TABLE OF CONTENTS

				Page
ARTICLE I THE MERGER				2
Section 1.1.		The Merger		2
Section 1.2.		Effective Time		2
Section 1.3.		Certificate of Incorporation and By-Laws		2
Section 1.4.		Closing		2
Section 1.5.		Directors and Officers		3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS				3
Section 2.1.		Effect on Capital Stock		3
Section 2.2.		Company Stock Options and Related Matters		5
Section 2.3.		Payments at Closing for Indebtedness		6
Section 2.4.		Payments at Closing for Expenses		6
Section 2.5.		Closing Estimates		6
Section 2.6.		Post Closing Adjustments		7
Section 2.7.		Tax Benefit Payments		9
Section 2.8.		Escrow Payment		9
Section 2.9.		Affiliate Accounts		9
Section 2.10.		Management Equity Rollover		9
ARTICLE III PAYMENT FOR SHARES; DISSENTING SHARES				10
Section 3.1.		Payment for Shares of Company Stock		10
Section 3.2.		Appraisal Rights		12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY				12
Section 4.1.		Existence; Good Standing; Authority		13
Section 4.2.		Capitalization		14
Section 4.3.		Subsidiaries		15
Section 4.4.		No Conflict; Consents		15
Section 4.5.		Financial Statements		15
Section 4.6.		Absence of Certain Changes		16
Section 4.7.		Litigation		17
Section 4.8.		Taxes		18
Section 4.9.		Employee Benefit Plans		19
Section 4.10.		Real and Personal Property		20

 

 

 

Section 4.11.		Labor and Employment Matters		22
Section 4.12.		Contracts and Commitments		22
Section 4.13.		Intellectual Property		24
Section 4.14.		Environmental Matters		25
Section 4.15.		Insurance		27
Section 4.16.		No Brokers		27
Section 4.17.		Compliance with Laws		27
Section 4.18.		Licenses and Permits		27
Section 4.19.		Knowledge		28
Section 4.20.		Undisclosed Liabilities		28
Section 4.21.		Affiliate Transactions		28
Section 4.22.		Customers and Suppliers		28
Section 4.23.		Inventory		29
Section 4.24.		Warranty		29
Section 4.25.		Indebtedness		29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO				29
Section 5.1.		Organization		30
Section 5.2.		Authorization; Validity of Agreement; Necessary Action		30
Section 5.3.		No Conflict; Consents		30
Section 5.4.		Required Financing		31
Section 5.5.		Brokers		31
Section 5.6.		Litigation		31
Section 5.7.		Inspection; No Other Representations		32
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER				32
Section 6.1.		Conduct of Business Prior to Closing		32
Section 6.2.		Other Pre-Closing Covenants		35
Section 6.3.		Affiliated Transactions		35
Section 6.4.		Actions with Respect to Financing		36
ARTICLE VII ADDITIONAL AGREEMENTS				36
Section 7.1.		Stockholders Consent		36
Section 7.2.		Access to Information		38
Section 7.3.		Confidentiality		39
Section 7.4.		Supplemental Disclosure		39
Section 7.5.		Regulatory and Other Authorizations		39
Section 7.6.		Press Releases		40
Section 7.7.		No Solicitations		41
Section 7.8.		Officers’ and Directors’ Indemnification		41

 

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Section 7.9.		Tax Matters		44
Section 7.10.		Books and Records		48
Section 7.11.		Further Action		48
ARTICLE VIII CONDITIONS TO THE MERGER				48
Section 8.1.		Conditions to the Obligations of Each Party to Effect the Closing		48
Section 8.2.		Additional Conditions to Obligations of Parent and MergerCo		49
Section 8.3.		Additional Conditions to Obligations of the Company		51
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION				52
Section 9.1.		Survival		52
Section 9.2.		Parent/MergerCo Indemnification		52
Section 9.3.		Indemnification by Parent and MergerCo		58
Section 9.4.		Stockholders’ Representative		62
Section 9.5.		Treatment of Indemnity Payments		65
Section 9.6.		Remedies Exclusive		65
Section 9.7.		Environmental Indemnification		66
ARTICLE X TERMINATION, AMENDMENT AND WAIVER				66
Section 10.1.		Termination		66
Section 10.2.		Effect of Termination		68
Section 10.3.		Termination Fee		68
Section 10.4.		Amendment		68
Section 10.5.		Extension; Waiver		68
ARTICLE XI GENERAL PROVISIONS				69
Section 11.1.		Notices		69
Section 11.2.		Disclosure Schedules		70
Section 11.3.		Assignment		71
Section 11.4.		Severability		71
Section 11.5.		No Agreement Until Executed		71
Section 11.6.		Certain Definitions		71
Section 11.7.		Interpretation		77
Section 11.8.		Fees and Expenses		77
Section 11.9.		Choice of Law/Consent to Jurisdiction		77
Section 11.10.		Specific Performance		78
Section 11.11.		Mutual Drafting		78
Section 11.12.		Miscellaneous		78

 

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ANNEXES
Annex A		List of Defined Terms
EXHIBITS
Exhibit A		Form of Escrow Agreement
Exhibit B		Form Letter of Transmittal
Exhibit C-1		Debt Commitment Letters
Exhibit C-2		Equity Commitment Letter
Exhibit D		Form of Goodwin Procter Legal Opinion
Exhibit E		Form of Common Equity Holders Agreement
Exhibit F		Form of Kirkland & Ellis LLP Legal Opinion
SCHEDULES
Schedule 2.3		Indebtedness
Schedule 4.1(a)		Existence; Good Standing; Authority
Schedule 4.2		Capitalization
Schedule 4.3(a)		Subsidiaries
Schedule 4.3(b)		Foreign Qualification
Schedule 4.4		No Conflicts; Consents
Schedule 4.5		Financial Statements
Schedule 4.6(a)		Absence of Certain Changes
Schedule 4.6(b)		Absence of Certain Changes
Schedule 4.7		Litigation
Schedule 4.8		Taxes
Schedule 4.9(a)		Employee Benefit Plans
Schedule 4.9(b)		ERISA
Schedule 4.9(d)		Effect of Transaction on Benefits
Schedule 4.9(e)		Section 280G Payments
Schedule 4.10(a)		Owned Real Property
Schedule 4.10(b)		Leased Real Property
Schedule 4.10(c)		Encumbrances
Schedule 4.10(c)(vi)		Certain Encumbrances
Schedule 4.10(d)		Assets
Schedule 4.11(a)		Labor and Employment Matters
Schedule 4.11(b)		Organized Labor Agreements
Schedule 4.12		Contracts and Commitments
Schedule 4.13(a)		Patents, Marks and Copyrights
Schedule 4.13(b)		Intellectual Property Encumbrances
Schedule 4.13(f)		Intellectual Property Licenses
Schedule 4.14		Environmental Matters
Schedule 4.15		Insurance
Schedule 4.17		Compliance with Laws

 

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Schedule 4.18		Licenses and Permits
Schedule 4.20		Undisclosed Liabilities
Schedule 4.21		Affiliate Transactions
Schedule 4.22		Customers and Suppliers
Schedule 4.24		Warranty
Schedule 4.25		Indebtedness
Schedule 5.2		Authorization
Schedule 5.3		No Conflicts; Consents
Schedule 6.1		Conduct of Business
Schedule 6.3		Affiliated Transactions
Schedule 7.8(b)		Indemnification Agreements
Schedule 8.2(d)		Required Consents
Schedule 9.2		Indemnity
Schedule 11.6(n)		Working Capital
Schedule 11.6(w)		Pro Rata Portion
Schedule 11.6(z)		Responsible Pro Rata Portion

 

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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is dated as of January 5, 2007, by and among WII Holding, Inc., a Delaware corporation (“ Parent ”), WII Merger Corporation, a Delaware corporation (“ MergerCo ”), WII Components, Inc., a Delaware corporation (the “ Company ”) and Behrman Capital III L.P., a Delaware limited partnership, solely in the capacity of the Stockholders’ Representative (the “ Stockholders’ Representative ”).  Certain terms used in this Agreement are defined in Section 11.6 hereof.  An index of defined terms used in this Agreement is attached as Annex A hereto.

WHEREAS, this Agreement amends and restates in its entirety that certain Agreement and Plan of Merger, dated as of December 11, 2006 (the “ Original Date ”), by and among the parties hereto (the “ Prior Agreement ”);

WHEREAS, Parent, MergerCo and the Company wish to effect a business combination through a merger (the “ Merger ”) of MergerCo with and into the Company on the terms and conditions set forth in this Agreement and in accordance with the Delaware General Corporation Law, as amended (the “ DGCL ”);

WHEREAS, the Board of Directors of the Company (the “ Company Board ”) has (i) approved this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement are advisable and in the best interest of its stockholders and (iii) resolved to recommend to the stockholders of the Company this Agreement and the transactions contemplated hereby;

WHEREAS, the Boards of Directors of Parent and MergerCo have determined that this Agreement, the Merger and the other transactions contemplated by this Agreement are in the best interest of their respective stockholders, and Parent has approved this Agreement as the sole stockholder of MergerCo;

WHEREAS, the holders of Company Stock of the Company constituting the Necessary Stockholder Approval have executed and delivered to the Company on or prior to the date hereof the Prior Written Consent irrevocably adopting and approving the Prior Agreement;

WHEREAS, concurrently with the execution of the Prior Agreement, Parent, MergerCo and the employees of the Company and/or its Subsidiaries listed on Schedule I attached hereto entered into employment agreements and non-compete agreements (the “ New Executive Arrangements ”) to be effective at the Effective Time (as defined herein); and

WHEREAS, subject to Section 2.10 hereof, immediately prior to the Effective Time, certain holders of Company Stock shall exchange a portion of such Company Stock for equity securities of Parent; and

WHEREAS, Parent, MergerCo and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and to prescribe various conditions to the Merger.

 

NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER

Section 1.1.                                 The Merger.   Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.2), the Company and MergerCo shall consummate the Merger pursuant to which (a) MergerCo shall be merged with and into the Company and the separate corporate existence of MergerCo shall thereupon cease, (b) the Company shall be the surviving corporation in the Merger (the “ Surviving Corporation ”) and shall continue to be governed by the laws of the State of Delaware, and (c) 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 DGCL.

Section 1.2.                                 Effective Time .   On the Closing Date (as defined in Section 1.4), MergerCo and the Company shall duly execute a certificate of merger (the “ Certificate of Merger ”) and file such Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL.  The Merger shall become effective at such time as the Certificate of Merger, accompanied by payment of the filing fee (as provided in the DGCL), has been examined by and received the endorsed approval of the Secretary of State of the State of Delaware (the “ Effective Time ”).

Section 1.3.                                 Certificate of Incorporation and By-Laws.   The certificate of incorporation of MergerCo, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided by law and the terms of such certificate of incorporation.  The by-laws of MergerCo, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Corporation until thereafter amended as provided by law, by the terms of the certificate of incorporation of the Surviving Corporation and by the terms of such by-laws.  Notwithstanding the foregoing, the name of the Surviving Corporation shall be “WII Components, Inc.” and the certificate of incorporation of the Surviving Corporation shall so provide.

Section 1.4.                                 Closing.   The closing of the Merger (the “ Closing ”) shall occur no later than the third Business Day (as defined below) after the conditions set forth in Sections 8.1, 8.2 and 8.3 have been satisfied or waived (other than conditions required to be satisfied at the Closing); and provided further, that notwithstanding the foregoing, the Closing may occur on any other date agreed upon by the Company, MergerCo and Parent.  The date on which the Closing occurs pursuant to the foregoing sentence is referred to in this Agreement as the “ Closing Date .”  The Closing shall take place at the offices of Kirkland & Ellis LLP, 153 East 53rd Street, New York, NY 10022, or at such other place as agreed to by the Company, MergerCo and Parent.  “ Business Day ” means any day other than a day on which the office of the Delaware Secretary of State is closed.

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Section 1.5.                                 Directors and Officers.   The directors of MergerCo immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and the officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS

Section 2.1.                                 Effect on Capital Stock.   Subject to the terms and conditions of this Agreement, as of the Effective Time, by virtue of the Merger and without any action on the part of the Parent, MergerCo, the Company, the holders (each a “ Stockholder ” and collectively, the “ Stockholders ”) of any shares of the capital stock of the Company (the “ Company Stock ”) or any holders of any shares of the capital stock of MergerCo:

(a)                                   Each share of common stock, par value $0.01 per share, of MergerCo issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation following the Merger.

(b)                                  Each share of Company Stock that is owned by the Company, by any wholly owned Subsidiary (as defined in Section 11.6) of the Company, by Parent, by MergerCo, or by any other wholly owned subsidiary of Parent immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

(c)                                   Each share of Voting Common Stock (as defined in Section 11.6) and Nonvoting Common Stock (as defined in Section 11.6) issued and outstanding immediately prior to the Effective Time, other than shares to be canceled in accordance with Section 2.1(b), the Dissenting Shares (as defined in Section 3.2(a)) and the Rollover Shares (as defined in Section 2.10), shall be cancelled and extinguished and converted into the right to receive that portion of the Merger Consideration equal to (i) the Merger Consideration (determined as though the phrase “(iv) less the Rollover Amount” was deleted from the definition of Merger Consideration) divided by (ii) (A) the aggregate number of shares of Voting Common Stock and Nonvoting Common Stock outstanding immediately prior to the Effective Time (including Dissenting Shares and the Rollover Shares), plus (B) the aggregate number of shares of Voting Common Stock and/or Nonvoting Common Stock then issuable upon the exercise of all vested Options (as defined in Section 11.6) outstanding immediately prior to the Effective Time (such per share amount derived pursuant to the foregoing clauses (i) and (ii), the “ Price Per Common Share ”), net to the holder thereof in cash, payable to the holder thereof, without any interest thereon, upon surrender and exchange of the Certificate (as defined in Section 2.1(e)) formerly representing such share of Voting Common Stock or Nonvoting Common Stock in accordance with Section 3.1 or the delivery of an affidavit as described in Section 3.1(h); provided that, for the avoidance

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of doubt, the holders of Rollover Shares shall not be entitled to receive Merger Consideration in respect of such Rollover Shares, and to the extent a Certificate represents both Rollover Shares and other shares of Company Stock, such holder shall be entitled to share in Merger Consideration in accordance with this Agreement only with respect to shares of Company Stock that are not Rollover Shares or Dissenting Shares.

(d)                                  The “ Merger Consideration ” shall mean the amount equal to:

(i)                                      $295,500,000;

(ii)                                   plus (A) Estimated Cash and Cash Equivalents (as defined in Section 2.5(a)), (B) the Aggregate Option Exercise Price Proceeds (as defined in Section 2.2(a)), and (C) if the Estimated Working Capital Adjustment (as defined in Section 2.5(b)) is a negative number, then the absolute value of such number (the “ Closing Overage ”);

(iii)                                less (A) the aggregate amount of all Indebtedness (as defined in Section 11.6) of the Company and its Subsidiaries outstanding as of the Measurement Time (as defined in Section 2.5(c)), (B) all Company Expenses (as defined in Section 2.4), (C) all Accelerated Earnout Payments (as defined in Section 11.6), (D) the Escrow Amount (as defined in Section 2.8), (E) if the Estimated Working Capital Adjustment is a positive number, then the absolute value of such number (the “ Closing Underage ”), and (F) the aggregate amount of the employer’s portion of social security, medicare, unemployment or other employment Taxes (as defined in Section 11.6) imposed or to be imposed with respect to any payment to any employee of the Company and/or any of its Subsidiaries pursuant to or contemplated by this Agreement and/or the transactions contemplated hereby (including, without limitation, all payments made in respect of Options and all deal bonuses, stay bonuses, success bonuses or change in control payments which are triggered or made payable as a result of the transactions contemplated herein, but specifically excluding with respect to this clause (F) any such payment to the extent arising under any of the New Executive Arrangements or any other arrangement entered into by Parent, MergerCo or the Surviving Corporation following the Closing), but only to the extent such amount of the employer’s portion of social security, medicare, unemployment or other employment Taxes imposed with respect to any such payments are not included as a current liability in Estimated Working Capital (as defined in Section 2.5) or in the Closing Working Capital (as defined in Section 2.6); and

(iv)                               less the Rollover Amount.

(e)                                   All shares of Company Stock (excluding, for the avoidance of doubt Rollover Shares), when converted as provided in Sections 2.1(c) above, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate (“ Certificate ”) previously evidencing such shares shall thereafter represent only the right to receive an amount equal to the product of (i) the Price Per Common Share multiplied by (ii) the number of shares of Company Stock (other than Rollover Shares) evidenced by such

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Certificate.  The holders of Certificates previously evidencing such shares of Company Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the Company Stock and, upon the surrender of Certificates in accordance with the provisions of Section 3.1, shall only represent the right to receive the applicable Merger Consideration in exchange for their shares of Company Stock (as computed pursuant to the immediately preceding sentence).

Section 2.2.                                 Company Stock Options and Related Matters.

(a)                                   Vested Options .  Each vested Option that is outstanding and unexercised immediately prior to the Effective Time shall be converted into the right to receive cash in accordance with this Section 2.2(a).  The Company hereby agrees that, prior to the Effective Time, the Company Board will take all actions necessary to accelerate the vesting of all Options that would become vested as a result of, or in connection with, the consummation of the transactions contemplated by this Agreement; provided, that the holder of each such Option is employed by the Company or one of its Subsidiaries at the Effective Time.  At the Effective Time, the Company shall pay to each holder of a vested Option (each an “ Optionholder ” and collectively, the “ Optionholders ”) an amount of cash for each share of Voting Common Stock then issuable upon exercise of such vested Option equal to the Price Per Common Share less the applicable exercise price, upon receipt by the Company, Parent and MergerCo from such Optionholder of a duly executed counterpart signature page to the Common Equity Holders Agreement (as defined in Section 8.2(k)).  The aggregate amount of the exercise prices of all the vested Options as of the Effective Time is referred to herein as the “ Aggregate Option Exercise Price Proceeds .”  The aggregate amount of cash paid to the Optionholders at the Effective Time pursuant to this Section 2.2(a) (after giving effect to Section 2.2(c) hereof) is referred to herein as the “ Total Option Proceeds. ”  The Company shall take all actions necessary so that, as of immediately prior to the Effective Time, the Plan (as defined in Section 11.6) and all vested Options that are outstanding as of immediately prior to the Effective Time shall be terminated and canceled without any payment therefor (except the right to receive payment of the Total Option Proceeds in respect of vested Options upon delivery by each such holder of a vested Option of a duly executed counterpart signature page to the Common Equity Holders Agreement (as defined in Section 8.2(k)) or other liability on the part of the Company, MergerCo, Parent or any of their respective Affiliates (as defined in Section 11.6) (including, without limitation, under Section 280G of the Code).

(b)                                  Unvested Options .  The Company shall take all actions necessary so that, as of immediately prior to the Effective Time, the Plan and all Options that are outstanding as of immediately prior to the Effective Time shall be terminated and canceled without any payment therefor or other liability on the part of the Company, MergerCo, Parent or any of their respective Affiliates (as defined in Section 11.6) (including, without limitation, under Section 280G of the Code).  At least two (2) Business Days prior to the Closing Date, the Company shall deliver a certificate to Parent and MergerCo setting forth for each Option outstanding as of immediately prior to the Effective Time: (i) the holder thereof; (ii) the extent to which such Option is vested or unvested; and (iii) the aggregate amount of the exercise prices in respect of such portion of the Option which is vested.

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(c)                                   All consideration to be received by the Optionholders pursuant to this Section 2.2 (as well as any amounts paid to the Optionholders pursuant to Sections 2.6, 2.7, 2.8 and 3.1) shall be treated as compensation by the Company and shall be net of any applicable Taxes.

Section 2.3.                                 Payments at Closing for Indebtedness .   Subject to the terms and conditions of this Agreement, as of the Closing, Parent and MergerCo shall cause the Surviving Corporation to repay all Indebtedness set forth on Schedule 2.3 and outstanding as of immediately prior to the Closing.  The Company, Parent and MergerCo will cooperate in arranging for such repayment and shall take such reasonable actions as may be necessary to facilitate such repayment and to facilitate the release, in connection with such repayment, of any mortgage, pledge, lien, conditional sale agreement, security title or other encumbrance (collectively, “ Encumbrances ”) securing such Indebtedness including, without limitation, by delivering to Parent and MergerCo at least two (2) Business Days prior to the Closing Date pay-off letters, releases and Encumbrance discharges (or agreements therefor) with respect to such Indebtedness as may be reasonably requested by Parent.

Section 2.4.                                 Payments at Closing for Expenses .  Subject to the terms and conditions of this Agreement, as of the Closing, Parent and MergerCo shall cause the Surviving Corporation to pay all outstanding fees and expenses of the Company and each of its Subsidiaries in connection with the negotiation and the consummation of the transactions contemplated by this Agreement (including any and all fees and expenses owed to Harris Williams & Co. and Behrman Brothers Management Corp.) that have not been paid on or prior to the Closing Date (the “ Company Expenses ”), to the extent such amounts are deducted from the Merger Consideration otherwise payable at the Closing pursuant to Section 2.1(d)(iii)(B).

Section 2.5.                                 Closing Estimates .

(a)                                   At least three (3) Business Days prior to the Closing Date, the Company shall deliver to Parent and MergerCo a good faith estimate of (i) the Cash and Cash Equivalents of the Company and its Subsidiaries (“ Estimated Cash and Cash Equivalents ”) and (ii) Net Working Capital (as defined in Section 11.6) of the Company and its Subsidiaries as of the Measurement Time (the “ Estimated Working Capital ”); provided, however, that in the event Parent delivers a notice to the Company prior to the Closing Date in which it disagrees in good faith with the Company’s estimate of the Estimated Working Capital, then the Estimated Working Capital will not exceed the Net Working Capital of the Company and its Subsidiaries as calculated from the consolidated balance sheet of the Company and its Subsidiaries contained in the Fall-Back Month-End Financials.  In connection with the foregoing, the Company shall provide to Parent and MergerCo any supporting documentation for such estimate and any additional information reasonably requested by Parent or MergerCo.

(b)                                  The “ Estimated Working Capital Adjustment ” shall mean an amount equal to $21,888,000 (the “ Base Amount ”) minus the Estimated Working Capital.

(c)                                   For purposes of this Agreement, “ Measurement Time ” means (i) if the Closing occurs on or prior to the close of business on January 9, 2007, 11:59 p.m. (New York City time) on December 31, 2006, and (ii) otherwise, immediately prior to the Closing.

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Section 2.6.                                 Post Closing Adjustments.

(a)                                   Post-Closing Estimate .  Within sixty (60) days following the Closing Date, Parent shall prepare and deliver to the Stockholders’ Representative a statement (the “ Closing Statement ”) setting forth Parent’s calculation of (i) the Company’s and its Subsidiaries’ actual Net Working Capital as of the Measurement Time (the “ Closing Working Capital ”), and (ii) the Company’s and its Subsidiaries’ actual Cash and Cash Equivalents (“ Closing Cash ”).  The Closing Statement shall be prepared in accordance with the definitions of “Net Working Capital” and “Cash and Cash Equivalents” as set forth in this Agreement.  The Stockholders’ Representative shall have thirty (30) days following its receipt of the Closing Statement (the “ Review Period ”) to review the same.  On or before the expiration of the Review Period, the Stockholders’ Representative shall deliver to Parent a written statement accepting or objecting to the Closing Statement (the “ Closing Statement Response Notice ”).  In the event that the Stockholders’ Representative shall object to the Closing Statement, such Closing Statement Response Notice shall include a detailed itemization of the Stockholders’ Representative’s objections and the reasons therefor.  If the Stockholders’ Representative does not deliver such Closing Statement Response Notice to Parent within the Review Period, the Stockholders’ Representative shall be deemed to have accepted the Closing Statement.

(b)                                  Determinations; Adjustments .

(i)                                      Closing Cash Adjustment .  If the Closing Cash as finally determined pursuant to this Section 2.6 is greater than the Estimated Cash and Cash Equivalents, Parent shall pay (or cause the Surviving Corporation to pay) to each Common Equity Holder (as defined in Section 11.6) such Person’s Pro Rata Portion (as defined in Section 11.6) of such excess in accordance with Section 2.6(e).  If the Closing Cash as finally determined pursuant to this Section 2.6 is less than the Estimated Cash and Cash Equivalents, the Responsible Common Equity Holders shall pay such shortfall to Parent in accordance with Section 2.6(e), with each Responsible Common Equity Holder only being required to pay such Person’s Responsible Pro Rata Portion of such shortfall.

(ii)                                   Net Working Capital Adjustment .  If the Closing Working Capital as finally determined pursuant to this Section 2.6 is greater than the Estimated Working Capital, Parent shall pay (or cause the Surviving Corporation to pay) to each Common Equity Holder such Person’s Pro Rata Portion of such excess in accordance with Section 2.6(e).  If the Closing Working Capital as finally determined pursuant to this Section 2.6 is less than the Estimated Working Capital, the Responsible Common Equity Holders shall pay such shortfall to Parent in accordance with Section 2.6(e), with each Responsible Common Equity Holder only being required to pay such Person’s Responsible Pro Rata Portion of such shortfall.

(c)                                   Reserved.

(d)                                  In the event that the Stockholders’ Representative shall object to the Closing Statement within the Review Period, Parent and the Stockholders’ Representative shall

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promptly meet and in good faith attempt to resolve such objections.  Any such objections which cannot be resolved between Parent and the Stockholders’ Representative within thirty (30) days following the Parent’s receipt of the Stockholders’ Representative’s statement of objections contained in the Closing Statement Response Notice shall be resolved in accordance with this Section 2.6(d).  Should the Stockholders’ Representative and Parent not be able to resolve such objections as may be raised therein with respect to the Closing Statement, within the thirty (30) day period described above, either party may submit the matter to KPMG LLP (the “ Accounting Referee ”) for review and resolution, with instructions to complete the same as promptly as practicable, but in any event within thirty (30) days of its engagement, and to make any calculations in accordance with the definitions of “Cash and Cash Equivalents” and “Net Working Capital” (as applicable) set forth in this Agreement; provided, that the scope of the dispute(s) to be resolved by the Accounting Referee is limited to only such items included in the Closing Statement that the Stockholders’ Representative has disputed in the Closing Statement Response Notice and which the parties have been unable to resolve.  The Accounting Referee shall determine, based solely on presentations by Parent and the Stockholders’ Representative and their respective representatives, and not by independent review, only those unresolved issues in dispute specifically set forth on the Closing Statement Response Notice and shall render a written report as to the dispute and the resulting calculation of Closing Cash and/or Closing Working Capital, as appropriate, which shall be conclusive and binding upon the parties.  In resolving any disputed item, the Accounting Referee: (i) shall be bound by the principles set forth in this Section 2.6, (ii) shall limit its review to matters specifically set forth in the Closing Statement Response Notice and (iii) shall not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party.  Such Accounting Referee shall deliver a statement setting forth its resolution of the dispute within thirty (30) days of the submission of the dispute to such firm, which resolution, absent manifest error, shall be binding and conclusive on the parties and not subject to appeal.  The Closing Statement shall be modified if necessary to reflect such determination by the Accounting Referee.  The fees and costs of the Accounting Referee, if one is required, shall be payable (i) by the Responsible Common Equity Holders on the one hand and (ii) by Parent, or at Parent’s election, the Surviving Corporation, on the other hand, on the basis, for each such party, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party, as determined by the Accounting Referee.

(e)                                   Without duplication, all amounts owed pursuant to Sections 2.6(b)(i) and (ii) shall be aggregated, and the net amount (if any) owed by Parent to the Common Equity Holders, on the one hand, or the Responsible Common Equity Holders to Parent, on the other hand, is referred to as the “ Final Closing Adjustment. ”  In the event that the Final Closing Adjustment would result in a decrease in the Merger Consideration, each Responsible Common Equity Holder shall pay to Parent an amount in cash equal to such Responsible Common Equity Holder’s Responsible Pro Rata Portion (as defined in Section 11.6) of the Final Closing Adjustment; provided that if any amounts are owed by the Responsible Common Equity Holders to Parent under this Section 2.6(e), Parent shall have the option of requiring that any such payments(s) first be satisfied from any remaining balance of the Escrow Account (as defined in Section 2.8) as of the date such payment is due.  In the event the Final Closing Adjustment would result in an increase in the Merger Consideration, the Parent shall pay, or cause the Surviving Corporation to pay, to each Common Equity Holder an amount in cash equal to such

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Common Equity Holder’s Pro Rata Portion of the Final Closing Adjustment, such cash amounts to be paid to the Stockholders’ Representative (on behalf of the Common Equity Holders for further distribution to each Common Equity Holder of its Pro Rata Portion of such amounts), net of Taxes required to be withheld on such payment (and in each such case where Tax withholding is so required Parent shall cause withholding and remittance of required Taxes to be made to the appropriate taxing authority).  The Final Closing Adjustment shall be calculated as an adjustment to the Merger Consideration and the Merger Consideration, as so adjusted, is referred to herein as the “ Final Merger Consideration .” Any payment made under this Section 2.6(e) shall be made within five (5) Business Days of the final determination of the Final Closing Adjustment.

Section 2.7.                                 Tax Benefit Payments .   Each Common Equity Holder shall have the right to receive from the Surviving Corporation additional amounts equal to such Common Equity Holder’s Pro Rata Portion of certain Tax refunds and certain other payments in respect of certain Tax benefits, as more fully described in Section 7.9(e).

Section 2.8.                                 Escrow Payment .   At the Closing, an amount equal to $11,250,000 (the “ Escrow Amount ”) shall be deposited by Parent in an escrow account (the “ Escrow Account ”) established pursuant to the terms and conditions of an escrow agreement (the “ Escrow Agreement ”) by and among Mellon Trust of New England, N.A., as escrow agent (the “ Escrow Agent ”), Parent, the Company and the Stockholders’ Representative, which will be substantially in the form of Exhibit A attached hereto.  Each Common Equity Holder shall also be entitled to receive such Common Equity Holder’s Pro Rata Portion of any remaining balance of the Escrow Amount (if, when and to the extent payable to the Common Equity Holders, or the Stockholders’ Representative on behalf of the Common Equity Holders, pursuant to the terms and conditions of this Agreement and the Escrow Agreement).

Section 2.9.                                 Affiliate Accounts .   Immediately prior to the Closing, all liabilities (other than any liabilities created by this Agreement, the agreements contemplated hereby or to the extent accrued for as a current liability in the Closing Working Capital (as finally determined pursuant to Section 2.6)) owed by the Company or any of its Subsidiaries to any Common Equity Holder or any of such Common Equity Holder’s Affiliates or to the Company or any Subsidiary shall be, to the extent not included as Indebtedness or Company Expenses and deducted from the Merger Consideration pursuant to Section 2.1(d)(iii), canceled without payment, in full and complete satisfaction of such liabilities.

Section 2.10.                          Management Equity Rollover .   On or prior to the Closing Date, certain holders of Company Stock identified by Parent and such holders to the Company in writing prior to the Closing Date (the “ Rollover Participants ”) may enter into one or more agreements with Parent pursuant to which they will acquire equity securities of Parent (the “ Management Rollover Agreements ”) by providing that as of immediately prior to the Effective Time and simultaneously with the contribution to Parent from the counterparty to the Equity Commitment Letter, each Rollover Participant will deliver to Parent the number of shares of Company Stock (the “ Rollover Shares ”) provided in the Management Rollover Agreements in exchange for certain equity securities of Parent identified in the Management Rollover Agreements.  The Company and the Stockholders’ Representative (in its capacity as such and in its capacity as a stockholder of the Company and the Majority Interest (as such term is defined in the Stockholders Agreement)) hereby consents to the transactions contemplated by this Section 2.10

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for all purposes under the Stockholders Agreement and otherwise and hereby waives any restrictions on transfer, rights-of-first refusal, participation rights and other rights in connection with such transactions, whether arising under the Stockholders Agreement, the Company’s Certificate of Incorporation or otherwise.

ARTICLE III

PAYMENT FOR SHARES; DISSENTING SHARES

Section 3.1.                                 Payment for Shares of Company Stock .

(a)                                   At the Effective Time, Parent shall deposit, or shall cause to be deposited, with Mellon Trust of New England, N.A. (the “ Exchange Agent ”) under and pursuant to the terms of the Escrow Agreement, for the benefit of the holders of shares of Company Stock (excluding the Rollover Shares) for exchange through the Exchange Agent, an aggregate amount of the Merger Consideration equal to the product of (i) the aggregate number of shares of Voting Common Stock and Nonvoting Common Stock outstanding as of immediately prior to the Effective Time (excluding the Rollover Shares, the Dissenting Shares and the aggregate number of shares of Voting Common Stock and/or Nonvoting Common Stock then issuable upon the exercise of all vested Options outstanding as of immediately prior to the Effective Time) and (ii) the Price Per Common Share.  The Company shall pay 100% of the fees and expenses of the Exchange Agent under the Escrow Agreement related to its duties as the Exchange Agent and such amounts shall be included as Company Expenses.

(b)                                  As soon as practicable following the Effective Time, the Surviving Corporation shall cause the Exchange Agent to deliver or mail to each holder of record of a Certificate or Certificates that immediately prior to the Effective Time represented outstanding shares of Company Stock (excluding the Rollover Shares) (i) a notice of the effectiveness of the Merger, (ii) a form of letter of transmittal in the form attached hereto as Exhibit B which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent and (iii) instructions for use in surrendering the Certificates in exchange for the applicable portion of the Merger Consideration.

(c)                                   Upon surrender of a Certificate for cancellation to the Exchange Agent together with such letter of transmittal, properly completed and duly executed, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor an amount in cash equal to the product of (i) the Price Per Common Share and (ii) the shares of Company Stock (excluding Rollover Shares) formerly represented by such Certificate.  Any Certificate so surrendered shall forthwith be canceled.  No interest will be paid or accrued on any of the Merger Consideration payable to holders of Certificates.

(d)                                  Until surrendered in accordance with this Section 3.1, each such Certificate (other than Certificates representing shares of Company Stock to be canceled in accordance with Section 2.1(b), Dissenting Shares and Rollover Shares) shall represent solely the right to receive the applicable portion of the Merger Consideration relating thereto, in each case,

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without any interest or dividends thereon.  If the Merger Consideration (or any portion thereof) is to be delivered to any person other than the person in whose name the Certificate formerly representing shares of Company Stock (other than Certificates representing shares of Company Stock to be canceled in accordance with Section 2.1(b), Dissenting Shares and Rollover Shares)  surrendered therefor is registered, it shall be a condition to such right to receive such applicable portion of the Merger Consideration that the Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person surrendering such shares of Company Stock shall pay to the Exchange Agent any Transfer Taxes (as defined in Section 7.9(f)) or other Taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not applicable.

(e)                                   Promptly following the date that is 90 days after the Effective Time, the Exchange Agent shall deliver to the Surviving Corporation all cash, Certificates and other documents in its possession relating to the Merger, and the Exchange Agent’s duties shall terminate.  Thereafter, each holder of a Certificate formerly representing shares of Company Stock may surrender such Certificate to the Surviving Corporation and (subject to applicable abandoned property, escheat and similar laws) receive in consideration therefor the Merger Consideration relating thereto in accordance with this Article III.

(f)                                     At the Effective Time, the stock transfer books of the Company shall be closed and thereafter, there shall be no further registration of transfers of shares of Company Stock on the stock transfer books of the Surviving Corporation of any shares of Company Stock that were outstanding immediately prior to the Effective Time.  On or after the Effective Time, any Certificates formerly representing shares of Company Stock presented to the Surviving Corporation or the Exchange Agent shall be surrendered and canceled in return for the payment of the Merger Consideration relating thereto (if any), as provided in this Article III.

(g)                                  None of Parent, the Surviving Corporation or the Exchange Agent or any of their respective Subsidiaries or affiliates shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(h)                                  If any Certificate shall have been lost, stolen or destroyed, upon the making and delivery of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue the applicable Merger Consideration in exchange for such lost, stolen or destroyed Certificate in accordance with this Article III.

(i)                                      The Exchange Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from the Merger Consideration or other amounts payable pursuant to this Agreement to any holder of Company Stock or Options such amounts as the Exchange Agent, Parent or the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of United States federal, state or local Tax laws and shall instead pay such amount to the applicable Governmental Authority (as defined in Section 11.6).  To the extent that amounts are so withheld by the Exchange Agent, Parent or the Surviving Corporation, such amounts withheld shall be treated for all purposes of this Agreement as having been paid to the holder of Company Stock or Options

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in respect of which such deduction and withholding was made by the Exchange Agent, Parent or the Surviving Corporation.

Section 3.2.                                 Appraisal Rights .

(a)                                   Notwithstanding anything in this Agreement to the contrary, any shares of Company Stock that are issued and outstanding immediately prior to the Effective Time and that are held by stockholders of the Company who have not consented in the Written Consent (as defined in Section 7.1(b)(i)) in favor of the adoption and approval of this Agreement (collectively, the “ Dissenting Shares ”) and who shall have demanded properly in writing appraisal for such shares in accordance with Section 262 of the DGCL (the “ Appraisal Rights Provisions ”) will not be converted as described in Section 2.1, but will thereafter constitute only the right to receive payment of the fair value of such shares of Company Stock in accordance with the Appraisal Rights Provisions; provided, however, that all shares of Company Stock held by Stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Company Stock under the Appraisal Rights Provisions shall thereupon be deemed to have been canceled and retired and to have been converted, as of the Effective Time, into the right to receive the applicable portion of the Merger Consideration, without interest, in the manner provided in Section 2.1 and Section 3.1.  Persons (as defined in Section 11.6) who have perfected statutory rights with respect to Dissenting Shares as aforesaid will not be paid by the Surviving Corporation as provided in this Agreement and will have only such rights as are provided by the Appraisal Rights Provisions with respect to such Dissenting Shares.  The Company shall give Parent and MergerCo prompt notice of any demands received by the Company for the exercise of appraisal rights with respect to shares of Company Stock, withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company, and Parent shall have the right to direct all negotiations and proceedings with respect to such demands.  The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld), make any payment with respect to, or settle or offer to settle, any such demands.

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

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and MergerCo that the following representations and warranties contained in this Article IV (i) are true and correct as of the Original Date and (ii) will be true and correct as of the Effective Time (except that representations and warranties that are made as of a specific date need only be true as of such date):

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Section 4.1.                                 Existence; Good Standing; Authority .

(a)                                   The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.  The Company has all requisite corporate power and authority to own, operate and lease its properties and carry on its business as currently conducted.  The Company is duly licensed or qualified to do business as a foreign corporation under the laws of each jurisdiction listed on Schedule 4.1(a) and each other jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary, except where the failure to be so licensed or qualified would not have, individually or in the aggregate, a Company Material Adverse Effect (as defined below).  The copies of the Company’s Certificate of Incorporation and By-laws (the “ By-laws ”), each as amended to date and made available to Parent’s and MergerCo’s counsel, are complete and correct, and no amendments thereto are pending, are in full force and effect and the Company is not in breach of any of the foregoing.  The minute books, stock record books and other records and books of the Company and its Subsidiaries are complete and correct in all material respects.  “ Company Material Adverse Effect ” means any event, change or circumstance (or combination of the foregoing) (i) in the kitchen and bath cabinet industry which has had or could reasonably be expected to have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, or (ii) which has had or could reasonably be expected to have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, except, in the case of clause (ii) hereof, for any such event, change or circumstance resulting from (1) the negotiation, execution or performance of this Agreement or the consummation of the transactions contemplated by this Agreement, (2) changes in general economic or political conditions or the securities markets in general (whether as a result of acts of terrorism, war (whether or not declared), armed conflicts or otherwise), or (3) changes in conditions generally applicable to businesses in the same or similar industries as the Company and its Subsidiaries including, without limitation, (A) changes in laws, regulations, rules, ordinances, policies, mandates, guidelines or other requirements of any Governmental Authority or (B) changes in generally accepted accounting principles as applied in the United States on a consistent basis (“ GAAP ”) or its application.

(b)                                  The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution and delivery of this Agreement, the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by the Company Board.  This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement by each of Parent and MergerCo, this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity) (collectively, “ General Enforceability Exceptions ”).

(c)                                   The approval of holders of a majority of the outstanding Voting Common Stock of the Company is the only vote of the Company’s stockholders required to approve this

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Agreement and the transactions contemplated hereby (the “ Necessary Stockholder Approval ”).  If the Closing occurs, as of the Closing, the Necessary Stockholder Approval shall have been obtained.

(d)                                  The Company Board, at a meeting duly called and held, has unanimously (i) declared the advisability of this Agreement and the transactions contemplated hereby, (ii) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interests of the stockholders of the Company, (iii) determined that the consideration to be paid in the Merger is fair to and in the best interests of the stockholders of the Company, (iv) approved and adopted this Agreement and the transactions contemplated by this Agreement, including the Merger, in accordance with applicable laws and (v) resolved to recommend that the stockholders of the Company approve and adopt this Agreement, the Merger and the other transactions contemplated hereby.  No “fair price”, “moratorium”, “control share acquisition” or other similar anti-takeover statute or regulation enacted under state or federal laws in the United States applicable to the Company is applicable to the Merger or the other transactions contemplated hereby, whether as a result of the action taken by the Company Board described in the preceding sentence or otherwise.

Section 4.2.                                 Capitalization .   The authorized capital stock of the Company as of the Original Date consists of (i) 28,000,000 shares of Voting Common Stock of which 21,762,081 shares are issued and outstanding, (ii) 1,000,000 shares of Nonvoting Common Stock of which 854,261 shares are issued and outstanding, (iii) and 1,000,000 shares of undesignated preferred stock, par value $.01 per share, of which zero (0) shares are issued and outstanding.  All of the issued and outstanding shares of capital stock and other Equity Interests of the Company have been duly authorized and validly issued, and are fully paid and nonassessable and free of preemptive rights, rights of first refusal or similar rights.  Except as set forth on Schedule 4.2 , there are no (x) authorized, issued and/or outstanding capital stock or other indicia of equity ownership (including options, warrants, profits interests, stock appreciation rights or similar rights) (“ Equity Interests ”) of the Company and/or (y) outstanding subscriptions, options, warrants, commitments, preemptive rights, deferred compensation rights, agreements, arrangements or commitments of any kind to which the Company is a party relating to the issuance of, or outstanding securities convertible into or exercisable or exchangeable for, any Equity Interests of the Company.  Except as set forth on Schedule 4.2 , there are no agreements to which the Company is a party with respect to the voting of Equity Interests of the Company or which restrict the transfer of any such Equity Interests of the Company.  Except as set forth on Schedule 4.2 , there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Equity Interests of the Company.

All of the issued and outstanding shares of the Company’s capital stock are owned of record and beneficially as set forth on Schedule 4.2 (and in the amounts as set forth on Schedule 4.2 ), free and clear of any Encumbrances.  Schedule 4.2 attached hereto also sets forth all outstanding Options granted by the Company, the name of the Person holding each such Option, the class and number of shares of Company Stock issuable upon the exercise of each such Option and the applicable exercise price of each such Option.  All Options described on Schedule 4.2 have been issued in accordance with the governing option plan and the option agreement or other instrument pursuant to which it was offered.  True and complete copies of all agreements and instruments relating to such Options (including all amendments and modifications thereto) have

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been made available to Parent, and there are no agreements to amend, modify or supplement such agreements or instruments.

Section 4.3.                                 Subsidiaries .

(a)                                   The Company’s Subsidiaries are listed on Schedule 4.3(a) .  The Company owns directly or indirectly all of the outstanding shares of capital stock or other Equity Interest of each of the Company’s Subsidiaries, free and clear of any Encumbrances.  Except as set forth in Schedule 4.3(a) , neither the Company nor any Subsidiary owns, directly or indirectly, any capital stock, equity or other ownership interest in any other Person.

(b)                                  Each of the Company’s Subsidiaries is a corporation duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, operate and lease its properties and carry on its business as currently conducted.  Each such Subsidiary is duly licensed or qualified to do business as a foreign corporation in each jurisdiction listed on Schedule 4.3(b) and each other jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary, except where the failure to be so licensed or qualified would not have, individually or in the aggregate, a Company Material Adverse Effect.  The copies of the organizational documents of each such Subsidiary, in each case as amended to date and made available to Parent’s and MergerCo’s counsel, are complete and correct, and no amendments thereto are pending.  Such organizational documents are in full force and effect and none of the Subsidiaries of the Company is in material breach of any of the foregoing.

Section 4.4.                                 No Conflict; Consents .   Except as set forth on Schedule 4.4 , the execution and delivery by the Company of this Agreement, and the consummation by the Company of the transactions contemplated hereby in accordance with the terms hereof, do not and will not (i) violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under, or give rise to a right of termination of, any contract, agreement, permit, license, authorization or obligation to which the Company or any of its Subsidiaries is a party or by which the Company’s or any of its Subsidiaries’ assets are bound, or any provision of the Certificate of Incorporation or By-laws; (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order, award or judgment of, or any restriction imposed by, any arbitrator, court or other governmental agency applicable to the Company or any of its Subsidiaries or (iii) require from the Company or any of its Subsidiaries any notice to, declaration or filing with, or consent or approval of any Governmental Authority or other Person, except, in each case, where such violation, conflict, default, termination or failure to provide notice or to obtain consent or approval, as applicable, would not have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.5.                                 Financial Statements .   The Company has delivered to Parent and MergerCo the following financial statements, copies of which are attached hereto as Schedule 4.5 (collectively, the “ Financial Statements ”):

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(a)                                   Audited consolidated balance sheets of the Company and its Subsidiaries as of December 31, 2004 and December 31, 2005, and consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended; and

(b)                                  An unaudited consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2006 (the “ Base Balance Sheet ”), and unaudited consolidated statements of income, changes in stockholders’ equity and cash flows of the Company and its Subsidiaries for the nine (9) month period ended September 30, 2006.

Subject to the absence of footnotes and year-end audit adjustments with respect to any unaudited Financial Statements (which shall not be material individually or in the aggregate), each of the Financial Statements (including the notes thereto, if any) is accurate and complete, is consistent with the books and records of the Company and its Subsidiaries (which, in turn, are accurate and complete in all material respects), has been prepared in accordance with GAAP consistently applied and presents fairly in all material respects the financial condition of the Company and its Subsidiaries as of the respective dates thereof and the operating results of the Company and its Subsidiaries for the periods covered thereby.  For purposes of the Closing, the term “Financial Statements” shall be deemed to include for all purposes hereunder, the Fall-Back Month-End Financials (as defined in Section 7.2(c)).  Except as otherwise set forth in this Agreement (including the Schedules hereto), the Company makes no representation or warranty in this Agreement regarding any financial document other than the Financial Statements, including but not limited to any representation or warranty regarding any financial projections with respect to the Company and its Subsidiaries or any representation or warranty as to whether such projections will be achieved.

Section 4.6.                                 Absence of Certain Changes .

(a)                                   Except as set forth on Schedule 4.6(a) , since the date of the Base Balance Sheet (i) the Company and its Subsidiaries have operated only in the ordinary course of business consistent with past practices, (ii) there has been no change in the condition, assets or business of the Company or its Subsidiaries, except such changes that have not had or would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect, and (iii) the Company and its Subsidiaries have made all capital expenditures in accordance with the capital budget set forth as Annex A to Schedule 4.6(a) .

(b)                                  Except as set forth on Schedule 4.6(b) and except as expressly contemplated by this Agreement, since the date of the Base Balance Sheet, neither the Company nor any of its Subsidiaries has (individually or collectively):

(i)                                      suffered a Company Material Adverse Effect;

(ii)                                   suffered any theft, damage, destruction or casualty loss in excess of $100,000 in the aggregate, to its assets, whether or not covered by insurance or suffered any substantial destruction of its books and records;

(iii)                                redeemed or repurchased, directly or indirectly, any Equity Interests of the Company or declared, set aside or paid any dividends or made any

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other distributions (whether in cash or in kind) with respect to any Equity Interests of the Company;

(iv)                               issued, sold or transferred any Equity Interests of the Company or any of its Subsidiaries (except for the issuance of shares of Company Stock upon the exercise of Options), or notes, bonds or other debt securities or equity securities convertible, exchangeable or exercisable into Equity Interests of the Company or any of its Subsidiaries, or warrants, options or other rights to acquire Equity Interests of the Company or any of its Subsidiaries or any profits interests, economic interests or similar rights;

(v)                                  subjected any portion of its properties or assets to any Encumbrance (other than Encumbrances permitted by Section 4.10(c) or Encumbrances in the ordinary course of business which the Company shall be caused to be released immediately prior to the Closing);

(vi)                               sold, leased, licensed, assigned or transferred a portion of its assets or properties, except for sales of inventory or product in the ordinary course of business to unaffiliated third Persons on an arm’s length basis or as specifically contemplated by this Agreement, or canceled without fair consideration any material debts or claims owing to or held by it;

(vii)                            suffered any extraordinary losses in excess of $100,000;

(viii)                         incurred intercompany charges or conducted its cash management customs and practices other than in the ordinary course of business (including, without limitation, with respect to maintenance of working capital balances and inventory levels, making of capital expenditures, collection of accounts receivable and payment of accounts payable);

(ix)                                 made any loans or advances to, or guarantees for the benefit of, any Persons;

(x)                                    granted any performance guarantee to its customers other than in the ordinary course of business and consistent with the policies and practices disclosed to Parent;

(xi)                                 acquired any other business or Person (or any significant portion or division thereof), whether by merger, consolidation or reorganization or by purchase of its assets or stock or acquired any other material assets;

(xii)                              abandoned or failed to maintain in effect any registrations or issuances with respect to the Company Intellectual Property; or

(xiii)                           committed or agreed to any of the foregoing.

Section 4.7.                                 Litigation .  Except as set forth on Schedule 4.7 , neither the Company nor any of its Subsidiaries is involved (either as plaintiff or defendant) in any litigation, action, suit,

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proceeding, claim, arbitration or investigation (and has not been during the preceding three (3) year period) or, to the Company’s knowledge, is any litigation, action, suit, proceeding, claim, arbitration or investigation pending or, to the Company’s knowledge, has any litigation, action, suit, proceeding, claim, arbitration or investigation been threatened in writing against the Company or any of its Subsidiaries which would have, individually or in the aggregate, a Company Material Adverse Effect.  None of the Company or any of its Subsidiaries is subject to any outstanding material order, judgment or decree issued by any governmental authority or any arbitrator or any settlement agreement.

Section 4.8.                                 Taxes .   Except as set forth on Schedule 4.8 :

(a)                                   The Company and its Subsidiaries have timely filed or been included in all income, sales and use and all other material Tax Returns (as defined in Section 11.6) required to be filed by them or in which they are to be included with respect to Taxes for any period ending on or before the Original Date, taking into account any extension of time to file granted to or obtained on behalf of the Company or any of its Subsidiaries and such Tax Returns in all material respects disclose all Taxes required to be paid for the periods covered thereby;

(b)                                  The Company and its Subsidiaries have paid or caused to be paid all Taxes due and owing (whether or not shown on such Tax Returns) prior to the Original Date or have made provision, in accordance with GAAP, for all Taxes owed or accrued through the Original Date;

(c)                                   Neither the IRS (as defined in Section 11.6) nor any other Governmental Authority has asserted any deficiency or claim for any amount of additional Taxes against the Company or any of its Subsidiaries, and no claim has ever been made by a taxing authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction;

(d)                                  No federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently being conducted with regard to any Taxes or Tax Returns of the Company or any of its Subsidiaries and neither the Company nor any of its Subsidiaries has received a written notice of any actual or threatened audits or proceedings or is otherwise aware of any such audits or proceedings;

(e)                                   All Taxes and other assessments and levies which the Company and its Subsidiaries were or are required to withhold or collect have been withheld and collected and have been paid over to the proper Governmental Authorities;

(f)                                     Neither the Company nor any of its Subsidiaries has ever been a member of an affiliated group of corporations filing a combined federal income Tax Return (other than a group the common parent of which is or was the Company) nor does the Company or any of its Subsidiaries have any liability for Taxes of any other Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of foreign, state or local law) or otherwise.  Neither the Company nor

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any of its Subsidiaries is a party to any agreement or arrangement requiring the indemnification, sharing or allocation of Taxes;

(g)                                  Neither the Company nor any of its Subsidiaries has distributed the stock of another entity or had its stock distributed by another entity in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code;

(h)                                  Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;

(i)                                      There are no liens for Taxes upon the assets of the Company or its Subsidiaries, except for liens relating to current Taxes not yet due; and

(j)                                      Except as would not have a Parent Material Adverse Effect, neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (iii) intercompany transaction or excess loss account described in Treasury Regulations under Code §1502 (or any corresponding or similar provision of state, local or foreign income Tax law), (iv) installment sale or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount received on or prior to the Closing Date.

Section 4.9.                                 Employee Benefit Plans .

(a)                                   Schedule 4.9(a) sets forth all “employee benefit plans”, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), each severance, incentive or bonus, deferred compensation, profit sharing, retirement, welfare, vacation or paid-time-off, stock purchase, stock option or equity incentive plan, program, agreement or arrangement, and any other material employee benefit plan, program or arrangement currently maintained or contributed to by the Company or any of its Subsidiaries or with respect to which the Company or any of its Subsidiaries have any liability (the “ Company Plans ”).  Neither the Company nor any of its Subsidiaries sponsors, maintains, contributes to (or is obligated to contribute to) or has any liability with respect to any “employee pension plan,” as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA or Section 412 of the Code or any “multiemployer plan,” as defined in Section 3(37) of ERISA.  Except as disclosed on Schedule 4.9(a) , none of the Company Plans provide for post-employment life or health insurance benefits for any participant or any beneficiary of a participant, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (or similar state law) and at the expense of the participant or the participant’s beneficiary.

(b)                                  Except as set forth in Schedule 4.9(b) , The Company Plans have been maintained and administered in form and operation, in all material respects, in accordance with

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all applicable laws, including, without limitation, ERISA and the Code.  Each Company Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS regarding its qualification thereunder and no events have occurred that could be expected to adversely affect such qualification.

(c)                                   There are no pending actions, claims, lawsuits or governmental investigations or audits which are pending or, to the knowledge of the Company, threatened, in each case in respect of the Company Plans.

(d)                                  Except as expressly contemplated by this Agreement or as set forth on Schedule 4.9(d) , neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment becoming due to any employee of the Company or any of its Subsidiaries, (ii) increase any benefits otherwise payable under any Company Plan or (iii) result in the forfeiture, acceleration of the time of payment or vesting of any such benefits under any such plan.

(e)                                   Except as disclosed on Schedule 4.9(e) , no amount required to be paid or payable to or with respect to any employee or other service provider of the Company or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event) could be an “excess parachute payment” within the meaning of Section 280G of the Code.

(f)                                     The Company has provided Parent with (i) true and complete copies of each Company Plan (or, if not written, a written summary of its terms), (ii) any related trust agreement or other funding instrument; (iii) the most recent IRS determination letter, if applicable; (iv) any summary plan description and other material written communication to employees concerning the benefits provided under the Company Plan; (v) the most recent Form 5500 annual report (including attached schedules and financial statements); and (vi) the most recent actuarial valuation reports, if applicable.

(g)                                  All contributions, premiums or other payments have been paid on a timely basis with respect to each Company Plan.  Except as taken into account in determining Closing Working Capital (as finally determined), no unfunded liability exists with respect to any Company Plan.

Section 4.10.                          Real and Personal Property .

(a)                                   Schedule 4.10(a) sets forth the address and description of each Owned Real Property.  With respect to each Owned Real Property: (i) the Company or one of its Subsidiaries has indefeasible fee simple title to such Owned Real Property, free and clear of all Encumbrances (except for the Encumbrances described in Section 4.10(c)(i)-(vii), as applicable),  (ii) except as set forth in Schedule 4.10(a) , none of the Company nor any of its Subsidiaries has leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and (iii) other than the rights of Parent and MergerCo pursuant to this Agreement, there are no outstanding rights of first offer or rights of first refusal or similar contracts or commitments to purchase such Owned Real Property or any portion thereof or interest therein.

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(b)                                  Schedule 4.10(b) sets forth a list of all material leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or any of its Subsidiaries (the “ Leased Real Property ”).  All leases (including subleases) relating to Leased Real Property are identified on Schedule 4.10(b) (each a “ Lease ” and collectively, the “ Leases ”).  With respect to each Lease listed on Schedule 4.10(b) , except as would not have, individually or in the aggregate, a Company Material Adverse Effect:

(i)                                      the Company or a Subsidiary of the Company, as applicable, have valid and enforceable leasehold interests to the leasehold estate in the Leased Real Property granted to the Company or such Subsidiary, as applicable, pursuant to each pertinent Lease, except as such enforceability may be limited by General Enforceability Exceptions;

(ii)                                   each of said Leases has been duly authorized and executed by the Company or such Subsidiary, as applicable, and is in full force and effect; and

(iii)                                neither the Company nor such Subsidiary is in default under any of said Leases, nor, to the Company’s knowledge, has any event occurred which, with notice or the passage of time, or both, would give rise to such a default by the Company or such Subsidiary, as applicable.

(c)                                   Except as set forth on Schedule 4.10(c) or as specifically disclosed in the Base Balance Sheet, the Company and each of its Subsidiaries have good and marketable title to, or a valid leasehold interest in, all of their property and assets, including those properties and assets shown on the Base Balance Sheet or acquired after the date of the Base Balance Sheet, free and clear of any Encumbrances, except for (i) Encumbrances disclosed in the Base Balance Sheet for Taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty (as to which adequate reserves have been established in the Financial Statements), (ii) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other similar Encumbrances arising in the ordinary course of business, (iii) Encumbrances consisting of pledges or deposits required in the ordinary course of business and in respect of statutory obligations in connection with workers’ compensation, unemployment insurance and other social security legislation, (iv) Encumbrances on any property acquired or held by the Company or its Subsidiaries in the ordinary course of business, securing indebtedness incurred or assumed for the purpose of financing (or refinancing) all or any part of the cost of acquiring such property, all of which shall be released as of immediately prior to the Closing, (v) Encumbrances securing capital lease obligations, (vi) Encumbrances set forth on Schedule 4.10(c)(vi) , all of which will be released concurrently with the Closing and (vii) with respect to the Owned Real Property, Encumbrances of record or imperfections of title which are not, individually or in the aggregate, material in character, amount or extent and which do not materially detract from the value or materially interfere with the present use of the assets subject thereto or affected thereby or which would not have, individually or in the aggregate, a Company Material Adverse Effect, and such property and assets are in good condition and repair (ordinary wear and tear expected) and are fit for use in the ordinary course of business of the Company and its Subsidiaries.

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(d)                                  The assets and properties (whether real or personal, tangible or intangible) owned or leased by the Company and its Subsidiaries constitute all of the assets and properties necessary for the conduct of their businesses as presently conducted.

Section 4.11.                          Labor and Employment Matters .

(a)                                   Except as set forth on Schedule 4.11(a) or as otherwise would not have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each of its Subsidiaries are in compliance with all federal and state laws respecting employment and employment practices, including, without limitation those laws relating to terms and conditions of employment, wages and hours, collective bargaining, equal employment, layoffs, immigration, workplace safety and the collection and payment of taxes and other withholdings.  There has been no “mass layoff” or “plant closing” within the meaning of the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar state or local “mass layoff” or “plant closing” law (collectively, the “WARN Act”) with respect to the Company or any of its Subsidiaries within the two (2) year period prior to the Effective Time.

(b)                                  Except as set forth on Schedule 4.11(b) , neither the Company nor any Subsidiary of the Company is a party to or otherwise bound by any collective bargaining agreement, contract or other agreement, understanding or relationship with a labor union or labor organization.  Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any Subsidiary of the Company is subject to any charge, demand, petition or representation proceeding seeking to compel, require or demand it to bargain with any labor union or labor organization nor, is there pending or, to the Company’s knowledge, threatened, any material labor strike, dispute, walkout, work stoppage, slow-down or lockout involving the Company or any Subsidiary of the Company.

Section 4.12.                          Contracts and Commitments .   Except as set forth on Schedule 4.12 , neither the Company nor any Subsidiary of the Company is a party to or bound by:

(a)                                   any partnership agreement or joint venture agreement or other agreement relating to ownership of or investments in any business or enterprise;

(b)                                  any agreement requiring the payment of severance with any director, officer, employee or consultant;

(c)                                   any employment or consulting agreement involving annual compensation in excess of $100,000 or any retention, change-of-control or similar agreements;

(d)                                  any agreement with another Person materially limiting or restricting the ability of the Company or any Subsidiary of the Company to enter into or engage in any market or line of business or to compete with or sell to any Person;

(e)                                   any agreement with any current officer, director, stockholder or Affiliate of the Company or any of its Subsidiaries or any of their respective Affiliates;

(f)                                     any agreements for the sale of any of the assets of the Company or any of its Subsidiaries other than with respect to the sale of inventory and product in the

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ordinary course of business or for the grant to any person of any rights to purchase any of its assets;

(g)                                  any agreement relating to the acquisition by the Company or any of its Subsidiaries of any business or any material portion of the assets or capital stock of any other Person entered into in the last five (5) years;

(h)                                  any material agreements relating to the incurrence, assumption, surety or guarantee of any indebtedness;

(i)                                      any agreements under which the Company or any of its Subsidiaries has made material advances or loans to any other Person (which shall not include advances made to an employee of the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice);

(j)                                      any other agreement (or group of related agreements) the performance of which requires aggregate payments to or from the Company or any of its Subsidiaries in excess of $100,000 per year;

(k)                                   any collective bargaining agreement with any labor union or any bonus, commission, pension, profit sharing, retirement or any other form of deferred compensation or incentive plan or any stock purchase, stock option or similar plan or practice; or

(l)                                      any material agreement which contains any provision(s) requiring the Company and/or any of its Subsidiaries to indemnify any other party thereto or any guaranty.

As used in this Section 4.12, the word “agreement” means and includes every written or oral contract, license, lease, commitment or agreement of any kind.  Each of the agreements set forth on Schedule 4.12 and/or any of the other Schedules (as defined in Section 11.2) hereto and each New Ordinary Course Contract (as defined in Section 6.1(e)) is in full force and effect, is the legal, valid and binding obligation of the Company and/or its Subsidiaries and, to the Company’s knowledge, each of the other counterparties thereto, and is enforceable against them in accordance with its terms, except as such enforceability may be limited by General Enforceability Exceptions, and neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any of the counterparties thereto has committed any material breach or default thereunder, nor has any event occurred that (with or without notice, lapse of time or both) would constitute a material breach or default.  The Company has heretofore made available to Parent a true, complete and correct copy and a true and correct description of all material terms of each oral agreement listed on Schedule 4.12 hereto or any of the other Schedules hereto and, in each case, all material amendments, modifications and supplements thereto and waivers thereunder (all of which are disclosed on Schedule 4.12 hereto or one of the other Schedules hereto).

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Section 4.13.                          Intellectual Property .

 

(a)                                   Schedule 4.13(a) sets forth an accurate and complete list of all Patents (as defined in Section 11.6), registered or applied for Marks (as defined in Section 11.6), registered or applied for Copyrights (as defined in Section 11.6), and any other material unregistered Copyrights and Marks owned or filed by the Company and its Subsidiaries and used in connection with the business of the Company and its Subsidiaries as currently conducted.

(b)                                  Except as set forth on Schedule 4.13(b) , the Company or a Subsidiary of the Company is the owner of all right, title and interest in and to all of the Intellectual Property (as defined in Section 11.6) as set forth in Schedule 4.13(a) and is the owner of all right, title, and interest in and to, or has a valid and enforceable right to use pursuant to a written license agreement set forth on Schedule 4.13(f) (other than commercially-available, off-the shelf software), all other Intellectual Property as is necessary in connection with the business of the Company and its Subsidiaries as currently conducted taken as a whole, free and clear of all Encumbrances (collectively, the “ Company Intellectual Property ”), except where the failure to own or have the right to use such Intellectual Property would not  have, individually or in the aggregate, a Company Material Adverse Effect.  The Company Intellectual Property (other than Patents included in the Company Intellectual Property) is valid and enforceable.  To the Company’s knowledge, the Patents included in the Company Intellectual Property are valid and enforceable.  No independent contractor, consultant or other third party has developed or assisted in the development of any Intellectual Property on behalf of the Company and/or any of its Subsidiaries.

(c)                                   The Company Intellectual Property owned, and to the knowledge of the Company or any Subsidiary, the Company Intellectual Property used, practiced or otherwise commercially exploited by the Company or its Subsidiaries has not and does not constitute an unauthorized use or misappropriation of any Intellectual Property of any Person other than any Patents, has not infringed, constituted an unauthorized use of or otherwise violated and does not infringe, constitute an unauthorized use of, or otherwise violate any other right of any Person (including pursuant to any non-disclosure agreements or obligations to which Company or its Subsidiaries or any of their present or former employees or consultants is a party) other than any Patents, and, to the Company’s knowledge, has not infringed or otherwise violated and does not infringe or otherwise violate on any Patents of any third party.

(d)                                  Neither the Company nor any of its Subsidiaries is or, to the Company’s knowledge, is threatened to be a party to any suit, action or proceeding which involves a claim of infringement, misappropriation, unauthorized use, or violation of any Intellectual Property used or owned by any Person against the Company or its Subsidiaries, or challenging the ownership, use, validity or enforceability of any Intellectual Property owned or used by the Company or its Subsidiaries, nor, to the Company’s knowledge, are there any facts or circumstances that would form the basis for any claim of infringement, misappropriation, unauthorized use, or violation by any Person against the Company and its Subsidiaries, or challenging the ownership, use, validity or enforceability of any Intellectual Property owned or used by the Company.

(e)                                   To the Company’s knowledge, no third party has infringed, misappropriated or otherwise conflicted with any of the Company Intellectual Property.

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(f)                                     Schedule 4.13(f) sets forth a complete and accurate list of all material licenses, sublicenses and other agreements to which the Company and/or its Subsidiaries are a party (i) granting any other Person the right to use the Company Intellectual Property, or (ii) pursuant to which Company or its Subsidiaries are authorized to use any third party Intellectual Property (identifying third party Intellectual Property for which the Company or any of its Subsidiaries possesses the source code), which are incorporated in, or are from a part of any product manufactured, distributed, or sold by the Company or any Subsidiary or which are otherwise used (or currently proposed to be used) by the Company or its Subsidiaries in the business of the Company as currently conducted, other than licenses for commercial off-the-shelf software.

(g)                                  During the twelve month period ending on the Effective Date, there have been no material failures, breakdown, outages or unavailability of any of the computer systems (including without limitation, the software, hardware and networks) currently used by the Company or any of its Subsidiaries in the operation of the business.

Section 4.14.                          Environmental Matters .   Except as set forth on Schedule 4.14 , or as would not have a Company Material Adverse Effect:

(a)                                   the Company and the Subsidiaries have complied in all material respects with, and are in compliance in all material respects with, all applicable Environmental Laws (as defined below), including those Environmental Laws applicable to their operations and use of the Leased Real Property;

(b)                                  neither the Company nor the Subsidiaries has generated, transported, treated, stored, disposed of, arranged for or permitted the disposal of, handled, exposed any Person to, or Released any Hazardous Material (as defined below) at any location, including without limitation at or on the Owned Real Property or the Leased Real Property, except in compliance in all material respects with all applicable Environmental Laws and as would not give rise to current or future liability of the Company or its Subsidiaries under Environmental Laws, and there has been no Release (as defined below) or threat of Release of any Hazardous Material at, on or affecting any property or facility currently or previously owned, leased or operated by the Company or the Subsidiaries, including the Owned Real Property and the Leased Real Property, that requires reporting or remediation by the Company or the Subsidiaries pursuant to any applicable Environmental Law or that would give rise to current or future liability of the Company or its Subsidiaries under Environmental Laws;

(c)                                   except for those matters that  prior to the Original Date have been fully settled without future obligation, neither the Company nor the Subsidiaries have (i) received written notice under the citizen suit provisions of any Environmental Law; (ii) received any written request for information, notice, demand letter, administrative inquiry or written complaint or claim from any Governmental Authority or any Person under any Environmental Law; (iii) been subject to or, to the Company’s knowledge, threatened with any governmental or citizen enforcement action or notice of liability with respect to any Environmental Law; or (iv) received written notice of or otherwise have

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knowledge of any material claim, notice of violation, notice of liability, or unsatisfied liability under any Environmental Law;

(d)                                  the Company and its Subsidiaries have obtained, have complied in all material respects with, and are in compliance in all material respects with all Company Licenses (as defined in Section 4.18) required under any Environmental Law for the Company’s or its Subsidiaries’ activities and operations, including operations at the Owned Real Property and the Leased Real Property; and

(e)                                   there are no drinking water wells, production water wells, groundwater monitoring wells, underground storage tanks, landfills, current or former waste disposal areas, or polychlorinated biphenyls at or on any property or facility currently owned or operated by the Company or the Subsidiaries, including the Owned Real Property and the Leased Real Property, for which the Company or its Subsidiaries has responsibility or liability under Environmental Law.

(f)                                     The Company and its Subsidiaries have not assumed, undertaken, provided an indemnity with respect to, or otherwise become subject to any liability of any other Person relating to Environmental Laws.

(g)                                  Neither the Company nor any of its Subsidiaries has any liabilities with respect to the presence of asbestos, silica or other Hazardous Material, in any product or in or upon any premises, property or facility.

(h)                                  The Company and its Subsidiaries have provided or made available to Parent copies of all material environmental reports, audits, assessments, and investigations, and any other material environmental documents, related to the Company and its Subsidiaries or any of their respective predecessors, or any of their past or present facilities, properties or operations, to the extent the foregoing are in the possession, custody, or control of the Company or its Subsidiaries.

 “ Environment ” means soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata and ambient air.

“ Environmental Laws ” means all laws (including principles of common law), statutes, ordinances, regulations, rules, orders, judgments, decrees or any other provisions having the force or effect of law relating to pollution, protection of the Environment, or protection of human health and safety, including, without limitation, the federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Endangered Species Act and similar federal, state and local laws as in effect on or prior to the Closing Date.

“ Hazardous Material ” means any pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, petroleum or petroleum-containing product, as listed or regulated under any Environmental Law, and any other substance for which liability or standards of conduct may be imposed under Environmental Laws.

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 “ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the Environment.

Section 4.15.                          Insurance .   Schedule 4.15 sets forth, a summary of the material insurance policies held by, or for the benefit of, the Company and its Subsidiaries or under which any of the Company, its Subsidiaries or any of their employees, businesses, assets and/or properties are covered, together with a claims history for the period from January 1, 2004 to the date of the Base Balance Sheet.  All of such insurance policies are in full force and effect, and none of the Company nor any of its Subsidiaries is or has been in material default thereunder and, during the past three years, there has been no lapse in the Company’s and its Subsidiaries’ insurance coverage.  None of the Company nor any of its Subsidiaries has been denied insurance coverage requested by or on behalf of any such Person within the past three (3) years.  Except as set forth on Schedule 4.15 none of the Company nor any of its Subsidiaries has any self-insurance or co-insurance programs, and the reserves set forth on the Base Balance Sheet are adequate to cover all anticipated liabilities with respect to any such self-insurance or co-insurance programs.

Section 4.16.                          No Brokers .   Neither the Company nor any of its Subsidiaries has entered into any contract, arrangement or understanding with any person or firm that may result in the obligation of such entity or Parent or MergerCo to pay any finder’s fees, brokerage or agent’s commissions or other like payments in connection with the negotiations leading to this Agreement or consummation of the Merger, except that the Company has retained and will owe fees to Harris Williams & Co. and Behrman Brothers Management Corp., all of which shall be included as Company Expenses and deducted from the Merger Consideration pursuant to Section 2.1(d)(iii)(B).

Section 4.17.                          Compliance with Laws .   Except as set forth in Schedule 4.17 , neither the Company nor any Subsidiary of the Company is (or has been in the past three (3) years) in default or violation of any law, statute, ordinance, regulation, rule, order, judgment or decree of any Governmental Authority applicable to the Company or such Subsidiary or by which any property or asset of the Company or its Subsidiaries is bound, except for any such conflicts, defaults or violations that would not have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.18.                          Licenses and Permits .   Schedule 4.18 contains a true, correct and complete list of all material licenses, permits, authorizations, registrations and certifications of any Governmental Authority, which have been issued to the Company or any of its Subsidiaries and are currently in effect (the “ Company Licenses ”).  Each Company License is valid and in full force and effect, except to the extent the failure of any such Company License to be valid and in full force and effect would not have, individually or in the aggregate, a Company Material Adverse Effect, and the Company and its Subsidiaries are in material compliance with the terms and conditions of such Company Licenses.  There is no investigation or proceeding pending or, to the knowledge of the Company, threatened in writing that could result in the termination, revocation, suspension, or restriction of any Company License or the imposition of any fine, penalty or other sanctions for violation of any legal or regulatory requirements relating to any Company License, except to the extent the termination, revocation, suspension, or restriction of any Company License or the imposition of any fine, penalty or other sanctions would not have, individually or in the aggregate, a Company Material Adverse Effect.  Except as set forth in

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Schedule 4.18 , none of the Company Licenses shall be affected in any manner by the consummation of the transactions contemplated hereby, except to the extent such effect would not have, individually or in the aggregate, a Company Material Adverse Effect.  The Company and its Subsidiaries hold all material licenses, permits, authorizations, registrations and certifications of any Governmental Authority necessary for the conduct of their business as presently conducted.

Section 4.19.                          Knowledge .   Whenever a representation or warranty made by the Company herein refers to the “knowledge of the Company”, the “Company’s knowledge” or a similar phase, such knowledge shall be deemed to consist only of the actual knowledge (after reasonable inquiry), on the Original Date and on the Closing Date, of John Fitzpatrick, Dale Herbst, John Sleva, Lynn McClintock and Paul Becker.

Section 4.20.                          Undisclosed Liabilities .   Except as set forth in Schedule 4.20 , to the Company’s knowledge none of the Company nor any of its Subsidiaries has any debts, liabilities or obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable, other than any such debts, liabilities or obligations (i) disclosed on the other Schedules hereto, (ii) reflected or reserved against on the face of the Base Balance Sheet or the notes thereto, (iii) incurred since the date of the Base Balance Sheet in the ordinary course of business of the Company and its Subsidiaries (none of which is a liability resulting from, arising out of or relating to any breach of contract, breach of warranty, tort, infringement, violation of law or a claim or lawsuit or an environmental liability) or (iv) that would not, individually or in the aggregate, have a Company Material Adverse Effect.  Notwithstanding the foregoing, this representation and warranty will not apply to (and will exclude) any liability arising out of or related to facts, events, transactions, or actions or inactions, the category of which is the subject of another representation or warranty set forth in this Article IV, whether or not the existence of such liability would constitute a breach or inaccuracy of such representation or warranty.  By way of example as to the foregoing sentence, pending and threatened litigation is addressed in the representations and warranties in Section 4.7 and therefore all pending and threatened litigation (regardless of whether such litigation is covered by the representation and warranties in Section 4.7) is considered a “category” for the purposes of the foregoing sentence.

Section 4.21.                          Affiliate Transactions .   Except as set forth on Schedule 4.21 attached hereto, no Common Equity Holder or any of such Common Equity Holder’s Affiliates or present or former officer, director or other Affiliate of the Company or any of its Subsidiaries is a party to any contract, agreement or transaction with the Company or any of its Subsidiaries or has any interest in any property, real or personal or tangible or intangible, used in or pertaining to the business of the Company and/or any of its Subsidiaries, except for (i) salaries, bonuses and other compensation under the terms of any pre-existing written employment contracts or employee benefit plans entered into prior to the Original Date and disclosed on the Schedules hereto and (ii) reimbursement of business expenses incurred in the ordinary course of business.

Section 4.22.                          Customers and Suppliers .   Schedule 4.22 lists the Company’s and its Subsidiaries’ (a) ten (10) largest customers (in terms of consolidated sales) during the nine (9) month period ended as of September 30, 2006 (the “ Customers ”), and (b) ten (10) largest suppliers (by dollar volume of purchases) during the nine (9) month period ended as of September 30, 2006 (the “ Suppliers ”).  Neither the Company nor any of its Subsidiaries has received any written notice from any such Customer or Supplier that such Customer or Supplier intends to terminate its relationship with the Company and its Subsidiaries or to materially modify its business relationship with the Company and its Subsidiaries.  To the Company’s knowledge, neither the Company nor any of its Subsidiaries has

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received any oral notice from any such Customer or Supplier that such Customer or Supplier intends to discontinue any program or business line with the Company or its Subsidiaries outside the ordinary course of business.

Section 4.23.                          Inventory .  The inventories of the Company and its Subsidiaries reflected on the Financial Statements are, and the inventory of the Company and its Subsidiaries to be included as assets in the computation of Net Working Capital will be, of a quantity and quality usable and saleable in the ordinary course of business of the Company and its Subsidiaries, and are not damaged, defective or obsolete, net of any applicable reserve in the Financial Statements therefor for damaged, defective and/or obsolete inventory.

Section 4.24.                          Warranty .  All products and services developed, sold, licensed, rendered and/or delivered by the Company and each of its Subsidiaries have been in conformity with all applicable contractual commitments and all express and implied warranties in all material respects, and none of the Company nor any of its Subsidiaries has any material liability in connection therewith in excess of any warranty reserve specifically established with respect thereto and included on the Base Balance Sheet (as adjusted for the passage of time through the Closing Date in accordance with GAAP).  Except as set forth in Schedule 4.24 attached hereto, no products and services developed, sold, licensed, rendered and/or delivered by the Company or any of its Subsidiaries are subject to any guaranty, warranty or other indemnity beyond the ordinary course terms and conditions of such sale, license or service.  None of the Company or any of its Subsidiaries has been notified of any extraordinary warranty claims or other extraordinary indemnity obligations relating to any of its products or services within the past twelve (12) months.

Section 4.25.                          Indebtedness .   Except as set forth on Schedule 4.25 hereto, neither the Company nor any of its Subsidiaries has any Indebtedness outstanding at the Original Date.  Except for the amount of Indebtedness included as a reduction to the Merger Consideration pursuant to Section 2.1(d)(iii)(A), as of the Measurement Time, the Company and its Subsidiaries will not have any Indebtedness outstanding.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO

Parent and MergerCo hereby jointly and severally represent and warrant to the Company that the following representations and warranties contained in this Article V (i) are true and correct as of the Original Date, and (ii) will be true and correct as of the Effective Time (except that representations and warranties that are made as of a specific date need only be true as of such date):

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Section 5.1.                                 Organization .   Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and MergerCo is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and each has all requisite corporate power and authority to own, operate and lease its properties and to carry on its respective business as currently conducted.  Each of Parent and MergerCo is duly licensed or qualified to do business as a foreign corporation under the laws of each jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary, except where the failure to be so licensed or qualified would not be reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.  “ Parent Material Adverse Effect ” means any effect, change or circumstance (or combination of the foregoing) which has had or could reasonably be expected to have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Parent and, prior to the Closing, MergerCo, taken as a whole, except for any such effects resulting from (i) the negotiation, execution or performance of this Agreement or the consummation of the transactions contemplated by this Agreement, (ii) changes in general economic or political conditions or the securities markets in general (whether as a result of acts of terrorism, war (whether or not declared), armed conflicts or otherwise), (iii) changes in laws, regulations, rules, ordinances, policies, mandates, guidelines or other requirements of any Governmental Authority or (iv) changes in GAAP or its application.

Section 5.2.                                 Authorization; Validity of Agreement; Necessary Action .   Each of Parent and MergerCo has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance by Parent and MergerCo of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action by the board of directors of Parent and the board of directors of MergerCo and by the stockholders of MergerCo, and, except as set forth on Schedule 5.2 , no other action on the part of Parent or MergerCo is necessary to authorize the execution and delivery by Parent or MergerCo of this Agreement and the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Parent and MergerCo and, assuming due and valid authorization, execution and delivery hereof by the Company, is a valid and binding obligation of each of Parent and MergerCo, as the case may be, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by General Enforceability Exceptions.

Section 5.3.                                 No Conflict; Consents .   Except as set forth on Schedule 5.3 , the execution and delivery by Parent and MergerCo of this Agreement, and the consummation by Parent and MergerCo of the transactions contemplated hereby in accordance with the terms hereof, do not and will not (i) violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under, or give rise to a right of termination of, any contract, agreement, permit, license, authorization or obligation to which Parent or MergerCo is a party or by which its assets are bound, or any provision of the organizational documents of Parent or any of its Subsidiaries; (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or rule, or any order, award or judgment of, or any restriction imposed by, any arbitrator, court or other governmental agency applicable to Parent or MergerCo or (iii) require from Parent or MergerCo any notice to, declaration or filing with, or consent or approval of any Governmental Authority or other Person, except, in each case, where such violation, conflict, default, termination or

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failure to provide notice or to obtain consent or approval, as applicable, would not have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 5.4.                                 Required Financing .   Attached as Exhibit C-1 hereto are copies of commitment letters from (a) Credit Suisse Securities (USA) LLC and Credit Suisse (the “ CS Commitment Letter ”), (b) Olympus (the “ Olympus Debt Commitment Letter ”) and (c) OCM Mezzanine Fund II, L.P.(the “ OCM Commitment Letter ” and, together with the CS Commitment Letter and the Olympus Debt Commitment Letter, collectively, the “ Debt Commitment Letters ”), pursuant to which the lenders party thereto have agreed, subject to the terms and conditions set forth therein, to provide the necessary debt financing to Parent and MergerCo for the consummation of the transaction contemplated hereby (the “ Debt Financing ”).  Attached as Exhibit C-2 is a copy of the commitment letter from Olympus Growth Fund IV, L.P. (the “ Equity Commitment Letter ” and together with the Debt Commitment Letters, the “Financing Commitments”), pursuant to which Olympus Growth Fund IV, L.P. has agreed, subject to the terms and conditions set forth therein, to provide the necessary equity financing to Parent and MergerCo for the transactions contemplated hereby (the “ Equity Financing ” and together with the Debt Financing, the “ Financing ”).  The Financing Commitments are in full force and effect as of the Original Date.  Assuming the Financing contemplated by the Financing Commitments is consummated in accordance with their terms (including, without limitation, the execution and deliver