parties: national vision inc , vision holding corp. , vision acquisition corp.

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Execution Copy

AGREEMENT AND PLAN OF MERGER

DATED AS OF JULY 25, 2005,

AMONG

Vision Holding Corp.,

Vision Acquisition Corp.,

AND

National Vision, Inc.

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Execution Copy

TABLE OF CONTENTS

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ARTICLE I THE OFFER AND THE MERGER......................................1

Section 1.01. The Offer.................................................1

Section 1.02. Company Actions...........................................4

Section 1.03. The Merger................................................5

Section 1.04. Closing...................................................5

Section 1.05. Effective Time............................................5

Section 1.06. Effects...................................................5

Section 1.07. Certificate of Incorporation and By-laws..................6

Section 1.08. Directors.................................................6

Section 1.09. Officers..................................................6

ARTICLE II EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT

CORPORATIONS; EXCHANGE OF CERTIFICATES........................6

Section 2.01. Effect on Capital Stock...................................6

Section 2.02. Exchange of Certificates..................................7

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................9

Section 3.01. Organization, Standing and Power..........................9

Section 3.02. Company Subsidiaries; Equity Interests...................10

Section 3.03. Capital Structure........................................10

Section 3.04. Authority; Execution and Delivery; Enforceability........11

Section 3.05. No Conflicts; Consents...................................12

Section 3.06. SEC Documents; Undisclosed Liabilities...................13

Section 3.07. Information Supplied.....................................14

Section 3.08. Absence of Certain Changes or Events.....................14

Section 3.09. Taxes....................................................15

Section 3.10. Absence of Changes in Benefit Plans......................16

Section 3.11. ERISA Compliance; Excess Parachute Payments..............17

Section 3.12. Litigation...............................................18

Section 3.13. Compliance with Applicable Laws..........................18

Section 3.14. Contracts; Debt Instruments..............................19

Section 3.15. Intellectual Property....................................19

Section 3.16. Certain Notes Receivable.................................20

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Section 3.17. Brokers; Schedule of Fees and Expenses...................20

Section 3.18. Opinion of Financial Advisor.............................20

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............21

Section 4.01. Organization, Standing and Power.........................21

Section 4.02. Sub......................................................21

Section 4.03. Authority; Execution and Delivery; Enforceability........21

Section 4.04. No Conflicts; Consents...................................21

Section 4.05. Information Supplied.....................................22

Section 4.06. Brokers..................................................22

Section 4.07. Financial Ability to Perform.............................22

Section 4.08. Litigation...............................................23

ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS....................23

Section 5.01. Conduct of Business......................................23

Section 5.02. No Solicitation..........................................25

Section 5.03. CVG Agreement............................................27

ARTICLE VI ADDITIONAL AGREEMENTS........................................27

Section 6.01. Preparation of Proxy Statement; Stockholders

Meeting..................................................27

Section 6.02. Access to Information; Confidentiality...................28

Section 6.03. Reasonable Efforts; Notification.........................29

Section 6.04. Stock Options............................................30

Section 6.05. Benefit Plans............................................31

Section 6.06. Indemnification..........................................31

Section 6.07. Fees and Expenses........................................32

Section 6.08. Public Announcements.....................................33

Section 6.09. Transfer Taxes...........................................33

Section 6.10. Directors................................................34

Section 6.11. Rights Agreement; Consequences if Rights

Triggered................................................34

Section 6.12. Stockholder Litigation...................................35

Section 6.13. Parent Loan to Company...................................35

Section 6.14. Indenture................................................35

ARTICLE VII CONDITIONS PRECEDENT.........................................35

Section 7.01. Conditions to Each Party's Obligation To Effect

The Merger...............................................35

</TABLE>

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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................36

Section 8.01. Termination..............................................36

Section 8.02. Effect of Termination....................................37

Section 8.03. Amendment................................................38

Section 8.04. Extension; Waiver........................................38

Section 8.05. Procedure for Termination, Amendment, Extension

or Waiver................................................38

ARTICLE IX GENERAL PROVISIONS...........................................39

Section 9.01. Nonsurvival of Representations and Warranties............39

Section 9.02. Notices..................................................39

Section 9.03. Definitions..............................................40

Section 9.04. Interpretation; Disclosure Letters.......................40

Section 9.05. Severability.............................................41

Section 9.06. Counterparts.............................................41

Section 9.07. Entire Agreement; Third-Party Beneficiaries..............41

Section 9.08. Governing Law............................................41

Section 9.09. Assignment...............................................41

Section 9.10. Enforcement..............................................41

Section 9.11. Consents.................................................42

</TABLE>

iii

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Execution Copy

AGREEMENT AND PLAN OF MERGER dated as of July 25, 2005, among Vision

Holding Corp., a Delaware corporation ("Parent"), Vision Acquisition Corp., a

Georgia corporation ("Sub") and a wholly owned subsidiary of Parent, and

National Vision, Inc., a Georgia corporation (the "Company").

WHEREAS the respective Boards of Directors of Parent, Sub and the Company

(in the case of the Company, acting on the recommendation of a special committee

appointed by the Board of Directors of the Company (the "Special Committee"))

have approved the acquisition of the Company by Parent on the terms and subject

to the conditions set forth in this Agreement;

WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub

to make a tender offer (as it may be amended from time to time as permitted

under this Agreement, the "Offer") to purchase all the outstanding shares of

common stock, par value $0.01 per share, of the Company (the "Company Common

Stock"), including the associated Company Rights (as defined in Section 3.03),

at a price per share of Company Common Stock (including the associated Company

Right) of $7.25 (the "Offer Price"), net to the seller in cash, on the terms and

subject to the conditions set forth in this Agreement;

WHEREAS the respective Boards of Directors of Parent, Sub and the Company

(in the case of the Company, acting on the recommendation of the Special

Committee) have approved the merger (the "Merger") of Sub into the Company, or

(at the election of Parent) the Company into Sub, on the terms and subject to

the conditions set forth in this Agreement, whereby each issued share of Company

Common Stock not owned directly by Parent or the Company, other than Appraisal

Shares (as defined in Section 2.01(d)), shall be converted into the right to

receive the highest per share cash consideration paid pursuant to the Offer; and

WHEREAS Parent, Sub and the Company desire to make certain

representations, warranties, covenants and agreements in connection with the

Offer and the Merger and also to prescribe various conditions to the Offer and

the Merger.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

THE OFFER AND THE MERGER

Section 1.01 The Offer.

(a) Commencement and Expiration of the Offer. Subject to the

conditions of this Agreement, as promptly as practicable after the date of this

Agreement (but in no event later than five business days after the public

announcement of this Agreement), Sub shall, and Parent shall cause Sub to,

commence the Offer within the meaning of the applicable rules and regulations of

the Securities and Exchange Commission (the "SEC"). The obligation of Sub to,

and of Parent to cause Sub to, commence the Offer and accept for payment, and

pay for, any shares of Company Common Stock tendered pursuant to the Offer are

subject to the conditions set forth in Exhibit A. The initial expiration date of

the Offer shall be at 12:00 midnight on the 20th business day following the

commencement of the Offer (determined using Rules 14d-1(g)(3) and 14d-2

promulgated under the Securities Exchange Act of 1934, as amended (the

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"Exchange Act")). Sub expressly reserves the right to waive any condition to the

Offer or modify the terms of the Offer, except that, without the consent of the

Company, Sub shall not and Parent shall not permit Sub to (i) reduce the number

of shares of Company Common Stock subject to the Offer, (ii) reduce the price

per share of Company Common Stock to be paid pursuant to the Offer, (iii) modify

in any manner adverse to the holders of Company Common Stock or add to the

conditions set forth in Exhibit A, (iv) except as provided in Section 1.01(b),

extend the Offer, (v) change the form of consideration payable in the Offer or

(vi) waive the Minimum Tender Condition, unless more than 50% of the Shares

outstanding on the expiration date of the Offer shall have been tendered and not

withdrawn.

(b) Sub's Ability to Extend the Offer. Notwithstanding the

provisions of Section 1.01(a), Sub may, without the consent of the Company, (A)

if at the scheduled or any extended expiration date of the Offer (whether

extended pursuant to this clause (A) or otherwise) any of the conditions to

Sub's obligation to purchase shares of Company Common Stock are not satisfied or

waived, extend the Offer for such period as Sub determines; provided that such

extension shall be in increments of not more than ten (10) business days if all

of the conditions set forth in Exhibit A other than the Minimum Tender Condition

have been satisfied or waived at such scheduled or extended expiration date, (B)

extend the Offer for any period required by any rule, regulation, interpretation

or position of the SEC or the staff thereof applicable to the Offer and (C) if

at the scheduled or any extended expiration date of the Offer all of the

conditions set forth in Exhibit A have been satisfied or waived, Sub may extend

the Offer pursuant to an amendment to the Offer providing for a "subsequent

offering period" not to exceed twenty (20) business days to the extent permitted

under, and in compliance with, Rule 14d-11 under the Exchange Act.

(i) In the event that the Minimum Tender Condition has not

been satisfied or waived at the scheduled expiration date of the Offer, at the

request of the Company, Sub shall, and Parent shall cause Sub to, extend the

expiration date of the Offer in such increments as Sub may determine until the

earliest to occur of (w) the satisfaction or waiver of such condition, (x)

Parent reasonably determines, after the date that is 90 days from the date of

commencement of the Offer, that such condition to the Offer is not capable of

being satisfied on or prior to the Outside Date (as defined in Section

8.01(b)(i)), (y) the termination of this Agreement in accordance with its terms

and (z) the Outside Date.

(ii) In the event that a filing with respect to the

transactions contemplated by this Agreement is required under the HSR Act, and

in the event that, following such filing, the waiting period under the HSR Act

applicable to the purchase of shares of the Company Common Stock pursuant to the

Offer shall not have expired or been terminated at the scheduled expiration date

of the Offer, at the request of the Company, Sub shall, and Parent shall cause

Sub to, extend the expiration date of the Offer in such increments as Sub may

determine until the earliest to occur of (a) the expiration or termination of

such waiting period, (b) the termination of this Agreement in accordance with

its terms and (c) the Outside Date.

(iii) In the event that a failure to satisfy the conditions in

subsection (f) of Exhibit A attached hereto shall exist and the cure period

described therein shall not have

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expired at the scheduled expiration date of the Offer, at the request of the

Company, Sub shall, and Parent shall cause Sub to, extend the expiration date of

the Offer in such increments as Sub may determine, but not greater than ten (10)

days, until the earliest to occur of (w) the cure of such failure, (x) the

expiration of such cure period, (y) the termination of this Agreement in

accordance with its terms and (z) the Outside Date.

(iv) In the event a notice contemplated by Section

8.05(b)(iii) is delivered to Parent within three business days of the initial

expiration date of the Offer, then Sub shall extend the Offer for a period of

not less than three business days.

(d) Top Up Option.

(i) The Company hereby grants to Parent and Sub an

irrevocable option (the "Top Up Option") to purchase up to 1,086,673 newly

issued shares of Company Common Stock (the "Top Up Shares") for a consideration

per Top Up Share equal to the Offer Price.

(ii) Such Top Up Option shall be exercisable only in the

event that more than 50% of the shares of Company Common Stock outstanding on

the expiration date of the Offer shall have been tendered and not withdrawn, and

then only to the extent necessary to cause Sub to own 67%, 80%, or 90%, as

applicable, of the shares of Company Common Stock outstanding on the expiration

date of the Offer, after such issuance. Such Top Up Option shall not be

exercisable if the number of shares of Company Common Stock subject thereto

exceeds the number of authorized shares of Company Common Stock available for

issuance.

(iii) In the event Parent and Sub wish to exercise the Top Up

Option, Parent shall cause Sub to provide the Company with one-day prior written

notice specifying the number of shares of Company Common Stock that are or will

be owned by Parent, Sub and their affiliates immediately following consummation

of the Offer and specifying a place and a time for the closing of such purchase.

The Company shall, promptly following receipt of such notice, deliver written

notice to Sub specifying the number of Top Up Shares. At the closing of the

purchase of the Top Up Shares, the portion of the purchase price owing upon

exercise of such Top Up Option which equals the product of (x) the number of

shares of Company Common Stock purchased pursuant to such Top Up Option,

multiplied by (y) the Offer Price, shall be paid to the Company in cash by wire

transfer of immediately available funds or by cashier's check.

(e) Payment Acceptance. On the terms and subject to the conditions

of the Offer and this Agreement, Parent shall cause Sub to accept for payment

and pay for all shares of Company Common Stock validly tendered and not

withdrawn pursuant to the Offer that Sub becomes obligated to purchase pursuant

to the Offer promptly after the expiration of the Offer.

(f) SEC Filings. On the date of commencement of the Offer, Parent

and Sub shall file with the SEC a Tender Offer Statement on Schedule TO with

respect to the Offer, which shall contain an offer to purchase and a related

letter of transmittal and summary advertisement (such Schedule TO and the

documents included therein pursuant to which the Offer will be made, together

with any supplements or amendments thereto, the "Offer Documents"). Each of

Parent, Sub and the Company shall promptly correct any information

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provided by it for use in the Offer Documents if and to the extent that such

information shall have become false or misleading in any material respect, and

each of Parent and Sub shall take all steps necessary to amend or supplement the

Offer Documents and to cause the Offer Documents as so amended or supplemented

to be filed with the SEC and to be disseminated to the Company's stockholders,

in each case as and to the extent required by applicable Federal securities

laws. Parent and Sub shall give the Company and its counsel a reasonable

opportunity to review and comment on the Offer Documents prior to their being

filed with the SEC or disseminated to the stockholders of the Company. Parent

and Sub shall provide the Company and its counsel in writing with any comments

Parent, Sub or their counsel may receive from the SEC or its staff with respect

to the Offer Documents promptly after the receipt of such comments and shall

provide the Company and its counsel with a reasonable opportunity to participate

in the response of Parent or Sub to such comments.

(g) Funding Obligations. Parent shall provide or cause to be

provided to Sub on a timely basis the funds necessary to purchase any shares of

Company Common Stock that Sub becomes obligated to purchase pursuant to the

Offer.

Section 1.02 Company Actions.

(a) Subject to Section 5.02(b), the Company hereby approves of and

consents to the Offer, the Merger and the other transactions contemplated by

this Agreement (collectively, the "Transactions").

(b) On the date the Offer Documents are filed with the SEC, the

Company shall file with the SEC a Solicitation/Recommendation Statement on

Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended and

supplemented from time to time, the "Schedule 14D-9"), describing the

recommendations referred to in Section 3.04(b), or any permitted withdrawal or

modification in accordance with Section 5.02(b), and shall mail the Schedule

14D-9 to the holders of Company Common Stock. Each of the Company, Parent and

Sub shall promptly correct any information provided by it for use in the

Schedule 14D-9 if and to the extent that such information shall have become

false or misleading in any material respect, and the Company shall take all

steps necessary to amend or supplement the Schedule 14D-9 and to cause the

Schedule 14D-9 as so amended or supplemented to be filed with the SEC and

disseminated to the Company's stockholders, in each case as and to the extent

required by applicable Federal securities laws. The Company shall provide Parent

and its counsel in writing with any comments the Company or its counsel may

receive from the SEC or its staff with respect to the Schedule 14D-9 promptly

after the receipt of such comments.

transfer agent to promptly furnish Sub with mailing labels containing the names

and addresses of the record holders of Company Common Stock as of a recent date

and of those persons becoming record holders subsequent to such date, together

with copies of all lists of stockholders, security position listings and

computer files and all other information as Sub may reasonably request in the

Company's possession or control regarding the beneficial owners of Company

Common Stock, and shall furnish to Sub such information and assistance

(including updated lists of stockholders, security position listings and

computer files) as Parent may reasonably request in communicating the Offer to

the Company's stockholders. Subject to the requirements of applicable Law (as

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defined in Section 3.05), and except for such steps as are necessary to

disseminate the Offer Documents and any other documents necessary to consummate

the Transactions, Parent and Sub shall hold in confidence pursuant to the

Confidentiality Agreement (as defined in Section 6.02) the information contained

in any such labels, listings and files, shall use such information only for the

purpose of communicating the Offer and disseminating any other documents

necessary to consummate the Offer, the Merger and the other Transactions and, if

this Agreement shall be terminated, shall, upon request, deliver to the Company

all copies of such information then in their possession.

Section 1.03 The Merger. On the terms and subject to the

satisfaction or waiver of the conditions set forth in this Agreement, and in

accordance with the Georgia Business Corporation Code (the "GBCC"), Sub shall be

merged with and into the Company at the Effective Time (as defined in Section

1.05). At the Effective Time, the separate corporate existence of Sub shall

cease and the Company shall continue as the surviving corporation (the

"Surviving Corporation"). The Surviving Corporation shall possess all the

rights, privileges, immunities, powers and franchises of the Company and Sub,

and the Surviving Corporation shall by operation of law become liable for all of

the debts, liabilities and duties of the Company and Sub. The name of the

Surviving Corporation shall be National Vision, Inc. and the purpose thereof

shall be as set forth in Section 2 of the Certificate of Incorporation of the

Surviving Corporation. Notwithstanding the foregoing, Parent may elect at any

time after the expiration of the Offer and prior to the Merger, instead of

merging Sub into the Company as provided above, to merge the Company with and

into Sub; provided, however, that the Company shall not be deemed to have

breached any of its representations, warranties or covenants set forth in this

Agreement solely by reason of such election. In such event, the parties shall

execute an appropriate amendment to this Agreement to reflect the foregoing. At

the election of Parent, any direct or indirect wholly owned subsidiary of Parent

may be substituted for Sub as a constituent corporation in the Merger. In such

event, the parties shall execute an appropriate amendment to this Agreement in

order to reflect the foregoing.

Section 1.04 Closing. The closing (the "Closing") of the Merger

shall take place at the offices of Weil, Gotshal & Manges, LLP, 100 Federal

Street, Boston, Massachusetts 02110 at 10:00 a.m. on the second business day

following the satisfaction (or, to the extent permitted by Law, waiver by all

parties) of the conditions set forth in Article VII hereof, or at such other

place, time and date as shall be agreed in writing between Parent and the

Company. The date on which the Closing occurs is referred to in this Agreement

as the "Closing Date".

Section 1.05 Effective Time. Prior to the Closing, Parent shall

prepare and give the Company and its counsel the opportunity to review, and on

the Closing Date or as soon as practicable thereafter Parent shall file with the

Secretary of State of the State of Georgia, a certificate of merger or other

appropriate documents (in any such case, the "Certificate of Merger") executed

in accordance with the relevant provisions of the GBCC and shall make all other

filings or recordings required under the GBCC. The Merger shall become effective

at such time as the Certificate of Merger is duly filed with such Secretary of

State, or at such other time as Parent and the Company shall agree and specify

in the Certificate of Merger (the time the Merger becomes effective being the

"Effective Time").

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Section 1.06 Effects. The Merger shall have the effects set forth in

Section 14-2-1106 of the GBCC.

Section 1.07 Certificate of Incorporation and By-laws.

(a) The Certificate of Incorporation of Sub as in effect

immediately prior to the Effective Time shall be the Certificate of

Incorporation of the Surviving Corporation until thereafter changed or amended

as provided therein or by applicable Law.

(b) The By-laws of Sub as in effect immediately prior to the

Effective Time shall be the By-laws of the Surviving Corporation until

thereafter changed or amended as provided therein or by applicable Law.

Section 1.08 Directors. At the Closing, Parent shall designate the

directors of the Surviving Corporation and such directors shall hold office

until the earlier of their resignation or removal or until their respective

successors are duly elected and qualified, as the case may be.

Section 1.09 Officers. At the Closing, Parent shall designate the

officers of the Surviving Corporation and such officers shall hold office until

the earlier of their resignation or removal or until their respective successors

are duly elected or appointed and qualified, as the case may be.

ARTICLE II

EFFECT ON THE CAPITAL STOCK OF THE

CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

Section 2.01 Effect on Capital Stock. At the Effective Time, by

virtue of the Merger and without any action on the part of the holder of any

shares of Company Common Stock or any shares of capital stock of Sub:

(a) Capital Stock of Sub. Each issued and outstanding share of

capital stock of Sub shall be converted into and become a number of fully paid

and non-assessable shares of common stock, par value $0.01 per share, of the

Surviving Corporation ("Surviving Corporation Common Stock") equal to (i) the

number of shares of Company Common Stock outstanding immediately prior to

Effective Time (excluding any shares of Company Common Stock that are owned by

any subsidiary of the Company or Parent other than Sub) divided by (ii) 1,000;

provided, however, that if the aggregate number of shares of Surviving

Corporation Common Stock into which the capital stock of Sub is to be converted

pursuant to this Section 2.01(a) is not a whole number, such number shall be

rounded up to the next higher whole number.

(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each

share of Company Common Stock that is owned directly by the Company, Parent or

Sub shall no longer be outstanding and shall automatically be canceled and

retired and shall cease to exist, and no other consideration shall be delivered

or deliverable in exchange therefor.

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(i) Subject to Sections 2.01(b) and 2.01(d), each issued

share of Company Common Stock shall be converted into the right to receive in

cash the highest price per share of Company Common Stock paid pursuant to the

Offer.

(ii) The cash payable upon the conversion of shares of

Company Common Stock pursuant to this Section 2.01(c) is referred to

collectively as the "Merger Consideration". As of the Effective Time, all such

shares of Company Common Stock shall no longer be outstanding and shall

automatically be canceled and retired and shall cease to exist, and each holder

of a certificate representing any such shares of Company Common Stock shall

cease to have any rights with respect thereto, except the right to receive

Merger Consideration upon surrender of such certificate in accordance with

Section 2.02, without interest.

(d) Appraisal Rights. Notwithstanding anything in this Agreement

to the contrary, shares (the "Appraisal Shares") of Company Common Stock that

are outstanding immediately prior to the Effective Time and that are held by any

person who is entitled to demand and properly demands appraisal of such

Appraisal Shares pursuant to, and who complies in all respects with, Article 13

of the GBCC (the "Appraisal Provisions") shall be entitled to payment of the

fair value of such Appraisal Shares in accordance with the Appraisal Provisions;

provided, however, that if any such holder shall fail to perfect or otherwise

shall waive, withdraw or lose the right to appraisal under the Appraisal

Provisions, then the right of such holder to be paid the fair value of such

holder's Appraisal Shares shall cease and such Appraisal Shares shall be deemed

to have been converted as of the Effective Time into, and to have become

exchangeable solely for the right to receive, Merger Consideration as provided

in Section 2.01(c). The Company shall serve prompt notice to Parent of any

demands received by the Company for appraisal of any shares of Company Common

Stock, and Parent shall have the right to participate in all negotiations and

proceedings with respect to such demands. Prior to the Effective Time, the

Company shall not, without the prior written consent of Parent, make any payment

with respect to, or settle or offer to settle, any such demands, or agree to do

any of the foregoing.

Section 2.02 Exchange of Certificates.

(a) Paying Agent. Prior to the Effective Time, Parent shall select

a bank or trust company in the United States to act as paying agent (the "Paying

Agent") for the payment of the Merger Consideration upon surrender of

certificates representing Company Common Stock. Parent shall take all steps

necessary to enable and cause the Surviving Corporation to provide to the Paying

Agent on a timely basis, as and when needed after the Effective Time, cash

necessary to pay for the shares of Company Common Stock converted into the right

to receive cash pursuant to Section 2.01(c) (such cash being hereinafter

referred to as the "Exchange Fund"). If for any reason (including losses) the

Exchange Fund is inadequate to pay the amounts to which holders of shares of

Company Common Stock shall be entitled under this Section 2.02(a), Parent shall

take all steps necessary to enable or cause the Surviving Corporation promptly

to deposit in trust additional cash with the Paying Agent sufficient to make all

payments required under this Agreement, and Parent and the Surviving Corporation

shall in any event be liable for payment thereof. The Exchange Fund shall not be

used for any purpose except as expressly provided in this Agreement.

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(b) Exchange Procedures. As soon as reasonably practicable after

the Effective Time, but in no event more than five (5) business days thereafter,

the Surviving Corporation shall cause the Paying Agent to mail to each holder of

record of a certificate or certificates (the "Certificates") that immediately

prior to the Effective Time represented outstanding shares of Company Common

Stock whose shares were converted into the right to receive Merger Consideration

pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that

delivery shall be effected, and risk of loss and title to the Certificates shall

pass, only upon delivery of the Certificates to the Paying Agent and shall be in

such form and have such other provisions as Parent may reasonably specify) and

(ii) instructions for use in effecting the surrender of the Certificates in

exchange for Merger Consideration. Upon surrender of a Certificate for

cancellation to the Paying Agent, together with such letter of transmittal, duly

executed, and such other documents as may reasonably be required by the Paying

Agent, the holder of such Certificate shall be entitled to receive in exchange

therefor the amount of cash into which the shares of Company Common Stock

theretofore represented by such Certificate shall have been converted pursuant

to Section 2.01, and the Certificate so surrendered shall forthwith be canceled.

In the event of a transfer of ownership of Company Common Stock that is not

registered in the transfer records of the Company, payment may be made to a

person other than the person in whose name the Certificate so surrendered is

registered, if such Certificate shall be properly endorsed or otherwise be in

proper form for transfer and the person requesting such payment shall pay any

transfer or other taxes required by reason of the payment to a person other than

the registered holder of such Certificate or establish to the satisfaction of

Parent that such tax has been paid or is not applicable. Until surrendered as

contemplated by this Section 2.02, each Certificate shall be deemed at any time

after the Effective Time to represent only the right to receive upon such

surrender the amount of cash, without interest, into which the shares of Company

Common Stock theretofore represented by such Certificate have been converted

pursuant to Section 2.01. If any holder of shares of Company Common Stock shall

be unable to surrender such holder's Certificates because such Certificates have

been lost, mutilated or destroyed, such holder may deliver in lieu thereof an

affidavit and indemnity bond in form and substance and with surety reasonably

satisfactory to the Surviving Corporation. No interest shall be paid or accrue

on the cash payable upon surrender of any Certificate.

Merger Consideration paid in accordance with the terms of this Article II upon

conversion of any shares of Company Common Stock shall be deemed to have been

paid in full satisfaction of all rights pertaining to such shares of Company

Common Stock, and after the Effective Time there shall be no further

registration of transfers on the stock transfer books of the Surviving

Corporation of shares of Company Common Stock that were outstanding immediately

prior to the Effective Time. If, after the Effective Time, any certificates

formerly representing shares of Company Common Stock are presented to the

Surviving Corporation or the Paying Agent for any reason, they shall be canceled

and exchanged as provided in this Article II.

(d) Termination of Exchange Fund. Any portion of the Exchange Fund

that remains undistributed to the holders of Company Common Stock for six months

after the Effective Time shall be delivered to Parent, upon demand, and any

holder of Company Common Stock who has not theretofore complied with this

Article II shall thereafter look only to Parent for payment of its claim for

Merger Consideration.

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(e) No Liability. None of Parent, Sub, the Company or the Paying

Agent shall be liable to any person in respect of any cash from the Exchange

Fund delivered to a public official pursuant to any applicable abandoned

property, escheat or similar Law. If any Certificate has not been surrendered

prior to five years after the Effective Time (or immediately prior to such

earlier date on which Merger Consideration in respect of such Certificate would

otherwise escheat to or become the property of any Governmental Entity (as

defined in Section 3.05)), any such shares, cash, dividends or distributions in

respect of such Certificate shall, to the extent permitted by applicable Law,

become the property of the Surviving Corporation, free and clear of all claims

or interest of any person previously entitled thereto.

(f) Investment of Exchange Fund. The Paying Agent shall invest any

cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any

interest and other income resulting from such investments shall be paid to

Parent.

(g) Withholding Rights. Parent shall be entitled to deduct and

withhold from the consideration otherwise payable to any holder of Company

Common Stock pursuant to this Agreement such amounts as may be required to be

deducted and withheld with respect to the making of such payment under the Code

(as defined in Section 3.11(b)), or under any provision of state, local or

foreign tax Law.

(h) Charges and Expenses. The Surviving Corporation shall pay all

charges and expenses, including those of the Paying Agent, in connection with

the exchange of cash for shares of Company Common Stock.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

Section 3.01 Organization, Standing and Power. Each of the Company

and each of its subsidiaries listed in the Company Disclosure Letter (as defined

below) (the "Company Subsidiaries") is duly organized, validly existing and in

good standing under the laws of the jurisdiction in which it is organized and

has all requisite corporate power and authority and possesses all governmental

franchises, licenses, permits, authorizations and approvals, and has made all

filings, registrations and declarations, in each case whether domestic or

foreign, necessary to enable it to own, lease or otherwise hold its properties

and assets and to conduct its businesses as presently conducted, in each case

other than such franchises, licenses, permits, authorizations, approvals,

filings, registrations and declarations the lack of which, individually or in

the aggregate, has not had and would not reasonably be expected to have a

material adverse effect on the Company and the Company Subsidiaries, taken as a

whole, a material adverse effect on the ability of the Company to perform its

obligations under this Agreement or a material adverse effect on the ability of

the Company to consummate the Offer, the Merger and the other Transactions (a

"Company Material Adverse Effect"). The Company and each Company Subsidiary is

duly qualified to do business in each jurisdiction where the nature of its

<PAGE>

business or their ownership or leasing of its properties make such qualification

necessary except where the failure to so qualify has not had and would not

reasonably be expected to have a Company Material Adverse Effect. The Company

has made available to Parent true and complete copies of the certificate of

incorporation of the Company, as amended to the date of this Agreement (as so

amended, the "Company Charter"), and the by-laws of the Company, as amended to

the date of this Agreement (as so amended, the "Company By-laws"), and the

comparable charter and organizational documents of each Company Subsidiary, in

each case as amended through the date of this Agreement.

Section 3.02 Company Subsidiaries; Equity Interests.

(a) The letter, dated as of the date of this Agreement, from

the Company to Parent and Sub (the "Company Disclosure Letter") lists each

Company Subsidiary and its jurisdiction of organization. All the outstanding

shares of capital stock of each Company Subsidiary have been validly issued and

are fully paid and nonassessable and, except as set forth in the Company

Disclosure Letter, are owned by the Company, by another Company Subsidiary or by

the Company and another Company Subsidiary, free and clear of all pledges,

liens, charges, mortgages, encumbrances and security interests of any kind or

nature whatsoever (collectively, "Liens").

(b) Except for its interests in the Company Subsidiaries and

except for the ownership interests set forth in the Company Disclosure Letter,

the Company does not own, directly or indirectly, any capital stock, membership

interest, partnership interest, joint venture interest or other equity interest

in any person.

Section 3.03 Capital Structure. The authorized capital stock of the

Company consists of 10,000,000 shares of Company Common Stock and 5,000,000

shares of preferred stock, par value $1.00 per share ("Preferred Stock", and

together with the Company Common Stock, the "Company Capital Stock"). At the

close of business on July 15, 2005, (i) 5,460,668 shares of Company Common Stock

were issued and outstanding, (ii) no shares of Company Common Stock were held by

the Company in its treasury, (iii) 556,600 shares of Company Common Stock were

subject to outstanding Company Stock Options (as defined in Section 6.04) and

182,926 additional shares of Company Common Stock were reserved for issuance

pursuant to the Company Stock Plans (as defined in Section 6.04), and (iv)

500,000 shares of Preferred Stock were reserved for issuance in connection with

the rights (the "Company Rights") issued pursuant to the Rights Agreement dated

as of January 17, 1997 (as amended from time to time, the "Company Rights

Agreement"), between the Company and Wachovia Bank of North Carolina, N.A., as

Rights Agent. Except as set forth above, at the close of business on July 15,

2005, no shares of capital stock or other voting securities of the Company were

issued, reserved for issuance or outstanding. Assuming completion of the Offer

and the Merger prior to August 31, 2005, Company Stock Options to purchase not

more than 556,600 shares of Company Common Stock will be exercisable, including

any Company Stock Options exercisable as a result of the Offer and the Merger,

at an exercise price equal to or less than $2.38 per share of Company Common

Stock (the "Vested Company Stock Options"). There are no outstanding stock

appreciation rights linked to the price of Company Common Stock and granted

under any Company Stock Plan. All outstanding shares of Company Capital Stock

are, and all such shares that may be issued prior to the Effective Time will be

when issued, duly authorized, validly

<PAGE>

issued, fully paid and nonassessable and not subject to or issued in violation

of any purchase option, call option, right of first refusal, preemptive right,

subscription right or any similar right under any provision of the GBCC, the

Company Charter, the Company By-laws or any Contract (as defined in Section

3.05) to which the Company is a party or otherwise bound. There are not any

bonds, debentures, notes or other indebtedness of the Company having the right

to vote (or convertible into, or exchangeable for, securities having the right

to vote) on any matters on which holders of Company Common Stock may vote

("Voting Company Debt"). Except as set forth above or in the Company Disclosure

Letter, as of the date of this Agreement, there are not any options, warrants,

rights, convertible or exchangeable securities, "phantom" stock rights, stock

appreciation rights, stock-based performance units, commitments, Contracts,

arrangements or undertakings of any kind to which the Company or any Company

Subsidiary is a party or by which any of them is bound (i) obligating the

Company or any Company Subsidiary to issue, deliver or sell, or cause to be

issued, delivered or sold, additional shares of capital stock or other equity

interests in, or any security convertible or exercisable for or exchangeable

into any capital stock of or other equity interest in, the Company or of any

Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or

any Company Subsidiary to issue, grant, extend or enter into any such option,

warrant, call, right, security, commitment, Contract, arrangement or undertaking

or (iii) that give any person the right to receive any economic benefit or right

similar to or derived from the economic benefits and rights occurring to holders

of Company Capital Stock. As of the date of this Agreement, there are not any

outstanding contractual obligations of the Company or any Company Subsidiary to

repurchase, redeem or otherwise acquire any shares of capital stock of the

Company or any Company Subsidiary. The Company has made available to Parent a

complete and correct copy of the Company Rights Agreement, as amended to the

date of this Agreement. The Company Disclosure Letter sets forth a true and

complete list of the outstanding Company Stock Options, and the Vested Company

Stock Options, together with the number of shares of Company Common Stock

subject thereto and the exercise price thereof.

Section 3.04 Authority; Execution and Delivery; Enforceability.

(a) The Company has all requisite corporate power and

authority to execute and deliver this Agreement and, subject to the Company

Stockholder Approval (as defined in Section 3.04(c)) with respect to the Merger

if required by Law, to consummate the Transactions. The execution and delivery

by the Company of this Agreement and the consummation by the Company of the

Transactions have been duly authorized by all necessary corporate action on the

part of the Company, subject, in the case of the Merger, to receipt of the

Company Stockholder Approval (if required by Law). The Company has duly executed

and delivered this Agreement, and this Agreement constitutes its legal, valid

and binding obligation (subject to the Company Stockholder Approval with respect

to the Merger if required by Law), enforceable against it in accordance with its

terms, except to the extent that enforceability may be limited by bankruptcy,

insolvency, reorganization, moratorium, fraudulent transfer or other similar

laws of general applicability relating to or affecting the enforcement of

creditors' rights and by the effect of the principles of equity (regardless of

whether enforceability is considered in a proceeding in equity or at law).

(b) The Board of Directors of the Company (the "Company

Board"), at a meeting duly called and held, and upon recommendation of the

Special Committee, duly and

<PAGE>

unanimously adopted resolutions (i) approving this Agreement, the Offer, the

Merger and the other Transactions, (ii) determining that the terms of the Offer

and the Merger are fair, from a financial point of view, to the Company and its

stockholders and that the Merger is advisable, (iii) recommending that the

holders of Company Common Stock accept the Offer and tender their shares of

Company Common Stock pursuant to the Offer and (iv) recommending that the

Company's stockholders approve this Agreement. No further corporate action is

required by the Board of Directors of the Company, pursuant to the GBCC or

otherwise, in order for the Company to approve this Agreement or the

transactions contemplated hereby. No state takeover statute or similar statute

or regulation applies or purports to apply to the Company with respect to this

Agreement, the Tender Agreements, the Offer, the Merger or any other

Transaction. The Company has been advised by each of its directors that, as of

the date of this Agreement, each such person intends to tender all shares of

Company Common Stock owned by such person pursuant to the Offer, except to the

extent of any restrictions created by Section 16(b) of the Exchange Act.

Company Capital Stock necessary to approve and adopt this Agreement and the

Merger is the approval of this Agreement by the holders of a majority of the

outstanding Company Common Stock and the approval of at least two-thirds of the

votes cast by the holders of outstanding Company Common Stock (collectively, the

"Company Stockholder Approval"). The affirmative vote of the holders of Company

Capital Stock, or any of them, is not necessary to consummate the Offer or any

Transaction other than the Merger.

Section 3.05 No Conflicts; Consents.

(a) Except as set forth in the Company Disclosure Letter,

the execution and delivery by the Company of this Agreement do not, and the

consummation of the Offer, the Merger and the other Transactions and compliance

with the terms hereof will not, result in any violation of or default (with or

without notice or lapse of time, or both) under, or give rise to a right of

termination, cancellation or acceleration of any obligation or to loss of a

material benefit under, or to increased, additional, accelerated or guaranteed

rights or entitlements of any person under, or result in the creation of any

Lien upon any of the properties or assets of the Company or any Company

Subsidiary under, any provision of (i) the Company Charter, the Company By-laws

or the comparable charter or organizational documents of any Company Subsidiary,

(ii) any contract, lease, license, indenture, note, bond, agreement, permit,

concession, franchise or other instrument filed as part of any Company SEC

Document (as defined below) (a "Contract") to which the Company or any Company

Subsidiary is a party or by which any of their respective properties or assets

is bound or (iii) subject to the filings and other matters referred to in

Section 3.05(b), any judgment, order, injunction or decree, domestic or foreign

("Judgment"), or statute, law (including common law), legislation,

interpretation, ordinance, rule or regulation, domestic or foreign ("Law"),

applicable to the Company or any Company Subsidiary or their respective

properties or assets.

(b) No consent, approval, license, permit, order or

authorization ("Consent") of, or registration, declaration or filing with, any

Federal, state, local or foreign government or any court of competent

jurisdiction, administrative agency or commission or other governmental

authority or instrumentality, domestic or foreign (a "Governmental Entity") is

required to be

<PAGE>

obtained or made by or with respect to the Company or any Company Subsidiary in

connection with the execution, delivery and performance of this Agreement or the

consummation of the Transactions, other than (i) compliance with and filings, if

necessary, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as

amended (the "HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9,

(B) if required by Law, a proxy or information statement relating to the

approval of this Agreement by the Company's stockholders (the "Proxy

Statement"), (C) any information statement (the "Information Statement")

required under Rule 14f-1 in connection with the Offer, and (D) such schedules

or reports under Section 13 of the Exchange Act as may be required in connection

with this Agreement, the Offer, the Merger and the other Transactions, (iii) the

filing of the Certificate of Merger with the Secretary of State of the State of

Georgia and appropriate documents with the relevant authorities of the other

jurisdictions in which the Company is qualified to do business, (iv) such

filings as may be required in connection with the taxes described in Section

6.09 and (vi) such other items that, individually or in the aggregate, have not

had and would not reasonably be expected to have a Company Material Adverse

Effect.

necessary to (i) render the Company Rights inapplicable to this Agreement, the

Offer, the Merger and the other Transaction and (ii) ensure that (A) neither

Parent nor any of its stockholders, affiliates or associates is or will become

an "Acquiring Person" (as defined in the Company Rights Agreement) by reason of

this Agreement, the Offer, the Merger or any other Transaction), (B) a

"Distribution Date" (as defined in the Company Rights Agreement) shall not occur

by reason of this Agreement, the Offer, the Merger or any other Transaction and

Section 3.06 SEC Documents; Undisclosed Liabilities. The Company has

filed all reports, schedules, forms, statements and other documents required to

be filed by the Company with the SEC since January 1, 2003 (the "Company SEC

Documents"). As of its respective date, each Company SEC Document complied in

all material respects with the requirements of the Exchange Act or the

Securities Act of 1933, as amended (the "Securities Act"), as the case may be,

and the rules and regulations of the SEC promulgated thereunder applicable to

such Company SEC Document, and did not contain any untrue statement of a

material fact or omit to state a material fact required to be stated therein or

necessary in order to make the statements therein, in light of the circumstances

under which they were made, not misleading. As of the date of this Agreement,

the Company's Annual Report on Form 10-K for the fiscal year ended January 1,

2005 (filed on March 25, 2005) (the "2004 Form 10-K"), its Quarterly Reports on

Form 10-Q for the quarter ended April 2, 2005 (filed on May 17, 2005) and its

Current Reports on Form 8-K (filed on May 3, 2005 and May 17, 2005), together

with any amendments to such reports filed with the SEC prior to the date hereof,

taken together do not contain any untrue statement of a material fact or omit to

state any material fact required to be stated therein or necessary in order to

make the statements therein, in light of the circumstances under which they were

made, not misleading. The consolidated financial statements of the Company

included in the Company SEC Documents comply as to form in all material respects

with applicable accounting requirements and the published rules and regulations

of the SEC with respect thereto, have been prepared in accordance with generally

accepted accounting principles ("GAAP") (except, in the case of unaudited

statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis

during the periods involved (except as may be indicated in the notes

<PAGE>

thereto) and fairly present the consolidated financial position of the Company

and its consolidated subsidiaries as of the dates thereof and the consolidated

results of their operations and cash flows for the periods then ended (subject,

in the case of unaudited statements, to normal year-end audit adjustments).

Except as set forth in the Filed Company SEC Documents (as defined in Section

3.08), neither the Company nor any Company Subsidiary has any liabilities or

obligations of any nature (whether accrued, absolute, contingent or otherwise)

required by GAAP to be set forth on a consolidated balance sheet of the Company

and its consolidated subsidiaries or in the notes thereto, other than

liabilities or obligations incurred in the ordinary course of business

consistent with prior practice since the date of the most recent financial

statements included in the Filed Company SEC Documents. Except as set forth in

the Company Disclosure Letter, neither the Company nor any Company Subsidiary is

a party to any contract, arrangement or understanding with an affiliate of such

party that is not disclosed in the Filed Company SEC Documents.

Section 3.07 Information Supplied. None of the information supplied

or to be supplied by the Company for inclusion or incorporation by reference in

(i) the Offer Documents, the Schedule 14D-9 or the Information Statement will,

at the time such document is filed with the SEC, at any time it is amended or

supplemented or at the time it is first published, sent or given to the

Company's stockholders, contain any untrue statement of a material fact or omit

to state any material fact required to be stated therein or necessary to make

the statements therein not misleading, or (ii) the Proxy Statement (if required

by Law) will, at the date it is first mailed to the Company's stockholders or at

the time of the Company Stockholders Meeting (as defined in Section 6.01),

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 Schedule 14D-9, the Information Statement and the Proxy

Statement (if required by Law) will comply as to form in all material respects

with the requirements of the Exchange Act and the rules and regulations

thereunder, except that no representation is made by the Company with respect to

statements made or incorporated by reference therein based on information

supplied by Parent or Sub for inclusion or incorporation by reference therein.

Section 3.08 Absence of Certain Changes or Events. Except as

disclosed in the Company SEC Documents filed and publicly available prior to the

date of this Agreement (the "Filed Company SEC Documents") or in the Company

Disclosure Letter, from the date of the most recent audited financial statements

included in the Filed Company SEC Documents to the date of this Agreement, the

Company has conducted its business only in the ordinary course, and during such

period there has not been:

(i) any event, change, effect or development that,

individually or in the aggregate, has had or would reasonably be expected to

have a Company Material Adverse Effect;

(ii) any declaration, setting aside or payment of any

dividend or other distribution (whether in cash, stock or property) with respect

to any Company Capital Stock or any repurchase for value by the Company of any

Company Capital Stock;

(iii) any split, combination or reclassification of any

Company Capital Stock or any issuance or the authorization of any issuance of

any other securities in respect of, in lieu of or in substitution for shares of

Company Capital Stock;

<PAGE>

(iv) (A) any granting by the Company or any Company

Subsidiary to any current or former director, officer or employee of the Company

or any Company Subsidiary of any increase in compensation, except (i) with

respect to employees (other than directors, officers or key employees), in the

ordinary course of business consistent with past practice, or (ii) to the extent

required under employment agreements in effect as of the date of the most recent

audited financial statements included in the Filed Company SEC Documents, (B)

any granting by the Company or any Company Subsidiary to any such director,

officer or employee of any material increase in severance or termination pay,

except as was required under any employment, severance or termination policy,

practice or agreements in effect as of the date of the most recent audited

financial statements included in the Filed Company SEC Documents or (C) any

entry by the Company or any Company Subsidiary into, or any amendment of, any

employment, severance or termination agreement with any such director, officer

or employee, except for such agreements or amendments with employees (other than

directors, officers or key employees) that are entered into in the ordinary

course of business consistent with prior practice;

(v) any termination of employment or departure of any

officer or other key employee of the Company or any Company Subsidiary;

(vi) any change in accounting methods, principles or

practices by the Company or any Company Subsidiary materially affecting the

consolidated assets, liabilities or results of operations of the Company, except

insofar as may have been required by a change in GAAP; or

(vii) any material elections with respect to Taxes (as defined

in Section 3.09) by the Company or any Company Subsidiary or settlement or

compromise by the Company or any Company Subsidiary of any material Tax

liability or refund.

Section 3.09 Taxes.

(a) Each of the Company and each Company Subsidiary has timely

filed, or has caused to be timely filed on its behalf, all Tax Returns required

to be filed by it, and all such Tax Returns are true, complete and accurate,

except to the extent any failure to file or any inaccuracies in any filed Tax

Returns, individually or in the aggregate, has not had and would not reasonably

be expected to have a Company Material Adverse Effect. All Taxes shown to be due

on such Tax Returns, or otherwise owed, have been timely paid, except to the

extent that any failure to pay, individually or in the aggregate, has not had

and would not reasonably be expected to have a Company Material Adverse Effect.

(b) The most recent financial statements contained in the Filed

Company SEC Documents reflect an adequate reserve (in

accordance with GAAP) for all Taxes payable by the Company and the Company

Subsidiaries for all Taxable periods and portions thereof through the date of

such financial statements (in addition to any reserve for deferred Taxes

established to reflect timing differences between book and tax income). No

material deficiency with respect to

<PAGE>

any Taxes has been proposed, asserted or assessed against the Company or any

Company Subsidiary, and no requests for waivers of the time to assess any such

Taxes are pending.

Subsidiary consolidated in such Returns have not, since January 1, 2000, (i) to

the Company's knowledge, been examined by, or (ii) settled with, the United

States Internal Revenue Service. All material assessments for Taxes due with

respect to such completed and settled examinations or any concluded litigation

have been fully paid.

(d) There are no material Liens for Taxes (other than for current

Taxes not yet due and payable) on the assets of the Company or any Company

Subsidiary. Neither the Company nor any Company Subsidiary is bound by any

agreement with respect to Taxes other than agreements between or among the

Company and Company Subsidiaries and no other person.

(e) No claim has been made in the past five years by any authority

in a jurisdiction within which the Company or any Company Subsidiary does not

file Tax Returns that it is, or may be, subject to taxation by that

jurisdiction.

(f) Neither the Company nor any Company Subsidiary has constituted

either a "distributing corporation" or a "controlled corporation" (within the

meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock

qualifying or intended to qualify for tax-free treatment under Section 355 of

the Code (A) in the two years prior to the date of this Agreement or (B) in a

distribution that could otherwise constitute part of a "plan" or "series of

related transactions" (within the meaning of Section 355(e) of the Code) in

conjunction with the Merger.

(g) For purposes of this Agreement:

"Taxes" includes all forms of taxation imposed by any Federal, state,

local, foreign or other Governmental Entity, including income, franchise,

property, sales, use, excise, employment, unemployment, payroll, social

security, estimated, value added, ad valorem, transfer, recapture,

withholding and other Taxes of any kind, including all interest, penalties

and additions thereto.

"Tax Return" means all Federal, state, local, provincial and foreign Tax

returns, declarations, statements, reports, schedules, forms and

information returns and any amended Tax return relating to Taxes.

Section 3.10 Absence of Changes in Benefit Plans. Except as

disclosed in the Filed Company SEC Documents or in the Company Disclosure

Letter, from the date of the most recent audited financial statements included

in the Filed Company SEC Documents to the date of this Agreement, there has not

been any adoption or amendment in any material respect by the Company or any

Company Subsidiary of any collective bargaining agreement or any bonus, pension,

profit sharing, deferred compensation, incentive compensation, stock ownership,

stock purchase, stock option, phantom stock, retirement, vacation, severance,

disability, death benefit, hospitalization, medical or other plan or arrangement

providing benefits to any current or former employee, officer or director of the

Company or any Company Subsidiary (collectively,

<PAGE>

"Company Benefit Plans"). Except as disclosed in the Filed Company SEC Documents

or in the Company Disclosure Letter, as of the date of this Agreement there are

not any employment, consulting, indemnification, severance or termination

agreements or arrangemen

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