The Board of Directors of the Company approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, and determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are advisable, fair to, and in the best interests of the Company and its stockholders, and the Company intends to file a Solicitation/ Recommendation Statement on Schedule 14D-9 with the U.S. Securities and Exchange Commission (the “SEC”) recommending that holders of Common Stock tender their Shares into the Offer.
The Merger Agreement provides that the Company, on the one hand, or Parent and Purchaser, on the other hand, may specifically enforce the obligations of the other party under the Merger Agreement, subject to the terms of the Merger Agreement.
The Merger Agreement contains customary representations and warranties by each of Parent, Purchaser and the Company. These representations and warranties were made solely for the benefit of the parties to the Merger Agreement and (i) may not be treated as categorical statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove inaccurate rather than establishing matters as fact, (ii) may have been qualified in the Merger Agreement by disclosures that were made to the other party in the confidential disclosure schedules to the Merger Agreement, (iii) may apply contractual standards of “materiality” that are different from “materiality” under applicable securities laws, and (iv) were made only as of the date of the Merger Agreement or such other date as may be specified in the Merger Agreement. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the Company, its subsidiaries or other affiliates or their respective businesses. Investors are not third-party beneficiaries to the representations and warranties of the Company under the Merger Agreement and should not rely on such representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or other affiliates at the time they were made or otherwise. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents that the Company files with or furnishes to the SEC.
The Company has made customary covenants in the Merger Agreement, including, without limitation, covenants to conduct its business in all material respects in the ordinary course consistent with past practice, including not taking certain specified actions, prior to the consummation of the Merger. Parent and Purchaser also have made customary covenants in the Merger Agreement.
The Merger Agreement provides for a 35-day go shop period which expires September 16, 2021. During such period, the Company’s Board of Directors, together with the Company’s financial and legal advisors, may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals to acquire the Company. At the end of the go shop period, the Company will cease such activities, and will be subject to a customary “no shop” provision that restricts the Company’s ability to solicit acquisition proposals from third parties and to provide non-public information to and engage in discussions or negotiations with third parties regarding acquisition proposals after the go shop period; provided, however, that the Company may (i) continue to engage in negotiations, discussions and share due diligence information with Excluded Parties (as that term is defined in the Merger Agreement) for 15 days after the end of the go shop period and (ii) under certain circumstances and in compliance with certain obligations, provide non-public information and engage in discussions and negotiations with respect to an unsolicited acquisition proposal that constitutes or is reasonably expected to lead to a Superior Proposal, as that term is defined in the Merger Agreement.
The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company, in certain circumstances, to terminate the Merger Agreement and accept a Superior Proposal, as that term is defined in the Merger Agreement. The Company will be required to pay Parent a termination fee equal to $7,601,783, approximately 4.375% of the equity value of the Company implied by the Transaction, if, among other reasons, the Merger Agreement is terminated by Parent because the Board of Directors of the Company makes an Adverse Recommendation Change (as defined in the Merger Agreement), approves another transaction, or breaches its “no shop” obligations, or if the Merger Agreement is terminated by the Company to enter into a transaction that constitutes a Superior Proposal. The termination fee payable by the Company will be reduced to 50% of the termination fee in the event the Merger Agreement is terminated by the Company prior to the end of the go-shop period, or within 15 days after such period in certain circumstances, to enter into an acquisition agreement that constitutes a Superior Proposal with an Excluded Party. The Parent will be required to pay the Company a reverse termination fee equal to $9,990,915, approximately 5.75% of the equity value of the Company implied by the Transaction, if the Company terminates the Merger Agreement because Parent or Purchaser is in material breach of its representations, warranties, or covenants and that has impeded consummation of the transaction or if Purchaser fails to consummate the transaction when the required conditions have been satisfied.
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