The Merger Agreement provides that, upon termination under specified circumstances, the Company would be required to pay Parent a termination fee in an amount equal to approximately $2.2 million. The Merger Agreement also provides that Parent will be required to pay to the Company a reverse termination fee of approximately $2.2 million upon termination under certain specified circumstances.
Any actions taken by, or omissions of, the Company (i) in breach of the interim operating covenants, or (ii) in breach of the Company’s covenants to facilitate Parent’s debt financing, in each case at the direction of, or with the consent of Parent, will in each case be disregarded and will not constitute a breach of the interim operating covenants or financing covenants, as applicable.
To finance the transaction contemplated by the Merger Agreement, Parent and Merger Sub have obtained debt financing commitments and the Rollover Investor has entered into a rollover equity commitment letter (the “Rollover Commitment”) pursuant to which the Rollover Investor has committed to roll-over all of its shares of capital stock of the Company on the terms and subject to the conditions set forth in the Rollover Commitment.
Wells Fargo Bank, National Association and Pathlight Capital LP (the “Lenders”) have committed to provide debt financing on the terms and subject to customary conditions set forth in the debt commitment letters entered into by Parent and Merger Sub in connection with the Merger.
In connection with the execution of the Merger Agreement, certain funds affiliated with Parent have provided the Company with a limitednon-recourse guarantee in favor of the Company guaranteeing the payment of certain monetary obligations that may be owed by Parent pursuant to the Merger Agreement, including any reverse termination fee that may become payable by Parent.
In addition, in connection with the execution of the Merger Agreement, the Rollover Investor, which owns approximately 35% of the Company’s outstanding common stock, has entered into a voting agreement (the “Voting Agreement”) with Parent and the Company pursuant to which the Rollover Investor agreed to vote in favor of the Merger and the adoption of the Merger Agreement, subject to the limitations set forth in the Voting Agreement. The Rollover Investor’s obligations under the Voting Agreement will automatically terminate without any further action required by any person upon the earliest to occur of (i) the mutual agreement of the parties thereto to terminate the Voting Agreement; (ii) the termination of the Merger Agreement in accordance with its terms, and (iii) the Effective Time.
The Merger and the Merger Agreement were unanimously recommended by the Special Committee to the Board, and thereafter approved unanimously by the entire Board (other than Mr. Stein). PJ Solomon Securities, LLC served as the financial advisor to the Special Committee of the Board in connection with the Merger and the Merger Agreement.
The Merger Agreement has been attached as an exhibit to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent, Merger Sub or any of their respective affiliates or businesses. The representations, warranties, covenants and agreements contained in the Merger Agreement were made only for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to such 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 security holders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent, Merger Sub or any of their respective affiliates or businesses. Moreover, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in disclosure letters that the parties have exchanged. Accordingly, investors and security holders should not rely on the representations and warranties as characterizations of the actual state of facts of the Company, Parent, Merger Sub or any of their respective affiliates or businesses. 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 Company’s public disclosures.
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