false
0001004989
0001004989
2024-08-30
2024-08-30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 30, 2024
SPAR Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-27408 33-0684451
(State or Other Jurisdiction of Incorporation) (Commission File No.) (IRS Employer Identification No.)
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1910 Opdyke Court 48326
,
Auburn Hills
,
MI
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (
248
)
364-7727
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(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)
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Name of each exchange on which registered
Symbol(s)
Common Stock SGRP The
, $0.01 par value Nasdaq
Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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SPAR Group, Inc. ("
SGRP
" or the "
Corporation
", and together with its subsidiaries, the "
Company
", "
SPAR
" or "
SPAR Group
") has listed its shares of Common Stock for trading through the Nasdaq Stock
Market LLC ("
Nasdaq
") under the trading symbol "
SGRP
" and periodically files reports with the Securities and Exchange Commission ("
SEC
"). Reference is made to: (a) SGRP's 2023 Annual Report on Form 10-K for the
year ended December 31, 2023, as filed with the SEC on April 1, 2024, and
SGRP's First Amendment to the 2023 Annual Report on Form 10-K/A for the year
ended December 31, 2023, as filed with the SEC on April 30, 2024 (as so
amended, the "
Annual Report
"); and (b) SGRP's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and other reports and statements as and when filed with the SEC (each an "
SEC Report
").
Item 1.01 Entry into a Material Definitive Agreement.
On August 30, 2024, the Corporation entered into an Agreement and Plan of
Merger (the "
Merger Agreement
") with Highwire Capital, LLC, a Texas limited liability company ("
Parent
"), and Highwire Merger Co. I, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("
Merger Sub
").
The Merger Agreement provides, among other things and subject to the approval
of the Corporation's stockholders and other terms and conditions set forth
therein, that Merger Sub will be merged with and into the Corporation, with
the Corporation surviving as a wholly owned subsidiary of Parent (the "
Merger
"). At the Effective Time (as defined in the Merger Agreement), by virtue of
the Merger, and without any other action on the part of Parent, Merger Sub,
the Corporation or any holder of any securities of the Company:
each share of common stock, par value
$0.01 per share, of the Corporation
issued and outstanding immediately
prior to the Effective Time (each a "
Share
" and collectively, the "
Shares
"), other than Shares to be cancelled pursuant to Section 2.01(a) of the Merger
Agreement and the Dissenting Shares (as defined in the Merger Agreement), shall be
converted automatically into the right to receive $2.50 per Share in cash, without
interest, subject to any withholding of taxes required by applicable law (the "
Merger Consideration
");
each option to acquire Shares (each, a "
Corporation Option
"), whether or not then vested or exercisable, that is outstanding
immediately prior to the Effective Time shall be, by virtue
of the Merger and without any action on the part of the holder
thereof, cancelled and be converted into the right to receive an
amount equal to the number of Shares underlying the Corporation
Option multiplied by the difference between the Merger Consideration
and the exercise price for the option, less any taxes required
to be withheld with respect to such Corporation Option;
each restricted stock unit granted
with respect to the Shares (the "
Corporation RSUs
") that is outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, vest in full and shall be cancelled and converted automatically
into the right to receive an amount equal to the number of Shares underlying the Corporation RSU multiplied
by the Merger Consideration, less any taxes required to be withheld with respect to such Corporation RSU; and
each outstanding phantom stock
unit of the Corporation ("
Corporation Phantom Stock Units
") that is outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action
on the part of the holder thereof, vest in full and shall be cancelled and converted automatically into the right
to receive an amount equal to the number of Shares underlying the Corporation Phantom Stock Unit multiplied by the
Merger Consideration, less any taxes required to be withheld with respect to such Corporation Phantom Stock Unit.
The board of directors of the Corporation (the "
Corporation Board
") established a special committee consisting solely of independent,
disinterested directors (the "
Special Committee
") to, among other things, evaluate the advisability and fairness of strategic
alternatives to the Corporation and its stockholders (including unaffiliated
stockholders of the Corporation). The Special Committee unanimously (i)
determined that the Merger Agreement and the transactions contemplated
thereby, including the Merger, are advisable, fair to and in the best
interests of the Corporation and its stockholders, (ii) determined that it is
advisable and in the best interests of the Corporation and its stockholders to
enter into the Merger Agreement and (iii) recommended that the Corporation
Board (A) declare the Merger Agreement and the transactions contemplated
thereby, including the Merger, advisable and in the best interests of the
Corporation, (B) approve the execution, delivery and performance by the
Corporation of the Merger Agreement and (C) recommend that the stockholders of
the Corporation approve the Merger Agreement and the transactions contemplated
thereby, including the consummation of the Merger.
The Corporation Board, acting on the recommendation of the Special Committee,
has, upon the terms and subject to the conditions set forth in the Merger
Agreement, unanimously (i) determined that the Merger Agreement and the
transactions contemplated thereby, including the Merger, are advisable, fair
to and in the best interests of the Corporation and its stockholders, (ii)
approved the Merger Agreement and the transactions contemplated thereby,
including the Merger, (iii) directed that the Merger Agreement, including the
Merger, be submitted to the stockholders of the Corporation for its adoption
and approval, and (iv) resolved to recommend that the Corporation's
stockholders vote to adopt and approve the Merger Agreement, including the
Merger.
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Simultaneously with the execution of the Merger Agreement, William H. Bartels,
a member of the Corporation Board, entered into a Voting Agreement and
Irrevocable Proxy with Parent (the "Voting Agreement"), with the approval of
the Corporation Board, pursuant to which Mr. Bartels has agreed, among other
things, to vote, and has granted an irrevocable proxy to Parent to vote, the
Shares that he owns as of the date of the Voting Agreement and any Shares he
thereafter acquires in favor of the Merger and against the approval of any
Takeover Proposal or Company Acquisition Agreement (as such terms are defined
in the Merger Agreement) and not to sell or transfer any of such Shares until
the termination thereof. As of the date of the Voting Agreement, Mr. Bartels
owns 4,709,837 Shares, or approximately 20% of the outstanding Shares. Mr.
Bartels also owns 50,000 Corporation Options.
Assuming the satisfaction of the conditions set forth in the Merger Agreement
and briefly discussed below, the Corporation expects the Merger to close in
the fourth quarter of 2024. The Corporation will promptly after the execution
of the Merger Agreement and in any event, no later than 30 days after the
execution of the Merger Agreement, prepare and file a proxy statement with the
Securities and Exchange Commission (the "
SEC
") whereby the Corporation will ask the stockholders of the Corporation to
vote on the adoption and approval of the Merger Agreement at a special
stockholder meeting that will be held on a date, and at the time and place, to
be announced when finalized.
The closing of the Merger is subject to various closing conditions, including
(i) adoption and approval of the Merger Agreement, including the Merger, by
holders of a majority of the Shares then outstanding (the "
Corporation Stockholder Approval
"), (ii) regulatory approvals (the parties expect none to be required), (iii)
the consummation of the Merger shall not be enjoined, restrained or prohibited
by any law, legal action or order, (iv) the absence of Corporation Material
Adverse Effect (as defined in the Merger Agreement) since the execution of the
Merger Agreement, and (v) the accuracy of the representations and warranties
contained in the Merger Agreement, subject to customary materiality
qualifications, and compliance with the covenants and agreements contained in
the Merger Agreement. The closing of the Merger is not subject to a financing
condition.
Parent has obtained a debt financing commitment, the proceeds of which will be
sufficient for Parent to consummate the transactions contemplated by the
Merger Agreement. Funds managed by CAP Services, LLC d/b/a Capital Platform ("
Capital Platform
") have committed to provide up to $115.0 million of senior secured credit
facilities on the terms and subject to the conditions set forth in a
commitment letter dated August 22, 2024 (the "
Debt Commitment Letter
"). The obligations of Capital Platform to provide debt financing under the
Debt Commitment Letter are subject to a number of customary conditions.
The Merger Agreement contains customary representations, warranties and
covenants, including, among others, covenants by the Corporation to conduct
the Company's business and operations in all material respects in the
ordinary course of business consistent with past practice between the date of
the Merger Agreement and the closing of the Merger, not to engage in certain
material transactions during such period, to convene and hold a special
meeting of its stockholders for the purpose of obtaining the Corporation
Stockholder Approval, to use commercially reasonable efforts to cooperate with
Parent in connection with the debt financing for the transactions contemplated
by the Merger Agreement, to use reasonable best efforts to obtain approval of
the transactions contemplated by the Merger Agreement by any governmental
entity, subject to certain customary exceptions, for the Corporation Board to
recommend that the stockholders adopt the Merger Agreement, including the
Merger, to reasonably cooperate with the Parent and use its reasonable best
efforts to enable the delisting of the Shares from Nasdaq and the
deregistration of the Shares under the Securities Exchange Act of 1934, as
amended (the "
Exchange Act
") and to have balance sheet cash of not less than $14,200,000 as of the
Closing Date after (i) giving effect to the payment of all expenses incurred
by the Company and obligations of the surviving corporation in connection with
the Merger Agreement and the Merger and other transactions contemplated
thereby (including, but not limited to, the payments that the surviving
corporation is required to make in respect of all Corporation Options and
Corporation Phantom Stock Units), and (ii) including all amounts expected to
be received by the Company in connection with the disposition of any of the
Company's entities. The Merger Agreement also contains customary representations
, warranties and covenants of Parent and Merger Sub, including a covenant that
Parent use its commercially reasonable efforts to consummate the debt
financing.
The Merger Agreement provides that, during the period commencing with the
execution and delivery of the Merger Agreement, the Corporation may not (i)
solicit, initiate or induce the making, submission or announcement of, or
knowingly encourage or facilitate any Takeover Proposal (as defined in the
Merger Agreement ) or any proposal that could reasonably be expected to lead
to a Takeover Proposal; (ii) continue, conduct, or engage in any discussions
or negotiations with any third party, disclose any non-public information
relating to the Company to any third party, afford access to the business,
properties, assets, books, or records of the Company to any third party, in
any such case where such action is intended to or could reasonably be expected
to induce, assist, participate in, or knowingly facilitate or encourage any
effort by, any third party (or its potential sources of financing) that is
contemplating or seeking to make, or has made, any Takeover Proposal; (iii)
except where a failure to do so would reasonably be expected to be
inconsistent with the fiduciary duties of the Corporation Board, amend or
grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of the Corporation; (iv) approve,
endorse or recommend any Takeover Proposal; (v) approve any transaction under,
or any third party other than Parent and Merger Sub becoming an "interested
stockholder" under, Section 203 of the Delaware General Corporation Law; (vi)
enter into any agreement in principle, letter of intent, memorandum of
understanding, term sheet, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement, or other Contract
(as defined in the Merger Agreement) contemplating or relating to any Takeover
Proposal; or (vii) approve, authorize, agree, or publicly announce any
intention to do any of the foregoing.
However, if at any time following the date of the Merger Agreement and prior
to the receipt of Corporation Stockholder Approval, (i) the Corporation
receives a bona fide written Takeover Proposal from a third party, (ii) the
Corporation has not breached the non-solicitation provision of the Merger
Agreement with respect to such Takeover Proposal and (iii) the Corporation
Board determines in good faith that such Takeover Proposal constitutes or
could reasonably be expected to lead to a Superior Proposal (as defined in the
Merger Agreement) and that it is required to take such action consistent with
its fiduciary duties, then the Corporation may (A) participate or engage in
negotiations or discussions with such third party and (B) furnish to such
third party non-public information relating to the Corporation, or afford to
such third party access to the business, properties, assets, books, records or
other non-public information, or to any personnel, of the Corporation (subject
to entry into an acceptable confidentiality agreement with such third party
and other customary notice and information obligations to Parent).
2
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Prior to obtaining the Corporation Stockholder Approval, the Corporation Board
may effect a Company Adverse Recommendation Change (as defined in the Merger
Agreement) and/or terminate the Merger Agreement if the Corporation has
received a bona fide written Takeover Proposal that the Corporation Board
determines in good faith, after consultation with and advice from its
financial advisor and outside counsel, constitutes, or could reasonably be
expected to lead to, a Superior Proposal. The Corporation shall not be
entitled to effect a Corporation Adverse Recommendation Change or terminate
the Merger Agreement unless (i) the Corporation provided at least five
business days' prior written notice to Parent of the Corporation's intention
to take such action, (ii) the Corporation specifies the identity of the party
making the Takeover Proposal and the material terms and conditions thereof in
such notice and includes an unredacted copy of the Takeover Proposal, and
(iii) the Corporation negotiates with Parent in good faith to make such
adjustments in the terms and conditions of this Agreement so that such
Takeover Proposal ceases to constitute a Superior Proposal, if requested by
Parent and Parent, in its discretion, proposes to make such adjustments and
(iv) the Corporation Board determines in good faith, after consulting with its
financial advisors and outside legal counsel, that such Takeover Proposal
continues to constitute a Superior Proposal (after taking into account any
adjustments made by Parent) and that the failure to take such action would be
reasonably likely to be inconsistent with its fiduciary duties under
applicable law. Prior to obtaining the Corporation Stockholder Approval, the
Corporation Board may effect a Company Adverse Recommendation Change, if the
Corporation Board determines, in good faith, after consultation with its
financial advisors and outside legal counsel, that an Intervening Event (as
defined in the Merger Agreement) has occurred and is continuing and the
failure to effect a Company Adverse Recommendation Change in response to such
Intervening Event would be reasonably likely to be inconsistent with its
fiduciary duties to the stockholders of the Company under applicable Law. The
Corporation shall not be entitled to effect a Company Adverse Recommendation
Change unless it complies with the notice and procedural requirements of the
Merger Agreement.
Similarly, prior to obtaining the Corporation Stockholder Approval, the
Corporation Board may effect a Company Adverse Recommendation Change if (i)
the Corporation Board determines in good faith, after consultation with and
advice from its financial advisor and outside counsel, that an Intervening
Event (as defined in the Merger Agreement) has occurred and is continuing, and
(ii) the failure to effect a Company Adverse Recommendation Change in response
to such Intervening Event would be reasonably likely to be inconsistent with
its fiduciary duties to the stockholders of the Corporation. Notwithstanding
the foregoing, the Corporation Board may not effect a Company Adverse
Recommendation Change unless (A) the Corporation provides at least five
business days' prior written notice to Parent of the material information and
facts relating to such Intervening Event, and that the Corporation Board
intends to hold a meeting to consider and determine whether to make a Company
Adverse Recommendation Change in response to such Intervening Event, (B) the
Corporation negotiates with Parent in good faith to make such adjustments in
the terms and conditions of the Merger Agreement as would obviate the need for
the Company Adverse Recommendation Change, if requested by Parent and (C) at
the end of the five business day period, the Corporation Board, after
consulting with its financial advisors and outside legal counsel and taking
into account any adjustments offered by Parent to the terms and conditions of
the Merger Agreement, makes a determination that the failure of the
Corporation Board to make such Company Adverse Recommendation Change in
response to such Intervening Event would be reasonably likely to be
inconsistent with its fiduciary duties to the stockholders of the Corporation
under applicable law. However, each time any material amendment, modification
or change to the Intervening Event occurs (whether before or after the
Corporation Board makes such a determination), the Corporation shall notify
Parent which shall commence a new five business day negotiation period as set
forth in the preceding sentence.
The Merger Agreement contains certain termination rights for both the
Corporation and Parent. The Merger Agreement may be terminated by (i) mutual
written consent of both parties prior to the Effective Time; (ii) by either
Corporation or Parent if the Merger is not consummated on or before May 30,
2025 (the "
End Date
"); (iii) by either Corporation or Parent at any time prior to the Effective
Time if any governmental entity issues an order or law prohibiting the
consummation of the Merger or the transactions contemplated by the Merger
Agreement, and such order or law becomes final and nonappealable; (iv) by
either the Corporation or Parent if the Corporation Stockholder Approval is
not obtained upon a vote taken at the Company Stockholders Meeting (as defined
in the Merger Agreement); (v) by Parent if (A) a Company Adverse Recommendation
Change shall have occurred or the Corporation shall have approved or adopted,
or recommended the approval or adoption of, any Company Acquisition Agreement
(as defined in the Merger Agreement) and (B) the Corporation shall have
entered into a definitive agreement relating to a Takeover Proposal; (vi) by
Parent if the Corporation breaches any of its covenants and such breach is
continuing and incapable of being cured by the End Date or the Corporation
fails to cure within 30 business days after notice is given by Parent; (vii)
by Parent if the Corporation breaches the Merger Agreement such that the
closing conditions would not be satisfied, Parent delivered a notice of such
breach to the Corporation and such breach is continuing and incapable of being
cured by the End Date or the Corporation fails to cure within 30 business
days; (viii) by Parent if there has been a Company Material Adverse Effect;
(ix) by the Corporation if the Corporation Board determines to accept a
Superior Proposal and enter into a Company Acquisition Agreement prior to the
receipt of the Corporation Stockholder Approval at the Company Stockholders
Meeting; (x) by the Corporation if Parent or Merger Sub breaches the Merger
Agreement such that the closing conditions would not be satisfied, the
Corporation delivered notice of such breach or failure to perform and such
breach or failure to perform is not capable of cure prior to the End Date or
Parent fails to cure within 30 business days and (xi) by the Corporation if,
after all closing conditions are satisfied, Parent fails to close within five
business days following written confirmation from the Corporation that it is
prepared to close if Parent performs its obligations under the Merger
Agreement and the debt financing is funded.
The Merger Agreement also provides that either party may specifically enforce
the other party's obligations thereunder, provided that the Corporation may
only cause Parent to consummate the Merger if certain requirements are
satisfied, including the availability of the debt financing to be funded.
If the Merger Agreement is terminated by Parent, in certain circumstances
related to a Company Adverse Recommendation Change, or by the Company
following a determination by the Corporation Board to accept a Superior
Proposal, and the Corporation consummates a Takeover Proposal within six
months following the termination of the Merger Agreement, then the Corporation
shall pay to Parent a termination fee of 3% of the Merger Consideration.
If the Corporation terminates the Merger Agreement because all closing
conditions are satisfied and Parent fails to close within five business days
following written confirmation from the Corporation that it is prepared to
close, then Parent shall pay to the Corporation a termination fee of 3% of the
Merger Consideration.
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The foregoing description of the Merger Agreement is only a summary, 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 filed herewith as
Exhibit 2.1 and is incorporated into this Current Report on Form 8-K by
reference in its entirety. The Merger Agreement has been filed as an exhibit
to provide investors and stockholders of the Corporation with information
regarding its terms. It is not intended to provide any other factual
information about the Corporation, Parent or Merger Sub. The representations,
warranties and covenants contained in the Merger Agreement were made only for
the purposes of the Merger Agreement and as of specified dates, were solely
for the benefit of the parties to the Merger Agreement and may be subject to
limitations agreed upon by the contracting parties. The representations and
warranties may have been made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these
matters as facts, and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors.
Investors and stockholders of the Corporation accordingly should not rely on
the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the
Corporation, Parent, Merger Sub or any of their respective subsidiaries or
affiliates. In addition, the assertions embodied in the representations and
warranties contained in the Merger Agreement are qualified by information in
confidential disclosure schedules that the Corporation exchanged with Parent
and Merger Sub in connection with the execution of the Merger Agreement.
Moreover, information concerning the subject matter of the representations and
warranties may change after the date of the Merger Agreement, which subsequent
information may or may not be fully reflected in the Corporation's public
disclosures. The Merger Agreement should not be read alone, but should instead
be read in conjunction with the other information regarding the parties to the
Merger Agreement and the Merger that will be contained in, or incorporated by
reference into, the proxy statement that the Corporation will be filing with
the SEC in connection with the Company Stockholders Meeting at which meeting
the Merger will be submitted for approval by the stockholders, as well as in
the Corporation's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and other documents that the Corporation has filed
or may file with the SEC.
Upon the closing of the Merger, the Shares will be delisted from Nasdaq and
deregistered under the Exchange Act.
Item 8.01
Other Events
On September 3, 2024, the Corporation issued a press release announcing the
Merger Agreement, a copy of which is filed herewith as Exhibit 99.1 and is
incorporated into this Current Report on Form 8-K by reference in its entirety.
Additional Information and Where to Find It
This report relates to the proposed Merger. A special meeting of the
stockholders of the Corporation will be announced as promptly as practicable
to seek stockholder approval in connection with the proposed Merger. The
Corporation expects to file with the SEC a proxy statement and other relevant
documents in connection with the proposed Merger. Stockholders of the
Corporation are urged to read the definitive proxy statement and other
relevant materials filed with the SEC when they become available because they
will contain important information about the Corporation, Parent, Merger Sub
and the Merger.
Stockholders may obtain a free copy of these materials (when they are
available) and other documents filed by the Corporation with the SEC at the
SEC's website at www.sec.gov, at the Corporation's website at https://investors.
sparinc.com/ or by sending a written request to the Corporation's Secretary at
its principal executive offices at 1910 Opdyke Court, Auburn Hills, Michigan
48326.
Participants in the Solicitation
The Corporation, its directors and certain of its executive officers and
employees may be deemed to be participants in soliciting proxies from its
stockholders in connection with the Merger. Information regarding the persons
who may, under the rules of the SEC, be considered to be participants in the
solicitation of the Corporation's stockholders in connection with the Merger
and any direct or indirect interests they have in the Merger will be set forth
in the Corporation's definitive proxy statement for its special stockholder
meeting when it is filed with the SEC. Information relating to the foregoing
can also be found in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 2023 filed with the SEC on April 1, 2024, its First
Amendment to the 10-K on Form 10K/A filed with the SEC on April 30, 2024 and
the Corporation's definitive proxy statement for its 2023 Annual Meeting of
Stockholders filed with the SEC on October 13, 2023 (the "
Annual Meeting Proxy Statement
").
To the extent that holdings of the Corporation's securities by its officers,
directors and 10% stockholders have changed since the amounts set forth in the
Annual Meeting Proxy Statement, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
Forward Looking Statements
This Current Report on Form 8-K and its exhibits (collectively, this "
Current Report
") contain forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, made by, or respecting,
the Corporation and its subsidiaries. Forward-looking statements include
information concerning the proposed Merger. "Forward-looking statements" are
defined in Section 27A of the Securities Act of 1933, as amended (the "
Securities Act
") and Section 21E of the Exchange Act, and other applicable federal and state
securities laws, rules and regulations, as amended.
4
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Readers can identify forward-looking statements by the fact that they do not
relate strictly to historical or current facts. Words such as "may," "will,"
"expect," "intend," "believe," "estimate," "anticipate," "continue," "plan,"
"project," or the negative of these terms or other similar expressions also
identify forward-looking statements. Forward-looking statements made by the
Corporation in this Current Report on Form 8-K may include (without
limitation) statements regarding: risks, uncertainties, cautions,
circumstances and other factors ("
Risks
"). Those Risks include (without limitation): approval of the Merger by the
Corporation's stockholders; the inability to consummate the Merger within the
anticipated time period, or at all, due to any reason, including any failure
to satisfy the conditions to the consummation of the Merger or complete
necessary financing arrangements; the risk that the Merger disrupts our
current plans and operations or diverts management's attention from its
ongoing business; the effects of the Merger on our business, operating
results, and ability to retain and hire key personnel and maintain
relationships with customers, suppliers and others with whom we do business;
the risk that our stock price may decline significantly if the Merger is not
consummated; the nature, cost and outcome of any legal proceedings related to
the Merger; the impact of selling certain of the Corporation's subsidiaries or
any resulting impact on revenues, earnings or cash; the impact of adding new
directors or new finance team members; the potential negative effects of any
stock repurchase and/or payment; the potential continuing negative effects of
the COVID pandemic on the Company's business; the Corporation's potential
non-compliance with applicable Nasdaq director independence, bid price or
other rules; the Company's cash flow or financial condition; and plans,
intentions, expectations, guidance or other information respecting the pursuit
or achievement of the Company's corporate objectives. For additional
information and risk factors that could affect SPAR Group, see its Form 10-K
for the year ended December 31, 2023 and its Quarterly Reports on Form 10-Q,
each as filed with the Securities and Exchange Commission. The information
contained in this Current Report on Form 8-K is made only as of the date
hereof, even if subsequently made available by the Company on its website or
otherwise.
You should carefully review and consider the Corporation's forward-looking
statements (including all risk factors and other cautions and uncertainties)
and other information made, contained or noted in or incorporated by reference
into this Current Report on Form 8-K, but you should not place undue reliance
on any of them. The results, actions, levels of activity, performance,
achievements or condition of the Company (including its affiliates, assets,
business, clients, capital, cash flow, credit, expenses, financial condition,
income, legal costs, liabilities, liquidity, locations, marketing, operations,
performance, prospects, sales, strategies, taxation or other achievement,
results, risks, trends or condition) and other events and circumstances
planned, intended, anticipated, estimated or otherwise expected by the Company
(collectively, "
Expectations
"), and our forward-looking statements (including all Risks) and other
information reflect the Corporation's current views about future events and
circumstances. Although the Corporation believes those Expectations and views
are reasonable, the results, actions, levels of activity, performance,
achievements or condition of the Company or other events and circumstances may
differ materially from our Expectations and views, and they cannot be assured
or guaranteed by the Corporation, since they are subject to Risks and other
assumptions, changes in circumstances and unpredictable events (many of which
are beyond the Corporation's control). In addition, new Risks arise from time
to time, and it is impossible for the Corporation to predict these matters or
how they may arise or affect the Company. Accordingly, the Corporation cannot
assure you that its Expectations will be achieved in whole or in part, that it
has identified all potential Risks, or that it can successfully avoid or
mitigate such Risks in whole or in part, any of which could be significant and
materially adverse to the Company and the value of your investment in the
Corporation's common stock.
These forward-looking statements reflect the Corporation's Expectations,
views, Risks and assumptions only as of the date hereof, and the Corporation
does not intend, assume any obligation, or promise to publicly update or
revise any forward- looking statements (including any Risks or Expectations)
or other information (in whole or in part), whether as a result of new
information, new or worsening Risks or uncertainties, changed circumstances,
future events, recognition, or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
2.1 Agreement and Plan of Merger, dated August 30, 2024, by and among
Highwire Capital, LLC, Highwire Merger Co. I, Inc. and SPAR Group, Inc.
Press Release, dated September 3, 2024.
99.1
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
5
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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 thereunto duly authorized.
SPAR Group, Inc.
Date: September 3, 2024
By: /s/ Michael R. Matacunas
Michael R. Matacunas, President & CEO
Exhibit 2.1
Confidential
AGREEMENT AND PLAN OF MERGER
By and Among
HIGHWIRE CAPITAL, LLC
HIGHWIRE MERGER CO I, INC.
and
SPAR GROUP, INC.
Dated as of August 30, 2024
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TABLE OF CONTENTS
ARTICLE I THE MERGER 1
Section 1.01 The Merger. 1
Section 1.02 Closing. 2
Section 1.03 Effective Time. 2
Section 1.04 Effects of the Merger. 2
Section 1.05 Certificate 2
of Incorporation; By-Laws.
Section 1.06 Directors and Officers. 2
ARTICLE II EFFECT OF THE MERGER ON 3
CAPITAL STOCK; PAYMENT FOR SHARES
Section 2.01 Effect of the 3
Merger on Capital Stock.
Section 2.02 Surrender and Payment. 4
Section 2.03 Dissenting Shares. 6
Section 2.04 Adjustments. 6
Section 2.05 Withholding Rights. 6
Section 2.06 Lost Certificates. 7
Section 2.07 Treatment of Stock Options 7
and Other Stock-Based Compensation.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
Section 3.01 Organization; Standing and 8
Power; Charter Documents; Subsidiaries.
Section 3.02 Capital Structure. 9
Section 3.03 Authority; Non-Contravention; Governmental 11
Consents; Board Approval; Anti-Takeover Statutes.
Section 3.04 SEC Filings; Financial Statements; Sarbanes-Oxley Act 13
Compliance; Undisclosed Liabilities; Off-Balance Sheet Arrangements.
Section 3.05 Absence of 16
Certain Changes or Events.
Section 3.06 Taxes. 16
Section 3.07 Intellectual Property. 18
Section 3.08 Compliance; Permits. 20
Section 3.09 Litigation. 20
Section 3.10 Brokers' and Finders' Fees. 21
Section 3.11 Related Person Transactions. 21
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Section 3.12 Employee Benefit Issues. 22
Section 3.13 Real Property and Personal Property Matters. 26
Section 3.14 Environmental Matters. 26
Section 3.15 Material Contracts. 27
Section 3.16 Insurance. 29
Section 3.17 Proxy Statement. 30
Section 3.18 Anti-Corruption Matters. 30
Section 3.19 Fairness Opinion. 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 31
Section 4.01 Organization. 31
Section 4.02 Authority; Non-Contravention; Governmental Consents; Board Approval. 31
Section 4.03 Proxy Statement. 33
Section 4.04 Financing. 33
Section 4.05 Financial Capability. 34
Section 4.06 Legal Proceedings. 34
Section 4.07 Ownership of Company Common Stock. 34
Section 4.08 Ownership of Parent and Merger Sub. 34
Section 4.09 No Stockholder and Management Arrangements. 34
Section 4.10 Brokers. 34
Section 4.11 No Other Representations and Warranties. 35
ARTICLE V COVENANTS 35
Section 5.01 Conduct of Business of the Company. 35
Section 5.02 Access to Information; Confidentiality. 39
Section 5.03 No Solicitation. 40
Section 5.04 Stockholders Meeting; Preparation of Proxy Materials; Approval by Sole Stockholder of Merger Sub. 44
Section 5.05 Notices of Certain Events. 45
Section 5.06 Employees; Benefit Plans. 46
Section 5.07 Directors' and Officers' Indemnification and Insurance. 48
Section 5.08 Reasonable Best Efforts. 50
ii
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Section 5.09 Public Announcements. 52
Section 5.10 Anti-Takeover Statutes. 52
Section 5.11 Section 16 Matters. 52
Section 5.12 Stock Exchange Delisting; Deregistration. 53
Section 5.13 Stockholder Litigation. 53
Section 5.14 Obligations of Merger Sub. 53
Section 5.15 Resignations. 53
Section 5.16 Balance Sheet Cash. 53
Section 5.17 Further Assurances. 54
Section 5.18 Transfer Taxes. 54
Section 5.19 Financing. 54
Section 5.20 Debt Financing Cooperation. 56
ARTICLE VI CONDITIONS 59
Section 6.01 Conditions to Each Party's Obligation to Effect the Merger. 59
Section 6.02 Conditions to Obligations of Parent and Merger Sub. 60
Section 6.03 Conditions to Obligation of the Company. 60
Section 6.04 Frustration of Closing Conditions. 61
ARTICLE VII TERMINATION, AMENDMENT, AND WAIVER 61
Section 7.01 Termination by Mutual Consent. 61
Section 7.02 Termination by Either Parent or the Company. 61
Section 7.03 Termination By Parent. 62
Section 7.04 Termination By the Company. 62
Section 7.05 Notice of Termination; Effect of Termination. 63
Section 7.06 Fees and Expenses Following Termination. 64
ARTICLE VIII MISCELLANEOUS 66
Section 8.01 Definitions. 66
Section 8.02 Interpretation; Construction. 76
Section 8.03 Survival. 77
Section 8.04 Governing Law. 77
iii
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Section 8.05 Mandatory Arbitration. 77
Section 8.06 Waiver of Jury Trial. 78
Section 8.07 Notices. 78
Section 8.08 Entire Agreement. 79
Section 8.09 Disclosure Schedules. 79
Section 8.10 No Third-Party Beneficiaries. 80
Section 8.11 Severability. 80
Section 8.12 Assignment. 80
Section 8.13 Amendment. 80
Section 8.14 Extension; Waiver. 80
Section 8.15 Remedies Cumulative. 81
Section 8.16 Specific Performance. 81
Section 8.17 Execution of Agreement; Counterparts; Electronic Signatures. 82
EXHIBITS
Exhibit A - Form of Certificate of Incorporation of Surviving Corporation
Exhibit B - Form of Bylaws of Surviving Corporation
iv
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "
Agreement
"), is entered into as of August 30, 2024, by and among SPAR Group, Inc., a
Delaware corporation (the "
Company
"), Highwire Capital, LLC, a Texas limited liability company ("
Parent
"), and Highwire Merger Co. I, Inc., a Delaware corporation and a wholly owned
Subsidiary of Parent ("
Merger Sub
"). Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in
Section 8.01
hereof.
RECITALS
WHEREAS
, the parties intend that Merger Sub be merged with and into the Company, with
the Company surviving that merger, on the terms and subject to the conditions
set forth herein;
WHEREAS
, in the Merger, upon the terms and subject to the conditions of this
Agreement, each outstanding share of common stock, par value $0.01 per share,
of the Company (the "
Company Common Stock
") will be converted into the right to receive the Merger Consideration except
as otherwise provided in this Agreement;
WHEREAS
, the Board of Directors of the Company (the "
Company Board
") has unanimously: (a) determined that it is in the best interests of the
Company and its stockholders, and declared it advisable, to enter into this
Agreement with Parent and Merger Sub; (b) approved the execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger; and (c) resolved, subject to the
terms and conditions set forth in this Agreement, to recommend adoption of
this Agreement by the stockholders of the Company; in each case, in accordance
with the Delaware General Corporation Law (the "
DGCL
");
WHEREAS
, the respective Boards of Directors of Parent and Merger Sub have each
unanimously: (a) determined that it is in the best interests of Parent or
Merger Sub, as applicable, and their respective stockholders, and declared it
advisable, to enter into this Agreement; and (b) approved the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger; in each case, in
accordance with the DGCL; and
WHEREAS
, the parties desire to make certain representations, warranties, covenants,
and agreements in connection with, and to prescribe certain terms and
conditions to, the Merger and the other transactions contemplated by this
Agreement;
NOW, THEREFORE
, in consideration of the foregoing and of the representations, warranties,
covenants, and agreements contained in this Agreement, the parties, intending
to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.01
The Merger.
On the terms and subject to the conditions set forth in this Agreement, and in
accordance with the DGCL, at the Effective Time: (a) Merger Sub will merge
with and into the Company (the "
Merger
"); (b) the separate corporate existence of Merger Sub will cease; and (c) the
Company will continue its corporate existence under the DGCL as the surviving
corporation in the Merger and a wholly owned Subsidiary of Parent (sometimes
referred to herein as the "
Surviving Corporation
").
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Section 1.02
Closing.
Upon the terms and subject to the conditions set forth herein, the closing of
the Merger (the "
Closing
") will take place at 12:01 AM, Central Standard Time, as soon as practicable
(and, in any event, within three (3) Business Days) after the satisfaction or,
to the extent permitted hereunder, waiver of the last to be satisfied or
waived of the conditions to the Merger set forth in
ARTICLE
VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or, to the extent permitted
hereunder, waiver of all such conditions), unless this Agreement has been
terminated pursuant to its terms or unless another time or date is agreed to
in writing by the parties hereto. The Closing shall take place remotely by
exchange of documents and signatures (or their electronic counterparts),
unless another place is agreed to in writing by the parties hereto. The actual
date of the Closing is hereinafter referred to as the "
Closing Date
."
Section 1.03
Effective Time.
Subject to the provisions of this Agreement, at the Closing, the Company,
Parent, and Merger Sub will cause a certificate of merger (the "
Certificate of Merger
") to be executed, acknowledged, and filed with the Secretary of State of the
State of Delaware in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
will become effective at such time as the Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware or at such later
date or time as may be agreed by the Company and Parent in writing and
specified in the Certificate of Merger in accordance with the DGCL (the
effective time of the Merger being hereinafter referred to as the "
Effective Time
").
Section 1.04
Effects of the Merger.
The Merger shall have the effects set forth in this Agreement and in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, from and after the Effective Time, all
property, rights, privileges, immunities, powers, franchises, licenses, and
authority of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, and duties
of each of the Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions, and duties of the Surviving Corporation.
Section 1.05
Certificate of Incorporation; Bylaws.
At the Effective Time: (a) the certificate of incorporation of the Surviving
Corporation shall be amended and restated to read in its entirety as set forth
in
Exhibit A
, and, as so amended and restated, shall be the certificate of incorporation
of the Surviving Corporation until, subject to
Section 5.07(a)
, thereafter amended in accordance with the terms thereof and applicable Law;
and (b) the bylaws of Merger Sub as in effect immediately prior to the
Effective Time, as set forth in
Exhibit B
, shall be the bylaws of the Surviving Corporation, except that references to
Merger Sub's name shall be replaced with references to the Surviving
Corporation's name, until, subject to
Section 5.07(a)
, thereafter amended in accordance with the terms thereof, the certificate of
incorporation of the Surviving Corporation, and applicable Law.
Section 1.06
Directors and Officers.
The directors and officers of Merger Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their respective successors
have been duly elected or appointed and qualified or until their earlier
death, resignation, or removal in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation.
2
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ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; PAYMENT FOR SHARES
Section 2.01
Effect of the Merger on Capital Stock.
At the Effective Time, as a result of the Merger and without any action on the
part of Parent, Merger Sub, or the Company or the holder of any capital stock
of Parent, Merger Sub, or the Company:
(a)
Cancellation of Certain Company Common Stock
. Each share of Company Common Stock that is owned by the Company (as treasury
stock or otherwise) or held directly by Parent or Merger Sub, or any direct or
indirect wholly owned Subsidiaries of the Company, Parent or Merger Sub, as of
immediately prior to the Effective Time ("
Cancelled Shares
") will automatically be cancelled and retired and will cease to exist, and no
consideration will be delivered in exchange therefor.
(b)
Conversion of Company Common Stock
. Each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time (other than Cancelled Shares and Dissenting Shares) will
be converted into the right to receive $2.50 in cash, without interest (the "
Merger Consideration
").
(c)
Cancellation of Shares
. At the Effective Time, all shares of Company Common Stock will no longer be
outstanding and all shares of Company Common Stock will be cancelled and
retired and will cease to exist, and, subject to
Section 2.01(a)
and
Section 2.03
, each holder of: (i) a certificate formerly representing any shares of
Company Common Stock (each, a "
Certificate
"); or (ii) any book-entry shares which immediately prior to the Effective
Time represented shares of Company Common Stock (each, a "
Book-Entry Share
") will, subject to applicable Law in the case of Dissenting Shares, cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration in accordance with
Section 2.02
hereof.
(d)
Conversion of Merger Sub Capital Stock
. Each share of common stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into and become one newly issued, fully paid, and non-assessable share of
common stock, par value $0.01 per share, of the Surviving Corporation with the
same rights, powers, and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation. From and after the Effective Time, all certificates representing
shares of Merger Sub common stock shall be deemed for all purposes to
represent the number of shares of common stock of the Surviving Corporation
into which they were converted in accordance with the immediately preceding
sentence.
3
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Section 2.02
Surrender and Payment.
(a)
Paying Agent; Payment Fund
. Prior to the Effective Time, Parent shall appoint a paying agent (the "
Paying Agent
") (the identity of which shall be reasonably acceptable to the Company) to
act as the agent for the purpose of paying the Merger Consideration for: (i)
the Certificates; and (ii) the Book-Entry Shares. At or promptly following the
Effective Time, Parent shall deposit, or cause the Surviving Corporation to
deposit, with the Paying Agent, sufficient funds to pay the aggregate Merger
Consideration that is payable in respect of all of the shares of Company
Common Stock represented by the Certificates and the Book-Entry Shares (other
than Cancelled Shares and Dissenting Shares) (the "
Payment Fund
") in amounts and at the times necessary for such payments. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of shares shall be entitled under
Section 2.01(b)
, Parent shall take all steps necessary to enable or cause the Surviving
Corporation to promptly deposit, in trust, additional cash with the Paying
Agent sufficient to make all payments required under this Agreement. The
Payment Fund shall not be used for any other purpose. Parent shall pay or
cause to be paid all fees, charges and expenses, including those of the Paying
Agent, in connection with the exchange of shares of Company Common Stock for
the Merger Consideration. Promptly after the Effective Time, Parent shall
send, or shall cause the Paying Agent to send, to each record holder of shares
of Company Common Stock at the Effective Time, whose Company Common Stock was
converted pursuant to
Section 2.01(b)
into the right to receive the Merger Consideration, a letter of transmittal
and instructions (which shall specify that the delivery shall be effected, and
risk of loss and title shall pass, only upon proper delivery of the
Certificates or transfer of the Book-Entry Shares to the Paying Agent, and
which letter of transmittal will be in customary form and have such other
provisions as Parent and the Surviving Corporation may reasonably specify) for
use in such exchange.
(b)
Procedures for Surrender; No Interest
. Each holder of shares of Company Common Stock that have been converted into
the right to receive the Merger Consideration shall be entitled to receive the
Merger Consideration in respect of the Company Common Stock represented by a
Certificate or Book-Entry Share upon: (i) surrender to the Paying Agent of a
Certificate (or affidavit of loss in lieu of the Certificate as provided in
Section 2.06
), together with a duly completed and validly executed letter of transmittal
and such other documents as may reasonably be requested by the Paying Agent;
or (ii) receipt of an "agent's message" by the Paying Agent (or such other
evidence, if any, of transfer as the Paying Agent may reasonably request) in
the case of Book-Entry Shares. Until so surrendered or transferred, as the
case may be, and subject to the terms set forth in
Section 2.03
, each such Certificate or Book-Entry Share, as applicable, shall represent
after the Effective Time for all purposes only the right to receive the Merger
Consideration payable in respect thereof. No interest shall be paid or accrued
on the cash payable upon the surrender or transfer of any Certificate or
Book-Entry Share. Upon payment of the Merger Consideration pursuant to the
provisions of this
ARTICLE II
, each Certificate or Certificates or Book-Entry Share or Book-Entry Shares so
surrendered or transferred, as the case may be, shall immediately be cancelled.
(c)
Investment of Payment Fund
. Until disbursed in accordance with the terms and conditions of this
Agreement, the cash in the Payment Fund will be invested by the Paying Agent,
as directed by Parent or the Surviving Corporation. No losses with respect to
any investments of the Payment Fund will affect the amounts payable to the
holders of Certificates or Book-Entry Shares. Any income from investment of
the Payment Fund will be payable to Parent or the Surviving Corporation, as
Parent directs.
4
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(d)
Payments to Non-Registered Holders
. If any portion of the Merger Consideration is to be paid to a Person other
than the Person in whose name the surrendered Certificate or the transferred
Book-Entry Share, as applicable, is registered, it shall be a condition to
such payment that: (i) such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer or such Book-Entry Share shall be
properly transferred; and (ii) the Person requesting such payment shall pay to
the Paying Agent any transfer or other Tax required as a result of such
payment to a Person other than the registered holder of such Certificate or
Book-Entry Share, as applicable, or establish to the reasonable satisfaction
of the Paying Agent that such Tax has been paid or is not payable.
(e)
Full Satisfaction
. All Merger Consideration paid upon the surrender of Certificates or transfer
of Book-Entry Shares in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock formerly represented by such Certificate or Book-Entry
Shares, and from and after the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock on the stock
transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates or Book-Entry Shares are presented to the Surviving Corporation,
they shall be cancelled and exchanged for the Merger Consideration provided
for, and in accordance with the procedures set forth, in this
ARTICLE II
.
(f)
Termination of Payment Fund
. Any portion of the Payment Fund that remains unclaimed by the holders of
shares of Company Common Stock twelve (12) months after the Effective Time
shall be returned to the Surviving Corporation (or, at the option of Parent,
to Parent), upon demand, and any such holder who has not exchanged shares of
Company Common Stock for the Merger Consideration in accordance with this
Section 2.02
prior to that time shall thereafter look only to the Surviving Corporation or
Parent, as applicable (subject to abandoned property, escheat, or other
similar Laws), for payment of the Merger Consideration without any interest.
Notwithstanding the foregoing, neither the Surviving Corporation nor Parent
shall be liable to any holder of shares of Company Common Stock for any
amounts paid to a public official pursuant to applicable abandoned property,
escheat, or similar Laws. Any amounts remaining unclaimed by holders of shares
of Company Common Stock two (2) 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 the Surviving Corporation
(or, at the option of Parent, of Parent) free and clear of any claims or
interest of any Person previously entitled thereto.
(g)
Dissenting Shares Merger Consideration
. Any portion of the Merger Consideration made available to the Paying Agent
in respect of any Dissenting Shares shall be returned to Parent, upon demand.
5
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Section 2.03
Dissenting Shares.
Notwithstanding any provision of this Agreement to the contrary, including
Section 2.01
, shares of Company Common Stock issued and outstanding immediately prior to
the Effective Time (other than Cancelled Shares) and held by a holder who has
not voted in favor of adoption of this Agreement or consented thereto in
writing and who is entitled to demand and has properly exercised appraisal
rights of such shares in accordance with Section 262 of the DGCL (such shares
of Company Common Stock being referred to collectively as the "
Dissenting Shares
" until such time as such holder fails to perfect or otherwise waives,
withdraws, or loses such holder's appraisal rights under the DGCL with respect
to such shares) shall not be converted into a right to receive the Merger
Consideration, but instead shall be entitled to only such rights as are
granted by Section 262 of the DGCL;
provided, however
, that if, after the Effective Time, such holder fails to perfect, waives,
withdraws, or loses such holder's right to appraisal pursuant to Section 262
of the DGCL or if a court of competent jurisdiction shall determine that such
holder is not entitled to the relief provided by Section 262 of the DGCL, such
shares of Company Common Stock shall be treated as if they had been converted
as of the Effective Time into the right to receive the Merger Consideration in
accordance with
Section 2.01(b)
, without interest thereon, upon surrender of such Certificate formerly
representing such share or transfer of such Book-Entry Share, as the case may
be. At the Effective Time, any holder of Dissenting Shares shall cease to have
any rights with respect thereto other than such rights as are provided to
holders of Dissenting Shares pursuant to Section 262 of the DGCL. The Company
shall provide Parent prompt written notice of any demands received by the
Company for appraisal of shares of Company Common Stock, any waiver or
withdrawal of any such demand, and any other demand, notice, or instrument
delivered to the Company prior to the Effective Time that relates to such
demand, and Parent shall have the opportunity and right, at Parent's sole cost
and expense, to direct all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall
not make any payment with respect to, or settle, or offer to settle, any such
demands.
Section 2.04
Adjustments.
Without limiting the other provisions of this Agreement, if at any time 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,
including by reason of any reclassification, recapitalization, stock split
(including a reverse stock split), or combination, exchange, readjustment of
shares, or similar transaction, or any stock dividend or distribution paid in
stock, the Merger Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted to reflect such change;
provided, however
, that this sentence shall not be construed to permit the Company to take any
action with respect to its securities that is prohibited by the terms of this
Agreement.
Section 2.05
Withholding Rights.
Each of the Paying Agent, Parent, Merger Sub, and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this
ARTICLE II
such amounts as may be required to be deducted and withheld with respect to
the making of such payment under any Tax Laws or any other provision of
applicable Law. To the extent that amounts are so deducted and withheld by the
Paying Agent, Parent, Merger Sub, or the Surviving Corporation, as the case
may be, such amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of which the Paying Agent, Parent,
Merger Sub, or the Surviving Corporation, as the case may be, made such
deduction and withholding. In the event that Parent determines that any such
deduction or withholding is applicable other than with regard to payments
disclosed in
Section 2.07
, (a) Parent shall use commercially reasonable efforts to notify the Company
prior to the date on which such deduction or withholding is anticipated to
occur, and (b) Parent and the Company shall reasonably cooperate to minimize
or eliminate such deduction or withholding as permitted by applicable Law.
6
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Section 2.06
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 have
been lost, stolen, or destroyed and, if required by Parent, the posting by
such Person of a bond, in such reasonable amount as Parent may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue, in exchange for such lost, stolen,
or destroyed Certificate, the Merger Consideration to be paid in respect of
the shares of Company Common Stock formerly represented by such Certificate as
contemplated under this
ARTICLE II
.
Section 2.07
Treatment of Stock Options and Other Stock-Based Compensation.
(a)
Company Stock Options
. The Company shall take all requisite action so that, at the Effective Time,
each option to acquire shares of Company Common Stock (each, a "
Company Stock Option
") that is outstanding immediately prior to the Effective Time, whether or not
then vested or exercisable, shall be, by virtue of the Merger and without any
action on the part of the holder thereof, cancelled and converted into the
right to receive from the Surviving Corporation, as promptly as reasonably
practicable after the Effective Time, an amount in cash, without interest,
equal to the product of: (i) the aggregate number of shares of Company Common
Stock subject to such Company Stock Option; multiplied by (ii) the excess, if
any, of the Merger Consideration over the per share exercise price under such
Company Stock Option, less any Taxes required to be withheld with respect to
such Company Stock Options in accordance with
Section 2.05
. For the avoidance of doubt, in the event that the per share exercise price
under any Company Stock Option is equal to or greater than the Merger
Consideration, such Company Stock Option shall be cancelled as of the
Effective Time without payment therefor and shall have no further force or
effect.
(b)
Company Restricted Stock Units
. The Company shall take all requisite action so that, at the Effective Time,
each restricted stock unit granted with respect to Company Common Stock (a "
Company RSU
") that is outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
vest in full and shall be cancelled and converted automatically, in accordance
with the procedures set forth in this Agreement, into the right to receive
from the Surviving Corporation, as promptly as reasonably practicable after
the Effective Time, an amount in cash, without interest, equal to the product
of: (i) the total number of shares of Company Common Stock underlying such
Company RSUs; multiplied by (ii) the Merger Consideration, less any Taxes
required to be withheld with respect to such Company RSUs in accordance with
Section 2.05
.
7
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(c)
Company Phantom Stock Units
. The Company shall take all requisite action so that, at the Effective Time,
each phantom stock unit representing the right to receive a cash payment equal
to the value of a share of Company Common Stock (a "
Company Phantom Stock Unit
") that is outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
vest in full and shall be cancelled and converted automatically, in accordance
with the procedures set forth in this Agreement, into the right to receive
from the Surviving Corporation, as promptly as reasonably practicable after
the Effective Time (but in no event more than five (5) Business Days after the
Effective Time), an amount in cash, without interest, equal to the product of:
(i) the total number of shares of Company Common Stock underlying such Company
Phantom Stock Units; multiplied by (ii) the Merger Consideration, less any
Taxes required to be withheld with respect to such Company Phantom Stock Unit
in accordance with
Section 2.05
.
(d)
Payment by Surviving Corporation
. The Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, pay to the holders of Company Stock Options, Company RSUs
and/or Company Phantom Stock Units, as applicable, the amounts described in
paragraphs (a), (b) and (c) of this
Section 2.07
, less any Taxes required to be withheld under applicable Law with respect to
such payments, as soon as practicable following the Effective Time, through
the Surviving Corporation's payroll system no later than the next regularly
scheduled payroll payment date.
(e)
Resolutions and Other Company Actions
. At or prior to the Effective Time, the Company, the Company Board (or, if
appropriate, any committee thereof), as applicable, shall adopt any
resolutions and take any actions (including obtaining any required consents)
that may be reasonably necessary to effectuate the provisions of paragraphs
(a), (b) and (c) of this
Section 2.07
.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as set forth in the correspondingly numbered Section of the
disclosure schedule, dated as of the date of this Agreement and delivered by
the Company to Parent concurrently with the execution of this Agreement (the "
Company Disclosure Schedule
");
provided, that,
disclosure in the Company Disclosure Schedule as to a specific representation
or warranty shall qualify any other representation or warranty contained in
this
Article III
to the extent provided in
Section 8.09
, and (b) as otherwise disclosed in the Company SEC Documents filed or
furnished with the SEC on or after January 1, 2022 and prior to the date
hereof (excluding (i) disclosures contained in the "Risk Factors" section of
any such Company SEC Document); (ii) any "forward-looking statements," as
defined under the caption "Note on Forward-Looking Statements" in the
Company's Form 10-K for the year ended December 31, 2023, contained in any
such Company SEC Document; and (iii) disclosures relating to the industry in
which the Company operates, laws and regulations affecting the industry,
general market or economic conditions);
provided, that
, such disclosure (x) describes a specific matter in reasonable detail and it is
reasonably apparent on the face of such disclosure so as to enable a
reasonable person to determine that such disclosure qualifies or is otherwise
applicable to a specific representation or warranty contained in this
Article III
, and (y) shall not be deemed to qualify any representations or warranties
contained in
Section 3.01(a)
,
Section 3.02(d)
,
Section 3.03(a)
,
Section 3.03(d)
,
Section 3.03(e)
,
Section 3.05(a)
, or
Section 3.10
; the Company hereby represents and warrants to Parent and Merger Sub as
follows:
8
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Section 3.01
Organization; Standing and Power; Charter Documents; Subsidiaries.
(a)
Organization; Standing and Power
. (i) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware. (ii) Each of the Company's
wholly-owned Subsidiaries is a corporation, limited liability company, or
other legal entity duly organized, validly existing, and in good standing (to
the extent that the concept of "good standing" is applicable in the case of
any jurisdiction outside the United States) under the Laws of its jurisdiction
of organization. (iii) The Company and each of its Subsidiaries has the
requisite corporate, limited liability company, or other organizational, as
applicable, power and authority to own, lease, and operate its assets and to
carry on its business as now conducted, except, in the case of the Company's
Subsidiaries (that are not wholly owned Subsidiaries), as does not,
individually or in the aggregate, constitute a Company Material Adverse
Effect. (iv) Each of the Company and its Subsidiaries is duly qualified or
licensed to do business as a foreign corporation, limited liability company,
or other legal entity and is in good standing (to the extent that the concept
of "good standing" is applicable in the case of any jurisdiction outside the
United States) in each jurisdiction where the character of the assets and
properties owned, leased, or operated by it or the nature of its business
makes such qualification or license necessary, except where the failure to be
so qualified or licensed or to be in good standing, individually or in the
aggregate, does not constitute a Company Material Adverse Effect.
(b)
Charter Documents
. The Company has delivered or made available to Parent a true and correct
copy of the certificate of incorporation (including any certificate of
designations), bylaws, or like organizational documents, each as amended to
date (collectively, the "
Charter Documents
"), of the Company and each of its Subsidiaries. Neither the Company nor any
of its Subsidiaries is in violation of any of the provisions of its Charter
Documents.
(c)
Subsidiaries
.
Section 3.01(c)(i)
of the Company Disclosure Schedule lists each of the Subsidiaries of the
Company as of the date hereof and its jurisdiction of organization.
Section 3.01(c)(ii)
of the Company Disclosure Schedule sets forth, for each Subsidiary that is
not, directly or indirectly, wholly owned by the Company: (i) the number and
type of any capital stock of, or other equity or voting interests in, such
Subsidiary that is outstanding as of the date hereof; and (ii) a list of all
holders of such shares of capital stock or other equity or voting interests in
such Subsidiary, specifying the number of such shares or interests owned,
beneficially and of record, by each such holder. All of the outstanding shares
of capital stock of, or other equity or voting interests in, each Subsidiary
of the Company that is owned directly or indirectly by the Company have been
validly issued, were issued free of pre-emptive rights, are fully paid and
non-assessable, and are free and clear of all Liens, including any restriction
on the right to vote, sell, or otherwise dispose of such capital stock or
other equity or voting interests, except for any Liens: (A) imposed by
applicable securities Laws; or (B) arising pursuant to the Charter Documents
of any non-wholly owned Subsidiary of the Company. Except for the capital
stock of, or other equity or voting interests in, its Subsidiaries, the
Company does not own, directly or indirectly, any capital stock of, or other
equity or voting interests in, any Person.
9
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Section 3.02
Capital Structure.
(a)
Capital Stock
. The authorized capital stock of the Company consists of: (i) 47,000,000
shares of Company Common Stock; and (ii) 3,000,000 shares of preferred stock,
par value $0.01, 2,000,000 of which are designated as Series B Preferred
Stock, par value of $0.01 per share, of the Company (collectively, the "
Company Preferred Stock
"). As of the close of business on the date of this Agreement: (A) 23,446,186
shares of Company Common Stock were issued and outstanding (not including
shares held in treasury); (B) 1,205,485 shares of Company Common Stock were
issued and held by the Company in its treasury; and (C) no shares of Company
Preferred Stock were issued and outstanding or held by the Company in its
treasury; and since August 14, 2024 and through the date hereof, no additional
shares of Company Common Stock or shares of Company Preferred Stock have been
issued other than the issuance of shares of Company Common Stock upon the
exercise or settlement of Company Equity Awards. All of the outstanding shares
of capital stock of the Company are duly authorized and validly issued and are
fully paid and non-assessable, and not subject to any pre-emptive rights. No
Subsidiary of the Company owns any shares of Company Common Stock.
(b)
Stock Awards
.
(i) As of the close of business on the date of this Agreement, an aggregate
of 0 shares of Company Common Stock were reserved for issuance pursuant to
Company Equity Awards not yet granted under the Company Stock Plans. As of the
close of business on the date of this Agreement, 882,250 shares of Company
Common Stock were reserved for issuance pursuant to outstanding Company Stock
Options, 57,143 Company RSUs (each of which relates to one share of Company
Common Stock) were issued and outstanding, and 474,747 Company Phantom Stock
Units (each of which relates to one share of Company Common Stock) were issued
and outstanding. Since August 14, 2024 and through the date hereof, no Company
Equity Awards have been granted and no additional shares of Company Common
Stock have become subject to issuance under the Company Stock Plans.
Section 3.02(b)(i)
of the Company Disclosure Schedule sets forth as of the date of this Agreement
a list of each outstanding Company Equity Award granted under the Company
Stock Plans and: (A) the name of the holder of such Company Equity Award; (B)
the number of shares of Company Common Stock subject or related to such
outstanding Company Equity Award; (C) if applicable, the exercise price,
purchase price, or similar pricing of such Company Equity Award; (D) the date
on which such Company Equity Award was granted or issued; (E) the applicable
vesting, repurchase, or other lapse of restrictions schedule, and the extent
to which such Company Equity Award is vested and exercisable as of the date
hereof; and (F) with respect to Company Stock Options, the date on which such
Company Stock Option expires. All shares of Company Common Stock subject to
issuance under the Company Stock Plans, upon issuance in accordance with the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, and
non-assessable.
10
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(ii) Except for the Company Stock Plans and as set forth in
Section
3.02(b)(ii)
of the Company Disclosure Schedule, there are no Contracts to which the
Company is a party obligating the Company to accelerate the vesting of any
Company Equity Award as a result of the transactions contemplated by this
Agreement (whether alone or upon the occurrence of any additional or
subsequent events). Other than the Company Equity Awards, as of the date
hereof, there are no outstanding: (A) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for Voting Debt or shares of
capital stock of the Company; (B) options, warrants, or other agreements or
commitments to acquire from the Company or any of its Subsidiaries, or
obligations of the Company or any of its Subsidiaries to issue, any Voting
Debt or shares of capital stock of (or securities convertible into or
exchangeable for shares of capital stock of) the Company; or (C) restricted
shares, restricted stock units, stock appreciation rights, performance shares,
profit participation rights, 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 shares
of capital stock of the Company, in each case that have been issued by the
Company or its Subsidiaries (the items in clauses (A), (B), and (C), together
with the capital stock of the Company, being referred to collectively as "
Company Securities
"). All outstanding shares of Company Common Stock, all outstanding Company
Equity Awards, and all outstanding shares of capital stock, voting securities,
or other ownership interests in any Subsidiary of the Company, have been
issued or granted, as applicable, in compliance with all applicable securities
Laws.
(iii) There are no outstanding Contracts requiring the Company or any of
its Subsidiaries to repurchase, redeem, or otherwise acquire any Company
Securities or Company Subsidiary Securities. Neither the Company nor any of
its Subsidiaries is a party to any voting agreement with respect to any
Company Securities or Company Subsidiary Securities.
(c)
Voting Debt
. No bonds, debentures, notes, or other indebtedness issued by the Company or
any of its Subsidiaries: (i) having the right to vote on any matters on which
stockholders or equityholders of the Company or any of its Subsidiaries may
vote (or which is convertible into, or exchangeable for, securities having
such right); or (ii) the value of which is directly based upon or derived from
the capital stock, voting securities, or other ownership interests of the
Company or any of its Subsidiaries, are issued or outstanding (collectively, "
Voting Debt
").
11
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(d)
Company Subsidiary Securities
. As of the date hereof, there are no outstanding: (i) securities of the
Company or any of its Subsidiaries convertible into or exchangeable for Voting
Debt, capital stock, voting securities, or other ownership interests in any
Subsidiary of the Company; (ii) options, warrants, or other agreements or
commitments to acquire from the Company or any of its Subsidiaries, or
obligations of the Company or any of its Subsidiaries to issue, any Voting
Debt, capital stock, voting securities, or other ownership interests in (or
securities convertible into or exchangeable for capital stock, voting
securities, or other ownership interests in) any Subsidiary of the Company; or
(iii) restricted shares, restricted stock units, stock appreciation rights,
performance shares, profit participation rights, 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 or voting securities of, or other ownership interests
in, any Subsidiary of the Company, in each case that have been issued by a
Subsidiary of the Company (the items in clauses (i), (ii), and (iii), together
with the capital stock, voting securities, or other ownership interests of
such Subsidiaries, being referred to collectively as "
Company Subsidiary Securities
").
Section 3.03
Authority; Non-Contravention; Governmental Consents; Board Approval;
Anti-Takeover Statutes.
(a)
Authority
. The Company has all requisite corporate power and authority to enter into
and to perform its obligations under this Agreement and, subject to, in the
case of the consummation of the Merger, adoption of this Agreement by the
affirmative vote or consent of the holders of a majority of the outstanding
shares of Company Common Stock (the "
Requisite Company Vote
"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby, and the execution and
delivery of the Voting Agreement and the consummation by the Principal
Stockholder of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or the Voting Agreement
or the consummation of the Merger and the other transactions contemplated
hereby and thereby, subject only, in the case of consummation of the Merger,
to the receipt of the Requisite Company Vote. The Requisite Company Vote is
the only vote or consent of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement, approve
the Merger, and consummate the Merger and the other transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company
and, assuming due execution and delivery by Parent and Merger Sub, constitutes
the legal, valid, and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and other similar Laws affecting
creditors' rights generally and by general principles of equity.
12
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(b)
Non-Contravention
. The execution, delivery, and performance of this Agreement by the Company,
and the consummation by the Company of the transactions contemplated by this
Agreement, including the Merger, and of the transactions contemplated by the
Voting Agreement by the Principal Stockholder, do not and will not: (i)
subject to obtaining the Requisite Company Vote, contravene or conflict with,
or result in any violation or breach of, (A) the Charter Documents of the
Company or any of its Subsidiaries or (B) any resolution adopted by the
Company Board or any committee thereof, the stockholders of the Company or the
board of directors or stockholders any of its Subsidiaries; (ii) assuming that
all Consents contemplated by clauses (i) through (vi) of
Section 3.03(c)
have been obtained or made and, in the case of the consummation of the Merger,
obtaining the Requisite Company Vote, contravene or conflict with or result in
any violation of any Law, or give any Governmental Entity (in its capacity as
a Governmental Entity, and not as a stockholder of the Company or any of its
Subsidiaries) the right to prevent the consummation of the Merger under any
Law applicable to the Company, any of its Subsidiaries, or any of their
respective properties or assets, (iii) contravene or conflict with or result
in any violation of any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Permit that is held by the Company or any of its Subsidiaries,
or that otherwise relates to the business of, or any of the assets owned or
used by, the Company or any of its Subsidiaries; (iv) cause the Company or any
of its Subsidiaries to become subject to, or to become liable for the payment
of, any Tax; (v) cause any of the assets owned by the Company or any of its
Subsidiaries to be reassessed or revalued by any taxing authority or other
Governmental Entity; or (vi) result in the creation of a Lien on any of the
properties or assets of the Company or any of its Subsidiaries, except, in the
case of each of clauses (ii), (iii), (iv), (v) and (vi), for any contraventions,
conflicts, violations, breaches, defaults, loss of benefits, additional
payments or other liabilities, alterations, terminations, amendments,
modifications, accelerations, cancellations, revocations, suspensions,
withdrawals or Liens that, or where the failure to obtain any Consents, in
each case, individually or in the aggregate, does not constitute a Company
Material Adverse Effect.
(c)
Consents
. No consent, approval, license, permission, order, or authorization of, or
registration, declaration, or filing with, or notice to (any of the foregoing
being a "
Consent
"), any Governmental Entity or other Person is required to be obtained or made
by the Company in connection with the execution, delivery, and performance by
the Company of this Agreement or the consummation by the Company of the Merger
and other transactions contemplated hereby, except for: (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(ii) the filing of the Company Proxy Statement in definitive form with the
Securities and Exchange Commission ("
SEC
") in accordance with the Securities Exchange Act of 1934, as amended (the "
Exchange Act
"), and such reports under the Exchange Act as may be required in connection
with this Agreement, the Merger, and the other transactions contemplated by
this Agreement; (iii) such Consents as may be required under any Antitrust
Laws that are applicable to the transactions contemplated by this Agreement;
(iv) such Consents as may be required under applicable state securities or
"blue sky" Laws and the securities Laws of any foreign country or the rules
and regulations of the Nasdaq National Market (the
"
Nasdaq
"); (v) the other Consents of Governmental Entities listed in
Section 3.03(c)(v)
of the Company Disclosure Schedule (the "
Other Governmental Approvals
"); (vi) the other Consents of third parties (other than Governmental
Entities) listed in
Section 3.03(c)(vi)
of the Company Disclosure Schedule, and (vii) such other Consents where
failure to obtain such Consent, individually or in the aggregate, does not
constitute a Company Material Adverse Effect.
13
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(d)
Board Approval
. The Company Board, by resolutions duly adopted by a unanimous vote at a
meeting of all directors of the Company duly called and held and not
subsequently rescinded or modified in any way, has: (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, upon
the terms and subject to the conditions set forth herein, are fair to, and in
the best interests of, the Company and the Company's stockholders; (ii)
approved and declared advisable this Agreement, and the Voting Agreement,
including the execution, delivery, and performance hereof and thereof, and the
consummation of the transactions contemplated hereby, including the Merger,
and thereby upon the terms and subject to the conditions set forth herein and
therein; (iii) directed that this Agreement be submitted to a vote of the
Company's stockholders for adoption at the Company Stockholders Meeting; and
(iv) resolved to recommend that Company stockholders vote in favor of adoption
of this Agreement in accordance with the DGCL (collectively, the "
Company Board Recommendation
").
(e)
Anti-Takeover Statutes
. Except for Section 203 of the DGCL, no "fair price," "moratorium," "control
share acquisition," "supermajority," "affiliate transactions," "business
combination," or other similar anti-takeover statute or regulation enacted
under any federal, state, local, or foreign laws applicable to the Company is
applicable to this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement. The Company Board has taken all actions
(including approval of the Voting Agreement) so that the restrictions
contained in Section 203 of the DGCL applicable to a "business combination"
(as defined in such Section 203) will not apply to Parent or Merger Sub or
with respect to or as a result of the execution, delivery, or performance of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement.
Section 3.04
SEC Filings; Financial Statements; Sarbanes-Oxley Act Compliance; Undisclosed
Liabilities; Off-Balance Sheet Arrangements.
(a)
SEC Filings
. The Company has filed with or furnished to, as applicable, the SEC all
registration statements, prospectuses, reports, schedules, forms, statements,
and other documents (including exhibits and schedules thereto and all other
information incorporated by reference) required to be filed or furnished by it
with the SEC since January 1, 2021 (the "
Company SEC Documents
"). True, correct, and complete copies of all Company SEC Documents are
publicly available in the Electronic Data Gathering, Analysis, and Retrieval
database of the SEC ("
EDGAR
"). To the extent that any Company SEC Document available on EDGAR contains
redactions pursuant to a request for confidential treatment or otherwise, the
Company has made available to Parent the full text of such Company SEC
Document. As of their respective filing dates or, if amended or superseded by
a subsequent filing prior to the date hereof, as of the date of the last such
amendment or superseding filing (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of the
relevant meetings, respectively), each of the Company SEC Documents materially
complied as to form with the applicable requirements of the Securities Act of
1933, as amended (the "
Securities Act
"), the Exchange Act, and the Sarbanes-Oxley Act of 2002 (including the rules
and regulations promulgated thereunder, the "
Sarbanes-Oxley Act
"), and the rules and regulations of the SEC thereunder applicable to such
Company SEC Documents. None of the Company SEC Documents, including any
financial statements, schedules, or exhibits included or incorporated by
reference therein at the time they were filed (or, if amended or superseded by
a subsequent filing prior to the date hereof, as of the date of the last such
amendment or superseding filing), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the Company
SEC Documents is the subject of ongoing SEC review or outstanding SEC
investigation and there are no outstanding or unresolved comments received
from the SEC with respect to any of the Company SEC Documents. None of the
Company's Subsidiaries are required to file or furnish any forms, reports, or
other documents with the SEC and neither the Company nor any of its
Subsidiaries is required to file or furnish any forms, reports, or other
documents with any securities regulation (or similar) regime of a non-United
States Governmental Entity.
14
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(b)
Financial Statements
. Each of the financial statements (including, in each case, any notes and
schedules thereto) contained in or incorporated by reference into the Company
SEC Documents: (i) materially complied with the published rules and
regulations of the SEC with respect thereto as of their respective dates; (ii)
was prepared in accordance with United States generally accepted accounting
principles ("
GAAP
") applied on a consistent basis throughout the periods involved (except as
may be disclosed in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC); and (iii) fairly present, in all
material respects, the consolidated financial position and the results of
operations and cash flows of the Company and its consolidated Subsidiaries as
of the respective dates of and for the periods referred to in such financial
statements, subject, in the case of unaudited interim financial statements, to
(A) the omission of notes to the extent permitted by SEC Regulation S-X (but
only if, in the case of interim financial statements included in the Company
SEC Documents since the Company's most recent annual report on Form 10-K, such
notes would not differ materially from the notes to the financial statements
included in such annual report) and (B) to normal year-end audit adjustments
as permitted by the applicable rules and regulations of the SEC (but only if
the effect of such adjustments would not, individually or in the aggregate, be
material). No financial statements of any Person other than the Subsidiaries
of the Company are, or since January 1, 2021, have been, required by GAAP to
be included in the consolidated financial statements of the Company.
(c)
Internal Controls
. The Company and each of its Subsidiaries has established and maintains a
system of "internal controls over financial reporting" (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) that is sufficient to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP, including policies and procedures that: (i) require the maintenance of
records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the Company and its
Subsidiaries; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
GAAP and that receipts and expenditures of the Company and its Subsidiaries
are being made only in accordance with appropriate authorizations of the
Company's management and the Company Board; and (iii) provide assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the assets of the Company and its Subsidiaries.
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(d)
Disclosure Controls and Procedures
. The Company's "disclosure controls and procedures" (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) are designed to ensure that all
material information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files with or furnishes to the
SEC under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the rules and forms of the SEC, and that
all such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the chief executive officer and
chief financial officer of the Company required under the Exchange Act with
respect to such reports. Neither the Company nor the Company's independent
registered public accounting firm has identified or been made aware of: (i)
any significant deficiency or material weakness in the system of internal
control over financial reporting utilized by the Company and its Subsidiaries
that has not been subsequently remediated; or (ii) any fraud that involves the
Company's management or other employees who have a role in the preparation of
financial statements or the internal control over financial reporting utilized
by the Company and its Subsidiaries.
(e)
Undisclosed Liabilities
. The audited balance sheet of the Company dated as of December 31, 2023
contained in the Company SEC Documents filed prior to the date hereof is
hereinafter referred to as the "
Company Balance Sheet
." Neither the Company nor any of its Subsidiaries has any Liabilities that
are required to be reflected on a balance sheet prepared in accordance with
GAAP other than Liabilities that (i) are reflected or reserved against in the
Company Balance Sheet (including in the notes thereto); (ii) were incurred
since the date of the Company Balance Sheet in the ordinary course of business
consistent with past practice; or (iii) arise out of or in connection with
this Agreement, the Merger or other transaction contemplated by this Agreement
that, in the case of clauses (i) and (ii), individually or in the aggregate,
are not material.
(f)
Off-Balance Sheet Arrangements
. Except as described in the Company SEC Documents filed as of the date of
this Agreement, neither the Company nor any of its Subsidiaries is a party to,
or has any commitment to become a party to: (i) any joint venture, off-balance
sheet partnership, or any similar Contract or arrangement (including any
Contract or arrangement relating to any transaction or relationship between or
among the Company or any of its Subsidiaries, on the one hand, and any other
Person, including any structured finance, special purpose, or limited purpose
Person, on the other hand); or (ii) any "off-balance sheet arrangements" (as
defined in Item 2.03(d) of the SEC's Current Report on Form 8-K or as
described in Instruction 8 to Item 303(b) of Regulation S-K promulgated by the
SEC).
(g)
Sarbanes-Oxley and Nasdaq Compliance
. Each of the principal executive officer and the principal financial officer
of the Company (or each former principal executive officer and each former
principal financial officer of the Company, as applicable) has made all
certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the Company SEC
Documents, and each such certification complied with the applicable
requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley
Act and the rules and regulations of the SEC thereunder applicable to such
certifications, and the statements contained in such certifications are true
and accurate 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. Without limiting the
foregoing, the Company is, and since January 1, 2021, has been, in compliance
with all applicable provisions of the Sarbanes-Oxley Act and the applicable
listing and corporate governance rules of Nasdaq, and the Company has
delivered to Parent complete and correct copies of all correspondence between
Nasdaq and the Company and its Subsidiaries since such date.
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(h)
Accounting, Securities, or Other Related Complaints or Reports
. Since January 1, 2021, none of the Company or any of its Subsidiaries nor
any director or officer of the Company has received any material written
complaint, allegation, assertion, or claim regarding the financial accounting,
internal accounting controls, or auditing practices, procedures, methodologies,
or methods of the Company.
Section 3.05
Absence of Certain Changes or Events.
Since the date of the Company Balance Sheet, except in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, the business of the Company and each of its
Subsidiaries has been conducted in the ordinary course of business consistent
with past practice and there has not been or occurred:
(a) any Company Material Adverse Effect or any event, condition, change, or
effect that would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; or
(b) any event, condition, action, or effect that, if taken during the
period from the date of this Agreement through the Effective Time, would
require the consent of Parent under, or constitute a breach of,
Section 5.01
.
Section 3.06
Taxes.
(a)
Tax Returns and Payment of Taxes
. The Company and each of its Subsidiaries have duly and timely filed or
caused to be filed (and, as to Tax Returns not filed as of the date hereof,
will duly and timely file or caused to be file) all Tax Returns required to be
filed by them. Such Tax Returns are true, complete, and correct in all
material respects. Neither the Company nor any of its Subsidiaries is
currently the beneficiary of any extension of time within which to file any
Tax Return other than extensions of time to file Tax Returns obtained in the
ordinary course of business consistent with past practice. All Taxes due and
owing by the Company or any of its Subsidiaries (whether or not shown on any
Tax Return) have been timely paid or, where payment is not yet due, the
Company has made an adequate provision for such Taxes in the Company's
financial statements included in the Company SEC Documents (in accordance with
GAAP). The Company's most recent financial statements included in the Company
SEC Documents reflect an adequate reserve (in accordance with GAAP) for all
Taxes payable by the Company and its Subsidiaries through the date of such
financial statements. Neither the Company nor any of its Subsidiaries has
incurred any Liability for Taxes since the date of the Company's most recent
financial statements included in the Company SEC Documents outside of the
ordinary course of business or otherwise inconsistent with past practice.
17
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(b)
Availability of Tax Returns
. The Company has delivered or made available to Parent complete and accurate
copies of all federal, state, local, and foreign income, franchise, and other
material Tax Returns filed by or on behalf of the Company or its Subsidiaries
for any Tax period ending after January 1, 2020.
(c)
Withholding
. The Company and each of its Subsidiaries have withheld and timely paid each
Tax required to have been withheld and paid in connection with amounts paid or
owing to any Company Employee, creditor, customer, stockholder, or other party
(including, without limitation, withholding of Taxes pursuant to Sections 1441
and 1442 of the Code or similar provisions under any state, local, and foreign
Laws), and materially complied with all information reporting and backup
withholding provisions of applicable Law.
(d)
Liens
. There are no Liens for Taxes upon the assets of the Company or any of its
Subsidiaries other than for current Taxes not yet due and payable or for Taxes
that are being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been made in the
Company's most recent financial statements included in the Company SEC
Documents.
(e)
Tax Deficiencies and Audits
. No deficiency for any Taxes which has been proposed, asserted, or assessed
in writing by any taxing authority against the Company or any of its
Subsidiaries remains unpaid. There are no waivers or extensions of any statute
of limitations currently in effect with respect to Taxes of the Company or any
of its Subsidiaries. Except as set forth on
Section 3.06(e)
of the Company Disclosure Schedule, there are no audits, suits, proceedings,
investigations, claims, examinations, or other administrative or judicial
proceedings ongoing or pending with respect to any Taxes of the Company or any
of its Subsidiaries.
(f)
Tax Jurisdictions
. Since December 31, 2019, no claim has ever been made in writing by any
taxing authority in a jurisdiction where the Company and its Subsidiaries do
not file Tax Returns that the Company or any of its Subsidiaries is or may be
subject to Tax in that jurisdiction.
(g)
Tax Rulings
. Neither the Company nor any of its Subsidiaries has requested or is the
subject of or bound by any private letter ruling, technical advice memorandum,
or similar ruling or memorandum with any taxing authority with respect to any
Taxes, nor is any such request outstanding.
(h)
Consolidated Groups, Transferee Liability, and Tax Agreements
. Neither the Company nor any of its Subsidiaries: (i) has been a member of a
group filing Tax Returns on a consolidated, combined, unitary, or similar
basis; (ii) has any liability for Taxes of any Person (other than the Company
or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of local, state, or foreign Law), as a transferee or
successor; or (iii) is a party to, bound by, or has any liability under any
Tax sharing, allocation, or indemnification agreement or arrangement (other
than customary Tax indemnifications contained in credit or other commercial
agreements the primary purpose of which agreements does not relate to Taxes).
18
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(i)
Change in Accounting Method
. Neither the Company nor any of its Subsidiaries has agreed to make, nor is
it required to make, any adjustment under Section 481(a) of the Code or any
comparable provision of state, local, or foreign Tax Laws by reason of a
change in accounting method or otherwise.
(j)
Post-Closing Tax Items
. The Company and its Subsidiaries will not 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) "closing agreement" as described in Section 7121 of the Code (or
any corresponding or similar provision of state, local or foreign income Tax
Law) executed on or prior to the Closing Date; (ii) installment sale or open
transaction disposition made on or prior to the Closing Date; (iii) prepaid
amount received on or prior to the Closing Date; or (iv) any income under
Section 965(a) of the Code, including as a result of any election under
Section 965(h) of the Code with respect thereto.
(k)
Ownership Changes
. Without regard to the transactions contemplated by this Agreement, to the
Knowledge of the Company, neither the Company nor any of its Subsidiaries has
undergone an "ownership change" within the meaning of Section 382 of the Code.
(l)
Section 355
. Neither the Company nor any of its Subsidiaries has been a "distributing
corporation" or a "controlled corporation" in connection with a distribution
described in Section 355 of the Code.
(m)
Reportable Transactions
. Neither Company nor any of its Subsidiaries has been a party to, or an
advisor with respect to, a "reportable transaction" within the meaning of
Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).
Section 3.07
Intellectual Property.
(a)
Scheduled Company-Owned IP
.
Section 3.07(a)
of the Company Disclosure Schedule contains a true and complete list,
specifying as to each as applicable, the name of the current owners,
jurisdictions, and application or registration numbers, as of the date hereof,
of all: (i) Company-Owned IP that is the subject of any issuance,
registration, certificate, application, or other filing by, to or with any
Governmental Entity or authorized private registrar, including patents, patent
applications, trademark registrations and pending applications for
registration, copyright registrations and pending applications for
registration, and internet domain name registrations; and (ii) material
unregistered Company-Owned IP.
19
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(b)
Right to Use; Title
. The Company or one of its Subsidiaries is the sole and exclusive legal and
beneficial owner of all right, title, and interest in and to the Company-Owned
IP, and, except as does not, individually or in the aggregate, constitute a
Company Material Adverse Effect, has the valid and enforceable right to use
all other Intellectual Property used in or necessary for the conduct of the
business of the Company and its Subsidiaries as currently conducted and as
proposed to be conducted (collectively with the Company-Owned IP, the "
Company IP
"), in each case, free and clear of all Liens, other than Permitted Liens.
(c)
Validity and Enforceability
. The Company and its Subsidiaries' rights in the Company-Owned IP are valid,
subsisting, and enforceable, and the Company and its Subsidiaries' rights in
the Company IP (other than Company-Owned IP) are valid, subsisting, and
enforceable, except as does not, individually or in the aggregate, constitute
a Company Material Adverse Effect. The Company and each of its Subsidiaries
have taken reasonable steps to maintain the Company IP and to protect and
preserve the confidentiality of all confidential and proprietary information
and trade secrets included in the Company IP.
(d)
Non-Infringement
. The conduct of the businesses of the Company and any of its Subsidiaries has
not infringed, misappropriated, or otherwise violated, and is not infringing,
misappropriating, or otherwise violating, any Intellectual Property of any
other Person in any material respect, and (ii) to the Knowledge of the
Company, no third party is infringing upon, violating, or misappropriating any
Company IP.
(e)
IP Legal Actions and Orders
. Except as disclosed on
Section
3.07(e)
of the Company Disclosure Schedule, there are no material Legal Actions
pending or threatened: (i) alleging any infringement, misappropriation, or
violation by the Company or any of its Subsidiaries of the Intellectual
Property of any Person; or (ii) challenging the validity, enforceability, or
ownership of any Company-Owned IP or the Company or any of its Subsidiaries'
rights with respect to any Company IP. The Company and its Subsidiaries are
not subject to any outstanding Order that restricts or impairs the use of any
Company IP.
(f)
No Impairment
. The consummation of the transactions contemplated by, and compliance by the
Company with the provisions of, this Agreement, will not result in the
termination, cancellation, loss, or impairment of, nor require the payment of
additional amounts or the Consent of any Person in respect of, or result in
the creation of any Lien in or upon, any Company IP.
(g)
Company IT Systems
. In the past two (2) years, there has been no material malfunction, failure,
continued substandard performance, denial-of-service, or other cyber incident,
including any cyberattack, or other impairment of the Company IT Systems. The
Company and its Subsidiaries have used their reasonable best efforts to
safeguard the confidentiality, availability, security, and integrity of the
Company IT Systems, including implementing and maintaining appropriate backup,
disaster recovery, and software and hardware support arrangements.
20
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(h)
Privacy and Data Security
. The Company and each of its Subsidiaries have complied in all material
respects with all applicable Laws and all internal or publicly posted
policies, notices, and statements concerning the collection, use, processing,
storage, transfer, and security of personal information in the conduct of the
Company's and its Subsidiaries' businesses. Except as does not, individually
or in the aggregate, constitute a Company Material Adverse Effect, in the past
two (2) years, the Company and its Subsidiaries have not: (i) experienced any
actual, alleged, or suspected data breach or other security incident involving
personal information in their possession or control; or (ii) been subject to
or received any notice of any audit, investigation, complaint, or other Legal
Action by any Governmental Entity or other Person concerning the Company's or
any of its Subsidiaries' collection, use, processing, storage, transfer, or
protection of personal information or actual, alleged, or suspected violation
of any applicable Law concerning privacy, data security, or data breach
notification, and there are no facts or circumstances that could reasonably be
expected to give rise to any such Legal Action.
Section 3.08
Compliance; Permits.
(a)
Compliance
. The Company and each of its Subsidiaries are and, since January 1, 2021,
have been in material compliance with, all Laws or Orders applicable to the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries or any of their respective businesses or properties is bound.
Since January 1, 2021, no Governmental Entity has issued any notice or
notification stating that the Company or any of its Subsidiaries is not in
compliance with any Law.
(b)
Permits
. The Company and its Subsidiaries hold, to the extent necessary to operate
their respective businesses substantially as such businesses are being
operated as of the date hereof, all Permits. No suspension, cancellation,
non-renewal, or adverse modifications of any Permits of the Company or any of
its Subsidiaries is pending or, to the Knowledge of the Company, threatened,
except as disclosed on
Section 3.08(b)
of the Company Disclosure Schedule. The Company and each of its Subsidiaries
is and, since January 1, 2021, has been in compliance in all material respects
with the terms of all Permits.
Section 3.09
Litigation.
There is, and since January 1, 2021 there has been, no Legal Action pending or
threatened in writing against the Company or any of its Subsidiaries or any of
their respective properties or assets or, to the Knowledge of the Company, any
officer or director of the Company or any of its Subsidiaries in their
capacities as such, other than any such Legal Action that: (a) does not
involve an amount in controversy in excess of $50,000; and (b) does not seek
material injunctive or other material non-monetary relief. None of the Company
or any of its Subsidiaries or any of their respective properties or assets are
subject to any material order, writ, assessment, decision, injunction, decree,
ruling, or judgment of a Governmental Entity, arbitrator, or other tribunal,
whether temporary, preliminary, or permanent ("
Order
"). To the Knowledge of the Company, there are, and since January 1, 2021
there have been, no SEC inquiries or investigations, other governmental
inquiries or investigations, or internal investigations, pending or
threatened, in each case regarding any accounting practices of the Company or
any of its Subsidiaries or any malfeasance by any officer or director of the
Company.
21
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Section 3.10
Brokers
'
and Finders
'
Fees.
Other than Lincoln International LLC (the "
Company Financial Advisor
"), pursuant to an engagement letter listed in
Section 3.10
of the Company Disclosure Schedule, a correct and complete copy of which has
been provided to Parent, no broker, finder or investment banker is entitled to
any investment banker, brokerage, or finders' fees or agents' commissions, or
any similar fees in connection with this Agreement or any transaction
contemplated by this Agreement based on arrangements made by or on behalf of
the Company or any of its Subsidiaries or Affiliates.
Section 3.11
Related Person Transactions.
Since December 31, 2023, there have been no transactions, or series of related
transactions, agreements, arrangements, or understandings in effect, nor are
there any currently proposed transactions, or series of related transactions,
agreements, arrangements, or understandings, that would be required to be
disclosed under Item 404(a) of Regulation S-K that have not been otherwise
disclosed in the Company SEC Documents filed prior to the date hereof.
Section 3.12
Employee Benefit Issues.
(a)
Schedule
.
Section 3.12(a)
of the Company Disclosure Schedule contains a true and complete list, as of
the date hereof, of each material plan, program, policy, agreement, collective
bargaining agreement, or other arrangement providing for compensation,
severance, deferred compensation, performance awards, stock or stock-based
awards, retirement, health, major medical, dental, life insurance, death,
accidental death & dismemberment, disability, fringe (including under Section
132 of the Code), or wellness benefits, or other employee benefits or
remuneration of any kind, including each employment, termination, severance,
retention, change in control, or consulting or independent contractor plan,
program, arrangement, or agreement, in each case whether written or unwritten
or otherwise, funded or unfunded, insured or self-insured, including each
"employee benefit plan," within the meaning of Section 3(3) of ERISA, whether
or not subject to ERISA, which is or has been sponsored, maintained,
contributed to, or required to be contributed to, by the Company or any of its
Subsidiaries for the benefit of any current or former employee, independent
contractor, or director of the Company or any of its Subsidiaries (each, a "
Company Employee
"), or with respect to which the Company or any Company ERISA Affiliate has or
may have any Liability (collectively, the "
Company Employee Plans
");
provided
that, for the avoidance of doubt, the following need not be set forth on
Section 3.12(a)
of the Company Disclosure Schedule: (i) any employment contract (A) with an
employee below the level of Vice President, or (B) that is in all material
respects consistent with a standard form previously made available to Parent
where the severance period or required notice of termination provided is not
in excess of thirty (30) days, (ii) any plan or arrangement sponsored or
maintained by a Governmental Entity or required to be provided to a service
provider pursuant to applicable Law; and (iii) any equity award that is
disclosed pursuant to
Section 3.02(b)(i)
.
(b)
Documents
. The Company has made available to Parent correct and complete copies (or, if
a plan or arrangement is not written, a written description) of all Company
Employee Plans and amendments thereto, and, to the extent applicable: (i) all
related trust agreements, funding arrangements, insurance contracts, and
service provider agreements now in effect or required in the future as a
result of the transactions contemplated by this Agreement or otherwise; (ii)
the most recent determination letter received regarding the tax-qualified
status of each Company Employee Plan; (iii) the most recent financial
statements for each Company Employee Plan; (iv) the Form 5500 Annual
Returns/Reports and Schedules for the most recent plan year for each Company
Employee Plan; (v) the current summary plan description and any related
summary of material modifications and, if applicable, summary of benefits and
coverage, for each Company Employee Plan; and (vi) all actuarial valuation
reports related to any Company Employee Plans.
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(c)
Employee Plan Compliance
. (i) Each Company Employee Plan has been established, administered, and
maintained in accordance, in all material respects, with its terms and in
compliance with applicable Laws, including but not limited to ERISA and the
Code; (ii) all the Company Employee Plans that are intended to be qualified
under Section 401(a) of the Code are so qualified and have received timely
determination letters from the IRS and no such determination letter has been
revoked nor, to the Knowledge of the Company, has any such revocation been
threatened, or with respect to a pre-approved plan, can rely on an opinion
letter from the IRS to the pre-approved plan sponsor, to the effect that such
qualified retirement plan and the related trust are exempt from federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and to the
Knowledge of the Company no circumstance exists that is likely to result in
the loss of such qualified status under Section 401(a) of the Code; (iii) the
Company and its Subsidiaries, where applicable, have timely made all
contributions, benefits, premiums, and other payments required by and due
under the terms of each Company Employee Plan and applicable Law and
accounting principles, and all benefits accrued under any unfunded Company
Employee Plan have been paid, accrued, or otherwise adequately reserved to the
extent required by, and in accordance with, GAAP; (iv) except to the extent
limited by applicable Law, each Company Employee Plan can be amended,
terminated, or otherwise discontinued after the Effective Time in accordance
with its terms, without any liability to Parent, the Company, or any of its
Subsidiaries (other than ordinary administration expenses and in respect of
accrued benefits thereunder); (v) there are no investigations, audits,
inquiries, enforcement actions, or Legal Actions pending or threatened by the
IRS, U.S. Department of Labor, U.S. Department of Health and Human Services,
Equal Employment Opportunity Commission, or any similar Governmental Entity or
subagency with respect to any Company Employee Plan; (vi) there are no Legal
Actions pending or threatened in writing with respect to any Company Employee
Plan (in each case, other than routine claims for benefits); (vii) neither the
Company nor any of its Company ERISA Affiliates has engaged in a transaction
that could subject the Company or any Company ERISA Affiliate to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA;
and (viii) all Foreign Company Employee Plans that are intended to be funded
or book-reserved are funded or book-reserved, as appropriate, based on
reasonable actuarial assumptions.
23
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(d)
Plan Liabilities
. Neither the Company nor any Company ERISA Affiliate has: (i) incurred or
reasonably expects to incur, either directly or indirectly, any liability
under Title I or Title IV of ERISA, or related provisions of the Code or
foreign Law relating to any Company Employee Plan and nothing has occurred
that could reasonably be expected to constitute grounds under Title IV of
ERISA to terminate, or appoint a trustee to administer, any Company Employee
Plan; (ii) except for payments of premiums to the Pension Benefit Guaranty
Corporation ("
PBGC
") which have been timely paid in full, incurred any liability to the PBGC in
connection with any Company Employee Plan covering any active, retired, or
former employees or directors of the Company or any Company ERISA Affiliate,
including, without limitation, any liability under Sections 4069 or 4212(c) of
ERISA or any penalty imposed under Section 4071 of ERISA, or ceased operations
at any facility, or withdrawn from any such Company Employee Plan in a manner
that could subject it to liability under Sections 4062, 4063 or 4064 of ERISA;
(iii) failed to satisfy the health plan compliance requirements under the
Affordable Care Act, including the employer mandate under Section 4980H of the
Code and related information reporting requirements; (iv) failed to comply
with Sections 601 through 608 of ERISA and Section 4980B of the Code,
regarding the health plan continuation coverage requirements under COBRA; (v)
failed to comply with the privacy, security, and breach notification
requirements under HIPAA; (vi) failed to comply with the mental health parity
requirements under MHPAEA, or (vii) incurred any withdrawal liability
(including any contingent or secondary withdrawal liability) within the
meaning of Sections 4201 or 4204 of ERISA to any multiemployer plan and
nothing has occurred that presents a material risk of the occurrence of any
withdrawal from or the partition, termination, reorganization, or insolvency
of any such multiemployer plan which could result in any liability of the
Company or any Company ERISA Affiliate to any such multiemployer plan. No
complete or partial termination of any Company Employee Plan has occurred or
is expected to occur.
(e)
Certain Company Employee Plans
. With respect to each Company Employee Plan:
(i) no such plan is a "multiemployer plan" within the meaning of Section
3(37) of ERISA or a "multiple employer plan" within the meaning of Section
413(c) of the Code and neither the Company nor any of its Company ERISA
Affiliates has now or at any time within the previous six years (6)
contributed to, sponsored, maintained, or had any liability or obligation in
respect of any such multiemployer plan or multiple employer plan;
(ii) no Legal Action has been initiated by the PBGC to terminate any such
Company Employee Plan or to appoint a trustee for any such Company Employee
Plan;
(iii) no Company Employee Plan is subject to the minimum funding standards
of Section 302 of ERISA or Sections 412, 418(b), or 430 of the Code, and none
of the assets of the Company or any Company ERISA Affiliate is, or may
reasonably be expected to become, the subject of any lien arising under
Section 303 of ERISA or Sections 430 or 436 of the Code.; and
(iv) no "reportable event," as defined in Section 4043 of ERISA, has
occurred, or is reasonably expected to occur, with respect to any such Company
Employee Plan.
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(f)
No Post-Employment Obligations
. Other than routine claims for benefits: (i) there are no pending or
threatened claims in writing by or on behalf of any participant in any Company
Employee Plan, or otherwise involving any Company Employee Plan or the assets
of any Company Employee Plan; and (ii) no Company Employee Plan provides
post-termination or retiree health benefits to any person for any reason,
except as may be required by COBRA or other applicable Law, and neither the
Company nor any Company ERISA Affiliate has any Liability to provide
post-termination or retiree health benefits to any person or ever represented,
promised, or contracted to any Company Employee (either individually or to
Company Employees as a group) or any other person that such Company
Employee(s) or other person would be provided with post-termination or retiree
health benefits, except to the extent required by COBRA or other applicable
Law.
(g)
Potential Governmental or Lawsuit Liability
. No Company Employee Plan is presently or has within the three (3) years
prior to the date hereof, been the subject of an examination or audit by a
Governmental Entity. No Company Employee Plan is presently the subject of an
application or filing under, or is a participant in, an amnesty, voluntary
compliance, self-correction, or similar program sponsored by any Governmental
Entity.
(h)
Section 409A Compliance
. Each Company Employee Plan that is subject to Section 409A of the Code has
been operated in compliance with such section and all applicable regulatory
guidance (including, without limitation, proposed regulations, notices,
rulings, and final regulations).
(i)
Health Plan Compliance
. Each of the Company and its Subsidiaries complies with the applicable
requirements under ERISA and the Code, including COBRA, HIPAA, MHPAEA, and the
Affordable Care Act, and other federal requirements for employer-sponsored
health plans, and any corresponding requirements under state statutes, with
respect to each Company Employee Plan that is a group health plan within the
meaning of Section 733(a) of ERISA, Section 5000(b)(1) of the Code, or such
state statute.
(j)
Effect of Transaction
. Neither the execution or delivery of this Agreement, the consummation of the
Merger, nor any of the other transactions contemplated by this Agreement will
(either alone or in combination with any other event): (i) entitle any current
or former director, employee, contractor, or consultant of the Company or any
of its Subsidiaries to severance pay or any other payment; (ii) accelerate the
timing of payment, funding, or vesting, or increase the amount of compensation
due to any such individual; or (iii) increase the amount payable or result in
any other material obligation pursuant to any Company Employee Plan. No amount
that could be received (whether in cash or property or the vesting of any
property) as a result of the consummation of the transactions contemplated by
this Agreement by any employee, director, or other service provider of the
Company under any Company Employee Plan or otherwise would not be deductible
by reason of Section 280G of the Code or would be subject to an excise tax
under Section 4999 of the Code.
(k)
Employment Law Matters
. The Company and each of its Subsidiaries: (i) is in compliance in all
material respects with all applicable Laws and agreements regarding hiring,
employment, termination of employment, plant closing and mass layoff,
employment discrimination, harassment, retaliation, and reasonable
accommodation, leaves of absence, terms and conditions of employment, wages
and hours of work, employee classification, employee health and safety, use of
genetic information, leasing and supply of temporary and contingent staff,
engagement of independent contractors, including proper classification of
same, payroll taxes, and immigration with respect to Company Employees and
contingent workers; and (ii) is in compliance with all applicable Laws
relating to the relations between it and any labor organization, trade union,
work council, or other body representing Company Employees.
25
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(l)
Labor
. Neither Company nor any of its Subsidiaries is party to, or subject to, any
collective bargaining agreement or other agreement with any labor
organization, work council, or trade union with respect to any of its or their
operations. No work stoppage, slowdown, or labor strike against the Company or
any of its Subsidiaries with respect to employees employed within the United
States is pending, threatened, or has occurred in the last two (2) years, and,
to the Knowledge of the Company, no work stoppage, slowdown, or labor strike
against the Company or any of its Subsidiaries with respect to employees who
are employed outside the United States is pending, threatened, or has occurred
in the last two (2) years. None of the Company Employees are represented by a
labor organization, work council, or trade union and, to the Knowledge of the
Company, there is no organizing activity, Legal Action, election petition,
union card signing or other union activity, or union corporate campaigns of or
by any labor organization, trade union, or work council directed at the
Company or any of its Subsidiaries, or any Company Employees. There are no
Legal Actions, government investigations, or labor grievances pending or
threatened relating to any employment-related matter involving any Company
Employee or applicant, including, but not limited to, charges of unlawful
discrimination, retaliation or harassment, failure to provide reasonable
accommodation, denial of a leave of absence, failure to provide compensation
or benefits, unfair labor practices, or other alleged violations of Law.
Section 3.13
Real Property and Personal Property Matters.
(a)
Real Property
. Neither the Company nor any of its Subsidiaries owns any real property or
interest therein. Neither the Company nor any Subsidiary is a party to any
agreement or option to purchase any real property or interest therein.
(b)
Leased Real Estate
.
Section 3.13(b)
of the Company Disclosure Schedule contains a true and complete list of all
Leases (including all amendments, extensions, renewals, guaranties, and other
agreements with respect thereto) as of the date hereof for each such Leased
Real Estate (including the date and name of the parties to such Lease
document). The Company has delivered or made available to Parent a true and
complete copy of each such Lease. Except as set forth on
Section 3.13(b)
of the Company Disclosure Schedule, with respect to each of the Leases: (i)
such Lease is legal, valid, binding, enforceable, and in full force and
effect; (ii) neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Company, any other party to the Lease, is in breach or
default under such Lease, and no event has occurred or circumstance exists
which, with or without notice, lapse of time, or both, would constitute a
breach or default under such Lease; (iii) the Company's or its Subsidiary's
possession and quiet enjoyment of the Leased Real Estate under such Lease has
not been disturbed, and to the Knowledge of the Company, there are no disputes
with respect to such Lease; and (iv) there are no Liens on the estate created
by such Lease other than Permitted Liens. Neither the Company nor any of its
Subsidiaries has assigned, pledged, mortgaged, hypothecated, or otherwise
transferred any Lease or any interest therein nor has the Company or any of
its Subsidiaries subleased, licensed, or otherwise granted any Person (other
than another wholly owned Subsidiary of the Company) a right to use or occupy
such Leased Real Estate or any portion thereof.
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(c)
Real Estate Used in the Business
. The Leased Real Estate identified in
Section 3.13(b)
of the Company Disclosure Schedule comprise all of the real property used or
intended to be used in, or otherwise related to, the business of the Company
or any of its Subsidiaries.
(d)
Personal Property
. The Company and each of its Subsidiaries are in possession of and have good
and marketable title to, or valid leasehold interests in or valid rights under
contract to use, the machinery, equipment, furniture, fixtures, and other
tangible personal property and assets owned, leased, or used by the Company or
any of its Subsidiaries, free and clear of all Liens other than Permitted
Liens.
Section 3.14
Environmental Matters.
Except as would not reasonably be expected to have, individually or in the
aggregate, a material and adverse effect on the Company:
(a)
Compliance with Environmental Laws
. The Company and its Subsidiaries are, and have been, in compliance with all
Environmental Laws, which compliance includes the possession, maintenance of,
compliance with, or application for, all Permits required under applicable
Environmental Laws for the operation of the business of the Company and its
Subsidiaries as currently conducted.
(b)
No Disposal, Release, or Discharge of Hazardous Substances
. Neither the Company nor any of its Subsidiaries has disposed of, released,
or discharged any Hazardous Substances on, at, under, in, or from any real
property currently or, to the Knowledge of the Company, formerly owned,
leased, or operated by it or any of its Subsidiaries or at any other location
that is: (i) currently subject to any investigation, remediation, or
monitoring; or (ii) reasonably likely to result in liability to the Company or
any of its Subsidiaries, in either case of (i) or (ii) under any applicable
Environmental Laws.
(c)
No Production or Exposure of Hazardous Substances
. Neither the Company nor any of its Subsidiaries has: (i) produced,
processed, manufactured, generated, transported, treated, handled, used, or
stored any Hazardous Substances, except in compliance with Environmental Laws,
at any of the Leased Real Estate; or (ii) exposed any employee or any third
party to any Hazardous Substances under circumstances reasonably expected to
give rise to any material Liability or obligation under any Environmental Law.
(d)
No Legal Actions or Orders
. Neither the Company nor any of its Subsidiaries has received written notice
of and there is no Legal Action pending or threatened in writing against the
Company or any of its Subsidiaries, alleging any Liability or responsibility
under or non-compliance with any Environmental Law or seeking to impose any
financial responsibility for any investigation, cleanup, removal, containment,
or any other remediation or compliance under any Environmental Law. Neither
the Company nor any of its Subsidiaries is subject to any Order, settlement
agreement, or other written agreement by or with any Governmental Entity or
third party imposing any material Liability or obligation with respect to any
of the foregoing.
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(e)
No Assumption of Environmental Law Liabilities
. Neither the Company nor any of its Subsidiaries has expressly assumed or
retained any Liabilities under any applicable Environmental Laws of any other
Person, including in any acquisition or divestiture of any property or
business.
Section 3.15
Material Contracts.
(a)
Material Contracts
.
Section 3.15(a)
of the Company Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of each of the following Contracts (other than any Company
Employee Plans) to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of their assets or
businesses are bound (and any material amendments, supplements and
modifications thereto), and the Company has provided Parent with correct and
complete copies of same, including all amendments thereto:
(i) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC), whether or not filed by the Company
with the SEC;
(ii) any employment or consulting Contract (in each case with respect to
which the Company has continuing obligations as of the date hereof) with any
current or former (A) officer of the Company, (B) member of the Company Board,
or (C) Company Employee providing for an annual base salary or payment in
excess of $250,000;
(iii) any Contract providing for indemnification or any guaranty by the
Company or any Subsidiary thereof, in each case that is material to the
Company and its Subsidiaries, taken as a whole, other than (A) any guaranty by
the Company or a Subsidiary thereof of any of the obligations of (1) the
Company or another wholly owned Subsidiary thereof or (2) any Subsidiary
(other than a wholly owned Subsidiary) of the Company that was entered into in
the ordinary course of business pursuant to or in connection with a customer
Contract, or (B) any Contract providing for indemnification of customers or
other Persons pursuant to Contracts entered into in the ordinary course of
business;
(iv) any Contract relating to the disposition or acquisition, directly or
indirectly (by merger, sale of stock, sale of assets, or otherwise), by the
Company or any of its Subsidiaries after the date of this Agreement of assets
or capital stock or other equity interests of any Person (A) with a fair
market value or aggregate consideration under such Contract in excess of
$250,000 or (B) pursuant to which the Company or any of its Subsidiaries has a
continuing earn-out or other contingent payment obligation or any
indemnification obligation;
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(v) Contracts with any of the top ten largest suppliers by purchases made
by the Company or any of its Subsidiaries during the twelve (12) month period
ended December 31, 2023;
(vi) Contracts with any of the top ten largest customers by sales made by
the Company or any of its Subsidiaries during the twelve (12) month period
ended December 31, 2023;
(vii) Contracts concerning any partnership, joint venture, limited
liability company agreement, or similar Contract relating to the formation,
creation, operation, management, or control of any material joint venture,
partnership, or limited liability company, other than any such Contract solely
between the Company and its wholly owned Subsidiaries or among the Company's
wholly owned Subsidiaries;
(viii) Contracts containing a covenant materially restricting the ability
of the Company or any of its Subsidiaries to engage in any line of business in
any geographic area or to compete with any Person, to market any product or to
solicit customers;
(ix) any Contract that grants any right of first refusal, right of first
offer, or similar right with respect to any assets, rights, or properties of
the Company or any of its Subsidiaries;
(x) any Contract that contains any provision that requires the purchase of
all or a material portion of the Company's or any of its Subsidiaries'
requirements for any product or service from a third party;
(xi) any Contract that obligates the Company or any of its Subsidiaries to
conduct business on an exclusive or preferential basis or that contains a
"most favored nation" or similar covenant with any third party or upon
consummation of the Merger will obligate Parent, the Surviving Corporation, or
any of their respective Subsidiaries to conduct business on an exclusive or
preferential basis or that contains a "most favored nation" or similar
covenant with any third party;
(xii) any material Company IP Agreement;
(xiii) any employee collective bargaining agreement or other Contract with
any labor union or other organization purporting to represent the Company's
employees;
(xiv) any Contract that is a settlement or similar Contract involving
payments by the Company or its Subsidiaries after the Closing in excess of
$250,000 in the aggregate or any injunctive or similar equitable obligations
that impose restrictions on the Company or any of its Subsidiaries;
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(xv) any mortgages, indentures, guarantees, loans, or credit agreements,
security agreements, or other Contracts, in each case relating to indebtedness
for borrowed money, as lender, in each case in excess of $250,000, other than
(A) accounts payable, and (B) loans to direct or indirect wholly owned
Subsidiaries of the Company; or
(xvi) mortgages, indentures, credit agreements, loan agreements and similar
instruments pursuant to which the Company or any of its Subsidiaries has or
will incur or assume any indebtedness or has or will guarantee or otherwise
become liable for any indebtedness of any other Person for borrowed money in
excess of $250,000 other than any indentures, credit agreements, loan
agreements or similar instruments between or among the Company and any of its
Subsidiaries.
(b) All Contracts set forth or required to be set forth in
Section 3.15(a)
of the Company Disclosure Schedule or filed or required to be filed as
exhibits to the Company SEC Documents (except to the extent subsequently
terminated or superseded) (the "
Company Material Contracts
") are valid, binding and in full force and effect and are enforceable by the
Company or the applicable Subsidiary in accordance with their terms, except as
limited by Laws affecting the enforcement of creditors' rights generally, by
general equitable principles or by the discretion of any Governmental Entity
before which any Legal Action seeking enforcement may be brought. The Company,
or the applicable Subsidiary, has performed all material obligations required
to be performed by it under the Company Material Contracts, and it is not
(with or without notice or lapse of time, or both) in breach or default
thereunder, and to the Knowledge of the Company, no other party to any Company
Material Contract is (with or without notice or lapse of time, or both) in
breach or default thereunder. Since December 31, 2022, neither the Company nor
any of its Subsidiaries has received written notice of any actual, alleged,
possible or potential violation of, or failure to comply with, any term or
requirement of any Company Material Contract or any intent to terminate,
cancel, or modify any Company Material Contract (whether as a result of a
change in control or otherwise).
Section 3.16
Insurance.
All material insurance policies maintained by the Company and its Subsidiaries
are in full force and effect and provide insurance in such amounts and against
such risks as the Company reasonably has determined to be prudent, taking into
account the industries in which the Company and its Subsidiaries operate, and
as is sufficient to comply with applicable Law. Neither the Company nor any of
its Subsidiaries is in breach or default, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination or modification of, any of such insurance policies. To the
Knowledge of the Company: (i) no insurer of any such policy has been declared
insolvent or placed in receivership, conservatorship, or liquidation; and (ii)
no notice of cancellation or termination, other than pursuant to the
expiration of a term in accordance with the terms thereof, has been received
with respect to any such policy.
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Section 3.17
Proxy Statement.
None of the information included or incorporated by reference in the letter to
the stockholders, notice of meeting, proxy statement, and forms of proxy
(collectively, the "
Company Proxy Statement
"), to be filed with the SEC in connection with the Merger, will, at the time
it is filed with the SEC in definitive form, at the time it (or any amendment
or supplement thereto) is first disseminated to the Company's stockholders, or
at the time of the Company Stockholders Meeting, 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 the light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by or
on behalf of Parent or Merger Sub for inclusion or incorporation by reference
in the Company Proxy Statement. The Company Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act.
Section 3.18
Anti-Corruption Matters.
Since December 31, 2021, none of the Company, any of its Subsidiaries or any
director, officer or employee of the Company or any of its wholly-owned
Subsidiaries has: (a) used any funds for unlawful contributions, gifts,
entertainment, or other unlawful payments relating to an act by any
Governmental Entity; (b) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party
or campaign or violated any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended (the "
FCPA
"); or (c) made any other unlawful payment under any applicable Law relating
to anti-corruption, bribery, or similar matters. Since December 31, 2021,
neither the Company nor any of its Subsidiaries has disclosed to any
Governmental Entity that it violated or may have violated any Law relating to
anti-corruption, bribery, or similar matters. To the Knowledge of the Company,
no Governmental Entity is investigating, examining, or reviewing the Company's
compliance with any applicable provisions of any Law relating to anti-corruption
, bribery, or similar matters. The Company and each of its wholly-owned
Subsidiaries and, to the Knowledge of the Company, their Affiliates have at
all times since December 31, 2021, conducted their respective businesses in
material compliance with the FCPA (including the recordkeeping provisions of
the FCPA) and all similar Laws, and the Company and each of its Subsidiaries
have instituted and maintained policies, procedures, and controls designed to
ensure continued compliance therewith and with all similar Laws).
Section 3.19
Fairness Opinion.
The Company Board has received the opinion of the Company Financial Advisor to
the effect that, as of the date of such opinion and based upon and subject to
the limitations, qualifications and assumptions set forth therein, the Merger
Consideration to be received by the holders of shares of Company Common Stock
(other than any Cancelled Shares and any Dissenting Shares) in the
transactions contemplated by this Agreement, is fair, from a financial point
of view, to such holders. As of the date of this Agreement, such opinion has
not been withdrawn, revoked, or modified. The Company will deliver to Parent
promptly following the execution of this Agreement an executed copy of the
written opinion received from the Company Financial Advisor solely for
informational purposes.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant to
the Company as follows:
Section 4.01
Organization.
Parent is a limited liability company duly organized, validly existing, and in
good standing under the Laws of Texas. Merger Sub is a corporation duly
organized, validly existing, and in good standing under the Laws of Delaware.
Section 4.02
Authority; Non-Contravention; Governmental Consents; Board Approval.
(a)
Authority
. Each of Parent and Merger Sub has all requisite limited liability company or
corporate power and authority to enter into and to perform its obligations
under this Agreement and to consummate the transactions contemplated by this
Agreement, subject to, in the case of the consummation of the Merger, the
adoption of this Agreement by Parent as the sole stockholder of Merger Sub.
The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary limited liability company
or corporate action on the part of Parent and Merger Sub and no other
proceedings on the part of Parent or Merger Sub are necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and the
other transactions contemplated hereby, subject only, in the case of the
consummation of the Merger, the adoption of this Agreement by Parent as the
sole stockholder of Merger Sub. This Agreement has been duly executed and
delivered by Parent and Merger Sub and, assuming due execution and delivery by
the Company, constitutes the legal, valid, and binding obligation of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar Laws affecting creditors' rights
generally and by general principles of equity. A complete and accurate list of
each of the directors and officers of each of Parent and Merger Sub is set
forth in
Section 4.02(a)
of the Parent Disclosure Schedules.
(b)
Non-Contravention
. The execution, delivery, and performance of this Agreement by Parent and
Merger Sub and the consummation by Parent and Merger Sub of the transactions
contemplated by this Agreement, do not and will not: (i) contravene or
conflict with, or result in any violation or breach of, the certificate of
incorporation, certificate of formation, company agreement, or bylaws of
Parent or Merger Sub; (ii) assuming that all of the Consents contemplated by
clauses (i) through (v) of
Section 4.02(c)
have been obtained or made, conflict with or violate any Law applicable to
Parent or Merger Sub or any of their respective properties or assets; (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in Parent's or
any of its Subsidiaries' loss of any benefit or the imposition of any
additional payment or other liability under, or alter the rights or
obligations of any third party under, or give to any third party any rights of
termination, amendment, acceleration, or cancellation, or require any Consent
under, any Contract to which Parent or any of its Subsidiaries is a party or
otherwise bound as of the date hereof; or (iv) result in the creation of a
Lien (other than Permitted Liens) on any of the properties or assets of Parent
or any of its Subsidiaries, except, in the case of each of clauses (ii),
(iii), and (iv), for any conflicts, violations, breaches, defaults, loss of
benefits, additional payments or other liabilities, alterations, terminations,
amendments, accelerations, cancellations, or Liens that, or where the failure
to obtain any Consents, in each case, would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Parent's
and Merger Sub's ability to consummate the transactions contemplated by this
Agreement.
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(c)
Governmental Consents
. No Consent of any Governmental Entity is required to be obtained or made by
Parent or Merger Sub in connection with the execution, delivery, and
performance by Parent and Merger Sub of this Agreement or the consummation by
Parent and Merger Sub of the Merger and other transactions contemplated
hereby, except for: (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; (ii) the filing with the SEC of
(A) the Company Proxy Statement in definitive form in accordance with the
Exchange Act, and (B) such reports under the Exchange Act as may be required
in connection with this Agreement, the Merger, and the other transactions
contemplated by this Agreement; (iii) such Consents as may be required under
any Antitrust Laws that are applicable to the transactions contemplated by
this Agreement; (iv) such Consents as may be required under applicable state
securities or "blue sky" Laws and the securities Laws of any foreign country
or the rules and regulations of the Nasdaq; (v) the Other Governmental
Approvals; and (vi) such other Consents which if not obtained or made would
not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Parent's and Merger Sub's ability to consummate the
transactions contemplated by this Agreement.
(d)
Board Approval
.
(i) The members and board of managers of Parent, by resolutions duly
adopted by a unanimous vote at a meeting of all members and managers of Parent
duly called and held and, not subsequently rescinded or modified in any way,
has (A) determined that this Agreement and the transactions contemplated
hereby, including the Merger, upon the terms and subject to the conditions set
forth herein, are fair to, and in the best interests of, Parent and Parent's
equity holders, and (B) approved and declared advisable this Agreement,
including the execution, delivery, and performance thereof, and the
consummation of the transactions contemplated by this Agreement, including the
Merger, upon the terms and subject to the conditions set forth herein.
(ii) The board of directors of Merger Sub by resolutions duly adopted by a
unanimous vote at a meeting of all directors of Merger Sub duly called and
held and, not subsequently rescinded or modified in any way, has (A)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, upon the terms and subject to the conditions set forth
herein, are fair to, and in the best interests of, Merger Sub and Parent, as
the sole stockholder of Merger Sub, (B) approved and declared advisable this
Agreement, including the execution, delivery, and performance thereof, and the
consummation of the transactions contemplated by this Agreement, including the
Merger, upon the terms and subject to the conditions set forth herein, and (C)
resolved to recommend that Parent, as the sole stockholder of Merger Sub,
approve the adoption of this Agreement in accordance with the DGCL.
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Section 4.03
Proxy Statement.
None of the information with respect to Parent or Merger Sub that Parent or
any of its Representatives furnishes in writing to the Company expressly for
use or incorporation in the Company Proxy Statement will, at the time such
Proxy Statement is filed with the SEC in definitive form, at the time it (or
any amendment or supplement thereto) is first disseminated to the Company's
stockholders, or at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made by Parent or Merger Sub with respect to statements made or incorporated
by reference therein based on information supplied by the Company or its
Representatives.
Section 4.04
Financing.
(a)
Delivery of Financing Commitment
. Concurrently with the execution of this Agreement, Parent has delivered to
the Company a true and complete copy of the executed Debt Commitment Letter,
including the Debt Fee Letter, if any, which Debt Fee Letter has been redacted
with respect to interest rates, fee amounts, pricing caps and other similar
economic terms (including any "market flex" provisions).
(b)
Status of Financing Commitments
. As of the date of this Agreement:
(i) the Debt Commitment Letter is in full force and effect, subject to the
terms and conditions set forth therein;
(ii) the Debt Commitment Letter has not been amended, supplemented or
modified in any manner;
(iii) the commitments under the Debt Commitment Letter have not been
withdrawn, rescinded, replaced or terminated;
(iv) no event has occurred which, with or without notice, lapse of time or
both, would constitute a breach or default on the part of Parent or any other
party thereto under the Debt Commitment Letter that could, in either case,
reasonably be expected to result in the failure of the funding obligations
thereunder; and
(v) neither Parent nor any of its Affiliates has entered into any material
written agreement, side letter or other arrangement relating to the Debt
Financing, other than as set forth in the Debt Commitment Letter, if any.
(c)
Adequate Proceeds
. The aggregate cash proceeds of the Debt Financing (both before and after
giving effect to the exercise of any or all applicable "market flex"
provisions) will be sufficient to consummate the transactions contemplated in
this Agreement in accordance with the terms hereof, including the making of
all payments to be made by or on behalf of Parent on the Closing Date.
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(d)
Conditions to Commitments
. Parent will be able to satisfy the Financing Conditions on a timely basis in
accordance with the terms of the Debt Commitment Letter and this Agreement.
(e)
Financing Not a Condition
. Without limiting or modifying any provisions of
Article VII
or
Section 8.16
, Parent understands and acknowledges that its obligations under this
Agreement are not contingent or conditional upon Parent's consummation of any
financing arrangements or Parent's obtaining of any financing for or in
connection with the Merger.
Section 4.05
Financial Capability.
Parent has or will have, and will cause Merger Sub to have, on or prior to the
Closing Date, funds that are, together with any funds obtained pursuant to the
Debt Financing, sufficient to pay the aggregate Merger Consideration
contemplated by this Agreement.
Section 4.06
Legal Proceedings.
As of the date hereof, there is no pending or, to the Knowledge of Parent,
threatened, Legal Action against Parent or any of its Subsidiaries, including
Merger Sub, nor is there any injunction, Order, judgment, ruling, or decree
imposed upon Parent or any of its Subsidiaries, including Merger Sub, in each
case, by or before any Governmental Entity, that would, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
Parent's and Merger Sub's ability to consummate the transactions contemplated
by this Agreement.
Section 4.07
Ownership of Company Common Stock.
Neither Parent nor any of its Affiliates or Associates "owns" (as defined in
Section 203(c)(9) of the DGCL) any shares of Company Common Stock.
Section 4.08
Ownership of Parent and Merger Sub.
All of the outstanding equity interests of Parent and Merger Sub have been
duly authorized and validly issued and are fully paid and nonassessable. All
of the issued and outstanding equity interests of Merger Sub are, and at the
Effective Time will be, wholly owned directly or indirectly by Parent. Merger
Sub was formed solely for purposes of the Merger and, except for matters
incident to its formation and organization and the execution and delivery of
this Agreement and the performance of the transactions contemplated by this
Agreement, has not prior to the date hereof engaged in any business or other
activities.
Section 4.09
No Stockholder and Management Arrangements.
Except for this Agreement, or as expressly authorized by the Company Board,
neither Parent or Merger Sub, nor any of their respective officers, directors
or affiliates, is a party to any Contract, or has made or entered into any
formal or informal arrangement or other understanding (including as to
continuing employment), with any stockholder, director or officer of the
Company relating to this Agreement, the Merger or any other transactions
contemplated by this Agreement, or the Surviving Corporation or any of its
affiliates, businesses or operations from and after the Effective Time.
Section 4.10
Brokers. N
o broker, finder or investment banker is entitled to any investment banker,
brokerage, or finders' fees or agents' commissions, or any similar fees in
connection with this Agreement or any transaction contemplated by this
Agreement based on arrangements made by or on behalf of Parent, Merger Sub or
any of their respective Affiliates for which the Company would be liable in
connection the Merger.
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Section 4.11
No Other Representations and Warranties.
Each of Parent and Merger Sub acknowledges that neither the Company nor any
Person on behalf of the Company makes, and none of Parent or Merger Sub has
relied upon, any express or implied representation or warranty with respect to
the Company or any of its Subsidiaries or with respect to any other
information provided to Parent or Merger Sub in connection with the
transactions contemplated by this Agreement including the accuracy or
completeness thereof other than the representations and warranties contained in
ARTICLE III.
Each of Parent and Merger Sub acknowledges and agrees that the Company and its
Subsidiaries, and each of their respective Affiliates, stockholders, and
Representatives, shall have no liability to Parent, Merger Sub, or their
respective Affiliates, stockholders, or Representatives for breach of warranty
or breach of representation based upon any information provided or made
available (including in any data rooms, management presentations, information
or descriptive memorandum or supplemental information), or statements made (or
any omissions therefrom), to Parent, Merger Sub, or any of their respective
Affiliates, stockholders or Representatives, except as and only to the extent
set forth in
ARTICLE III
, the related sections of the Company Disclosure Schedule or any officers'
certificates or other closing document delivered by or on behalf of the
Company pursuant to or in connection with this Agreement;
provided, however
,
that the foregoing shall not apply to the Company and its Subsidiaries with
regard to any fraud or intentional misrepresentation by the Company or any of
its Subsidiaries, Affiliates or Representatives.
ARTICLE V
COVENANTS
Section 5.01
Conduct of Business of the Company.
During the period from the date of this Agreement until the earlier of the
termination of this Agreement (in accordance with its terms) or the Effective
Time, the Company shall, and shall cause each of its Subsidiaries (i) except
with the prior written consent of Parent (not to be unreasonably withheld,
conditioned or delayed), to conduct its business in all material respects in
the ordinary course of business consistent with past practice, (ii) to comply
in all material respects with all applicable Laws and the terms and conditions
of all Company Material Contracts (which for the purpose of this
Section 5.01
shall include any Contract that would be a Company Material Contract if
existing on the date of this Agreement), and (iii) to use its reasonable best
efforts to keep available the services of its and its Subsidiaries' current
officers and employees, to preserve its and its Subsidiaries' goodwill and
present relationships with customers, suppliers, distributors, licensors,
licensees, and other Persons having business relationships with it. Without
limiting the generality of the foregoing, except as required by Law, as set
forth in
Section 5.01
of the Company Disclosure Schedule or as otherwise expressly contemplated by
any other provision of this Agreement, between the date of this Agreement and
the Effective Time or the earlier of the termination of this Agreement (in
accordance with its terms), the Company shall not, nor shall it permit any of
its Subsidiaries to, take any of the following actions without the prior
written consent of Parent (not to be unreasonably withheld, conditioned or
delayed):
(a) amend its Charter Documents (other than amendments that are not adverse
to Parent and do not prevent or delay the consummation of the transactions
contemplated by this Agreement);
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(b) (i) split, combine, or reclassify any Company Securities except with
respect to any Subsidiaries of the Company, (ii) repurchase, redeem, or
otherwise acquire, or offer to repurchase, redeem, or otherwise acquire, any
Company Securities except with respect to any Subsidiaries of the Company, or
(iii) declare, set aside, or pay any dividend or distribution (whether in
cash, stock, property, or otherwise) in respect of, or enter into any Contract
with respect to the voting of, any shares of its capital stock (other than
dividends or other distributions from its direct or indirect wholly owned
Subsidiaries);
(c) issue, sell, pledge, dispose of, or encumber any Company Securities or
Company Subsidiary Securities, other than the issuance of Company Securities
upon the exercise of Company Options or settlement of Company RSUs outstanding
as of the date hereof in accordance with their terms;
(d) except (i) in the ordinary course of business consistent with past
practice and disclosed to Parent prior to the date of this Agreement or (ii)
as required by this Agreement, applicable Law or the existing terms of any
Company Employee Plan or Contract in effect as of the date of this Agreement
(A) increase the compensation payable or to become payable by the Company or
any of its Subsidiaries to directors, officers, or employees, (B) promote any
officers or employees, except in connection with Company's annual or quarterly
compensation review cycle or as the result of the termination or resignation
of any officer or employee after the date of this Agreement, (C) hire any new
employee at the level of manager or above or with an annual base salary in
excess of $250,000 or engage any independent contractor whose engagement may
not be terminated by the Company without penalty on sixty (60) days' notice or
less, or (D) establish, adopt, enter into, amend, terminate, or take any
action to accelerate rights under any Company Employee Plans or any plan,
agreement, program, policy, trust, fund, or other arrangement that would be a
Company Employee Plan if it were in existence as of the date of this Agreement;
(e) acquire, by merger, consolidation, acquisition of stock or assets, or
otherwise, any business or Person or division thereof, or make any loans,
advances, or capital contributions to or investments in any Person, other than
(A) acquisitions by the Company from any wholly owned Subsidiary or among any
wholly owned Subsidiaries of the Company or (B) any other acquisitions pending
on the date hereof with a purchase price of less than $250,000;
(f) (i) transfer, license, sell, lease, or otherwise dispose of (whether by
way of merger, consolidation, sale of stock or assets, or otherwise), or
pledge, encumber, mortgage, or otherwise subject to any Lien (other than a
Permitted Lien), any capital stock or other equity interests in any Subsidiary
of the Company or any other material assets;
provided, that
the foregoing shall not prohibit the Company and its Subsidiaries from
engaging in such transferring, selling, leasing, or disposing of material
assets (A) as required by the terms of existing Contracts, (B) in connection
with the sale or purchase of goods or inventory in the ordinary course of
business consistent with past practice, or (C) in connection with the
disposition of obsolete, surplus, or worn out equipment , inventory or assets
that are no longer used in the ordinary course of the Company's business; or
(ii) adopt or effect a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization, or other reorganization, except with respect
to any wholly owned Subsidiary of the Company;
37
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(g) repurchase, prepay, or incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or options, warrants, calls, or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any debt
securities of another Person, enter into any "keep well" or other Contract to
maintain any financial statement condition of any other Person (other than any
of its wholly owned Subsidiaries) or enter into any arrangement having the
economic effect of any of the foregoing, except in connection with (i)
refinancings of existing indebtedness (other than as contemplated by the
Merger or this Agreement) on terms reasonably acceptable to (and with the
prior written consent of) Parent, (ii) borrowings under the Company's existing
credit facilities or issuances of commercial paper for working capital and
general corporate purposes in the ordinary course of business, (iii) letters
of credit for the benefit of Company vendors in the ordinary course of
business consistent with past practice, (iv) indebtedness to any seller
incurred in connection with the acquisition of any Person or assets permitted
under
Section 5.01(e)
and (v) indebtedness not to exceed $250,000 in any single transaction or
series of related transactions;
(h) enter into or amend or modify in any material respect, consent to the
termination of or fail to exercise any renewal rights with respect to, or
waive, release, or assign any rights or claims under, any Company Material
Contract or any Lease with respect to material Leased Real Estate or any other
Contract or Lease that, if in effect as of the date hereof would constitute a
Company Material Contract or Lease with respect to material Leased Real Estate
hereunder, in each case other than in the ordinary course of business
consistent with past practice (such ordinary course of business including
renewals or extensions of any existing Company Material Contracts and
amendments that accompany such renewals or extensions in the ordinary course
of business);
(i) settle or compromise any material Legal Action involving the payment of
monetary damages by the Company or any of its Subsidiaries of any amount
exceeding $500,000 in the aggregate, other than (i) any Legal Action brought
against Parent or Merger Sub arising out of a breach or alleged breach of this
Agreement by Parent or Merger Sub, or (ii) the payment, satisfaction or
settlement of claims, liabilities, or obligations reflected or reserved
against in the statements disclosed in the Company SEC Documents;
provided, that
neither the Company nor any of its Subsidiaries shall settle or agree to
settle any Legal Action which settlement involves a conduct remedy or
injunctive or similar relief;
(j) make any change in any method of financial accounting principles or
practices, in each case except for any such change required by GAAP,
applicable Law, Nasdaq or by a Governmental Entity;
38
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(k) (i) settle or compromise any material Tax claim, audit, or assessment
for an amount in excess of the amount reserved or accrued on the Company
Balance Sheet, or (ii) make or change any material Tax election, change any
annual Tax accounting period, or adopt or change any method of Tax accounting,
(iii) amend any Tax Returns or file claims for material Tax refunds, or (iv)
enter into any closing agreement, surrender in writing any right to claim any
Tax refund, offset or other reduction in Tax liability or consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or its Subsidiaries;
(l) enter into any agreement, agreement in principle, letter of intent,
memorandum of understanding, or similar Contract with respect to any joint
venture, strategic partnership, or alliance;
(m) take any action to exempt any Person from, or make any acquisition of
securities of the Company by any Person not subject to, any state
anti-takeover statute or similar statute or regulation that applies to the
Company, with respect to a Takeover Proposal or otherwise, including the
restrictions on "business combinations" set forth in Section 203 of the DGCL,
except for Parent, Merger Sub, or any of their respective Subsidiaries or
Affiliates, or the transactions contemplated by this Agreement;
(n) abandon, allow to lapse, sell, assign, transfer, grant any security
interest in, fail to renew or extend, or otherwise encumber or dispose of any
material Company IP, or grant any right or license to any Company IP other
than pursuant to non-exclusive licenses entered into in the ordinary course of
business consistent with past practice;
(o) modify any privacy policies of the Company or any of its Subsidiaries
or the integrity, security, or operation of the Company IT Systems in any
manner adverse to the Company and its Subsidiaries, individually or in the
aggregate;
(p) terminate or modify in any material respect, or fail to exercise
renewal rights with respect to, any material insurance policy;
(q) engage in any transaction with, or enter into any agreement,
arrangement or understanding with, any Affiliate of the Company or other
Person covered by Item 404 of Regulation S-K promulgated by the SEC that would
be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated
by the SEC;
(r) adopt or implement any stockholder rights plan or similar arrangement;
(s) terminate or modify any Company Employee Plans maintained by the
Company or its Subsidiaries; or
(t) agree or commit to do any of the foregoing.
39
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Section 5.02
Access to Information; Confidentiality.
(a)
Access to Information
. From the date of this Agreement until the earlier to occur of the Effective
Time or the termination of this Agreement in accordance with the terms set
forth in ARTICLE VII, the Company shall, and shall cause its Subsidiaries to,
afford to Parent and Parent's Representatives reasonable access, at reasonable
times during normal business hours and in a manner as shall not unreasonably
interfere with the business or operations of the Company or any Subsidiary
thereof, upon prior notice to the Company, to the officers, employees,
properties, offices, and other facilities and to all books, records,
contracts, and other assets of the Company and its Subsidiaries, and the
Company shall, and shall cause its Subsidiaries to, promptly furnish to Parent
such other information concerning the business and properties of the Company
and its Subsidiaries as Parent may reasonably request from time to time;
provided, however,
that neither the Company nor any of its Subsidiaries shall be required to
provide access to or furnish or disclose such information to the extent that
the Company reasonably believes that such access or disclosure would (i)
jeopardize the protection of, or result in the loss of, attorney-client
privilege or breach, contravene or violate any Law (it being agreed that the
parties shall use their reasonable best efforts to cause such information to
be provided in a manner that would not result in such jeopardy, loss, or
contravention), (ii) result in the disclosure of any trade secrets of third
parties in violation of applicable Law or any confidentiality obligations owed
to any third party or otherwise breach, contravene or violate any effective
Contract existing on the date hereof to which the Company or any of its
Subsidiaries is a party, (iii) result in the disclosure of materials provided
to the Company Board or resolutions or minutes of the Company Board, in each
case, that were provided to the Company Board in connection with its
consideration of the Merger or the sale process leading to the Merger. No
investigation by Parent or Parent's Representatives hereunder shall affect the
Company's representations, warranties, covenants, or agreements contained
herein, or limit or otherwise affect the remedies available to Parent or
Merger Sub pursuant to this Agreement. Notwithstanding anything contained in
this Agreement to the contrary, neither the Company nor any of its
Subsidiaries shall be required to provide any access or furnish any
information pursuant to this
Section 5.02
to the extent such access or information is reasonably pertinent to a Legal
Action where the Company or any of its affiliates, on the one hand, and Parent
or any of its affiliates, on the other hand, are adverse parties or reasonably
likely to become adverse parties. The Company may, as it deems advisable and
necessary, reasonably designate any competitively sensitive material to be
provided to the other under this
Section 5.02
as "Outside Counsel Only Material." Such materials and information contained
therein shall be given only to the outside legal counsel of the recipient and
will not be disclosed by such outside legal counsel to employees (including
in-house legal counsel), officers, directors or other independent contractors
(including accountants and expert witnesses) of the recipient unless express
permission is obtained in advance from the source of the materials or its
legal counsel.
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(b)
Confidentiality
. Each party agrees that all information provided to the other party or the
other party's Representatives in connection with this Agreement and the
consummation of the transactions contemplated hereby, including any
information obtained pursuant to
Section 5.02(a)
, shall be treated in accordance with the Confidentiality Agreement, dated
February 1, 2024, between Parent and the Company (the "
Confidentiality Agreement
"). Parent and the Company shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Confidentiality Agreement, which shall survive the termination of this
Agreement in accordance with the terms set forth therein. Prior to the
Closing, each of Parent and Merger Sub shall not, and shall cause their
respective Representatives not to, contact or otherwise communicate with the
employees (other than members of the Company's senior leadership team),
customers, suppliers, or distributors of the Company and its Subsidiaries, or,
except as required pursuant to
Section 5.08
, any Governmental Entity, regarding the business of the Company, this
Agreement or the transactions contemplated by this Agreement without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, conditioned or delayed.
Section 5.03
No Solicitation.
(a)
Takeover Proposal
. Except as permitted by this
Section 5.03
, during the period from the date of this Agreement until the earlier of the
Effective Time or the valid termination of this Agreement in accordance with
its terms, the Company shall not, and shall direct its Subsidiaries and the
Company's and its Subsidiaries' respective Representatives not to, directly or
indirectly: (i) solicit, initiate or induce the making, submission or
announcement of, or knowingly encourage or facilitate, any Takeover Proposal
or any proposal that could reasonably be expected to lead to any Takeover
Proposal; (ii) continue, conduct, or engage in any discussions or negotiations
with any third party (other than solely informing a third party of the
existence of the provisions contained in this
Section 5.03
), disclose any non-public information relating to the Company or any of its
Subsidiaries to any third party, afford access to the business, properties,
assets, books, or records of the Company or any of its Subsidiaries to any
third party, in any such case where such action is intended to or could
reasonably be expected to induce, assist, participate in, or knowingly
facilitate or encourage any effort by, any third party (or its potential
sources of financing) that is contemplating or seeking to make, or has made,
any Takeover Proposal; (iii) except where a failure to do so would reasonably
be expected to be inconsistent with the fiduciary duties of the Company Board,
amend or grant any waiver or release under any standstill or similar agreement
with respect to any class of equity securities of the Company or any of its
Subsidiaries; (iv) approve, endorse or recommend any Takeover Proposal; (v)
approve any transaction under, or any third party other than Parent and Merger
Sub becoming an "interested stockholder" under, Section 203 of the DGCL; (vi)
enter into any agreement in principle, letter of intent, memorandum of
understanding, term sheet, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement, or other Contract
(other than an Acceptable Confidentiality Agreement) contemplating or relating
to any Takeover Proposal (each, a "
Company Acquisition Agreement
"); or (vii) approve, authorize, agree, or publicly announce any intention to
do any of the foregoing. The Company shall, and shall direct its Subsidiaries
and the Company's and its Subsidiaries' Representatives to immediately cease
and cause to be terminated any and all existing activities, discussions, or
negotiations, if any, with any third party conducted prior to the date hereof
with respect to any Takeover Proposal and shall use its reasonable best
efforts to cause any such third party (or its agents or advisors) in
possession of non-public information in respect of the Company or any of its
Subsidiaries that was furnished by or on behalf of the Company and its
Subsidiaries to return or destroy (and confirm destruction of) all such
information.
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(b)
Permitted Conduct Related to Certain Takeover Proposals
. Notwithstanding
Section 5.03(a)
, prior to the receipt of the Requisite Company Vote, the Company Board,
directly or indirectly through any Representative, may, subject to
Section 5.03(c)
and
Section 5.03(d)
: (i) participate or engage in negotiations or discussions with any third
party (and its Representatives, prospective debt and equity financing sources
and/or their respective Representatives) that has made or is making (and not
withdrawn) a bona fide, unsolicited, written Takeover Proposal that the
Company Board believes in good faith, based on information then available and
after consultation with its financial advisors and outside legal counsel,
constitutes or could reasonably be expected to lead to a Superior Proposal;
and (ii) furnish to such third party (and its Representatives, prospective
debt and equity financing sources and/or their respective Representatives) any
non-public information relating to the Company or any of its Subsidiaries, or
afford to such third party making such Takeover Proposal (and its
Representatives, prospective debt and equity financing sources and/or their
respective Representatives) access to the business, properties, assets, books,
records or other non-public information, or to any personnel, of the Company
or any of its Subsidiaries, pursuant to an executed confidentiality agreement
that constitutes an Acceptable Confidentiality Agreement (a copy of which
confidentiality agreement shall be provided promptly to Parent for
informational purposes (and in all events within 24 hours));
provided
, in each such case that: (A) none of the Company or its Subsidiaries or any
of their respective Representatives shall have violated any of the provisions
of this
Section 5.03
, and (B) the Company Board first shall have determined in good faith, after
consultation with its financial advisors and outside legal counsel, that it is
required to take such action consistent with its fiduciary duties under
applicable Law.
(c)
Notification to Parent
. The Company Board shall promptly (and in any event within 24 hours) notify
Parent if the Company determines to begin providing information or to engage
in discussions or negotiations concerning a Takeover Proposal pursuant to
Section 5.03(b)
. The Company shall promptly (and in any event within 24 hours) notify Parent
in the event that it obtains Knowledge of the receipt by the Company (or any
of its Representatives) of any Takeover Proposal, any inquiry that could
reasonably be expected to lead to a Takeover Proposal, any request for
non-public information relating to the Company or any of its Subsidiaries or
for access to the business, properties, assets, books, or records of the
Company or any of its Subsidiaries by any third party. In such notice, the
Company shall identify the third party making, and details of the material
terms and conditions of, any such Takeover Proposal, indication or request,
including any proposed financing. The Company shall keep Parent informed, on a
current basis, of the status and terms of any such Takeover Proposal,
indication or request, including any amendments or proposed amendments as to
price, proposed financing, and other material terms thereof. The Company shall
provide Parent with at least two (2) Business Days' prior notice of any
meeting of the Company Board (or such lesser notice as is provided to the
members of the Company Board) at which the Company Board is reasonably
expected to consider any Takeover Proposal. At least two (2) Business Days
prior to furnishing or making available to any third party any non-public
information concerning the Company and any of its Subsidiaries or their
respective businesses, present or future performance, financial condition, or
results of operations, the Company shall furnish copies of all such non-public
information to Parent, to the extent such information has not been previously
provided to Parent.
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(d)
Permitted Conduct Related to a Superior Proposal
. Notwithstanding anything to the contrary contained in
Section 5.03(a)
, if the Company has received a bona fide written Takeover Proposal that the
Company Board determines in good faith, after consultation with its financial
advisors and outside legal counsel, constitutes, or could reasonably be
expected to lead to, a Superior Proposal, at any time prior to the receipt of
the Requisite Company Vote, the Company Board may: (i) effect a Company
Adverse Recommendation Change with respect to such Superior Proposal or (ii)
terminate this agreement pursuant to
Section 7.04(a)
in order to enter into a Company Acquisition Agreement with respect to such
Superior Proposal, in each case, that did not result from a breach of this
Section 5.03
, if: (A) the Company promptly notifies Parent, in writing, at least five (5)
Business Days (the "
Superior Proposal
Notice Period
") before taking the action described in clause (i) or (ii) of this
Section 5.03(d)
, of its intention to take such action with respect to such Takeover Proposal,
which notice shall state expressly that the Company has received a Takeover
Proposal that the Company Board intends to declare is a Superior Proposal, and
that the Company Board intends to take the action described in clause (i) or
(ii) of this
Section 5.03(d)
; (B) the Company specifies the identity of the party making the Takeover
Proposal and the material terms and conditions thereof in such notice and
includes an unredacted copy of the Takeover Proposal and attaches to such
notice the most current version of any proposed agreement (which version shall
be updated on a prompt basis) for such Takeover Proposal and any related
documents, including financing documents, to the extent provided by the
relevant party in connection with the Takeover Proposal; (C) the Company and
its Representatives, during the Superior Proposal Notice Period, negotiate
with Parent in good faith to make such adjustments in the terms and conditions
of this Agreement so that such Takeover Proposal ceases to constitute a
Superior Proposal, if requested by Parent and Parent, in its discretion,
proposes to make such adjustments (it being agreed that in the event that,
after commencement of the Superior Proposal Notice Period, there is any
revision to the material terms of a Superior Proposal, including any revision
in price or financing, the Company shall be required to deliver a new written
notice to Parent satisfying the requirements of clause (A) of this sentence
and to comply with the requirements of this
Section 5.03(d)
with respect to such new written notice, and the Superior Proposal Notice
Period shall be deemed to have recommenced on the date of such new notice (it
being understood that there may be multiple extensions); and (D) the Company
Board determines in good faith, after consulting with its financial advisors
and outside legal counsel, that such Takeover Proposal continues to constitute
a Superior Proposal (after taking into account any adjustments made by Parent
during the Superior Proposal Notice Period in the terms and conditions of this
Agreement) and that the failure to take such action would be reasonably likely
to be inconsistent with its fiduciary duties under applicable Law.
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(e)
Intervening Event
. Notwithstanding anything to the contrary contained in
Section 5.03(a)
, the Company Board may at any time prior to the receipt of the Requisite
Company Vote effect a Company Adverse Recommendation Change if (i) the Company
Board determines, in good faith, after consultation with its financial
advisors and outside legal counsel, that an Intervening Event has occurred and
is continuing and (ii) the failure to effect a Company Adverse Recommendation
Change in response to such Intervening Event would be reasonably likely to be
inconsistent with its fiduciary duties to the stockholders of the Company
under applicable Law;
provided, however,
that such Company Adverse Recommendation Change shall not occur unless (A) the
Company shall have given Parent written notice advising Parent of the material
information and facts relating to such Intervening Event, and that the Company
Board intends to hold a meeting to consider and determine whether to make a
Company Adverse Recommendation Change in response to such Intervening Event,
at least five (5) Business Days' prior to any such meeting of the Company
Board, (B) during such five (5)-Business Day period, the Company has
negotiated in good faith with Parent (to the extent Parent wishes to so
negotiate) to make such adjustments to the terms and conditions of this
Agreement as would obviate the need for the Company Board to effect a Company
Adverse Recommendation Change, and (C) at the end of such five (5) Business
Day period, the Company Board (after consultation with its financial advisors
and outside legal counsel and taking into account any adjustments offered by
Parent to the terms and conditions of this Agreement) makes a determination
described in this clause (ii) that the failure of the Company Board to make
such a Company Adverse Recommendation Change in response to such Intervening
Event would be reasonably likely to be inconsistent with its fiduciary duties
to the stockholders of the Company under applicable Law;
provided, further,
that each time any material amendment, modification or change to the
Intervening Event occurs (whether before or after the Company Board makes such
a determination), the Company shall notify Parent of such material amendment,
modification or change in writing and such written notice shall commence a new
five (5)-Business Day period during which the Company shall negotiate in good
faith with Parent (to the extent Parent wishes to so negotiate) adjustments to
the terms and conditions of this Agreement as contemplated above (it being
understood that there may be multiple such extensions).
(f)
Compliance with Tender Offer Rules
. Nothing contained herein shall prevent the Company Board or any committee
thereof from (i) disclosing to the Company's stockholders a position
contemplated by Rule 14d-9, Rule 14e-2(a) or Item 1012(a) of Regulation M-A
promulgated under the Exchange Act, or (ii) making any disclosure to the
stockholders of the Company if the Company Board reasonably determines in good
faith, after consultation with its financial advisors and outside legal
counsel, that the failure to make such disclosure would be reasonably likely
to be inconsistent with the Company Board's fiduciary duties to the
stockholders of the Company or violate applicable Law;
provided, however,
that this
Section 5.03(f)
shall not be deemed to permit the Company Board to make a Company Adverse
Recommendation Change or take any other actions prohibited by this
Section 5.03
except to the extent expressly permitted by
Section 5.03(b)
,
Section 5.03(d)
and
Section 5.03(e)
, and
provided further,
that any public disclosure (other than any "stop, look and listen" statement
made under Rule 14d-9(f) under the Exchange Act) by the Company or the Company
Board (or any committee thereof) relating to any determination, position or
other action by the Company, the Company Board or any committee thereof with
respect to any Takeover Proposal shall be deemed to be a Company Adverse
Recommendation Change unless the Company expressly and publicly reaffirms the
Company Board Recommendation in such disclosure.
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Section 5.04
Stockholders Meeting; Preparation of Proxy Materials; Approval by Sole
Stockholder of Merger Sub.
(a)
Company Stockholders Meeting
. The Company shall take all action necessary in accordance with the DGCL and
the Charter Documents to duly call, give notice of, convene, and hold the
Company Stockholders Meeting as soon as reasonably practicable after the date
of this Agreement. Except to the extent that the Company Board shall have
effected a Company Adverse Recommendation Change as permitted by
Section 5.03
hereof, the Company Proxy Statement shall include the Company Board
Recommendation. Subject to
Section 5.03
hereof, the Company shall use reasonable best efforts in compliance with all
applicable Laws, to solicit from the holders of Company Common Stock proxies
in favor of the adoption of this Agreement and approval of the Merger
(including by postponing or adjourning the Company Stockholders Meeting to
allow additional solicitation of proxies in order to obtain the Requisite
Company Vote, if necessary). The Company may, if it receives an unsolicited
Takeover Proposal or if the Company Board otherwise determines in good faith
after consultation with outside counsel that the Company's failure to provide
the stockholders with additional information would cause the Company Proxy
Statement to contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, delay the mailing of the Company Proxy Statement or the
holding of the Company Meeting, in each case for such reasonable period as
would provide a reasonable opportunity for the Company Board to consider such
Takeover Proposal or such additional information and to determine what
additional actions the Company Board may be required to take in response
thereto in order to comply with its fiduciary duties to the stockholders of
the Company under applicable Law, in any case as permitted by
Section 5.03
. The Company shall set a record date for Persons entitled to notice of, and
to vote at, the Company Stockholders Meeting. The Company shall keep Parent
updated with respect to proxy solicitation results. The Company shall have the
right, after good faith consultation with Parent, to, and shall at the request
of Parent, postpone or adjourn the Company Stockholders Meeting: (A) for the
absence of a quorum, (B) to allow reasonable additional time to solicit
additional proxies if necessary in order to obtain the Requisite Company Vote,
(C) to allow reasonable additional time for the filing and mailing of any
necessary supplement or amendment to the Company Proxy Statement as provided
above, (D) with the consent of Parent (not to be unreasonably withheld,
conditioned or delayed), or (E) if required by Law.
45
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(b)
Preparation of Company Proxy Statement
. In connection with the Company Stockholders Meeting, as soon as reasonably
practicable following the date of this Agreement (and no later than thirty
(30) days after the date hereof), the Company shall prepare and file the
Company Proxy Statement with the SEC. Parent, Merger Sub, and the Company will
cooperate and consult with each other in the preparation of the Company Proxy
Statement. Without limiting the generality of the foregoing, each of Parent
and Merger Sub will furnish the Company the information relating to it
required by the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Company Proxy Statement. The Company shall
not file the Company Proxy Statement, or any amendment or supplement thereto,
without providing Parent a reasonable opportunity to review and comment
thereon (which comments shall be reasonably considered by the Company). The
Company shall use its reasonable best efforts to cause the Company Proxy
Statement to comply as to form with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder. The Company shall use its
reasonable best efforts to resolve, and each party agrees to consult and
cooperate with the other party in resolving, all SEC comments with respect to
the Company Proxy Statement as promptly as practicable after receipt thereof
and to cause the Company Proxy Statement in definitive form to be cleared by
the SEC and mailed to the Company's stockholders as promptly as reasonably
practicable following filing with the SEC. The Company agrees to consult with
Parent prior to responding to SEC comments with respect to the preliminary
Company Proxy Statement. Each of Parent, Merger Sub, and the Company agree to
correct any information provided by it for use in the Company Proxy Statement
which shall have become false or misleading and the Company shall promptly
prepare and mail to its stockholders an amendment or supplement setting forth
such correction. The Company shall as soon as reasonably practicable: (i)
notify Parent of the receipt of any comments from the SEC with respect to the
Company Proxy Statement and any request by the SEC for any amendment to the
Company Proxy Statement or for additional information; and (ii) provide Parent
with copies of all written correspondence between (A) the Company or its
Representatives, on the one hand, and (B) the SEC, on the other hand, with
respect to the Company Proxy Statement.
(c)
Approval by Sole Stockholder of Merger Sub
. Immediately following the execution and delivery of this Agreement, Parent,
as sole stockholder of Merger Sub, shall adopt this Agreement and approve the
Merger, in accordance with the DGCL.
Section 5.05
Notices of Certain Events.
From and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement in accordance with
ARTICLE VII
, subject to applicable Law, the Company shall notify Parent and Merger Sub,
and Parent and Merger Sub shall notify the Company, promptly 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
contemplated by this Agreement; (b) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by this
Agreement; (c) any Legal Action by or before any Governmental Entity being
initiated by or against such party or any of its Subsidiaries, or, in the case
of the Company only, known by such party to be threatened against such party
or any of its Subsidiaries or any of their respective directors, officers,
employees, or stockholders in their capacity as such, with respect to the
Merger, or of any written correspondence received by such party from any
Person asserting or threatening a claim with respect to the Merger or, in the
case of the Company, any of the Company's assets or properties, in each case,
that is, or is reasonably likely to be, material to the Company or any of and
its Subsidiaries and (d) any event, change, or effect between the date of this
Agreement and the Effective time which, individually or in the aggregate,
would reasonably be expected to result in the failure of any of the conditions
set forth in
ARTICLE VI
of this Agreement to be satisfied;
provided, that
the delivery of any notice pursuant to this
Section 5.05
shall not cure any breach of, or noncompliance with, any other provision of
this Agreement or limit the remedies available to the party receiving such
notice.
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Section 5.06
Employees; Benefit Plans.
(a)
Comparable Salary and Benefits
. During the period commencing at the Effective Time and ending on the date
which is twelve (12) months from the Effective Time (or if earlier, the date
of the employee's termination of employment with Parent and its Subsidiaries),
and to the extent consistent with the terms of the governing plan documents,
Parent shall cause the Surviving Corporation and each of its Subsidiaries, as
applicable, to provide the employees of the Company and its Subsidiaries who
remain employed immediately after the Effective Time (collectively, the "
Company Continuing Employees
") with (i) annual base salary or wage level that is not less than the base
salary or wage level provided to such Company Continuing Employee immediately
prior to the Effective Time, (ii) annual target bonus opportunities (excluding
equity-based compensation) that is not materially less favorable than the
annual target bonus opportunities (excluding equity-based compensation)
provided to such Company Continuing Employee immediately prior to the
Effective Time, and (iii) other employee benefits (excluding any retiree
health or defined benefit retirement benefits) that are not materially less
favorable, in the aggregate, than the employee benefits (excluding any retiree
health or defined benefit retirement benefits) provided by the Company and its
Subsidiaries on the date of this Agreement.
(b)
Treatment of 2024 Bonus Plans
. Parent shall, or shall cause the Parent Subsidiaries, including the
Surviving Corporation, to assume, honor and continue each of the Company's
2024 annual cash bonus plans that are in effect at the Effective Time, solely
as such plans apply to the calendar year 2024, without any amendment or
modification thereto, other than an amendment or modification required to
comply with applicable Law or that is consented to by the Company Continuing
Employee(s) impacted by such amendment or modification.
(c)
Waiver of Certain Conditions; Recognition of Prior Service
. Parent shall, or shall cause the Surviving Corporation and each applicable
Subsidiary to, use commercially reasonable efforts to waive, or cause to be
waived, any pre-existing condition limitations, exclusions, evidence of
insurability, actively at work requirements and waiting periods under any
welfare benefit plan in which the Company Continuing Employees (and their
eligible dependents) will be eligible to participate from and after the
Effective Time. Parent shall, or shall cause the Surviving Corporation to,
credit and recognize, or cause to be credited and recognized the dollar amount
of all co-payments deductibles, offsets and similar expenses incurred by each
Company Continuing Employee (and his or her eligible dependents) during the
calendar year in which the Effective Time occurs for purposes of satisfying
each year's deductible, out of pocket, co-payment or similar limitations or
requirements under the relevant welfare benefit plans in which such Company
Continuing Employee (and their eligible dependents) will be eligible to
participate from and after the Effective Time. In addition, for purposes of
determining eligibility to participate, level of benefits, vesting, and
benefit accruals, each Company Continuing Employee's service with (or service
otherwise recognized by) the Company or any of its Subsidiaries, as reflected
on the Company's records, shall be treated as service with Parent, the
Surviving Corporation, or a Subsidiary thereof; provided, however, that such
service need not be recognized with respect to any defined benefit pension
plan, nonqualified deferred compensation plan, or severance benefit plan, or
to the extent that such recognition would result in duplication of benefits.
47
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(d)
Termination of Benefit Plans
. Effective no later than the day immediately preceding the Closing Date, the
Company shall terminate any Company Employee Plans maintained by the Company
or its Subsidiaries that Parent has requested to be terminated by providing a
written notice to the Company at least thirty (30) days prior to the Closing
Date;
provided, that
such Company Employee Plans can be terminated in accordance with their terms
and applicable Law without any adverse consequences with respect to any
Company ERISA Affiliate; and
provided further, that
nothing in this
Section
5.06(d)
shall limit Parent's obligation to cause the Surviving Corporation and each of
its Subsidiaries, as applicable, to provide employee benefits to Company
Continuing Employees to the extent required by
Section
5.06(a)
. No later than the day immediately preceding the Closing Date, the Company
shall provide Parent with evidence that such Company Employee Plans have been
terminated.
(e)
Employees Not Third-Party Beneficiaries
. This
Section 5.06
shall be binding upon and inure solely to the benefit of each of the parties
to this Agreement, and nothing in this
Section 5.06
, express or implied, shall confer upon any Company Employee (including any
Company Continuing Employee), any beneficiary, or any other Person any rights
or remedies of any nature whatsoever under or by reason of this
Section 5.06
. Nothing contained herein, express or implied: (i) shall be construed to
establish, amend, or modify any benefit plan, program, agreement, or
arrangement; (ii) shall alter or limit the ability of the Surviving
Corporation, Parent, or any of their respective Affiliates to amend, modify,
or terminate any benefit plan, program, agreement, or arrangement at any time
assumed, established, sponsored, or maintained by any of them; or (iii) shall
prevent the Surviving Corporation, Parent, or any of their respective
Affiliates from terminating the employment of any Company Continuing Employee
following the Effective Time. The parties hereto acknowledge and agree that
the terms set forth in this
Section 5.06
shall not create any right in any Company Employee (including any Company
Continuing Employee) or any other Person to any continued employment with the
Surviving Corporation, Parent, or any of their respective Subsidiaries or
compensation or benefits of any nature or kind whatsoever, or otherwise alters
any existing at-will employment relationship between any Company Employee and
the Surviving Corporation.
(f)
Prior Written Consent
. With respect to matters described in this
Section 5.06
, the Company will not send any written notices or other written communication
materials to Company Employees without the prior written consent of Parent
(not to be unreasonably withheld, conditioned or delayed).
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Section 5.07
Directors
'
and Officers
'
Indemnification and Insurance.
(a)
Indemnification
. From and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless, and shall
advance expenses as incurred, to the fullest extent provided under (i) the
Charter Documents in effect as of the date of this Agreement and (ii) any
Contract of the Company or its Subsidiaries in effect as of the date of this
Agreement and listed on
Section 5.07
of the Company Disclosure Schedule, each present and former director and
officer of the Company and its Subsidiaries and each of their respective
employees who serves as a fiduciary of a Company Employee Plan (each an "
Indemnified Party
") against any costs or expenses (including reasonable attorneys' fees),
judgments, settlements, fines, losses, claims, damages or liabilities incurred
in connection with any Legal Action or investigation, whether civil, criminal,
administrative or investigative, whenever asserted, arising out of or
pertaining to matters existing or occurring at or prior to the Effective Time,
including in connection with this Agreement or the transactions contemplated
by this Agreement. Parent agrees that all rights to indemnification,
advancement of expenses, and exculpation arising from, relating to, or
otherwise in respect of, acts or omissions occurring at or prior to the
Effective Time (including in connection with this Agreement or the
Transactions) existing as of the Effective Time in favor of any Indemnified
Party as provided in the Charter Documents of the Company or pursuant to any
other Contracts of the Company or its Subsidiaries, in each case as in effect
on the date of this Agreement and disclosed on
Section 5.07
of the Company Disclosure Schedule, shall survive the Merger and shall
continue in full force and effect in accordance with their terms, and shall be
observed by the Surviving Corporation to the fullest extent permitted by
applicable Law. For a period of no less than six (6) years from the Effective
Time, the Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, cause the Charter Documents of the Surviving Corporation to
maintain in effect provisions with respect to indemnification, advancement of
expenses, and exculpation that are at least as favorable to the Indemnified
Parties as the indemnification, advancement of expenses, and exculpation
provisions set forth in the Charter Documents of the Company as of the date of
this Agreement or in any Contract of the Company or its Subsidiaries with any
of their respective directors, officers or employees in effect as of the date
of this Agreement and disclosed on
Section 5.07
of the Company Disclosure Schedule, and shall not amend, repeal or otherwise
modify any such provisions in any manner, except as required by Law, that
would adversely affect the rights thereunder of any individuals who
immediately before the Effective Time were current or former directors,
officers or employees of the Company or its Subsidiaries;
provided, however,
that all rights to exculpation, indemnification and advancement of expenses in
respect of any claim made within such period shall continue until the final
disposition of such Proceeding, as provided in the Charter Documents of the
Company or any Contract listed on
Section 5.07
of the Company Disclosure Schedule.
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(b)
Insurance
. The Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to obtain, as of the Effective Time, "tail" policies to the
current directors' and officers' liability insurance maintained on the date of
this Agreement by the Company with a claims period of six (6) years from the
Effective Time with at least the same coverage and amounts and containing
terms and conditions that are not less advantageous to the Indemnified
Parties, or, if substantially equivalent insurance coverage is unavailable,
the best available coverage, in each case with respect to claims arising out
of or relating to events which occurred before or at the Effective Time;
provided, however,
that in no event will the Surviving Corporation be required to pay aggregate
annual premiums for such coverage in excess of 350% percent of the last annual
premium paid by the Company or any of its Subsidiaries for such insurance
prior to the date of this Agreement, which amount is set forth in
Section 5.07(b)
of the Company Disclosure Schedule (the "
Maximum Premium
"). If such insurance coverage cannot be obtained at an annual aggregate
premium equal to or less than the Maximum Premium, the Surviving Corporation
will obtain, and Parent will cause the Surviving Corporation to obtain, the
greatest coverage available for a cost not exceeding an annual aggregate
premium equal to the Maximum Premium. The provisions of the immediately
preceding sentence shall be deemed to have been satisfied if prepaid policies
have been obtained by the Company prior to the Effective Time, which policies
provide such directors and officers with such coverage for an aggregate period
of six (6) years with respect to claims arising from facts or events that
occurred on or before the Effective Time, including in respect of this
Agreement or the transactions contemplated by this Agreement. For the
avoidance of doubt, and notwithstanding anything herein to the contrary, the
Company shall be permitted, at its sole discretion, to obtain such prepaid
policies that provide such coverage prior to the Effective Time.
(c)
Survival
. The obligations of Parent and the Surviving Corporation under this
Section 5.07
(i) are intended to be for the benefit of, and shall be enforceable by, each
Indemnitee, his or her heirs and his or her representatives, and (ii) shall
survive the consummation of the Merger and shall not be terminated or modified
in such a manner as to adversely affect any Indemnified Party to whom this
Section 5.07
applies without the written consent of such affected Indemnified Party (it
being expressly agreed that the Indemnified Parties to whom this
Section 5.07
applies shall be third party beneficiaries of this
Section 5.07
, each of whom may enforce the provisions of this
Section 5.07
as to himself or herself).
(d)
Assumption by Successors and Assigns; No Release or Waiver
. In the event Parent, the Surviving Corporation or any of their respective
successors or assigns: (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity in such
consolidation or merger; or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in either such case, Parent and
the Surviving Corporation shall cause proper provision to be made so that such
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall expressly assume all of the obligations set forth in this
Section 5.07
. The agreements and covenants contained herein shall not be deemed to be
exclusive of any other rights to which any Indemnified Party is entitled,
whether pursuant to Law, Contract, or otherwise. Nothing in this Agreement is
intended to, shall be construed to, or shall release, waive, or impair any
rights to directors' and officers' insurance claims under any policy that is
or has been in existence with respect to the Company or its officers,
directors, and employees, it being understood and agreed that the
indemnification or advancement of expenses provided for in this
Section 5.07
is not prior to, or in substitution for, any such claims under any such
policies.
50
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Section 5.08
Reasonable Best Efforts.
(a)
Governmental and Other Third-Party Approvals; Cooperation and Notification
. Upon the terms and subject to the conditions set forth in this Agreement
(including those contained in this
Section 5.08
), each of the parties hereto shall, and shall cause its Subsidiaries 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, and to satisfy all conditions to, in the most expeditious manner
practicable (and in any event no later than the End Date), the Merger and the
other transactions contemplated by this Agreement, including: (i) the
obtaining of all necessary Permits, waivers, and actions or nonactions from
Governmental Entities and the making of all necessary registrations, filings,
and notifications (including filings with Governmental Entities) and the
taking of all steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entities; (ii) the
obtaining of all material consents or waivers required to be obtained from
third parties;
provided, however
, that the Company shall not be obligated to pay any consideration therefor to
any third party from whom consent or approval is requested; and (iii) the
execution and delivery of any additional instruments necessary to consummate
the Merger and to fully carry out the purposes of this Agreement. The Company
and Parent shall, subject to applicable Law, promptly: (A) cooperate and
coordinate with the other in the taking of the actions contemplated by clauses
(i), (ii), and (iii) immediately above; and (B) supply the other with any
information that may be reasonably required in order to effectuate the taking
of such actions. Each party hereto shall promptly inform the other party or
parties hereto, as the case may be, of any communication from any Governmental
Entity regarding any of the transactions contemplated by this Agreement. If
the Company, on the one hand, or Parent or Merger Sub, on the other hand,
receives a request for additional information or documentary material from any
Governmental Entity with respect to the transactions contemplated by this
Agreement, then it shall use reasonable best efforts to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request, and, if
permitted by applicable Law and by any applicable Governmental Entity, provide
the other party's counsel with advance notice and the opportunity to attend
and participate in any meeting with any Governmental Entity in respect of any
filing made thereto in connection with the transactions contemplated by this
Agreement. Neither Parent nor the Company shall commit to or agree (or permit
any of their respective Subsidiaries to commit to or agree) with any
Governmental Entity to stay, toll, or extend any applicable waiting period
under any applicable Antitrust Laws, without the prior written consent of the
other (such consent not to be unreasonably withheld, conditioned, or delayed).
The Company will pay all filing fees required to be paid to the SEC in
connection with the Company Proxy Statement, including the fees required by
Rule 0-11 and Rule 14a-6(i) under the Exchange Act, and Parent will pay, or
cause its affiliates to pay, all filing fees required under any other
regulatory Laws for any of the transactions contemplated by this Agreement.
(b)
Governmental Antitrust Authorities
. Without limiting the generality of the undertakings pursuant to
Section 5.08(a)
hereof, the parties hereto shall: (i) provide or cause to be provided as
promptly as reasonably practicable to Governmental Entities with jurisdiction
over the Antitrust Laws (each such Governmental Entity, a "
Governmental Antitrust Authority
") information and documents requested by any Governmental Antitrust Authority
as necessary, proper, or advisable to permit consummation of the transactions
contemplated by this Agreement, including preparing and filing any consents
and filings under any Antitrust Laws as promptly as practicable following the
date of this Agreement and thereafter to respond as promptly as practicable to
any request for additional information or documentary material that may be
made under any applicable Antitrust Laws; and (ii) subject to the terms set
forth in
Section 5.08(c)
hereof, use their reasonable best efforts to take such actions as are
necessary or advisable to obtain prompt approval of the consummation of the
transactions contemplated by this Agreement by any Governmental Entity or
expiration of applicable waiting periods.
51
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(c)
Actions or Proceedings
. The parties agree that Parent and the Company shall cooperate fully in
jointly devising and controlling the strategy for obtaining clearances,
approvals and waiting period expirations under Regulatory Laws, including any
filings, notifications, submissions and communications with or to any
Governmental Entity in connection therewith. In the event that any
administrative or judicial action or proceeding is instituted (or threatened
to be instituted) by a Governmental Entity or private party challenging the
Merger or any other transaction contemplated by this Agreement, or any other
agreement contemplated hereby, the Company shall cooperate with Parent and
Merger Sub and shall use its reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed, or overturned
any Order, whether temporary, preliminary, or permanent, that is in effect and
that prohibits, prevents, or restricts consummation of the transactions
contemplated by this Agreement.
(d)
Limitations
. Neither Parent nor Merger Sub shall, and Parent and Merger Sub shall cause
their Affiliates not to: (i) take any action the effect of which, or refrain
from taking any action the effect of refraining from which, could reasonably
be expected to materially delay or impede the ability of the parties to
consummate any of the transactions contemplated by this Agreement, or (ii)
acquire or agree to acquire (by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner), any Person if the entering into a definitive agreement relating
to, or the consummation of, such acquisition, merger or consolidation could
reasonably be expected to materially increase the risk of any Governmental
Entity seeking an Order prohibiting or that would reasonably be expected to
materially delay, the consummation of any of the transactions contemplated by
this Agreement.
(e)
No Divestitures; Other Limitations
. Notwithstanding anything to the contrary set forth in this Agreement, none
of Parent, Merger Sub, or any of their respective Subsidiaries shall be
required to, and the Company may not, without the prior written consent of
Parent, become subject to, consent to, or offer or agree to, or otherwise take
any action with respect to, any requirement, condition, limitation,
understanding, agreement, or Order to: (i) sell, license, assign, transfer,
divest, hold separate, or otherwise dispose of any assets, business, or
portion of business of the Company, the Surviving Corporation, Parent, Merger
Sub, or any of their respective Subsidiaries; (ii) conduct, restrict, operate,
invest, or otherwise change the assets, business, or portion of business of
the Company, the Surviving Corporation, Parent, Merger Sub, or any of their
respective Subsidiaries in any manner; or (iii) impose any restriction,
requirement, or limitation on the operation of the business or portion of the
business of the Company, the Surviving Corporation, Parent, Merger Sub, or any
of their respective Subsidiaries;
provided, that
if requested by Parent, the Company will become subject to, consent to, or
offer or agree to, or otherwise take any action with respect to, any such
requirement, condition, limitation, understanding, agreement, or Order so long
as such requirement, condition, limitation, understanding, agreement, or Order
is only binding on the Company in the event the Closing occurs.
52
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(f)
Continued Business Operation
. Nothing contained in this Agreement shall give Parent or Merger Sub,
directly or indirectly, the right to control, supervise or direct the
operations of the Company or its Subsidiaries prior to the consummation of the
Merger. Prior to the Effective Time, the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete unilateral control,
supervision and direction over its and its Subsidiaries' business operations.
Section 5.09
Public Announcements.
The initial press release with respect to this Agreement and the transactions
contemplated hereby shall be a release mutually agreed to by the Company and
Parent, and Parent and the Company will issue such press release promptly
following the execution of this Agreement. Thereafter, each of the Company and
Parent agrees that no public release, statement, announcement, or other
disclosure concerning the Merger and the other transactions contemplated
hereby shall be issued by any party without the prior written consent of the
other party (which consent shall not be unreasonably withheld, conditioned, or
delayed), except as may be required by: (a) applicable Law, (b) court process,
(c) the rules or regulations of any applicable United States securities
exchange, or otherwise disclosed in any Company SEC Documents, or (d) any
Governmental Entity to which the relevant party is subject or submits,
provided,
in each such case, the party making the release, statement, announcement, or
other disclosure shall use its reasonable best efforts to allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance. Notwithstanding the foregoing, the restrictions set forth in
this
Section 5.09
shall not apply to any release, statement, announcement or other disclosure
made with respect to: (i) a Superior Proposal or a Company Adverse
Recommendation Change, in each case, issued or made in compliance with
Section 5.03
; or (ii) any other disclosure issued or made in compliance with
Section 5.03
. The Company shall file one or more current reports on Form 8-K with the SEC
attaching the announcement press release and a copy of this Agreement as
exhibits.
Section 5.10
Anti-Takeover Statutes.
If any state takeover Law or state Law that purports to limit or restrict
business combinations or the ability to acquire or vote Shares (including any
"control share acquisition," "fair price," "moratorium," or other
anti-takeover Law) becomes or is deemed to be applicable to Parent, the Merger
Sub, the Company, the Merger, or any other transaction contemplated by this
Agreement, then each of the Company and the Company Board shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to render such anti-takeover Law
inapplicable to the foregoing.
Section 5.11
Section 16 Matters.
Prior to the Effective Time, the Company shall take all such steps as may be
reasonably necessary to cause to be exempt under Rule 16b-3 promulgated under
the Exchange Act any dispositions of shares of Company Common Stock (including
derivative securities with respect to such shares) that are treated as
dispositions under such rule and result from the transactions contemplated by
this Agreement by each director or officer of the Company who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect
to the Company immediately prior to the Effective Time.
53
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Section 5.12
Stock Exchange Delisting; Deregistration.
To the extent requested by Parent, prior to the Effective Time, the Company
shall reasonably cooperate with Parent and use its 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 the rules and policies of the Nasdaq to enable the delisting by the
Surviving Corporation of the shares of Company Common Stock from the Nasdaq
and the deregistration of the shares of Company Common Stock under the
Exchange Act as promptly as practicable after the Effective Time, and in any
event no more than ten (10) days after the Effective Time.
Section 5.13
Stockholder Litigation.
The Company shall promptly advise Parent after becoming aware of any Legal
Action commenced or threatened against the Company or any of its directors by
any stockholder of the Company (on their own behalf or on behalf of the
Company) relating to this Agreement, the transactions contemplated hereby
(including the Merger and the other transactions contemplated hereby) or any
disclosures contained in the Company Proxy Statement or publicly made in
connection therewith and shall keep Parent reasonably informed regarding any
such Legal Action. The Company shall: (a) give Parent the opportunity to
participate in the defense and settlement of any such stockholder litigation,
(b) keep Parent reasonably apprised on a prompt basis of proposed strategy and
other significant decisions with respect to any such stockholder litigation,
and provide Parent with the opportunity to consult with the Company regarding
the defense of any such litigation, which advice the Company shall consider in
good faith, and (c) not settle any such stockholder litigation without the
prior written consent of Parent (which consent shall not be unreasonably
withheld, delayed, or conditioned). Notwithstanding anything to the contrary
in this Section 5.13, any matters relating to Dissenting Shares shall be
governed by Section 2.03.
Section 5.14
Obligations of Merger Sub.
During the period from the date of this Agreement and the earlier of the
Effective Time or the valid termination of this Agreement in accordance with
ARTICLE VII
, Merger Sub shall not engage in any activity of any nature except for
activities contemplated by, related to or in furtherance of the transactions
contemplated by this Agreement (including enforcement of its rights under this
Agreement), and, subject to the foregoing, neither Parent nor Merger Sub shall
take or agree to take any action that would prevent or materially delay the
consummation of the transactions contemplated by this Agreement. Parent hereby
guarantees the prompt payment, performance and discharge by Merger Sub of, and
the compliance by Merger Sub with, all of the covenants, agreements,
obligations and undertakings of Merger Sub under this Agreement in accordance
with the terms of this Agreement, and covenants and agrees to take all actions
necessary or advisable to cause Merger Sub to perform its obligations under
this Agreement, and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
Section 5.15
Resignations.
At the written request of Parent, the Company shall cause each director of the
Company or any director of any of the Company's Subsidiaries to resign in such
capacity, with such resignations to be effective as of the Effective Time.
Section 5.16
Balance Sheet Cash.
The Company shall cause the balance sheet cash of the Company to be not less
than $14,200,000 as of the Closing Date, after (i) giving effect to the
payment of all expenses incurred by the Company and obligations of the
Surviving Corporation in connection with this Agreement and the Merger and
other transactions contemplated hereby, including but not limited to the
payments that the Surviving Corporation is required to make in respect of all
Company Stock Options and Company Phantom Stock Units pursuant to Section 2.07
and (ii) including all amounts expected to be received by the Company in
connection with the disposition of any of the Company's entities.
54
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Section 5.17
Further Assurances.
At and after the Effective Time, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Sub, any deeds, bills of sale, assignments, or
assurances and to take and do, in the name and on behalf of the Company or
Merger Sub, any other actions and things to vest, perfect, or confirm of
record or otherwise in the Surviving Corporation any and all right, title, and
interest in, to and under any of the rights, properties, or assets of the
Company owned, acquired or assumed or to be owned, acquired or assumed by the
Surviving Corporation as a result of, or in connection with, the Merger.
Section 5.18
Transfer Taxes.
All transfer, documentary, sales, use, stamp, registration and other similar
Taxes and all conveyance fees, and recording charges (including any penalties
and interest) incurred in connection with the Merger shall be borne by the
Surviving Corporation,
Section 5.19
Financing.
(a)
Parent shall use its commercially reasonable efforts to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary or
advisable to consummate on the Closing Date the Debt Financing on the terms
and subject to the conditions (including the "market flex" provisions) set
forth in the Debt Commitment Letter, including using its commercially
reasonable efforts to:
(i)
maintain in full force and effect the Debt Commitment Letter in accordance
with the terms and subject to the conditions thereof until the Merger is
consummated or this Agreement is terminated in accordance with its terms; and
without the prior written consent of the Company (which consent shall not be
unreasonably withheld, conditioned or delayed) not permit any amendment or
modification to be made to, not consent to any waiver of any provision or
remedy under, and not replace, the Debt Commitment Letter, in any case if such
amendment, modification, waiver or replacement imposes new or additional
conditions or otherwise materially amends or modifies any of the conditions to
the funding of the Debt Financing in a manner that could reasonably be
expected to delay or prevent the Closing; provided, that, Parent may amend,
modify or supplement the Debt Commitment Letter to (x) add lenders, lead
arrangers, bookrunners, syndication agents or similar entities who have not
executed the Debt Commitment Letter as of the date hereof, (y) effectuate any
"market flex" provisions contained therein; provided further, however, that,
Parent shall disclose to the Company its intention to enter into any such
amendment, modification, waiver or replacement of the Debt Commitment Letter
prior to the effectiveness of such amendment, modification, waiver or
replacement and shall promptly furnish to the Company copies of executed
versions of any such amendment, modification, waiver or replacement;
55
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(ii)
satisfy on a timely basis all conditions to the Debt Financing that are within
its control;
(iii)
negotiate, execute and deliver Debt Financing Documents that reflect and are
consistent with the terms contained in the Debt Commitment Letter (including
any "market flex" provisions related thereto) as the same may be amended,
modified or supplemented as permitted by this Agreement; and
in the event that all conditions set forth in
Section 6.01
and
Section 6.02
have been satisfied or waived or, upon funding of the Debt Financing would be
satisfied, cause the full amount of the Debt Financing to be funded as
contemplated by the Debt Commitment Letter at the Closing.
(b)
Parent shall provide to the Company, upon request, copies of all executed
agreements and other documents relating to the Debt Financing and keep the
Company informed on a reasonably current basis and in reasonable detail of all
material developments with respect to the status of its efforts to arrange the
Debt Financing.
(c)
Without the prior written consent of the Company (not to be unreasonably
withheld, conditioned or delayed), neither Parent nor any of its affiliates
shall take any action that could reasonably be expected to materially delay or
prevent the consummation of the Debt Financing.
(d)
If any Financing Failure Event occurs, Parent shall (unless Parent determines
that the affected portion of the Debt Financing is not reasonably required to
consummate the Merger) promptly notify the Company thereof and use its
commercially reasonable efforts to obtain, as promptly as practicable, on
terms reasonably as favorable to Parent (as reasonably determined by Parent)
as the terms of the Debt Commitment Letter, alternative debt financing ("
Debt Replacement Financing
") in an amount that would, together with other funds readily available to
Parent, be sufficient to pay the aggregate Merger Consideration on the Closing
Date. Parent shall deliver to the Company copies of all executed contracts or
other arrangements pursuant to which any alternative source shall have
committed to provide any portion of the Debt Replacement Financing (provided
that any fee letters in connection therewith may be redacted with respect to
interest rates, fee amounts, pricing caps and other similar economic terms
(including any "market flex" provisions). Any Debt Replacement Financing shall
be subject to the same obligations as set forth in this
Section 5.19
with respect to the Debt Financing.
(e)
All non-public or otherwise confidential information regarding the Company and
its Subsidiaries obtained by Parent or its representatives shall be kept
confidential in accordance with the Confidentiality Agreement, except that
Parent shall be permitted to disclose such information to potential investors
and lenders in connection with the Debt Financing subject to such investors
and lenders entering into customary confidentiality undertakings with respect
to such information.
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(f)
Notwithstanding anything contained in this
Section 5.19
or anything else in this Agreement to the contrary, in no event shall the
commercially reasonable efforts of Parent be deemed or construed to require
Parent to, and Parent shall not be required to, (x) incur or pay any fees to
obtain a waiver or amendment of any term of the Debt Commitment Letter or any
Debt Financing Documents in excess (in the aggregate) of those contemplated by
the Debt Commitment Letter as of the date hereof, (y) agree to conditionality
or economic terms of the Debt Financing that are less favorable to Parent than
those contemplated by the Debt Commitment Letter (including any market flex
provisions therein) as of the date hereof, or (z) obtain or seek equity
financing to supplement or replace all or any portion of the Debt Financing.
Section 5.20
Debt Financing Cooperation.
(a)
The Company shall use commercially reasonable efforts to provide such
cooperation in connection with the arrangement of the Debt Financing as is
customary for similar debt financings and is reasonably requested by Parent;
provided
, that (i) the Company shall in no event be required to provide any such
assistance that could reasonably be expected to unreasonably or materially
interfere with its business operations, (ii) neither the Parent nor any of its
Financing Sources shall have the right to perform any investigative procedures
that involve damage to any property or other assets of the Company or its
Subsidiaries, and (iii) nothing herein shall require the Company or any of its
Subsidiaries to furnish any information not customarily required for
completion of debt financings similar to the Debt Financing. Such assistance
shall include, but not be limited to, the following, each of which shall be at
Parent's written request with reasonable prior notice:
(i) cooperation with the Financing Sources' due diligence, including
participation in due diligence sessions conducted by conference call;
(ii)
participation by the senior management team of the Company in the customary
marketing activities undertaken in connection with the marketing of the Debt
Financing, including (A) preparation of customary marketing material and
authorization letters and participation in due diligence sessions related
thereto, and (B) a reasonable number of road shows and meetings with
prospective lenders and debt investors;
(iii)
participation by senior management of the Company in, and assistance with, the
preparation of rating agency presentations and meetings with rating agencies,
if necessary;
(iv)
delivery to Parent of the Financing Information and such other financial
information and other pertinent information regarding the Company and its
Subsidiaries and their respective businesses as Parent may reasonably request
in connection with the preparation of such marketing materials, road show
presentations or rating agency presentations;
(v)
participation by senior management of the Company in the negotiation of the
Debt Financing Documents;
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(vi)
preparation and delivery of all documentation and other information required
by regulatory authorities under applicable "know your customer," beneficial
ownership and anti-money laundering rules and regulations, including the
PATRIOT Act, to the extent requested by the Financing Sources;
(vii) taking such corporate actions as shall be reasonably requested by
Parent (which actions shall not be effective prior to the Closing) to
authorize and direct persons who shall remain officers or directors of the
Company or any of its Subsidiaries after the Closing to take such actions as
Parent or the Financing Sources shall reasonably request to facilitate the
consummation of the Debt Financing on the Closing Date, including (subject to
and contingent upon the Closing) the execution by and on behalf of the Company
or any of its Subsidiaries, as applicable, security agreements, financing
statements and other documents and instruments, in forms appropriate for
filing, necessary to pledge, grant security interests in, and otherwise
establish liens on the assets of the Company and its Subsidiaries;
(viii) the taking of such other actions and the execution and delivery of
such other certificates, documents and instruments, containing such
certifications, representations, covenants and agreements, by officers of the
Company as Parent or Parent's Financing Sources may reasonably request in
connection with the Debt Financing;
provided, however,
that (1) no obligation of the Company or any of its Subsidiaries under any
such certificate, document or instrument, nor any authorizing resolutions in
respect of the same, shall be effective until the Closing, it being understood
that all such obligations and authorizations shall be based on authorizations
(including the appointment of directors and authorized officers) provided by,
and derived exclusively from the authority of, Parent as the controlling
equityholder of the Company as constituted after giving effect to the Closing;
(2) none of the Company or any of its Subsidiaries shall be required to take
any action under any certificate, document or instrument that is not
contingent upon the Closing (including the entry into any agreement that is
effective before the Closing), that does not terminate without liability to
the Company upon the termination of this Agreement or that would be effective
prior to the Closing; and (3) the foregoing provisions shall not require
cooperation to the extent it would (I) interfere unreasonably with the
business or operations of the Company or any of its Subsidiaries, (II) cause
any condition to Closing to not be satisfied or otherwise cause any breach of
this Agreement (including any representations or warranties thereunder), (III)
cause the Company or any of its Subsidiaries to incur liability in connection
with the Financing prior to the Effective Time, (IV) result in the material
contravention of, or that could reasonably be expected to result in a material
violation or breach of, or a default under, any Laws, under any material
Contract or under any confidentiality arrangement to which the Company or any
of its Subsidiaries is a party in effect on the date hereof, (V) require the
Company to undertake any actions that the Company reasonably believes could
result in the loss of any legal or other applicable privilege, (VI (provided
that, in the case of any confidentiality obligation, the Company shall, to the
extent permitted by such confidentiality arrangement, notify Parent if any
information that Parent or any Financing Source has specifically requested is
being withheld as a result of any such obligation of confidentiality), require
the Company to provide access to or disclose information that the Company
determines would jeopardize any attorney-client privilege of the Company or
any of its Subsidiaries or would otherwise be restricted from disclosure in
accordance with the proviso in
Section 5.02(a)
, (VII) require the Company to deliver or cause the delivery of any legal
opinions or accountants' comfort letters or reliance letters in connection
with the Debt Financing, (VIII) require the Company to conduct any intrusive,
destructive or invasive physical testing (including, without limitation, any
Phase II environmental testing) of any owned real estate, (IX) require the
Company or any of its Subsidiaries to prepare separate financial statements
for any of the Company's Subsidiaries or to change any fiscal period, (X)
require the Company to amend any terms of this Agreement, (XI) require the
Company or any of its Subsidiaries to take any action that would subject any
director, manager, partner, officer or employee of the Company or any of its
Subsidiaries to any actual or potential personal liability, or (XII) require
the Company or any of its Subsidiaries to make any representations, warranties
or certifications as to which, after the Company's use of commercially
reasonable efforts to cause such representation, warranty or certification to
be true, the Company has determined that such representation, warranty or
certification is not true. Notwithstanding anything to the contrary elsewhere
in this Agreement, neither the Company nor any Subsidiary thereof shall be
required to pay any commitment or other similar fee or make any other payment
or incur any other expense or liability (other than the reasonable costs of
providing the cooperation, authorization letters and other documents and
information required by this
Section 5.20(a)
) or provide or agree to provide any indemnity in connection with the Debt
Financing, except for any such obligation, liability or indemnity that is not
effective unless and until the Closing occurs.
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(b)
The Company shall not be required to agree to any contractual obligation
relating to the Debt Financing that is not conditioned upon the Closing and
that does not terminate without liability to the Company and its affiliates
upon the termination of this Agreement. The Company shall not be required to
deliver or cause the delivery of any legal opinions or reliance letters in
connection with the Debt Financing.
(c)
Parent shall indemnify and hold harmless the Company and its Subsidiaries, and
each of their respective directors, officers, employees, agents and other
Representatives, from and against any and all liabilities, costs or expenses
suffered or incurred in connection with the Debt Financing or any assistance
or activities provided in connection therewith. Parent shall reimburse the
Company for all documented out-of-pocket third-party costs and expenses
incurred by the Company in complying with its obligations under
Section 5.20(a)
upon the earlier of the Closing Date or any termination of this Agreement.
(d)
Notwithstanding anything to the contrary herein, it is understood and agreed
that the condition precedent set forth in
Section 6.02(b)
, as applied to the Company's obligations under this
Section 5.20
, shall be deemed to be satisfied unless the Debt Financing has not been
obtained as a direct result of the Company's breach of its obligations under
this
Section 5.20
. Parent acknowledges and agrees that obtaining the Financing is not a
condition to Closing. For the avoidance of doubt, if the Financing has not
been obtained, Parent shall continue to be obligated, until such time as this
Agreement is terminated in accordance with its terms and subject to the waiver
or fulfillment of the conditions set forth in
Section 6.01
and
Section 6.03
, to complete the transactions contemplated by this Agreement.
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ARTICLE VI
CONDITIONS
Section 6.01
Conditions to Each Party
'
s Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the
Merger is subject to the satisfaction or waiver (where permissible pursuant to
applicable Law) on or prior to the Closing of each of the following conditions:
(a)
Company Stockholder Approval
. This Agreement will have been duly adopted by the Requisite Company Vote.
(b)
Regulatory Approvals
. All required filings have been made and all required approvals obtained (or
waiting periods expired or terminated) under any applicable Antitrust Laws.
(c)
No Injunctions, Restraints, or Illegality
. No Governmental Entity having jurisdiction over any party hereto shall have
enacted, issued, promulgated, enforced, or entered any Orders, whether
temporary, preliminary, or permanent, that make illegal, enjoin, or otherwise
prohibit consummation of the Merger or the other transactions contemplated by
this Agreement, and no Law shall be in effect that makes consummation of the
Merger illegal or otherwise prohibits or interferes with the consummation of
the Merger.
(d)
Governmental Consents
. All consents, approvals and other authorizations of any Governmental Entity
set forth in
Section 3.03(c)(v)
of the Company Disclosure Schedule and required to consummate the Merger and
the other transactions contemplated by this Agreement (other than the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware) shall have been obtained, free of any condition that would
constitute a Company Material Adverse Effect or reasonably be expected to have
a material adverse effect on Parent's and Merger Sub's ability to consummate
the transactions contemplated by this Agreement.
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Section 6.02
Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the satisfaction or waiver (where permissible pursuant to applicable Law)
by Parent and Merger Sub on or prior to the Closing of the following
conditions:
(a)
Representations and Warranties
. (i) The representations and warranties contained in (A)
Section 3.01(a)(i)
,
Section 3.03(a)
,
Section 3.03(d)
,
Section 3.03(e)
and
Section 3.05(a)
shall be true and correct (other than
de minimis
inaccuracies), and (B)
Section 3.01(a)(ii)-(iv)
,
Section 3.02(d)
, and
Section 3.10
shall be true and correct in all material respects, as of the date of this
Agreement and as of the Closing Date, as if made at and as of such date
(except those representations and warranties that address matters only as of a
particular date, which shall be true and correct in all material respects as
of that date); (ii) the representations and warranties of the Company
contained in
Section 3.02(a)-(c)
shall be true and correct (other than
de minimis
inaccuracies) as of the date of this Agreement and as of the Closing Date, as
if made at and as of such date; and (iii) the representations and warranties
of the Company set forth in
ARTICLE III
of this Agreement (other than those contained in the Sections listed in the
preceding clauses (i) and (ii) of this sentence) shall be true and correct
(without giving effect to any limitation indicated by the words "Company
Material Adverse Effect," "in all material respects," "in any material
respect," "material," or "materially" or similar qualifiers) as of the date of
this Agreement and as of the Closing Date, as if made at and as of such date
(except those representations and warranties that address matters only as of a
particular date, which shall be true and correct in all respects as of that
date), except, in the case of this clause (iii), where the failure of such
representations and warranties to be so true and correct does not constitute,
individually or in the aggregate, a Company Material Adverse Effect.
(b)
Performance of Covenants
. The Company shall have performed and complied with all agreements and
covenants in this Agreement required to be performed by or complied with by it
at or prior to the Closing.
(c)
Company Material Adverse Effect
. Since the date of this Agreement, there shall not have been any Company
Material Adverse Effect.
(d)
Officers Certificate
. Parent shall have received a certificate, signed by the chief executive
officer or chief financial officer of the Company, certifying that the
conditions set forth in
Section 6.02(a)
,
Section 6.02(b)
, and
Section 6.02(c)
hereof have been satisfied,
provided,
that the certification as to
Section 6.02(c)
may be qualified to the knowledge of the certifying officer.
(e)
No Litigation
. No Legal Action by any Governmental Entity shall be pending challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement.
Section 6.03
Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company on or prior to the Closing of the
following conditions:
(a)
Representations and Warranties
. The representations and warranties of Parent and Merger Sub set forth in
ARTICLE IV
of this Agreement shall be true and correct in all respects (without giving
effect to any limitation indicated by the words "material adverse effect," "in
all material respects," "in any material respect," "material," or "materially"
or similar qualifiers) as of the date of this Agreement and as of the Closing
Date, as if made at and as of such date (except those representations and
warranties that address matters only as of a particular date, which shall be
true and correct in all respects as of that date), except where the failure of
such representations and warranties to be so true and correct would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Parent's and Merger Sub's ability to consummate the
transactions contemplated by this Agreement.
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(b)
Performance of Covenants
. Parent and Merger Sub shall have performed and complied with all agreements
and covenants in this Agreement required to be performed by or complied with
by them at or prior to the Closing.
(c)
Officers Certificate
. The Company will have received a certificate, signed by an officer of
Parent, certifying as to the matters set forth in Section 6.03(a) and Section
6.03(b).
Section 6.04
Frustration of Closing Conditions.
Neither Parent, Merger Sub, nor the Company may rely, as a basis for not
consummating the Merger or the other transactions contemplated by this
Agreement, on the failure of any condition set forth in
Section 6.01
, Section 6.02, or Section 6.03, as applicable and as the case may be, to be
satisfied if such failure was caused by such party's breach of any provision
of, or failure of such party to perform its obligations under, this Agreement.
ARTICLE VII
TERMINATION
Section 7.01
Termination by Mutual Consent.
This Agreement may be terminated at any time prior to the Closing (whether
before or after the receipt of the Requisite Company Vote) by the mutual
written consent of Parent and the Company.
Section 7.02
Termination by Either Parent or the Company.
This Agreement may be terminated by either Parent or the Company at any time
prior to the Closing (whether before or after the receipt of the Requisite
Company Vote):
(a) if the Merger has not been consummated on or before May 30, 2025 (the "
End Date
");
provided, however
,
that the right to terminate this Agreement pursuant to this
Section 7.02(a)
shall not be available to any party whose material breach of any representation
or warranty, or failure to materially perform any covenant or obligation, set
forth in this Agreement has been a cause of, or has resulted in, the failure
of the Merger to be consummated on or before the End Date;
(b) if any Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced, or entered any Law or Order making
illegal, permanently enjoining, or otherwise permanently prohibiting the
consummation of the Merger or the other transactions contemplated by this
Agreement, and such Law or Order shall have become final and nonappealable;
provided, however
,
that the right to terminate this Agreement pursuant to this
Section 7.02(b)
shall not be available to any party whose material breach of any representation
or warranty, or failure to materially perform any covenant or obligation, set
forth in this Agreement has been a cause of, or has resulted in, the issuance,
promulgation, enforcement, or entry of any such Law or Order; or
(c) if this Agreement has been submitted to the stockholders of the Company
for adoption at a duly convened Company Stockholders Meeting, such Company
Stockholders Meeting (including any adjournment or postponement thereof) shall
have been held and completed, and the Requisite Company Vote shall not have
been obtained at such meeting;
provided, however
, that a party shall not be permitted to terminate this Agreement pursuant to
this
Section 7.02(c)
if the failure to obtain the Requisite Company Vote is attributable to a
failure on the part of such party to materially perform any obligation
required to be performed by such party
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Section 7.03
Termination By Parent.
This Agreement may be terminated by Parent at any time prior to the Closing:
(a) If: (i) a Company Adverse Recommendation Change shall have occurred or
the Company shall have approved or adopted, or recommended the approval or
adoption of, any Company Acquisition Agreement (it being understood and agreed
that any written notice that the Company has provided information or taken any
other action that it is permitted to provide or take pursuant to
Section 5.03(b)
or
Section 5.03(c)
shall not, in and of itself, result in Parent or Merger Sub having any
termination rights pursuant to this
Section 7.03(a)
); and (ii) the Company shall have entered into a definitive agreement
relating to a Takeover Proposal;
(b) the Company shall have breached any of its covenants in
Section 5.03 or Section 5.04
and, in the case of a breach of
Section 5.04
, such breach is continuing and incapable of being cured by the End Date, or,
if capable of being cured by the End Date, shall not have been cured prior to
the earlier of (x) thirty (30) Business Days after written notice thereof is
given by Parent to the Company, or (y) the End Date; or
(c) if there has been a breach of any representation, warranty, covenant,
or agreement on the part of the Company set forth in this Agreement such that
the conditions to the Closing of the Merger set forth in
Section 6.02(a)
or
Section 6.02(b)
, as applicable, would not be satisfied (other than conditions that by their
nature are to be satisfied at the Closing, but which shall then be capable of
satisfaction if the Closing were to occur on such date) and, such breach is
continuing and incapable of being cured by the End Date, or, if capable of
being cured by the End Date, shall not have been cured prior to the earlier of
(i) thirty (30) Business Days after written notice thereof is given by Parent
to the Company or (ii) the End Date;
provided, however
, that Parent shall not have the right to terminate this Agreement pursuant to
this
Section 7.03(c)
if there has been any material breach by Parent or Merger Sub of any
representation, warranty, covenant, or obligation hereunder and such breach is
continuing and has not been cured.
(d) If, since the date of this Agreement, there shall have been a Company
Material Adverse Effect.
Section 7.04
Termination By the Company.
This Agreement may be terminated by the Company at any time prior to the
Closing:
(a) if prior to the receipt of the Requisite Company Vote at the Company
Stockholders Meeting, the Company Board determines to accept a Superior
Proposal, to the extent permitted by and subject to compliance with the
applicable terms and conditions of this Agreement, including
Section 5.03
hereof (including but not limited to its obligation under
Section 5.03(d)
to negotiate in good faith with Parent), and to enter into a Company
Acquisition Agreement (other than an Acceptable Confidentiality Agreement) in
respect of a Superior Proposal;
provided, however,
that in the event of such termination, the Company substantially concurrently
enters into such Company Acquisition Agreement;
provided further,
that the Company shall pay any amounts due pursuant to
Section 7.06(a)
hereof, in accordance with the terms, and at the times, specified therein;
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(b) if there shall have been a breach of any representation, warranty,
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement such that the conditions to the Closing of the Merger set forth in
Section 6.03(a)
or
Section 6.03(b)
, as applicable, would not be satisfied (other than conditions that by their
nature are to be satisfied at the Closing, but which shall then be capable of
satisfaction if the Closing were to occur on such date) and, such breach is
continuing and incapable of being cured by the End Date, or, if capable of
being cured by the End Date, shall not have been cured in all material
respects prior to the earlier of (i) thirty (30) Business Days after written
notice thereof is given by the Company to Parent or (ii) the End Date;
provided, however
, that the Company shall not have the right to terminate this Agreement
pursuant to this
Section 7.04(b)
if the Company is then in breach of any material representation, warranty,
covenant, or obligation hereunder, and such breach is continuing and shall not
have been cured; or
(c) if (i) all of the conditions set forth in
Section 6.01
and
Section 6.02
have been satisfied or waived (other than conditions that by their nature are
to be satisfied at the Closing, but which shall then be capable of
satisfaction if the Closing were to occur on such date) and Parent and Merger
Sub fail to consummate the Closing on the date required by
Section
1.02
, (ii) the Company thereafter delivers written notice to Parent confirming
that the requirements of clause (i) have been satisfied and stating that, if
Parent performs its obligations hereunder and the Debt Financing is funded,
then the Company will consummate the Closing in accordance with the terms of
this Agreement, (iii) Parent would not be entitled to terminate this Agreement
pursuant to
Section 7.02
or
Section 7.03
, and (iv) Parent fails to consummate the transactions contemplated by this
Agreement within five (5) Business Days after delivery of such notice,
provided, that
the conditions to the obligations of Parent and Merger Sub to consummate the
Closing set forth in
Section 6.01
and
Section 6.02
remain satisfied or waived at the close of business on such fifth (5th)
Business Day; and
provided further,
that during such five (5) Business Day period after delivery of such notice by
the Company, Parent shall not be entitled to terminate this Agreement pursuant
to
Section 7.02
(a).
Section 7.05
Notice of Termination; Effect of Termination.
The party desiring to terminate this Agreement pursuant to this ARTICLE VII
(other than pursuant to
Section 7.01
) shall deliver written notice of such termination to the other party or
parties hereto specifying with particularity the reason for such termination
and the provisions hereof pursuant to which such termination is made and the
basis therefor described in reasonable detail, and any such termination in
accordance with this
Section 7.05
shall be effective immediately upon delivery of such written notice. If this
Agreement is properly and validly terminated pursuant to this
ARTICLE VII
, it will become void and of no further force and effect (except with respect to
Section 5.02(b)
,
Section 5.09
,
Section 5.20(c)
, this
Section 7.05
,
Section 7.06
and
ARTICLE VIII
), with no liability or obligation on the part of any party to this Agreement
(or any stockholder, director, officer, employee, agent, or Representative of
such party) to any other party or parties hereto, except: (a) with respect to
Section 5.02(b)
,
Section 5.09
,
Section 5.20(c)
, this
Section 7.05
,
Section 7.06
and
ARTICLE VIII
(and any related definitions contained in any such Sections or Article), which
shall remain in full force and effect; and (b) nothing herein shall relieve
any party with respect to any liabilities or damages incurred or suffered by
another party or parties hereto, to the extent such liabilities or damages
were the result of fraud or the breach by the first party of any of its
representations, warranties, covenants, or other agreements set forth in this
Agreement.
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Section 7.06
Fees and Expenses Following Termination.
(a) If (i) this Agreement is terminated by the Company pursuant to
Section 7.04(a)
or terminated by Parent pursuant to
Section 7.03(a)
, and (ii) the Company consummates a Takeover Proposal within six (6) months
following the date of such termination of this Agreement, then the Company
shall pay to Parent, promptly following the consummation of such transaction,
the Termination Fee.
(b) If this Agreement is terminated by the Company pursuant to
Section 7.04(c)
, Parent shall pay to Company (by wire transfer of immediately available
funds, to an account designated in writing by the Company, or in the absence
of such designation, an account established for the sole benefit of the
Company), within two (2) Business Days of such termination, the Termination
Fee.
(c) Each party acknowledges and agrees that the provisions of this
Section 7.06
are an integral part of the transactions contemplated by this Agreement
(including the Merger), and that, without such provisions, Parent and Merger
Sub and the Company would not have entered into this Agreement.
(d) In circumstances where the Termination Fee is payable to Parent in
accordance with
Section 7.06(a)
, Parent's receipt of the Termination Fee (if received) from or on behalf of
the Company shall be Parent's and Merger Sub's sole and exclusive remedy
(whether based in contract, tort or strict liability, by the enforcement of
any assessment, by any legal or equitable proceeding, by virtue of any
statute, regulation or applicable Laws or otherwise) against the Company and
its Subsidiaries and any of their respective former, current or future direct
or indirect equity holders, general or limited partners, controlling persons,
stockholders, members, managers, directors, officers, employees, agents,
affiliates or assignees (collectively, the "
Company Related Parties
") for all losses and damages suffered as a result of the failure of the
Merger or the other transactions contemplated by this Agreement, for any
breach or failure to perform hereunder or otherwise, and upon payment of such
amount, no such Person shall have any further liability or obligation relating
to or arising out of this Agreement or the transactions contemplated by this
Agreement.
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(e) In circumstances where the Termination Fee is payable to the Company in
accordance with
Section 7.06(b)
, the Company's receipt of the Termination Fee (if received) from or on behalf
of Parent shall be the Company's sole and exclusive remedy (whether based in
contract, tort or strict liability, by the enforcement of any assessment, by
any legal or equitable proceeding, by virtue of any statute, regulation or
applicable Laws or otherwise) against Parent and Merger Sub and any of their
respective former, current or future direct or indirect equity holders,
general or limited partners, controlling persons, stockholders, members,
managers, directors, officers, employees, agents, affiliates or assignees
(collectively, the "
Parent Related Parties
") for all losses and damages suffered as a result of the failure of the
Merger or the other transactions contemplated by this Agreement, for any
breach or failure to perform hereunder or otherwise, and upon payment of such
amount, no such Person shall have any further liability or obligation relating
to or arising out of this Agreement or the transactions contemplated by this
Agreement.
(f) Except as expressly set forth in this
Section 7.06
or elsewhere in this Agreement, all Expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such Expenses.
(g) Other than with respect to the right to seek specific performance of,
or damages in respect of the breach of,
Section 5.02(b)
of this Agreement or the Confidentiality Agreement or the Voting Agreement,
any claim or cause of action under this Agreement may only be brought against
Persons that are expressly named as parties, and then only with respect to the
specific obligations set forth in this Agreement. Other than claims related to
the breach or violation of the Confidentiality Agreement or the Voting
Agreement, no Company Related Party or Parent Related Party shall have any
liability or obligation for any of the representations, warranties, covenants,
agreements, obligations or liabilities of the Company, Parent or Merger Sub or
of or for any claim, investigation, or Legal Action, in each case under, based
on, in respect of, or by reason of, this Agreement or the transactions
contemplated by this Agreement (including the breach, termination or failure
to consummate such transactions), in each case whether based on contract, tort
or strict liability, by the enforcement of any assessment, by any legal or
equitable Legal Action, by virtue of any applicable Laws or otherwise and
whether by or through attempted piercing of the corporate, limited liability
company or partnership veil, by or through a claim by or on behalf of a party
or another Person (including a claim to enforce the Debt Commitment Letter) or
otherwise. Notwithstanding anything to the contrary contained in this
Agreement, neither any party hereto nor any of their respective subsidiaries,
affiliates, directors, officers, employees, agents, partners, managers,
members or stockholders shall have any direct rights or claims against any
Financing Source (other than Parent and Merger Sub), in any way relating to
this Agreement or any of the transactions contemplated by this Agreement, or
in respect of any oral representations made or alleged to have been made in
connection herewith or therewith, including any dispute arising out of or
relating in any way to the Debt Commitment Letter or the performance thereof
or the financings contemplated thereby, whether at law or equity, in contract,
in tort or otherwise.
66
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ARTICLE VIII
MISCELLANEOUS
Section 8.01
Definitions.
For purposes of this Agreement, the following terms will have the following
meanings when used herein with initial capital letters:
"
Acceptable Confidentiality Agreement
" means a confidentiality agreement containing customary limitations on the
use and disclosure of all nonpublic written and oral information furnished or
disclosed by or on behalf of the Company and its Subsidiaries and terms that
are no less restrictive to the counterparty than those contained in the
Confidentiality Agreement,
provided, that
such confidentiality agreement need not contain any "standstill" or similar
provision or otherwise prohibit the making of any Takeover Proposal; and
provided, further,
that such confidentiality agreement shall not prohibit compliance by the
Company with any of the provisions of
Section 5.03
.
"
Affiliate
" means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
first Person. For the purposes of this definition, "control" (including, the
terms "controlling," "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by Contract, or
otherwise.
"
Affordable Care Act
" means the Patient Protection and Affordable Care Act (PPACA), as amended by
the Health Care and Education Reconciliation Act (HCERA).
"
Agreement
" has the meaning set forth in the Preamble.
"
Antitrust Laws
" means the Sherman Act of 1890, as amended, the Clayton Act of 1914, as
amended, the Federal Trade Commission Act of 1914, as amended, the HSR Act,
and all other federal, state, foreign or supranational Laws or Orders in
effect from time to time that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition through merger or acquisition.
"
Associate
" has the meaning set forth in Section 203(c)(2) of the DGCL.
"
Book-Entry Share
" has the meaning set forth in
Section 2.01(c)
.
"
Business Day
" means any day other than a Saturday, Sunday, and those legal public holidays
specified in 5 U.S.C. (s) 6103(a), as amended from time to time.
"
Cancelled Shares
" has the meaning set forth in
Section 2.01(a)
.
"
Certificate
" has the meaning set forth in
Section 2.01(c)
.
"
Certificate of Merger
" has the meaning set forth in
Section 1.03
.
"
Charter Documents
" has the meaning set forth in
Section 3.01(b)
.
"
Closing
" has the meaning set forth in
Section 1.02
.
"
Closing Date
" has the meaning set forth in
Section 1.02
.
"
COBRA
" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and as codified in Section 4980B of the Code and Section 601
et. seq
. of ERISA.
67
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"
Code
" means the Internal Revenue Code of 1986, as amended.
"
Company
" has the meaning set forth in the Preamble.
"
Company Acquisition Agreement
" has the meaning set forth in
Section 5.03(a)
.
"
Company Adverse Recommendation Change
" means the Company Board: (a) withdrawing, amending, modifying, or materially
qualifying, in a manner adverse to Parent, the Company Board Recommendation;
(b) failing to include the Company Board Recommendation in the Company Proxy
Statement that is disseminated to the Company's stockholders; (c) adopting,
approving, recommending, publicly endorsing, or otherwise publicly declaring
advisable a Takeover Proposal; (d) approving or causing the Company to enter
into any merger agreement, letter of intent or other similar agreement
relating to any Takeover Proposal; or (e) resolving or agreeing to take any of
the foregoing actions.
"
Company Balance Sheet
" has the meaning set forth in
Section 3.04(e)
.
"
Company Board
" has the meaning set forth in the Recitals.
"
Company Board Recommendation
" has the meaning set forth in
Section 3.03(d)
.
"
Company Common Stock
" has the meaning set forth in the Recitals.
"
Company Continuing Employees
" has the meaning set forth in
Section 5.06(a)
.
"
Company Disclosure Schedule
" has the meaning set forth in the introductory language in
ARTICLE III
.
"
Company Employee
" has the meaning set forth in
Section 3.12(a)
.
"
Company Employee Plans
" has the meaning set forth in
Section 3.12(a)
.
"
Company Equity Award
" means a Company Stock Option, a Company RSU, or a Company Phantom Stock Unit
granted under one of the Company Stock Plans, as the case may be.
"
Company ERISA Affiliate
" means all employers, trades, or businesses (whether or not incorporated)
that would be treated together with the Company or any of its Affiliates as a
"single employer" within the meaning of Section 414 of the Code.
"
Company Financial Advisor
" has the meaning set forth in
Section 3.10
.
"
Company IP
" has the meaning set forth in
Section 3.07(b)
.
"
Company IP Agreements
" means all licenses, sublicenses, consent to use agreements, settlements,
coexistence agreements, covenants not to sue, waivers, releases, permissions,
and other Contracts, whether written or oral, relating to Intellectual
Property and to which the Company or any of its Subsidiaries is a party,
beneficiary, or otherwise bound.
68
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"
Company IT Systems
" means all software, computer hardware, servers, networks, platforms,
peripherals, and similar or related items of automated, computerized, or other
information technology networks and systems (including telecommunications
networks and systems for voice, data, and video) owned, leased, licensed, or
used (including through cloud-based or other third-party service providers) by
the Company or any of its Subsidiaries.
"
Company Material Adverse Effect
" means any event, circumstance, development, occurrence, fact, condition,
effect, or change (each, an "
Effect
") that is, or would reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, financial condition, or
results of operations of the Company and its Subsidiaries, taken as a whole;
or (b) the ability of the Company to perform its obligations under this
Agreement or consummate the transactions contemplated hereby;
provided, however,
that, a Company Material Adverse Effect shall not be deemed to include any
effect (alone or in combination) arising out of, relating to, or resulting
from the following, and the following shall not otherwise be taken into
account in determining whether a Company Material Adverse Effect has occurred
or would reasonably be expected to occur: (i) changes generally affecting the
economy, financial, credit or securities markets, including inflation,
monetary policy, commodity prices, interests rates or exchange rates, in the
United States or globally, or changes generally affecting the industries
(including seasonal fluctuations) in which the Company or its Subsidiaries
operate in the United States or globally, or changes in political, labor or
regulatory conditions; (ii) the continuation or worsening of supply chain
disruptions affecting the industries in which the Company and its Subsidiaries
operate; (iii) the negotiation, execution and delivery, announcement, pendency
or consummation of this Agreement and the Merger, or the transactions
contemplated by this Agreement, including the identity of, or the effect of
any fact or circumstance relating to, the Parent or any of its Affiliates or
any communication by Parent or any of its Affiliates regarding plans,
proposals or projections with respect to the Company, its Subsidiaries or
their employees; (iv) any changes or proposed changes in applicable Law or
GAAP, other applicable accounting standards or the interpretation or
enforcement thereof; (v) changes in global or national political conditions
(including the outbreak or escalation of war (whether or not declared),
military action or operation, sabotage, civil unrest, civil disobedience,
national or international calamity, the outbreak of hostilities or acts of
terrorism), changes due to natural disasters or changes in the weather, or
changes due to the outbreak or worsening of epidemics, pandemics, or public
health emergencies or other health crisis (including COVID-19); (vi) any
failure, in and of itself, by the Company or any of its Subsidiaries to meet
any internal or published projections, forecasts, estimates, or predictions in
respect of revenues, earnings, adjusted EBITDA or other financial or operating
metrics for any period (it being understood that the underlying cause of such
failure may be taken into account in determining whether there has been, or
would reasonably be expected to become, a Company Material Adverse Effect, to
the extent permitted by this definition and not otherwise excepted by another
clause of this proviso); (vii) any change, in and of itself, in the market
price or trading volume of the Company's securities or any suspension of
trading, or any changes in the ratings or the ratings outlook for the Company
by any applicable rating agency or changes in any analyst's recommendations or
ratings with respect to the Company (it being understood that the underlying
cause of such change or suspension may be taken into account in determining
whether there has been, or would reasonably be expected to become, a Company
Material Adverse Effect, to the extent permitted by this definition and not
otherwise excepted by another clause of this proviso); (viii) actions taken as
required or specifically permitted by this Agreement or actions or omissions
taken or not taken at the request of, or with the consent of, Parent; or (ix)
any Legal Action arising from allegations of breach of fiduciary duty or
violation of Law relating to this Agreement or the Transactions;
provided further, however
, that any Effect referred to in clauses (i), (ii), (iv), or (v) immediately
above shall be taken into account in determining whether a Company Material
Adverse Effect has occurred or would reasonably be expected to occur if such
effect has an adversely disproportionate effect on the Company and its
Subsidiaries, taken as a whole, compared to other participants in the
industries in which the Company and its Subsidiaries conduct their businesses.
69
-------------------------------------------------------------------------------
"
Company Material Contract
" has the meaning set forth in
Section 3.15(b)
.
"
Company-Owned IP
" means all Intellectual Property owned by the Company or any of its
Subsidiaries.
"
Company Phantom Stock Unit
" has the meaning set forth in
Section 2.07(c)
.
"
Company Preferred Stock
" has the meaning set forth in
Section 3.02(a)
.
"
Company Proxy Statement
" has the meaning set forth in
Section 3.17
.
"
Company RSU
" has the meaning set forth in Section 2.07(b).
"
Company Related Parties
" has the meaning set forth in
Section 7.06(d)
.
"
Company SEC Documents
" has the meaning set forth in
Section 3.04(a)
.
"
Company Securities
" has the meaning set forth in
Section 3.02(b)(ii)
.
"
Company Stock Option
" has the meaning set forth in
Section 2.07(a)
.
"
Company Stock Plans
" means the following plans, in each case as amended: (i) 2021 Stock
Compensation Plan of SPAR Group, Inc., effective as of August 12, 2021; (ii)
2020 Stock Compensation Plan of SPAR Group, Inc., effective as of January 19,
2021; (iii) 2018 Stock Compensation Plan of SGRP, effective as of May 2, 2018;
(iv) 2008 Stock Compensation Plan, effective as of May 29, 2008, and as
amended through May 28, 2009; (v) 2000 Stock Option Plan, as amended through
May 16, 2006; (vi) 2001 Employee Stock Purchase Plan; and (vii) 2001
Consultant Stock Purchase Plan.
"
Company Stockholders Meeting
" means the special meeting of the stockholders of the Company to be held to
consider the adoption of this Agreement.
"
Company Subsidiary Securities
" has the meaning set forth in
Section 3.02(d)
.
"
Confidentiality Agreement
" has the meaning set forth in
Section 5.02(b)
.
"
Consent
" has the meaning set forth in
Section 3.03(c)
.
70
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"
Contracts
" means any contracts, agreements, licenses, notes, bonds, mortgages,
indentures, leases, or other binding instruments or binding commitments,
whether written or oral.
"
Debt Commitment Letter
" means the debt commitment letter, dated as of the date hereof, together with
the Debt Fee Letter and any other agreement, in each case, as amended,
supplemented or replaced in accordance with this Agreement, pursuant to which
the Financing Sources party thereto have agreed or may agree to provide or
cause to be provided the Debt Financing for the purposes of financing the
transactions contemplated by this Agreement, including the Merger
Consideration.
"
Debt Fee Letter
" means that certain fee letter relating to the Debt Financing.
"
Debt Financing
" means the debt financing incurred or intended to be incurred pursuant to the
Debt Commitment Letter.
"
Debt Financing Documents
" means the agreements, documents and certificates contemplated by the Debt
Financing, including without limitation: (a) all credit agreements, loan
documents, purchase agreements, underwriting agreements, indentures,
debentures, notes, intercreditor agreements, lease agreements, mortgages and
other security documents pursuant to which the Debt Financing will be governed
or otherwise contemplated by the Debt Commitment Letter; (b) officer,
secretary, solvency and perfection certificates, legal opinions, corporate
organizational documents, good standing certificates, Lien searches, and
resolutions contemplated by the Debt Commitment Letter or reasonably requested
by Parent or its Financing Sources; (c) all documentation and other
information required by bank regulatory authorities under applicable
"know-your-customer" and anti-money laundering rules and regulations,
including the Patriot Act; and (d) agreements, documents or certificates that
facilitate the creation, perfection or enforcement of liens securing the Debt
Financing (including original copies of all certificated securities (with
transfer powers executed in blank), control agreements, surveys, title
insurance, landlord consent and access letters) as are reasonably requested by
Parent or its Financing Sources.
"
Debt Replacement Financing
" has the meaning set forth in
Section 5.19(d)
.
"
DGCL
" has the meaning set forth in the Recitals.
"
Dissenting Shares
" has the meaning set forth in
Section 2.03
.
"
EDGAR
" has the meaning set forth in
Section 3.04(a)
.
"
Effective Time
" has the meaning set forth in
Section 1.03
.
"
End Date
" has the meaning set forth in
Section 7.02(a)
.
71
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"
Environmental Laws
" means any applicable Law, and any Order or binding agreement with any
Governmental Entity: (a) relating to pollution (or the cleanup thereof) or the
protection of natural resources, endangered or threatened species, human
health or safety, or the environment (including ambient air, soil, surface
water or groundwater, or subsurface strata); or (b) concerning the presence
of, exposure to, or the management, manufacture, use, containment, storage,
recycling, reclamation, reuse, treatment, generation, discharge, transportation,
processing, production, disposal or remediation of any Hazardous Materials.
The term "Environmental Law" includes, without limitation, the following
(including their implementing regulations and any state analogs): the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. (s)(s) 9601
et. seq.
; the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. (s)(s) 6901
et. seq.
; the Federal Water Pollution Control Act of 1972, as amended by the Clean
Water Act of 1977, 33 U.S.C. (s)(s) 1251
et. seq.
; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. (s)(s) 2601
et seq.
; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
(s)(s) 11001
et. seq.
; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of
1990, 42 U.S.C. (s)(s) 7401
et. seq.
; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
(s)(s) 651
et. seq.
"
ERISA
" means the Employee Retirement Income Security Act of 1974, as amended.
"
Exchange Act
" has the meaning set forth in
Section 3.03(c)
.
"
Expenses
" means, with respect to any Person, all reasonable and documented
out-of-pocket fees and expenses (including all fees and expenses of counsel,
accountants, financial advisors, and investment bankers of such Person and its
Affiliates), incurred by such Person or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution, and
performance of this Agreement and any transactions related thereto, any
litigation with respect thereto, the preparation, printing, filing, and
mailing of the Company Proxy Statement, the filing of any required notices
under any Antitrust Laws, or in connection with other regulatory approvals,
and all other matters related to the Merger and the other transactions
contemplated by this Agreement.
"
Financing Conditions
" means the Exclusive Funding Conditions, as defined in the Debt Commitment
Letter.
"
Financing Failure Event
" means any of the following: (a) the commitments with respect to all or any
material portion of the Debt Financing expiring or being terminated; (b) all
or any material portion of the Debt Financing becoming unavailable; (c) a
breach or repudiation of the Debt Commitment Letter by any party thereto of
which Parent becomes aware; or (d) any party to the Debt Commitment Letter
alleging in writing that any of the events set forth in the foregoing clauses
has occurred.
"
Financing Information
" means information with respect to the business, operations and financial
condition of the Company and its Subsidiaries that is required to be provided
by the Financing Sources.
"
Financing Sources
" means the financial institutions that are party to the Debt Commitment
Letter in the capacity as arranger, agent or lender.
"
Foreign Company Employee Plan
" means any Company Employee Plan pertaining to a Person located outside of
the United States or Canada.
72
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"
GAAP
" has the meaning set forth in
Section 3.04(b)
.
"
Governmental Antitrust Authority
" has the meaning set forth in
Section 5.08(b)
.
"
Governmental Entity
" means any supranational, national, state, municipal, local, or foreign
government, any instrumentality, subdivision, court, administrative agency or
commission, or other governmental authority, or any quasi-governmental or
private body exercising any regulatory or other governmental or quasi-government
al authority.
"
Hazardous Substance
" means: (a) any material, substance, chemical, waste, product, derivative,
compound, mixture, solid, liquid, mineral, or gas, in each case, whether
naturally occurring or man-made, that is hazardous, acutely hazardous, toxic,
or words of similar import or regulatory effect under Environmental Laws; and
(b) any petroleum or petroleum-derived products, radon, mold, radioactive
materials or wastes, asbestos in any form, lead or lead-containing materials,
urea formaldehyde foam insulation, and polychlorinated biphenyls.
"
HIPAA
" means the Health Insurance Portability and Accountability Act of 1996, as
amended.
"
HSR Act
" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"
Indemnified Party
" has the meaning set forth in
Section 5.07(a)
"
Intellectual Property
" means any and all of the following arising pursuant to the Laws of any
jurisdiction throughout the world: (a) trademarks, service marks, trade names,
and similar indicia of source or origin, all registrations and applications
for registration thereof, and the goodwill connected with the use of and
symbolized by the foregoing; (b) copyrights and all registrations and
applications for registration thereof; (c) trade secrets and know-how; (d)
patents and patent applications; (e) internet domain name registrations; and
(f) other intellectual property and related proprietary rights.
"
Intervening Event
" means any event, development, occurrence or change in circumstances that (a)
is material to the Company and its Subsidiaries, taken as a whole, (b) was not
known to the Company Board as of or prior to the date of this Agreement, and
(c) does not involve or relate to a Takeover Proposal.
"
IRS
" means the United States Internal Revenue Service.
"
JAMS
" means Judicial Arbitration and Mediation Services, Inc.
"
Knowledge
" means: (a) with respect to the Company and its Subsidiaries, the actual
knowledge of each of the individuals listed in
Section 8.01
of the Company Disclosure Schedule; and (b) with respect to Parent and its
Subsidiaries, the actual knowledge of each of the individuals listed in
Section 8.01
of the Parent Disclosure Schedule; in each case, after due inquiry.
"
Laws
" means any federal, state, local, municipal, foreign, multi-national or other
laws, common law, statutes, constitutions, ordinances, rules, regulations,
codes, Orders, or legally enforceable requirements enacted, issued, adopted,
promulgated, enforced, ordered, or applied by any Governmental Entity.
73
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"
Lease
" means all leases, subleases, licenses, concessions, and other agreements
(written or oral) under which the Company or any of its Subsidiaries holds any
Leased Real Estate, including the right to all security deposits and other
amounts and instruments deposited by or on behalf of the Company or any of its
Subsidiaries thereunder.
"
Leased Real Estate
" means all leasehold or subleasehold estates and other rights to use or
occupy any land, buildings, structures, improvements, fixtures, or other
interest in real property held by the Company or any of its Subsidiaries.
"
Legal Action
" means any legal, administrative, arbitral, or other proceedings, suits,
actions, investigations, examinations, claims, audits, hearings, charges,
complaints, indictments, litigations, examinations, or other similar legal
proceedings by or pending before any Governmental Entity, arbitrator,
mediator, or other tribunal.
"
Liability
" means any liability, indebtedness, or obligation of any kind (whether
accrued, absolute, contingent, matured, unmatured, determined, determinable,
or otherwise, and whether or not required to be recorded or reflected on a
balance sheet under GAAP).
"
Liens
" means, with respect to any property or asset, all pledges, liens, mortgages,
charges, encumbrances, hypothecations, options, rights of first refusal,
rights of first offer, and security interests of any kind or nature whatsoever.
"
Maximum Premium
" has the meaning set forth in
Section 5.07(b)
.
"
Merger
" has the meaning set forth in
Section 1.01
.
"
Merger Consideration
" has the meaning set forth in
Section 2.01(b)
.
"
Merger Sub
" has the meaning set forth in the Preamble.
"
MHPAEA
" means the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008, as amended.
"
Nasdaq
" has the meaning set forth in
Section 3.03(c)
.
"
Order
" has the meaning set forth in
Section 3.09
.
"
Other Governmental Approvals
"
has the meaning set forth in
Section 3.03(c)
.
"
Parent
" has the meaning set forth in the Preamble.
"
Paying Agent
" has the meaning set forth in
Section 2.02(a)
.
74
-------------------------------------------------------------------------------
"
Parent Disclosure Schedule
" means the disclosure schedule, dated as of the date of this Agreement and
delivered by Parent and Merger Sub to the Company concurrently with the
execution of this Agreement.
"
Parent Related Parties
" has the meaning set forth in
Section 7.06(e)
.
"
Payment Fund
" has the meaning set forth in
Section 2.02(a)
.
"
PBGC
" has the meaning set forth in
Section 3.12(d)
.
"
Permits
" means permits, licenses, registrations, variances, clearances, Consents,
commissions, franchises, exemptions, Orders, authorizations, and approvals
from Governmental Entities or from quasi-governmental entities having the
legal authority to issue the same.
"
Permitted Liens
" means: (a) statutory Liens for current Taxes not yet due and payable; (b)
mechanics', carriers', workers', repairers', and similar statutory Liens
arising or incurred in the ordinary course of business for amounts that are
not delinquent; (c) zoning, entitlement, building, and other land use
regulations imposed by Governmental Entities having jurisdiction over such
Person's owned or leased real property that are not violated by the current
use and operation of such real property; (d) covenants, conditions,
restrictions, easements, and other similar non-monetary matters of record
affecting title to such Person's owned or leased real property that do not
materially impair the occupancy or use of such real property for the purposes
for which it is currently used in connection with such Person's businesses;
(e) any right of way or easement related to public roads and highways that do
not materially impair the occupancy or use of such real property for the
purposes for which it is currently used in connection with such Person's
businesses; (f) any non-exclusive license to any Intellectual Property entered
into in the ordinary course; (g) Liens arising under workers' compensation,
unemployment insurance, social security, retirement, and similar legislation;
and (h) such other Liens which would not, individually or in the aggregate,
interfere materially with the ordinary conduct of the business of the Company
and its Subsidiaries as currently conducted, taken as a whole, or materially
detract from the use, occupancy, value or marketability of the property
affected by such Lien.
"
Person
" means any individual, corporation, limited or general partnership, limited
liability company, limited liability partnership, trust, association, joint
venture, Governmental Entity, or other entity or group (which term will
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act).
"
Principal Stockholder
" means William Bartels, who is the beneficial owner, directly or indirectly,
of approximately 20.08% of the outstanding Company Securities.
"Representatives
" means collectively, with respect to any Person, such Person's directors,
officers, Affiliates, employees, investment bankers, attorneys, accountants,
consultants, brokers, or other agents, advisors, or authorized representative
of such Person.
"
Requisite Company Vote
" has the meaning set forth in
Section 3.03(a)
.
"
Sarbanes-Oxley Act
" has the meaning set forth in
Section 3.04(a)
.
75
-------------------------------------------------------------------------------
"
SEC
" has the meaning set forth in
Section 3.03(c)
.
"
Securities Act
" has the meaning set forth in
Section 3.04(a)
.
"
Subsidiary
" of a Person means any other Person of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by such Person
and/or by one or more of its Subsidiaries.
"
Superior Proposal
" means a bona fide written Takeover Proposal that did not result from a
breach of
Section 5.03
(except that, for purposes of this definition, each reference in the
definition of "Takeover Proposal" to "15% or more" shall be replaced with "all
or substantially all") that the Company Board determines in good faith (after
consultation with its financial advisor and outside legal counsel), is (a)
reasonably likely to be consummated in accordance with its terms, and (b) if
consummated, more favorable to the holders of Company Common Stock than the
transactions contemplated by this Agreement; in each case, after taking into
account: (i) all financial considerations, including an opinion of a
nationally-recognized independent financial advisor as to the determination
required by clause (b) of this paragraph; (ii) the identity of the third party
making such Takeover Proposal; (iii) the anticipated timing, conditions
(including any financing condition) and prospects for completion of such
Takeover Proposal; (iv) the other terms and conditions of such Takeover
Proposal and the implications thereof on the Company, including relevant
legal, regulatory, and other aspects of such Takeover Proposal deemed relevant
by the Company Board (including any conditions relating to stockholder
approval, regulatory approvals, or other events or circumstances beyond the
control of the party invoking the condition); and (v) any revisions to the
terms of this Agreement and the Merger proposed by Parent during the Superior
Proposal Notice Period set forth in
Section 5.03(d)
.
"
Superior Proposal Notice Period
" has the meaning set forth in
Section 5.03(d)
.
"
Surviving Corporation
" has the meaning set forth in
Section 1.01
.
"
Takeover Proposal
" means an inquiry or offer from, or indication of interest in making a
proposal or offer by, any Person or group (other than Parent and its
Subsidiaries, including Merger Sub), relating to any transaction or series of
related transactions (other than the transactions contemplated by this
Agreement), involving any: (a) direct or indirect acquisition of assets of the
Company or its Subsidiaries (including any voting equity interests of
Subsidiaries, but excluding sales of assets or securities in the ordinary
course of business) equal to fifteen percent (15%) or more of the fair market
value of the Company's and its Subsidiaries' consolidated assets or to which
fifteen percent (15%) or more of the Company's and its Subsidiaries' net
revenues or net income on a consolidated basis are attributable; (b) direct or
indirect acquisition of fifteen percent (15%) or more of the voting equity
interests of the Company or any of its Subsidiaries whose business constitutes
fifteen percent (15%) or more of the consolidated net revenues, net income, or
assets of the Company and its domestic Subsidiaries, taken as a whole; (c)
tender offer or exchange offer that if consummated would result in any Person
or group (as defined in Section 13(d) of the Exchange Act) beneficially owning
(within the meaning of Section 13(d) of the Exchange Act) fifteen percent
(15%) or more of the voting power of the Company; (d) merger, consolidation,
other business combination, or similar transaction involving the Company or
any of its Subsidiaries, pursuant to which such Person or group (as defined in
Section 13(d) of the Exchange Act) would own fifteen percent (15%) or more of
the consolidated net revenues, net income, or assets of the Company, and its
Subsidiaries, taken as a whole; (e) liquidation, dissolution (or the adoption
of a plan of liquidation or dissolution), or recapitalization or other
significant corporate reorganization of the Company or one or more of its
Subsidiaries which, individually or in the aggregate, generate or constitute
fifteen percent (15%) or more of the consolidated net revenues, net income, or
assets of the Company and its Subsidiaries, taken as a whole; or (f) any
combination of the foregoing.
76
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"
Taxes
" means all federal, state, local, foreign, and other income, gross receipts,
sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll,
employment, unemployment, estimated, excise, severance, environmental, stamp,
occupation, premium, property (real or personal), real property gains,
windfall profits, customs, duties or other taxes, fees, assessments, or
charges of any kind whatsoever, together with any interest, additions, or
penalties with respect thereto and any interest in respect of such additions
or penalties.
"
Tax Returns
" means any return, declaration, report, claim for refund, information return
or statement, or other document relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"
Termination Fee
" means three percent (3%) of the aggregate Merger Consideration.
"
Treasury Regulations
" means the regulations promulgated by the IRS under the Code.
"
Voting Agreement
" means the written agreement between Parent and the Principal Stockholder
entered into concurrently herewith, pursuant to which the Principal
Stockholder has agreed, among other things, to vote, and to grant an
irrevocable proxy to Parent to vote, his shares of voting Company Securities
in favor of the Merger and against the approval of any Takeover Proposal or
Company Acquisition Agreement.
"
Voting Debt
" has the meaning set forth in
Section 3.02(c)
.
Section 8.02
Interpretation; Construction.
(a) The table of contents and headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof. Where a
reference in this Agreement is made to a Section, Exhibit, Article, or
Schedule, such reference shall be to a Section of, Exhibit to, Article of, or
Schedule of this Agreement unless otherwise indicated. Unless the context
otherwise requires, references herein: (i) to an agreement, instrument, or
other document means such agreement, instrument, or other document as amended,
supplemented, and modified from time to time to the extent permitted by the
provisions thereof; and (ii) to a statute means such statute as amended from
time to time and includes any successor legislation thereto and any
regulations promulgated thereunder. Whenever the words "include," "includes,"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation," and the word "or" is not exclusive. The
word "extent" in the phrase "to the extent" means the degree to which a
subject or other thing extends, and does not simply mean "if." A reference in
this Agreement to $ or dollars is to U.S. dollars. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. The words "hereof," "herein," "hereby," "hereto," and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
References to "this Agreement" shall include the Company Disclosure Schedule
and the Parent Disclosure Schedule. References to "made available" or
"provided to" (or words of similar import) when referring to any document or
information being made available by the Company to Parent or Merger Sub shall
mean posted to the electronic data room established in respect to the Merger
at least two (2) Business Days prior to the date of this Agreement unless
otherwise specified.
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(b) The parties have participated jointly in negotiating and drafting this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
Section 8.03
Survival.
None of the representations, warranties or covenants contained in this
Agreement or in any instrument delivered under this Agreement will survive the
Effective Time. This
Section 8.03
does not limit any covenant or agreement of the parties contained in this
Agreement which, by its terms, contemplates performance after the Effective
Time. The Confidentiality Agreement will survive termination of this Agreement
in accordance with its terms.
Section 8.04
Governing Law.
Except as set forth in
Section 8.05
, this Agreement, and all Legal Actions (whether based on contract, tort, or
statute) arising out of, relating to, or in connection with this Agreement or
the actions of any of the parties hereto in the negotiation, administration,
performance, or enforcement hereof, shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of Laws of any jurisdiction other than those of the State of Delaware.
Section 8.05
Mandatory Arbitration.
Any controversy or claim between the parties hereto and arising out of or
relating to this Agreement, or the breach thereof, other than claims pursuant
to
Section 8.16
, shall be settled by arbitration administered by JAMS in accordance with its
Comprehensive Arbitration Rules and Procedures and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Claims shall be heard by a single arbitrator mutually selected by
Parent and the Company, unless the claim amount exceeds $1,000,000.00, in
which case (a) the dispute shall be heard by a panel of three (3) arbitrators
and (b) within fifteen (15) days after the commencement of arbitration, each
of Parent and the Company shall select one (1) person to act as arbitrator and
the parties shall use commercially reasonable efforts to cause the two (2)
selected arbitrators to select a third arbitrator within ten (10) days of
their appointment. If the arbitrators selected by the parties are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be
selected by JAMS. The arbitrator(s) shall be former judges experienced in
mergers and acquisitions matters, unless otherwise agreed by the parties. The
place of arbitration shall be New York, New York. The parties agree that the
arbitrator shall apply the substantive law of the state of Delaware to all
claims, provided that discovery shall be permitted and shall be conducted in
accordance with the Rules of Civil Procedure of the State of New York. The
parties hereto shall use commercially reasonable efforts to cause the award to
be made within six (6) months of the filing of the notice of intention to
arbitrate (demand), and the arbitrator(s) shall agree to comply with this
schedule before accepting appointment. However, this time limit may be
extended by the arbitrator for good cause shown, or by mutual written
agreement of the parties. The arbitrator(s) shall award to the prevailing
party, if any, as determined by the arbitrators, all of such prevailing
party's costs and fees. "Costs and fees" mean all reasonable pre-award
expenses of the arbitration, including the arbitrators' fees, administrative
fees, travel expenses, out-of-pocket expenses such as copying and telephone,
court costs, witness fees, and reasonable attorneys' fees. The award of the
arbitrators shall be accompanied by a reasoned written opinion. Except as may
be required by law, neither a party nor an arbitrator may disclose the
existence, content, or results of any arbitration hereunder without the prior
written consent of both parties.
78
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Section 8.06
Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND,
THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE
EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION
8.06
.
Section 8.07
Notices.
All notices, requests, consents, claims, demands, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
given upon the earlier of actual receipt or (a) when delivered by hand
(providing proof of delivery); (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); or (c) on the
date sent by email if sent during normal business hours of the recipient, and
on the next Business Day if sent after normal business hours of the recipient.
Such communications must be sent to the respective parties at the following
addresses (or to such other Persons or at such other address for a party as
shall be specified in a written notice given in accordance with this
Section 8.07
):
If to Parent or Merger Highwire Capital, LLC
Sub, to: 717 Harwood Street
Suite 2400
Dallas, Texas 75201
Attention: Ben Hudson
Email: ben@highwire.capital
79
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with a copy (which will Ferguson Braswell Fraser Kubasta PC
not constitute notice to 2500 Dallas Parkway
Parent or Merger Sub) to: Suite 600
Plano, Texas 75093
Attention: Kenn Webb and Justin Shelton
Email: kwebb@fbfk.law; jshelton@fbfk.law
If to the Company, to: SPAR Group, Inc.
1910 Opdyke Ct.
Auburn Hills, Michigan 48326
Attention: James Gillis
Email: james@gillisinc.com
with a copy (which will Foley & Lardner LLP
not constitute notice to the 777 East Wisconsin Avenue
Company) to: Milwaukee, Wisconsin 53202
Attention: Jason M. Hille
Email: jhille@foley.com
Section 8.08
Entire Agreement.
This Agreement (including all exhibits, annexes, and schedules referred to
herein), the Company Disclosure Schedule, the Parent Disclosure Schedule, and
the Confidentiality Agreement constitute the entire agreement among the
parties with respect to the subject matter of this Agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties to this Agreement with respect to the subject matter of this
Agreement. In the event of any inconsistency between the statements in the
body of this Agreement, the Confidentiality Agreement, the Parent Disclosure
Schedule, and the Company Disclosure Schedule (other than an exception
expressly set forth as such in the Parent Disclosure Schedule or the Company
Disclosure Schedule), the statements in the body of this Agreement will
control.
Section 8.09
Disclosure Schedules.
The Company Disclosure Schedule and the Parent Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in
Article III
and
Article IV
, respectively. The information disclosed in any numbered or lettered part of
the Company Disclosure Schedule or the Parent Disclosure Schedule shall be
deemed to relate to and to be incorporated into any other numbered or lettered
part of the Company Disclosure Schedule or the Parent Disclosure Schedule, as
applicable, so long as (i) such other numbered or lettered part contains a
cross-reference specifically referring to disclosure in the numbered or
lettered part so incorporated, or (ii) it is reasonably apparent on the face
of such disclosure so that a reasonable person would conclude that such
disclosure qualifies or is otherwise applicable to such other numbered or
lettered part. Every statement made in the Company Disclosure Schedule shall
be deemed to be a representation of the Company in this Agreement as if set
forth in
Article III
. Every statement made in the Parent Disclosure Schedule shall be deemed to be
a representation of Parent in this Agreement as if set forth in
Article IV
.
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Section 8.10
No Third-Party Beneficiaries.
This Agreement is for the sole benefit of the parties hereto and their
permitted assigns and respective successors and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit, or remedy of any nature whatsoever under or by
reason of this Agreement, except if the Effective Time occurs: (a) the rights
of holders of Company Common Stock to receive the Merger Consideration, (b)
the rights of holders of Company Equity Awards to receive the consideration
set forth in
Section 2.07
, and (c) the rights of the Indemnified Parties as set forth in
Section 5.07
.
Section 8.11
Severability.
In the event that any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal,
void or unenforceable, or incapable of being enforced under any applicable
Law, the remainder of this Agreement shall continue in full force and effect
and the application of such provision to other Persons or circumstances shall
be interpreted so as reasonably to effect the intent of the Parties. The
Parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that shall achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
Section 8.12
Assignment.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
Parent or Merger Sub, on the one hand, nor the Company on the other hand, may
assign its rights or obligations hereunder without the prior written consent
of the other party (Parent in the case of Parent and Merger Sub);
provided, however
,
that prior to the Effective Time, Merger Sub may, without the prior written
consent of the Company, assign all or any portion of its rights under this
Agreement to Parent or to one or more of Parent's direct or indirect wholly
owned subsidiaries. No assignment shall relieve the assigning party of any of
its obligations hereunder.
Section 8.13
Amendment.
At any time prior to the Effective Time, this Agreement may be amended or
supplemented in any and all respects, whether before or after receipt of the
Requisite Company Vote, by written agreement signed by each of the parties
hereto;
provided, however
, that following the receipt of the Requisite Company Vote, there shall be no
amendment or supplement to the provisions of this Agreement which by Law would
require further approval by the holders of Company Common Stock without such
approval.
Section 8.14
Extension; Waiver.
At any time prior to the Effective Time, Parent or Merger Sub, on the one
hand, or the Company, on the other hand, may: (a) extend the time for the
performance of any of the obligations of the other party(ies); (b) waive any
inaccuracies in the representations and warranties of the other party(ies)
contained in this Agreement or in any document delivered under this Agreement;
or (c) unless prohibited by applicable Law, waive compliance with any of the
covenants, agreements, or conditions contained in this Agreement;
provided, however
, that after receipt of the Requisite Company Vote, there may not be any
extension or waiver of this Agreement which decreases the Merger Consideration
or which adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders. Any agreement on the part of a
party to any extension or waiver will be valid only if set forth in an
instrument in writing signed by such party. The failure of any party to assert
any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.
81
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Section 8.15
Remedies Cumulative.
Except as otherwise provided in this Agreement, any and all remedies expressly
conferred upon a party to this Agreement will be cumulative with, and not
exclusive of, any other remedy contained in this Agreement, at Law, or in
equity. The exercise by a party to this Agreement of any one remedy will not
preclude the exercise by it of any other remedy.
Section 8.16
Specific Performance.
(a) The parties acknowledge and agree that the Company, Parent and Merger
Sub, as applicable, would be irreparably damaged if any of the provisions of
this Agreement were not performed in accordance with their specific terms and
that any breach of this Agreement by the Company, Parent or Merger Sub could
not be adequately compensated by monetary damages alone. Accordingly, subject
to
Section
8.16(b)
, in addition to any other right or remedy to which the Company, Parent or
Merger Sub may be entitled, at law or in equity, it shall be entitled, without
proof of damages, to enforce any provision of this Agreement by a decree of
specific performance and temporary, preliminary, and permanent injunctive
relief to prevent breaches or threatened breaches of any of the provisions of
this Agreement, without posting any bond or other undertaking. In the event
that any action shall be brought by the Company, Parent or Merger Sub in
equity to enforce the provisions of the Agreement, the Company, Parent or
Merger Sub, as applicable, shall not allege, and hereby waives the defense,
that there is an adequate remedy at law or that the award of specific
performance is not an appropriate remedy for any reason of law or equity.
(b) Notwithstanding anything to the contrary set forth in this Agreement,
(i) in no event shall the Company be entitled to specific performance against
(or to bring any Legal Action in equity against) the Financing Sources to
cause the Debt Financing to be funded under this Agreement or the Debt
Commitment Letter (or any replacements thereof or definitive agreements
executed pursuant thereto) or for any other reason whatsoever, and (ii) the
Company shall be entitled to bring a Legal Action pursuant to
Section 8.16(a)
seeking to specifically enforce Parent and Merger Sub's obligation to
consummate the Closing if (and only if and for so long as) (A) all of the
conditions set forth in
Section 6.01
and
Section 6.02
have been and continue to be satisfied or waived (other than those conditions
that by their nature are to be satisfied at the Closing, but which shall then
be capable of satisfaction if the Closing were to occur on such date) and
Parent and Merger Sub fail to consummate the Closing on the date required by
Section 1.02
, (B) the proceeds of the Debt Financing (or any alternative debt financing)
have been funded to Parent or the agent for the Financing Sources under the
Debt Commitment Letter (or any replacement thereof or definitive agreements
executed pursuant thereto) has irrevocably confirmed in writing to Parent that
the Debt Financing will be funded, (C) this Agreement has not been terminated
in accordance with
Article VII
and the Company has confirmed to Parent in writing that all of the conditions
set forth in
Section 6.01
and
Section 6.02
have been and continue to be satisfied or waived (other than those conditions
that by their nature are to be satisfied at the Closing, but which shall then
be capable of satisfaction if the Closing were to occur on such date) and that
if the Debt Financing is funded, then the Company will consummate the Closing
in accordance with the terms of this Agreement, and (D) Parent and Merger Sub
have failed to consummate the Closing within five (5) Business Days after
receipt of such confirmation (provided that the conditions to the obligations
of Parent and Merger Sub to consummate the Closing set forth in
Section 6.01
and
Section 6.02
remain satisfied or waived at the close of business on such fifth (5th)
Business Day). For the avoidance of doubt, in no event shall the Company be
entitled to specifically enforce (and shall not initiate any Legal Action
seeking to specifically enforce) any provision of this Agreement or to obtain
an injunction or injunctions, or to bring any other Action in equity in
connection with the transactions contemplated by this Agreement, against any
Person other than Parent and Merger Sub and, in such case, only under the
circumstances expressly set forth in this
Section 8.16
.
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Section 8.17
Execution of Agreement; Counterparts; Electronic Signatures.
(a)
The Agreement may be executed in several counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument and shall become effective when counterparts have been signed by
each of the parties and delivered to the other parties; it being understood
that all parties need not sign the same counterpart.
(b)
The exchange of signed copies of this Agreement or of any other document
contemplated by this Agreement (including any amendment or any other change
thereto) by any electronic means intended to preserve the original graphic and
pictorial appearance of a document shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of an
original Agreement or other document for all purposes. Signatures of the
parties transmitted by any electronic means referenced in the preceding
sentence shall be deemed to be original signatures for all purposes.
(c)
Notwithstanding the Electronic Signatures in Global and National Commerce Act
enacted June 30, 2000, 15 U.S.C. (s)(s) 7001-7006, or any other Law relating
to or enabling the creation, execution, delivery, or recordation of any
contract or signature by electronic means, and notwithstanding any course of
conduct engaged in by the parties, no party shall be deemed to have executed
this Agreement or any other document contemplated by this Agreement (including
any amendment or other change thereto) unless and until such party shall have
executed this Agreement or such document on paper by a handwritten original
signature or any other symbol executed or adopted by a party with current
intention to authenticate this Agreement or such other contemplated document
and an original of such signature has been exchanged by the parties either by
physical delivery or in the manner set forth in
Section 8.17(b)
. "Originally signed" or "original signature" means or refers to a signature
that has not been mechanically or electronically reproduced.
[SIGNATURE PAGE FOLLOWS]
83
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
COMPANY:
SPAR GROUP, INC.,
a Delaware corporation
By
/s/ Michael R. Matacunas
Name: Michael R. Matacunas
Title: President & CEO
By
/s/ James Gillis
Name: James Gillis
Title: Chairman of the Board of Directors
PARENT:
HIGHWIRE CAPITAL, LLC,
a Texas limited lability company
By
/s/ Ben Hudson
Name: Ben Hudson
Title: Chief Financial Officer
MERGER SUB:
HIGHWIRE MERGER CO. I, INC.,
a Delaware corporation
By
/s/ Ben Hudson
Name: Ben Hudson
Title: Chief Financial Officer
84
Exhibit 99.1
For Immediate Release
September 3, 2024
SPAR Group Enters into Definitive Agreement to be Acquired by Highwire Capital
for $2.50 Per Share
Letter of Intent Previously Announced on June 5, 2024
$2.50 Per Share Merger Consideration Represents a 72% Premium to SPAR Group
'
s Closing Share Price on August 30
AUBURN HILLS, MI
-
SPAR Group
, Inc. (NASDAQ: SGRP) ("SPAR", "SPAR Group" or the "Company"), a provider of
merchandising, marketing and distribution services, announced today it has
entered into a definitive agreement to be acquired by Highwire Capital
("Highwire"), an investment firm focused on transforming businesses through
technology.
Under the terms of the agreement, which has been unanimously approved by SPAR
Group's Board of Directors, SPAR Group stockholders will receive $2.50 per
share in cash, representing a 72% premium over the closing share price on the
last trading day before the announcement and a 37.8% premium over SPAR Group's
30-day volume-weighted average share price. Upon approval by SPAR Group's
stockholders and completion of the transaction, SPAR Group will become a
privately held company, and its stock will no longer be traded on NASDAQ.
Mike Matacunas, SPAR Group's President and CEO said, "I'm very pleased to be
announcing this agreement today as the transaction will result in immediate
and substantial value creation for our stockholders. This transaction
represents a culmination of an extensive and lengthy review by our Special
Committee and Board of Directors of strategic alternatives to provide value to
our stockholders and offer financial flexibility for our company to pursue
future growth initiatives."
The transaction is expected to close in the fourth quarter of 2024, subject to
the receipt of stockholder approval, regulatory approvals, and the
satisfaction of other customary closing conditions.
Transaction Details
Highwire has obtained a debt financing commitment, the proceeds of which will
be sufficient for Highwire to consummate the transaction contemplated by the
merger agreement.
Simultaneously with the execution of the merger agreement, William H. Bartels,
a member of the SPAR Board and holder of approximately 20% of the outstanding
shares, entered into a voting agreement and irrrevocable proxy with Highwire.
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As a closing condition, the Company will have balance sheet cash of not less
than $14,200,000 as of the closing date including all amounts expected to be
received by the Company in connection with the disposition of any of the
Company's entities.
Following the close of the transaction, SPAR Group will continue to be led by
Mike Matacunas, who has been its President and CEO since early 2021.
Advisors
Lincoln International LLC is serving as SPAR's financial advisors and Foley &
Lardner LLP is serving as the Company's legal advisers. Ferguson Braswell
Fraser Kubasta P.C. is acting as Highwire's legal advisers.
About Highwire Capital
Highwire Capital transforms middle-market businesses by integrating innovative
technologies with traditional operating models. By driving efficiency and
fostering industry advancements, Highwire revitalizes established entities
into leading platforms for disruption and growth. For more information, please
visit Highwire's website at
http://www.highwire.capital
.
About
SPAR Group, Inc.
SPAR Group is an innovative services company offering comprehensive
merchandising, marketing and distribution solutions to retailers and brands.
We provide the resources and analytics that improve brand experiences and
transform retail spaces. We offer a unique combination of scale and
flexibility with a passion for client results that separates us from the
competition. For more information, please visit the SPAR Group's website at
http://www.sparinc.com.
Forward Looking Statements
This Press Release (this "Press Release") contains "forward-looking
statements" within the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, made by, or respecting, the Company.
Forward-looking statements include information concerning the proposed merger
(the "Proposed Merger") of the Company and Highwire Merger Co. I, Inc.
("Merger Sub"), a wholly owned subsidiary of Highwire Capital, LLC ("Parent"),
pursuant to the terms of the Agreement and Plan of Merger, dated as of August
30, 2024, by and among the Company, Parent and Merger Sub. "Forward-looking
statements" are defined in Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended,
and other applicable federal and state securities laws, rules and regulations,
as amended.
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All statements (other than those that are purely historical) are forward-looking
statements. Words such as "may," "will," "expect," "intend," "believe,"
"estimate," "anticipate," "continue," "plan," "project," or the negative of
these terms or other similar expressions also identify forward-looking
statements. Forward-looking statements made by the Company in this Press
Release may include (without limitation) statements regarding: risks,
uncertainties, cautions, circumstances and other factors ("Risks"). Those
Risks include (without limitation): the impact of the news of the Proposed
Merger or developments in it~ the uncertainty of approval by SGRP's
stockholders and satisfaction of other closing conditions respecting the
Proposed Merger~ the impact of the Company's continued strategic review
process, or any resulting action or inaction, should the Proposed Merger not
occur~ the impact of selling certain of the Company's subsidiaries or any
resulting impact on revenues, earnings or cash~ the impact of adding new
directors or new finance team members~ the potential negative effects of any
stock repurchase and/or payment~ the potential continuing negative effects of
the COVID pandemic on the Company's business~ the Company's potential
non-compliance with applicable Nasdaq director independence, bid price or
other rules~ the Company's cash flow or financial condition~ and plans,
intentions, expectations, guidance or other information respecting the pursuit
or achievement of the Company's corporate objectives.
You should carefully review and consider the Company's forward-looking
statements (including Risks and other cautions and uncertainties) and other
information made, contained or noted in or incorporated by reference into this
Press Release, but you should not place undue reliance on any of them. The
results, actions, levels of activity, performance, achievements or condition
of the Company (including its affiliates, assets, business, clients, capital,
cash flow, credit, expenses, financial condition, foreign exchange, income,
liabilities, liquidity, locations, marketing, operations, performance,
prospects, revenues, sales, strategies, taxation or other achievement,
results, Risks, trends or condition) and other events and circumstances
planned, intended, anticipated, estimated or otherwise expected by the Company
(collectively, " Expectations"), and our forward-looking statements (including
all Risks) and other information reflect the Company's current views about
future events and circumstances. Although the Company believes those
Expectations and views are reasonable, the results, actions, levels of
activity, performance, achievements or condition of the Company or other
events and circumstances may differ materially from our Expectations and
views, and they cannot be assured or guaranteed by the Company, since they are
subject to Risks and other assumptions, changes in circumstances and
unpredictable events (many of which are beyond the Company's control). In
addition, new Risks arise from time to time, and it is impossible for the
Company to predict these matters or how they may arise or affect the Company.
Accordingly, the Company cannot assure you that its Expectations will be
achieved in whole or in part, that it has identified all potential Risks, or
that it can successfully avoid or mitigate such Risks in whole or in part, any
of which could be significant and materially adverse to the Company and the
value of your investment in the Company's common stock.
These forward-looking statements reflect the Company's Expectations, views,
Risks and assumptions only as of the date of this Press Release, and the
Company does not intend, assume any obligation, or promise to publicly update
or revise any forward-looking statements (including any Risks or Expectations)
or other information (in whole or in part), whether as a result of new
information, new or worsening Risks or uncertainties, changed circumstances,
future events, recognition, or otherwise.
Additional Information and Where to Find It
This Press Release relates to the Proposed Merger. A special meeting of the
stockholders of the Company will be announced as promptly as practicable to
seek stockholder approval in connection with the proposed Merger. The Company
expects to file with the SEC a proxy statement and other relevant documents in
connection with the proposed Merger. Stockholders of the Company are urged to
read the definitive proxy statement and other relevant materials filed with
the SEC when they become available because they will contain important
information about the Company, Parent, Merger Sub and the Proposed Merger.
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Stockholders may obtain a free copy of these materials (when they are
available) and other documents filed by the Company with the SEC at the SEC's
website at www.sec.gov, at the Company's website at https://investors.sparinc.co
m/ or by sending a written request to the Company 's Secretary at its
principal executive offices at 1910 Opdyke Court, Auburn Hills, Michigan 48326.
Participants in the Solicitation
The Company, its directors and certain of its executive officers and employees
may be deemed to be participants in soliciting proxies from its stockholders
in connection with the Proposed Merger. Information regarding the persons who
may, under the rules of the SEC, be considered to be participants in the
solicitation of the Company's stockholders in connection with the Proposed
Merger and any direct or indirect interests they have in the Proposed Merger
will be set forth in the Company's definitive proxy statement for its special
stockholder meeting when it is filed with the SEC. Information relating to the
foregoing can also be found in the Company's Annual Report on Form 10-K for
the year ended December 31, 2023 filed with the SEC on April 1, 2024, its
First Amendment to the 10-K on Form 10K/A filed with the SEC on April 30, 2024
and the Company's definitive proxy statement for its 2023 Annual Meeting of
Stockholders filed with the SEC on October 13, 2023 (the "Annual Meeting Proxy
Statement").
To the extent that holdings of the Company's securities by its officers,
directors and 10% stockholders have changed since the amounts set forth in the
Annual Meeting Proxy Statement, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
###
Media Contact: Investor Relations Contact: Highwire Capital Contact:
Ronald Margulis Sandy Martin Ben Hudson
RAM Communications Three Part Advisors Highwire Capital, LLC
908-272-3930 214-616-2207 ben@highwire.capital
ron@rampr.com smartin@threepa.com
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