UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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April 13, 2015
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Dover Saddlery, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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000-51624
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04-3438294
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_____________________
(State or other jurisdiction
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_____________
(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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525 Great Road, P.O. Box 1100, Littleton, Massachusetts
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01460
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_________________________________
(Address of principal executive offices)
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___________
(Zip Code)
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Registrants telephone number, including area code:
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978-952-8062
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Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[x] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On April 13, 2015, Dover Saddlery, Inc., a Delaware corporation ("Registrant"), Dover Saddlery Holdings, Inc., a Delaware corporation ("Parent"), and Dover Saddlery Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent ("Sub") entered into an Agreement and Plan of Merger ("Merger Agreement"). Parent and Sub are affiliates of Webster Capital ("Webster") and at the closing of the transactions contemplated by the Merger Agreement, Parent will be owned by funds managed by Webster and affiliates of QIC ("QIC"), one of the largest institutional investors in funds managed by Webster.
The Merger Agreement provides that, subject to the terms and conditions thereof, Sub will be merged with and into Registrant (the "Merger") with Registrant continuing as the surviving corporation in the Merger. At the effective time of the Merger (the "Effective Time") each share of common stock of the Registrant ("Common Stock") issued and outstanding immediately prior to the Effective Time (other than certain shares as provided in the Merger Agreement) will be automatically converted into the right to receive $8.50 in cash (the "Merger Consideration").
At the Effective Time, each "in-the-money" option or warrant that is vested and exercisable immediately prior to the Effective Time will be entitled to receive a cash payment equal to the number of shares underlying the option or warrant multiplied by an amount equal to the excess of the Merger Consideration over the exercise or purchase price per share.
The Registrant's Board of Directors unanimously (i) determined that the Merger Agreement and the Merger are advisable and in the best interests of the Registrant and its stockholders, (ii) approved the execution, delivery and performance of the Merger Agreement, and (iii) resolved to recommend the adoption of the Merger Agreement by the stockholders of the Registrant and directed that such matter be submitted for consideration of the stockholders of the Registrant. Stockholders of the Registrant will be asked to vote on the adoption of the Merger Agreement at a stockholders meeting that will be held on a date to be announced.
The Merger contains customary representations, warranties and covenants of the parties as well as conditions to closing ("Closing Conditions"), including, among other things, Registrant stockholder approval, receipt of third party consents, the absence of any judicial order or transaction litigation, and the absence of a material adverse effect on Registrant. The Merger is expected to close in the second quarter of 2015, subject to the satisfaction of the Closing Conditions.
Subject to certain limited exceptions, the Merger Agreement provides that the Company, its subsidiaries and affiliates and their representatives may not, among other things, solicit, initiate or take any action to facilitate or encourage the submission of any alternative acquisition proposal, enter into any agreement constituting or relating to an alternative acquisition proposal; or participate in any discussions or provide information to a third party making an alternative acquisition proposal.
The Merger Agreement contains certain termination rights, including the right of Registrant to terminate the Merger Agreement to accept a superior proposal (so long as Registrant complies with certain notice and other requirements under the Merger Agreement). If Registrant terminates for that reason, or if Parent terminates for certain limited reasons, then Registrant will be required to pay the Parent a termination fee of $2,072,400. In addition, upon termination by Registrant for certain limited reasons, Parent will be required to pay Registrant a termination fee of $2,072,400.
Parent has obtained equity financing commitments for the purpose of financing the transactions contemplated by the Merger Agreement. Webster Capital Fund III, L.P., a fund advised by Webster, has entered into an equity commitment letter to provide, subject to the terms and conditions set forth therein, financing sufficient for Parent to pay all amounts required to be paid to Registrant’s stockholders and holders of outstanding options and warrants. Parent has also represented to Registrant that the proceeds of this equity financing, and or additional debt capacity arranged by the Parent, will be sufficient to pay all expenses related to the Merger.
In connection with the execution of the Merger Agreement, certain stockholders of Registrant, who collectively hold approximately 25% of the Registrant's outstanding shares, have entered into voting agreements with Parent in which they have agreed to vote their shares of Registrant’s capital stock to approve the Merger. Those stockholders and Registrant also agreed not to solicit, initiate or encourage any inquiries or proposals regarding alternative transactions involving Registrant.
Upon the consummation of the Merger, Parent has agreed to continue to employ certain members of Registrant's management ("Dover Executives") under the terms of their existing executive employment contracts; to offer the Dover Executives the right to purchase shares of Parent's capital stock at a price comparable to the Merger Consideration; and to adopt an equity incentive plan ("Plan") representing up to 10% of the fully diluted equity of Parent ("Parent Option Pool"), pursuant to which the Dover Executives will be eligible to receive options and other types of equity awards.
The foregoing description of the Merger and Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement itself has been provided solely to inform investors of its terms. The Merger Agreement contains representations and warranties by the parties to the Merger Agreement, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that the parties have exchanged in connection with signing the agreement. The Merger Agreement may include disclosure schedules that contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the agreement. Moreover, certain representations and warranties in the agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what may be viewed as material to shareholders or may have been used for the purpose of allocating risk between the parties to the agreement. Accordingly, current stockholders and investors are not third-party beneficiaries under the agreement and should not rely on the representations and warranties in the agreement as characterizations of the actual state of facts about the parties to the agreement at the time they were made or otherwise.
Item 7.01 Regulation FD Disclosure.
On April 14, 2015, Registrant announced that it has entered into the Merger Agreement. The Merger Agreement provides that, subject to the terms and conditions thereof, Sub will be merged with and into the Registrant, with Registrant continuing as the surviving corporation in the Merger. At the Effective Time, each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than certain shares as provided in the Merger Agreement) will be automatically converted into the right to receive $8.50 in cash.
At closing, all in-the-money stock options and warrants will be cashed out. Webster is partnering with QIC, one of Webster’s largest institutional investors, to provide equity financing. Registrant's Board of Directors has unanimously approved the Merger Agreement and recommended that Dover’s stockholders vote to approve the transaction.
The offer represents a significant premium over Registrant’s share price immediately prior to announcement of the Merger. The transaction is expected to close in the second quarter of fiscal 2015, subject to customary closing conditions, including stockholder approval.
In connection with the execution of the Merger Agreement, Stephen Day and other certain directors and a member of Registrant's management team, who currently own approximately 25% of Dover’s outstanding shares, have agreed to vote their shares in favor of the Merger.
The information in this Item 7.01 of Current Report on Form 8-K, as well as Exhibit 99.1, shall not be treated as "filed" for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act.
Item 9.01 Financial Statements and Exhibits.
On April 14, 2015, Registrant issued a press release announcing that it has entered into an Agreement and Plan of Merger with an affiliate of Webster Capital, which has agreed to acquire all of the outstanding shares of Registrant's common stock for $8.50 per share in cash, and take the Registrant private. A copy of the Press Release is attached as Exhibit 99.1.
d) Exhibits
Exhibit No.
2.1 Agreement and Plan of Merger dated as of April 13, 2015 among Dover Saddlery, Inc., Dover Saddlery Holdings, Inc., and Dover Saddlery Merger Sub, Inc.*
99.1 Press Release dated April 14, 2015.
* Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. Registrant agrees to furnish a supplemental copy of any omitted schedules to the SEC upon request.
This Form 8-K and the attached press release include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements made about the proposed merger with an affiliate of Webster. In some cases, forward-looking statements can be identified by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “outlook,” “guidance” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. The forward-looking information and statements are or may be based on estimates and involve risks and uncertainties. These risks and uncertainties include such factors as: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (2) the failure to obtain stockholder approval or the failure to satisfy any of the other closing conditions, (3) the risks related to the financing arrangements entered into in connection with the Merger Agreement, (4) the risks related to disruption of management’s attention from Registrant’s ongoing business operations due to the transaction, (5) the effect of the announcement of the transaction on the ability of Registrant to retain and hire key personnel and maintain relationships with its customers, suppliers and others with whom it does business, or on its operating results and business generally, (6) changes in general economic conditions, (7) Registrant’s ability to effectively manage its growth and operations, and (8) changes in the legal or regulatory environment. Additional risks are described under Item 1A, “Risk Factors,” in Registrant’s most recent annual report on Form 10-K for the year ended December 31, 2014 filed on March 31, 2015. Given these uncertainties, undue reliance should not be placed on these forward-looking statements.
All statements other than statements of historical fact included herein regarding the prospects for consummation of the Merger, Registrant’s strategies, plans, objectives, expectations, and future operating results are forward-looking statements. Although Registrant believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. Registrant is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Dover Saddlery, Inc.
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April 14, 2015
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By:
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/s/ David R. Pearce
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Name: David R. Pearce
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Title: Chief Financial Officer
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Exhibit Index
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Exhibit No.
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Description
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2.1
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Agreement and Plan of Merger dated as of April 13, 2015 among Dover Saddlery, Inc., Dover Saddlery Holdings, Inc., and Dover Saddlery Merger Sub, Inc
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99.1
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April 14, 2015 Press Release
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Exhibit 2.1
Agreement and Plan of Merger among Dover Saddlery Holdings, Inc., Dover
Saddlery Merger Sub, Inc., and Dover Saddlery, Inc.
Dated as of April 13, 2015
Agreement and Plan of Merger
Table of Contents
Page
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ARTICLE I THE MERGER |
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1 |
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Section 1.1 |
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The Merger. |
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1 |
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Section 1.2 |
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Effective Time |
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2 |
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Section 1.3 |
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Effects of the Merger. |
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2 |
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Section 1.4 |
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Charter and Bylaws; Directors and Officers. |
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2 |
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Section 1.5 |
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Conversion of Securities. |
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2 |
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Section 1.6 |
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Parent to Make Cash Available. |
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3 |
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Section 1.7 |
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Return of Exchange Fund. |
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4 |
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Section 1.8 |
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No Further Ownership Rights in Company Stock. |
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5 |
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Section 1.9 |
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Closing of Company Transfer Books. |
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5 |
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Section 1.10 |
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Lost Certificates. |
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5 |
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Section 1.11 |
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Further Assurances. |
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5 |
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Section 1.12 |
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Closing. |
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5 |
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
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6 |
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Section 2.1 |
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Organization, Standing and Power. |
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6 |
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Section 2.2 |
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Authority. |
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6 |
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Section 2.3 |
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Consents and Approvals; No Violation. |
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6 |
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Section 2.4 |
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Company Proxy Statement. |
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7 |
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Section 2.5 |
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Actions and Proceedings. |
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7 |
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Section 2.6 |
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No Required Vote of Parent Shareholders. |
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7 |
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Section 2.7 |
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Brokers. |
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8 |
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Section 2.8 |
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Operations of Sub. |
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8 |
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Section 2.9 |
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Sufficient Funding. |
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8 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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8 |
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Section 3.1 |
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Organization, Standing and Power. |
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8 |
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Section 3.2 |
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Capital Structure. |
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9 |
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Section 3.3 |
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Authority.10 |
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Section 3.4 |
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Consents and Approvals; No Violation.10 |
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Section 3.5 |
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SEC Documents; Financial Statements; and Other Reports.11 |
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Section 3.6 |
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Company Proxy Statement.13 |
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Section 3.7 |
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Absence of Certain Changes or Events.13 |
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Section 3.8 |
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Permits and Compliance.14 |
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Section 3.9 |
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Tax Matters.14 |
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Section 3.10 |
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Orders and Actions.16 |
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Section 3.11 |
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Employee Benefits.17 |
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Section 3.12 |
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Labor Matters.18 |
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Section 3.13 |
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Insurance.19 |
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Section 3.14 |
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Required Vote of Company Stockholders.19 |
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Section 3.15 |
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Intellectual Property.20 |
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Section 3.16 |
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Environmental.22 |
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Section 3.17 |
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Material Contracts.23 |
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Section 3.18 |
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Title to Assets and Properties.25 |
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Section 3.19 |
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Antitakeover Statutes.26 |
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Section 3.20 |
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Affiliate Transactions.26 |
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Section 3.21 |
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No Undisclosed Material Liabilities; Indebtedness.26 |
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Section 3.22 |
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Brokers.27 |
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ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS27
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Section 4.1 |
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Conduct of Business Pending the Merger.27 |
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Section 4.2 |
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No Solicitation.30 |
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ARTICLE V ADDITIONAL AGREEMENTS32
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Section 5.1 |
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Proxy Statement; Stockholder Meeting.32 |
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Section 5.2 |
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Stockholder Litigation.33 |
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Section 5.3 |
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Access to Information.33 |
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Section 5.4 |
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Fees and Expenses.34 |
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Section 5.5 |
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Company Options and Company Warrants.35 |
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Section 5.6 |
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Reasonable Best Efforts.35 |
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Section 5.7 |
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Public Announcements.36 |
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Section 5.8 |
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De-Listing and De-Registration.36 |
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Section 5.9 |
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Indemnification; Directors and Officers Insurance.36 |
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Section 5.10 |
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Notification of Certain Matters.37 |
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Section 5.11 |
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Employee Benefit Plans and Agreements.38 |
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Section 5.12 |
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FIRPTA Certificate.38 |
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ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER38
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Section 6.1 |
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Conditions to Each Partys Obligation to Effect the Merger.38 |
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Section 6.2 |
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Additional Conditions to Obligation of the Company to Effect the Merger. |
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39 |
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Section 6.3 Additional Conditions to Obligations of Parent and Sub to Effect the Merger.
39
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
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39 |
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Section 7.1 |
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Termination. |
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39 |
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Section 7.2 |
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Effect of Termination. |
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40 |
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Section 7.3 |
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Amendment. |
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41 |
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Section 7.4 |
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Waiver. |
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41 |
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ARTICLE VIII GENERAL PROVISIONS
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41 |
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Section 8.1 |
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Non-Survival of Representations and Warranties. |
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41 |
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Section 8.2 |
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Notices. |
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41 |
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Section 8.3 |
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Interpretation. |
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42 |
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Section 8.4 |
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Counterparts. |
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42 |
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Section 8.5 |
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Entire Agreement; No Third-Party Beneficiaries. |
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42 |
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Section 8.6 |
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Governing Law. |
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42 |
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Section 8.7 |
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Binding Effect; Assignment. |
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42 |
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Section 8.8 |
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Severability. |
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43 |
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Section 8.9 |
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Company Disclosure Schedule; Parent Disclosure Schedule. |
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43 |
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Section 8.10 |
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WAIVER OF JURY TRIAL. |
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43 |
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Section 8.11 |
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Remedies. |
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43 |
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Section 8.12 |
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Jurisdiction. |
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44 |
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1
TABLE OF DEFINED TERMS
Defined Term Section
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Acquisition Proposal |
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4.2 |
(a) |
Adverse Recommendation Change |
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4.2 |
(a) |
Affiliate |
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3.2 |
(b) |
Agreement |
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Forepart |
Alternative Acquisition Agreement |
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4.2 |
(a) |
Certificate of Merger |
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1.1 |
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Certificates |
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1.6 |
(b) |
Change of Control Obligation |
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3.17(a)(xiii) |
Closing |
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1.12 |
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Code |
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1.6 |
(c) |
Company |
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Forepart |
Company Board Recommendation |
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3.3 |
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Company Bylaws |
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1.4 |
(a) |
Company Charter |
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1.4 |
(a) |
Company Disclosure Schedule |
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3.2 |
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Company Material Contract |
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3.17 |
(a) |
Company Permits |
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3.8 |
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Company Plans |
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3.11 |
(c) |
Company Proxy Statement |
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2.4 |
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Company SEC Documents |
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3.5 |
(a) |
Company Securities |
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3.2 |
(c) |
Company Stock |
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Recitals |
Company Stock Options |
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3.2 |
(a) |
Company Stock Plans |
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3.2 |
(a) |
Company Stockholders |
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1.6 |
(c) |
Company Stockholder Approval |
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3.14 |
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Company Stockholder Meeting |
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5.1 |
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Confidentiality Agreement |
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5.3 |
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Constituent Corporations |
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Forepart |
Contingent Workers |
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3.12 |
(b) |
Contract |
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3.17 |
(a) |
D&O Insurance |
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5.9 |
(c) |
DGCL |
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1.1 |
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Dissenting Shares |
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1.5 |
(e) |
Equity Commitment Letter |
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Recitals |
Equity Financing |
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2.9 |
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Effective Time |
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1.2 |
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Employment Agreements |
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Recitals |
End Date |
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7.1 |
(d) |
Environmental Law |
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3.16 |
(a) |
Environmental Permits |
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3.16 |
(a) |
ERISA |
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3.11 |
(a) |
ERISA Affiliate |
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3.11 |
(c) |
Exchange Act |
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2.3 |
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Exchange Agent |
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1.6 |
(a) |
Exchange Fund |
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1.6 |
(a) |
Exchange Amount |
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1.5 |
(c) |
GAAP |
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3.5 |
(d) |
Governmental Entity |
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2.3 |
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Hazardous Substance |
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3.16 |
(a) |
Indebtedness |
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3.21 |
(b) |
Indemnified Parties |
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5.9 |
(a) |
Intellectual Property |
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3.15 |
(f) |
internal controls |
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3.15 |
(d) |
Knowledge of Parent |
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2.5 |
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Knowledge of the Company |
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3.5 |
(b) |
Latest Balance Sheet |
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3.21 |
(a) |
Law |
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1.6 |
(c) |
Leased Real Property |
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3.18 |
(c) |
Leases |
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3.18 |
(c) |
Liens |
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3.2 |
(d) |
made available |
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3.2 |
(b) |
Material Adverse Effect |
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2.3 |
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Merger |
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Recitals |
Multiemployer Plan |
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3.11 |
(c) |
Nasdaq |
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2.3 |
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Parent |
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Forepart |
Parent Disclosure Schedule |
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2.3 |
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Permitted Liens |
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3.4 |
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Person |
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1.6 |
(b) |
Registered Intellectual Property |
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3.15 |
(a) |
Representatives |
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4.2 |
(a) |
Retained Employee |
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5.11 |
(a) |
Sarbanes-Oxley Act |
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3.5 |
(a) |
SEC |
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3.5 |
(a) |
Securities Act |
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3.5 |
(a) |
Sub |
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Forepart |
Subsidiary |
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2.3 |
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Superior Proposal |
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4.2 |
(b) |
Support Agreements |
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Recitals |
Surviving Corporation |
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1.1 |
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Tax Returns |
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3.9 |
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Taxes |
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3.9 |
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Third Party |
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4.2 |
(a) |
Transaction Litigation |
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5.2 |
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Transactions |
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1.12 |
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Uncertificated Shares |
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1.5 |
(d) |
Agreement and Plan of Merger
Agreement and Plan of Merger, dated as of April 13, 2015 (this Agreement), among Dover
Saddlery Holdings, Inc., a Delaware corporation (Parent), Dover Saddlery Merger Sub, Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent (Sub), and Dover Saddlery,
Inc., a Delaware corporation (the Company) (Sub and the Company being collectively referred to as
the Constituent Corporations).
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have approved
and declared advisable this Agreement and the merger of Sub with and into the Company (the
Merger), upon the terms and subject to the conditions set forth in this Agreement, including the
conversion of each issued and outstanding share of common stock, par value $.0001 per share, of the
Company (Company Stock) not owned directly or indirectly by Parent or the Company, into the right
to receive the Exchange Amount (as defined below) and the payment to holders of Company Options and
Company Warrants (each as defined below) of an amount equal to the value, if any, of such Company
Options and Company Warrants, as set forth in Section 5.5 hereof;
WHEREAS, simultaneously with the execution and delivery of this Agreement and as a condition
to Parents willingness to enter into this Agreement, Parent and each of the stockholders of the
Company listed on Exhibit A have entered into an agreement (each, a Support Agreement and
collectively the Support Agreements) pursuant to which such stockholders agreed to vote in favor
of approval of this Agreement and against any Acquisition Proposal, and to take certain other
actions in furtherance of the consummation of the Merger upon the terms and subject to the
conditions set forth in the Support Agreements;
WHEREAS, simultaneously with the execution and delivery of this Agreement and as a condition
to the Companys willingness to enter into this Agreement, Webster Capital Fund III, L.P., a
Delaware limited partnership (Sponsor) is entering into an equity commitment letter with Parent
(the Equity Commitment Letter); and
WHEREAS, the Board of Directors of the Company has determined that the Merger is in the best
interests of the Companys stockholders.
NOW, THEREFORE, in consideration of the premises, representations, warranties and agreements
contained in this Agreement, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of this Agreement,
and in accordance with the Delaware General Corporation Law (the DGCL), Sub shall be merged with
and into the Company at the Effective Time. Upon the Closing, the Constituent Corporations shall
file a Certificate of Merger (the Certificate of Merger), executed in accordance with the
relevant provisions of the DGCL, with the Secretary of State of the State of Delaware and make all
other filings or recordings required by the DGCL in connection with the Merger. Following the
Merger, the separate corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the Surviving Corporation) and shall succeed to and assume all the rights
and obligations of Sub in accordance with the DGCL.
Section 1.2 Effective Time. The Merger shall become effective when the Certificate of
Merger, executed in accordance with the relevant provisions of the DGCL, is filed with the
Secretary of State of the State of Delaware; provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date of effectiveness
of the Merger not more than 30 days after the date the Certificate of Merger is filed. When used
in this Agreement, the term Effective Time shall mean the date and time at which the Certificate
of Merger is filed or such later time set forth in the Certificate of Merger.
Section 1.3 Effects of the Merger. The Merger shall have the effects set forth in this
Agreement and in the DGCL, including Section 259 thereof.
Section 1.4 Charter and Bylaws; Directors and Officers.
(a) At the Effective Time, the Amended and Restated Certificate of Incorporation, as amended,
of the Company (the Company Charter), as in effect immediately prior to the Effective Time, shall
be amended as set forth in Exhibit C. As so amended, the Company Charter shall be the
Amended and Restated Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law. At the Effective Time, the Bylaws of
the Company, as amended (the Company Bylaws), as in effect immediately prior to the Effective
Time shall be amended and restated as set forth in Exhibit D. As so amended and restated,
the Company Bylaws shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable Law.
(b) The directors of Sub at the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their respective successors
are duly elected and qualified. The officers of the Company at the Effective Time of the Merger
shall be the officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified.
Section 1.5 Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of Sub, the Company or the holders of any securities of the
Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $.01 per share, of Sub shall
be converted into one validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(b) All shares of Company Stock that, immediately prior to the Effective Time, are held in the
treasury of the Company or by Parent or Sub shall be canceled and no consideration shall be
delivered in exchange for such shares.
(c) Each share of Company Stock issued and outstanding immediately prior to the Effective Time
(other than Dissenting Shares and shares to be canceled in accordance with Section 1.5(b)) shall be
converted into the right to receive $8.50 in cash, without interest (such per-share amount being
the Exchange Amount).
(d) At the Effective Time, all such shares of Company Stock shall no longer be outstanding and
shall automatically be canceled, and each holder of a certificate representing any such shares or
of uncertificated shares of Company Stock, which immediately prior to the Effective Time were
registered to such holder on the stock transfer books of the Company (the Uncertificated Shares),
so long as such shares are not Dissenting Shares, shall in either case cease to have any rights
with respect to such shares, except the right to receive the Exchange Amount in respect of each
such share of Company Stock.
(e) Notwithstanding anything in this Agreement to the contrary, shares of Company Stock issued
and outstanding immediately prior to the Effective Time which are held of record by stockholders
who shall not have voted such shares in favor of the Merger and who shall have demanded properly in
writing appraisal of such shares in accordance with Section 262 of the DGCL (Dissenting Shares)
shall not be converted into the right to receive the Exchange Amount as set forth in Section
1.5(c), but the holders of such shares instead shall be entitled to, and the Dissenting Shares
shall only represent the right to receive, payment of the fair value of such shares in accordance
with the provisions of Section 262 of the DGCL; provided, however, that (i) if such a holder fails
to demand properly in writing from the Surviving Corporation the appraisal of his or its shares in
accordance with Section 262(d) of the DGCL or, after making such demand, subsequently delivers an
effective written withdrawal of such demand, or fails to establish his or its entitlement to
appraisal rights as provided in Section 262 of the DGCL, if so required, or (ii) if the applicable
court shall determine that such holder is not entitled to receive payment for such holders shares
or such holder shall otherwise lose such holders appraisal rights, then, in any such case, each
share of Company Stock held of record by such holder or holders shall be treated as if they had
been converted as of the Effective Time into the right to receive the Exchange Amount.
(f) If, during the period between the date of this Agreement and the Effective Time, any
change in the outstanding shares of capital stock of the Company shall occur, as a result of any
reclassification, recapitalization, stock split (including reverse stock split), merger,
combination, exchange or readjustment of shares, subdivision or other similar transaction, or any
stock dividend thereon with a record date during such period, the Exchange Amount and any other
amounts payable pursuant to this Agreement shall be appropriately adjusted to eliminate the effect
of such event on the Exchange Amount or any such other amounts payable pursuant to this Agreement.
Section 1.6 Parent to Make Cash Available.
(a) Exchange of Certificates. Prior to the Effective Time, Parent shall authorize a
commercial bank or trust company or such other Person or Persons as shall be reasonably acceptable
to the Company to act as Exchange Agent for the Merger (the Exchange Agent). Prior to or as of
the Effective Time, Parent shall deposit (i) with the Exchange Agent cash as required to make all
payments to the holders of the Company Stock contemplated by Section 1.5(c), and all payments to
the holders of Company Warrants contemplated by Section 5.5(a), (such amounts collectively, the
Exchange Fund) and (ii) with the Company cash as required to make all payments to holders of the
Company Stock Options contemplated by Section 5.5(a). The Exchange Agent shall make payments to
holders of Company Stock and Company Warrants out of the Exchange Fund.
(b) Exchange Procedures. Parent shall mail, or instruct the Exchange Agent, as soon as
practicable after the Effective Time, to mail, to each record holder of a share or shares of
Company Stock a letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title shall pass, only upon actual delivery of the certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of Company Stock
converted in the Merger (the Certificates) or transfer of the Uncertificated Shares to the
Exchange Agent, and shall contain instructions for use in effecting the surrender of the
Certificates, or the transfer of Uncertificated Shares, in exchange for cash, and which shall be
reasonably satisfactory to the Company). Upon (i) surrender for cancellation to the Exchange Agent
of one or more Certificates evidencing shares of Company Stock, together with a properly completed
letter of transmittal by, or (ii) receipt of an agents message by the Exchange Agent (or such
other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a
book-entry transfer of Uncertificated Shares from or on behalf of, a holder of shares of Company
Stock, such holder shall be entitled to receive in cash in exchange therefor, in accordance with
the terms of this Agreement, the Exchange Amount with respect to each share of Company Stock
represented by such Certificate(s) or Uncertificated Share(s). Until so surrendered or transferred,
each such Certificate or Uncertificated Share shall represent after the Effective Time for all
purposes only the right to receive such Exchange Amount. If any portion of the Exchange Amount is
to be paid to an individual, corporation, partnership, limited liability company, association,
trust or other entity or organization, including a government or political subdivision or an agency
or instrumentality thereof (each, a Person), other than the Person in whose name the surrendered
Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such
payment that (x) either such Certificate shall be properly endorsed or shall otherwise be in proper
form for transfer or such Uncertificated Share shall be properly transferred and (y) the Person
requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a
result of such payment to a Person other than the registered holder of such Certificate or
Uncertificated Share or establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(c) Withholding. Each of Parent, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Stock at the Effective Time (collectively, the
Company Stockholders) such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the Code) or under
any provision of any Law, including any state, local or foreign Tax Law. To the extent that
amounts are so withheld by Parent, the Surviving Corporation or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid to the Company
Stockholders in respect of which such deduction and withholding was made by Parent, the Surviving
Corporation or the Exchange Agent. For purposes of this Agreement, Law means any federal, state
or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code,
rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted,
adopted, promulgated, enforced or applied by a Governmental Entity, as the same may be amended from
time to time.
Section 1.7 Return of Exchange Fund. Any portion of the Exchange Fund which remains
undistributed to the Company Stockholders for two years after the Effective Time shall be delivered
to Parent or to the Company, upon demand of Parent or the Company, and any Company Stockholders who
have not exchanged shares of Company Stock for the Exchange Amount in accordance with this Article
I prior to such date shall thereafter look only to Parent for payment of their claim for the
Exchange Amount. Neither Parent nor the Surviving Corporation shall be liable to any Company
Stockholder for any such cash which is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. Any amounts remaining unclaimed by holders of shares
of Company Stock two years after the Effective Time (or such earlier date immediately prior to such
time when the amounts would otherwise escheat to or become property of any Governmental Entity)
shall become, to the extent permitted by applicable Law, the property of Parent free and clear of
any claims or interest of any Person previously entitled thereto.
Section 1.8 No Further Ownership Rights in Company Stock. All cash paid upon the surrender
for exchange of Certificates or Uncertificated Shares in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the
Company Stock (including the rights to any related dividends) represented by such Certificates or
Uncertificated Shares.
Section 1.9 Closing of Company Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of shares of Company Stock shall thereafter be
made on the records of the Company. If, after the Effective Time, Certificates or Uncertificated
Shares are presented to the Surviving Corporation, the Exchange Agent or Parent, such Certificates
or Uncertificated Shares shall be canceled and exchanged as provided in this Article I.
Section 1.10 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Exchange Agent, the posting by such Person of
a bond, in such reasonable amount as the Exchange Agent may direct as indemnity against any claim
that may be made against them with respect to such Certificate, the Exchange Agent will pay or
cause to be paid in exchange for such lost, stolen or destroyed Certificate the consideration to
which the holder of such Certificate is entitled pursuant to this Article I.
Section 1.11 Further Assurances. If at any time at or after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to
or under any of the rights, privileges, powers, properties or assets of either of the Constituent
Corporations, or (b) otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall be authorized to execute
and deliver, in the name and on behalf of either of the Constituent Corporations, all such deeds,
bills of sale, assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary, desirable or proper to
vest, perfect or confirm the Surviving Corporations right, title or interest in, to or under any
of the rights, privileges, powers, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Agreement.
Section 1.12 Closing. The closing (the Closing) of the transactions contemplated by this
Agreement (the Transactions) and all actions specified in this Agreement to occur at the Closing
shall take place by telephone and email at 10:00 a.m., Eastern time, no later than the third
business day following the day on which the last of the conditions set forth in Article VI shall
have been fulfilled or waived (if permissible) (other than conditions that by their nature are to
be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver
of those conditions at the Closing) or at such other time and place as Parent and the Company shall
mutually agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 2.1 Organization, Standing and Power. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority to carry on its business as now being
conducted.
Section 2.2 Authority. Each of Parent and Sub has all requisite corporate power to enter
into this Agreement and to consummate the Transactions. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of the Transactions have been
duly authorized by all necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company and its validity and binding effect on the
Company) this Agreement constitutes the valid and binding obligation of Parent and Sub enforceable
against each of them in accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other Laws affecting creditors rights
generally and general principles of equity).
Section 2.3 Consents and Approvals; No Violation. Assuming that all consents, approvals,
authorizations and other actions described in this Section 2.3 have been obtained and all filings
and obligations described in this Section 2.3 have been made, and except as set forth in Section
2.3 of the disclosure schedule and delivered to the Company on the date of this Agreement, which
relates to this Agreement and is designated the Parent Disclosure Schedule (the Parent Disclosure
Schedule), the execution and delivery of this Agreement does not, and the consummation by Parent
and Sub of the Transactions and compliance with the provisions of this Agreement will not, result
in any violation of, or default (with or without notice or lapse of time, or both) under any
provision of, or the acceleration of any obligation under, or the termination or material
alteration of (a) the Certificate of Incorporation or By-laws of Parent or the Certificate of
Incorporation or By-laws of Sub, (b) any loan or credit agreement, note, lease, license, permit or
other agreement applicable to Parent or any of its Subsidiaries or (c) any Law applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets, other than, in the case
of clauses (b) or (c), any such violations, defaults, rights, liens, security interests, charges or
encumbrances that would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent, prohibit Parent or Sub from performing their respective
obligations under this Agreement or prevent the consummation of any of the Transactions. The
execution, delivery and performance by Parent and Sub of this Agreement and the consummation by
Parent and Sub of the Transactions require no action by or in respect of, or filing with, any
domestic (federal or state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal (a Governmental Entity), except for (i) in connection,
or in compliance, with the provisions of the Securities Exchange Act of 1934, as amended (together
with the rules and regulations promulgated thereunder, the Exchange Act), (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) applicable requirements, if any, of the Nasdaq
Stock Market (Nasdaq), and (iv) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not reasonably be
expected to have, individually or in the aggregate, Material Adverse Effect on Parent, prohibit
Parent or Sub from performing its obligations under this Agreement or prevent the consummation of
any of the Transactions. For purposes of this Agreement (A) Material Adverse Effect with respect
to a party means any event, change or effect that (1) would prevent such party from consummating
the Merger or (2) individually or when taken together with all other such events, changes or
effects is materially adverse to the business, financial condition, assets or results of operations
of such party and its Subsidiaries, taken as a whole, except to the extent resulting from (x) any
changes or events generally affecting the United States economy or the industry in which such party
and its Subsidiaries operate; provided that such change or event (I) does not specifically relate
to such party and its Subsidiaries, and (II) is not disproportionately adverse to such party and
its Subsidiaries compared to other companies operating in the industry in which such party and its
Subsidiaries operate, and (y) the execution or announcement or compliance with the terms of this
Agreement; and (B) Subsidiary means any corporation, partnership, limited liability company,
joint venture or other legal entity of which Parent or the Company (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation, partnership, limited liability
company, joint venture or other legal entity.
Section 2.4 Company Proxy Statement. None of the information to be supplied in writing by
Parent or Sub for inclusion or incorporation by reference in the proxy statement relating to the
Company Stockholder Meeting (the Company Proxy Statement) or any amendment or supplement thereto
will, at the time of the mailing of the Company Proxy Statement or any amendment or supplement
thereto and at the time of the Company Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading. Notwithstanding the
foregoing, Parent and Sub make no representation or warranty with respect to any information
supplied by the Company or any of its representatives on its behalf which is contained or
incorporated by reference in the Company Proxy Statement.
Section 2.5 Actions and Proceedings. There are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving Parent or any of its
Subsidiaries, or any of its or their properties, assets or business, that, individually or in the
aggregate, would prohibit Parent or Sub from consummating the Merger. There are no actions, suits
or claims or legal, administrative or arbitration proceedings or investigations pending or, to the
Knowledge of Parent, threatened against or involving Parent or any of its Subsidiaries or its or
their properties, assets or business that, individually or in the aggregate, would prohibit the
Company from consummating the Merger. As of the date of this Agreement, there are no actions,
suits, or other litigation, legal or administrative proceedings or governmental investigations
relating to the Transactions that are pending or, to the Knowledge of Parent, threatened against
Parent or any of its Subsidiaries or any of its or their properties, assets or business. For
purposes of this Agreement, Knowledge of Parent means the knowledge of the individuals identified
in Section 2.5 of the Parent Disclosure Schedule upon due inquiry.
Section 2.6 No Required Vote of Parent Shareholders. No vote of the shareholders of Parent
is required by Law, the Certificate of Incorporation of Parent, the Bylaws of Parent or otherwise
in order for Parent to consummate the Merger and the other Transactions.
Section 2.7 Brokers. No broker, investment banker or other Person is entitled to any
brokers, finders or other similar fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of Parent.
Section 2.8 Operations of Sub. Sub is a direct, wholly owned subsidiary of Parent, was
formed solely for the purpose of engaging in the Transactions, has engaged in no other business
activities and has conducted its operations only as contemplated by this Agreement.
Section 2.9 Sufficient Funding. Parent has delivered to the Company complete and correct
copies of the executed Equity Commitment Letter from Sponsor to provide, subject only to the terms
and conditions expressly set forth therein, financing in the aggregate amount set forth therein
(the Equity Financing). The Equity Commitment Letter has not been amended or modified, no such
amendment or modification is presently contemplated, and the respective obligations and commitments
contained in such letters have not been withdrawn or rescinded in any respect. The Equity
Commitment Letter is in full force and effect and represents the valid, binding and enforceable
obligation of Parent, Sub and Sponsor (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other Laws affecting creditors rights generally and
general principles of equity). There are no side letters or other Contracts or arrangements
relating to the Equity Financing. The proceeds of the Equity Financing, when funded at the Closing,
will be sufficient for Parent to pay all amounts required to be paid pursuant to Sections 1.5 and
5.5, and the proceeds of the Equity Financing or additional debt capacity arranged by the Parent
will be sufficient to pay all expenses related to the Merger and provide sufficient debt financing
for the Companys 2015 growth plan. Subject to Section 8.11(b), the only condition precedent to
the obligations of Sponsor to make the full amount of the Equity Financing available to Parent
under the Equity Commitment Letter is the fulfillment of the conditions to Parent and Subs
obligation to close pursuant to this Agreement, and the Equity Commitment Letter will provide
amounts necessary to pay the Parent Termination Fee if such fee becomes due and payable under this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 Organization, Standing and Power. The Company is a corporation duly organized,
validly existing and in good standing under the DGCL and has the requisite corporate power and
authority to carry on its business as now being conducted. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the Laws of the jurisdiction in which it is
organized and has the requisite corporate or company power and authority to carry on its business
as now being conducted. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where such qualification is necessary,
except where the failure to be so qualified has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company has
made available to Parent true, complete and correct copies of the Company Charter and Company
Bylaws as in effect on the date of this Agreement.
Section 3.2 Capital Structure.
(a) The authorized capital stock of the Company consists of 16,000,000 shares of capital stock
of which 10,000,000 are shares of Company Stock, and 1,000,000 are preferred stock, par value
$.0001 per share. At the close of business on April 10, 2015, (A) 5,409,492 shares of Company
Stock were issued and outstanding, all of which were duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights, (B) no shares of preferred stock were issued or
outstanding, and (C) 1,088,191 shares of Company Stock were reserved for issuance pursuant to
options to purchase shares of Company Stock (Company Stock Options) issued and outstanding
pursuant to the Company Stock Plans and 118,170 shares of Company Stock were reserved for issuance
pursuant to warrants to purchase shares of Company Stock (Company Warrants), each of which will
be, when issued in accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable.
(b) No Subsidiary of the Company owns any shares of capital stock of the Company. Section
3.2(b) of the disclosure schedule dated and delivered to Parent on the date of this Agreement by
the Company, which relates to this Agreement and is designated the Company Disclosure Schedule (the
Company Disclosure Schedule), contains a complete and correct list of each outstanding Company
Stock Option, including with respect to each such option the holder, date of grant, exercise price,
and number of shares of Company Stock subject thereto. For purposes of this Agreement, (1)
Company Stock Plans means the Companys 1999 Stock Option Plan and Amended and Restated 2005
Equity Incentive Plan, (2) Affiliate means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such Person and (3) made
available means that the information referred to (x) was delivered to Parent prior to 9:00 a.m.
Eastern Time on the date prior to the date of this Agreement or (y) was posted prior to 9:00 a.m.
Eastern Time on the date prior to the date of this Agreement on the Companys electronic data site.
(c) There are no outstanding bonds, debentures, notes or other obligations or indebtedness the
holders of which have the right to vote (or convert into or be exercised for securities having the
right to vote) with the holders of the Company Stock on any matter. As of the date of this
Agreement, except as set forth in Section 3.2(a) and for the issuance of shares of Company Stock
since April 10, 2015 pursuant to Company Stock Options or Company Warrants outstanding on such
date, there are no issued, reserved for issuance or outstanding (A) shares of capital stock or
other voting securities of or other ownership interest in the Company, (B) securities of the
Company convertible into or exchangeable for shares of capital stock or other voting securities of
or other ownership interest in the Company, (C) options, warrants, calls, rights, puts or
agreements to acquire from the Company, or other obligations of the Company to issue, deliver, sell
or redeem, or cause to be issued, delivered, sold or redeemed, any shares of capital stock, other
voting securities convertible into or exchangeable for capital stock or other voting securities of
or other ownership interest in the Company, or obligating the Company to grant, extend or enter
into any such option, warrant, call, right, put or agreement, or (D) restricted shares, stock
appreciation rights, performance units, contingent value rights, phantom stock or similar
securities or rights that are derivative of, or provide economic benefits based, directly or
indirectly, on the value or price of, any capital stock of, or other voting securities of or
ownership interests in, the Company (the items in clauses (A) though (D) being referred to
collectively as the Company Securities).
(d) Each outstanding share of capital stock (or other voting security, equity equivalent or
ownership interest) of each Subsidiary of the Company is duly authorized, validly issued, fully
paid and nonassessable, and each such share (or other voting security, equity equivalent or
ownership interest) is owned by the Company or another Subsidiary of the Company, free and clear of
all mortgages, security interests, liens, encumbrances, claims, pledges, charges, options, rights
of first refusal and adverse claims of any kind (collectively, Liens) and free and clear of any
other limitation or restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership interests) other than Liens
arising by operation of Law and Liens set forth on Section 3.2(d) of the Company Disclosure
Schedule. There are no issued, reserved for issuance or outstanding (i) securities of the Company
or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other
voting securities of or ownership interests in any Subsidiary of the Company, (ii) warrants, calls,
options or other rights to acquire from the Company or any of its Subsidiaries, or other
obligations of the Company or any of its Subsidiaries to issue, any capital stock or other voting
securities of or ownership interests in, or any securities convertible into or exchangeable for any
capital stock or other voting securities of or ownership interests in, any Subsidiary of the
Company or (iii) restricted shares, stock appreciation rights, performance units, contingent value
rights, phantom stock or similar securities or rights that are derivative of, or provide economic
benefits based, directly or indirectly, on the value or price of, any capital stock of, or other
voting securities of or ownership interests in, any Subsidiary of the Company (other than to the
extent that the value of the Company Stock is derivative of and provides economic benefits based on
the value of the voting securities of or ownership interests in the Subsidiaries of the Company).
Except as set forth in Section 3.2 of the Company Disclosure Schedule and except for the capital
stock or other equity or voting interests of its Subsidiaries and publicly traded securities held
for investment which do not exceed 5% of the outstanding securities of any entity, the Company does
not own, directly or indirectly, any capital stock or other equity or voting interests in any
Person. Section 3.2(d) of the Company Disclosure Schedule lists all of the Subsidiaries of the
Company.
Section 3.3 Authority. On or prior to the date of this Agreement, at a meeting duly called
and held, the Board of Directors of the Company declared this Agreement and the Merger advisable
and in the best interest of the Company and its stockholders and approved and adopted this
Agreement in accordance with the DGCL (including taking all action necessary to exempt this
Agreement, the Merger and the transactions contemplated by this Agreement from the prohibitions on
business combinations under Section 203 of the DGCL), resolved to recommend the approval and
adoption of this Agreement by the Companys stockholders (the Company Board Recommendation), and
directed that this Agreement be submitted to the Companys stockholders for approval and adoption.
The Company has all requisite corporate power to enter into this Agreement and, subject to approval
and adoption of this Agreement by the stockholders of the Company, to consummate the Transactions.
The execution and delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly authorized by all necessary corporate action on the part of the
Company, subject to approval and adoption of this Agreement by the stockholders of the Company.
This Agreement has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and the validity and
binding effect of this Agreement on Parent and Sub) constitutes the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other Laws affecting
creditors rights generally and general principles of equity). The filing of the Company Proxy
Statement with the SEC will be duly authorized by the Companys Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming that all consents, approvals,
authorizations and other actions described in this Section 3.4 and in Section 3.14 have been
obtained and all filings and obligations described in this Section 3.4 and in Section 3.14 have
been made, except as set forth in Section 3.4 of the Company Disclosure Schedule, the execution and
delivery of this Agreement does not, and the consummation of the Transactions and compliance with
the provisions of this Agreement will not, (a) result in any violation of, or default (with or
without notice or lapse of time, or both) under any provision of, or the acceleration of any
obligation under, or the termination or material alteration of (i) the Company Charter or the
Company Bylaws, (ii) any provision of the comparable charter or organization documents of any of
the Companys Subsidiaries, (b) result in any material violation of, or material default (with or
without notice or lapse of time, or both) under any provision of, or the acceleration of any
material obligation under, or the termination or material alteration of (i) any material loan or
credit agreement, note, lease, license, permit or other material agreement applicable to the
Company or any of its Subsidiaries, (ii) any Law applicable to the Company or any of its
Subsidiaries or any of their respective material properties or assets, or (c) result in the
creation or imposition of any material Lien on any asset of the Company or any of its Subsidiaries,
other than: (w) Liens that are disclosed in the Company Disclosure Schedule, (x) liens for Taxes,
fees, levies, duties or other governmental charges of any kind which are not yet due and payable,
(y) liens for mechanics, materialmen, laborers, employees, suppliers or similar liens arising by
operation of Law for amounts which are owed, but not yet delinquent, and (z) in the case of real
property, any matters, restrictions, covenants, conditions, limitations, rights, rights of way,
encumbrances, encroachments, reservations, easements, agreements and other matters of record, such
state of facts of which an accurate survey of the property would reveal ((w), (x), (y) and (z)
collectively, Permitted Liens). The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the Transactions require no action by or in
respect of, or filing with, any Governmental Entity except for (A) compliance with the provisions
of the Exchange Act, (B) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of other states in which
the Company or any of its Subsidiaries is qualified to do business, (C) applicable requirements, if
any, of Nasdaq, and (D) such other consents, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained is not reasonably likely to be materially adverse
to the Company or any of its Subsidiaries, prohibit the Company from performing its obligations
under this Agreement or prevent the consummation of any of the Transactions.
Section 3.5 SEC Documents; Financial Statements; and Other Reports.
(a) Except as set forth in Section 3.5(a) of the Company Disclosure Schedule, the Company has
timely filed all required documents with the Securities and Exchange Commission (the SEC) since
January 1, 2012 (collectively, together with any exhibits and schedules thereto and other
information incorporated therein, the Company SEC Documents). Except as set forth in Section
3.5(a) of the Company Disclosure Schedule, as of their respective filing dates, the Company SEC
Documents complied, and all Company SEC Documents filed subsequent to the date of this Agreement
will comply, in all material respects with the requirements of the Exchange Act, the Securities Act
of 1933, as amended (together with the rules and regulations promulgated thereunder, the
Securities Act), and the Sarbanes-Oxley Act of 2002 (together with the rules and regulations
promulgated thereunder, the Sarbanes-Oxley Act), and, at the respective times they were filed,
none of the Company SEC Documents did, and none of the Company SEC Documents filed subsequent to
the date of this Agreement will, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure Schedule, the Company is
in compliance in all material respects with and, since January 1, 2012, has complied in all
material respects with (and, to the Knowledge of the Company, each of its executive officers and
directors are in compliance with and have complied in all material respects with) the applicable
listing and corporate governance rules and regulations of Nasdaq. For purposes of this Agreement,
Knowledge of the Company means the knowledge of the individuals identified on Section 3.5(b) of
the Company Disclosure Schedule upon due inquiry.
(c) The Company has established and maintains disclosure controls and procedures (as defined
in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its consolidated Subsidiaries,
is made known to the Companys principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared.
(d) The Company and its Subsidiaries have established and maintained a system of internal
control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) (internal
controls). Such internal controls are sufficient (i) to provide reasonable assurance regarding
the reliability of the Companys financial reporting and the preparation of the Companys financial
statements for external purposes in accordance with U.S. generally accepted accounting principles
(GAAP), (ii) that receipts and expenditures of the Company and its Subsidiaries are being made,
in all material respects, only in accordance with the authorization of management and directors of
the Company and such Subsidiaries, and (iii) to provide reasonable assurance regarding prevention
or timely detection of the unauthorized acquisition, use or disposition of the Companys or its
Subsidiaries assets that would have a material effect on the Companys financial statements. The
Company has no Knowledge of any fraud, whether or not material, that involves management or other
employees who have a significant role in internal controls. Except as set forth on Section 3.5(d)
of the Company Disclosure Schedule, since January 1, 2012, the Board of Directors of the Company
and the Audit Committee of the Board of Directors of the Company have not received any oral or
written notification from the Companys auditors or any member of the Companys accounting or
legal staff of any material weakness in the Companys internal control over financial reporting
and there is no outstanding significant deficiency or material weakness that the Companys
independent accountants certify has not been appropriately and adequately remedied by the Company.
For purposes of this Agreement, the terms significant deficiency and material weakness shall
have the meanings assigned to them in Release No. 2007-005 of the Public Company Accounting
Oversight Board, as in effect on the date of this Agreement.
(e) Since January 1, 2012, each of the principal executive officer and principal financial
officer of the Company (or each former principal executive officer and principal financial officer
of the Company, as applicable) has made all certifications required by Rule 13a-14 and 15d-14 under
the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and
regulations promulgated by the SEC and Nasdaq, and the statements contained in any such
certifications are complete and correct in all material respects. For purposes of this Agreement,
principal executive officer and principal financial officer shall have the meanings given to
such terms in the Sarbanes-Oxley Act.
(f) The consolidated financial statements (including any notes thereto) of the Company
included or incorporated by reference in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published rules and regulations
of the SEC, were prepared in accordance with GAAP (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of
the respective dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described therein). Except as
set forth in Section 3.5(f) of the Company Disclosure Schedule or as required by GAAP, the Company
has not, between December 31, 2014 and the date of this Agreement, made any material change in the
accounting practices or policies applied in the preparation of financial statements.
(g) All of the accounts receivable of the Company and its Subsidiaries arose from the bona
fide arms length sale of goods or provision of services in the ordinary course of business, and
are not subject to any material, valid right of set-off or counterclaim; provided that accounts
receivable are subject to adjustment for trade allowances and similar adjustments consistent with
past practices of the Company and its Subsidiaries.
(h) The inventory of the Company and its Subsidiaries consists solely of material and goods of
a quality and quantity which are usable in the ordinary course of the business, net of any reserve
for damage, loss, shrinkage, excessive or obsolete inventories properly reflected on the
consolidated financial statements (including any notes thereto) of the Company included or
incorporated by reference in the Company SEC Documents or incurred in the ordinary course of
business and consistent with past practice since the date of such financial statements. As of the
date of such financial statements, such financial statements reflect adequate reserves for
inventory write downs in accordance with GAAP, consistently applied.
(i) Each Company Stock Option and restricted stock award was granted in compliance in all
material respects with all applicable legal requirements and was recorded on the Companys
financial statements in accordance with GAAP consistently applied, and to the Knowledge of the
Company, the Company has not granted any Company Stock Options at an exercise price that represents
a discount from the fair market value of the Company Stock underlying such Company Stock Option on
the date of grant.
Section 3.6 Company Proxy Statement. At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company, at the time such
stockholders vote on adoption of this Agreement and at the Effective Time, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 3.6 will not apply to statements or
omissions included in the Company Proxy Statement based upon information furnished to the Company
in writing by Parent specifically for use therein. The Company Proxy Statement will, when filed,
comply as to form in all material respects with the provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except as set forth in Section 3.7 of
the Company Disclosure Schedule, since December 31, 2014, the business of the Company and its
Subsidiaries has been conducted in the ordinary course consistent with past practices, and (a)
there has not been any event, occurrence or development that has had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on the Company,
(b) there has not been any damage, destruction, or other casualty loss with respect to any asset or
property owned, leased or otherwise used by the Company or any of its Subsidiaries whether or not
covered by insurance, other than (i) damage, destruction or loss of assets or properties immaterial
to the Company and its Subsidiaries in the aggregate, (ii) normal wear and tear on Company
facilities, fixtures, properties and assets, and (iii) inventory losses incurred in the ordinary
course of business, and (c) neither the Company nor any of its Subsidiaries have taken any action
that would, if taken after the date of this Agreement without the prior consent of Parent,
constitute a breach of Section 4.1(i), (iii), (iv), (v), (vi), (viii), (xi), (xii), (xiii), (xvi),
(xviii), (xxi) or (xxiii).
Section 3.8 Permits and Compliance. Each of the Company and its Subsidiaries is in
possession of all material authorizations, licenses and permits of any Governmental Entity
necessary for the Company or any of its Subsidiaries to own and operate its properties and other
assets and to carry on its business as it is now being conducted (the Company Permits). The
Company and each of its Subsidiaries is and, since January 1, 2012, has been in compliance in all
material respects with the terms of the Company Permits. None of the Company and its Subsidiaries
is in violation of its charter, by-laws or other organizational documents. None of the Company and
its Subsidiaries is in violation in any material respect of (i) any applicable Law, or (ii) any
material order, decree or judgment of any Governmental Entity having jurisdiction over the Company
or any of its Subsidiaries. To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries is under investigation with respect to nor has been threatened to be charged with or
given notice or other communication alleging or relating to a possible material violation of
applicable Laws.
Section 3.9 Tax Matters. Except as otherwise set forth in Section 3.9 of the Company
Disclosure Schedule:
(a) (i) the Company and each of its Subsidiaries have filed all Tax Returns required to have
been filed in a timely manner, and such Tax Returns are true, correct and complete in all material
respects, and no penalties or charges are due with respect to the late filing of any Tax Return
required to have been filed; (ii) all Taxes shown to be due on such Tax Returns and any other
material Taxes that the Company or its Subsidiaries are otherwise obligated to pay have been timely
paid; (iii) neither the Company nor any of its Subsidiaries is currently the beneficiary of an
extension of time within which to file any Tax Return required to be filed, other than customary
extensions that are granted automatically; (iv) the Company and each of its Subsidiaries have
complied in all material respects with all rules and regulations relating to the withholding of
Taxes, and the Company and each of its Subsidiaries have timely remitted and reported all withheld
Taxes to the proper Governmental Entity in accordance with all applicable Laws; (v) the Company and
each of its Subsidiaries do not have any deficiency, audit, examination, investigation or other
proceeding in respect of Taxes or Tax matters that is in progress, pending or, to the Companys
knowledge, threatened; (vi) all deficiencies asserted or assessments made as a result of any
examination of Taxes or Tax Returns by any taxing authority have been paid in full; (vii) since
January 1, 2012, neither the Company nor any of its Subsidiaries has waived any statute of
limitations with respect to Taxes or Tax matters or agreed to any extension of time with respect to
a Tax assessment or deficiency; (viii) neither the Company nor any of its Subsidiaries has a
request for a private letter ruling, a request for administrative relief, a request for technical
advice, a request for a change of any method of accounting, or any other request that is pending
with any taxing authority that relates to Taxes or Tax Returns of the Company or its Subsidiaries;
(ix) no power of attorney granted by the Company or any of its Subsidiaries with respect to any
Taxes is currently in force; (x) since January 1, 2012, no written claim has been delivered to the
Company or any of its Subsidiaries by a Governmental Entity in a jurisdiction where the Company or
any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or
may be subject to taxation in such jurisdiction; (xi) there are no Liens for Taxes on any of the
assets of the Company or its Subsidiaries, other than Permitted Liens; and (xii) the Company and
its Subsidiaries have provided adequate reserves, in accordance with GAAP, as reflected in the most
recent consolidated financial statements of the Company and its Subsidiaries contained in the
Company SEC Documents for any Taxes of the Company or any of its Subsidiaries that have not been
paid.
(b) Neither the Company nor any of its Subsidiaries is a party to, is otherwise bound by, or
has an obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation
agreement or similar Contract or arrangement.
(c) Neither the Company nor any of its Subsidiaries (i) has ever been a member of a combined,
consolidated, affiliated or unitary group for Tax purposes (other than a group the common parent of
which was the Company) or (ii) has any liability for the Taxes of any Person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any corresponding or
similar provision of state, local or foreign Law), as a transferee or successor, by Contract or
otherwise.
(d) The Company has made available to Parent true and correct copies of the income Tax Returns
and all other material Tax Returns filed by the Company and its Subsidiaries for the Tax years
ending December 31, 2010 through December 31, 2013.
(e) There is no Contract, plan or arrangement of the Company or its Subsidiaries covering any
Person that, individually or collectively, would reasonably be expected to result in compensation
in excess of the deduction limitation set forth in Code Section 162(m). Neither the Company nor
its Subsidiaries has made any payments, is obligated to make any payments, or is a party to any
agreement that would reasonably be expected to obligate it to make any payments that, in whole or
in part, will not be deductible under Section 280G of the Code. No payment to be made under any
Company Plan is, or to the Knowledge of the Company, will be, subject to the additional taxes and
penalties of Section 409A(a)(1) of the Code.
(f) Neither the Company nor any of its Subsidiaries has entered into any agreement or
arrangement with any Governmental Entity with regard to the Tax liability of the Company or any of
its Subsidiaries affecting any Tax period for which the applicable statute of limitations, after
giving effect to extensions or waivers, has not expired.
(g) Neither the Company nor any of its Subsidiaries has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897 of the Code.
(h) Neither the Company nor any of its Subsidiaries will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (i) use of an improper method of
accounting for a taxable period ending on or prior to the Closing Date, (ii) closing agreement as
described in Code Section 7121 (or any corresponding or similar provision of state, local or
foreign Law) executed on or prior to the Closing Date, (iii) installment sale or open transaction
disposition made on or prior to the Closing Date, (iv) prepaid amount or any other income eligible
for deferral under the Code or Treasury Regulations promulgated thereunder (including, without
limitation, pursuant to Code Sections 455 or 456, Treasury Regulations Section 1.451-5 and Revenue
Procedure 2004-34, 2004-33 I.R.B. 991) received on or prior to the Closing Date, (v) intercompany
transactions or any excess loss account described in Treasury Regulations under Code Section 1502
(or any corresponding or similar provision of state, local or foreign Law), or (vi) election made
under Code Section 108(i) prior to the Closing.
(i) The Company and each of its Subsidiaries is (and always has been) taxed as a C corporation
for U.S. federal income Tax purposes. Neither the Company nor any of its Subsidiaries has a
permanent establishment or conduct business through any branch other than its country of formation.
(j) Neither the Company nor any of its Subsidiaries has ever been either a distributing
corporation or a controlled corporation within the meaning of Section 355 of the Code and the
Treasury Regulations promulgated thereunder.
(k) Neither the Company nor any of its Subsidiaries has ever been a party to any joint
venture, partnership or other arrangement or Contract treated as a partnership for federal income
Tax purposes.
(l) Neither the Company nor any of its Subsidiaries has participated in any listed
transaction as defined under Treasury Regulations Section 1.6011-4(b)(2).
(m) All related party transactions involving the Company or any of its Subsidiaries are at
arms length in compliance with Section 482 of the Code and the Treasury Regulations promulgated
thereunder and any similar provision of state, local or foreign Law. Neither the Company nor any
of its Subsidiaries is a party to any cost-sharing agreement or similar arrangement. The Company
and each of its Subsidiaries has maintained in all material respects all necessary documentation in
connection with such related party transactions in accordance with Sections 482 and 6662 of the
Code and the Treasury Regulations promulgated thereunder and any similar provision of state, local
or foreign Law.
For purposes of this Agreement, (x) Taxes means any federal, state, local, foreign or provincial
income, gross receipts, capital gains, property, unclaimed property, environmental, sales, use,
license, excise, franchise, employment, payroll, social security, unemployment, disability,
withholding, alternative or added minimum, ad valorem, value-added, stamp, registration,
occupation, premium, transfer or excise tax, or any fee, duty, levy, custom, tariff, impost,
assessment, obligation or charge of the same or similar nature to any of the foregoing or other tax
of any kind, together with any interest or penalty imposed by any Governmental Entity, whether
disputed or not, and (y) Tax Return means any return, report or similar statement (including the
attached schedules) filed or required to be filed with respect to any Tax, including, without
limitation, any information return, claim for refund, amended return or declaration of estimated
Tax.
Section 3.10 Orders and Actions. Except as set forth in Section 3.10 of the Company
Disclosure Schedule, there are no outstanding rulings, orders, judgments, injunctions, awards or
decrees of any Governmental Entity or, to the Knowledge of the Company, investigations by any
Governmental Entity, against or involving the Company or any of its Subsidiaries, or any of its or
their properties, assets or business that has or would reasonably be expected to be materially
adverse to the Company. Except as set forth in Section 3.10 of the Company Disclosure Schedule,
there are no actions, suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the Knowledge of the Company, threatened against or involving the
Company, any of its Subsidiaries, any present or former officer, director or employee of the
Company or any of its Subsidiaries in their respective capacities as such or any Person for whom
the Company or any of its Subsidiaries may be liable or any of their respective properties before
(or, in the case of threatened actions, suits, investigations or proceedings, which would be
before) any Governmental Entity that has or would reasonably be expected to be materially adverse
to the Company. As of the date of this Agreement, there are no actions, suits, or other
litigation, legal or administrative proceedings or governmental investigations relating to the
Transactions that are pending or, to the Knowledge of the Company, threatened against the Company
or any of its Subsidiaries or any of its or their properties, assets or business.
Section 3.11 Employee Benefits.
(a) Schedule 3.11(a) of the Company Disclosure Schedule sets forth a true, complete and
correct list of every Company Plan and Multiemployer Plan. Except as has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the
Company, each Company Plan complies in all relevant respects with the Employee Retirement Income
Security Act of 1974, as amended (ERISA), the Code and all other applicable statutes and
governmental rules and regulations. Neither the Company nor any of its ERISA Affiliates has
participated in or withdrawn from any Multiemployer Plan or instituted, or is currently considering
taking, any action to do so. Neither the Company nor any ERISA Affiliate of the Company sponsors,
maintains or contributes to, or has in the past sponsored, maintained or contributed to, any
Company Plan subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA.
(b) To the Knowledge of the Company, no event has occurred and there exists no condition or
set of circumstances in connection with which the Company or any ERISA Affiliate or Company Plan
fiduciary would be subject to any liability under the terms of such Company Plans, ERISA, the Code
or any other applicable Law, other than liabilities for benefits payable in the normal course.
(c) As used in this Agreement, (i) Company Plan means a pension plan (as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan)), a welfare plan (as defined in Section
3(1) of ERISA), or any bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock option, phantom stock, holiday pay, vacation, employment, executive compensation,
change in control, severance, death benefit, sick leave, fringe benefit, insurance or similar plan,
program, agreement, policy or arrangement, established or maintained by the Company or any of its
ERISA Affiliates or as to which the Company or any of its ERISA Affiliates has contributed or
otherwise may have any liability, (ii) Multiemployer Plan means a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates is or
has been obligated to contribute or otherwise may have any liability, and (iii) with respect to any
Person, ERISA Affiliate means any trade or business (whether or not incorporated) which is under
common control or would be considered a single employer with such Person pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those sections or
pursuant to Section 4001(b) of ERISA and the regulations promulgated thereunder. Copies of such
Company Plans (and, if applicable, related trust or funding agreements or insurance policies) and
all amendments thereto have been made available to Parent together with the most recent summary
plan description, annual report (Form 5500 including, if applicable, Schedule B thereto) and tax
return (Form 990) prepared in connection with any such plan or trust.
(d) Each Company Plan which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter that it is so qualified, or has pending or has time
remaining in which to file, an application for such determination from the Internal Revenue
Service, and the Company is not aware of any reason why any such determination letter should be
revoked or not be reissued. The Company has made available to Parent prior to date of this
Agreement copies of the most recent Internal Revenue Service determination letters with respect to
each such Company Plan. No events have occurred with respect to any Company Plan that would result
in payment or assessment by or against the Company of any excise taxes under the Code which would
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(e) Except as set forth in Section 3.11(e) of the Company Disclosure Schedule, with respect to
each current or former employee or independent contractor of the Company or any of its
Subsidiaries, the consummation of the Transactions will not, either alone or together with any
other event: (i) entitle any such Person to severance pay, bonus amounts, retirement benefits, job
security benefits or similar benefits, (ii) trigger or accelerate the time of payment or funding
(through a grantor trust or otherwise) of any compensation or benefits payable to any such Person,
(iii) accelerate the vesting of any compensation or benefits of any such Person (including any
stock options or other equity-based awards, any incentive compensation or any deferred compensation
entitlement) or (iv) trigger any other material obligation to any such Person. Section 3.11(e) of
the Company Disclosure Schedule lists (A) all the agreements, arrangements and other instruments
which give rise to an obligation to make or set aside amounts payable to or on behalf of the
officers of the Company and its Subsidiaries as a result of the Transactions and/or any subsequent
employment termination (whether by the Company or the officer), copies of which have been made
available to Parent prior to the date of this Agreement and (B) the maximum aggregate amounts so
payable to each such individual as a result of the Transactions and/or any subsequent employment
termination (whether by the Company or the officer).
(f) There has been no amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its Affiliates relating to, or change in employee participation
or coverage under, any Company Plan which would increase materially the expense of maintaining such
Company Plan above the level of the expense incurred in respect thereof for the fiscal year ended
December 31, 2014. No condition exists that would prevent the Company from amending or terminating
any Company Plan without liability, other than the obligation for ordinary benefits accrued prior
to the termination of such plan.
(g) There is no action, suit, investigation, audit or proceeding pending against or involving
or, to the Knowledge of the Company, threatened against or involving, any Company Plan before any
Governmental Entity which has had, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Section 3.12 Labor Matters.
(a) Since January 1, 2012: (i) neither the Company nor any of its Subsidiaries is or has been
a party to any collective bargaining agreement (ii) neither the Company nor any of its Subsidiaries
recognizes or has recognized a trade union, works council or other body representing employees or
Contingent Workers; (iii) there has not been any, labor strike or material dispute, slowdown or
stoppage pending or, to the Knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries which may interfere in any material respect with the respective business
activities of the Company or any of its Subsidiaries.
(b) The Company has made available to Parent complete and accurate information on all Company
employees as of the dates set forth in such information, setting forth for each employee: his or
her location, hourly or salary status, pay rate, bonuses, date of hire and position. None of the
Companys employees are in a visa or work permit status. Except as set forth on Section 3.12(b)
of the Company Disclosure Schedule, no bonus, retention, severance or other amounts are required to
be paid at the Closing or otherwise in connection with the transactions contemplated by this
Agreement. The Company has also made available to Parent complete and accurate information as of
the date set forth in such information of all of the independent contractors, consultants,
temporary employees, leased employees or other agents employed or used by the Company and
classified by the Company as other than employees, or compensated other than through wages paid by
the Company through the Companys payroll department (Contingent Workers), showing for each
Contingent Worker such individuals role in the business and fee or compensation arrangements.
(c) The Company has properly classified its employees as exempt or non-exempt in all material
respects for the purposes of the Fair Labor Standards Act and state, local and foreign wage and
hour Laws, and is otherwise in compliance with such Laws in all material respects. To the extent
that any Contingent Workers are employed or used, the Company has properly classified and treated
them in all material respects as Contingent Workers (as opposed to employees) in accordance with
applicable Law and for the purpose of all employee benefit plans and perquisites.
(d) The Company is, and for the past three years has been, in compliance in all material
respects with all applicable Laws and regulations respecting labor and employment matters,
including fair employment practices, work place safety and health, work authorization and
immigration, unemployment compensation, workers compensation, affirmative action, terms and
conditions of employment, employee leave and wages and hours, including payment of minimum wages
and overtime. The Company does not have, and within the three years preceding the date of this
Agreement has not had, any formal or informal grievances, complaints, charges, litigation,
governmental audits or investigations, court orders, decrees, injunctions, judgments or private
settlement contracts with respect to employment or labor matters (including allegations of
employment discrimination, retaliation, noncompliance with wage and hour laws or unfair labor
practices) pending, threatened or resolved against the Company in any judicial, regulatory or
administrative forum, under any private dispute resolution procedure or internally, except as has
not had and would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has not experienced a plant closing, business
closing, or mass layoff as defined in the Worker Adjustment and Retraining Notification Act of
1988 (the WARN Act) or any similar state, local or foreign law or regulation affecting any site
of employment of the Company or one or more facilities or operating units within any site of
employment or facility of the Company. During the ninety (90) day period preceding the date of
this Agreement, no Employee or Contingent Worker has suffered an employment loss as defined in
the WARN Act with respect to the Company.
Section 3.13 Insurance. The Company and its Subsidiaries maintain insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance with normal
industry practice for companies engaged in businesses similar to that of the Company or its
Subsidiaries (taking into account the cost and availability of such insurance).
Section 3.14 Required Vote of Company Stockholders. The affirmative vote of the holders of
at least a majority of the outstanding shares of Company Stock (the Company Stockholder Approval)
is required to approve the Merger and adopt this Agreement. No other vote of the security holders
of the Company is required by Law, the Company Charter or the Company Bylaws or otherwise in order
for the Company to consummate the Merger and the Transactions.
Section 3.15 Intellectual Property.
(a) Section 3.15(a) of the Company Disclosure Schedule contains a list of all domain names,
patents and patent applications, registered copyrights, registered trademarks, registered service
marks and applications for registration of any of the foregoing, owned, in whole or in part,
legally or beneficially, by the Company or any of its Subsidiaries or used in the conduct of the
business of the Company and its Subsidiaries (collectively, the Registered Intellectual
Property). All Registered Intellectual Property owned by the Company and its Subsidiaries is
subsisting, valid and enforceable in all material respects, and no material item of Registered
Intellectual Property has been found to be, nor has the Company or any of its Subsidiaries received
any notice alleging that such item is, invalid, expired, cancelled, unenforceable or ineffective
for any reason. All material items of Registered Intellectual Property purported to be owned by
the Company or one of its Subsidiaries have been assigned to the Company or one of its
Subsidiaries, and the Company or one of its Subsidiaries is the sole and exclusive owner of all
right, title and interest in and to each such material item of Registered Intellectual Property,
free and clear of all Liens other than Permitted Liens. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the
Company, all maintenance, renewal and other fees required to maintain the Registered Intellectual
Property have been paid.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure Schedule, the Company and
its Subsidiaries own or have a valid right to use all Intellectual Property used in or necessary to
conduct the business of the Company and its Subsidiaries as it has been conducted, is currently
conducted and is reasonably anticipated to be conducted, except where the failure to have such
Intellectual Property has not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company. To the Knowledge of the Company, except
as set forth in Section 3.15(b) of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries (whether directly, as a contributory infringer, through inducement or otherwise)
has infringed, misappropriated or otherwise violated any Intellectual Property of any Person.
Except as set forth in Section 3.15(b) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has received any written notice (including, without limitation, any cease
and desist or invitation to license letter or notice) or otherwise has Knowledge of any pending
or threatened claim, action, suit, order or proceeding, or third party allegation, with respect to
any material Intellectual Property, or involving an assertion that the Company or any of its
Subsidiaries, any services provided, disclosures made, marketing or advertising materials or
activities provided or performed, processes used or products manufactured, used, imported, offered
for sale or sold by the Company or any of its Subsidiaries infringes, misappropriates or otherwise
violates any Intellectual Property of any Person or constitutes unfair competition or trade
practices.
(c) Except as set forth in Section 3.15(c) of the Company Disclosure Schedule, no Person has
challenged, infringed, misappropriated or violated any Intellectual Property owned by and/or
licensed (or sublicensed) from or to the Company or any of its Subsidiaries, except where such
challenge, infringement, misappropriation or violation has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
(d) The consummation of the Transactions will not, except as set forth in Section 3.15(d) of
the Company Disclosure Schedule: (i) impair or extinguish any material Intellectual Property owned
by or licensed to the Company or any of its Subsidiaries; or (ii) by operation of Law, contractual
terms, or other means, cause the Company or any of its Subsidiaries to lose or forfeit any material
Intellectual Property granted to the Company or any of its Subsidiaries pursuant to license, or to
infringe, misappropriate, or otherwise violate the Intellectual Property of any Person in any
material way that would not be infringed, misappropriated or otherwise violated, but for the
consummation of the Transactions.
(e) The Company and its Subsidiaries have taken reasonable steps in accordance with normal
industry practice to own or have the right to use all Intellectual Property arising from the
conduct of the business of the Company and its Subsidiaries, and to maintain the confidentiality of
all of their trade secrets and confidential information and rights to limit the use or disclosure
thereof.
(f) For purposes of this Agreement, Intellectual Property means all intellectual property
rights and industrial rights of any type or nature, however denominated, throughout the world,
including without limitation rights in: (A) trademarks, service marks, brand names, certification
marks, trade dress, domain names and other indications of origin, the goodwill associated with the
foregoing, all common law rights thereto, and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; (B) inventions and discoveries, whether
patentable or not, in any jurisdiction; patents, applications for patents (including, without
limitation, divisions, continuations, continuations-in-part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; (C) trade secrets and know-how; (D)
writings and other works of authorship, whether copyrightable or not, in any jurisdiction, and any
and all copyright rights, whether registered or not; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions thereof; (E) moral
rights, database rights, design rights, mask works, industrial property rights, publicity rights
and privacy rights; (F) shop rights; and (G) choses in action and administrative rights (such as
rights to oppose, interfere, and cancel) arising from the foregoing.
(g) Section 3.15(g) of the Company Disclosure Letter contains a true, correct and complete
list of all social media accounts operated or maintained by the Company and its Subsidiaries,
including in connection with marketing or promoting any products. All use of the social media
accounts by or on behalf of the Company and its Subsidiaries complies in all material respects with
all (i) terms and conditions and other Contracts applicable to such social media accounts to which
the Company and its Subsidiaries are a party or are otherwise bound, and (ii) applicable Law.
(h) The Company and its Subsidiaries comply in all material respects with their published
privacy policies and internal privacy policies, procedures and guidelines, related contractual
obligations with customers and all applicable Laws, in each case relating to data privacy, data
collection, data protection and data security, including with respect to the collection, storage,
transmission, transfer, disclosure and use of Personal Data. Since January 1, 2012, there has been
no material loss, damage, unauthorized access, use, unauthorized transmission, modification, or
other misuse of any such Personal Data by the Company, its Subsidiaries or, in connection with
their performance of services for the Company, any of their employees or contractors. No Person
(including any Governmental Entity) has commenced any action, or, to the Knowledge of the Company,
made any written claim, with respect to material loss, damage, unauthorized access, use,
modification, or other misuse of any such Personal Data by the Company, its Subsidiaries or, in
connection with their performance of services for the Company, any of their employees or
contractors. To the Knowledge of the Company, since January 1, 2012, the Company and its
Subsidiaries have made all material required disclosures to, and obtained any necessary material
consents from, users, customers, employees, contractors, Governmental Entities and other applicable
Persons required by applicable Laws related to data privacy, data collection, data protection and
data security and has filed any required registrations with the applicable data protection
authority. Personal Data means: (i) a natural persons name, street address, telephone number,
e-mail address, photograph, social security number or tax identification number, drivers license
number, passport number, credit card number, bank information, or customer or account number,
biometric identifiers, device or machine identifier, IP address, or any other piece of information
that alone or in combination with other information directly or indirectly collected, held, or
otherwise processed by or for the Company allows for the identification or contact with, a natural
person or a particular computing device; (ii) any information defined as personal data,
personally identifiable information, individually identifiable health information, protected
health information, or personal information under any Law; and (iii) any information that is
associated, directly or indirectly, with any of the foregoing.
(i) Since January 1, 2012, the Company and its Subsidiaries have used commercially reasonable
efforts to monitor their information systems, networks, devices, physical infrastructure and
facilities, and have implemented reasonable operational, managerial, physical and technical
safeguards and controls designed to protect the Intellectual Property of the Company and any
Personal Data under their control, where applicable, against loss, damage, and unauthorized and
unlawful access, use, modification or other misuse. To the Knowledge of the Company, since January
1, 2012, neither the Company nor its Subsidiaries have suffered a security breach which has
compromised in any material respects either the security, confidentiality or integrity of Personal
Data under their control or the physical, technical, administrative or organizational safeguards
put in place by the Company to protect the security, confidentiality or integrity of Personal Data
under their control.
Section 3.16 Environmental.
(a) Except as set forth in Section 3.16 of the Company Disclosure Schedule, the Company and
its Subsidiaries are and have been in compliance in all material respects with all Environmental
Laws and all Environmental Permits. For purposes of this Agreement, (i) Environmental Law shall
mean any Law, or any agreement with any Governmental Entity or other Person, relating to (A) the
control of any potential pollutant or protection of the air, water or land, (B) solid, gaseous or
liquid waste generation, handling, treatment, storage, disposal or transportation, (C) human health
and safety, (D) the environment, or (E) Hazardous Substances, (ii) Environmental Permits shall
mean all permits, licenses and similar authorizations of Governmental Entities relating to or
required by Environmental Laws and affecting, or relating to, the business of the Company or any of
its Subsidiaries as conducted as of the date of this Agreement, and (iii) Hazardous Substance
shall mean any pollutant, contaminant, waste or any toxic, radioactive, ignitable, corrosive,
reactive or otherwise hazardous substance, waste or material, or any substance, waste or material
having any constituent elements displaying the foregoing characteristics, including any hazardous
substance, waste or material regulated under any Environmental Law.
(b) Except as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, no notice, notification, demand, request for
information, citation, summons or order has been received, no complaint has been filed, no penalty
has been assessed, and no investigation, action, claim, suit, proceeding or review (or any basis
therefor) is pending or, to the Knowledge of the Company, threatened by any Governmental Entity or
other Person relating to the Company or any Subsidiary or their respective facilities and relating
to or arising out of any Environmental Law or regarding any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations. There are no liabilities or environmental investigatory,
remedial or corrective obligations, or other obligations reasonably likely to require any material
increase in the expenditure of money by the Company or any of its Subsidiaries in the future to
maintain compliance with Environmental Laws, of the Company or any of its Subsidiaries, whether
accrued, contingent, absolute, determined, determinable or otherwise arising under or relating to
any Environmental Law or any Hazardous Substance and there is no condition, situation or set of
circumstances that would reasonably be expected to result in or be the basis for any such liability
or obligation.
(c) There has been no environmental investigation, study, audit, test, review or other
analysis of which the Company has Knowledge in relation to the current or prior business of the
Company or any of its Subsidiaries or any property or facility leased or previously owned or leased
by the Company or any of its Subsidiaries that has not been made available to Parent.
Section 3.17 Material Contracts.
(a) Section 3.17(a) of the Company Disclosure Schedule lists each of the following contracts,
agreements, leases and contractual licenses (each, a Contract), whether written or oral, to which
the Company or any of its Subsidiaries is a party or by which it is bound as of the date of this
Agreement and which has any continuing obligation(s) (each such Contract listed or required to be
so listed, a Company Material Contract):
(i) any Contract or series of related Contracts for the purchase, receipt,
lease or use of materials, supplies, goods, services, equipment or other assets
involving payments by or to the Company or any of its Subsidiaries of more than
$100,000 on an annual basis or $250,000 in the aggregate (other than purchase orders
arising in the ordinary course of business);
(ii) any Contract to sell products or to provide services to third parties
which the Company knows or has reason to believe is at a price based on current cost
of goods sold which would result in a net loss to the Company on the sale of such
products or provision of such services;
(iii) any Contract or series of related Contracts involving payments by or to
the Company or any of its Subsidiaries of more than $300,000 in the aggregate that
requires consent of or notice to a third party in the event of or with respect to
the Merger, including in order to avoid a breach or termination of, a loss of
benefit under, or triggering a price adjustment, right of renegotiation or other
remedy under, any such agreement;
(iv) any Contract relating to Indebtedness, whether as borrower, lender or
guarantor (other than intercompany agreements between and among the Company and its
Subsidiaries);
(v) any Contract relating to any interest rate, currency or commodity hedging,
swaps, caps, floors and option agreements and other risk management or derivative
arrangements;
(vi) any material joint venture, profit sharing, partnership agreements or
other similar agreements;
(vii) any Contracts or series of related Contracts relating to the acquisition
or disposition of the securities of any Person, any business or any assets outside
the ordinary course of business (whether by merger, sale of stock, sale of assets or
otherwise);
(viii) any Contract with a Governmental Entity;
(ix) all leases or subleases for personal property involving annual expense in
excess of $100,000;
(x) any Contract that (A) limits the freedom of the Company or any of its
Subsidiaries to engage or compete in any line of business or with any Person, in any
territory, or in any field of commercial activity or which would so limit the
freedom of Parent, the Company or any of their respective Affiliates after the
Effective Time or (B) contains exclusivity, most favored nation, rights of first
refusal, rights of first negotiation or similar obligations or restrictions that are
binding on the Company or any of its Subsidiaries or that would be binding on Parent
or its Affiliates after the Effective Time;
(xi) all agreements by the Company or any of its Subsidiaries not to acquire
assets or securities of a third party (including standstill agreements) and all
agreements by a third party not to acquire assets or securities of the Company or
any of its Subsidiaries (including standstill agreements);
(xii) any material Contract under which the Company or any of its Subsidiaries
has guaranteed any liabilities or obligations of any other Person (other than
guarantees by the Company of obligations of its Subsidiaries and guarantees by the
Companys Subsidiaries of obligations of the Company or other Subsidiaries of the
Company);
(xiii) any Contract having the effect of providing that the consummation of the
Merger or the execution, delivery or effectiveness of this Agreement will give rise
under such Contract to any increased or accelerated rights (including any change of
control payment, special bonus, stay bonus, retention bonus, severance payment, or
similar compensation that the Company or any of its Subsidiaries has agreed to pay
and that becomes due and payable as a result of the consummation of the Merger or
the other transactions contemplated by this Agreement, whether due and payable prior
to, at or after the Closing (including obligations that are contingent upon both the
consummation of the Merger and the occurrence of another event or the passage of
time (each, a Change of Control Obligation));
(xiv) any Contracts with any (A) director of the Company or any of its
Subsidiaries; (B) key employee, management employee or officer of the Company,
including without limitation for each employee who is one of the 10 most highly
compensated employees of the Company and its Subsidiaries; (C) record or beneficial
owner of five percent or more of the voting securities of Company; or (D) affiliate
(as such term is defined in Rule 12b-2 promulgated under the Exchange Act) or
associates (or members of any of their immediate family) (as such terms are
respectively defined in Rule 12b-2 and Rule 16a-1 of the Exchange Act) of any such
employee, director or beneficial owner; and
(xv) any other Contract required to be filed by the Company pursuant to Item
601(b)(10) of Regulation S-K of the SEC.
(b) The Company has prior to the date of this Agreement made available to Parent complete and
accurate copies of each Company Material Contract listed, or required to be listed, in Section
3.17(a) of the Company Disclosure Schedule (including all amendments, modifications, extensions and
renewals thereto and waivers thereunder). All of the Company Material Contracts are, and
immediately following the consummation of the Transactions will remain, valid and binding and in
full force and effect (except as set forth in Section 3.17(b) of the Company Disclosure Schedule
and except those which are cancelled, rescinded or terminated after the date of this Agreement in
accordance with their terms), except where the failure to be in full force and effect has not, and
would not reasonably be expected to be, materially adverse to the Company or any of its
Subsidiaries, and no notice to terminate, in whole or part, any of the same has been served (nor,
to the Knowledge of the Company, has there been any indication that any such notice of termination
will be served).
(c) Neither the Company nor any of its Subsidiaries has made any oral or written warranties or
guarantees with respect to the quality or absence of defects of the products or services which it
has sold or performed which are currently in force, except for those warranties or guarantees which
are specifically set forth in writing on Section 3.17(c) of the Company Disclosure Schedule and
except as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. There are no material claims or requests
pending or, to the Knowledge of the Company, threatened against the Company or any of its
Subsidiaries with respect to the worth of, quality of or absence of defects in such products or
services (nor are there any facts, circumstances or conditions that would reasonably be expected to
result in or give rise to any such claims).
Section 3.18 Title to Assets and Properties.
(a) Neither the Company nor its Subsidiaries owns any real property and has not owned title to
any real property since January 1, 2012.
(b) The Company and its Subsidiaries have (i) good and marketable title to, or (ii) a valid
leasehold interest, license or easement in, the material real and personal properties as reflected
in the most recent balance sheet included in the Company SEC Documents, except for properties and
assets that have been disposed of in the ordinary course of business since the date of such balance
sheet, free and clear of all Liens of any nature except for Permitted Liens.
(c) Section 3.18(c) of the Company Disclosure Schedule sets forth the address of each property
in which the Company or its Subsidiaries holds a leasehold or subleasehold estate or similar right
to use or occupy any land, buildings, structures, improvements, fixtures or other interests in real
property which is used in the Companys business (the Leased Real Property) and true and complete
list of all leases, subleases and material licenses, concessions and other agreements (written or
oral) pursuant to which the Company or any Subsidiary holds any Leased Real Property (including all
material amendments, extensions, renewals, guaranties and other agreements with respect thereto)
(the Leases) have been made available to Parent. Except as set forth in Section 3.18(c) of the
Disclosure Schedule, with respect to each of the Leases that is material to the Company or and of
its Subsidiaries: (i) such Lease is legal, valid, binding, enforceable and in full force and
effect; (ii) the Merger does not require the consent of any other party to such Lease, will not
result in a breach of or default under such Lease, or otherwise cause such Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on identical terms following the
Closing; (iii) the Companys or its Subsidiarys, as applicable, possession and quiet enjoyment of
the Leased Real Property under such Lease has not been disturbed, and to the Knowledge of the
Company, there are no disputes with respect to such Lease; (iv) neither the Company nor its
Subsidiary, as applicable, nor any other party to the Lease is in breach or default under such
Lease, and no event has occurred or circumstance exists which, with the delivery of notice, the
passage of time or both, would constitute such a breach or default, or permit the termination,
modification or acceleration of rent under such Lease; (v) no security deposit or portion thereof
deposited with respect to such Lease has been applied in respect of a breach or default under such
Lease which has not been redeposited in full; (vi) neither the Company nor its Subsidiary, as
applicable, owes, or will owe in the future, any brokerage commissions or finders fees with
respect to such Lease; (vii) the other party to such Lease is not an Affiliate of, and otherwise
does not have any economic interest in (other than as a holder of less than 5% of the Company
Stock), the Company or any Subsidiary of the Company; (viii) neither the Company nor any Subsidiary
of the Company has subleased, licensed or otherwise granted any Person the right to use or occupy
such Leased Real Property.
Section 3.19 Antitakeover Statutes. The Company has taken all action necessary to exempt
or exclude the Merger, this Agreement and the Transactions contemplated by this Agreement from
Section 203 of the DGCL, and, accordingly, the restrictions on business combinations set forth in
such Section will not apply to the Transactions.
Section 3.20 Affiliate Transactions. Except as set forth in Section 3.20 of the Company
Disclosure Schedule, as of the date of this Agreement, there are no transactions, arrangements or
Contracts between the Company or any of its Subsidiaries, on the one hand, and its Affiliates or
other Persons (other than its wholly-owned Subsidiaries), on the other hand, that would be required
to be disclosed under Item 404 of Regulation S-K under the Securities Act.
Section 3.21 No Undisclosed Material Liabilities; Indebtedness.
(a) There are no liabilities of the Company or any of its Subsidiaries of any kind, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances that would reasonably be expected to result in such a
liability, other than (i) liabilities disclosed and provided for in the Latest Balance Sheet, (ii)
liabilities incurred in the ordinary course of business or in connection with the Transactions
since December 31, 2014, (iii) liabilities that have not had and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the Company, and (iv)
liabilities set forth in Section 3.21(a) of the Company Disclosure Schedule. For purposes of this
Agreement, the Latest Balance Sheet means the balance sheet of the Company and its Subsidiaries
as of December 31, 2014 as set forth in the Company SEC Documents.
(b) Except as set forth in Section 3.21(b) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries have any Indebtedness. The term Indebtedness for purposes of
this Agreement shall mean, with respect to any Person, (i) any liability of that Person (including
any principal, premium, accrued and unpaid interest, related expenses, prepayment penalties,
commitment and other fees, reimbursements and all other amounts payable in connection therewith):
(A) for borrowed money; (B) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any property or assets,
including securities; (C) for the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business; (D) under any lease or similar
arrangement that would be required to be accounted for by the lessee as a capital lease in
accordance with U.S. GAAP; or (E) arising out of interest rate and currency swap arrangements and
any other arrangements designed to provide protection against fluctuations in interest or currency
rates; (ii) any guarantee by that Person of any indebtedness of others described in the preceding
clause (i) (other than guarantees by the Company of obligations of its Subsidiaries and guarantees
by the Companys Subsidiaries of obligations of the Company or other Subsidiaries of the Company);
(iii) the maximum liabilities of such Person under any Off Balance Sheet Arrangement (as defined
in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act); and (iv) all
liabilities to reimburse any bank or other Person for amounts paid under a letter of credit, surety
bond, or bankers acceptance.
Section 3.22 Brokers. Except for Duff & Phelps and Piper Jaffray, copies of whose
engagement agreements have been provided to Parent prior to the date of this Agreement and the fees
and expenses of which will be paid by the Company, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf of the Company or
any of its Subsidiaries who might be entitled to any fee or commission in connection with the
Transactions.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. Except as required by this Agreement,
during the period from the date of this Agreement through the Effective Time, the Company shall,
and shall cause each of its Subsidiaries to, conduct its business in the ordinary course of its
business consistent with past practice and in compliance in all material respects with all
applicable Laws and all material governmental authorizations, and use reasonable best efforts to
preserve intact its present business organization, keep available the services of its directors,
officers and employees and preserve its relationships with its customers, lenders, suppliers and
others having material business relationships with it. Without limiting the generality of the
foregoing and to the fullest extent permitted by applicable Law, from the date of this Agreement
until the Effective Time, except as otherwise required by this Agreement or as set forth in Section
4.1 of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions
(whether in cash, stock, property or any combination thereof) in respect of, any shares of
its capital stock or other securities, or otherwise make any payments to its stockholders in
their capacity as such other than dividends or distributions by Subsidiaries to other
Subsidiaries or to the Company, (B) split, subdivide, combine, or reclassify any shares of
its capital stock, or adjust or amend the terms of any of its capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities other than
the cancellation of Company Stock Options and Company Warrants in connection with their
exercise;
(ii) issue, deliver, sell, pledge, grant, accelerate, dispose of or otherwise encumber,
or authorize the issuance, delivery, sale, grant, acceleration, pledge, disposal or
encumbrance of, any Company Securities, other than the issuance of shares of Company Stock
upon the exercise of Company Stock Options and Company Warrants that are outstanding on the
date of this Agreement in accordance with the terms of those instruments on the date of this
Agreement;
(iii) amend its charter or by-laws or other comparable charter or organizational
documents (whether by merger, consolidation or otherwise);
(iv) (A) acquire or agree to acquire, (including by merger, consolidation or
acquisition of stock or assets) any interest in any business or any corporation, limited
liability company, partnership, joint venture, association or other business organization or
division thereof or any material amount of assets from any other Person (other than
purchases of inventory in the ordinary course of business or capital expenditures in
accordance with Section 4.1(x)), (B) merge or consolidate with any other Person or (C) adopt
a plan of complete or partial liquidation, dissolution, recapitalization or restructuring;
(v) sell, lease, license, mortgage, hypothecate or otherwise dispose or encumber any
Subsidiary or any securities, properties or assets, other than (A) the sale of inventory or
obsolete equipment in the ordinary course of business consistent with past practice or
pursuant to existing Contracts or commitments or (B) properties or assets with a fair value
of less than $100,000;
(vi) (A) create, incur, assume, suffer to exist or otherwise be liable with respect to
any Indebtedness or enter into any keep well or other Contract to maintain any financial
or similar condition of another Person (except for inter-company borrowings between or among
the Company and its Subsidiaries and except for revolving credit borrowings under the
Companys current credit facility), (B) make any loan, advance, investment or capital
contribution to, or other investment in, either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property or assets of any
Person, other than loans, advances, investments and capital contributions to or in its
wholly-owned Subsidiaries made in the ordinary course of business consistent with past
practices and other than advances of reasonable travel or other business expenses to
employees and consultants in the ordinary course of business consistent with past practice
or (C) repurchase or repay any Indebtedness (other than ordinary course payments of interest
or other amounts under any Contract relating to Indebtedness in existence as of the date of
this Agreement and made available to Parent);
(vii) (A) terminate, establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or otherwise modify, any Company
Stock Plans, Company Plans or employment agreements (or any plan or arrangement that would
be a Company Stock Plan, Company Plan or employment agreement if in existence on the date
hereof), (B) enter into any collective bargaining agreement with any labor organization or
union, or (C) increase the salary, wage, bonus or other compensation (including severance
obligations) of any directors or any employees or contractors of the Company or any of its
Subsidiaries receiving more than $150,000 in yearly compensation, except to the extent
required by applicable Law or by any of the Company Plans, Company Stock Plans or employment
agreements existing as of the date of this Agreement and made available to Parent;
(viii) incur any Change of Control Obligation;
(ix) hire any Person to be an officer or employee of the Company or any of its
Subsidiaries with an annual base salary in excess of $100,000, or terminate the employment
of any officer or employee of the Company or any of its Subsidiaries with an annual base
salary in excess of $100,000;
(x) incur any capital expenditures or any obligations or liabilities in respect
thereof, other than expenditures set forth on Section 4.1 of the Company Disclosure
Schedule;
(xi) create or incur any material Lien on any asset other than Permitted Liens;
(xii) make any change in any method of accounting or accounting principles or practice,
except for any such change required by reason of a concurrent change in GAAP or Regulation
S-X under the Exchange Act, as approved by the Companys independent public accountants;
(xiii) settle, waive or compromise, or offer or propose to settle, waive or compromise,
any litigation, investigation, arbitration, or proceeding or claim in any such matter
involving or against the Company or any of its Subsidiaries, including any litigation,
arbitration, proceeding or dispute that relates to the Transactions;
(xiv) pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction, in the ordinary course of business and consistent with past practice, of
liabilities and obligations reflected or reserved against in the financial statements of the
Company or incurred in the ordinary course of business and consistent with past practice;
(xv) other than in the ordinary course of business, modify, amend, or terminate any
Company Material Contract or enter into any contract that would be a Company Material
Contract if entered into prior to the date hereof, or waive or assign any of its rights or
claims under a Company Material Contract or contract that would be a Company Material
Contract if entered into prior to the date hereof;
(xvi) enter into any agreement, understanding, or commitment that restrains,
limits or impedes the Companys or any of its Subsidiaries ability to compete with or
conduct any business or line of business, including geographic limitations on the Companys
or any of its Subsidiaries activities;
(xvii) communicate with employees of the Company or any of its Subsidiaries
regarding the future compensation, benefits or other treatment that they will receive
following the Closing of the Merger, unless (i) any such communication is mutually agreed by
the Company by Parent, (ii) any such communication addresses any employees right to receive
Exchange Amount pursuant to Section 1.5(c) or any employees treatment of his or her Company
Stock Options under Section 5.5, or (iii) any such communication addresses any employee in
their capacity as a stockholder of the Company;
(xviii) enter into any new line of business;
(xix) engage in any other promotional sales or discount activity outside the ordinary
course of business;
(xx) except as required by Law, take any action which the Company would reasonably
expect to result in any of the conditions to the Merger set forth in this Agreement not
being satisfied or that would reasonably be expected to prevent, delay or impair the ability
of the Company to consummate the Merger;
(xxi) implement any employee layoffs that could implicate the WARN Act or any similar
foreign, state, or local law, regulation, or ordinance;
(xxii) grant any material refunds, credits, rebates or other allowances to any end
user, customer, reseller or distributor, in each case other than in the ordinary course of
business consistent with past practice;
(xxiii) (A) make any material Tax election or take any position on any Tax Return filed
on or after the date of this Agreement or adopt any accounting method that is inconsistent
with elections made, positions taken or methods used in preparing or filing similar Tax
Returns in prior periods, (B) settle or resolve any Tax controversy, (C) file any amended
Tax Return, (D) enter into any agreement (including, without limitation, a closing
agreement) with respect to Taxes, (E) surrender any right to claim a refund of Taxes, (F)
consent to any extension or waiver of the limitations period applicable to any Tax claim or
assessment, (G) make or request any Tax ruling, (H) enter into any Tax sharing or similar
agreement or arrangement, (I) enter into any transactions giving rise to a deferred gain or
loss, or (J) settle any Tax claim or assessment; or
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(xxiv)agree, resolve or commit to do any of the foregoing.
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Section 4.2
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No Solicitation |
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(a) From the date of this Agreement until the earlier of the Effective Time or the date on
which the Agreement is terminated, the Company shall not, and shall cause its Subsidiaries and
Affiliates and its and their officers, directors, employees, investment bankers, attorneys,
accountants, consultants and other agents, advisors or representatives (collectively,
Representatives) not to, directly or indirectly, (i) solicit, initiate or take any action to
facilitate or encourage the submission of any Acquisition Proposal, (ii) enter into any agreement
in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar instrument constituting
or relating to any Acquisition Proposal (an Alternative Acquisition Agreement), or (iii) enter
into or participate in any discussions or negotiations with, furnish any information relating to
the Company or any of its Subsidiaries or afford access to the business, properties, assets, books
or records of the Company or any of its Subsidiaries to, otherwise cooperate in any way with any
effort by any Third Party that is seeking to make, or has made, an Acquisition Proposal. The
Company shall, and shall cause its Subsidiaries and its Representatives to, cease immediately and
cause to be terminated any and all existing activities, discussions or negotiations, if any, with
any Third Party conducted prior to the date of this Agreement with respect to any Acquisition
Proposal. Furthermore, neither the Board of Directors of the Company nor any committee of the
Board of Directors with authority to approve an Acquisition Proposal shall (A) adopt, approve or
recommend (publicly or otherwise) an Acquisition Proposal, (B) fail to publicly recommend against
any Acquisition Proposal to the extent the Acquisition Proposal has been made public,
or (C) fail to recommend against any Acquisition Proposal subject to Regulation 14D under the
Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 under the Exchange Act
within ten days after the commencement of any tender offer in connection with such Acquisition
Proposal (any action described in the foregoing clauses (A) through (C), an Adverse Recommendation
Change). For purposes of this Agreement, (A) Acquisition Proposal shall mean, other than the
Transactions, any offer, proposal or inquiry relating to, or any Third Party indication of interest
in, (1) any acquisition or purchase, direct or indirect, of 30% or more of the consolidated assets
of the Company and its Subsidiaries (or to which 30% or more of the Companys revenues on a
consolidated basis are attributable), or over 30% of the voting securities of the Company, (2) any
tender offer (including a self-tender offer) or exchange offer that, if consummated, would result
in such Third Partys beneficially owning 30% or more of the voting securities of the Company, (3)
a merger, consolidation, share exchange, business combination, sale of substantially all the
assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction
involving the Company or (4) any other transaction the consummation of which would be reasonably
expected to prevent the consummation of the Merger, and (B) Third Party shall mean any Person,
including as defined in Section 13(d) of the Exchange Act, other than Parent or any of its
Affiliates, and the directors, officers, employees, agents and advisors of such Person, acting in
such capacity.
(b) From the date of this Agreement until the earlier of the Effective Time or the date on
which the Agreement is terminated, the Company shall not, and shall cause its Subsidiaries and
Affiliates and its and their officers, directors, employees, investment bankers, attorneys,
accountants, consultants and other agents, advisors or representatives (collectively,
Representatives) not to, directly or indirectly, (i) solicit, initiate or take any action to
facilitate or encourage the submission of any Acquisition Proposal, (ii) enter into any agreement
in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar instrument constituting
or relating to any Acquisition Proposal (an Alternative Acquisition Agreement), or (iii) enter
into or participate in any discussions or negotiations with, furnish any information relating to
the Company or any of its Subsidiaries or afford access to the business, properties, assets, books
or records of the Company or any of its Subsidiaries to, otherwise cooperate in any way with any
effort by any Third Party that is seeking to make, or has made, an Acquisition Proposal. The
Company shall, and shall cause its Subsidiaries and its Representatives to, cease immediately and
cause to be terminated any and all existing activities, discussions or negotiations, if any, with
any Third Party conducted prior to the date of this Agreement with respect to any Acquisition
Proposal. Furthermore, neither the Board of Directors of the Company nor any committee of the
Board of Directors with authority to approve an Acquisition Proposal shall (A) adopt, approve or
recommend (publicly or otherwise) an Acquisition Proposal, (B) fail to publicly recommend against
any Acquisition Proposal to the extent the Acquisition Proposal has been made public, or (C) fail
to recommend against any Acquisition Proposal subject to Regulation 14D under the Exchange Act in a
Solicitation/Recommendation Statement on Schedule 14D-9 under the Exchange Act within ten days
after the commencement of any tender offer in connection with such Acquisition Proposal (any action
described in the foregoing clauses (A) through (C), an Adverse Recommendation Change). For
purposes of this Agreement, (A) Acquisition Proposal shall mean, other than the Transactions, any
offer, proposal or inquiry relating to, or any Third Party indication of interest in, (1) any
acquisition or purchase, direct or indirect, of 30% or more of the consolidated assets of the
Company and its Subsidiaries (or to which 30% or more of the Companys revenues on a consolidated
basis are attributable), or over 30% of the voting securities of the Company, (2) any tender offer
(including a self-tender offer) or exchange offer that, if consummated, would result in such Third
Partys beneficially owning 30% or more of the voting securities of the Company, (3) a merger,
consolidation, share exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar transaction involving
the Company or (4) any other transaction the consummation of which would be reasonably expected to
prevent the consummation of the Merger, and (B) Third Party shall mean any Person, including as
defined in Section 13(d) of the Exchange Act, other than Parent or any of its Affiliates, and the
directors, officers, employees, agents and advisors of such Person, acting in such capacity.
(c) Notwithstanding Section 4.2(a), at any time prior to the adoption of this Agreement by the
Companys stockholders, the Board of Directors of the Company, directly or indirectly through
advisors, agents or other intermediaries, may, subject to compliance with Section 4.2(c), (i)
engage in negotiations or discussions with any Third Party that, subject to the Companys
compliance with this Section 4.2, has made after the date of this Agreement a Superior Proposal or
an unsolicited bona fide Acquisition Proposal that the Board of Directors of the Company reasonably
believes (after considering the advice of its financial advisors and outside legal counsel) will
lead to a Superior Proposal, (ii) thereafter furnish to such Third Party nonpublic information
relating to the Company or any of its Subsidiaries pursuant to a confidentiality agreement with
terms no less favorable to the Company than those contained in the Confidentiality Agreement (a
copy of which agreement shall be provided, promptly after its execution, for information purposes
only to Parent); and (iii) make an Adverse Recommendation Change with respect to such Acquisition
Proposal, but only if the Board of Directors of the Company determines in good faith by a majority
vote, after considering advice from outside legal counsel to the Company, that such action is
necessary in order for the Board of Directors of the Company to comply with its fiduciary duties to
the Companys stockholders under applicable Law. Nothing contained in this Agreement shall prevent
the Board of Directors of the Company from complying with the requirements of Rule 14e-2(a) under
the Exchange Act with regard to an Acquisition Proposal, provided, however, that the Company shall
not effect or disclose pursuant to such rules or otherwise a position which constitutes an Adverse
Recommendation Change unless specifically permitted by this Section 4.2. For purposes of this
Agreement, Superior Proposal shall mean any bona fide, unsolicited written Acquisition Proposal
for at least a majority of the outstanding shares of Company Stock on terms that the Board of
Directors of the Company determines in good faith by a majority vote, after considering the advice
of its financial advisors and outside legal counsel and taking into account all the terms and
conditions of the Acquisition Proposal would result in a transaction (A) that, if consummated, is
more favorable to Companys stockholders from a financial point of view than the Merger or, if
applicable, any proposal by Parent to amend the terms of this Agreement taking into account all the
terms and conditions of such proposal and this Agreement (including the expected timing and
likelihood of consummation, taking into account any governmental and other approval requirements),
(B) that is reasonably capable of being completed on the terms proposed, taking into account the
identity of the Person making the proposal, any approval requirements (including stockholder
approvals) and all other financial, legal and other aspects of such proposal and (C) for which
financing, if a cash transaction (whether in whole or in part), is then fully committed or
reasonably determined to be available by the Board of Directors of the Company. The Company shall
provide any commercially sensitive non-public information to any competitor in connection with the
actions contemplated by this Section 4.2(b) in a manner consistent with the Companys past practice
in dealing with the disclosure of such information in the context of competition sensitive
Acquisition Proposals.
(d) The Company shall notify Parent promptly (and, in any event, within 48 hours) after
receipt by the Company (or any of its Representatives) of any Acquisition Proposal, which notice
shall identify the Third Party making, and the material terms and conditions of, any such
Acquisition Proposal (including, if applicable, copies of any written proposals or offers,
including proposed agreements), and the Company shall keep Parent reasonably informed on a prompt
basis of any material developments, discussions or negotiations regarding any Acquisition Proposal
(including any material amendments thereto and any change in the Companys intentions as previously
notified) and shall provide copies of all written proposals or offers, including proposed
agreements.
(e) The Board of Directors of the Company shall not (i) make an Adverse Recommendation Change
in response to any Acquisition Proposal or (ii) terminate this Agreement pursuant to Section 7.1(f)
to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal,
unless (A) the Company has complied with its obligations under this Section 4.2 with respect to
such Acquisition Proposal, (B) the Company promptly notifies Parent in writing, at least four
business days before taking such action, of the determination of the Board of Directors of the
Company that such Acquisition Proposal constitutes a Superior Proposal and of its intention to take
such action, attaching the most current version of the proposed agreement under which such Superior
Proposal is proposed to be consummated and the identity of the Third Party making such Superior
Proposal, and (C) during such four business day period, the Company negotiates with Parent in good
faith and uses its reasonable best efforts to cause its Representatives to negotiate with Parent in
good faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and
conditions of this Agreement, such that such Acquisition Proposal would cease to constitute a
Superior Proposal (it being understood and agreed that any material amendment to the financial
terms or other material terms of such Superior Proposal or any new Superior Proposal in response to
any amendment to this Agreement shall require a new written notification from the Company; provided
that the requirement for a four business day period under this Section 4.2(d) shall be reduced to
two business days). Nothing in this Agreement shall limit the Companys ability to provide a Third
Party making a Superior Proposal with rights similar to the provisions of this Section 4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Proxy Statement; Stockholder Meeting.
(a) As promptly as reasonably practicable following the date of this Agreement, the Company
shall prepare and file the Company Proxy Statement with the SEC. The Company shall provide Parent
with a reasonable opportunity to review and comment on the Company Proxy Statement prior to filing.
The Company shall use reasonable best efforts as promptly as reasonably practicable (and after
consultation with Parent) to respond to any comments made by the SEC with respect to the Company
Proxy Statement. The Company shall provide Parent with a reasonable opportunity to review and
comment on any responses to comments from the SEC on the Company Proxy Statement or any amendments
or supplements to the Company Proxy Statement prior to the filing of such responses, amendments or
supplements. The Company shall use reasonable best efforts to cause the Company Proxy Statement
(substantially in the form last filed and/or cleared) to be filed with the SEC in definitive form
as contemplated by Rule 14c-2 under the Exchange Act and then to be disseminated to the
stockholders of the Company pursuant to the SECs rules as promptly as practicable after the latest
of (i) confirmation from the SEC that it has no further comments on the Company Proxy Statement,
(ii) confirmation from the SEC that the Company Proxy Statement will not to be reviewed or (iii)
expiration of the 10-day period after filing in the event the SEC does not review the Company Proxy
Statement.
(b) If, at any time prior to the Effective Time, the Company or Parent identifies any
information that should be set forth in an amendment or supplement to the Company Proxy Statement
so that the Company Proxy Statement does not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party discovering this information shall, as
promptly as reasonably practicable, notify the other parties to this Agreement and, to the extent
required by Law, the Company shall cause an appropriate amendment or supplement describing this
information, as promptly as reasonably practicable, to be filed with the SEC and, to the extent
required by Law, disseminated to the stockholders of the Company.
(c) Subject to the requirements of the DGCL and the SEC, as soon as reasonably practicable
following the completion of the Company Proxy Statement, the Company will duly call, give notice
of, convene and hold a meeting of stockholders (the Company Stockholder Meeting) for the purpose
of voting on the approval and adoption of this Agreement and approving the Merger. Subject to
Section 4.2, the Board of Directors of the Company shall recommend approval and adoption of this
Agreement and approval of the Merger by the Companys stockholders and, subject to Section 4.2,
shall not withdraw or modify, or propose to withdraw or modify in a manner adverse to Parent, such
recommendation. In connection with such meeting, the Company shall (a) use reasonable best efforts
to obtain the Company Stockholder Approval, and (b) otherwise comply with all legal requirements
applicable to such meeting.
Section 5.2 Stockholder Litigation. In the event that any lawsuits or other legal
proceedings, whether judicial or administrative, challenging, or seeking damages or other relief as
a result of, the Merger, this Agreement or the other transactions contemplated hereby (Transaction
Litigation) is brought against the Company and/or the members of the Board of Directors of the
Company prior to the Effective Time, the Company shall promptly notify Parent thereof and shall
keep Parent reasonably informed with respect to the status thereof. The Company shall give Parent
the opportunity to participate in the defense or settlement of any Transaction Litigation, and the
Company shall not settle, compromise, come to an arrangement regarding or agree to settle,
compromise or come to an arrangement regarding any Transaction Litigation, without Parents prior
written consent (such consent not to be unreasonably withheld, delayed or conditioned).
Section 5.3 Access to Information. Subject to applicable Law, during the period from the
date of this Agreement through the Effective Time, (a) the Company shall, and shall cause its
Subsidiaries to, give to Parent, its accountants, auditors, counsel, financial advisors and other
authorized representatives reasonable access to, and permit them to make such inspections as they
may reasonably require of, during normal business hours and upon reasonable notice, all of the
Companys offices, properties, books, contracts, commitments and records (including, without
limitation, the work papers of independent accountants, if available and subject to the consent of
such independent accountants), and (b) during such period, the Company shall furnish promptly to
Parent, its accountants, auditors, counsel, financial advisors and other authorized representatives
such financial and operating data and other information as such Persons may reasonably request.
All information obtained pursuant to this Section 5.3 shall be subject to the Confidentiality
Agreement between Parent and the Company dated March 24, 2015 (the Confidentiality Agreement).
Section 5.4 Fees and Expenses.
(a) Except as provided in this Section 5.4, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the Transactions including,
without limitation, the fees and disbursements of counsel, financial advisors and accountants,
shall be paid by the party incurring such costs and expenses. All printing expenses shall be paid
by the Company. Costs and expenses incurred in connection with this Agreement and the Transactions
will not reduce the Exchange Amount.
(b) If Parent terminates this Agreement pursuant to breaches of covenants by the Company as
provided in Section 7.1(b), or breaches of representations and warranties by the Company as
provided in Section 7.1(c), or the Company terminates this Agreement in connection with a Superior
Proposal pursuant to Section 7.1(f), then the parties agree that Parent will have suffered a loss
of an incalculable nature and amount, unrecoverable in law, and the Company shall promptly pay
Parent (by wire transfer of immediately available funds) a fee of $2,072,400 (the Company
Termination Fee); provided that, if the Company terminates this Agreement in connection with a
Superior Proposal pursuant to Section 7.1(f), then the Company Termination Fee shall be payable at
the time of termination.
(c) If Parent terminates this Agreement pursuant to Sections 7.1(d), 7.1(e) or 7.1(g), and, in
all such cases, after the date hereof, an Acquisition Proposal for the Company had been made
publicly and within twelve (12) months after such termination the Company has consummated any
Acquisition Proposal for the Company, then the parties agree that Parent will have suffered a loss
of an incalculable nature and amount, unrecoverable in law, and the Company shall promptly pay
Parent (by wire transfer of immediately available funds) the Company Termination Fee upon
consummation of such Acquisition Proposal.
(d) If the Company terminates this Agreement pursuant to breaches of covenants by Parent or
Sub as provided in Sections 7.1(b), or breaches of representations and warranties by Parent or Sub
as provided in Section 7.1(c), then the parties agree that the Company will have suffered a loss of
an incalculable nature and amount, unrecoverable in law, and Parent shall promptly pay the Company
(by wire transfer of immediately available funds) a fee of $2,072,400 (the Parent Termination
Fee).
(e) The parties acknowledge that the agreements contained in this Section 5.4 are an integral
part of the Transactions and that, without these agreements, the parties would not enter into this
Agreement. Accordingly, if any party fails promptly to pay any amount due to the another party
pursuant to this Section 5.4, it shall also pay any costs and expenses incurred by such other party
in connection with a legal action to enforce this Agreement that results in a judgment against the
nonpaying party for such amount.
Section 5.5 Company Options and Company Warrants. As of the Effective Time, each Company
Stock Option and each Company Warrant which is outstanding immediately prior to the Effective Time,
whether or not then exercisable, shall be cancelled by the Company in consideration for which the
holder of any such Company Stock Option or Company Warrant that (a) is vested and exercisable as of
immediately prior to the Effective Time (taking into account any acceleration upon an acquisition
or a change of control), and (b) has an exercise or purchase price per share of Company Stock
subject to such Company Stock Option or Company Warrant that is less than the Exchange Amount,
shall thereupon be entitled to receive promptly (but in no event later than five days) after the
Effective Time, a cash payment from the Surviving Corporation (for Company Stock Options) or the
Exchange Agent (for Company Warrants) in respect of such cancellation in an amount (if any) equal
to the product of (x) the number of shares of Company Stock subject to such Company Stock Option or
Company Warrant and (y) the excess of the Exchange Amount over the exercise or purchase price per
share of Company Stock subject to such Company Stock Option or Company Warrant, subject to and
reduced by all applicable federal, state and local Taxes required to be withheld by the Company.
All Company Stock Options or Company Warrants that are not vested and exercisable as of immediately
prior to the Effective Time (taking into account any acceleration upon an acquisition or change of
control), or that have an exercise or purchase price per share of Company Stock subject to such
Company Stock Option or Company Warrant that is equal to or greater than the Exchange Amount, shall
be forfeited and cancelled for no consideration as of the Effective Time. All restrictions on
shares of Company Stock granted pursuant to a Company Stock Plan shall lapse immediately prior to
the Effective Time. At or prior to the Effective Time, the Companys Board of Directors
(or a committee thereof) will adopt amendments to, or make determinations with respect to,
the Company Stock Plans, individual agreements evidencing the grant of Company Stock Options or
Company Plans, to the extent necessary, and take all other actions, as it may reasonably deem to be
necessary, to implement the provisions of this Section 5.5.
Section 5.6 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective expeditiously the Merger and the
other Transactions, including, but not limited to: (i) preparing and filing as promptly as
practicable with any Governmental Entity or other third party all documentation to effect all
necessary filings, notices, statements, registrations, submissions of information, applications and
other documents that are necessary, proper or advisable to consummate the Transactions, (ii)
obtaining and maintaining all consents, approvals, registrations, permits, authorizations,
confirmations and waivers required to be obtained from any Governmental Entity or other third party
that are necessary, proper or advisable to consummate the Transactions, and (iii) cooperating to
the extent reasonable with the other parties in their efforts to comply with their obligations
under this Agreement.
(b) The Company and Parent shall cooperate with one another (i) in determining whether any
action by or in respect of, or filing with, any Governmental Entity is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any material Contracts,
in connection with the consummation of the Transactions, and (ii) in taking such actions or making
any such filings, furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.
Section 5.7 Public Announcements. Neither Parent nor the Company will issue (and will
instruct their respective representatives not to issue) any press release, make any other public
statement, or schedule any press conference or conference call with investors or analysts with
respect to this Agreement or the Transactions without prior consultation with the other party, and,
except as may be required by applicable Law or by obligations pursuant to any listing agreement
with or rule of Nasdaq, neither shall issue (and shall instruct their respective representatives
not to issue) any such press release, make any such other public statement or schedule any such
press conference or conference call before such consultation.
Section 5.8 De-Listing and De-Registration. Prior to the Effective Time, the Company shall
cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions,
and do or cause to be done all things, reasonably necessary, proper or advisable on its part under
applicable Laws and rules and policies of Nasdaq to enable the de-listing by the Surviving
Corporation of the Company Stock from Nasdaq and the deregistration of the Company Stock under the
Exchange Act as promptly as practicable after the Effective Time, and in any event no more than ten
days after the Closing.
Section 5.9 Indemnification; Directors and Officers Insurance.
(a) From and after the Effective Time, Parent shall, and shall cause the Surviving Corporation
to, indemnify and hold harmless each present and former director and officer of the Company (when
acting in such capacity) determined as of the Effective Time (the Indemnified Parties), against
any costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent permitted under applicable
Law (and the Surviving Corporation shall also advance expenses as incurred to the fullest extent
permitted under applicable Law, provided the Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such Person is not entitled
to indemnification); provided, however, that Parent and the Surviving Corporation
shall not have any obligation under this Agreement to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated by this Agreement is
prohibited by applicable Law.
(b) Any Indemnified Party wishing to claim indemnification under Section 5.9(a), upon learning
of any such claim, action, suit, proceeding or investigation, shall promptly notify Parent and the
Surviving Corporation thereof, but the failure to so notify shall not relieve Parent and the
Surviving Corporation of any liability they may have to such Indemnified Party except to the extent
such failure prejudices Parent or the Surviving Corporation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the Effective Time),
(i) the Surviving Corporation shall have the right to assume the defense thereof and the Surviving
Corporation shall not be liable to such Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises that there are issues which raise conflicts
of interest between the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly, (ii) the Indemnified
Parties will cooperate in the defense of any such matter, and (iii) the Surviving Corporation shall
not be liable for any settlement effected without its prior written consent.
(c) Parent shall cause the Surviving Corporation to and the Surviving Corporation shall
maintain a policy of officers and directors liability insurance for acts and omissions occurring
prior to the Effective Time (D&O Insurance) with coverage in amount and scope at least as
favorable as the Companys existing directors and officers liability insurance coverage for a
period of six years after the Effective Time; provided, however, that in lieu of such coverage,
Parent may substitute a prepaid tail policy for such coverage, which the Company agrees to obtain
prior to the Effective Time upon request of Parent. Prior to the Effective Time, the Company shall
assist Parent as requested in determining the manner in which Parent will comply with the
obligations of this Section 5.9(c), but the Company shall not modify, increase, or extend its D&O
Insurance for any period beyond the current policy period (and, to the extent the current period
would lapse prior to the Effective Time, one year beyond the current period), obtain any tail
policy or obtain new D&O Insurance or prepay any D&O Insurance, without Parents prior consent, and
Parent shall not at any time be required to procure any coverage for an annual premium of 200% of
the current annual premium paid by the Company for its existing coverage.
(d) If Parent or any of its successors or assigns (i) shall consolidate with or merge into any
other corporation or entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent shall assume all of the
obligations set forth in this Section 5.9.
(e) The provisions of this Section 5.9 are intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties, their heirs and their representatives.
Section 5.10 Notification of Certain Matters. Each of the Company and Parent shall
promptly notify the other of:
(a) any notice or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the Transactions;
(b) any notice or other communication from any Governmental Entity in connection with the
Transactions;
(c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge,
threatened against, relating to or involving or otherwise affecting the Company or any of its
Subsidiaries or Parent and any of its Subsidiaries, that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to any Section of this Agreement or that
relate to the consummation of the Transactions;
(d) any inaccuracy of any representation or warranty contained in this Agreement at any time
during the term of this Agreement that would reasonably be expected to cause the conditions set
forth in Sections 6.2 or Section 6.3 not to be satisfied; and
(e) any failure of that party to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement;
provided, however, that the delivery of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect the remedies available under this Agreement to the party receiving that notice.
Section 5.11 Employee Benefit Plans and Agreements.
(a) Parent shall take all necessary action so that, throughout the 12-month period beginning
at the Effective Time, the Company, the Surviving Corporation and their Subsidiaries maintain for
each person who is an employee of the Company or any of its Subsidiaries as of the Effective Time
(including each such person who is on vacation, temporary layoff, approved leave of absence, sick
leave or short- or long-term disability) (a Retained Employee), employee benefits that are
substantially comparable in the aggregate as the benefits provided to the Retained Employee under
the Company Plans immediately prior to the Effective Time. Parent shall take all necessary action
so that after the Effective Time each Retained Employee shall continue to be credited with the
unused vacation and sick leave credited to such employee through the Effective Time under the
applicable vacation and sick leave policies of the Company and its Subsidiaries, and Parent shall
permit or cause the Surviving Corporation and their Subsidiaries to permit such employees to use
such vacation and sick leave on the same basis as such vacation and sick leave was usable prior to
the Effective Time. Parent shall take all necessary action so that, for all purposes under each
employee benefit plan maintained by Parent or any of its Subsidiaries in which employees or former
employees of the Company and its Subsidiaries become eligible to participate upon or after the
Effective Time, each such person shall be given credit for all service with the Company and its
Subsidiaries (or all service credited by the Company or its Subsidiaries) (for purposes of
eligibility and vesting, but not benefit accrual) to the same extent as if rendered to Parent or
any of its Subsidiaries, except where credit result in duplication of benefits.
(b) Nothing in this Agreement shall confer upon any Retained Employee any right to continue in
the employ or service of the Surviving Corporation or any Affiliate of the Surviving Corporation,
or shall restrict in any way the rights of the Surviving Corporation, which rights are hereby
expressly reserved, to discharge or terminate the services of any Retained Employee at any time for
any reason whatsoever, with or without cause. Notwithstanding any provision in this Agreement to
the contrary, nothing in this Section 5.11 shall (i) be deemed or construed to be an amendment or
other modification of any Company Plan or Parent employee benefit plan, or (ii) create any third
party rights in any current or former employee, director or other service provider of the Surviving
Corporation, Parent or any of their respective Affiliates (or any beneficiaries or dependents
thereof).
Section 5.12 FIRPTA Certificate.(a) On or prior to the Closing, the Company shall have
delivered to Parent, in a form reasonably acceptable to Parent, a properly completed and executed
certificate satisfying Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c) certifying that the
shares in the Company are not interests in United States real property interests within the
meaning of Section 897(c) of the Code.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Partys Obligation to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the fulfillment (or, to the
extent permissible, waiver) of the following conditions:
(a) Stockholder Approval. Company Stockholder Approval shall have been duly obtained.
(b) Authorizations and Consents. All authorizations, consents, orders, declarations
or approvals of, or filings with, or terminations or expirations of waiting periods imposed by, any
Governmental Entity, which the failure to obtain, make or occur would have the effect of making the
Merger or any of the Transactions illegal, shall have been obtained, shall have been made or shall
have occurred.
(c) No Order or Transaction Litigation. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Transaction shall be in effect, and no
Transaction Litigation shall be pending.
Section 6.2 Additional Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the fulfillment (or, to the
extent permissible, waiver by the Company) of the following conditions: (i) each of Parent and Sub
shall have performed in all material respects each of its material agreements contained in this
Agreement required to be performed at or prior to the Effective Time, and (ii) each of the
representations and warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects at the Effective Time as if made as of such time (other than
representations and warranties which address matters only as of a certain date which shall be true
and correct as of such certain date).
Section 6.3 Additional Conditions to Obligations of Parent and Sub to Effect the
Merger. (a) The obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment (or, to the extent permissible, waiver by Parent) of the following conditions: (i) the
Company shall have performed in all material respects each of its material agreements contained in
this Agreement required to be performed at or prior to the Effective Time, (ii) each of the
representations and warranties of the Company contained in this Agreement shall be true and correct
in all material respects at the Effective Time as if made as of such time (other than
representations and warranties which address matters only as of a certain date which shall be true
and correct as of such certain date) except with respect to the representations and warranties set
forth in Section 3.2(a), which shall be true in all respects other than de minimis errors or errors
which have no adverse effect on Parent, and (iii) there shall not have occurred and be continuing
as of the Effective Time any event which has had or would reasonably be expected to have a Material
Adverse Effect on the Company.
(b) The Company shall have filed all Company filings required to be filed with the SEC prior
to the Effective Time.
(c) Consent under the Citizens Loan Agreement (as defined in the Company Disclosure
Schedule).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after any approval of this Agreement and the Merger by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by Parent if the Company has failed to perform any covenant or agreement contained in this
Agreement, which failure causes the condition set forth in Section 6.3(i) not to be satisfied and
such condition is incapable of being satisfied by the End Date; or by the Company if Parent or Sub
has failed to perform any covenant or agreement contained in this Agreement, which failure causes
the condition set forth in Section 6.2(i) not to be satisfied and such condition is incapable of
being satisfied by the End Date;
(c) by Parent if there has been a breach by the Company of any representation or warranty
which breach causes the condition set forth in Section 6.3(ii) not to be satisfied and such
condition is incapable of being satisfied by the End Date; or by the Company if there has been a
breach by Parent or Sub of any representation or warranty which breach causes the condition set
forth in Section 6.2(ii) not to be satisfied and such condition is incapable of being satisfied by
the End Date;
(d) by Parent or the Company if: (i) the Merger has not been effected on or prior to the
close of business on August 13, 2015 (the End Date); provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(d)(i) shall not be available to any party
whose breach of any provision of this Agreement has been the cause of, or resulted in, the failure
of the Merger to have occurred by such date; or (ii) there shall be any applicable Law that (A)
makes consummation of the Merger illegal or otherwise prohibited or (B) enjoins the Company or
Parent from consummating the Merger and such enjoinment shall have become final and nonappealable;
(e) by Parent or the Company if the stockholders of the Company do not approve and adopt this
Agreement at the Company Stockholder Meeting or at any reconvened meeting after adjournment or
postponement of the Company Stockholder Meeting;
(f) by the Company if the Board of Directors of the Company authorizes the Company, subject to
complying with the terms of this Agreement, to enter into a written agreement concerning a Superior
Proposal; provided, that the Company shall pay any amounts due pursuant to Section 5.4(b) in
accordance with the terms, and at the times, specified therein; or
(g) by Parent, if (i) there shall have been an Adverse Recommendation Change (provided,
however, with respect to clause (B) of the definition of Adverse Recommendation Change, the Parent
has provided the Company with at least two business days notice of Parents intent to terminate
this Agreement and the Company has not publicly recommended against the subject Acquisition
Proposal prior to the end of such two business day period), or (ii) the Company shall have
knowingly and willfully breached any of its obligations under Section 4.2 in any material
respect, or (iii) the Board of Directors of the Company shall have publicly withdrawn its approval
of this Agreement or the Merger.
The party desiring to terminate this Agreement pursuant to this Section 7.1 (other than
pursuant to Section 7.1(a)) shall give notice of such termination to the other party.
Section 7.2 Effect of Termination. If this Agreement is terminated pursuant to Section
7.1, this Agreement shall become void and of no effect without liability of any party (or any
stockholder, director, officer, employee, agent, consultant or representative of such party) to the
other party (except as provided in Section 5.4(b), and Section 8.11 and except with respect to any
fraud, or any willful and material breach of this Agreement by any party). The provisions of
Section 5.4(b), this Section 7.2, Article VIII and the Confidentiality Agreement shall survive any
termination pursuant to Section 7.1.
Section 7.3 Amendment. This Agreement may be amended by the parties to this Agreement at
any time before or after approval of this Agreement and the Merger at the Company Stockholder
Meeting, but, after any such approval, no amendment shall be made which by Law requires further
approval by such stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties to this Agreement.
Section 7.4 Waiver. No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies in this Agreement shall be cumulative and not exclusive
of any rights or remedies provided by applicable Law.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall
terminate at the Effective Time.
Section 8.2 Notices. All notices and other communications under this Agreement shall be in
writing and shall be deemed given (i) when delivered personally, (ii) the first business day after
being delivered to an overnight courier, (iii) when telecopied or emailed during a business day
(with a confirmatory copy sent by overnight courier), or (iv) the next business day after being
telecopied or emailed outside of a business day (provided a confirmatory copy is sent by overnight
courier). Such notices and communications shall be sent to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Dover Saddlery Holdings, Inc.
c/o Webster Capital Fund III, L.P.
Attention: Donald Steiner
Facsimile No.: (781) 419-1516
Email: dsteiner@webstercapital.com
with a copy to:
Goodwin Procter LLP
53 State Street
Boston, MA 02109-2802
Attention: John R. LeClaire
Jared G. Jensen
Facsimile No.: (617) 523-1231
Email: jleclaire@goodwinprocter.com
jjensen@goodwinprocter.com
(b) if to the Company, to
Dover Saddlery, Inc.
525 Great Road
Littleton, Massachusetts 01460
Attention: Stephen Day
Facsimile No.: (978) 952-8063
Email: sday@doversaddlery.com
with a copy to:
Bartlit Beck Herman Palenchar & Scott LLP
1899 Wynkoop Suite 800
Denver, Colorado 80202
Attention: Thomas R. Stephens
Facsimile No.: (303) 592-3140
Email: thomas.stephens@bartlit-beck.com
Section 8.3 Interpretation. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated. The table of
contents, list of defined terms and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the
words include, includes or including are used in this Agreement, they shall be deemed to be
followed by the words without limitation.
Section 8.4 Counterparts. This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement and the
Confidentiality Agreement constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement, except as provided in the next sentence, is not intended to confer any
rights or remedies on any Person other than the parties to this Agreement. The parties to this
Agreement expressly intended the provisions of Section 5.9 to confer a benefit upon and be
enforceable by, as third party beneficiaries of this Agreement, the third Persons referred to in,
or intended to be benefited by such provision.
Section 8.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 8.7 Binding Effect; Assignment. The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective successors and assigns. No
party may assign, delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of each other party.
Section 8.8 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law, or public policy, all other terms,
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic and legal substance of the Transactions are not affected in any manner
materially adverse to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as closely as possible in
a mutually acceptable manner in order that the Transactions may be consummated as originally
contemplated to the fullest extent possible.
Section 8.9 Company Disclosure Schedule; Parent Disclosure Schedule. The parties agree
that disclosure of any item, matter or event in a particular Section of the Company Disclosure
Schedule or Parent Disclosure Schedule shall only be deemed to be an exception to (or, as
applicable, a disclosure for purposes of) (a) the representations and warranties (or covenants, as
applicable) of the relevant party that are contained in the corresponding Section of this
Agreement, and (b) any other representation and warranty of such party that is contained in another
Section this Agreement, but only to the extent that it would be reasonably apparent to a reader
(without independent knowledge and without reference to the text of any documents referenced in
such disclosures) that such disclosure would on its face be appropriately responsive to such other
Section or subsection.
Section 8.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Section 8.11 Remedies.
(a) Remedies of Parent and Sub.
(i) Specific Performance. Prior to the valid termination of this Agreement pursuant
to Article VII, Parent and Sub shall be entitled to seek and obtain an injunction, specific
performance and other equitable relief to prevent breaches of this Agreement by the Company and to
enforce specifically the terms and provisions hereof, including the Companys obligation to
consummate the Merger.
(ii) Company Termination Fee. Parent shall be entitled to payment of the Company
Termination Fee if and when payable under Section 5.4.
(iii) Damages. Other than in the case of fraud or willful and material breach of this
Agreement, in no event shall Parent, Sub or any of their respective equityholders, officers,
directors, employees, agents, controlling persons, assignees or Affiliates of any of the foregoing
have the right to seek or obtain money damages or expense reimbursement under this Agreement
(whether at law or in equity, in contract, in tort or otherwise) from the Company or any of its
equityholders, officers, directors, employees, agents, controlling persons, assignees or
Affiliates, other than the right of Parent and Sub to payment of the Company Termination Fee if and
when payable under Section 5.4.
(b) Remedies of the Company.
(i) Specific Performance. Prior to the valid termination of this Agreement pursuant
to Article VII, and other than with respect to any right to cause Parent and Sub to consummate the
Merger (which shall not be subject to any claim for specific performance by the Company, its
officers, directors, employees, stockholders, agents or representatives or any other Person), the
Company shall be entitled to seek and obtain an injunction, specific performance and other
equitable relief to prevent breaches of this Agreement by Parent and Sub and to enforce
specifically the terms and provisions hereof (including, but not limited to, demanding Parent and
Sub pay the Parent Termination Fee).
(ii) Parent Termination Fee. The Company shall be entitled to payment of the Parent
Termination Fee if and when payable under Section 5.4.
(iii) Damages. Other than in the case of fraud or willful and material breach of this
Agreement, in no event shall the Company or any of its Subsidiaries or any of their respective
equityholders, officers, directors, employees, agents, controlling persons, assignees or Affiliates
of any of the foregoing have the right to seek or obtain money damages or expense reimbursement
under this Agreement (whether at law or in equity, in contract, in tort or otherwise) from Parent,
Sub or Sponsor or any of their respective equityholders, officers, directors, employees, agents,
controlling persons, assignees or Affiliates, other than the right of the Company to payment of the
Parent Termination Fee if and when payable under Section 5.4.
(c) The parties agree that irreparable damage would occur in the event that any of the
provisions under this Agreement to which the right of specific performance is applicable were not
performed in accordance with their specific terms or were otherwise breached and that any breach of
this Agreement could not be adequately compensated in all cases by monetary damages alone. Each
party hereby agrees, solely to the extent specific performance is available to it under this
Section 8.11, not to raise any objections to the availability of the equitable remedy of specific
performance to prevent or restrain breaches of this Agreement by such party, and to specifically
enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of,
or to enforce compliance with, the covenants and obligations of such party under this Agreement all
in accordance with the terms of this Section 8.11. Any party seeking an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this
Agreement shall not be required to provide any bond or other security in connection with such order
or injunction sought in accordance with the terms of this Section 8.11.
(d) The parties hereto acknowledge and agree that the remedies provided for in this Section
8.11 shall be the parties sole and exclusive remedies for any breaches this Agreement or any
claims relating to the transactions contemplated hereby. In furtherance of the foregoing, each
party hereby waives, to the fullest extent permitted by applicable law, any and all other rights,
claims and causes of action, known or unknown, foreseen or unforeseen, which exist or may arise in
the future, that such party may have against the other party or any of its representatives arising
under or based upon any federal, state or local law (including any securities law, common law or
otherwise) for any breach of the representations and warranties or covenants contained in this
Agreement.
Section 8.12 Jurisdiction. The parties agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement or the Transactions shall be brought in the United States District Court for the District
of Delaware or any Delaware State court, so long as one of such courts shall have subject matter
jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this
Agreement shall be deemed to have arisen from a transaction of business in the State of Delaware,
and each of the parties irrevocably consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding in any such court or that any such
suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
Process in any such suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 8.2 shall be deemed
effective service of process on such party.
[Remainder of page intentionally left blank; signature page attached.]
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to be signed
by their respective officers thereunto duly authorized all as of the date first written above.
Dover Saddlery Holdings, Inc.,
By: /s/ Donald Steiner
Name: Donald Steiner
Its: President
Dover Saddlery Merger Sub, Inc.,
By: /s/ Donald Steiner
Name: Donald Steiner
Its: President
Dover Saddlery, Inc.,
By: /s/ Stephen L. Day
Name: Stephen L. Day
Its: President
2
Exhibit 99.1
Janet Nittmann
jnittmann@doversaddlery.com
Tel 978 952 8062 x218
For Immediate Release
Dover Announces Agreement to Be Acquired by Webster Capital for $8.50 per Share
LITTLETON, MA(MARKET WIRE)(April 14, 2015) -Dover Saddlery, Inc. (NASDAQ: DOVR News),
the leading multichannel retailer of equestrian products in the United States, today announced that
it has entered into a definitive merger agreement under which a company formed by Webster Capital
will acquire all of the outstanding shares of Dover common stock for $8.50 per share in cash and
take Dover private. At closing all in-the-money stock options and warrants will be cashed out.
Webster is partnering with QIC, one of Websters largest institutional investors, to provide equity
financing. The Dover Board of Directors has unanimously approved the merger agreement and
recommended that Dovers stockholders vote to approve the transaction.
The offer represents a significant premium over Dovers current share price. The transaction is
expected to close in the second quarter of fiscal 2015, subject to customary closing conditions,
including stockholder approval.
Stephen L. Day, CEO and Chairman of the Board of Dover, said, We are very pleased that the merger
agreement we have negotiated with Webster will, upon closing, produce tremendous value for our
shareholders. As the leading omni-channel retailer in the equestrian industry, we are excited and
looking forward to partnering with Webster to grow our retail store base and pursue other exciting
expansion plans. Dover and its employees and customers will benefit from this partnership with
Webster, which has extensive experience and business connections in the retail and
direct-to-consumer sectors. With our long-standing customer relationships and excellent management
team, Dover fits well with Websters interest to invest in leading direct-to-consumer companies and
help these companies accelerate their growth and evolution. We feel that this will be a win-win
outcome for all constituents.
Donald Steiner, Managing Partner of Webster Capital, stated We are excited about the opportunity
to work with Dovers management to help Dover achieve its full potential. Webster will support
Dovers strategy to expand its retail store base as well as its catalog and internet marketing
programs of quality equestrian products for both the horse and the rider.
In connection with the execution of the merger agreement, Stephen Day and other certain directors
and a member of Dovers management team, who currently own approximately 25% of Dovers outstanding
shares, have agreed to vote their shares in favor of the merger.
Duff & Phelps, LLC and Piper Jaffray & Co. are acting as financial co-advisors to Dover in the
transaction, and Preti, Flaherty, Beliveau & Pachios, Chartered, LLP and Bartlit Beck Herman
Palenchar & Scott LLP are acting as Dovers legal advisors. Goodwin Procter LLP is acting as
Websters legal advisor.
About Dover
Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multichannel retailer of equestrian products in
the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team
members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a
broad and distinctive selection of competitively priced, brand-name products for horse and rider
through catalogs, the internet and company-owned retail stores. Dover Saddlery, Inc. serves the
English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith
Brothers® are registered marks of Dover Saddlery.
About Webster
Founded in 2003, Webster Capital is a private equity firm with over $600 million of committed
capital which invests in the branded consumer and healthcare services industries. Webster focuses
on companies with transaction values in the range of $40 $100 million. Webster Capital provides
equity financing, expertise and a broad contact network for management buyouts and growth capital.
For additional information on Webster Capital please visit www.webstercapital.com.
About QIC
QIC is owned by the Queensland Government and is one of the largest institutional investment
managers in Australia, with US$57.9 billion (as of December 31, 2014) in funds under
management. QIC has over 90 clients including governments, pension plans, sovereign wealth funds
and insurers, spanning Australia, Europe, Asia, Middle East and the US. Headquartered in Brisbane,
Australia QIC also has offices in New York, San Francisco, Los Angeles and London. For more
information, please visit: www.qic.com.
Additional Information About the Transaction and Where You Can Find It
In connection with the transaction, Dover will file a proxy statement with the SEC for Dovers
stockholder meeting and stockholders are strongly advised to read the proxy statement when it
becomes available because it will contain important information about the proposed transaction.
Investors and stockholders may obtain a free copy of the proxy statement (when available) and other
documents filed by Dover at the SECs web site at http://www.sec.gov. The proxy statement (when
available) and other relevant documents may also be obtained for free from Dover by directing a
request to Dover Saddlery, Inc., c/o Investor Relations, P.O. Box 1100 Littleton, MA 01460
Dover and its directors, executive officers and certain other members of its management and
employees may be deemed to be participants in the solicitation of proxies from its stockholders in
connection with the proposed transaction. Certain information regarding the interests of such
directors and executive officers is included in Dovers Proxy Statement for its 2014 Annual Meeting
of Stockholders filed with the SEC on May 7, 2014, and information concerning all of the
participants in the solicitation will be included in the proxy statement relating to the proposed
transaction when it becomes available. Each of these documents is, or will be, available free of
charge at the SECs website at http://www.sec.gov and from Dover Saddlery, Inc., c/o Investor
Relations, P.O. Box 1100 Littleton, MA 01460.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including without limitation statements made about the proposed merger with an affiliate
of Webster. All statements other than statements of historical fact included in this press release
regarding the prospects for consummation of the Webster Merger, Dovers strategies, plans,
objectives, expectations, and future operating results are forward-looking statements. Although
Dover believes that the expectations reflected in such forward-looking statements are reasonable at
this time, it can give no assurance that such expectations will prove to have been correct. These
forward-looking statements involve significant risks and uncertainties, including those discussed
in this release and others that can be found in Item 1A Risk Factors of Dover Saddlerys Annual
Report on Form 10-K for the fiscal year ended December 31, 2014. Dover Saddlery is providing this
information as of this date and does not undertake any obligation to update any forward-looking
statements contained in this document as a result of new information, future events or otherwise.
No forward-looking statement can be guaranteed and actual results may differ materially from those
Dover Saddlery projects.
All trademarks and registered trademarks mentioned herein are the property of their respective
owners.
Contact:
Dover Investor Relations
Janet Nittmann
Tel 978-952-8062 x218
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