AGREEMENT AND PLAN OF MERGER by and among

 

 

 

Dated as of October 16, 2011

 

 

 

 

 

		Page
Acquisition Proposal			1
Acquisition Transaction
Action
affiliates
AGC
Agreement
Alternate Financing
Bank Letter
Bridge Bank
business day
Certificate
Certificate of Merger
Closing
Closing Date
Code
Company
Company Approvals
Company Benefit Plans
Company Change of Recommendation
Company Common Stock
Company Disclosure Schedule
Company Employees
Company Equity Awards
Company Joint Venture
Company Leased Real Property
Company Material Adverse Effect
Company Material Contract
Company Organizational Documents
Company Permits

 

 

Company Permitted Lien
Company Preferred Stock
Company Real Property Leases
Company Recommendation
Company Restricted Stock Unit
Company SEC Documents
Company Stock Option
Company Stockholder Approval
Company Stockholders Meeting
Company Subsidiaries’ Equity Interests
Company Superior Offer
Company Termination Fee
Confidentiality Agreement
Contract
control
Converted Option
Converted Restricted Stock Unit
Craig Hallum
Designated Directors
DGCL
Disclosing Party
Effective Time
End Date
Environment
Environmental Law
ERISA
ERISA Affiliate
Exchange Act
Exchange Agent
Exchange Ratio
Form S-4

 

 

GAAP
Governmental Entity
Hazardous Materials
Indemnified Party
Inquiry
Intellectual Property Rights
knowledge
Law
Laws
Lien
Merger
Merger Consideration
Merger Sub
New Plans
NYSE Amex
Old Plans
Parent
Parent  Approvals
Parent  Employees
Parent  Leased Real Property
Parent  Permits
Parent  Recommendation
Parent  Stockholders Meeting
Parent  Termination Fee
Parent Benefit Plans
Parent Common Stock
Parent Disclosure Schedule
Parent Equity Awards
Parent Insurance Policies
Parent Joint Venture
Parent Material Adverse Effect
Parent Material Contract

 

 

Parent Organizational Documents
Parent Permitted Lien
Parent Preferred Stock
Parent Real Property Leases
Parent SEC Documents
Parent Stock Issuance
Parent Stockholder Approval
Parent Subsidiaries’ Equity Interests
Parent Warrant
Permitted Encumbrances
person
Receiving Party
Representatives
Required Stockholders Meeting
Restraints
Rights Plan
Sarbanes-Oxley Act
SEC
Share
Subsidiaries
Surviving Corporation
Takeover Laws
Tax Return
Taxes
Transactions
Union
WARN Act

 

Section 5.2 Investigation

 

(a) Upon reasonable notice, each of the Company and Parent (a “Disclosing Party”) shall, and shall cause its Subsidiaries to, afford to (x) the officers and employees and (y) the accountants, consultants, legal counsel, financial advisors and agents and other representatives (such persons described in this clause (y), collectively, “Representatives”) of the other (a “Receiving Party”) reasonable access upon reasonable advance notice, during normal business hours throughout the period prior to the earlier of the Effective Time and the termination of this Agreement, to all of its available employees, properties, books, contracts and records (including, but not limited to, Tax Returns) and, during such period, a Disclosing Party shall, and shall cause their respective Subsidiaries to, furnish promptly to the Receiving Party or its affiliates, officers, directors, employees and Representative, (i) access to each report, schedule and other document filed or received by the Disclosing Party or any of its Subsidiaries pursuant to the requirements of federal or state securities laws or filed with or sent to the SEC or any other federal or state regulatory agency or commission and (ii) access to all information concerning the Disclosing Party, such the Disclosing Party’s Subsidiaries, and its directors, officers and stockholders and such other matters as may be reasonably requested by the other party or its affiliates, officers, directors, employees and Representatives in connection with any filings, applications or approvals required or contemplated by this Agreement, but only to the extent that such access does not unreasonably interfere with the business or operations of such party and its Subsidiaries (and, to the extent required by applicable Law, access to personnel records will be provided only if authorized by the specific employees); provided, however, that the Disclosing Party may restrict the foregoing access and the disclosure of information to the extent that (i) in the reasonable judgment of the Disclosing Party, any Law applicable to such party requires such party or its Subsidiaries to restrict or prohibit access to any such properties or information, (ii) in the reasonable judgment of the Disclosing Party, the information is subject to confidentiality obligations to a third party, (iii) such disclosure would result in disclosure of any trade secrets or confidential strategic analyses and evaluations of the Disclosing Party or of third parties or (iv) disclosure of any such information or document could result in the loss of attorney-client privilege (provided that the Disclosing Party and/or its counsel shall use their reasonable best efforts to enter into such joint defense agreements or other arrangements, as appropriate, so as to allow for such disclosure in a manner that does not result in the loss of attorney client privilege); provided further, however, that with respect to clauses (i) through (iv) of this Section 5.2(a), the Disclosing Party shall use its commercially reasonable best efforts to (A) obtain the required consent of such third party to provide such access or disclosure or (B) develop an alternative to providing such information so as to address such matters that is reasonably acceptable to both parties; provided further, however, that no investigation pursuant to this Section 5.2 shall affect or be deemed to modify any representation or warranty made by such party herein.  The Receiving Party agrees to indemnify and hold the other and its Subsidiaries harmless from any and all claims and liabilities, including costs and expenses for loss, injury to or death of any director, officer, employee or Representative of the Disclosing Party, and any damage to or destruction of any property owned by the Disclosing Party or any of its Subsidiaries or others (including claims or liabilities for loss of use of any property) resulting from the action of any of the directors, officers, employees or Representatives of the Receiving Party (other than as directed by the Disclosing Party or any of its Subsidiaries or any of their respective directors, officers, employees or Representatives) during any visit to the business or property sites of the Disclosing Party or its Subsidiaries prior to the Closing Date, whether pursuant to this Section 5.2 or otherwise.  During any visit to the business or property sites of the Disclosing Party or any of its Company Subsidiaries, the Receiving Party shall, and shall cause its affiliates, officers, directors, employees or Representatives accessing such properties to, comply with all applicable laws and all of the Disclosing Party and its Subsidiaries’ safety and security procedures and conduct itself in a manner that would not be reasonably expected to interfere with the operation, maintenance or repair of the assets of the Disclosing Party or its Subsidiaries.  Each of the parties agrees (i) to provide the financial information necessary to determine the monthly calculations set forth on Section 3.1(c) of the Company Disclosure Schedule and Section 4.1(c) of the Parent Disclosure Schedule, respectively, (ii) to calculate such financial information in accordance with such party’s customary past practice and consistent with its historical methods, and (iii) such party’s monthly financial information shall be provided to the other party within 15 calendar days after the completion of the prior month.

 

(b) The parties hereto hereby agree that all information provided to them or their respective affiliates, officers, directors, employees and Representatives in connection with this Agreement and the consummation of the Transactions shall be deemed to be “Evaluation Material” as such term is used in, and shall be treated in accordance with, the letter agreement, dated as of May 31, 2011, between Parent and the Company (the “Confidentiality Agreement”).

 

Section 5.3 Non-Solicitation

 

(a) Each of the Company and Parent agrees that it shall not, and shall cause its Subsidiaries not to, and shall use its reasonable best efforts to cause its Subsidiaries’ Representatives not to, directly or indirectly:  (i) solicit, initiate, seek or knowingly encourage (including by way of furnishing information) or knowingly take any other action designed to facilitate any inquiries or the making or submission of any Acquisition Proposal, (ii) furnish any nonpublic information regarding it or any of its Subsidiaries to any person (other than the other parties to this Agreement) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in any discussions or negotiations with any person (other than the other parties to this Agreement) with respect to any Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or (v) enter into any letter of intent, agreement in principle or other agreement providing for any Acquisition Transaction (except as contemplated by Section 7.1(i)); provided, however, that this Section 5.3 shall not prohibit (A) Parent and the Company, or their respective Boards of Directors, directly or indirectly through any affiliate, director, officer, employee or Representative, prior to the receipt of such party’s Stockholder Approval, from furnishing nonpublic information regarding such party or any of such party’s respective Subsidiaries to, or entering into or participating in discussions or negotiations with, any person in response to (x) an unsolicited, written Acquisition Proposal that the Board of Directors of such party concludes in good faith, after consultation with its financial advisors, constitutes or could reasonably lead to a Superior Offer, or (y) an unsolicited inquiry relating to a Acquisition Proposal by a person that the Board of Directors of such party determines is credible and reasonably capable of making a Superior Offer (an “Inquiry”), if (1) such Acquisition Proposal or Inquiry did not result from a breach of this Section 5.3(a) (other than any such breach that is unintentional and immaterial in effect), (2) such party gives to the other party the notice required by Section 5.3(b) and (3) such party furnishes any nonpublic information provided to the maker of the Acquisition Proposal or Inquiry only pursuant to a confidentiality agreement between such party and such person on terms no less favorable to the other party than the Confidentiality Agreement (provided that such confidentiality agreement shall not in any way restrict such party from complying with its disclosure obligations under this Agreement, including with respect to such proposal), and such furnished information is delivered promptly to the other party (to the extent such information has not been previously furnished or made available by such party to the other party) or (B) Parent and the Company from taking and disclosing to its respective stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to any Acquisition Proposal; provided, however, that compliance with such rules shall not in any way limit or modify the effect that any action taken pursuant to such rules has under any other provision of this Agreement and in no event shall such party or such party’s Board of Directors or a committee thereof take any action that would constitute a Change of Recommendation in respect of a Company Acquisition Proposal other than in compliance with Section 5.3(d).

 

(b) Each of Parent and the Company shall promptly, and in no event later than 24 hours, after its receipt of any Acquisition Proposal or any request for nonpublic information relating to it or any of its Subsidiaries in connection with an Acquisition Proposal, advise the other party orally and in writing of such Acquisition Proposal or request, including providing the identity of the person making or submitting such Acquisition Proposal or request, and, (x) if it is in writing, a copy of such Acquisition Proposal and any related draft agreements and (y) if oral, a reasonably detailed summary of any such Acquisition Proposal or request that is made or submitted by any person during the period between the date hereof and the Closing.  Each of Parent and the Company shall keep the other reasonably informed in all material respects on a current basis with respect to the status and details of, including any change to the status or material terms of, any such Acquisition Proposal.

 

(c) Upon the execution of this Agreement, each of the Company and Parent shall, and shall cause their respective Subsidiaries and their and their Subsidiaries respective officers, directors and employees, and shall use their reasonable best efforts to cause their and their Subsidiaries respective Representatives to, immediately cease and terminate any discussions existing as of the date of this Agreement between or any of their Subsidiaries or any of their respective officers, directors, employees or Representatives and any person (other than the parties to this Agreement) that relate to any Acquisition Proposal and, to the extent provided by the applicable confidentiality agreement or similar agreement governing such discussions, require any third party to such discussions to return to such party or to destroy all confidential information of such party and its Subsidiaries.

 

(d) Except as contemplated by this Section 5.3(d), neither the Board of Directors of Parent or the Company, respectively, nor any respective committee thereof shall (i) (A) withhold, withdraw, qualify or modify, or resolve to or publicly propose to withhold, withdraw, qualify or modify their respective Recommendations in a manner adverse to the other party, (B) fail to reaffirm or re-publish their respective Recommendations within five days of being requested by the other party to do so (provided that, the other party shall not make more than two such requests) or (C) approve, adopt or recommend any Acquisition Proposal (each such action set forth in clauses (A) through (C) above being a “Company Change of Recommendation”) or (ii) approve, adopt or recommend, or publicly propose to approve, adopt or recommend, a merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract (other than the confidentiality agreement referred to in Section 5.3(a)) or any tender offer providing for, with respect to, or in connection with any Acquisition Proposal.  Notwithstanding the foregoing, the Board of Directors of Parent or the Company, respectively, may at any time prior to receipt of their requisite Stockholder Approval, in respect of a Acquisition Proposal, (i) make a Change of Recommendation and/or (ii) terminate this Agreement pursuant to Section 7.1(i) of this Agreement, if and only if:  (A) an Acquisition Proposal is made to such party by a third party, and such offer is not withdrawn; (B) such party’s Board of Directors determines after consultation with its financial advisors that such offer constitutes a Superior Offer; (C) the Board of Directors of such party determines in good faith (after consultation with outside legal counsel) that failure to take such action would be reasonably likely to be inconsistent with the exercise by the Board of Directors of its duties under applicable Laws; (D) the Board of Directors of such party has provided to the other party five business days prior written notice of its intent to take such action (which notice shall include the reasonable details regarding the cause for, and nature of, such party’s Change of Recommendation) and, if requested by the other party, negotiate in good faith with the other party during such five business day period regarding revisions to this Agreement which would avoid such Change of Recommendation and/or termination.

 

The Board of Directors of Parent and the Company, respectively, may not, in respect of a Acquisition Proposal, make a Change of Recommendation in a manner adverse to the other party except in compliance in all respects with this Section 5.3(d) and Section 7.1(i).  For the avoidance of doubt, a change of Recommendation to “neutral” is a Change of Recommendation.

 

(e) As used in this Agreement:

 

(i) “Acquisition Proposal” shall mean any bona fide offer, inquiry, proposal or indication of interest received from a third party (other than an offer, inquiry, proposal or indication of interest by a party to this Agreement) relating to any Acquisition Transaction;

 

(ii) “Acquisition Transaction” shall mean any transaction or series of transactions involving:  (a) any merger, consolidation, share exchange, recapitalization, business combination or similar transaction involving either the Parent or the Company other than the Transactions; (b) any direct or indirect acquisition of securities, tender offer, exchange offer or other similar transaction in which a person or “Group” (as defined in the Exchange Act) of persons directly or indirectly acquires beneficial or record ownership of securities representing twenty percent (20%) or more of any class of equity securities of Parent or the Company; (c) any direct or indirect acquisition of any business or businesses or of assets that constitute or account for twenty percent (20%) or more of the consolidated net revenues, net income or assets of Parent or the Company, and their respective Subsidiaries, taken as a whole; or (d) any liquidation or dissolution of Parent or the Company or any of their respective Subsidiaries; and

 

(iii) “Superior Offer” shall mean an Acquisition Proposal (provided that for purposes of this definition, references to 20% in the definition of Acquisition Transaction shall be deemed to be references to 50%) that Parent’s or the Company’s Board of Directors, as the case may be, determines, in good faith after consultation with its financial advisors and outside legal counsel taking into account all financial, legal and regulatory terms and conditions of Acquisition Proposal (including  any conditions to and expected timing of consummation and, any risks of non-consummation of such Acquisition Proposal) to be more favorable to Parent or the Company, as the case may be, and its stockholders (in their capacity as stockholders) as compared to the Transactions, including the Merger, and to any alternative transaction (including any modifications to the terms of this Agreement) proposed by Parent or the Company, as the case may be.

 

Section 5.4 Proxy Statement; Company Stockholders’ Meeting

 

(a) Joint Proxy Statement/Prospectus and Form S-4.

 

(i) As promptly as practicable after the date of this Agreement, Parent, Merger Sub and the Company shall cooperate in preparing and shall cause to be filed with the SEC mutually acceptable proxy materials which shall constitute the proxy statement/prospectus relating to the matters to be submitted to the Company Stockholders at the Company Stockholders Meeting and to the Parent stockholders at the Parent Stockholders Meeting (such joint proxy statement/prospectus, and any amendments or supplements thereto, the “Joint Proxy Statement/Prospectus”), and Parent shall prepare, together with the Company, and file with the SEC a registration statement on Form S-4 (of which the Joint Proxy Statement/Prospectus shall be a part) with respect to the issuance of Parent Common Stock pursuant to the Transactions (the “Parent Stock Issuance”) (such Form S-4, and any amendments or supplements thereto, the “Form S-4”.

(ii) Each of Parent and the Company shall use reasonable best efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and the Form S-4 declared effective by the SEC as promptly as practicable after their initial filing, to keep the Form S-4 effective as long as is necessary to consummate the Merger and the other transactions contemplated hereby in accordance with the terms of this Agreement and to mail the Joint Proxy Statement/Prospectus to their respective stockholders as promptly as practicable after the Form S-4 is declared effective. Parent and the Company shall, as promptly as practicable after receipt thereof, provide the other party with copies of any written comments and advise the other party of any oral comments with respect to the Joint Proxy Statement/Prospectus or Form S-4 received from the SEC.

 

(iii) Each of Parent and the Company represents and warrants to the other, and covenants that, none of the information supplied or to be supplied by it for inclusion or incorporation by reference in (A) the Form S-4 will, at the time the Form S-4 is filed with the SEC and at the time it is declared effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) the Joint Proxy Statement/Prospectus will, at the date of mailing to stockholders and at the times of the meetings of stockholders to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Each of the Parent and the Company shall use reasonable best efforts to cause the Joint Proxy Statement/Prospectus to comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder.  No representation or warranty shall be made by either such party with respect to statements made or incorporated by reference therein based on information supplied by the other party for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus or Form S-4.

 

(iv) Parent and the Company shall make any necessary filings with respect to the Merger under the Securities Act and the Exchange Act rules and regulations thereunder.  Parent shall use its reasonable best efforts to take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified or filing a general consent to service of process in any jurisdiction) required to be taken under any applicable state securities laws in connection with the Parent Stock Issuance, and each party shall furnish all information concerning it and the holders of its capital stock as may be reasonably requested in connection with any such action.

 

(v) Each party will advise the other party, promptly after it receives notice thereof, of the time when the Form S-4 has been declared effective, the issuance of any stop order, the suspension of the qualification of the Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment or supplement of the Joint Proxy Statement/Prospectus or the Form S-4. If at any time prior to the Effective Time, any information relating to either of the parties, or their respective affiliates, officers or directors, should be discovered by either party which should be set forth in an amendment or supplement to any of the Form S-4 or the Joint Proxy Statement/Prospectus so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other party hereto and, to the extent required by Law, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC, disseminated to the stockholders of Parent and the Company and, if required in connection therewith, proxies shall be re-solicited with respect thereto.

 

(vi) Each party shall cooperate and provide the other party with a reasonable opportunity to review and comment on any amendment or supplement to the Joint Proxy Statement/Prospectus and the Form S-4 prior to filing such with the SEC, and any substantive correspondence and responses to SEC comments. Except as otherwise set forth in this Agreement, no amendment or supplement (including by incorporation by reference) to the Joint Proxy Statement/Prospectus or the Form S-4 shall be made without the approval of Parent and the Company,  which approval shall not be unreasonably withheld or delayed; provided that the Company, in connection with a Change in Company Recommendation, and Parent, in connection with a Change in Parent Recommendation, may amend or supplement the proxy statement for the Company, the proxy statement for Parent or the Form S-4 (including by incorporation by reference) to effect or reflect such change without the other party’s approval, by an amendment or supplement which effects or reflects a Change in Company Recommendation or a Change in Parent Recommendation (as the case may be); provided further that any such amendment or supplement is limited to (A) a Change in Company Recommendation or a Change in Parent Recommendation (as the case may be), (B) a discussion of the reasons of the Company Board of Directors or Parent Board of Directors (as the case may be) for making such Change in Company Recommendation or Change in Parent Recommendation (as the case may be) and (C) background information regarding the Company Board of Directors’ or Parent Board of Directors’ (as the case may be) deliberations and conclusions relating to the Change in Company Recommendation or Change in Parent Recommendation (as the case may be) or other factual information reasonably related thereto.  Each party will provide the other party with a copy of all filings made with and written communications to the SEC.

 

(b) Company Stockholders Meeting.  The Company shall duly take lawful action to establish a record date for, call, give notice of, convene and hold a meeting of its stockholders as promptly as practicable following the date upon which the Form S-4 becomes effective (the “Company Stockholders Meeting”) for the purpose of obtaining the Company Stockholder Approval with respect to the transactions contemplated by this Agreement and, unless it is permitted to make a Company Change of Recommendation pursuant to Section 5.3, shall use its reasonable best efforts to solicit the adoption of this Agreement by its stockholders in accordance with applicable Law.  The Company’s Board of Directors shall include the Company Recommendation in the Joint Proxy Statement/Prospectus and shall not make a Company Change of Recommendation, except  as and to the extent permitted by Section 5.3.

 

(c) Parent Stockholders Meeting.  Parent shall duly take all lawful action to establish a record date for, call, give notice of, convene and hold a meeting of its stockholders as promptly as practicable following the date upon which the Form S-4 becomes effective (the “Parent Stockholders Meeting” and, together with the Company Stockholders Meeting, the “Required Stockholders Meetings”) for the purpose of obtaining the Parent Stockholder Approval with respect to the transactions contemplated by this Agreement and, unless it is permitted to make a Parent Change of Recommendation pursuant to Section 5.3, shall use its reasonable best efforts to solicit the approval of its stockholders of this Agreement by its stockholders in accordance with applicable Law.  The Parent Board of Directors shall include the Parent Recommendation in the Joint Proxy Statement/Prospectus and shall not make a Parent Change of Recommendation, except  as and to the extent permitted by Section 5.3.  In addition, the Parent shall submit to a vote of its of its stockholders at the Parent Stockholders Meeting an amendment to its 2010 Equity Compensation Plan to increase the number of shares of Parent Common Stock available for grants to be made under such plan by 2,500,000 shares, which such additional shares of Parent shall be used for future grants to be made to all eligible employees at the discretion of the Compensation Committee of the Parent’s Board of Directors.

 

(d) The Company and Parent shall each use its reasonable best efforts to cause the Company Stockholders Meeting and the Parent Stockholders Meeting to be held on the same date. Once the Required Stockholders Meetings have been called and noticed, neither the Company nor Parent shall postpone or adjourn its respective Required Stockholders Meeting without the consent of the other party, which consent shall not be unreasonably withheld or delayed.

 

Section 5.5 Employee Matters

 

(a) For purposes of vesting, eligibility to participate and accrual and level of benefits under the employee benefit plans of Parent and its Subsidiaries providing benefits to any Company Employees after the Effective Time (the “New Plans”), each Company Employee shall be credited for his or her years of service with the Company and its Subsidiaries and their respective predecessors before the Effective Time, to the same extent as such Company Employee was entitled, before the Effective Time, to credit for such service under any similar Company employee benefit plan in which such Company Employee participated or was eligible to participate immediately prior to the Effective Time, provided, however, that the foregoing shall not apply to the extent that its application would result in a duplication of benefits or to benefit accrual under a defined benefit pension plan.  In addition, and without limiting the generality of the foregoing, (A) Parent shall cause each Company Employee to be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan is comparable to a Company Benefit Plan set forth on Section 3.10(a) of the Company Disclosure Schedule in which such Company Employee participated immediately before the Effective Time (such plans, collectively, the “Old Plans”) and (B) for purposes of each New Plan providing medical, dental, pharmaceutical or vision benefits to any Company Employee, Parent shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such employee and his or her covered dependents, unless such conditions would not have been waived under the comparable plans of Parent or its Subsidiaries in which such employee participated immediately prior to the Effective Time, and Parent shall cause any eligible expenses incurred by such employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.

 

(b) Parent agrees that it will use reasonable best efforts to cause all amounts due under Parent’s deferred compensation program to be paid in Parent Common Stock, based on the fair market value of Parent Common Stock on the date paid, on or prior to the Effective Time; provided, however, that Parent shall not be required to pay any amount in Parent Common Stock to the extent that shares are not available at such time of payment under existing Parent Registration Statements on Form S-8 as of the date of this Agreement; provided, further, that to the extent payments cannot be made in Parent Common Stock due to the previous clause, Parent agrees to use reasonable best efforts to delay such payments in Parent Common Stock, until an effective Registration Statement on Form S-8 is filed after the Effective Time represent shares approved by Parent stockholders as contemplated by Section 5.4(c) hereof.  Parent agrees, covenants, represents, and warrants that all bonuses granted by Parent that are payable in Parent Common Stock, but have not been paid in Parent Common Stock prior to the date of this Agreement, whether or not vested, are valued based on the fair market value of Parent Common Stock on the date of payment.

 

(c) The Company agrees to use reasonable best efforts to cause any payments due, if any, under the Company’s 2011 Bonus Program to be paid to the recipients in Company Common Stock in lieu of cash, based on the fair marked value of Company Common Stock on the date paid; provided, however, the Company shall not be required to pay any amount in Company Common Stock to the extent that shares are not available at such time of payment under existing Company Registration Statements on Form S-8 as of the date of this Agreement.

 

Section 5.6 Regulatory Approvals; Third-Party Consents; Reasonable Best Efforts

 

(a) Subject to the terms and conditions set forth in this Agreement, each of the parties hereto shall use its reasonable best efforts (subject to, and in accordance with, applicable Law) to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Transactions, including (i) the obtaining of all necessary actions or nonactions, waivers, consents and approvals, including Parent Approvals and the Company Approvals, from Governmental Entities and the making of all necessary registrations and filings and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Transactions and (iv) the execution and delivery of any additional instruments necessary to consummate the Transactions.

 

(b) Subject to the terms and conditions herein provided and without limiting the foregoing, Parent and the Company shall as promptly as practicable following the date of this Agreement, but in any event within 30 days, use reasonable best efforts to (i) make all necessary filings and thereafter make any other required submissions in respect of each of Parent Approvals and the Company Approvals, (ii) cooperate with each other in (A) determining whether any filings are required to be made with, or consents, permits, authorizations, waivers or approvals are required to be obtained from, any third parties or other Governmental Entities in connection with the execution and delivery of this Agreement and the consummation of the Transactions and (B) timely making all such filings and timely seeking all such consents, permits, authorizations or approvals, (iii) subject to Section 5.6(b), take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the Transactions.

 

Section 5.7 Takeover Statute.  If any Takeover Law may become, or may purport to be, applicable to the Transactions, each of Parent and the Company shall grant such approvals and take such actions as are reasonably necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the Transactions.  If any takeover plan or agreement may become, or purport to be, applicable to the Transactions, Parent shall grant such approvals and take such actions as are reasonably necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such plan or agreement on the Transactions.

 

Section 5.8 Public Announcements.  Except with respect to a Company Change of Recommendation or any action taken by Parent or the Company or their Boards of Directors pursuant to, and in accordance with, Section 5.3 (or in response thereto), so long as this Agreement is in effect, the parties shall use reasonable best efforts to consult with each other before issuing any press release or making any public announcement relating to this Agreement or the Transactions and, except for any press release or public announcement as may be required by applicable Law, court process or any listing agreement with any national securities exchange, shall use reasonable efforts not to issue any such press release or make any such public announcement without consulting the other parties.  Parent and the Company agree to issue a mutually acceptable initial joint press release announcing this Agreement.

 

Section 5.9 Indemnification and Insurance.

 

(a) From and after the Effective Time, Parent shall cause the Surviving Corporation to honor all rights to exculpation, indemnification and advancement of expenses now existing in favor of the current or former directors, officers or employees, as the case may be, of Company or its Subsidiaries as provided in their respective certificate of incorporation or bylaws or other organization documents or in any agreement to which Company or any of its Subsidiaries is a party, which rights shall survive the Merger and shall continue in full force and effect to the extent permitted by Law.  For a period of six years from the Effective Time, Parent shall cause the Surviving Corporation to maintain in effect the exculpation, indemnification and advancement of expenses provisions of Company’s and any of Company’s Subsidiaries’ certificate of incorporation or bylaws or similar organization documents in effect as of the date hereof or in any indemnification agreements of Company or its Subsidiaries with any of their respective directors, officers or employees in effect immediately prior to the Effective Time, and shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any individuals who immediately before the Effective Time were current or former directors, officers or employees of Company or any of its Subsidiaries; provided, however, that all rights to indemnification in respect of any Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or resolution of such claim.  Parent shall assume, be jointly and severally liable for, and honor, guaranty and stand surety for, and shall cause the Surviving Corporation and its Subsidiaries to honor, in accordance with their respective terms, each of the covenants contained in this Section 5.9 without limit as to time.

 

(b) From and after the Effective Time, Parent shall cause the Surviving Corporation, to the fullest extent permitted under applicable Law, indemnify and hold harmless (and advance funds in respect of each of the foregoing) each current and former director, officer and employee of Company or any of its Subsidiaries and each person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of Company or any of its Subsidiaries (each, together with such person’s heirs, executors or administrators, an “Indemnified Party”) against any costs or expenses (including advancing attorneys’ fees and expenses in advance of the final disposition of any claim, suit, proceeding or investigation to each Indemnified Party to the fullest extent permitted by law), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement (provided, that any Action may only be settled with the prior written consent of Parent, not to be unreasonably withheld) in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (an “Action”), arising out of, relating to or in connection with any action or omission relating to their position with the Company or its Subsidiaries occurring or alleged to have occurred before or at the Effective Time (including acts or omissions in connection with such persons serving as an officer, director or other fiduciary in any entity if such service was at the request or for the benefit of the Company).  In the event of any such Action, (i) the Indemnified Party shall have the right to select its own counsel, which counsel shall be reasonably satisfactory to the Surviving Corporation, and (ii) any determination required to be made with respect to whether an Indemnified Party’s conduct complies with the standards set forth under the business corporation law of the Surviving Corporation’s state of incorporation and the certificate of incorporation or by-laws of the Surviving Corporation shall be made by independent counsel mutually acceptable to the Surviving Corporation and the Indemnified Party.  The Indemnified Parties as a group may retain only one law firm with respect to each related matter except to the extent there is, in the opinion of counsel to an Indemnified Party, under applicable standards of professional conduct, a conflict on any significant issue between positions of such Indemnified Party and any other Indemnified Party or Indemnified Parties.  Parent shall cause the Surviving Corporation shall cooperate with the Indemnified Party in the defense of any such Action.

 

 

(c) For a period of six years from the Effective Time, Parent shall cause to be maintained (on terms and conditions no less advantageous to the indemnified parties) in effect the coverage provided by the policies of directors’ and officers’ liability insurance and fiduciary liability insurance in effect as of the Closing Date maintained by Parent and its Subsidiaries with respect to matters arising on or before the Effective Time either through Parent’s existing insurance provider or another provider reasonably selected by Parent; provided, however, that, after the Effective Time, Parent shall not be required to pay annual premiums in excess of 200% of the last annual premium paid by the Company prior to the date hereof in respect of the coverage required to be obtained pursuant hereto, but in such case shall purchase as much coverage as reasonably practicable for such amount; provided further, however, that in lieu of the foregoing insurance coverage, the Company may direct Parent to purchase “tail” insurance coverage (on terms and conditions no less advantageous to the indemnified parties), at a cost no greater than the aggregate amount which the Surviving Corporation would be permitted to spend during the six-year period provided for in this Section 5.9(c), that provides coverage no materially less favorable than the coverage described above.

 

(d) Parent shall cause the Surviving Corporation to pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified Party in enforcing the indemnity and other obligations provided in this Section 5.9.

 

(e) The rights of each Indemnified Party hereunder shall be in addition to, and not in limitation of, any other rights such Indemnified Party may have under the certificate of incorporation or bylaws or other organization documents of Parent or any of its Subsidiaries or the Surviving Corporation, any other indemnification arrangement, the DGCL or otherwise.  The provisions of this Section 5.9 shall survive the consummation of the Merger and expressly are intended to benefit, and are enforceable by, each of the Indemnified Parties.

 

(f) In the event that the Surviving Corporation or any of its respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in either such case, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall assume the obligations set forth in this Section 5.9.]

 

Section 5.10 Control of Operations.  Without in any way limiting any party’s rights or obligations under this Agreement, the parties understand and agree that (i) nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time and (ii) prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations.

 

Section 5.11 Notification of Certain Matters; Stockholder Litigation

 

(a) Each of Parent and the Company shall give prompt written notice to the other (and will subsequently keep the other informed on a current basis of any developments related to such notice) upon its becoming aware of the occurrence or existence of any fact, event or circumstance that is reasonably likely to result in any of the conditions set forth in Article VI not being able to be satisfied prior to the End Date.

 

(b) Prior to the Effective Time, each of the Company and Parent shall give prompt notice to the other, of any actions, suits, claims or proceedings commenced or, to the knowledge of such party, threatened against such party or its Subsidiaries which relate to this Agreement and the Transactions.

 

Section 5.12 Stock Listing.  Parent shall use its reasonable best efforts to cause (i) the Shares of Parent Common Stock to be issued in the Merger and (ii) the shares of Parent Common Stock to be reserved for issuance upon the exercise, vesting or payment under any Converted Stock Option or Converted Restricted Stock Unit, to be approved for listing on the NYSE Amex, subject to official notice of issuance, prior to the Effective Time.

 

Section 5.13 Section 16 Matters.  Prior to the Effective Time, each of Parent and the Company shall use its reasonable best efforts to approve in advance in accordance with the procedures set forth in Rule 16b-3 promulgated under the Exchange Act and the Skadden, Arps, Slate, Meagher & Flom LLP SEC No-Action Letter (January 12, 1999) any dispositions of shares of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the transactions contemplated by this Agreement by each individual who is subject to Section 16 of the Exchange Act with respect to the Company (or who will become subject to Section 16 of the Exchange Act as a result of the transactions contemplated hereby).

 

Section 5.14 Tax Treatment.

 

(a) For U.S. federal income tax purposes, the Merger is intended to be a reorganization within the meaning of Section 368(a) of the Code and this Agreement is intended to be a “plan of reorganization” within the meaning of the regulations promulgated under Section 368(a) of the Code and for the purpose of qualifying the Merger as a Tax-free transaction for U.S. federal income Tax purposes. Each of the parties shall use commercially reasonable efforts to cause the Merger to qualify as a “reorganization” under the provisions of Section 368(a) of the Code and will not take any action inconsistent with the Merger qualifying as a reorganization under Section 368(a) of the Code.  Each of Parent and the Company covenants and agrees to use its commercially reasonable efforts to defend in good faith all challenges to the treatment of the Merger as a reorganization as described in this Section 5.14, and none of the parties will take or cause to be taken any action which would prevent the transactions contemplated by this Agreement from qualifying as a reorganization under Section 368(a).  Each of Parent and Company agree that if such Party becomes aware of any fact or circumstance that is reasonably likely to prevent the Merger from qualifying as a reorganization described in Section 368(a) of the Code, it will promptly notify the other parties in writing of such fact or circumstance.  If applicable, each of Parent and the Company will comply with all reporting and record-keeping obligations set forth in the Code and the U.S. Department of Treasury regulations that are consistent with the Merger qualifying as a “reorganization” under the provisions of Section 368(a) of the Code.  The parties acknowledge and agree to make such representations or warranties as to the qualification of the Merger as a reorganization under Section 368 of the Code as requested by counsel.

 

(b) For a period of one (1) year from the Effective Time, Parent will continue at least one (1) significant historic business line of the Company or use at least a significant portion of the Company’s  historic business assets in a business, each within the meaning of U.S. Department of Treasury Regulation 1.368-1(d).

 

Section 5.15 Rights Plan.  Parent shall take all further action (in addition to that referred to in Section 4.26) necessary in order to render the rights granted under the Rights Plan inapplicable to the Merger and the other transactions contemplated by this Agreement.  Prior to the Effective Time, Parent shall not terminate, waive any provision of, exempt any Person (other than the Company, its affiliates and Company Stockholders) from or amend the terms of the Rights Plan (or redeem the rights granted under the Rights Plan).

Section 5.16 Cooperation with Financing.

 

(a) Parent has delivered to the Company copies of a letter of intent of Bridge Bank, N.A. (the “Bridge Bank”), dated as of October 11, 2011, pursuant to which Bridge Bank, subject to the terms and conditions set forth therein, has summarized for discussion purposes the financing that Bridge Bank is interested in considering (the “Bank Letter”). Subject to the funding of the financing set forth in the Bank Letter in accordance with its terms, the aggregate proceeds of the financing contemplated by the Bank Letter shall be sufficient to enable Parent to consummate the transactions contemplated by this Agreement.

 

(b) Parent shall use reasonable best efforts to cause the financing contemplated by the Bank Letter, subject to the terms and conditions set forth therein, to be available at Closing; provided, however, that if funds in the amount set forth in the Bank Letter become unavailable to Parent on the terms and conditions set forth therein, Parent shall use its best reasonable efforts to obtain such funds to the extent available on terms and conditions no less favorable in the aggregate to Parent than as set forth in the Bank Letter (the “Alternate Financing”).

 

(c) The Company shall provide, shall cause the Company Subsidiaries to provide and shall use its reasonable best efforts to cause its and their Representatives to provide, such reasonable cooperation in connection with the arrangement of any debt financing as may be reasonably requested by Parent, including (a) participation in meetings, presentations, drafting sessions, and due diligence sessions, (b) furnishing Parent and its financing sources with financial and other pertinent information regarding the Company as may be reasonably requested by Parent to consummate such debt financing, (c) cooperating with the marketing efforts of Parent and its financing sources for any portion of such debt financing, reasonably facilitating the pledging of collateral and execution and delivery of definitive financing documents and customary deliverables and (e) using reasonable best efforts to obtain legal opinions and certificates as reasonably requested by Parent.

 

Section 6.1 Conditions to Each Party’s Obligation to Effect the Merger.  The respective obligations of each party to effect the Merger shall be subject to the fulfillment (or waiver by all parties) at or prior to the Effective Time of the following conditions:

 

(a) Company Stockholder Approval and Parent Stockholder Approval  shall have been obtained.

 

(b) No (i) temporary restraining order or preliminary or permanent injunction or other order by any Federal or state court or other tribunal of competent jurisdiction preventing consummation of the Merger or (ii) applicable Federal or state law prohibiting consummation of the Merger (collectively, “Restraints”) shall be in effect.

 

(c) The shares of (i) Parent Common Stock to be issued in the Merger and (ii) Parent Common Stock to be reserved for issuance upon exercise, vesting or payment under any Converted Stock Option or Converted Restricted Stock Unit shall have been approved for listing on the NYSE Amex, subject to official notice of issuance.

 

(d) The Form S-4 shall have become effective under the Securities Act, and no stop order or similar restraining order by the SEC suspending the effectiveness of the Form S-4 shall be in effect.

 

(e) Parent shall have entered into the employment agreements with the certain persons listed on, and on terms substantially as those set forth in, Section 6.1(e) of the Parent Disclosure Schedule.

 

(f) Parent shall have received financing on the terms provided for in the Bank Letter or any Alternate Financing.

 

Section 6.2 Conditions to Obligation of the Company to Effect the Merger.  The obligation of the Company to effect the Merger is further subject to the fulfillment of, or the waiver by the Company on or prior to the Effective Time of, the following conditions:

 

(a) The representations and warranties of Parent and Merger Sub set forth herein (i) with respect to Section 4.2(a), Section 4.3(a), Section 4.20 and Section 4.21 shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), in all respects (except in the case of Section 3.2(a) for such inaccuracies as are de minimis in the aggregate) and (ii) with respect to all other representations and warranties shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except in the case of clause (ii) where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Parent Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

(b) Each of Parent and Merger Sub shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it prior to the Effective Time.

 

(c) A Parent Material Adverse Effect shall not have occurred since the date hereof.

 

(d) Parent shall have delivered to the Company a certificate, dated the Closing Date and signed by its Chief Executive Officer or Chief Financial Officer, certifying to the effect that the conditions set forth in Section 6.2(a) and 6.2(b) have been satisfied.

 

(e) Parent shall have received financing on the terms provided for in the Bank Letter or any Alternate Financing.

 

(f) Parent shall have received the third party consent set forth on Section 6.2(f) of the Company Disclosure Schedule.

 

Section 6.3 Conditions to Obligation of Parent to Effect the Merger.  The obligation of Parent and Merger Sub to effect the Merger is further subject to the fulfillment of, or the waiver by the Parent on or prior to the Effective Time of, the following conditions:

 

(a) The representations and warranties of the Company set forth herein (i) with respect to Section 3.2(a), Section 3.3(a), Section 3.19 and Section 3.20 shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), in all respects (except in the case of Section 3.2(a) for such inaccuracies as are de minimis in the aggregate) and (ii) with respect to all other representations and warranties shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except in the case of clause (ii) where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b) The Company shall have in all material respects performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it prior to the Effective Time.

 

(c) A Company Material Adverse Effect shall not have occurred, since the date hereof.

 

(d) The Company shall have delivered to Parent a certificate, dated the Closing Date and signed by its Chief Executive Officer or Chief Financial Officer, certifying to the effect that the conditions set forth in Sections 6.3(a), 6.3(b), and 6.3(c) have been satisfied.

 

(e) The Company shall have received the third party consent set forth on Section 6.3(e) of the Parent Disclosure Schedule.

 

Section 6.4 Frustration of Closing Conditions.  Neither the Company nor Parent may rely, as a basis either for not consummating the Transactions, including the Merger, or terminating this Agreement and abandoning the Transactions, including the Merger, on the failure of any condition set forth in Section(s) 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by such party’s material breach of any material provision of this Agreement or failure to use its reasonable best efforts to consummate the Transactions, including the Merger, as required by and subject to Section 5.6.

 

Section 7.1 Termination or Abandonment.  Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or after any approval of the matters presented in connection with the Merger by the stockholders of Parent and the Company:

 

(a) by the mutual written consent of Parent and the Company;

 

(b) by either Parent or the Company if the Merger shall not have been consummated on or prior to the six (6) month anniversary of the date hereof (the “End Date”), provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to a party if the failure of the Closing to occur by such date shall be due to the failure of such party to perform or comply in all material respects with the covenants and agreements of such party set forth in this Agreement;

 

(c) by either Parent or the Company if any Restraint having any of the effects set forth in Section 6.1(b) shall be in effect and shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 7.1(c) shall have used its reasonable best efforts to prevent the entry of and to remove such Restraint;

 

(d) by either Parent or the Company if the Company Stockholders’ Meeting (including any adjournments or postponements thereof) shall have concluded and Company Stockholder Approval contemplated by this Agreement shall not have been obtained; provided, however, that the right to terminate under this Section 7.1(d) shall not be available to the Company where the failure to obtain Company Stockholder Approval shall have been caused by or related to the Company’s material breach of this Agreement;

 

 

(e) by either Parent or the Company if Parent Stockholders’ Meeting (including any adjournments or postponements thereof) shall have concluded and Parent Stockholder Approval contemplated by this Agreement shall not have been obtained; provided, however, that the right to terminate under this Section 7.1(e) shall not be available to Parent where the failure to obtain Parent Stockholder Approval shall have been caused by or related to Parent’s material breach of this Agreement;

 

(f) by the Company, if Parent shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in Section 6.1 or Section 6.2 and (ii) is not cured within 30 days of receipt of the written notice contemplated by the proviso below in this Section 7.1(f) or cannot be cured by the End Date, provided, that the Company shall have given Parent written notice, delivered at least 30 days prior to such termination (but no later than the expected Closing Date), stating the Company’s intention to terminate this Agreement pursuant to this Section 7.1(f) and the basis for such termination;

 

(g) by Parent, if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in Section 6.1 or Section 6.3 and (ii) is not cured within 30 days of receipt of the written notice contemplated by the proviso below in this Section 7.1(g) or cannot be cured by the End Date, provided, that Parent shall have given the Company written notice, delivered at least 30 days prior to such termination (but no later than the expected Closing Date), stating Parent’s intention to terminate this Agreement pursuant to this Section 7.1(g) and the basis for such termination;

 

(h) by Parent or the Company, in the event the other party or any of such other party’s Subsidiaries or their respective affiliates, directors, officers, employees or Representatives shall have breached in any material respect any of their respective obligations under Section 5.3;

 

(i) by the Company, at any time prior to obtaining Company Stockholder Approval, in order to enter into a written definitive agreement for a Company Superior Offer, if the Company has complied with its obligations under Section 5.3(d); provided, however, that any such purported termination by the Company pursuant to this Section 7.1(i) shall be void and of no force or effect unless Parent pays to Parent the Company Termination Fee in accordance with Section 7.2;

 

(j) by Parent, at any time prior to obtaining Parent Stockholder Approval, in order to enter into a written definitive agreement for a Parent Superior Offer, if Parent has complied with its obligations under Section 5.3(d); provided, however, that any such purported termination by Parent pursuant to this Section 7.1(j) shall be void and of no force or effect unless Parent pays to the Company Parent Termination Fee in accordance with Section 7.2;

 

(k) by Parent, if there has been a Company Change of Recommendation; or

 

(l) by the Company, if there has been a Parent Change of Recommendation.

 

In the event of termination of this Agreement pursuant to this Section 7.1, this Agreement shall terminate (except for the provisions of Sections 7.2, 8.2, 8.4, 8.5 and 8.6), and there shall be no other liability on the part of Parent or the Company to the other except under such provisions, or for liability arising out of fraud or intentional or material breach of this Agreement or as provided for in the Confidentiality Agreement, in which case the aggrieved party shall be entitled to all rights and remedies available at law or in equity.

 

Section 7.2 Effect of Termination.

 

(a) Parent and the Company agree that (i) if this Agreement is terminated by (A) Parent pursuant to Section 7.1(h) or Section 7.1(k) or (B) the Company pursuant to Section 7.1(i) or (ii) (A) if this Agreement is terminated by Parent pursuant to Section 7.1(g)and the breach or other circumstance giving rise to such termination was willful, or by Parent or the Company pursuant to Section 7.1(b) or Section 7.1(d), (B) prior to any such termination, any person (other than Parent or its affiliates) shall have made a Company Acquisition Proposal which shall have been publicly announced or disclosed (or any person shall have publicly announced a bona fide intention, whether or not conditional, to make a Company Acquisition Proposal) and (C) within twelve months after such termination of this Agreement, the Company shall have entered into an agreement to consummate, or shall have consummated, a Company Acquisition Transaction, then the Company shall pay to Parent the Company Termination Fee.  Any Company Termination Fee shall be paid to Parent by the Company in immediately available funds (x) upon termination of this Agreement in the case of a termination pursuant to clause (i)(B) above, (y) within five business days after termination in the case of a termination pursuant to clause (i)(A) above and (z) upon the execution of or entrance into a definitive agreement with respect to a Company Acquisition Transaction in the case of a termination pursuant to clause (ii) above.

 

(b) Parent and the Company agree that (i) if this Agreement is terminated by (A) the Company pursuant to Section 7.1(h) or Section 7.1(l) or (B) Parent pursuant to Section 7.1(j) or (ii) (A) if this Agreement is terminated by the Company pursuant to Section 7.1(f) and the breach or other circumstance giving rise to such termination was willful, or by Parent or the Company pursuant to Section 7.1(b) or Section 7.1(e), (B) prior to any such termination, any person (other than the Company or its affiliates) shall have made a Parent Acquisition Proposal which shall have been publicly announced or disclosed (or any person shall have publicly announced a bona fide intention, whether or not conditional, to make a Parent Acquisition Proposal) and (C) within twelve months after such termination of this Agreement, Parent shall have entered into an agreement to consummate, or shall have consummated, a Parent Acquisition Transaction, then the Parent shall pay to the Company the Parent Termination Fee.  Any Parent Termination Fee shall be paid to the Company by Parent  in immediately available funds (x) upon termination of this Agreement in the case of a termination pursuant to clause (i)(B) above, (y) within five business days after termination in the case of a termination pursuant to clause (i)(A) above and (z) upon the execution of or entrance into a definitive agreement with respect to a Parent Acquisition Transaction in the case of a termination pursuant to clause (ii) above.

 

(c) As used in this Agreement, “Company Termination Fee” shall mean $500,000.

 

(d) As used in this Agreement, “Parent Termination Fee” shall mean $500,000.

 

(e)  Upon payment of Company Termination Fee in accordance with this Section 7.2, the Company shall have no further liability to the Parent or its stockholders with respect to this Agreement or the Transactions; provided, that nothing herein shall release any party from liability for intentional breach or fraud.  The parties acknowledge and agree that in no event shall the Company be required to pay the Company Termination Fee on more than one occasion.

 

(f) Upon payment of Parent Termination Fee in accordance with this Section 7.2, Parent shall have no further liability to the Company or its stockholders with respect to this Agreement or the Transactions; provided, that nothing herein shall release any party from liability for intentional breach or fraud.  The parties acknowledge and agree that in no event shall Parent be required to pay Parent Termination Fee on more than one occasion.

 

 

Section 8.1 Survival.  The parties agree that the terms of the Confidentiality Agreement shall survive any termination of this Agreement pursuant to Article VII and, in the event of the termination of this Agreement pursuant to Article VII, all references to "the date hereof" in the Confidentiality Agreement shall be deemed to be the date of such termination  None of the representations, warranties, covenants and agreements in this Agreement or in any certificate, document or instrument delivered pursuant to this Agreement shall survive the Effective Time, except for covenants and agreements which contemplate performance after the Effective Time or otherwise expressly by their terms survive the Effective Time.

 

Section 8.2 Expenses.  Except as otherwise provided in Section 7.2, whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger, this Agreement and the Transactions shall be paid by the party incurring or required to incur such expenses.

 

Section 8.3 Counterparts; Effectiveness.  This Agreement may be executed in two or more counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by telecopy or otherwise) to the other parties.

 

 

Section 8.4 Governing Law.  This Agreement shall be governed by and construed in accordance with (a) the Laws of the State of Nevada with respect to matters, issues and questions relating to the Merger or the duties of the Board of Directors of Parent or Merger Sub, (b) the Laws of the State of Delaware with respect to matters, issues and questions relating to the fiduciary duties of the Board of Directors of the Company and (c) the Laws of the State of Delaware with respect to all other matters, issues and questions, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

 

Section 8.5 Jurisdiction; Specific Enforcement.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Federal court located in the state of Delaware.  The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement to enforce specifically the terms and provisions hereof in any Delaware state court or any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at Law or in equity.

 

Section 8.6 WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.

 

Section 8.7 Notices.  Any notice required to be given hereunder shall be sufficient if in writing, and sent by facsimile transmission (provided, that any notice received by facsimile transmission or otherwise at the addressee’s location on any non-business day or any business day after 5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next business day), by reliable overnight delivery service (with proof of service) or hand delivery, addressed as follows:

 

or to such other address as any party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated or personally delivered.  Any party to this Agreement may notify any other party of any changes to the address or any of the other details specified in this paragraph; provided, however, that such notification shall only be effective on the date specified in such notice or five business days after the notice is given, whichever is later.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

 

Section 8.8 Disclosure Schedule.  The parties hereto agree that any reference in a particular Section of either Parent Disclosure Schedule or the Company Disclosure Schedule shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (i) the representations and warranties (or covenants, as applicable) of the relevant party that are contained in the corresponding Section of this Agreement and (ii) any other representations and warranties of such party that is contained in this Agreement (regardless of the absence of an express reference or cross-reference in a particular Section of this Agreement or a particular Section of either Parent Disclosure Schedule or Parent Disclosure Schedule), but only if the relevance of that reference as an exception to (or a disclosure for purposes of) such representations and warranties would be reasonably apparent.

 

Section 8.9 Assignment; Binding Effect.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties.  Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 

Section 8.10 Severability.  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

 

Section 8.11 Entire Agreement; No Third-Party Beneficiaries.  This Agreement (including the schedules hereto) and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof and thereof.  This Agreement is not intended to and shall not confer upon any person other than the parties hereto any rights or remedies hereunder except (i) as specifically provided in Section 5.9, and (ii) that the Company shall have the right to pursue damages on behalf of its stockholders in the event of Parent or Merger Sub’s breach or wrongful termination of this Agreement, which right is hereby acknowledged by Parent and Merger Sub.

 

Section 8.12 Amendments; Waivers.  At any time prior to the Effective Time, any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub or, in the case of a waiver, by the party against whom the waiver is to be effective; provided, however, that after receipt of Company Stockholder Approval, if any such amendment or waiver shall by applicable Law or in accordance with the rules and regulations of the NYSE Amex require further approval of the stockholders of Parent, the effectiveness of such amendment or waiver shall be subject to the approval of the stockholders of Parent.  Notwithstanding the foregoing, no failure or delay by the Company or Parent in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

Section 8.13 Obligations of the Company and of Parent.  Whenever this Agreement requires a Subsidiary of the Company to take any action, such requirement shall be deemed to include an undertaking on the part of the Company to cause such Subsidiary to take such action and, after the Effective Time, on the part of the Surviving Corporation to cause such Subsidiary to take such action.  Whenever this Agreement requires the Merger Sub to take any action, such requirements shall be deemed to include an undertaking on the part of the Parent to cause the Merger Sub to take such action.

 

Section 8.14 Headings.  Headings of the Articles and Sections of this Agreement are for convenience of the parties only and shall be given no substantive or interpretive effect whatsoever.  The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 8.15 Interpretation.  When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  Each of the parties has participated in the drafting and negotiation of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.

 

Section 8.16 Further Assurances.  Each party will execute such further documents and instruments and take such further actions as may reasonably be requested by any other party in order to consummate the Transaction in accordance with the terms hereof.

 

Section 8.17 Definitions.  References in this Agreement to “Subsidiaries” of any party shall mean any corporation, partnership, association, trust or other form of legal entity of which (i) more than fifty percent (50%) of the voting power of the outstanding voting securities are on the date hereof directly or indirectly owned by such party or (ii) such party or any Subsidiary of such party is a general partner on the date hereof (excluding partnerships in which such party or any Subsidiary of such party does not have a majority of the voting interests in such partnership).  References in this Agreement (except as specifically otherwise defined) to “affiliates” shall mean, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common control with, such person.  As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.  References in this Agreement (except as specifically otherwise defined) to “person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, group (as such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any permitted successors and assigns of such person.  As used in this Agreement, “knowledge” means (i) with respect to Parent, the actual knowledge of the persons listed in Section 8.17 of the Parent Disclosure Schedule and (ii) with respect to the Company, the actual knowledge of the persons listed in Section 8.17 of the Company Disclosure Schedule.  As used in this Agreement, “business day” shall mean any day other than a Saturday, Sunday or other day on which the banks in New York are authorized by law or executive order to be closed.  References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder.  Any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

Pursuant to Item 601(b)(2) of Regulation S-K, the following schedules and exhibits to the Agreement and Plan of Merger, by and among Vertro, Inc., Inuvo, Inc., and Anhinga Merger Subsidiary, Inc., dated October 16, 2011, have not been provided herein:

 

Section 1.9		Designated Directors
Section 3.1(b)		Qualification, Organization, Subsidiaries, etc.
Section 3.1(c)		Company Material Adverse Effect
Section 3.3		Corporate Authority Relative to this Agreement; No Violation
Section 3.4		SEC Reports and Financial Statements
Section 3.7		Investigations; Litigation
Section 3.9		Tax Matters
Section 3.10		Employee Benefit Plans
Section 3.16		Intellectual Property
Section 3.17		Material Contracts
Section 5.1		Conduct of Business by the Company
Section 6.2		Conditions to Obligation of the Company to Effect the Merger
Section 8.17		Definitions

 

 

Section 4.1(b)		Qualification, Organization, Subsidiaries, etc.
Section 4.1(c)		Parent Material Adverse Effect
Section 4.2		Stock
Section 4.3		Corporate Authority Relative to this Agreement; No Violation
Section 4.7		Investigations; Litigation
Section 4.9		Tax Matters
Section 4.10		Employee Benefit Plans
Section 4.16		Intellectual Property
Section 4.17		Material Contracts
Section 5.1		Conduct of Business by the Parent
Section 6.1(e)		Employment Agreements
Section 6.3		Conditions to Obligations of the Parent to Effect the Merger
Section 8.17		Definitions

 

N/A

Vertro, Inc. and Inuvo, Inc. agree to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.