Sallie Mae's lawsuit seeks a declaration that the buyer group has reneged on the merger agreement, that no "material adverse change" has occurred, and that Sallie Mae may terminate the takeover and collect the $900 million.

A material adverse change is a condition that could cause a substantial reduction in earnings power and it can give buyers or lenders a "walk right" from their obligations.

The lawsuit is being seen by many as a hard-ball attempt by Sallie Mae to force the buyer group to stick to the original deal, in which the group offered $60 a share, or come up with something closer to it than its revised proposal of $50 a share, or $20.6 billion offer, plus extra payments depending on how the company performed.

"We are prepared to close under the contract the parties signed in April," said Sallie Mae chairman Albert Lord in a statement late on Monday. "Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same."

The original buyout agreement has a $900 million breakup fee. But if the buyers could prove the student lender has suffered a material adverse change, they would not have to pay it.

J.C. Flowers & Co said on Tuesday their revised buyout offer has expired and that the future of deal would be resolved in court.

"We regret that our offer to amend the terms of the Sallie Mae transaction was allowed to expire without discussion," J.C. Flowers said in a statement. "Instead, Sallie Mae filed what we firmly believe is a meritless lawsuit. We now look forward to having this matter resolved in the Delaware Chancery Court."

J.C. Flowers repeated its stance that a material adverse change has occurred and that Sallie Mae has misinterpreted the merger contract.

Joel Greenberg, co-chair of law firm Kaye Scholer LLP's corporate and finance department, said it would be difficult for J.C. Flowers to argue there has been a material adverse change, because the contract specifically addressed the question of new legislation.

"Is it so substantially worse than the company predicted that it is a material adverse change? It's a very hard argument," Greenberg added.

Bingham McCutchen LLP, a 1,000-lawyer U.S. firm with offices in London, Tokyo and Hong Kong, and New Tokyo International Law Office, a premier insolvency, corporate and litigation firm with 22 lawyers, have officially combined operations in Tokyo and moved into expanded office space, creating a significant presence in Japan for Bingham.

The combination increases the number of lawyers in Bingham’s Tokyo office to more than 50 Japanese lawyers (bengoshi) and six foreign lawyers. The addition of New Tokyo, founded by Mitsue Aizawa and Yutaka Kimura, expands Bingham’s on-the-ground capacity in Asia and further bolsters its renowned cross-border restructuring and insolvency practice. The New Tokyo deal is Bingham’s second in Japan for 2007. Earlier this year, Bingham combined with another leading restructuring firm, Sakai & Mimura, founded by Hideyuki Sakai, with approximately 20 Japanese lawyers.

"Our strategy has always been to focus on where our clients need -- or will need -- top-notch legal talent," said Bingham Chairman Jay Zimmerman. "By building upon our key practices of insolvency, securities and financial services in Japan, we are positioning ourselves to be the ‘go-to law firm’ for financial institutions investing in Japan and in major economic markets worldwide." Bingham also opened a Hong Kong office in 2007 and has offices in key financial centers around the globe, including London and New York.

The addition of the New Tokyo firm will also expand and build upon Bingham’s finance and corporate practice, representing major corporations, insurance companies and investment banks.

The deal also benefits clients of the legacy New Tokyo firm. Aizawa noted that these clients are increasingly thinking of overseas strategies. "The fit with Bingham is complementary in every sense," she said. "We wanted to be able to provide our clients the global backup they need while Bingham wanted to build in Tokyo for their clientele. Together, we are increasing our ability to provide one-stop services in the corporate and compliance areas. Moreover, our depth of practice in insolvency and the insurance area, combined with Bingham’s insolvency proficiency, gives us tremendous strength."

The addition of the New Tokyo firm, with its 22 Japanese lawyers, and the pending arrival of 10 new Japanese lawyers to Bingham’s Tokyo office later this year, will bring Bingham’s number of bengoshi to nearly 60, among the highest for foreign law firms in Japan. In addition, Bingham’s Japanese Practice, with its 50 lawyers outside of Japan, focuses on large-scale, cross-border financial restructurings, corporate/M&A and finance matters, and has significant intellectual property, antitrust and litigation strengths.

http://www.bingham.com

While acknowledging that the new disclosure rules have provided investors with a substantial amount of information on executive pay, "far too often meaningful analysis is missing," John White, the director of the SEC's division of corporate finance, said during a speech Tuesday in San Francisco at the National Association of Stock Plan Professionals annual conference on executive compensation.

The SEC had the most questions on "performance targets" for individuals that companies used to determine compensation and asked them to explain how the quality of an executive's performance translates into an objective pay decision.

Corporate performance goals included in the proxies ranged from financial targets such as earnings and sales growth, to strategic goals including increases in market share, according to the review.

The SEC earlier this year began faxing requests for more detailed information to hundreds of companies, including General Electric Co, Schering-Plough Corp. and Prudential Financial Inc.

The government's initial review also found data presentation is important, including "using plain English."

"Techniques such as providing an executive summary, or creating tables or charts tailored to a company's particular executive compensation program, can make the disclosure more useful and meaningful," according to the review.

The reviews continue, and the specific correspondence with a company will not be released until 45 days after each review is completed, the SEC said.

Since the new disclosure rules started, the Associated Press calculates total pay using the executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The AP figures may vary from the total compensation of company's report.

AEP, based in Columbus, Ohio, maintains it never violated Clean Air Act rules to curb emissions, and had already spent or planned to pay $5.1 billion on scrubbers and other equipment to reduce its pollution.

Scott Cowger, spokesman for Maine's Department of Environmental Protection, said the settlement should have an impact beyond acid rain control. It will limit regional haze and ozone, and very possibly reduce mercury in the environment, he said.

Cowger acknowledged Maine was not in the suit, but not due to a lack of interest. Maine is involved in acid rain litigation against the EPA already, said Cowger, adding that the state must aim its resources where they are going to have the greatest effect.

Matthew Davis of Environment Maine said he hopes the settlement sends a message that power plant operators no longer can disobey the Clean Air Act and get away with it.

In Vermont, Attorney General William Sorrell said the new pollution control devices will reduce a lot of particulate matter that causes pollution, helping people with asthma and other conditions.

"This is a major victory for the environment in the northeastern part of the U.S.," said Sorrell. "Acid rain is a huge problem in the Adirondacks, the Green Mountains and the White Mountains."

New Hampshire Attorney General Kelly Ayotte and Environmental Services Commissioner Thomas Burack said the settlement will open the door to the largest emissions reductions ever.

"This settlement represents a huge step toward reducing the impact that Midwestern coal-fired power plants have on New Hampshire's air quality," Ayotte said.

The case against AEP began in 1999 when New Hampshire, Vermont and six other states, as well as 13 environmental groups joined the Environmental Protection Agency's crackdown on energy companies accused of rebuilding coal-fired power plants without installing pollution controls as required.

Thompson, who did not participate in two debates held since he formally entered the race last month, said the U.S. economy was not headed for a recession and warned against strict trade restrictions on China during the debate with his eight Republican rivals.

But he was a bystander in an early confrontation between Giuliani, former mayor of New York, and Romney, the former Massachusetts governor, who continued their running campaign-trail battle over tax and spending policies while in office.

Giuliani, who leads Republicans in national opinion polls in the November 2008 presidential race, said he brought taxes down 17 percent in New York while Romney let them increase by 11 percent in Massachusetts.

"The point is, you've got to control taxes. But I did it. He didn't," Giuliani said.

Romney shot back: "It's baloney. Mayor, you've got to check your facts. I did not increase taxes in Massachusetts. I lowered taxes."

Thompson and the other Republicans criticized the explosion of federal spending in recent years and said rising budgets and deficits under President George W. Bush had to be tamed. Arizona Sen. John McCain pointed to his own Republican Party as the culprit.