EXECUTION COPY AGREEMENTAND PLAN OF MERGER

 

Dated as of March 15, 2010,

 

Among

 

SAGE PARENT COMPANY, INC.,

 

SAGE MERGER COMPANY, INC.

 

and

 

SPORT SUPPLY GROUP, INC.

 

 

 TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

(d)           No plan currently or ever in the past six (6) years maintained, sponsored, contributed to or required to be contributed to by the Company, any Company Subsidiary, or any of their respective current or former ERISA Affiliates is or ever in the past six (6) years was (i) a “multiemployer plan” as defined in Section 3(37) of ERISA, (ii) a plan described in Section 413 of the Code, (iii) a plan subject to Title IV of ERISA, (iv) a plan subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, or (v) a plan maintained in connection with any trust described in Section 501(c)(9) of the Code.  The term “ERISA Affiliate” means any Person that, together with the Company or any Company Subsidiary, would be deemed a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

(e)           Neither the Company nor any Company Subsidiary has been assessed any liability or penalty under Sections 4975 through 4980B of the Code or Title I of ERISA.  The Company and the Company Subsidiaries have complied in all material respects with all applicable health care continuation requirements in Section 4980B of the Code and in ERISA.  No “Prohibited Transaction,” within the meaning of Section 4975 of the Code or Sections 406 or 407 of ERISA and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Benefit Plan that could reasonably be expected to result in material liability to the Company and the Company Subsidiaries, taken as a whole.

 

(f)            No Benefit Plan provides, or reflects or represents any liability to provide, benefits (including, without limitation, death or medical benefits), whether or not insured, with respect to any former or current employee, or any spouse or dependent of any such employee, beyond the employee’s retirement or other termination of employment with the Company and its Subsidiaries other than (i) coverage mandated by Part 6 of Title I of ERISA or Section 4980B of the Code, (ii) retirement or death benefits under any plan intended to be qualified under Section 401(a) of the Code, (iii) disability benefits that have been fully provided for by insurance under a Benefit Plan that constitutes an “employee welfare benefit plan” within the meaning of Section (3)(1) of ERISA, or (iv) benefits in the nature of severance pay with respect to one or more of the employment contracts set forth on Section 3.10(f) of the Company Disclosure Letter.

 

(g)           Except as set forth in Section 3.10(g) of the Company Disclosure Letter, there is no Contract covering any current or former employee of the Company or any Company Subsidiary that, individually or collectively, could give rise to the payment as a result of the Transactions, including the Merger, of any amount that would not be deductible by the Company or such Subsidiary by reason of Section 280G of the Code.  For purposes of the foregoing sentence, the term “payment” shall include (without limitation) any payment, acceleration, forgiveness of Indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits.  Except as set forth in Section 3.10(g) of the Company Disclosure Letter, the execution of this Agreement and the consummation of the Transactions, including the Merger, (alone or together with any other event which, standing alone, would not by itself trigger such entitlement or acceleration) will not (i) entitle any Person to any payment, forgiveness of Indebtedness, vesting, distribution, or increase in benefits under or with respect to any Benefit Plan, (ii) otherwise trigger any acceleration (of vesting or payment of benefits or otherwise) under or with respect to any Benefit Plan, or (iii) trigger any obligation to fund any Benefit Plan.

 

(h)           No Action (excluding claims for benefits incurred in the ordinary course) has been brought or is pending or threatened against or with respect to any Benefit Plan or the assets or any fiduciary thereof (in that Person’s capacity as a fiduciary of such Benefit Plan).  There are no Actions pending or, to the Knowledge of the Company, threatened by the IRS, DOL, or other Governmental Entity with respect to any Benefit Plan.

 

(i)            With respect to each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined for purposes of Section 409A(d)(1) of the Code), (i) such plan has been operated since January 1, 2005 in compliance with Section 409A of the Code and all applicable IRS guidance promulgated thereunder to the extent such plan is subject to Section 409A of the Code and so as to avoid any Tax, interest or penalty thereunder; (ii) the document or documents that evidence each such plan have conformed to the provisions of Section 409A of the Code and the final regulations under Section 409A of the Code since December 31, 2008; and (iii) as to any such plan in existence prior to January 1, 2005 and not subject to Section 409A of the Code, has not been “materially modified” (within the meaning of IRS Notice 2005-1) at any time after October 3, 2004.  No Company Option (whether currently outstanding or previously exercised) is, has been or would be, as applicable, subject to any Tax, penalty or interest under Section 409A of the Code.

 

(j)            Except as set forth in Section 3.10(j) of the Company Disclosure Letter, each Benefit Plan can be amended, terminated or otherwise discontinued on or after the Closing Date in accordance with its terms, without material liability to the Company or without any liability (which liability would be material to the Company) to any of its ERISA Affiliates.

 

(k)           Except as set forth in Section 3.10(k) of the Company Disclosure Letter or as contemplated by this Agreement or as requested by Parent, none of the Company, any Company Subsidiary, any ERISA Affiliate or, to the Knowledge of the Company, any officer or employee thereof, has made any promises or commitments, whether legally binding or not, to create any additional plan, agreement, or arrangement, or to modify or change any existing Benefit Plan (other than a modification or change required by ERISA or the Code).

 

(l)            No employee of the Company or any Company Subsidiary is based outside of the United States.  In addition to the foregoing, neither the Company nor any Company Subsidiary has sponsored or incurred any liability with respect to any Benefit Plan that is not subject to United States Law.

SECTION 3.11.       Litigation.

 

(a)           Except as disclosed in Section 3.11(a) of the Company Disclosure Letter, there is no suit, action, audit, inquiry or other proceeding (each, an “Action”) pending or, to the Knowledge of the Company, threatened against or directly affecting the Company, any Company Subsidiaries or any of the directors or officers of the Company or any of the Company Subsidiaries in their capacities as such, that (i) seeks injunctive relief against any of the foregoing, (ii) has been brought by or on behalf of any Company Stockholder against any of the foregoing, (iii) would reasonably be expected to result in an adverse judgment in excess of $100,000 in excess of applicable insurance coverage, or (iv) has had or would reasonably be expected to have a Company Material Adverse Effect.  Since January 1, 2007, neither the Company nor any Company Subsidiaries, nor, to the Knowledge of the Company, any officer, director or employee of the Company or any Company Subsidiary, has been permanently or temporarily enjoined by any Order of any Governmental Entity from engaging in or continuing any conduct or practice, in any material respect, in connection with the business, assets or properties of the Company or such Company Subsidiary, nor, to the Knowledge of the Company, is the Company, any Company Subsidiary or any officer, director or employee of the Company or any Company Subsidiaries under investigation by any Governmental Entity with respect to any material actions, activities, or omissions regarding any business, assets, or properties of the Company or the Company Subsidiaries.

 

(b)           Except as set forth in Section 3.11(b) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has, as of the date hereof and since June 30, 2009, commenced any material Action against any Person.

 

SECTION 3.12.       Compliance with Applicable Laws; Permits.  Except as set forth in Section 3.12 of the Company Disclosure Letter, the Company and the Company Subsidiaries are, and since January 1, 2007 have been, in compliance with all applicable Orders and Laws (excluding Environmental Laws) in all material respects.  Except as set forth in Section 3.12 of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has received any written communication since January 1, 2007 from a Governmental Entity that alleges that the Company or a Company Subsidiary is not in compliance in any material respect with any applicable Law.  Since January 1, 2007, there has occurred no default under, or violation of, any Permit of the Company of any Company Subsidiary, except for defaults under, or violations of, Permits where such default or violation, individually or in the aggregate, would not reasonably be expected to be material to the Company and the Company Subsidiaries, taken as a whole.  The Merger, in and of itself, would not cause the revocation or cancellation of any Permit that is material to the Company and the Company Subsidiaries, taken as a whole.

 

SECTION 3.13.       Brokers.  No broker, investment banker, financial advisor or other Person, other than Houlihan Lokey Howard & Zukin Capital, Inc. (“Houlihan Lokey”), is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission directly or indirectly in connection with the Merger and the other Transactions based upon arrangements made by or on behalf of the Company.  Prior to the date hereof, the Company has furnished to Parent a true and complete copy (except for certain redacted items none of which would impose any obligations on Parent, the Surviving Corporation or their respective Affiliates) of all agreements between the Company and Houlihan Lokey relating to the Merger, and none of such agreements has been subsequently supplemented, modified, waived or amended.  Section 3.13 of the Company Disclosure Letter sets forth a true and correct statement of the amount of all fees and expenses paid or payable to Houlihan Lokey in connection with the consummation of the Merger.

SECTION 3.14.       Opinion of Financial Advisor.  The Special Committee has received the opinion (the “Fairness Opinion”) of Houlihan Lokey, dated as of the date the Special Committee recommended this Agreement, subject to certain assumptions, limitations, qualifications and other matters, in each case, as set forth in the Fairness Opinion, to the effect that the Merger Consideration to be received by the holders of Company Common Stock (other than Parent, Sub, Guarantor, the Rollover Persons and their respective Affiliates, is fair to such holders from a financial point of view.  A true, correct and complete copy of such opinion will be provided to Parent for informational purposes only following receipt of a written copy of such opinion by the Special Committee, and as of the date hereof, such opinion has not been withdrawn, revoked, waived, amended, modified or supplemented in any respect.

 

SECTION 3.15.       Environmental Matters.

 

(a)           The Company and the Company Subsidiaries are, and since January 1, 2007 have been, in material compliance with all Environmental Laws.

 

(b)           Since June 30, 2009, (i) neither the Company nor any of the Company Subsidiaries has placed, held, located, released, transported or disposed of any Hazardous Substances on, under, from or at any of the Company’s or any of the Company Subsidiaries’ properties or any other properties in a manner that has resulted, or would reasonably be expected to result, individually or in the aggregate, in any liability material to the Company and the Company Subsidiaries, taken as a whole, (ii) to the Knowledge of the Company, there are no Hazardous Substances on, under or at any of the Company’s or any of the Company Subsidiaries’ properties (or any other property but arising from the Company’s or any of the Company Subsidiaries’ properties), in a manner that has resulted, or would reasonably be expected to result, individually or in the aggregate, in any liability material to the Company and the Company Subsidiaries, taken as a whole, (iii) neither the Company nor any Company Subsidiary has received any written notice (i) of any violation of or liability under any applicable Law or Order of any Governmental Entity relating to any matter of pollution, protection of the environment, natural resources, or occupational health and safety, or regarding Hazardous Substances on or under any of the Company’s or any of the Company Subsidiaries’ properties or any other properties (collectively, “Environmental Laws”) or of the institution or pendency of any material Action by any Governmental Entity or any third party in connection with any such violation, (ii) requiring the response to or remediation of Hazardous Substances at or arising from any of the Company’s or any of the Company Subsidiaries’ owned or leased properties, or (iii) demanding payment for any response to or remediation of Hazardous Substances at or arising from any of the Company’s or any of the Company Subsidiaries’ owned or leased properties, and (iv) no Lien (other than Permitted Liens) has been placed upon any of the Company’s or the Company Subsidiaries’ owned properties under any Environmental Law.  For purposes of this Agreement, the term “Hazardous Substance” shall mean any toxic or hazardous materials or substances, including asbestos, buried contaminants, petroleum and petroleum products, chemicals, flammable explosives, radioactive materials, and any substances defined as, or included in the definition of, “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any applicable Environmental Laws.

(c)         To the Knowledge of the Company, no Environmental Law imposes any obligation upon the Company or the Company Subsidiaries arising out of or as a condition to any Transaction, including, any requirement to modify or to transfer any Permit, any requirement to file any notice or other submission with any Governmental Entity, the placement of any notice, acknowledgment or covenant in any land records, or the modification of or provision of notice under any Contract, Order or Consent.

 

SECTION 3.16.       Contracts.

 

(a)         Except as set forth in Section 3.16 of the Company Disclosure Letter, except for any Contract disclosed or filed with any Company SEC Document since January 1, 2007, and except for Contracts permitted by this Agreement to be entered into after the date hereof, neither the Company nor any Company Subsidiary is a party to, and neither the Company, any Company Subsidiary, nor any of their respective properties or assets, are bound by, any Contract:

 

(i)           which contains any non-compete provisions with respect to any line of business or any geographic area with respect to the Company or any Company Subsidiary or restricts the conduct of any line of business by the Company or any Company Subsidiary or any geographic area in which the Company or any Company Subsidiary may conduct business, in each case in any material respect;

 

(ii)          which would reasonably be expected to prohibit or materially delay the consummation of the Transactions;

 

(iii)         establishing or maintaining any material partnership, joint venture or strategic alliance;

 

(iv)         that includes any put, call, option, registration, right of first refusal, right to redeem or other rights with respect to Company Capital Stock (other than Benefits Plans);

 

(v)          under which the Company or any Company Subsidiary leases personal property from or to third parties which involve rental payments of at least $200,000 per annum;

 

(vi)         with any Governmental Entity (except for (A) purchase orders for inventory entered into in the ordinary course of business consistent with past practice and (B) Contracts that are not material);

 

(vii)        with any independent contractor or consultant (or similar arrangement) to which the Company or any Subsidiary is a party and which involves annual aggregate payments by the Company or any Company Subsidiary of more than $100,000 or which are not cancelable within sixty (60) days notice without payment of a premium, penalty or similar charge;

 

(viii)       for the purchase or sale of any material assets of the Company or any Company Subsidiary (to the extent such purchase and sale was consummated at any time since January 1, 2007 or is to be consummated at any time from and after the date hereof), except purchases and sales of inventory in the ordinary course of business;

(ix)        other than this Agreement, relating to an acquisition, divestiture, merger or similar transaction, involving the Company or any Company Subsidiary;

 

(x)          that is a license of third party intellectual property of the Company and the Company Subsidiaries that involves annual payments in excess of $150,000 in the aggregate;

 

(xi)         which, as of the date hereof, evidences Indebtedness of the Company or any Company Subsidiary with an outstanding principal amount exceeding $100,000 in the aggregate;

 

(xii)        other than purchase orders for inventory made in the ordinary course of business consistent with past practice, which requires aggregate annual expenditures or payments by the Company or any Company Subsidiary, in excess of $100,000, including Contracts relating to the manufacture or distribution (whether in the United States or any foreign jurisdiction) of any products used, sold, distributed, or held in inventory by the Company or any Company Subsidiary;

 

(xiii)       pursuant to which the Company or any Company Subsidiary has granted any Liens (other than Permitted Liens) on any of their respective material assets;

 

(xiv)       relates to any Intellectual Property Rights (including license, development or similar Contracts) and that involve annual payments in excess of $150,000 in the aggregate;

 

(xv)        pursuant to which the Company or any Company Subsidiary has any continuing material indemnification obligation (except for Contracts entered into in the ordinary course of business consistent with past practice); or

 

(xvi)       is material to the business of the Company and the Company Subsidiaries, taken as a whole, including, without limitation, any Contract that, as of the date hereof, is a “material contract” as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC.

 

(b)         Each Contract of the type described above in this Section 3.16 (including those set forth in any applicable Filed Company SEC Document), each Contract required to be disclosed pursuant to any of Sections 3.10(a) and 3.20, and each Contract required to be disclosed pursuant to Section 3.17 that relates to any Owned Real Property or material Leased Real Property (in each case, whether or not set forth in the applicable Section of the Company Disclosure Letter) is referred to herein as an “Applicable Company Contract.” Except as set forth in Section 3.16 of the Company Disclosure Letter, each Applicable Company Contract is valid and binding on the Company and each Company Subsidiary party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, and the Company and each applicable Company Subsidiary has in all material respects performed all material obligations required to be performed by it under each Applicable Company Contract and, to the Knowledge of the Company, each other party to each Applicable Company Contract has in all material respects performed all material obligations required to be performed by it under such Applicable Company Contract.  Neither the Company nor any Company Subsidiary has received written notice of any, and, to the Knowledge of the Company, there has been no, material default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) any Applicable Company Contract.

 

SECTION 3.17.       Properties.

 

(a)           Each of the Company and each of the Company Subsidiaries has good and valid (and, with respect to Owned Real Property, insurable) title to, or valid leasehold interests in, all of its Owned Real Property and material Leased Real Property, and other material properties and assets, free and clear of all Liens, except for Permitted Liens.

 

(b)           Section 3.17(b) of the Company Disclosure Letter contains a true, correct and complete list of all real property owned by the Company and each of the Company Subsidiaries (the “Owned Real Property”) as of the date hereof.  Except as set forth in Section 3.17(b) of the Company Disclosure Letter, no Person has any outstanding option, right of first offer or right of first refusal to purchase any Owned Real Property.

 

(c)           Section 3.17(c) of the Company Disclosure Letter contains a true, correct and complete list of all real property in which the Company or any Company Subsidiaries has a leasehold interest (the “Leased Property”, and together with the Owned Real Property, the “Real Property”) held under leases, subleases, licenses and/or other types of occupancy agreements (the “Real Property Leases”) as of the date hereof.  Other than as set forth in Section 3.17(c) of the Company Disclosure Letter, as of the date hereof none of the Real Property Leases have been amended, modified, supplemented or superseded. Except as set forth in Section 3.17(c) of the Company Disclosure Letter, no rents under any Real Property Lease have been prepaid, except for the current month’s rent.  To the Knowledge of the Company, each of the Company and each of the Company Subsidiaries enjoys peaceful and undisturbed possession under all such material Real Property Leases.

 

(d)           The Real Property constitutes all real properties occupied by the Company and the Company Subsidiaries in connection with their business.

 

(e)           To the Knowledge of the Company, no zoning or similar land use restrictions are currently in effect or proposed by any Governmental Entity that would materially impair the operation of the Company’s or any Company Subsidiary’s business as currently conducted or which would materially impair the use, occupancy and enjoyment of any of the Real Property in any material respect. Since June 30, 2009, the Company has not received any written notice from any Person with regard to (i) material encroachments on or off the Real Property, or (ii) material defects in the good and valid title of the Real Property.  Neither the Company nor any Company Subsidiary has been named as a party in any material claim or right of adverse possession by any third party with respect to the Real Property.  To the Knowledge of the Company, no portion of the Real Property is subject to any pending sale, condemnation, expropriation or taking (by eminent domain or otherwise) by any Governmental Entity, and no such sale, condemnation, expropriation or taking has been proposed.

(f)            For purposes of this Agreement, “Permitted Liens” means:  (i) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which there are adequate reserves on the books; (ii) mechanic’s, materialman’s, supplier’s, vendor’s, purchase money security interests or similar Liens arising in the ordinary course of business or which is a statutory Lien securing payments not yet due; (iii) any statutory or contractual lien in favor of the landlord or grantor in connection with any Real Property Lease; (iv) zoning, building and other similar restrictions that do not, individually or in the aggregate, materially interfere with the value or current use of any real property; (v) any easement, covenant, right-of-way or other similar restriction recorded in the appropriate recorder’s office in each case that does not materially detract from the value of any real property or materially interfere with the use thereof; (vi) any Lien securing existing Indebtedness of the Company or a Company Subsidiary; (vii) any Lien that does not materially impair, and would not reasonably be expected to materially impair, the value, marketability, or continued use of the property subject to such Lien, and (viii) any Lien which is specifically disclosed on the consolidated balance sheet of the Company as of December 31, 2009, as set forth in the Company’s Form 10-Q for the period then ended, and (ix) Liens listed in Schedule 3.17(f) of the Company Disclosure Letter.

 

SECTION 3.18.       Intellectual Property.

 

(a)           Except as set forth in Section 3.18(a) of the Company Disclosure Letter, the Company and the Company Subsidiaries own, or are validly licensed or otherwise have the right to use, all material patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights, domain names and other proprietary intellectual property rights and computer programs (collectively, “Intellectual Property Rights”) that are used in or held for use in the conduct of the business of the Company or any Company Subsidiary, except as would not, individually or in the aggregate, be material to the business of the Company and the Company Subsidiaries, taken as a whole.

 

(b)           Except as set forth in Section 3.18(b) of the Company Disclosure Letter and except as would not, individually or in the aggregate, be material to the business of the Company and the Company Subsidiaries, taken as a whole, the operation of the business of the Company or any Company Subsidiary does not infringe, misappropriate or violate any third party Intellectual Property Rights.

 

(c)           Section 3.18(b) of the Company Disclosure Letter sets forth a description of (i) all material registered Intellectual Property Rights owned by the Company and any of the Company Subsidiaries, and applications therefor, and (ii) all other Intellectual Property Rights that are material to the conduct of the business of the Company and the Company Subsidiaries, taken as a whole.

 

(d)           Except as set forth in Section 3.18(d) of the Company Disclosure Letter, to the Knowledge of the Company, no Person is infringing the rights of the Company or any of the Company Subsidiaries in any material respect with respect to any Intellectual Property Right.

SECTION 3.19.       Labor Matters.

 

(a)           There are no, and since January 1, 2007, there have been no, collective bargaining or other labor union agreements to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound. Since January 1, 2007, to the Knowledge of the Company, there has been no material labor union organizing activity or labor negotiations with any labor organization, or any actual or threatened material employee strikes, work stoppages, picketing, leafleting, boycotts, slowdowns or lockouts at the Company or any Company Subsidiary.  Since January 1, 2007, no election or proceeding relating to the labor relations of the Company or any Company Subsidiary is pending or, to the Knowledge of the Company, threatened and, since January 1, 2007, no material unfair labor practice, charge or grievance has been filed against or, to the Knowledge of the Company, threatened against the Company or any Company Subsidiary.

 

(b)           Except as disclosed in Section 3.19(b) of the Company Disclosure Letter, there are no pending or, to the Knowledge of the Company, threatened material charges or complaints, and since January 1, 2007, there have been no material charges or complaints, of (i) unlawful harassment or discrimination, (ii) failure to pay wages or benefits owed, or (iii) any other labor or employment controversies of any kind, pending or threatened between the Company or any Company Subsidiary and any of their respective employees or their representatives. Since January 1, 2007, except as set forth in Section 3.19(b) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary: (x) has been found by a Governmental Entity to be in violation in any material respect of any Laws relating to employees or other labor-related matters; (y) is a party to, or otherwise bound by, any Consent decree with, or citation by, any Governmental Entity relating to its current or former employees, officers or directors, or employment practices; and (z) has not been subject to any audit or investigation by the Occupational Safety and Health Administration, the DOL or other similar Governmental Entity, or subject to material fines, penalties, or assessments associated with such audits or investigations.

 

(c)           Neither the Company nor any Company Subsidiary, taken as a whole, has any material liability, whether absolute or contingent, including any material obligations under any Benefit Plan, with respect to any misclassification of any Person under any wage and hour laws, including any misclassification as an independent contractor or consultant rather than as an employee.

 

(d)           To the Knowledge of the Company, as of the date hereof and as of the Closing Date, all of the employees of the Company and each Company Subsidiary are:  (i) United States citizens or lawful permanent residents of the United States; (ii) aliens whose right to work in the United States is unrestricted; or (iii) aliens who have valid, unexpired work authorizations issued by the United States government.

 

(e)           Since January 1, 2010, neither the Company nor any Company Subsidiary has experienced or effected a “plant closing” or “mass layoff,” as defined by the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (“WARN”) or any similar state or local Laws.  Since January 1, 2007, neither the Company nor any Company Subsidiary has incurred any material liability or obligation that remains unsatisfied under WARN or any similar state or local Laws.

SECTION 3.20.       Affiliate Transactions.  Except as disclosed in Sections 3.10(a) (including any agreement that would otherwise be required to be disclosed in Section 3.10(a) of the Company Disclosure Letter except for the fact that it is an immaterial contract), 3.17 and 3.20 of the Company Disclosure Letter, there are no transactions, arrangements, understandings or Contracts between the Company and the Company Subsidiaries, on the one hand, and (i) any of their respective officers, directors, employees, or Affiliates (other than wholly-owned Company Subsidiaries) or (ii) Persons with whom such transaction, arrangement, understanding or Contract would be required to be disclosed under Item 404 of Regulation S-K of the SEC, in each case, on the other hand.

 

SECTION 3.21.       Warranties of Products; Products Liability; Regulatory Compliance.  As of the date hereof and to the Knowledge of the Company:

 

(a)           Except to the extent written down on the books of account of the Company or reserved against thereon, the products manufactured, sold, distributed, used or held in inventory by the Company or any Company Subsidiary (including all documentation furnished in connection therewith) are free from material defects in workmanship and materials, and conform in all material respects with all customary and reasonable standards for products of such type.

 

(b)           No Governmental Entity regulating the manufacture, sale, distribution or use of any of the products manufactured, sold, distributed, used or held in inventory by the Company or any Company Subsidiary (including all documentation furnished in connection therewith) has, since January 1, 2007, requested in writing that any such product be removed from the market, that substantial new product testing be undertaken as a condition to the continued manufacturing, selling, distribution or use of any such product or that such product be modified in any material respect.

 

SECTION 3.22.       Receivables.  As of the date hereof, to the Knowledge of the Company, except to the extent to which adequate reserves have been established on the Company’s consolidated balance sheet as of December 31, 2009 (as adjusted for the passage of time through the date of this Agreement), all accounts receivable of the Company or any Company Subsidiary (a) arose from, and on the Closing Date will have arisen from, sales of goods and/or services actually made or performed, (b) represent valid obligations of the applicable Company customer, and are not subject to any asserted, or,  threatened contest, claim, or right of set-off, other than returns and adjustments in the ordinary course of business, and (c) are good and collectible in the ordinary course of business consistent with past practice at the aggregate recorded amounts thereof.

 

SECTION 3.23.       Customers.  As of the date hereof, to the Knowledge of the Company, there is no reason to believe that the benefits of the business relationship with any material customers of the Company and the Company Subsidiaries, taken as a whole will not continue after the Closing in substantially the same manner as existed prior to the Closing.

 

SECTION 3.24.       Suppliers.  As of the date hereof, to the Knowledge of the Company, there is no reason to believe that the benefits of the business relationship with any material suppliers of the Company and the Company Subsidiaries, taken as a whole, will not continue after the Closing in substantially the same manner as existed prior to the Closing.

SECTION 3.25.       Inventory.  As of the date hereof, to the Knowledge of the Company, the raw materials, work in process, supplies and finished goods included in the inventory of the Company and the Company Subsidiaries consists, in all material respects, of items of a quality and quantity usable and saleable in the ordinary course of business consistent with past practices.  As of the date hereof, to the Knowledge of the Company, the finished goods included in the inventory are not obsolete, damaged or defective in any material respect, subject only to any reserve for inventory recorded in the Company’s consolidated balance sheet as of December 31, 2009, as set forth in the Company’s Form 10-Q for the period then ended, as adjusted for the passage of time through the date of this Agreement.

 

SECTION 3.26.       Insurance.  Section 3.26 of the Company Disclosure Letter sets forth a complete and correct list of all material insurance policies owned or held by the Company and each Company Subsidiary as of the date of this Agreement and all such policies have been made available to Parent for review prior to the date hereof.  With respect to each such insurance policy listed on Section 3.26 of the Company Disclosure Letter, except as would not, or would not reasonably be expected to, individually or in the aggregate, be material to the Company and the Company Subsidiaries, taken as a whole: (i) except for policies that have expired under their terms in the ordinary course and have been replaced by policies with substantially similar coverage, such policy is in full force and effect; (ii) neither the Company nor any Company Subsidiary has received written notice that it is in material breach or default (including any such breach or default with respect to the payment of premiums), and, to the Knowledge of the Company, no event has occurred which, with notice or the lapse of time (or both), would constitute such a material breach or default, or permit termination or material modification, under the policy; and (iii) to the Knowledge of the Company, no notice of cancellation or termination has been received other than in connection with ordinary renewals.

 

ARTICLE IV

 

 

Parent and Sub jointly and severally represent and warrant to the Company that, except as set forth in the disclosure letter, dated as of the date of this Agreement, from Parent and Sub to the Company and delivered to the Company on or prior to the date hereof (the “Parent Disclosure Letter”) (with specific reference to the particular section or subsection of this Agreement to which the information set forth in such disclosure relates; provided, however, that any information set forth in one section of Parent Disclosure Letter shall be deemed to apply to each other section or subsection thereof to which its relevance is reasonably apparent on its face):

 

SECTION 4.01.       Organization, Standing and Power.  Each of Parent and Sub is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full corporate power and authority, as applicable, to conduct its businesses as presently conducted.  Each of Parent and Sub is duly qualified to do business in each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary or the failure to so qualify has had or would reasonably be expected to have a Parent Material Adverse Effect.

SECTION 4.02.       Operations of Parent and Sub.  Each of Parent and Sub was formed solely for the purpose of engaging in the Transactions.  Since the date of its incorporation, neither Parent nor Sub has carried on any business or conducted any operations other than the execution of this Agreement or the other documents contemplated hereby, the performance of its obligations hereunder and matters ancillary thereto.

 

SECTION 4.03.       Authority; Execution and Delivery; Enforceability.  Each of Parent and Sub has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions.  The execution and delivery and performance by each of Parent and Sub of this Agreement and the consummation by it of the Transactions have been duly authorized by all necessary corporate action, on the part of Parent and Sub.  Parent, as sole stockholder of Sub, has adopted this Agreement.  Each of Parent and Sub has duly executed and delivered this Agreement, and assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar applicable Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

SECTION 4.04.       No Conflicts; Consents.

 

(a)           The execution, delivery and performance by each of Parent and Sub of this Agreement do not, and the consummation of the Merger and the other Transactions and compliance with the terms hereof and thereof by Parent and Sub will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any Person under, or result in the creation of any Lien upon any of the properties or assets of Parent or Sub under, any provision of (i) the certificate of incorporation or bylaws of Parent or Sub, (ii) any Contract to which Parent or Sub is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 4.04(b), any material Order or material Law applicable to Parent or Sub or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect.

 

(b)           No Consent of, or Order of, or registration, declaration or filing with, or Permit from, any Governmental Entity is required to be obtained or made by or with respect to Parent or Sub in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than (i) the filing with the SEC of (1) the Proxy Statement, and (2) such reports under Sections 13 and 16 of the Exchange Act, as may be required in connection with this Agreement, the Merger and the other Transactions, (ii) the filing of the Certificate of Merger with the Delaware Secretary and (iii) such other items that, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect.

SECTION 4.05.       Information Supplied.  None of the information included or incorporated by reference in the Proxy Statement or in a Rule 13E-3 transaction statement on Schedule 13 E-3 (“Schedule 13E-3”), will 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 at the date it is first mailed to Company’s stockholders and at the time of the stockholders meeting; provided, however, that no representation or warranty is made by Parent or Sub with respect to any written information that is supplied by the Company or its Representatives specifically for inclusion in the Proxy Statement.

 

SECTION 4.06.       Financing.  Parent has delivered to the Company true, correct and complete copies of (i) executed commitment letters (as the same may be amended pursuant to Section 6.09(b), the “Debt Financing Commitments”), as set forth in Section 4.06 of the Parent Disclosure Letter, pursuant to which the lender parties thereto have agreed, subject to the terms and conditions thereof, to provide or cause to be provided the debt amounts set forth therein (the “Debt Financing”), and (ii) an executed equity commitment letter (the “Equity Financing Commitment,” and together with the Debt Financing Commitment, the “Financing Commitments”), as set forth in Section 4.06 of the Parent Disclosure Letter, pursuant to which ONCAP Investment Partners II, L.P. has committed, subject to the terms and conditions thereof, to invest the amount set forth therein (the “Equity Financing,” and together with the Debt Financing, the “Financing”).  As of the date of this Agreement, none of the Financing Commitments has been amended or modified, and the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded.  Other than as set forth in the Financing Commitments, there are no other written or oral agreements, understandings or Contracts between Parent, Sub or any of their Affiliates and the other parties to the Financing Commitments and their Affiliates that (A) adversely amend or expand upon the conditions precedent to the Financing as set forth in such Financing Commitment, (B) would reasonably be expected to delay or hinder the Closing or (C) reduce the aggregate amount of available Financing.  As of the date of this Agreement, (i) the Financing Commitments are in full force and effect and a legal, valid and binding obligation of Parent, Sub and their Affiliates party to such Financing Commitments and, to the knowledge of Parent, the other parties thereto and (ii) neither Parent nor Sub is in breach of any of the terms or conditions set forth therein and, to the knowledge of Parent, no fact, occurrence, condition or event exists or has occurred which, with or without notice, lapse of time or both, could reasonably be expected to constitute a breach or failure to satisfy a condition precedent set forth in the Financing Commitments or that would reasonably be expected to cause the commitments provided in the Financing Commitments to be terminated.  Parent and Sub have paid any and all commitment and other fees that have been incurred and are due and payable on or prior to the date hereof in connection with the Financing Commitments.  Subject to the terms and conditions of this Agreement (including the accuracy of the Company’s representations and warranties in Section 3.03 and 3.13), as of the date hereof, the aggregate proceeds contemplated by the Financing Commitments, together with the available cash of the Company on the Closing Date, will be sufficient for Parent and Sub to pay the Merger Consideration, Restricted Share Consideration, and the Option Consideration upon the terms contemplated by this Agreement, and to pay all related fees and expenses associated with the Transactions (including any and all change in control payments), including payment of all amounts under Article II of this Agreement.

SECTION 4.07.       Limited Guarantee.  Concurrently with the execution of this Agreement, the Guarantor has delivered to the Company the Limited Guarantee, dated as of the date hereof, in favor of the Company, in the form provided to the Company concurrent with the execution of this Agreement, with respect to the performance by Parent and Sub, respectively, of their monetary obligations under Section 6.06 of this Agreement.   The Limited Guaranty is in full force and effect and a legal, valid and binding obligation of the Guarantor and Guarantor is not in breach of any of the terms or conditions set forth therein.

 

SECTION 4.08.       Investigations; Litigation.

 

(a)           As of the date hereof, there is no Action pending or, to the knowledge of Parent, threatened against or directly affecting Parent or Sub that (i) seeks injunctive relief against Parent, Sub or any of their officers or directors, (ii) would reasonably be expected to interfere, in any material respect, with the consummation of the Transactions, including the Merger, or (iii) has had or would reasonably be expected to have a Parent Material Adverse Effect.  As of the date hereof, neither Parent nor Sub, nor, to the knowledge of Parent, any officer, director or employee of Parent or Sub, has been permanently or temporarily enjoined by any Order of any Governmental Entity from entering into this Agreement or consummating the Transactions, including the Merger, nor, to the knowledge of Parent, is it, Sub, or any officer, director or employee of Parent or Sub under investigation by any Governmental Entity with respect to this Agreement or the consummation of the Transactions, including the Merger.

 

(b)           Neither Parent nor Sub has, as of the date hereof, filed any material Action against any Person.

 

SECTION 4.09.       Brokers.  In the event that the Merger is not consummated for any reason, no Person shall be entitled to receive any broker’s, finder’s, financial advisor’s or other similar fee or commission from the Company or any Company Subsidiary arising directly or indirectly in connection with the Merger and the other Transactions based upon arrangements made by or on behalf of Parent, Sub or, to the knowledge of Parent, any of their Affiliates.

 

SECTION 4.10.       Lack of Ownership of Company Common Stock.  Except as set forth in Section 4.10 of the Parent Disclosure Letter, neither Parent, Sub or, to the knowledge of Parent, any of their Affiliates beneficially or of record owns, directly or indirectly, any shares of Company Common Stock or other securities convertible into, exchangeable into or exercisable for shares of Company Common Stock.  Except for the Voting Agreements, there are no (i) voting trusts or other agreements, arrangements or understandings to which Parent, Sub or, to the knowledge of the Parent, any of their Affiliates is a party or a beneficiary with respect to the voting of the capital stock or other equity interest of the Company, or (ii) agreements, arrangements or understandings to which Parent, Sub or, to the knowledge of Parent, any of their Affiliates is a party or a beneficiary with respect to the acquisition, divestiture, retention, purchase, sale or tendering of the Company Capital Stock.  Neither Parent nor Sub, nor, to the knowledge of Parent, any of their Affiliates has been an “interested stockholder” of the Company within the last three years prior to the date of this Agreement as such terms is used in Section 203 of the DGCL.

 

SECTION 4.11.       Antitrust Matters.  No notification is required to be made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) for the consummation of the Merger because (a) no “acquiring person” involved in the Merger has “annual net sales or total assets” of $12.7 million or more, and (b) no “acquiring person” will “hold an aggregate total amount of voting securities and assets of the acquired person” in excess of $253.7 million (as such terms are used under the HSR Act).

 

SECTION 4.12.       Management Agreements.  Other than the Rollover Agreements and the other agreements set forth in Section 4.12 of the Parent Disclosure Letter, there are no Contracts between Parent or Sub or, to the knowledge of Parent, any of their Affiliates, on the one hand, and any member of the Company’s management or the Company Board or any stockholder of the Company, on the other hand, relating to the Transactions or the operations of the Surviving Corporation or the Company Subsidiaries after the Effective Time.  Parent has delivered to the Company true, correct and complete copies of all of the Rollover Agreements and the other agreements required to be set forth in Section 4.12 of the Parent Disclosure Letter.

 

SECTION 4.13.       Solvency.  Assuming (a)  the satisfaction of the conditions to the Closing set forth in Article VII, (b) the accuracy of the representations and warranties of the Company set forth in Article III hereof, (c) any estimates, projections, or forecasts of the Company have been prepared in good faith based upon reasonable assumptions at the time and (d) the consolidated financial statements of the Company included in the Company SEC Documents fairly present the consolidated financial condition of the Company and the Company Subsidiaries as of the end of the periods covered thereby and the consolidated results of operations of the Company and the Company Subsidiaries for the periods covered thereby, then immediately after giving effect to the Transactions (including the Financings, the payment of the aggregate Merger Consideration, the Restricted Share Consideration and the Option Consideration, and the payment of all related fees and expenses), the Surviving Corporation will be Solvent.  For purposes of this Section 4.13, the term “Solvent,” with respect to the Surviving Corporation, means that, immediately following the Effective Time on the Closing Date, (a) the amount of the fair saleable value of the assets of the Surviving Corporation and its subsidiaries, taken as a whole, exceeds the sum of (i) the value of all liabilities of the Surviving Corporation and its subsidiaries, taken as a whole, including contingent liabilities, as such terms are generally determined in accordance with the applicable federal Laws governing determinations of the solvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of the Surviving Corporation and its subsidiaries, taken as a whole, on its existing debts (including contingent liabilities) as such debts become absolute and matured, (b) the Surviving Corporation and its subsidiaries, taken as a whole, will not have an unreasonably small amount of capital for the operation of the businesses in which they are engaged or proposed to be engaged by Parent following such date, and (c) the Surviving Corporation and its subsidiaries, taken as a whole, will be able to pay their liabilities, including contingent and other liabilities, as they mature.

 

SECTION 4.14.       No Additional Representations.

 

(a)           Parent and Sub acknowledge that (i) it and its Representatives have received access to certain books and records, facilities, equipment, Contracts and other assets of the Company and that it and its Representatives have had an opportunity to meet with certain management of the Company and to discuss certain aspects of the business of the Company, and (ii) neither Parent, Sub nor any of their Affiliates requires any additional access, meetings or discussions with the Company or its Representatives in order to enter into this Agreement (it being acknowledged and agreed that this representation and warranty shall not in any way amend, modify or otherwise limit the express rights of Parent and its Representatives and obligations of the Company under this Agreement, including Section 6.02).

 

(b)           Parent acknowledges that neither the Company nor any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any information (including any estimates, projections, forecasts, plans or budgets for the Company or its Subsidiaries) regarding the Company furnished or made available to Parent and its Representatives, except as expressly set forth in Article III (which includes the Company Disclosure Letter), and neither the Company nor any other Person shall be subject to any liability to Parent or any of its Affiliates resulting from the Company’s making available to Parent or Parent’s use of such information provided or made available to Parent or its Representatives, or any information, documents or material made available to Parent in the due diligence materials provided to Parent, other management presentations (formal or informal) (including any estimates, projections, forecasts, plans or budgets for the Company or its Subsidiaries) or in any other form in connection with the Transactions; provided that, notwithstanding the foregoing, nothing in this Section 4.14 shall relieve the Company of any liability for fraud or willful misconduct by the Company or any of its Representatives.  Other than the representations and warranties of the Company set forth in Article III (including the Company Disclosure Letter), Parent and Sub acknowledge that neither they nor any of their Affiliates are relying upon any other representations, warranties, statements, projections, estimates, forward looking statements or business plans made by the Company, any Company Subsidiary or any of their employees, officers, directors, agents or Representatives in connection with the determination of Parent and Sub to enter into this Agreement and consummate the Transactions;  provided, however, that, notwithstanding the foregoing, nothing in this Section 4.14 shall relieve the Company of any liability for fraud or willful misconduct by the Company or any of its Representatives.

 

ARTICLE V

 

 

SECTION 5.01.       Conduct of Business.

 

(a)           The Company agrees that, from the date of this Agreement to the Effective Time, except as set forth in Section 5.01 of the Company Disclosure Letter, as required by applicable Law, as agreed to in writing by Parent (which consent may be withheld, conditioned or delayed in Parent’s sole discretion), or as expressly required or expressly permitted by this Agreement, (i) the Company shall, and shall cause each Company Subsidiary to, operate its business in the ordinary course of business consistent with past practice, and (ii) the Company shall use commercially reasonable efforts to (i) preserve substantially intact the business, facilities, intellectual capital and organization of the Company and the Company Subsidiaries, (ii) keep available the services of the current officers and key employees and key consultants of the Company and the Company Subsidiaries, (iii) preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers and other Persons with which the Company or any Company Subsidiary has any material business relations, and (iv) preserve its assets and property in good repair and condition; provided, however, that no action by the Company or any Company Subsidiary with respect to matters specifically addressed by any provision of Section 5.01(b) or Section 5.01(c) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provisions.

 

(b)         The Company agrees that, between the date of this Agreement and the Effective Time, except as expressly required or expressly permitted by this Agreement, except as set forth in Section 5.01 of the Company Disclosure Letter, as required by applicable Law, or as agreed to in writing by Parent (which consent may be withheld, conditioned or delayed in Parent’s sole discretion), the Company shall not, and shall cause the Company Subsidiaries not to, directly or indirectly, take any of the following actions:

 

(i)           amend or otherwise change the Company Charter, Company Bylaws or the equivalent organizational documents of any Company Subsidiary;

 

(ii)          (1) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any shares of any class of Company Capital Stock, any security convertible, exercisable or exchangeable therefor, or any other equity interests or voting securities in or of the Company or any Company Subsidiary, or (2) sell, pledge, dispose of, transfer, lease, license, guarantee or encumber, or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of, any material property or assets of the Company or any Company Subsidiary; except (A) with respect to clauses (1) and (2), pursuant to Contracts in effect as of the date hereof (and then only to the extent set forth on Section 5.01 of the Company Disclosure Letter), and (B) with respect to clause (2), for sales or dispositions of inventory or obsolete or excess assets in the ordinary course of business consistent with past practice;

 

(iii)         declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its Company Capital Stock (except for dividends by any wholly-owned Company Subsidiary to the Company or any other wholly-owned Company Subsidiary), or enter into any agreement with respect to the voting of its Company Capital Stock; provided, that the Company may pay quarterly cash dividends of $0.025 per share of Common Stock if such dividends are declared and paid at times consistent with past practice over the prior 12-month period (i.e., declared on the fourth Friday of the last month of a fiscal quarter and paid three weeks thereafter);

 

(iv)         reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any class of Company Capital Stock or other equity interests of the Company or any Company Subsidiary, except for purchases and redemptions pursuant to Contracts in effect as of the date hereof;

 

(v)          adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary (other than the Merger);

(vi)         terminate, cancel, extend, request or agree to any amendment, waiver or other modification to any Applicable Company Contract, or enter into any Contract that (x) if entered into prior to the date hereof, would constitute an Applicable Company Contract, or (y) would be required to be filed as an exhibit to any filing by the Company under the Exchange Act;

 

(vii)        make, authorize or approve any (A) capital expenditures, or (B) material amendment to the Company’s 2010 budget (as previously provided to Parent prior to the date of this Agreement) or any new budget for any fiscal period, other than in the case of clause (A), in accordance with the Company’s 2010 budget (as previously provided to Parent prior to the date of this Agreement) in an amount not to exceed $500,000 in the aggregate;

 

(viii)       (A) incur any Indebtedness, except for borrowings under the Credit Agreement in amounts, and at times, necessary to fund working capital expenditures and capital expenditures to the extent permitted pursuant to Section 5.01(b)(vii) above (provided that in no event shall the amount of such aggregate borrowings under the Credit Agreement (such amount to exclude any borrowings made to fund an amount equal to the enterprise value of acquisitions permitted by the terms hereof (with such enterprise value to include the net working capital of the target of such acquisition)) at the end of any fiscal month of the Company exceed the amount of aggregate borrowings under the Credit Agreement as set forth in the Company's 2010 budget (as previously provided to Parent prior to the date of this Agreement) by more than $4,000,000), (B) grant any Lien (other than Permitted Liens) on any material assets or properties of the Company or any Company Subsidiary, or (C) make any loans, advances or capital contributions to Persons other than the Company Subsidiaries except pursuant to Contracts in effect as of the date hereof (and then only to the extent set forth on Section 5.01(b)(viii)(C) of the Company Disclosure Letter);

 

(ix)          (A) grant or agree to grant to any employee, officer or director of the Company or any Company Subsidiary any increase in wages or bonus, severance, profit sharing, retirement, deferred compensation, insurance or other compensation or benefits, except to the extent required pursuant to Contracts in effect as of the date hereof (and then only to the extent set forth on Section 5.01(b)(ix) of the Company Disclosure Letter), (B) enter into any employment, consulting, indemnification, severance or termination agreement with any such employee, officer or director, (C) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Benefit Plan or (D) take any action to accelerate any rights or benefits, or make any material determinations not in the ordinary course of business consistent with prior practice, under any collective bargaining agreement or Benefit Plan;

 

(x)          acquire (including by merger, consolidation, or acquisition of stock or assets or any other business combination), or make any debt or equity investment in, any Person or any division thereof, except for any such investments by the Company in a wholly-owned Company Subsidiary or acquisitions or investments of less than $100,000 in the aggregate, other than sales-force acquisitions of less than 10 persons in the aggregate;

 

(xi)         make or change any material Tax election, file any amended material Tax Return, enter into any material closing agreement, settle or compromise any proceeding with respect to any material Tax claim or assessment relating to the Company or any Company Subsidiary, consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or any Company Subsidiary, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax or change an annual period; or

 

(xii)        announce an intention, enter into any agreement or otherwise make a commitment, to do any of the foregoing.

 

(c)         The Company agrees that, between the date of this Agreement and the Effective Time, except as expressly required or expressly permitted by this Agreement, except as set forth in Section 5.01 of the Company Disclosure Letter, as required by applicable Law, or as agreed to in writing by Parent (which consent, notwithstanding anything to the contrary in Section 5.01(a), shall not be unreasonably withheld, delayed or conditioned), the Company shall not, and shall cause the Company Subsidiaries not to, directly or indirectly, take any of the following actions:

 

(i)           create any new Company Subsidiary;

 

(ii)          make any material changes, other than changes required by GAAP or Law, with respect to accounting policies or procedures;

 

(iii)         (A) prepay any material Indebtedness, other than prepayments that may be made without premium or penalty, (B) accelerate or delay collection of notes or accounts receivable in advance of or beyond their regular due dates or (C) delay or accelerate payment of any account payable in advance of its due date, except, in the cases of clauses (B) and (C) in the ordinary course of business consistent with past practice;

 

(iv)         waive, release, assign, settle or compromise any Action to which the Company or any of the Company Subsidiaries or any of their respective employees or directors, is a party (which shall include, without limitation, any pending or threatened Action arising out of or related to this Agreement or the Transactions, including the Merger), which (A) involves the payment of amounts, or assumptions of liabilities, by the Company or any of the Company Subsidiaries, (B) enjoins or restricts the Company or any Company Subsidiary from conducting the business of the Company and the Company Subsidiaries as currently conducted in any material respect, or (C) would or would reasonably be expected to result in a Company Material Adverse Effect; except, in the case of clause (A) for any waiver, release, assignment, settlement or compromise that (1) involves an amount less than $50,000 in excess of applicable insurance coverage, deductibles and any self-insured retentions, (2) includes a full release of the Company, each Company Subsidiary, and their respective Affiliates and Representatives, (3) imposes no material ongoing obligations or restrictions of any type on any of Parent, the Company, any Company Subsidiary, or their respective Affiliates and Representatives and (4) is so resolved in the ordinary course of business;

 

(v)          enter into a new line of business or make any material change in the line of business in which it engages as of the date of this Agreement;

 

(vi)         except in the ordinary course of business or as would not, or would not reasonably be expected to, individually or in the aggregate, be material to the Company and the Company Subsidiaries, taken as a whole, cancel, surrender, allow to expire or fail to renew, any Permits;

 

(vii)        fail to use commercially reasonable efforts to prevent any material insurance policy naming it as a beneficiary or loss-payable payee to be cancelled or terminated, except for ordinary course terminations and cancellations of such policies that are being replaced with policies providing for substantially equivalent coverage; or

 

(viii)       announce an intention, enter into any agreement or otherwise make a commitment, to do any of the foregoing.

 

(d)         Other Actions.  The Company and Parent, as applicable, shall, and shall cause their respective Subsidiaries to, use their reasonable best efforts to take or not omit to take any action the taking or failure of which to take would reasonably be expected to result in any other condition to the Merger set forth in Article VII not being satisfied.

SECTION 5.02.       No Solicitation.

 

(a)           Notwithstanding anything else in this Section 5.02 (but otherwise subject to the terms of this Agreement), during the period beginning on the date of this Agreement and continuing until 11:59 p.m. (Central Time) on the date that is 30 days after the date of execution of this Agreement (the “Original Solicitation Period End Date”), as such date may be extended to the Solicitation Period End Date (as defined below) with respect to only a Continuing Party pursuant to the second proviso of this Section 5.02(a), the Company, and any officer, director or employee of, or any investment banker, attorney or other advisor or representative (collectively, “Representatives”) of, and any Affiliate of, the Company or any Company Subsidiary shall be permitted (acting under the direction of the Company Board, or, if applicable, the Special Committee) to (i) directly or indirectly solicit, initiate or encourage the submission of a Company Takeover Proposal and (ii) directly or indirectly participate in discussions or negotiations regarding, and furnish to any Person information with respect to, and take any other action to facilitate any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, a Company Takeover Proposal; provided, however, that (A) the Company shall not, nor shall it authorize or permit any Company Subsidiary, Representative or Affiliate of the Company or any Company Subsidiary to:  (i) provide to any Person any non-public information with respect to the Company or any Company Subsidiary without first entering into an Acceptable Confidentiality Agreement with such Person, (ii) grant any waiver, amendment or release under any standstill or confidentiality agreement, or anti-takeover Laws, or (iii) approve or enter into any letter of intent, memorandum of understanding, agreement in principle, commitment, merger agreement, acquisition agreement or similar agreement relating to any Company Takeover Proposal or that conflicts with this Agreement or requires or would reasonably be expected to require, the Company to abandon this Agreement (each, an “Acquisition Agreement”) other than an Acceptable Confidentiality Agreement or a non-binding letter of intent or term sheet entered into prior to the Original Solicitation Period End Date described in clause (B) of the second proviso of this Section 5.02(a), and (B) the Company shall promptly provide to Parent any non-public information concerning the Company or any Company Subsidiary that is provided to such Person, its Representatives or Affiliates which was not previously provided to Parent, its Representatives or Affiliates; and provided, further, that the Solicitation Period End Date shall be extended until the date provided in the immediately following sentence solely with respect to any Person (a “Continuing Party”) that has submitted to the Company a bona fide detailed written Company Takeover Proposal prior to the end of the Original Solicitation Period End Date that (1) shall (A) provide that each issued and outstanding share of Company Common Stock shall be converted into the right to receive in excess of $13.55, (B) include a non-binding letter of intent or term sheet reflecting the material terms of such Company Takeover Proposal (which the Company may or may not sign), (C) include a draft merger agreement (which may be provided in the form of this Agreement marked to show a draft of the changes such Continuing Party proposes to make to this Agreement), (D) include a detailed non-binding term sheet setting forth the proposed terms of any proposed equity and/or debt financing required to fund the purchase price in connection with any such Company Takeover Proposal, and (E) include any draft voting or other ancillary agreements with the Company or any of its Affiliates that comprise a material component of such Company Takeover Proposal and (2) the Company Board (or, if applicable, the Special Committee), determines, by 11:59 p.m. (Central Time) on the day that is two (2) calendar days after the Original Solicitation Period End Date (the “Continuing Party Determination Date”), in good faith, after consultation with its outside counsel and its independent financial advisors, is a Superior Company Proposal or would reasonably be expected to lead to a Superior Company Proposal by or prior to 11:59 p.m. (Central Time) on the date that is 45 days after the execution of this Agreement as such date may be extended with respect to a particular Continuing Party pursuant to the following sentence (the “Solicitation Period End Date”).  The Original Solicitation Period End Date solely with respect to any such Continuing Party shall be deemed to be extended until, and terminate at, the Solicitation Period End Date, unless on or prior to such date, the Company shall have delivered a Superior Proposal Notice with respect to a Superior Company Proposal proposed by such Continuing Party pursuant to Section 8.05(b) hereof, in which case the Solicitation Period End Date solely with respect to such Continuing Party shall be deemed to be extended until, and shall terminate on, 11:59 p.m. (Central Time) on the date that is two (2) Business Days following the last day of the last Notice Period (including any new Notice Period(s) that may be required if any Continuing Party makes any modification to the financial terms or other material terms of a Company Takeover Proposal prior to the Solicitation Period End Date as extended hereby) described in Section 8.05(b) relating to such Superior Company Proposal.  Notwithstanding anything in this Section 5.02(a) to the contrary, any Continuing Party shall cease to be a Continuing Party for all purposes hereunder at such time as any bona fide detailed written Company Takeover Proposal made by such Continuing Party is withdrawn, terminated, expires or at any time fails to satisfy the requirements of this Section 5.02(a) in all respects, with respect to the terms of clause (1)(A) of the second proviso of the first sentence of this Section 5.02(a), and otherwise in all material respects.

(b)           Subject to the terms hereof (including Section 5.02(a) with respect to a Continuing Party and Sections 5.02(c), 5.02(d) and 8.05), from the day following the Original Solicitation Period End Date until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, the Company shall not, nor shall it authorize or permit any Company Subsidiary, or any Representative or Affiliate of, the Company or any Company Subsidiary to, (i) directly or indirectly solicit, initiate, propose, encourage, facilitate or induce any inquiries, discussions, proposals, indications of interest, submissions or announcements of any Company Takeover Proposal, or take any other action to encourage, facilitate or assist any inquiries or discussions, or the making of any proposal, indication of interest, submission or announcement, in each case, that constitutes or could reasonably be expected to lead to, any Company Takeover Proposal, (ii) approve or enter into any Acquisition Agreement (other than an Acceptable Confidentiality Agreement), (iii) directly or indirectly participate or engage in any discussions or negotiations regarding any Company Takeover Proposal, (iv) furnish to any Person (other than Parent, Sub or any Representative of Parent or Sub) any non-public information relating to the Company or any of the Company Subsidiaries, or afford to any Person (other than Parent, Sub and any Representatives of Parent and Sub) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of the Company Subsidiaries, in any such case, which could reasonably be expected to induce the making, proposal, submission or announcement of, or which could reasonably be expected to encourage, facilitate or assist, a Company Takeover Proposal or any inquiries or discussions, or the making of any proposal, indication of interest, submission or announcement, in any such case, which could reasonably be expected to lead to a Company Takeover Proposal (it being acknowledged and agreed by Parent that the terms of this clause (iv) shall not be deemed breached by any disclosure by the Company of non-public information in the ordinary course of business consistent with past practice to any customer or supplier solely in its capacity as a customer or supplier and not in the context of a Company Takeover Proposal, it being further acknowledged and agreed that any provision of such information to any customer or supplier when acting in the capacity of a potential maker of a Company Takeover Proposal shall be deemed a breach of the terms of this clause (iv) (unless such information is provided pursuant to and in compliance with the terms of Section 5.02(c)), or (v) grant any waiver, amendment or release under any standstill or confidentiality agreement, or anti-takeover Laws, or otherwise take any action with the primary purpose of facilitating any effort or attempt by any Person to make a Company Takeover Proposal.  Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in the preceding sentence by any Company Subsidiary, Representative or Affiliate of the Company or any Company Subsidiary shall be deemed to be a breach of this Section 5.02(b) by the Company.  Subject to Section 5.02(a) (with respect to only a Continuing Party) and Section 5.02(c), beginning on the day following the Original Solicitation Period End Date, the Company shall immediately cease and cause to be terminated any existing solicitation, encouragement, discussion, negotiation or other action permitted by Section 5.02(a) conducted by the Company, any Company Subsidiary or any of their respective Representatives or Affiliates regarding any proposal that constitutes, or could reasonably be expected to lead to, a Company Takeover Proposal (other than with respect to a Person that is then a Continuing Party).  The Company shall, (X) on the Continuing Party Determination Date, deliver a written notice to each Person that submitted a Company Takeover Proposal prior to the Original Solicitation Period End Date (other than with respect to a Person that is, as of such date, a Continuing Party, or with respect to a Person which has made a Company Takeover Proposal and with which the Company would be allowed to participate in discussions and negotiations with respect to such Company Takeover Proposal pursuant to and in accordance with Section 5.02(c), and subject to the last sentence of Section 5.02(a)) to the effect that, the Company is ending all discussions and negotiations with such Person with respect to any Company Takeover Proposal, effective on and from such date, and the notice shall also request that such Person promptly return or destroy all confidential information concerning the Company and the Company’s Subsidiaries, and (Y) provide Parent with (A) the number of Persons that have been qualified as Continuing Parties and (B) copies of all documents referred to in clauses (B) through (E) of the second proviso in Section 5.02(a); provided, however, that, subject to Section 5.02(e) and Section 8.05(b), the Company may (1) limit the identity of the Continuing Party to whether it is a strategic or financial Person (including making any necessary redactions in any of the copies referred to in clause (B) above) and (2) exclude the identity of the financing sources, and pricing terms of the financing proposed to be provided by such financing sources, in connection with the Company Takeover Proposal proposed by any such Continuing Party.

 

(c)           Notwithstanding anything to the contrary in Section 5.02(b), but subject to the other terms of this Agreement (including Section 5.02(a) and Sections 5.02(d), 5.02(f) and 8.05) from the day after the Original Solicitation Period End Date to the date on which the Company Stockholder Approval is received, the Company may in response to an unsolicited, bona fide written Company Takeover Proposal which did not result from a breach of Section 5.02, and which the Company Board (acting through the Special Committee, if applicable) determines, in good faith, (1) after consultation with its outside counsel and its independent financial advisors, constitutes or would reasonably be expected to lead to, a Superior Company Proposal and (2) would be reasonably likely to result in a breach of their fiduciary duties to the Company’s stockholders if they fail to take the actions described in clauses (x) and (y) below, take the following actions (or instruct their Representatives to take the following actions): (x) furnish information with respect to the Company and the Company Subsidiaries to the Person making such Company Takeover Proposal and its Representatives pursuant to an Acceptable Confidentiality Agreement and (y) participate in discussions or negotiations with such Person, its Representatives and Affiliates regarding any such Company Takeover Proposal.  The parties agree that nothing herein shall prevent the Company or its Representatives from directing any Persons to this Agreement from the day following the Original Solicitation Period End Date until the receipt of the Company Stockholder Approval or, if earlier, the date of termination of this Agreement pursuant to the terms hereof.

(d)           Subject to Section 8.01(d) and 8.01(f), commencing on the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VIII, neither the Company nor the Company Board (acting through the Special Committee, if applicable) nor any committee thereof shall (i) withhold, withdraw, amend, qualify or modify, in a manner adverse to Parent or Sub, or propose publicly to withhold, withdraw, amend, qualify or modify, in a manner adverse to Parent or Sub, or change to a neutral position or no position, the Company Board Recommendation, (ii) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, or publicly take a neutral position or no position with respect to, any Company Takeover Proposal, (iii) make any public statement or take any public action in connection with the Company Stockholders Meeting that is inconsistent with the Company Board Recommendation, or (iv) fail to include the Company Board Recommendation in the Proxy Statement (any of the actions or events described in clauses (i) through (iv), an “Adverse Recommendation Change”).  Notwithstanding anything in this Section 5.02(d) to the contrary (but otherwise subject to the terms of this Agreement), at any time prior to receipt of the Company Stockholder Approval, the Company Board (or, if applicable, the Special Committee) may, make an Adverse Recommendation Change:  (i) in response to a Superior Company Proposal, but only after compliance with Section 8.05(b); or (ii) in response to an Intervening Event if, but only if (A) a majority of the directors of the Company Board (acting through the Special Committee, if applicable) shall have determined in their good faith judgment, after consultation with outside legal counsel and consultation with an independent financial advisor, that the failure to make an Adverse Recommendation Change in response to such Intervening Event would result or would reasonably be expected to result in a breach of their fiduciary duties to the stockholders of the Company under the DGCL (any such determination, an “Intervening Event Determination”); (B) the Company promptly, but in any event within one (1) day of making any Intervening Event Determination, notifies Parent in writing that the Company Board (acting through the Special Committee, if applicable) has made an Intervening Event Determination (any such notice, an “Intervening Event Notice”) and provides Parent with a description of the Intervening Event in reasonable detail; (C) for a period of at least five (5) days following receipt by Parent of an Intervening Event Notice (such time period, the “Intervening Event Notice Period”), the Company has, if requested by Parent, negotiated in good faith with Parent to permit Parent to make a proposal or to amend the terms of the Transactions or this Agreement; (D) at the end of the Intervening Event Notice Period, and taking into account any proposals (including any proposal to amend the terms of the Transactions or this Agreement) made by Parent since receipt of the Intervening Event Notice (a “Parent Intervening Event Proposal”), such Intervening Event is continuing and the Company Board (or the Special Committee, if applicable) has again made a Intervening Event Determination in connection with such Intervening Event (it being understood and agreed that if, in light of any Parent Intervening Event Proposal, the Company Board (or the Special Committee, if applicable) is no longer able to make a Intervening Event Determination with respect to such Intervening Event, then the Company shall immediately enter into an amendment to this Agreement with Parent and Sub that embodies the terms of such Parent Intervening Event Proposal); and (E) the Company is in compliance in all material respects with this Section 5.02(d) with respect to such Intervening Event (provided, that the Company acknowledges and agrees that any material change to the Intervening Event shall constitute a new Intervening Event and shall require a new compliance with the terms and conditions of this Section 5.02(d) (and, for the avoidance of doubt, shall require a new Intervening Event Notice Period)); or (iii) in circumstances other than in response to an Intervening Event or a Superior Company Proposal (any Adverse Recommendation Change made pursuant to this clause (iii) of this second sentence of Section 5.02(d), a “Non-Intervening Event Adverse Recommendation Change”), but only if (A) a majority of the directors of the Company Board (or the Special Committee, if applicable) shall have determined in their good faith judgment, after consultation with outside legal counsel and independent financial advisors, that the failure to make a Non-Intervening Event Adverse Recommendation Change would result or would reasonably be expected to result in a breach of their fiduciary duties to the stockholders of the Company under the DGCL (any such determination, a “Non-Intervening Event Adverse Recommendation Change Determination”); (B) the Company promptly, but in any event within one (1) day of making any Non-Intervening Event Adverse Recommendation Change Determination, notifies Parent in writing that the Company Board (or the Special Committee, if applicable) has made a Non-Intervening Event Adverse Recommendation Change Determination pursuant to this clause (iii) of this second sentence of Section 5.02(d) (any such notice, an “Non-Intervening Event Adverse Recommendation Change Notice”) and provides Parent with a description of the Company Board’s (or the Special Committee’s, if applicable) reasons for making such Non-Intervening Event Adverse Recommendation Change Determination in reasonable detail; (C) for a period of at least five (5) days following receipt by Parent of an Non-Intervening Event Adverse Recommendation Change Notice (such time period, the “Non-Intervening Event Adverse Recommendation Change Notice Period”), the Company has, if requested by Parent, negotiated in good faith with Parent to permit Parent to make a proposal or to amend the terms of the Transactions or this Agreement; (D) at the end of the Non-Intervening Event Adverse Recommendation Change Notice Period, and taking into account any proposals (including any proposal to amend the terms of the Transactions or this Agreement) made by Parent since receipt of the Non-Intervening Event Adverse Recommendation Change Notice (a “Parent Non-Intervening Adverse Recommendation Change Proposal”), the Company Board (or the Special Committee, if applicable) has again made a Non-Intervening Event Adverse Recommendation Change Determination (it being understood and agreed that if, in light of any Parent Non-Intervening Event Adverse Recommendation Change Proposal, the Company Board (or the Special Committee, if applicable) is no longer able to make a Non-Intervening Event Adverse Recommendation Change Determination, then the Company shall immediately enter into an amendment to this Agreement with Parent and Sub that embodies the terms of such Parent Non-Intervening Event Adverse Recommendation Change Proposal); and (E) the Company is in compliance in all material respects with this Section 5.02(d) with respect to such Non-Intervening Event Adverse Recommendation Change Determination (provided, that the Company acknowledges and agrees that any material change to the Company Board’s (or the Special Committee’s, if applicable) reasons for making a Non-Intervening Event Adverse Recommendation Change Determination shall require a new compliance with the terms and conditions of this clause (iii) of this second sentence of Section 5.02(d) (and, for the avoidance of doubt, shall require a new Non-Intervening Event Adverse Recommendation Change Notice Period)).

 

(e)           Notwithstanding anything to the contrary in Section 5.02(b) (but otherwise subject to the terms of this Agreement), the Company shall, (x) prior to the Original Solicitation Period End Date (or the Solicitation Period End Date with respect to a Continuing Party), periodically advise Parent of the existence, but not the terms or conditions of, any inquiries, discussions, indications of interest, submissions or announcements that could reasonably be expected to lead to a Company Takeover Proposal (including whether the Person making or initiating such inquiry, discussions, indication of interest, submission or announcement is a strategic or financial buyer) received at a price per share in excess of $13.55 per share of Company Common Stock (or, if applicable, with respect to a Company Takeover Proposal that does not ascribe a particular price per share, total consideration expected to be paid to the Company’s stockholders in excess of an amount equal to such price per share multiplied by the amount of all outstanding shares of Company Common Stock) and (y) following the Original Solicitation Period End Date (or the Solicitation Period End Date with respect to a Continuing Party), promptly (i) advise Parent of any inquiries, discussions, proposals, indications of interest, submissions or announcements with respect to, or that could reasonably be expected to lead to, any Company Takeover Proposal, (ii) provide Parent with the identity of the Person making or initiating any Company Takeover Proposal, inquiry, discussions, indication of interest, submission or announcement of interest and the financial and other material terms of any such Company Takeover Proposal, (iii) keep Parent reasonably informed of the status of any Company Takeover Proposal, inquiry, discussions, proposal, indication of interest, submission or announcement (including any change to the financial terms and any material change to any other material terms), (iv) provide Parent with a copy of any such written Company Takeover Proposal, inquiries, proposals, indications of interest or submissions and any draft agreements relating to such Company Takeover Proposal, inquiries, proposals, indications of interest or submissions promptly following the receipt by or distribution by the Company or the Company Board thereof, and (v) provide Parent with copies of any non-public information concerning the Company or any Company Subsidiary that is provided to such Person, its Representatives or Affiliates which was not previously provided to Parent promptly after the time at which such materials are provided to such Person, its Representatives or Affiliates.

 

(f)            Nothing contained in this Section 5.02 shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) or 14d-9 promulgated under the Exchange Act or from making any disclosure required under applicable Law to the Company’s stockholders if, in the good faith judgment of the Company Board (or the Special Committee, if applicable), after consultation with its outside counsel, failure so to disclose would reasonably be likely to constitute a breach of its fiduciary obligations or any applicable disclosure obligations under applicable Law; provided, however, that any disclosure that constitutes a “stop, look and listen” communication or similar communication of the type contemplated by Section 14d-9(f) under the Exchange Act shall not be deemed to be an Adverse Recommendation Change (including for purposes of Section 8.01(d)(i)) so long as it expressly publicly reaffirms at the time of such disclosure the Company Board Recommendation (and any failure to so expressly publicly reaffirm (including by taking a neutral position or no position with respect to this Agreement or the Transactions) at the time of such disclosure of the Company Board Recommendation shall be deemed to constitute an Adverse Recommendation Change hereunder).  Notwithstanding the foregoing, none of the Company, the Company Board (or the Special Committee, if applicable) or any committee thereof shall effect an Adverse Recommendation Change except in accordance with and in compliance with the terms of Section 5.02(d).

 

(g)           For purposes of this Agreement:

 

“Company Takeover Proposal” means any bona fide proposal or offer (whether or not written) from any Person or “group” (as defined under Section 13(d) of the Exchange Act, a “Group”)) (including from any stockholder of the Company or any of such stockholder’s Affiliates, but other than from Parent, Sub or any of their respective Affiliates) relating to, or that could reasonably be expected to lead to, any direct or indirect (i) acquisition, purchase, merger, consolidation, business combination, share exchange, joint venture, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company; (ii) issuance of, or acquisition or purchase, whether by merger, consolidation, business combination, share exchange, joint venture, tender offer, exchange offer or otherwise of, 20% or more of the outstanding Company Common Stock or any other class of voting stock (or securities convertible into or exchangeable for voting stock) of the Company, or 20% or more of any class of voting stock (or securities convertible into or exchangeable for voting stock) of any Company Subsidiary; (iii) acquisition in any manner, whether by merger, consolidation, business combination, share exchange, joint venture, lease, mortgage, pledge or otherwise (including through any arrangement having substantially the same economic effect as a sale of assets), of assets, subsidiaries or businesses that represent or constitute more than 20% of the assets, net revenues or net income of the Company and the Company Subsidiaries, taken as a whole; or (iv) combination of any the transactions described in clauses (i) through (iii) of this definition, in each case in one or a series of related transactions, and in each case other than the Transactions.

 

“Superior Company Proposal” means a bona fide written Company Takeover Proposal that was not solicited in violation of Section 5.02 and that the Company Board (or, if applicable, the Special Committee) in good faith determines by a majority vote, (i) is on terms and conditions that are more favorable from a financial point of view to the holders of Company Common Stock than the Transactions, after (a) receiving the advice of an independent financial advisor and consultation with outside counsel, (b) taking into account legal (with the advice of outside counsel), financial, regulatory or other aspects of such proposal and any other relevant factors that the Company Board (or, if applicable, the Special Committee) determines relevant, and (c) taking into account any proposal by Parent to amend the terms of the Merger or any of the Transactions, (ii) that is reasonably capable of being completed without unreasonable delay relative to the consummation of the Transactions (taking into account all financial, regulatory, legal and other aspects of such proposal) and (iii) that, to the extent financing is required, is fully financed by means of an executed customary commitment letter from a reputable Person that has agreed, subject to the terms and conditions in such executed commitment letter, to provide or cause to be provided the debt amounts set forth therein; provided, that, for purposes of this definition of “Superior Company Proposal,” references in the term “Company Takeover Proposal” to “20%” shall instead be deemed to be references to “51%”.

 

“Intervening Event” means a material favorable change in the business of the Company and the Company Subsidiaries, taken as a whole, arising after the date of this Agreement, which is (i) unknown to, nor reasonably foreseeable by, the Company, the Company Board, or the Special Committee, if applicable, as of or prior to the date of this Agreement and (ii) becomes known to or by the Company, the Company Board, or the Special Committee, if applicable, prior to the receipt of the Company Stockholder Approval; provided, however, that in no event shall the receipt of a Company Takeover Proposal or Superior Company Proposal constitute an Intervening Event.

ARTICLE VI

 

 

SECTION 6.01.       Preparation of the Proxy Statement; Stockholders Meeting.

 

(a)           The Company shall, as soon as reasonably practicable following the date of this Agreement (but in any event within 20 Business Days after the date hereof), prepare and file with the SEC the Proxy Statement in preliminary form, and the Company and Parent shall, as soon as reasonably practical following the date of this Agreement (but in any event within 20 Business Days after the date hereof) jointly prepare and file with the SEC the Schedule 13E-3, subject, in each case, to the Company or the Parent receiving all necessary information from the other, its Affiliates and other third parties required to be provided in the Proxy Statement or the Schedule 13E-3.  Parent and Sub shall provide the Company with information the Company reasonably requests for inclusion in the Proxy Statement, and Parent, Sub and the Company shall cooperate in the preparation of the Schedule 13E-3.  The Company and Parent shall each use their reasonable best efforts to respond as promptly as practicable to any comments of the SEC with respect thereto.  The Company and Parent shall notify each other promptly, and in any event within one (1) Business Day, of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or the Schedule 13E-3, or for additional information, and shall supply each other with copies of all correspondence between the Company or Parent, or any of their respective Representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement, the Schedule 13E-3 or the Transactions contemplated hereby.  The Company shall use its reasonable best efforts to prepare and file with the SEC the definitive Proxy Statement and to cause the definitive Proxy Statement to be mailed to the Company’s stockholders as promptly as practicable.  The Company (and, in the case of the Schedule 13E-3, the Company and Parent jointly) shall cause the Proxy Statement and the Schedule 13E-3 to comply as to form and substance in all material respects with the applicable requirements of the Exchange Act and the rules of the SEC and the NASDAQ National Market.  If at any time prior to receipt of the Company Stockholder Approval, any information relating to the Company, Parent, Sub or any of their respective Affiliates, directors or officers should be discovered by the Company or Parent, that the Company or Parent determines should be set forth in an amendment or supplement to the Proxy Statement or the Schedule 13E-3, so that the Proxy Statement or the Schedule 13E-3 shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other party, and an appropriate amendment, supplement or other filing incorporated by reference into the Proxy Statement or the Schedule 13E-3 describing such information shall be filed by the Company (or, in the case of the Schedule 13E-3, jointly by the Company and Parent) with the SEC and, to the extent required by applicable Law, disseminated to the stockholders of the Company, in each case, as promptly as reasonably practicable.  Notwithstanding the foregoing, prior to filing or mailing the preliminary or definitive Proxy Statement (or, in each case, any amendment or supplement thereto) or responding to the comments of the SEC or its staff with respect thereto, the Company (i) shall provide Parent a reasonable opportunity to review and comment on such document or response and (ii) shall include in such document or response all reasonable comments proposed by Parent.

 

(b)           The Company shall duly call, give notice of, convene and hold a meeting of its stockholders (the “Company Stockholder Meeting”) as promptly as practicable after the SEC clears the Proxy Statement, and in any event shall hold the Company Stockholder Meeting within 30 days after the Proxy Statement is mailed to its stockholders (unless a delay is required to comply with applicable Law (including in connection with the required dissemination of a material amendment or supplements to the Proxy Statement or the Schedule 13E-3)), for the purpose of obtaining the Company Stockholder Approval in connection with this Agreement and the Transactions, including the Merger.  Unless the Company Board shall have made an Adverse Recommendation Change, the Company shall, through the Company Board (or the Special Committee, if applicable), recommend to its stockholders that they give the Company Stockholder Approval and shall cause such recommendation to be included in the Proxy Statement. The Company shall take all lawful action to obtain the Company Stockholder Approval by the requisite vote of the Company’s stockholders, including (i) postponing or adjourning the Company Stockholder Meeting to obtain a quorum, (ii) using reasonable efforts to solicit proxies (including through the hiring of a nationally recognized proxy solicitor if reasonably requested by Parent), (iii) calling, giving notice of, convening and holding the Company Stockholder Meeting following a postponement of any previously called Company Stockholder Meeting (provided in no event shall the Company be obligated to hold more than one Company Stockholder Meeting) (iv) consulting with, and providing updates to, Parent, upon Parent’s reasonable request, and (v) taking such other actions as Parent may reasonably request.  At the Company Stockholder Meeting, no matters shall be noticed or submitted to the stockholders other than the matters to be considered in connection with obtaining the Company Stockholder Approval or a proposal to adjourn or postpone the meeting, including for purposes of soliciting additional proxies in order to obtain the Company Stockholder Approval.  Unless this Agreement is validly terminated in accordance with its terms pursuant to Article VIII, the Company shall submit this Agreement to its stockholders at the Company Stockholder Meeting even if (x) there has occurred the commencement, proposal, disclosure or other communication of any Company Takeover Proposal or (y) the Company Board (or the Special Committee, if applicable) shall have withdrawn, modified or qualified its recommendation thereof or otherwise effected an Adverse Recommendation Change or proposed or announced any intention to do so.