PROPOSAL 5
APPROVAL OF AMENDMENTS TO OUR 2009 EQUITY INCENTIVE PLAN, INCLUDING
AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR AWARD
GRANT PURPOSES UNDER THE 2009 EQUITY INCENTIVE PLAN BY 7,000,000 SHARES
OF COMMON STOCK
Overview
At the special
meeting, shareholders will be asked to approve the following amendments to our 2009 Equity Incentive Plan (2009 Plan), which were approved, subject to shareholder approval, by the Board of Directors on October 31, 2013:
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Increase in Aggregate Share Limit.
The 2009 Plan currently limits the aggregate number of shares of common stock that may be delivered pursuant
to all awards granted under the 2009 Plan to 6,892,815 shares. The proposed amendments would increase this limit by an additional 7,000,000 shares so that the new aggregate share limit for the 2009 Plan would be 13,892,815 shares. The proposed
amendments would also increase the limit on the number of shares that may be delivered pursuant to incentive stock options granted under the 2009 Plan to 15,297,584 shares. For purposes of clarity, any shares that are delivered
pursuant to incentive stock options also count against (and are not in addition to) the aggregate 2009 Plan share limit described above.
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Extension of Performance-Based Award Feature.
The 2009 Plan offers the flexibility to grant certain performance-based awards designed to satisfy
the requirements for deductibility of compensation under Section 162(m) of the U.S. Internal Revenue Code (the Code). These awards are referred to as performance-based awards and are in addition to other awards, such as
stock options and stock appreciation rights, expressly authorized under the 2009 Plan which may also qualify as performance-based compensation for Section 162(m) purposes. If stockholders approve this 2009 Plan proposal, the performance-based
award feature of the 2009 Plan will be extended through the first annual meeting of our stockholders that occurs in 2018 (this expiration time is earlier than the general expiration date of the 2009 Plan and is required under applicable tax rules).
(See the section titled Performance Conditions below)
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We believe that shareholder approval of
the 2009 Plan amendments will allow us to continue to provide long-term incentives to key employees and other eligible service providers who are responsible for our success and growth. Increased stock ownership will further align their interests
with the interests of shareholders and will assist us in attracting and retaining talented employees. If our shareholders do not approve the 2009 Plan amendments, the current share limits under the 2009 Plan will continue in effect.
The Board of Directors encourages shareholders to consider the following in voting to approve this Proposal 5, which the Board of
Directors strongly believes are essential for our future success:
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Achieving superior long-term results has always been a primary objective for us and therefore it is essential that our employees think and act like
owners. Stock ownership helps enhance the alignment of the long-term economic interests of shareholders and employees. Accordingly, we have a history of issuing equity awards as a primary incentive to attract, motivate and retain employees.
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Our employees are our most valuable asset. Our ability to grant equity compensation awards is vital (i) to attract and keep intact a talented
management team and (ii) to attract and retain other talented and experienced individuals as we compete for employees against larger competitors.
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The Compensation Committee (which administers the 2009 Plan) recognizes its responsibility to strike a balance between shareholder concerns regarding the potential dilutive effect of equity awards and the
ability to attract, retain and reward employees whose contributions are critical to the long-term success of the Company.
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The 2009 Plan is the Companys only active employee equity plan (other than its Employee Stock Purchase Plan), and the current number of shares remaining available for grant under the 2009
Plan is expected to last until approximately
[
the end of the Companys 2014 fiscal year]. The Compensation Committee anticipates that the additional shares requested (together with the 2,551,129 shares remaining available for new award
grants under the 2009 Plan as of October 16, 2013) will provide the Company with flexibility to continue to grant equity awards under the 2009 Plan through approximately
[
the end of its 20 fiscal year] (subject to
adjustment based on the factors noted under Specific Benefits below), accommodating anticipated grants relating to the hiring, retention and promotion of employees and providing reasonable flexibility for acquisitions and other corporate
transactions.
Summary Description of the 2009 Plan
Following is a summary of the principal provisions of the 2009 Plan. If there is any inconsistency between the below summary and the 2009 Plans terms or if there is any inaccuracy in the below
summary, the terms of the 2009 Plan shall govern. The 2009 Plan has been filed as
Annex D
to the copy of this proxy statement that was filed electronically with the SEC and can be reviewed on the SECs website at
http://www.sec.gov
.
You may also obtain, free of charge, a copy of the 2009 Plan by writing to Investor Relations, Overland Storage, Inc., 9112 Spectrum Center Boulevard, San Diego, California 92123, or by calling 1-800-729-8725.
Background and Purpose of the 2009 Plan.
The purpose of the 2009 Plan is to promote the long-term success of our
company and the creation of shareholder value by:
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encouraging employees, non-employee directors and consultants to focus on critical long-range objectives,
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encouraging the attraction and retention of employees, outside directors and consultants with exceptional qualifications, and
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linking employees, outside directors and consultants directly to shareholder interests through increased stock ownership.
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The 2009 Plan permits the grant of the following types of equity-based incentive awards: (1) stock options (which can be either ISOs
or nonstatutory stock options), (2) stock appreciation rights, (3) restricted shares, and (4) stock units.
Eligibility to Receive Awards.
Employees, non-employee directors and consultants of our company and certain of our related
companies are eligible to receive awards under the 2009 Plan. The 2009 Plan Committee (as defined below) generally selects, in its discretion, the individuals who will be granted awards under the 2009 Plan. As of October 16, 2013, approximately
162 of our employees (including each of our named executive officers) and the
four
non-employee members of our Board of Directors were eligible to participate in the 2009 Plan.
Shares Subject to the 2009 Plan.
Currently, the maximum number of shares of common stock that can be issued under the 2009 Plan is
equal to the sum of (i) 6,892,815 shares plus (ii) the number of shares (if any) that are subject to any outstanding awards under our prior stock incentive plans (the Prior Plans) that, at any time after January 5, 2010,
are either forfeited or are repurchased at original cost by us plus any shares that are not issued to the award holder as a result of a Prior Plan outstanding award being exercised or settled for less than the full number of shares that are subject
to such exercise or settlement. If our shareholders approve this 2009 Plan proposal, the number of shares referred to in clause (i) above will be increased by an additional 7,000,000 shares. It is worth noting that the shares covered by clause
(ii) above have previously been approved by shareholders for issuance under the Prior Plans and so the only increase to potential shareholder dilution are the shares subject to this 2009 Plan proposal. For purposes of the 2009 Plan and this
Proposal 5, our Prior Plans consist of our 1995 Stock Option Plan, 1997 Executive Stock Option Plan, 2000 Stock Option Plan, 2001 Supplemental Stock Option Plan, and 2003 Equity Incentive Plan.
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Administration of the 2009 Plan.
The 2009 Plan is generally administered by a
committee comprised solely of independent members of our Board of Directors (2009 Plan Committee) whose composition must consist of two or more independent members of our Board of Directors. The members of the 2009 Plan Committee must be
independent non-employee directors under Rule 16b-3 of the Exchange Act, and outside directors under Section 162(m) of the Internal Revenue Code. The Board of Directors has designated our Compensation Committee as the
2009 Plan Committee. A secondary committee of two or more directors, who need not all be independent, may be delegated authority to make grants to non-executive individuals who are not subject to Section 16 of the Exchange Act or
Section 162(m) of the Internal Revenue Code. Subject to the terms of the 2009 Plan, the 2009 Plan Committee has the sole discretion, among other things, to:
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select the individuals who will receive awards;
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determine the terms and conditions of awards (for example, the exercise price and vesting schedule);
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correct any defect, supply any omission, or reconcile any inconsistency in the 2009 Plan or any award agreement;
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accelerate the vesting, extend the post-termination exercise term or waive restrictions of any awards at any time and under such terms and conditions
as it deems appropriate; and
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interpret the provisions of the 2009 Plan and outstanding awards.
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The 2009 Plan Committee may also use the 2009 Plan to issue shares under other plans or subplans as may be deemed necessary or
appropriate, such as to provide for participation by our non-U.S. employees and those of any of our subsidiaries and affiliates. The Board of Directors or the 2009 Plan Committee may suspend or terminate awards if they reasonably believe that a
participant has committed an act of cause (as defined in the 2009 Plan). In addition, awards may be subject to any policy that we may implement on the recoupment of compensation (referred to as a clawback policy). The members of the
Board of Directors, the 2009 Plan Committee and their delegates shall be indemnified by us to the maximum extent permitted by applicable law for actions taken or not taken regarding the 2009 Plan.
No Repricing
. In no case (except due to an adjustment to reflect a stock split or similar event or any repricing that may be
approved by our shareholders) will any adjustment be made to a stock option or stock appreciation right award under the 2009 Plan (by amendment, cancellation and regrant, exchange or other means) that would constitute a repricing of the per share
exercise or base price of the award.
Types of Awards
Stock Options.
A stock option is the right to acquire shares of common stock at a fixed exercise price over a fixed period of time. The 2009 Plan Committee (or, if authorized for non-executive
employees, the secondary committee) will determine the number of shares of common stock covered by each stock option and the exercise price of the shares of common stock subject to each stock option, but such per share exercise price cannot be less
than the fair market value of our common stock on the date of grant of the stock option.
Stock options granted under the 2009
Plan may be either ISOs or nonstatutory stock options (NSOs). As required by the Internal Revenue Code and applicable regulations, ISOs are subject to various limitations. For example, the exercise price for any ISO granted to any employee owning
more than 10% of our common stock may not be less than 110% of the fair market value of our common stock on the date of grant and such ISO must expire not later than five years after the grant date. The aggregate fair market value (determined at the
date of grant) of our common stock subject to all ISOs held by a participant that are first exercisable in any single calendar year cannot exceed $100,000. ISOs may not be transferred other than upon death, or to a revocable trust where the
participant is considered the sole beneficiary of the stock option while it is held in trust. The 2009 Plan provides that no more than 8,297,584 shares may be issued pursuant to the exercise of ISOs. If the shareholders approve this Proposal 5, this
limit will increase by 7,000,000 shares.
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A stock option granted under the 2009 Plan generally cannot be exercised until it becomes
vested. The 2009 Plan Committee establishes the vesting schedule of each stock option at the time of grant. The maximum term life for stock options granted under the 2009 Plan may not exceed ten years from the date of grant.
The exercise price of each stock option granted under the 2009 Plan must be paid in full at the time of exercise, either with cash or
through a broker-assisted cashless exercise and sale program, or through another method approved by the 2009 Plan Committee. The optionee must also make arrangements to pay any taxes we are required to withhold at the time of exercise.
Stock Appreciation Rights.
A stock appreciation right is the right to receive, upon exercise, an amount equal to the
excess of the fair market value of the shares of common stock on the date of exercise over the fair market value of the shares of common stock covered by the exercised portion of the stock appreciation right on the date of grant. The 2009 Plan
Committee determines the terms of stock appreciation rights, including the exercise price, the vesting and the term of the stock appreciation right. The maximum term life for stock appreciation rights granted under the 2009 Plan may not exceed ten
years from the date of grant. The 2009 Plan Committee may determine that a stock appreciation right will only be exercisable if our company satisfies performance goals established by the 2009 Plan Committee. Settlement of a stock appreciation right
may be in shares of common stock or in cash, or any combination thereof, as the 2009 Plan Committee may determine.
Restricted Shares.
Awards of restricted shares are shares of common stock that vest in accordance with the terms and conditions
established by the 2009 Plan Committee. The 2009 Plan Committee also will determine any other terms and conditions of an award of restricted shares. In determining whether an award of restricted shares should be made, and/or the vesting schedule for
any such award, the 2009 Plan Committee may impose whatever conditions to vesting as it determines to be appropriate. For example, the 2009 Plan Committee may determine that an award of restricted shares will vest only if our company satisfies
performance goals established by the 2009 Plan Committee.
Stock Units.
Stock units are the right to receive an amount
equal to the fair market value of the shares of common stock covered by the stock unit at some future date after the grant. The 2009 Plan Committee will determine all of the terms and conditions of an award of stock units, including the vesting
period. Upon each vesting date of a stock unit, a participant will be entitled to receive an amount equal to the then fair market value of the shares of common stock on the settlement date. The 2009 Plan Committee may determine that an award of
stock units will vest only if our company satisfies performance goals established by the 2009 Plan Committee. Payment of stock units may be in shares of common stock or in cash, or any combination thereof, as the 2009 Plan Committee may determine.
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Performance Conditions.
The 2009 Plan specifies performance conditions that the 2009
Plan Committee may include in awards that are intended to qualify as performance-based compensation under Internal Revenue Code Section 162(m). Examples of these performance condition criteria include one or more of the following:
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net order dollars
net profit dollars
net revenue dollars
profit/loss or profit margin
operating profit
net operating profit
operating margin
working capital
sales or revenue
revenue growth
gross margin
cost of goods sold
individual performance
cash
accounts receivables
write-offs
cash flow
liquidity
income
net income
operating income
net operating income
earnings
earnings before interest, taxes, depreciation and/or amortization
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earnings per share
growth in earnings per share
price/earnings ratio
debt or debt-to-equity
economic value added
assets
return on assets
return on equity
stock price
shareholders equity
total shareholder return, including stand-alone or relative to a stock market or peer
group index
return on capital
return on assets or net assets
return on investment
return on operating revenue
any other financial
objectives objective customer satisfaction indicators and efficiency measures
operations
research or related milestones
intellectual property (e.g., patents)
product development
site, plant or building development
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internal controls
policies and procedures
information technology
human resources
corporate governance
business development
market share
strategic alliances, licensing and partnering
contract awards or backlog
expenses
overhead or other expense reduction
compliance programs
legal matters
accounting and reporting
credit rating
strategic plan development and implementation
mergers and acquisitions and divestitures
financings
management
improvement in workforce diversity
or any similar criteria.
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Performance conditions must be satisfied for the applicable performance period for awards containing
performance goals to vest.
Including one or more of the foregoing performance conditions in awards of stock and stock units
to persons subject to the limitations of Internal Revenue Code Section 162(m) may enable us to grant awards intended to qualify as performance-based compensation. Approval of the material terms of the 2009 Plan (including participant
eligibility, the foregoing specified performance condition criteria and the numerical limitations on the magnitude of grants) by shareholders is necessary for grants of stock options, stock appreciation rights, restricted shares and stock units to
employees covered by Internal Revenue Code Section 162(m) to qualify for the performance-based compensation exception to the income tax deduction limitations of Section 162(m) of the Internal Revenue Code. See the section under the heading
Internal Revenue Code Section 162(m) Limits below for further details.
Limited Transferability of Awards.
Awards granted under the 2009 Plan generally are not transferrable other than upon death, or pursuant to a court-approved domestic relations order. However, the 2009 Plan Committee may in its discretion permit awards other than ISOs to be
transferred. Generally, where transfers are permitted, they will be permitted only by gift to a member of the participants immediate family or to a trust or other entity for the benefit of the member(s) of the participants and/or his or
her immediate family.
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Termination of Employment, Death or Disability.
The 2009 Plan Committee will
determine the effect of the termination of employment on awards, which determination may be different depending on the nature of the termination, such as terminations due to cause, resignation, death, disability or retirement.
Corporate Transaction.
In the event that we are a party to a merger or other reorganization, outstanding awards will be subject to
the agreement of merger or reorganization. Such agreement may provide for (a) the continuation of the outstanding awards by our company, if our company is a surviving corporation, (b) the assumption of the outstanding awards by the
surviving corporation or its parent or subsidiary, (c) the substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding awards, (d) full exercisability or vesting and accelerated expiration of
the outstanding awards, (e) settlement of the full value of the outstanding awards in cash or cash equivalents followed by cancellation of such awards or (f) cancellation of outstanding awards with or without consideration. The Board of
Directors need not adopt the same rules for each award or participant.
Adjustments
. In the event of a stock
split, reverse stock split, share dividend or similar transaction, the maximum aggregate number of shares of common stock reserved for issuance under the 2009 Plan , the number and kind of securities available
for awards (and which can be issued as ISOs), the per person annual limitations on awards issued under the 2009 Plan, the number and kind of securities covered by each outstanding award, the exercise price under each
outstanding stock option and stock appreciation right, and the number and kind of outstanding securities issued under the 2009 Plan will automatically adjust appropriately.
Change in Control.
The 2009 Plan Committee will decide the effect of a change in control of our company on outstanding awards. The
2009 Plan Committee may, among other things, provide that awards will fully vest upon a change in control, or upon a change in control followed by an involuntary termination within a certain period of time.
Deferral of Awards.
Subject to 2009 Plan Committee approval and compliance with applicable tax laws, participants may elect to
(a) defer amounts (cash or shares) that would otherwise be paid or delivered from the exercise or settlement of certain awards to a deferred compensation account with our company, or (b) convert shares that would otherwise be delivered as
a result of the exercise of a stock option or stock appreciation right to an equal number of stock units. Any deferred compensation account established on behalf of a participant will generally represent an unfunded and unsecured obligation of our
company.
Governing Law.
The governing state law of the 2009 Plan (except for choice of law provisions) is California
which is the state of our corporate headquarters and where most of our employees are employed.
Amendment and Termination
of the 2009 Plan.
The Board of Directors generally may amend or terminate the 2009 Plan at any time and for any reason, except that the Board of Directors must obtain shareholder approval of material amendments, including any addition of shares,
or repricing of stock options or stock appreciation rights after the date of their grant as required by the Listing Rules. The 2009 Plan is scheduled to terminate on November 14, 2019 if not terminated earlier by the Board of Directors.
Certain Federal Income Tax Information
The following is a general summary of the federal income tax consequences to us and to U.S. participants for awards granted under the 2009 Plan. The federal tax laws may change and the federal, state and
local tax consequences for any participant will depend upon his or her individual circumstances. Tax consequences for any particular individual may be different. This summary is not intended to be exhaustive and does not discuss the tax consequences
of a participants death or provisions of income tax laws of any municipality, state or other country. We advise participants to consult with their own tax advisors regarding the tax implications of their awards under the 2009 Plan.
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Incentive Stock Options.
For federal income tax purposes, the holder of an ISO has no
taxable income at the time of the grant or exercise of the ISO. If such person retains the shares of common stock for a period of at least two years after the stock option is granted and one year after the stock option is exercised, any gain upon
the subsequent sale of the common stock will be taxed as a long-term capital gain. A participant who disposes of shares of common stock acquired by exercise of an ISO prior to the expiration of two years after the stock option is granted or before
one year after the stock option is exercised will realize ordinary income as of the date of exercise equal to the difference between the exercise price and fair market value of the shares of common stock. Any additional gain or loss recognized upon
any later disposition of the shares of common stock would be short or long term capital gain or loss depending on whether the shares had been held by the participant for one year or more. The difference between the option exercise price and the fair
market value of the shares of common stock on the exercise date of an ISO is an adjustment in computing the holders alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the
participants regular income tax for the year.
Nonstatutory Stock Options.
A participant who receives an NSO
generally will not realize taxable income on the grant of such option, but will realize ordinary income at the time of exercise of the stock option equal to the difference between the option exercise price and the fair market value of the shares of
common stock on the date of exercise. Any additional gain or loss recognized upon any later disposition of the shares of common stock would be short or long term capital gain or loss depending on whether the shares had been held by the participant
for one year or more.
Stock Appreciation Rights.
No taxable income is reportable when a stock appreciation right is
granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received plus the fair market value of any shares of common stock received. Any additional gain or loss recognized upon
any later disposition of any shares of commons stock received would be short or long term capital gain or loss depending on whether the shares had been held by the participant for one year or more.
Restricted Shares.
A participant will not have taxable income upon grant of unvested restricted shares unless he or she elects to
be taxed at that time pursuant to an Internal Revenue Code Section 83(b) election. Instead, he or she will recognize ordinary income at the time(s) of vesting equal to the fair market value (on each vesting date) of the shares of common stock
or cash received minus any amount paid for the shares.
Stock Units.
No taxable income is reportable when unvested
stock units are granted to a participant. Upon settlement of the vested stock units, the participant will recognize ordinary income in an amount equal to the value of the payment received pursuant to the stock units.
Income Tax Effects for our Company.
We generally will be entitled to a tax deduction in connection with an award under the 2009
Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example, upon the exercise of an NSO).
Excess Parachute Payments.
The benefits of an award may be reduced if, as a result of an excise tax that would be imposed by Section 4999 of the Internal Revenue Code for parachute
payments, the after-tax value of the award to the participant will be greater than if the award were not so reduced. In addition, the 2009 Plan Committee may determine at the time of granting an award or any time after grant to reduce an award
so that the award will not be subject to the limitation on deductibility of parachute payments imposed by Section 280G of the Internal Revenue Code.
Internal Revenue Code Section 162(m) Limits.
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct in any one fiscal
year with respect to certain of our executive officers. However, qualified performance-based compensation is not subject to the deduction limit if it is granted pursuant to a plan approved by shareholders and certain other requirements are met. In
this regard, the 2009 Plan imposes the following annual grant limits on awards that may be made to any one individual and
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that are intended to constitute qualified performance-based compensation under Internal Revenue Code Section 162(m):
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Share Grant Limit Per Fiscal Year
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Stock options and SARs
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1,300,000
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Stock Units
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33,333
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Restricted Shares
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33,333
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Our 2009 Plan is intended to enable certain awards to constitute performance-based compensation not
subject to the annual deduction limitations of Section 162(m) of the Internal Revenue Code. However, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, our Compensation Committee
has not adopted a policy that all compensation must be deductible.
Internal Revenue Code Section 409A.
Section 409A of the Internal Revenue Code governs the federal income taxation of certain types of nonqualified deferred compensation arrangements. A violation of Section 409A of the Internal Revenue Code generally results in an
acceleration of the recognition of income of amounts intended to be deferred and the imposition of an excise tax of 20% on the employee over and above the income tax owed plus possible penalties and interest. The types of arrangements covered by
Section 409A of the Internal Revenue Code are broad and may apply to certain awards available under the 2009 Plan (such as stock units). The intent is for the 2009 Plan, including any awards available thereunder, to comply with the requirements
of Section 409A of the Internal Revenue Code to the extent applicable.
Specific Benefits
The Company has not approved any awards that are conditioned on shareholder approval of the 2009 Plan proposal. The Company cannot
currently determine the benefits or number of shares subject to awards that may be granted in the future to executive officers and other employees and to directors under the 2009 Plan. If the proposed increase in the share limit for the 2009 Plan
had been in effect in fiscal 2013, the Company expects that its award grants for fiscal 2013 would not have been substantially different from those actually made in that year under the plan. For information regarding past award grants under the 2009
Plan, see the Aggregate Past Grants Under the 2009 Plan table below.
As of 10/16
/
2013, a total of
1,837,829 shares of the Companys common stock were subject to outstanding restricted stock unit awards granted under the 2009 Plan, 885,094 shares were subject to outstanding stock options granted under the 2009 Plan, and 2,551,129 shares were
then available for new award grants under the 2009 Plan. The total number of shares of the Companys common stock subject to awards that the Company granted under the 2009 Plan in each of the last three fiscal years, and to-date (as of 10/16/
2013) for fiscal 2014, are as follows:
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5,359,632 shares in fiscal 2011 (of which 624,600 shares were subject to stock option awards and 4,735,032 shares were subject to restricted stock unit
awards);
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1,430,742 shares in fiscal 2012 (of which 334,642 shares were subject to stock option awards and 1,096,100 shares were subject to restricted stock unit
awards);
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730,500 shares in fiscal 2013 (of which 484,000 shares were subject to stock option awards and 246,500 shares were subject to restricted stock unit
awards); and
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193,000 in fiscal 2014 (of which 33,000 shares were subject to stock option awards and 160,000 shares were subject to restricted stock unit awards).
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As previously noted, the Compensation Committee anticipates that the 7,000,000 additional shares requested
for the 2009 Plan (together with the shares available for new award grants under the 2009 Plan on 10/16/2013) will provide the Company with flexibility to continue to grant equity awards under the 2009 Plan
123
through approximately
[
the end of the Companys 20 fiscal year
]
, accommodating anticipated grants relating to the hiring, retention and promotion of
employees and providing reasonable flexibility for acquisitions and other corporate transactions. However, this is only an estimate, in the Companys judgment, based on current circumstances. The total number of shares that are awarded under
the 2009 Plan in any one year or from year-to-year may change based on any number of variables, including, without limitation, the value of the Companys common stock (since higher stock prices generally require that fewer shares be issued to
produce awards of the same grant date fair value), changes in competitors compensation practices or changes in compensation practices in the market generally, changes in the number of our employees, changes in the number of our directors and
officers, acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the type of awards the Company grants and how the Company chooses to balance total
compensation between cash and equity-based awards.
To help assess the potential dilutive impact of the 2009 Plan, the
weighted-average number of shares of the Companys common stock issued and outstanding in each of the last three fiscal years is 15,452,462 shares issued and outstanding in fiscal 2011, 24,487,080 shares issued and outstanding in fiscal 2012,
and 28,840,809 shares issued and outstanding in fiscal 2013. The number of shares of the Companys common stock issued and outstanding as of October 16, 2013 was 31,119,454 shares. The closing market price for a share of the Companys
common stock as of October 16, 2013 was $0.91 per share.
Aggregate Past Grants Under the 2009 Plan
As of October 16, 2013, awards covering 11,233,442 shares of our common stock had been granted under the 2009 Plan. (This number of
shares includes shares subject to awards that expired or terminated without having been exercised and paid and became available for new award grants under the 2009 Plan.) The following table shows information regarding the distribution of all awards
among the persons and groups identified below,
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option exercises and restricted stock vesting prior to that date, and option and unvested restricted stock holdings as of that date.
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STOCK OPTIONS
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RESTRICTED STOCK/UNITS
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Name and Position
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Number of
Shares
Subject to
Past
Option
Grants
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Number of
Shares
Acquired
On Exercise
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Number of Shares Underlying
Options as of [10/16/13]
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Number of
Shares/
Units
Subject to
Past
Awards
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Number
of
Shares/
Units
Vested
as of
10/16/13
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Number of
Shares/
Units
Outstanding
and
Unvested as
of
10/16/13
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Exercisable
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Unexercisable
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Named Executive Officers:
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Eric L. Kelly
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1,238,000
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0
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1,238,000
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0
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1,778,385
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1,253,924
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524,461
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President and Chief Executive Officer
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Kurt L. Kalbfleisch
|
|
|
177,000
|
|
|
|
0
|
|
|
|
177,000
|
|
|
|
0
|
|
|
|
713,160
|
|
|
|
504,108
|
|
|
|
209,052
|
|
Senior Vice President, Chief Financial Officer and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jillian Mansolf(1)
|
|
|
178,356
|
|
|
|
0
|
|
|
|
178,356
|
|
|
|
0
|
|
|
|
625,420
|
|
|
|
445,614
|
|
|
|
179,806
|
|
Former Senior Vice President of Global Sales and Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for All Current Executive Officers as a Group (2 persons):
|
|
|
1,415,000
|
|
|
|
0
|
|
|
|
1,415,000
|
|
|
|
0
|
|
|
|
2,491,545
|
|
|
|
1,758,032
|
|
|
|
733,513
|
|
Robert A. Degan
|
|
|
62,728
|
|
|
|
0
|
|
|
|
62,728
|
|
|
|
0
|
|
|
|
22,728
|
|
|
|
0
|
|
|
|
0
|
|
Joseph A. De Perio
|
|
|
62,728
|
|
|
|
0
|
|
|
|
62,728
|
|
|
|
0
|
|
|
|
22,728
|
|
|
|
0
|
|
|
|
0
|
|
Vivekanand Mahadevan
|
|
|
30,000
|
|
|
|
0
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Scott McClendon
|
|
|
22,728
|
|
|
|
0
|
|
|
|
22,728
|
|
|
|
0
|
|
|
|
679,043
|
|
|
|
452,696
|
|
|
|
226,347
|
|
Total for all Current Non-Executive Directors as a Group (4 persons):
|
|
|
178,184
|
|
|
|
0
|
|
|
|
178,184
|
|
|
|
0
|
|
|
|
724,499
|
|
|
|
452,696
|
|
|
|
226,347
|
|
Each other person who has received 5% or more of the options, warrants or rights under the Plan:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
All employees, including all current officers who are not executive officers or directors, as a group:
|
|
|
831,725
|
|
|
|
3,237
|
|
|
|
597,511
|
|
|
|
234,214
|
|
|
|
1,686,464
|
|
|
|
853,951
|
|
|
|
877,969
|
|
Total
|
|
|
2,424,909
|
|
|
|
3,237
|
|
|
|
2,190,695
|
|
|
|
234,214
|
|
|
|
4,902,508
|
|
|
|
3,064,679
|
|
|
|
1,837,829
|
|
(1)
|
Effective on September 3, 2013, Jillian Mansolf no longer serves as an executive officer of the Company. She remained employed by us as our Senior Vice President
of Marketing until her resignation from employment on November 5, 2013.
|
125
Equity Compensation Plan Information
The following table provides information about our equity compensation plans at June 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
(a)
Number of common shares
to be issued upon exercise
of outstanding
options
|
|
|
(b)
Weighted-average
exercise price of
outstanding options (3)
|
|
|
(c)
Number of common shares
remaining available
for
future issuance under equity
compensation plans
(excluding shares reflected
in
column (a))
|
|
Equity compensation plans approved by our shareholders (1)
|
|
|
3,932,278
|
|
|
$
|
2.26
|
|
|
|
2,830,882
|
|
Equity compensation plans not approved by our shareholders (2)
|
|
|
500,022
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,432,300
|
|
|
$
|
2.16
|
|
|
|
2,830,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Of the aggregate number of shares that remained available for future issuance reported in column (c), 2,290,085 were available under the 2009 Plan and 540,797 were
available under the 2006 Employee Stock Purchase Plan. The 2009 Plan permits the granting of the following types of incentive awards: stock options, stock appreciation rights, restricted shares, and stock units.
|
(2)
|
These figures represent options to purchase shares of our common stock granted to certain employees (including Ms. Mansolf) (the Inducement Options)
and stock units (the Inducement Stock Units) as an inducement to their commencing employment with us. Neither the Inducement Options nor the Inducement Stock Units were granted under a plan and are administered by the Compensation
Committee. The Inducement Options and Inducement Stock Units are generally subject to the same terms as options and stock units granted under the 2009 Plan. The Inducement Options have a six-year term and the Inducement Stock Units vest over three
years and are subject to earlier termination in the case of termination of the employees employment or a change in control of us.
|
(3)
|
The weighted-average exercise prices do not reflect shares subject to outstanding awards of restricted stock units.
|
Summary
We believe
strongly that the approval of the 2009 Plan amendments is essential to our future success. Awards such as those provided under the 2009 Plan constitute an important incentive for participants and will help us to attract and retain qualified
individuals to serve on behalf of our company. Each of our executive officers and directors is eligible to participate in the 2009 Plan.
Vote Required
Approval
of this Proposal 5 requires the affirmative vote of the holders of a majority of the shares casting votes in person or by proxy on this Proposal 5 at the special meeting. The number of such affirmative votes must be at least a majority of the
required quorum for the special meeting.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AMENDMENTS TO OUR 2009
EQUITY INCENTIVE PLAN, INCLUDING AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR AWARD GRANT PURPOSES UNDER THE 2009 EQUITY INCENTIVE PLAN BY 7,000,000 SHARES OF COMMON STOCK.
126
PROPOSAL 6
APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES
We may ask our shareholders to vote on a proposal to grant discretionary authority to adjourn the Special Meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the adjournment to approve the other proposals set forth in this proxy statement. We currently do not intend to propose adjournment at the Special Meeting
if there are sufficient votes to approve such other proposals. The approval of a majority of the votes cast is required to approve the adjournment of the Special Meeting for the purpose of soliciting additional proxies. If our shareholders
approve this proposal, we may adjourn the Special Meeting and use the additional time to solicit additional proxies, including proxies from our shareholders who have previously voted against any other proposals.
If our shareholders do not approve Proposal 6:
|
|
|
We may not be able to consummate the Acquisition of Tandberg on the terms set forth in the Acquisition Agreement, and Tandberg and its shareholders may
have the right to terminate the Acquisition Agreement.
|
|
|
|
We may not be able to maintain a minimum market value of listed securities, or MVLS, of $35 million as required for continued listing on the NASDAQ
Capital Market under NASDAQ Listing Rule 5550(b)(2), and as a result our securities may be delisted from the NASDAQ Capital Market as a result of our failure to comply with the minimum MVLS requirement.
|
|
|
|
Our business would continue to incur significant operating losses, which would require us to seek additional capital in the form of debt or equity,
which we may not able to secure. If we are unable to secure such financing, we may need to implement additional cost reduction efforts across our operations, which could materially harm our business, results of operations and future prospects.
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL
6
.
PROXIES RECEIVED BY OUR BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
127
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may get copies of any of these
documents (excluding exhibits), or this proxy statement, at no charge to you by writing or calling Investor Relations at Overland Storage, Inc., 9112 Spectrum Center Boulevard, San Diego, California 92123, or by calling 1-800-729-8725. You may also
access these filings at our web site under the investor link at
http://phx.corporate-ir.net/phoenix.zhtml?c=108165&p=irol-irhome.
You may read and copy any document we file at the SECs public reference rooms at 100 F Street, N.E, Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the operation of the public reference rooms. Copies of our SEC filings are also
available to the public from the SECs web site at www.sec.gov.
If you would like to request any of these documents from
us, please do so by , 2013 to ensure you receive them before the special meeting. You will not be charged for any of these documents that you request. If
you request any of these documents from us, we will mail them to you by first class mail, or another equally prompt means, within one business day after we receive your request.
THIS PROXY STATEMENT IS DATED , 2013. YOU SHOULD NOT ASSUME
THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO THE SHAREHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors knows of no other business that will be conducted at the Special Meeting other than as described in this Proxy Statement. If any other matter or
matters are properly brought before the meeting or any adjournment or postponement of the meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment.
By order of the Board of Directors,
KURT L. KALBFLEISCH
Secretary
128
Annex A
A
CQUISITION
A
GREEMENT
A
MONG
O
VERLAND
S
TORAGE
,
I
NC
.,
T
ANDBERG
D
ATA
H
OLDINGS
S.
À
R
.
L
.,
AND
T
HE
C
OMPANY
S
HAREHOLDERS
L
ISTED
ON
S
CHEDULE
I
H
ERETO
November 1, 2013
TABLE OF CONTENTS
- i -
TABLE OF CONTENTS
- ii -
TABLE OF CONTENTS
SCHEDULES AND EXHIBITS
|
|
|
Schedule I
|
|
Company Shareholders
|
Schedule II
|
|
Subsidiaries of the Company
|
Schedule III
|
|
Persons Included in the Definition of Knowledge
|
Schedule IV
|
|
Continuing Officers and Directors of the Group Companies
|
|
|
Exhibit A
|
|
Form of Registration Rights Agreement
|
Exhibit B
|
|
Form of Voting Agreement
|
- iii -
ACQUISITION AGREEMENT
T
HIS
A
CQUISITION
A
GREEMENT
(this
Agreement
) is made and entered into as
of November 1, 2013 (the
Agreement Date
) by and among Overland Storage, Inc., a California corporation (
Buyer
), on the one hand, and Tandberg Data Holdings S.à r.l., a private limited liability
company (
société à responsabilité limitée
) incorporated under the laws of the Grand Duchy of Luxembourg, having a share capital of twelve thousand five hundred Euro
(EUR 12,500.-),
its registered office at 46A, avenue J.F. Kennedy, L-1855 Luxembourg, registered with the Luxembourg Register of Commerce and Companies (R.C.S. Luxembourg) under number B 147.829 (the
Company
), and the persons listed on
Schedule I
attached hereto (collectively, the
Company Shareholders
), on the other hand (each a
Party
and together the
Parties
).
R
ECITALS
A. The Company Shareholders together own (i) 100% of the outstanding capital shares of the Company and (ii) an income sharing loan agreement granted by the Company Shareholders to the Company,
and have approved and adopted this Agreement, the Acquisition (as defined below) and the other transactions contemplated hereby prior to the Agreement Date.
B. The Company Shareholders desire to sell to Buyer, and Buyer desires to purchase from the Company Shareholders, 100% of the Company Interests (as defined below), in each case on the terms and
subject to the conditions of this Agreement (the
Acquisition
).
C. The Boards of Directors of the
Company and Buyer have determined that the Acquisition is in the best interests of such Parties and their respective shareholders and have approved and declared advisable this Agreement and the Acquisition.
D As a condition to Buyers obligation to consummate the Acquisition, certain employees of the Group Companies (as defined
below) shall execute and deliver to Buyer consulting agreements (each, a
Consulting Agreement
) at the Closing (as defined below).
E. Certain employees of the Group Companies may execute and deliver to Buyer employment agreements (each an
Employment Agreement
) at the Closing.
F. As a condition to Buyers obligation to consummate the Acquisition, certain employees and consultants of the Group
Companies shall execute and deliver to Buyer Non-Solicitation Agreements (each, a
Non-Solicitation Agreement
) at the Closing.
G. Buyer, the Company and the Company Shareholders desire to make certain representations, warranties, covenants and agreements in connection with the Acquisition and to prescribe various conditions to
the Acquisition.
A
GREEMENT
N
OW
, T
HEREFORE
, in consideration of the foregoing and the mutual promises, covenants and conditions contained herein, the Parties hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall
have the meanings set forth below.
A-1
Action
means any action, order, writ, injunction, or claim, suit,
litigation, proceeding, arbitration, mediation, audit, investigation or dispute.
Affiliate
shall
have the meaning set forth in Rule 144 promulgated under the Securities Act.
Alternative Buyer
Transaction
means: (i) any acquisition or purchase of shares of Buyer Common Stock from Buyer by any person or group (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder)
representing more than a 50% voting interest in any class or series of Equity Securities of Buyer or any tender offer or exchange offer that if consummated would result in any person or group (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) beneficially owning Equity Securities of Buyer representing 50% or more of the voting interest in any class or series of Equity Securities of Buyer or any merger, consolidation, business
combination or similar transaction involving Buyer pursuant to which the shareholders of Buyer immediately preceding such transaction hold less than 50% of the equity interests in any class or series of capital stock of the surviving or resulting
entity of such transaction; (ii) any merger, consolidation, business combination or similar transaction involving Buyer, (iii) any sale, lease, exchange, transfer, license, acquisition or disposition of all or substantially all of the
assets of Buyer and its Subsidiaries, considered as a whole; or (iv) any sale, lease, exchange, transfer, license or disposition to a third party of the business of Buyer.
Alternative Transaction
means: (i) any acquisition or purchase of Company Shares from the Company by any
person or group (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) representing more than a 15% voting interest in any class or series of Company Shares or any tender offer or exchange
offer that if consummated would result in any person or group (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) beneficially owning Company Capital Stock representing 15% or more of the
voting interest in any class or series of Company Shares or any merger, consolidation, business combination or similar transaction involving the Company pursuant to which the Company Shareholders immediately preceding such transaction hold less than
85% of the equity interests in any class or series of capital stock of the surviving or resulting entity of such transaction; (ii) any acquisition, directly or indirectly, of any capital stock of any Group Company or any merger, consolidation,
business combination or similar transaction involving any Group Company, (iii) any sale, lease, exchange, transfer, license, acquisition or disposition of a substantial portion of the assets of any Group Company; (iv) any sale, lease,
exchange, transfer, license or disposition to a third party of the Company Business; or (v) any initial public offering of capital stock or other securities of any Group Company pursuant to a registration statement filed under the Securities
Act or any similar offering or filing in any foreign jurisdiction.
Applicable Law
means,
collectively, all supranational, international, national (of any jurisdiction), federal, state, local or municipal laws, statutes, ordinances, regulations, and rules, and all orders, writs, injunctions, awards, judgments and decrees (and any
regulations promulgated thereunder) applicable to the assets, properties and business of the applicable Person.
Balance Sheet Date
means June 30, 2013.
Business Day
means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by Applicable Law to be closed in New York, New York, San
Francisco, California or the Grand Duchy of Luxembourg.
Buyer Ancillary Agreements
means
each agreement or document (other than this Agreement) that Buyer is to enter into as a party thereto pursuant to this Agreement.
Buyer Common Stock
means common stock, no par value, of Buyer.
Buyer Shareholders Additional Approval Matters
means (i) a proposal to authorize the board of directors of
Buyer, in its discretion, to effect a reverse stock split of the Buyer Common Stock at a specific ratio,
A-2
ranging from one-for-two to one-for-ten, to be determined by the board of directors of Buyer and effected, if at all, within one (1) year from the date of the Buyer Shareholders Meeting,
and (ii) a proposal to approval the issuance of shares of Buyer Common Stock upon the conversion of Convertible Notes or New Convertible Notes held by Cyrus and/or its Affiliates.
Buyer Shareholders Meeting
means the special meeting of the shareholders of Buyer to be held to consider, among
other things, the issuance of the Acquisition Shares to the Company Shareholders and the Buyer Shareholders Additional Approval Matters.
CFIUS Regulations
means the Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons, 31 CFR Part 800.
Charter Documents
means, with respect to a particular legal entity, the articles or certificate of incorporation, deed
of incorporation, formation or registration (including, if applicable, certificates of change of name), memorandum of association, articles of association, rules of procedure for the management of any other corporate body, bylaws, articles of
organization, limited liability company agreement, trust deed, trust instrument, operating agreement, joint venture agreement, business license, or similar or other constitutive, governing, or charter documents, or equivalent documents, of such
entity.
Closing
means the closing of the transactions necessary to consummate the Acquisition.
Closing Date
means a time and date to be specified by the Parties, which shall be
(i) no later than the third (3
rd
) Business Day
after the satisfaction or waiver (to the extent permitted by Applicable Law and this Agreement) of the conditions set forth in
Article 9
, or (ii) if later, 30 December 2013, or in each case at such other time or date as the Parties
hereto agree in writing. Notwithstanding the foregoing, if the Closing would otherwise occur during the third month of any fiscal quarter of Buyer, absent the written waiver of Buyer, Buyer and the Company shall mutually agree in writing on an
alternative date not occurring in such month.
Closing Transaction Fees Certificate
means a
certificate of the Company, executed by authorized representatives of the Company and dated as of the Closing Date, certifying the amount of the Transaction Fees that have been or will be paid by the Company at or prior to the Closing, together with
the amount of the Transaction Fees that will remain unpaid by the Company as of the Closing (including an itemized list of each Transaction Fee and the Party to whom such amount has been or will be made at or prior to the Closing by the Company or
to whom such amount will be owed as of the Closing). The Closing Transaction Fees Certificate shall include a representation of the Company, certified by authorized representatives of the Company, that such certificate includes all Transaction Fees
previously paid by the Company and all Unpaid Transaction Fees payable following the Closing by the Company or any Affiliate of the Company (including Buyer).
COBRA
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
Code
means the Internal Revenue Code of 1986, as amended.
Company Ancillary Agreements
means each agreement or document (other than this Agreement) that any Group
Company is to enter into as a party thereto pursuant to this Agreement.
Company Balance
Sheet
means the Company and its Subsidiaries unaudited consolidated balance sheet as of the Balance Sheet Date included in the Company Financial Statements.
Company Business
means the business of the Group Companies taken as a whole as presently conducted and as
presently proposed to be conducted.
Company Employee Agreement
means each management,
employment, retention, change in control, severance, consulting, relocation, repatriation or expatriation agreement or other similar Contract between any
A-3
Group Company or any of their respective Affiliates, on the one hand, and any current or former employee, independent contractor or director of any Group Company or any of their respective
Affiliates, on the other hand.
Company Employee Plan
means any plan, program, policy,
practice (including, in respect of TD Germany, company practice (
betriebliche Übung
)), Contract or other arrangement providing for compensation, severance, vesting acceleration, change in control pay, termination pay,
deferred compensation, profit-sharing, bonuses or other incentives, performance awards, stock or stock-related awards, insurance coverage (including any self-insured arrangements that are clearly identified as such), vacation or other paid-time off
benefits, disability benefits, death benefits, hospitalization benefits, retirement benefits, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each
employee benefit plan, within the meaning of Section 3(3) of ERISA (whether or not ERISA is applicable to such plan), that is or has been maintained, contributed to, or required to be contributed to, by the Company or any ERISA
Affiliate for the benefit of any current or former employee, independent contractor or director of the Company or any Affiliate of the Company, or with respect to which the Company or any ERISA Affiliate has or may have any Liability or obligation,
except such definition shall not include any Company Employee Agreement.
Company Financial
Statements
means (i) the audited consolidated balance sheets of the Company and its Subsidiaries as of December 31, 2011 and December 31, 2012; (ii) the Company and its Subsidiaries audited consolidated statements
of operations, changes in shareholders equity and cash flows for the years ended December 31, 2011 and December 31, 2012; (iii) the Company and its Subsidiaries unaudited consolidated statements of operations, changes in
shareholders equity and cash flows for the 6 months ended June 30, 2013; and (iv) the Company Balance Sheet.
Company Intellectual Property
means any and all Intellectual Property that is used, held for use or practiced by the Company or any Group Company, including any Intellectual
Property incorporated into or otherwise used, held for use or practiced in connection with (or planned to be incorporated into or otherwise used, held for use or practiced in connection with) any Company Offerings.
Company Interests
means, collectively, the Company Shares and the ISL.
Company Material Contract
means any Contract required to be listed on the Company Disclosure Letter pursuant to
Section 4.10
,
Section 4.12
or
Section 4.14
.
Company Offerings
means any products or services designed, developed, manufactured, offered, provided, sold or otherwise distributed by or for the Group Companies, or any products or service offerings under development that form the basis, in whole or in part, of any
revenue or business projection provided to Buyer.
Company-Owned
Intellectual Property
means any and all Intellectual
Property that is owned in whole or in part by the Company. Company-Owned Intellectual Property includes Registered Company Intellectual Property.
Company Shareholder Ancillary Agreements
means each agreement or document (other than this Agreement) that any Company Shareholder is to enter into as a party thereto pursuant to
this Agreement.
Company Shares
means the capital shares of the Company that may be outstanding from
time to time, taken together.
Contract
means any written or oral contract, agreement, instrument,
arrangement, commitment, understanding or undertaking (including leases, licenses, mortgages, notes, guarantees, sublicenses, subcontracts and purchase orders).
A-4
Converted Buyer Shares
means any shares of Buyer Common Stock
issued by Buyer pursuant to any conversion or exchange of any Convertible Notes or New Convertible Notes.
Convertible Notes
means the convertible promissory notes issued by Buyer pursuant to the Note Purchase Agreement.
Copyleft License
means any license that requires, as a condition of use, modification or
distribution of Works of Authorship, that such Works of Authorship, or other software or other Intellectual Property incorporated into, derived from, used, or distributed with such Works of Authorship: (i) in the case of software, be made
available or distributed in a form other than binary (
e.g.
, source code form); (ii) be licensed for the purpose of preparing derivative works; (iii) be licensed under terms that allow the Company Offerings or portions
thereof or interfaces therefore to be reverse engineered, reverse assembled or disassembled (other than by operation of law); or (iv) be redistributable at no license fee. Copyleft licenses include the GNU General Public License, the GNU Lesser
General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License, and all Creative Commons sharealike licenses.
Copyleft Materials
means any software or other Intellectual Property subject to a Copyleft License.
Copyrights
means copyrights and all other rights with respect to Works of Authorship and all registrations
thereof and applications therefor (including moral and economic rights, however denominated).
Cyrus
means Cyrus Capital Partners, L.P., a Delaware limited partnership.
Damages
means losses, reductions in
value, costs, damages, loss of revenue or profits, Liabilities, interest and expenses (including reasonable and documented out-of-pocket attorneys fees, other professionals and experts fees, costs of investigation and court costs).
Databases
means databases and other compilations and collections of data or information.
Debt
means the principal amount of the Group Companies outstanding indebtedness for borrowed money,
including any interest accrued thereon, as of immediately prior to the Closing (as defined by and determined in accordance with GAAP) after taking into account any payments scheduled to be made pursuant to the terms of this Agreement on the Closing
Date.
Domain Names
means domain names, uniform resource locators and other names and locators
associated with the Internet.
Encumbrance
means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, charge, security interest, title retention device, collateral assignment or transfer, conditional assignment or transfer, adverse claim, restriction, usufruct or other encumbrance of any kind in respect of such asset (including any
restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset, any restriction on the
possession, exercise or transfer of any other attribute of ownership of any asset and any co-ownership of another Person). For purposes of clarification only, neither restrictions on transferability imposed by foreign, federal or state securities
laws nor the grant of a license to Intellectual Property Rights shall constitute an Encumbrance.
Environmental
Law
means any supranational, international, national (of any jurisdiction), federal, provincial, state or local statute, law, regulation, guideline, rule, standard or other legal requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Materials of Environmental
Concern or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern.
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Equity Securities
means, with respect to any Person that is a legal
entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment,
conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing, or any Contract providing for the acquisition of any of the foregoing.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate
means any entity (whether or not incorporated) other than the Company that, together with the
Company, is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
FBC
means FBC Holdings S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée) having its registered
office at 46A, Avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of Commerce and Companies under number B 142133.
Fully Diluted Buyer Shares
means the sum, without duplication, of the aggregate number of shares of Buyer
Common Stock that are issued and outstanding as of the date of this Agreement plus (i) any shares of Buyer Common Stock issuable in connection with the conversion, exercise or exchange of other Equity Securities of Buyer issued or issuable upon
conversion of any New Convertible Notes, plus (ii) all Equity Securities of Buyer exercisable or convertible into shares of Buyer Common Stock at a per share price less than or equal to $1.30, plus (iii) any Converted Buyer Shares issued
upon conversion of Convertible Notes occurring prior to the Closing Date, plus (iv) any shares of Buyer Common Stock issued after the date of this Agreement but before the Closing Date at a per share price of $1.00 or more, but excluding
(x) all Equity Securities of Buyer exercisable or convertible into shares of Buyer Common Stock at a per share price greater than $1.30, (y) all unvested restricted stock units issued to employees or consultants of Buyer and its
Subsidiaries and (z) any shares issuable upon conversion of the Convertible Notes and any Converted Buyer Shares issuable upon conversion thereof (other than any Converted Buyer Shares included in subsection (iii) above) and
Fully
Diluted Buyer Share
means each of them.
GAAP
means United States generally accepted
accounting principles applied on a consistent basis.
Governmental Authority
means any court or
tribunal, governmental, quasi-governmental or regulatory body, administrative agency or bureau, commission or authority or other body exercising similar powers or authority, including any regulatory body, administrative agency or bureau, commission
or authority or other body of the European Union.
Group Companies
means, collectively, the Company
and its Subsidiaries as set forth in
Schedule II
attached hereto.
Intellectual Property
means any and all: (i) technology, formulae, algorithms, procedures, processes, methods, techniques, know how, ideas, creations, inventions, discoveries, and improvements (whether patentable or unpatentable and whether or not reduced to
practice); (ii) technical, engineering, manufacturing, product, marketing, servicing, financial, supplier, personnel and other information and materials; (iii) customer lists, customer contact and registration information, customer
correspondence and customer purchasing histories; (iv) specifications, designs, models, devices, prototypes, schematics and development tools; (v) Works of Authorship; (vi) Databases; (vii) Trademarks; (viii) Domain Names;
(ix) Trade Secrets; (x) tangible embodiments of any of the foregoing, in any form or media whether or not specifically listed herein; and (xi) all Intellectual Property Rights related thereto.
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Intellectual Property Rights
means any and all rights (anywhere in
the world, whether statutory, common law or otherwise) relating to, arising from, or associated with Intellectual Property, including: (i) Patents; (ii) Copyrights; (iii) industrial design rights and registrations thereof and
applications therefor; (iv) rights with respect to Trademarks, and all registrations thereof and applications therefor; (v) rights with respect to Domain Names, including registrations thereof and applications therefor; (vi) rights
with respect to Trade Secrets, including rights to limit the use or disclosure thereof by any Person; (vii) rights with respect to Databases, including registrations thereof and applications therefor; (ix) publicity and privacy rights,
including all rights with respect to use of a Persons name, signature, likeness, image, photograph, voice, identity, personality, and biographical and Personal Information and materials; and (x) any rights equivalent or similar to any of
the foregoing.
Intervening Event
means a material event or circumstance that was not known to the
board of directors of Buyer prior to the execution of this Agreement (or if known, the consequences of which were not known or reasonably foreseeable), which event or circumstance, or any consequence thereof, becomes known to the board of directors
of Buyer after the execution of this Agreement by Buyer and prior to the receipt of the Buyer Shareholder Approval;
provided
,
however
, that in no event shall the receipt, existence or terms of an Alternative Buyer Transaction or any
matter relating thereto constitute an Intervening Event.
IRS
means the United States Internal Revenue
Service.
ISL
means an income sharing loan granted by FBC to the Company on October 26, 2009 for a
total principal amount of one hundred fifty-five thousand three hundred ninety Euro and seventy-six cents (EUR 155,390.76), as partly assigned to TDM on September 7, 2010, as described in
Schedule I
below.
Knowledge
or
Known
means, with respect to any Party, the knowledge of a particular fact,
circumstance, event or other matter in question of any of the Persons identified underneath such Partys name on
Schedule III
and of any other Persons that may, between the date of this Agreement and the Closing Date, succeed to any of
the duties of the aforementioned individuals (collectively, the
Entity Representatives
). Any such Entity Representative will be deemed to have knowledge of a particular fact, circumstance, event or other matter if (i) such
Entity Representative has actual knowledge of the fact, circumstance, event or other matter, (ii) such fact, circumstance, event or other matter is reflected in one or more documents (whether written or electronic, including e-mails sent to or
by such Entity Representative) in, such Entity Representatives actual possession, or (iii) such fact, circumstance, event or other matter is reflected in one or more documents (whether written or electronic) contained in books and records
of the relevant Person that would reasonably be expected to be reviewed by a person who has the duties and responsibilities of such Entity Representative in connection with such Persons entering into this Agreement, or (iv) such Entity
Representative would reasonably be expected to have such knowledge in the ordinary and prudent course of performing their respective duties and roles on behalf of the relevant Person, including through responses to formal requests for information in
relation to the subject matters set forth in this Agreement with the personnel that report to them who are responsible for the relevant subject matters.
Liabilities
means debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, known or unknown,
including those arising under any law, action or governmental order and those arising under any Contract.
Licensed Company Intellectual Property
means all of the Company Intellectual Property that is not
Company-Owned
Intellectual Property and is licensed to the Company or any of its Subsidiaries.
Luxembourg Company Law
means the law dated August 10, 1915 concerning the commercial companies as amended.
Material Adverse Change
and
Material Adverse Effect
when used in connection with an entity means any change, event, circumstance, condition or effect that
(i) is or is reasonably likely to be or become,
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individually or in the aggregate, materially adverse to the condition (financial or otherwise), prospects, assets (including Intellectual Property or other intangible assets), Liabilities
(including those relating to Intellectual Property), business or results of operations of the Group Companies, taken as a whole or Buyer and its Subsidiaries, taken as a whole, as the case may be, or (ii) prevents, materially delays or
materially impairs the ability of any Party to carry out their obligations under this Agreement and to consummate the Acquisition and the transactions contemplated by this Agreement;
provided
,
however
, that none of the following shall
be deemed to constitute or be taken into account in determining pursuant to clause (i) above whether that has been or will or could be, a Material Adverse Effect: (A) any changes resulting from or arising out of general market,
economic or political conditions (including any changes arising out of acts of terrorism, or war, weather conditions or other force majeure events), provided, that such changes do not have a substantially disproportionate impact on the relevant
Party, (B) any changes resulting from or arising out of general market, economic or political conditions in the industries in which the relevant Party conducts business (including any changes arising out of acts of terrorism, or war, weather
conditions or other force majeure events), provided, that such changes do not have a substantially disproportionate impact on the relevant Party, (C) any changes resulting from or arising out of actions taken pursuant to (and required by) this
Agreement or at the request of the other Parties to this Agreement or the failure to take any actions due to restrictions set forth in this Agreement, (D) any changes in the price or trading volume of Buyer Common Stock, in and of itself,
provided, that such exclusion shall not apply to any underlying fact, event or circumstance that may have caused or contributed to such change in market price or trading volume, (E) any failure of the Buyer Common Stock to be listed on The
Nasdaq Capital Market, including as a result of or pursuant to the notice of deficiency received by Buyer from Nasdaq on January 2, 2013 and (F) any failure by the Company or Buyer to meet published revenue or earnings projections, in and
of itself, provided, that such exclusion shall not apply to any underlying fact, event or circumstance that may have caused or contributed to such failure to meet published revenue or earnings projections.
Materials of Environmental Concern
include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is currently regulated by an Environmental Law or that is otherwise a danger to health, reproduction or the environment.
New Convertible Notes
means the convertible promissory notes having an aggregate principal amount of $7,000,000 issued
or issuable by Buyer pursuant to the New Note Purchase Agreement (whether or not such notes are ultimately issued).
New Note Purchase Agreement
means the amended and restated note purchase agreement dated November 1, 2013
amending and restating the Note Purchase Agreement, to be entered into by and among Buyer and Cyrus or its Affiliates and the other purchasers party thereto before the Closing Date, as amended from time to time.
Note Purchase Agreement
means that certain note purchase agreement dated as of February 12, 2013 by and
among Buyer and the purchasers party thereto, as amended by that certain amendment to the note purchase agreement dated March 5, 2013.
Open Source License
means any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the
Free Software Foundation), or any substantially similar license, including but not limited to any license approved by the Open Source Initiative, and any Creative Commons License. For avoidance of doubt, Open Source Licenses include Copyleft
Licenses.
Open Source Materials
means any software or other Intellectual Property subject to an
Open Source License.
Ordinary Course of Business
means a course of business that is (i) in the
ordinary course of the Group Companies or the Buyer Groups business and consistent with its past practices, as applicable (ii) is consistent with the Buyers or the Companys (or other Group Companys, as applicable)
business plan (including the
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capital investment and business expansion components thereof), as applicable, previously provided to Buyer or the Company Shareholders, as applicable, and (iii) consistent with prudent
business practices for an entity that is of a similar size and in a similar industry.
Patents
means patents and patent applications, utility models and applications for utility models,
inventors certificates and applications for inventors certificates, and invention disclosure statements.
Permitted Encumbrances
means (i) statutory liens for Taxes that are not yet due and payable;
(ii) statutory liens to secure obligations to landlords, lessors or renters under leases or rental agreements; (iii) deposits or pledges made in connection with, or to secure payment of, workers compensation, unemployment insurance
or similar programs mandated by Applicable Law; (iv) statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens; (v) any minor imperfection of title
or similar liens, charges or encumbrances which individually or in the aggregate with other such liens, charges and encumbrances does not impair the value of the property subject to such lien, charge or encumbrance or the use of such property in the
conduct of the Company Business; and (vi) any liens or Encumbrances which are to be, and will be, released at the Closing without the payment of any consideration by Buyer and/or any of the Group Companies.
Person
means any individual, corporation, company, limited liability company, partnership, limited liability
partnership, trust, estate, proprietorship, joint venture, association, organization, entity or Governmental Authority.
Personal Information
means information from or about an individual person the use, aggregation, holding or
management of which is restricted under any Applicable Law, including, but not limited to, an individual persons: (a) personally identifiable information (
e.g.,
name, address, telephone number, email
address, financial account number, government-issued identifier, and any other data used or intended to be used to identify, contact or precisely locate a person); and (b) Internet Protocol address or other persistent identifier.
Prohibited Person
means any Person that is (a) a national or resident of any U.S.
embargoed or restricted country, (b) included on, or Affiliated with any Person on, the United States Commerce Departments Denied Parties List, Entities and Unverified Lists; the U.S. Department of Treasurys Specially Designated
Nationals, Specially Designated Narcotics Traffickers or Specially Designated Terrorists, or the Annex to Executive Order No. 13224; the Department of States Debarred List; UN Sanctions, (c) a member of any PRC military organization,
or (d) a Person with whom business transactions, including exports and re-exports, are restricted by a U.S. Governmental Authority, including, in each clause above, any updates or revisions to the foregoing and any newly published rules.
Public Official
means any executive, official, or employee of a Governmental Authority,
political party or member of a political party, political candidate; executive, employee or officer of a public international organization; or director, officer or employee or agent of a wholly owned or partially state-owned or controlled
enterprise.
Registered Company Intellectual Property
means: (i) all Patents, registered
Trademarks, applications to register Trademarks (including intent-to-use applications), registered Copyrights, applications to register Copyrights, and all Domain Names included in the
Company-Owned
Intellectual Property that are registered, recorded or filed by, for, or under authorization from (or in the name of) the Company; and (ii) any other applications, registrations, recordings and filings by the Company (or otherwise authorized by
or in the name of the Company) with respect to any
Company-Owned
Intellectual Property.
Registration Rights Agreement
means a registration rights agreement in substantially the form attached hereto as
Exhibit A
to be entered into by Buyer and the Company
Shareholders in respect of the Acquisition Shares.
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SEC
means the Securities and Exchange Commission.
Securities Act
means the Securities Act of 1933, as amended.
Subsidiary
means with respect to any Person, any corporation, association, business entity, partnership,
limited liability company or other Person of which such Person, either alone or together with one or more Subsidiaries or by one or more other Subsidiaries (i) directly or indirectly owns or controls securities or other interests representing
at least fifty percent (50%) of the voting power of such Person, or (ii) is entitled, by Contract or otherwise, to elect, appoint or designate directors or other members constituting a majority of the members of such Persons board of
directors, board of managers or other governing body.
Superior Proposal
means a written
Alternative Buyer Transaction that the board of directors of Buyer has determined, after consultation with its outside legal counsel and financial advisor, in its good faith judgment, taking into account the conditionality, expected timing and
likelihood of consummation of the proposal and all other factors the board of directors of Buyer determines in good faith to be relevant, (i) is reasonably likely to be consummated and (ii) if consummated, would result in a transaction
more favorable to Buyers shareholders from a financial point of view than the transactions contemplated by this Agreement.
Tax
(and, with correlative meaning,
Taxes
) means (i) any federal, state, local or foreign net income, alternative or add-on minimum, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, estimated or windfall profit tax, custom duty, national insurance tax,
health tax or other tax or other like assessment or charge of any kind whatsoever, including social security contributions, in each case together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental
Authority responsible for the imposition of any such tax (domestic or foreign), whether disputed or not, (ii) any Liability for the payment of any amounts of the type described in clause (i) of this sentence as a result of being a member
of an affiliated, consolidated, combined, unitary or aggregate group for any Tax period, and (iii) any Liability for the payment of any amounts of the type described in clause (i) or (ii) of this sentence as a result of being a
transferee of or successor to any Person or as a result of any express or implied obligation to indemnify any other Person, by Contract or otherwise. Taxes include any taxes within the meaning of Section 3 of the German Tax Code.
Tax Return
means any return, declaration, report, claim for refund, information return or
statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Tax Ruling
means the letter from the Luxembourg tax authorities issued on the establishment of the Company.
TD Germany
means Tandberg Data GmbH with its legal seat in Dortmund, Germany, registered with the
commercial register of local court of Dortmund, Germany, under HRB 5589.
TDM
means Tandberg Data
Management S.à r.l., a Luxembourg private limited liability company (
société à responsabilité limitée
) having its registered office at L-1855 Luxembourg, 46A, avenue J.F. Kennedy, registered with
the Luxembourg Register of Commerce and Companies under number B 151.395.
Trade Secrets
means
information and materials not generally known to the public, including trade secrets and other confidential and proprietary information.
Trademarks
means trademarks, service marks, logos and design marks, trade dress, trade names, fictitious and other business names, brand names, together with all goodwill
associated with any of the foregoing.
Transaction Fees
means all out-of-pocket costs and
expenses of the Group Companies , any employee of any Group Company or any Company Shareholder incurred by, paid by, or to be paid by, any Group Company in
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connection with the Acquisition and this Agreement (and the related term sheet and the related discussions and negotiations between the Parties with respect thereto) and the transactions
contemplated hereby, including, any fees and expenses of investment bankers, financial advisors, legal counsel, accountants or other professional advisors.
Transfer Pricing Policy
means the transfer pricing policy applicable to the Group Companies disclosed by the Company to the Buyer prior to the date of this Agreement.
Treasury Regulations
means the United States Treasury Regulations promulgated under the Code.
Unpaid Transaction Fees
means any Transaction Fees, or portions thereof, that are not paid in full
prior to the Closing.
WARN Act
means the Workers Adjustment and Retraining Notification Act, as
amended.
Voting Agreement
means a voting rights agreement in substantially the form attached hereto as
Exhibit B
to be entered into by Buyer and the Company Shareholders in respect of the Acquisition Shares.
Works of Authorship
means software (whether in source code, object code form, including user interfaces,
command structures, menus, buttons and icons, flow-charts, and related documentation), websites, content, images, graphics, text, photographs, artwork, audiovisual works, sound recordings, graphs, drawings, reports, analyses, writings, and other
works of authorship and copyrightable subject matter.
Other capitalized terms defined elsewhere in this Agreement and
not defined in this
Article 1
shall have the meanings assigned to such terms in this Agreement in the sections referenced below:
|
|
|
Defined Term
|
|
Section
|
10-K
|
|
6.6
|
401(k) Plan
|
|
7.11
|
Acquisition Shares
|
|
2.2(a)
|
Acquisition Subsidiary
|
|
2.1(b)
|
Agreement
|
|
Preamble
|
Agreement Date
|
|
Preamble
|
Articles of Incorporation
|
|
6.3
|
Board
|
|
4.3(a)
|
Board Approval
|
|
4.3(d)
|
Buyer
|
|
Preamble
|
Buyer Disclosure Letter
|
|
Article 6
|
Buyer Representatives
|
|
8.3(a)
|
Company
|
|
Preamble
|
Company Benefit Arrangement
|
|
4.16(h)
|
Company Certificates
|
|
2.4(b)(iii)
|
Company Disclosure Letter
|
|
Article 4
|
Company Intellectual Property Contracts
|
|
4.14(e)
|
Company Representative
|
|
4.22(a)
|
Company Shareholders
|
|
Preamble
|
Compliance Laws
|
|
4.22(a)
|
Consulting Agreement
|
|
Recitals
|
Consideration
|
|
2.2(a)
|
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|
|
|
Defined Term
|
|
Section
|
Employment Agreement
|
|
Recitals
|
Evaluation Date
|
|
6.24
|
Export Approvals
|
|
4.23(a)
|
FCPA
|
|
4.22(a)
|
Governmental Permits
|
|
4.15(c)
|
Inbound Intellectual Property Contracts
|
|
4.14(e)
|
Leased Real Property
|
|
4.10(a)
|
Leases
|
|
4.10(a)
|
Non-Solicitation Agreement
|
|
Recitals
|
Outbound Intellectual Property Contracts
|
|
4.14(e)
|
Owned Real Property
|
|
4.10(a)
|
Party
|
|
Preamble
|
Payee
|
|
2.5
|
Real Property
|
|
4.10(a)
|
Rights Plan
|
|
6.3
|
Significant Customer
|
|
4.20(b)
|
Significant Supplier
|
|
4.20(c)
|
SEC Filings
|
|
6.6
|
Systems
|
|
4.14(p)
|
Takeover Proposal
|
|
8.3(b)
|
TD Corp
|
|
7.10
|
ARTICLE 2
THE ACQUISITION
2.1
Purchase and Sale of Company Interests
.
(a) Subject to the terms and conditions set forth herein, at the Closing and effective as of the Closing Date, the Company Shareholders
shall sell to Buyer, and Buyer shall purchase from the Company Shareholders, the Company Interests, free and clear of all Encumbrances, for the consideration specified in
Section 2.2(a)
.
(b) Prior to the Closing, Buyer shall form a wholly-owned subsidiary of Buyer incorporated under the laws of the Grand Duchy of
Luxembourg (
Acquisition Subsidiary
), and Buyer shall assign its right to acquire and receive the Company Shares from the Company Shareholders pursuant to this Agreement to Acquisition Subsidiary. Following the formation of
Acquisition Subsidiary, any obligation of Buyer to the Company or the Company Shareholders under this Agreement which is performed, satisfied or fulfilled by Acquisition Subsidiary (which, for the avoidance of doubt, shall not include the obligation
to issue the Acquisition Shares pursuant to
Section 2.1(a)
at the Closing), shall be deemed to have been performed, satisfied or fulfilled in all respects by Buyer.
2.2
Purchase Price
.
(a) The aggregate
consideration payable by Buyer to the Company Shareholders (the
Consideration
) in respect of the Company Interests shall consist of one (1) share of fully paid and nonassessable Buyer Common Stock for each Fully Diluted Buyer
Share (the
Acquisition Shares
).
(b) The issuance of the Acquisition Shares to the Company Shareholders
pursuant to
Section 2.2(a)
shall be made in accordance with an allocation to be provided by the Company Shareholders to Buyer five (5) Business Days prior to the Closing Date.
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(c)
Adjustments
. In the event of any share split, reverse share split, share dividend
(including any dividend or distribution of securities convertible into capital shares), reorganization, reclassification, combination, recapitalization or other like change with respect to the Company Shares or the shares of Buyer Common Stock
occurring after the date of this Agreement and prior to the Closing, all references in this Agreement to specified numbers of shares of any class or series affected thereby, and all calculations provided for that are based upon numbers of shares of
any class or series (or trading or other prices therefor or relating thereto) affected thereby, shall be equitably adjusted to the extent necessary to provide the Parties the same economic effect as contemplated by this Agreement prior to such share
split, reverse share split, share dividend, reorganization, reclassification, combination, recapitalization or other like change. Unless indicated otherwise, all mathematical calculations contemplated by this Agreement shall be made to the fifth
decimal place.
(d)
No Fractional Shares
. Notwithstanding any other provision of this Agreement, no certificates for
fractional shares of Buyer Common Stock shall be issued in the Acquisition. Each holder of Company Shares who otherwise would have been entitled to a fraction of a share of Buyer Common Stock shall receive in lieu thereof cash (without interest) in
an amount determined by multiplying the fractional share interest to which such holder would otherwise be entitled (after taking into account all Company Shares owned by such holder at the Closing) by the closing market price of the Buyer Common
Stock on the date that is three (3) Business Days prior to the Closing Date. No such holder shall be entitled to any dividends, voting rights or any other rights in respect of any fractional share.
(e)
Transfer Formalities
. Buyer and the Company Shareholders instruct and authorise the Company to register at the Closing, in the
name and on behalf of Buyer, the transfer of the Company Shares in the shareholders register of the Company and to file as soon as practicable a notice with the Luxembourg Register of Commerce and Companies in respect of the transfer of the
Company Shares from the Company Shareholders to Buyer. The Company Shareholders, Buyer and the Company hereby jointly empower and authorise any manager of the Company, acting individually, to (i) proceed, at the Closing, with the entry of the
transfer of the Company Shares in accordance with this Agreement in the shareholders register of the Company and to sign the shareholders register of the Company in accordance with article 185 of the Luxembourg Company Law,
(ii) file a Company Shares transfer notice with the Luxembourg Register of Commerce and Companies and (iii) perform any operation or act which might be necessary or useful for the performance and the execution of this Agreement, in
particular the Company Shares and ISL transfer formalities.
2.3
Closing
. Subject to the
earlier termination of this Agreement pursuant to
Article 10
, the Closing shall take place at the offices of OMelveny & Myers LLP, 2765 Sand Hill Road, Menlo Park, California 94025, at 10:00 a.m. local time on the Closing
Date,
provided
,
however
, that to the extent possible pursuant to Applicable Law, the Closing may take place by exchange of executed documents by facsimile or email transmission.
2.4
Transactions to be Effected at the Closing
.
(a) At the Closing Buyer shall:
(i) deliver to the Company and the Company Shareholders a duly executed counterpart of this Agreement and each of the Buyer Ancillary Agreements to which Buyer is a party;
(ii) deliver to the Company and FBC all other agreements, documents, instruments or certificates and other items required to be delivered
by Buyer at or prior to the Closing;
(iii) provide the Company Shareholders with duly executed shareholders resolutions
(i) accepting the resignation of the current managers of the Company and (ii) appointing as of the Closing, new managers of the Company;
(iv) provide the evidence that following the transfer of the Company Shares to Buyer, the registered office of the Company will be transferred and the domiciliation agreement be terminated, or as the case
may be, provide evidence that transfer of the Company Shares to Buyer and related change of control of the Company has
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been accepted by the trust company with which the Company has its office registered and the domiciliation agreement continued; and
(v) issue the Acquisition Shares to FBC pursuant to
Section 2.2(a)
.
(b) At the Closing the Company and each Company Shareholder shall:
(i) deliver to Buyer a duly executed counterpart of this Agreement and each of the Company Ancillary Agreements or Company Shareholder
Ancillary Agreements to which the Company or such Company Shareholder is a party;
(ii) deliver to Buyer all other agreements,
documents, instruments or certificates and other items required to be delivered by the Company or such Company Shareholder, or any of their respective Affiliates, at or prior to the Closing;
(iii) surrender its share certificate or certificates (if any) which as of the Closing represented the Company Shares (the
Company Certificates
);
provided
, that in the event any Company Certificate shall have been lost, stolen or destroyed, the owner of such lost, stolen or destroyed Company Certificate shall provide to Buyer an indemnity
agreement or bond against any claim that may be made against Buyer with respect to the Company Certificate alleged to have been lost, stolen or destroyed;
(iv) deliver to Buyer a certified true copy of the resolutions of the Company Shareholders approving the Acquisition in accordance with and pursuant to this Agreement and the Buyer as the new shareholder
of the Company for the purpose of article 189 of the Luxembourg Company Law;
(v) deliver to Buyer a certified true copy of the
duly updated shareholders register of the Company evidencing the registration of the transfer of the Company Shares from the Company Shareholders to Buyer, along with all other corporate books and records and registers (complete and duly
written up-to-date) of the Company;
(vi) deliver to Buyer transfer forms for all of the Company Shares duly executed in favour
of Buyer as transferee, free and clear of all Encumbrances, duly executed by the registered holders as transferors; and
(vii)
written evidence of due corporate action taken to effect the termination of each 401(k) Plan sponsored or maintained by TD Corp, effective as of no later than one day prior to Closing (but such termination may be contingent upon the Closing).
2.5
Tax Withholding
. Buyer shall be entitled to deduct and withhold, or cause to be
deducted and withheld, from the Consideration or any other payment otherwise payable pursuant to this Agreement, to each Company Shareholder (each, the
Payee
), the amounts required to be deducted and withheld under the Code, or
any provision of state, local or foreign Tax law, with respect to the making of such payment and, to the extent that amounts are so deducted and withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the
Payee in respect of whom such deduction and withholding was made. The Parties agree to cooperate to allow Buyer, at its election, to effectuate such withholding by means acceptable to Buyer, including by paying the applicable portion of the
Consideration for which such withholding is required to the Company or any of its Subsidiaries and causing the Company or such Subsidiary to withhold the applicable amounts through the Companys or such Subsidiarys payroll system. If any
deduction or withholding is required as contemplated by this
Section 2.5
, then the Parties shall take all reasonable steps to reduce the rate of withholding Tax as provided under relevant Tax law and practice. The Parties shall cooperate
reasonably in completing and filing documents required under the provisions of any Applicable Law in connection with reducing the rate of withholding Tax due under the laws of the relevant territory or relevant double tax treaties, or in connection
with any claim to a refund of, or credit for, any required deduction or withholding.
2.6
Further Assurances
. If, at any time before or after the Closing, any of the Parties hereto reasonably believes or is advised that any further instruments, deeds, assignments or assurances are reasonably necessary to consummate the Acquisition
or to carry out the purposes and intent of this Agreement at or after the Closing,
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then the Company, Buyer, the Company Shareholders and their respective officers and directors shall execute and deliver all such proper deeds, assignments, instruments (including not limited to a
notice of the transfer of the Company Shares with the Luxembourg Register of Commerce and Companies, in order to make the transfer of the Company Shares enforceable vis-à-vis third parties) and assurances and do all other things (including
but not limited to the publication of the aforementioned notice of transfer in the Luxembourg official gazette, in accordance with applicable provisions of the Luxembourg Company Law) reasonably necessary to consummate the Acquisition and to carry
out the purposes and intent of this Agreement.
ARTICLE 3
[RESERVED]
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE GROUP COMPANIES
Subject to
the exceptions set forth in a numbered or lettered section of the disclosure letter of the Company addressed to Buyer, dated as of the Agreement Date and delivered to Buyer concurrently with the Parties execution of this Agreement (the
Company Disclosure Letter
) specifically referencing a representation or warranty herein, the Company represents and warrants to Buyer that the statements contained in this
Article 4
(each of which exceptions and disclosures
set forth in any section or subsection of the Company Disclosure Letter will apply to any other section or subsection of the Company Disclosure Letter to the extent the relevance to such other section or subsection is reasonably apparent from a
reading of the text of such disclosure to a reader unfamiliar with the Company Business) are true and correct on and as of the Agreement Date and shall be true and correct as of immediately prior to the Closing. For purposes of this Agreement, a
document shall be deemed to have been made available by the Company to Buyer only if it has been posted in the electronic data site at
https://oursite.reedsmith.com
in connection with the Acquisition.
4.1
Organization and Good Standing
. All Group Companies, their respective jurisdictions of
incorporation and their respective legal form are identified in
Schedule II
. Each Group Company is duly incorporated or organized, validly existing, and in good standing under the laws of the jurisdiction where such Group Company is
incorporated or organized. Each Group Company has all power and authority to own, operate and lease its properties and to carry on its business as currently conducted and proposed to be conducted. Each Group Company is duly qualified or licensed to
do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly
qualified, licensed and in good standing would not result, or reasonably be expected to result, in a Material Adverse Effect on the Company. The Company has made available to Buyer true and complete copies of the currently effective Charter Document
of each Group Company, each, as amended to date. The minute books (containing the records of meetings of the shareholders, the board of directors or other governing body and any committee thereof), the stock certificate books, and the stock record
books, to the extent kept, of each Group Company are correct and complete. No Group Company is in default under or in violation of any provision of its Charter Documents.
Schedule 4.1(a)
contains a true and complete list of each jurisdiction
where the Group Companies are organized and qualified to do business.
Schedule 4.1(b)
lists the managers, directors and officers of each Group Company.
Schedule 4.1(c)
contains a true and correct copy, as of October 17, 2013, of
an excerpt from the commercial register (
Handelsregisterauszug
) of TD Germany. No registrations or applications for registration in such register are pending and there are no matters which are not registered therein, but with respect to which
a registration would be required under Applicable Law.
4.2
Subsidiaries
. Except as set
forth on
Schedule II
, no Group Company has any Subsidiaries, and no Group Company owns or controls, directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, or have any commitment or obligation to
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invest in, purchase any securities or obligations of, fund, guarantee, contribute or maintain the capital of or otherwise financially support any corporation, partnership, limited liability
company, trust, joint venture or other business association or entity. Each Subsidiary is, directly or indirectly, wholly owned by the Company. Any former Subsidiary of any Group Company that is no longer in existence has been duly dissolved in
accordance with its charter documents and the laws of the jurisdiction of its incorporation or organization and there are no outstanding Liabilities, including Taxes, with respect to any such entity for which any Group Company is responsible. TD
Germany is not a party to any enterprise agreement (Unternehmensvertrag) within the meaning of Sections 291 et seq. of the German Stock Corporation Act (AktG), nor is TD Germany obliged to enter into any such agreement. No bankruptcy, insolvency,
liquidation or similar proceedings (whether mandatory or voluntary) are pending and no filing for such proceeding has been made or is required, with respect to TD Germany. TD Germany has not stopped or suspended payment of its debts, become
unable to pay its debts or otherwise become insolvent. TD Germany is not over-indebted (überschuldet). No assets of TD Germany have been seized or confiscated by or on behalf of any third party nor are any foreclosure, forfeiture, execution or
enforcement proceedings pending or threatened with respect to TD Germany or its assets. To the Knowledge of the Company, there are no facts or events which may reasonably be expected to result in any such proceedings or other events as referred to
in this Section 4.2.
4.3
Power, Authorization and Validity
.
(a)
Power and Authority
. The Company has the capacity as well as all requisite corporate power and corporate authority to enter
into, execute, deliver and perform its obligations under this Agreement and each of the Company Ancillary Agreements and to consummate the Acquisition, subject to the approval of the Company Shareholders. The Acquisition and the execution, delivery
and performance by the Company of this Agreement, each of the Company Ancillary Agreements and all other agreements, transactions and actions contemplated hereby or thereby, have been duly and validly approved and authorized by the Companys
managers (the
Board
).
(b)
No Consents
. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to any (i) Governmental Authority or (ii) any other Person is necessary or required to be made or obtained by the Company to enable the Company to lawfully execute and deliver, enter
into, and perform its obligations under this Agreement and each of the Company Ancillary Agreements or to consummate the Acquisition (including the consent of or notice to any Person required pursuant to the terms of such Contract to be obtained or
given in order to keep any Contract between such Person and the Company in effect following the Acquisition or to provide that the Company is not in breach or violation of any such Contract following the Acquisition, in each case, as a result of
failure to obtain such consent or provide such notice), except for filings required to be made pursuant to the provisions of the Luxembourg Company Law.
(c)
Enforceability
. This Agreement has been duly executed and delivered by the Company. This Agreement and each of the Company Ancillary Agreements are, or when executed by the Company will be,
valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors generally and (ii) rules of law and equity governing specific performance, injunctive relief and other equitable remedies.
(d)
Board Approval
. The Board has, at a meeting duly called and held, by a unanimous vote of those directors voting on such
matters, or by a unanimous written consent in lieu thereof: (i) approved and declared advisable this Agreement; (ii) determined that the Acquisition and other transactions contemplated by this Agreement are advisable, fair to, and in the
best interests of the Company; (iii) resolved to recommend to the Company Shareholders the approval of this Agreement and the Acquisition; and (iv) directed that this Agreement be submitted to the Company Shareholders for their
adoption (collectively, the
Board Approval
). No takeover statute or similar statute or regulation of any jurisdiction applies or purports to apply to the Acquisition.
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(e)
Required Vote of Company Shareholders
. The affirmative vote or consent of the
Company Shareholders (the
Shareholder Approval
) are the only votes or consents of the holders of any class or series of Company Shares necessary to adopt this Agreement. Such votes and consents have been obtained in a manner fully
in accordance with Applicable Law. Other than the Shareholder Approval, no other votes or consents of any Company Shareholder, holder of any Debt or holder of any other Equity Securities of the Company or any of its Subsidiaries is required to adopt
or approve this Agreement and the transactions contemplated hereby.
4.4
Capitalization
. As of the date of this Agreement, the entire subscribed share capital of the Company consists of twelve thousand five hundred (12,500) Company Shares. As of the date of this Agreement, there are 12,500 Company Shares
issued and outstanding and no Company Shares that are authorized but not issued. All of the issued and outstanding Company Shares have been duly authorized, are validly issued and fully paid in compliance with all the requirements of Applicable Law
and all requirements set forth in applicable organizational documents and as of the date of this Agreement are held beneficially and of record by the respective Company Shareholders as set forth in
Schedule 4.4
of the Company Disclosure
Letter.
Schedule 4.4
of the Company Disclosure Letter contains a true, correct and complete description of the share capital and the Equity Securities issued by each of the Subsidiaries. The Equity Securities of the Subsidiaries are held
as indicated in
Schedule 4.4
of the Company Disclosure Letter, free and clear of any Encumbrances. All of the issued and outstanding Equity Securities of each other Group Company have been duly authorized, are validly issued, fully paid
not been repaid, neither in whole nor in part, and nonassessable, in compliance with all the requirements of Applicable Law and all requirements. There are no outstanding or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other Contracts or commitments that could require any Group Company to issue, sell, or otherwise cause to become outstanding any of its Equity Securities. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with respect to any Group Company. No Group Company is a party to and there is not, and immediately after the Closing there will not be, any Contract, right of first refusal, right
of first offer, proxy, voting agreement, voting trust or agreement, sub-participation agreement, registration rights agreement or shareholders agreement, whether or not such Group Company is a party thereto, with respect to the purchase, sale,
creating of Encumbrances or voting or other shareholder rights of or in respect of any Equity Securities of any Group Company. No Group Company holds any treasury shares. There are no unvested shares of capital stock of the Company or shares of
capital stock of the Company that are subject to a repurchase right of the Company. There is no Liability for dividends accrued and unpaid by the Company. Each Company Shareholder is ultimately solely controlled by U.S. persons within the meaning of
the CFIUS Regulations.
4.5
No Conflict
. Neither the execution and delivery of this
Agreement or any of the Company Ancillary Agreements by the Company, nor the consummation of the Acquisition or any other transaction contemplated hereby or thereby, shall conflict with, result in a termination, breach, impairment or violation of
(with or without notice or lapse of time, or both), or constitute a default, or require the consent, release, waiver or approval of, or notice to, any third party, under: (i) any provision of the Charter Document of any Group Company, each as
currently in effect; (ii) any Applicable Law applicable to any Group Company or any of its assets or properties; or (iii) any Company Material Contract. Neither the Companys entering into this Agreement nor the consummation of the
Acquisition shall change the obligations or rights of the Company as they exist at the Closing and without giving effect to any action taken by Buyer after the Closing to make payments to or receive payments from any customer or supplier of the
Company.
4.6
Litigation
. There is no Action pending against any Group Company (and
there is no Action pending against any officer, director, employee or agent of any Group Company in their capacity as such or relating to their employment, services or relationship with such Group Company) before any Governmental Authority,
arbitrator or mediator, nor, to the Knowledge of the Company, has any such Action been threatened. There is no judgment, decree, injunction, rule or order of any Governmental Authority, arbitrator or mediator outstanding against any Group Company.
To the Knowledge of the Company, there is no reasonable basis for any person to assert a claim against any Group Company based upon the Companys entering into this Agreement or any Company Ancillary Agreement or consummating the Acquisition or
any of the transactions contemplated by this
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Agreement or any Company Ancillary Agreement. No Group Company has an Action pending against any Governmental Authority or other Person.
4.7
Taxes
.
(a)
Tax Returns and Audits
.
(i) Each Group Company (A) has properly
completed and timely filed all Tax Returns required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects, (B) has timely paid all Taxes required to be paid by it for which payment was due (whether
or not shown on any Tax Returns), (C) in accordance with generally accepted accounting practice, has established an adequate accrual or reserve for the payment of all Taxes expect to be payable in respect of the periods or portions thereof
prior to the Balance Sheet Date (which accrual or reserve as of the Balance Sheet Date is fully reflected on the face of the Company Balance Sheet (rather than in any notes thereto) and will establish an adequate accrual or reserve for the payment
of all Taxes payable in respect of the periods or portion thereof through the Closing Date, (D) has made (or will make on a timely basis) in all material respects all estimated Tax payments required to be made, (E) has no Liability for
Taxes in excess of the amount so paid or accruals or reserves so established, and (F) since the Balance Sheet Date has not incurred any material Liability for Taxes outside the Ordinary Course of Business or otherwise inconsistent with past
custom and practice other than as a result of the transactions contemplated by this Agreement. The Company has made available to Buyer correct and complete copies of all federal income and other material Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any Group Company filed or received for all taxable years remaining open under the applicable statute of limitations.
(ii) None of the Group Companies is materially delinquent in the payment of any Tax or in the filing of any Returns, no material
deficiencies for any Tax have been threatened, claimed, proposed or assessed against any Group Company or any of its officers, employees or agents in their capacity as such, where such threat, claim, proposal or assessment remains outstanding.
(iii) Within the three years prior to Closing, no Group Company has received from the IRS or any other Governmental Authority
(including any sales or use Tax authority) any written and outstanding (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed
adjustment of or any amount of Tax proposed, asserted, or assessed by any Governmental Authority against any Group Company. No Tax Return of any Group Company is under audit by the IRS or any other Governmental Authority and any such past audits (if
any) have been completed and fully resolved to the satisfaction of the applicable Governmental Authority conducting such audit and all Taxes determined by such audit to be due from such Group Company have been paid in full to the applicable
Governmental Authorities or adequate reserves therefor have been established and are reflected on the face of the Company Balance Sheet (rather than in any notes thereto). To the Knowledge of the Company, no claim has ever been made by a
Governmental Authority in a jurisdiction where any Group Company does not file Tax Returns that such Group Company is or may be required to file any such Tax Returns in that jurisdiction.
(iv) No material Tax liens are currently in effect against any of the assets of any Group Company other than liens for Taxes not yet due
and payable. There is not in effect any waiver by any Group Company of any statute of limitations with respect to any Taxes nor has any Group Company agreed to any extension of time for filing any Tax Return that has not been filed. No Group Company
has consented to extend the period in which any Tax may be assessed or collected by any Tax agency or authority which extension is still in effect.
(v) Each Group Company has in its possession official foreign government receipts for any Taxes paid by it to any foreign Governmental Authorities.
(vi) Except as set forth on
Schedule 4.7(a)
of the Company Disclosure Letter, no consideration payable pursuant to this Agreement
is subject to withholding in any jurisdiction.
(vii) No Group Company will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result
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of: (A) the application of Section 481 or Section 263A of the Code (or any corresponding or similar provisions of state, local or foreign Tax laws) to transactions, events or
accounting methods employed prior to the Closing, (B) any closing agreement, as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the
Closing Date, (C) any intercompany transaction or any excess loss account (within the meaning of Treasury Regulations Sections 1.1502-13 and 1502-19, respectively) (or any corresponding or similar provisions of
state, local or foreign Tax law); (D) any installment sale, open transaction or other transaction made on or prior to the Closing Date, or (E) any prepaid amount received on or prior to the Closing Date.
(b)
Withholding
. Each Group Company has materially complied with all Applicable Law relating to the payment and withholding of
Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445 and 1446 of the Code or any corresponding or similar provisions of state, local or foreign Tax law), and has, substantially within the time and in the manner prescribed
by Applicable Law, withheld from employee wages and paid over to the proper Governmental Authorities all amounts required to be so withheld and paid over under all Applicable Law (including the Federal Insurance Contribution Act, Medicare, Federal
Unemployment Tax Act and relevant state income and employment Tax withholding laws), including federal, state, local and foreign Taxes, and has timely filed or provided all withholding Tax Returns in accordance with Applicable Law.
(c)
Special Tax Status
.
(i) No Group Company is a party to or bound by any Tax sharing, indemnity, or allocation Contract (other than with another Group Company), and no Group Company has any Liability to another party (other
than with another Group Company) under any such Contract.
(ii) No Group Company is now, or has ever been, a member of a
consolidated, combined, unitary or aggregate group of which the Company was not the ultimate parent corporation. No Group Company has any Liability for the Taxes of any Person (other than another Group Company) under Treasury Regulations
Section 1.1502-6 (or any corresponding or similar provision of state, local or foreign Tax law), as a transferee or successor, by Contract or otherwise.
(iii) Within the three years prior to Closing, the Company has not constituted either a distributing corporation or a controlled corporation in a distribution of stock intended to
qualify for tax-free treatment under Section 355 of the Code.
(iv) Each Group Company is, and has been at all times
within the past two (2) years, in compliance with the Transfer Pricing Policy in all material respects.
(v) Each Group
Company is in compliance with all terms and conditions of any Tax exemptions expressly granted by the IRS or any other Governmental Authority, and to the Knowledge of the Company the consummation of the Acquisition shall not have any adverse effect
on the continued validity and effectiveness of any such Tax exemptions.
(vi) No Group Company has a permanent establishment
(within the meaning of an applicable Tax treaty) in any country other than the country in which it is incorporated. No Group Company operates or conducts business through any branch in any country other the country in which it is incorporated.
(vii) No Group Company has ever requested or received a material ruling from any Tax authority (other than the Tax Ruling) or
signed a closing or other agreement with any Tax authority.
(viii) To the Knowledge of the Company, there is no limitation on
the utilization by any Group Company of its net operating losses, built-in losses, Tax credits or similar items under Sections 382, 383 or 384 of the Code or comparable provisions of foreign, state or local law (other than any such limitation
arising as a result of the consummation of the transactions contemplated by this Agreement).
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(d)
Nonqualified Deferred Compensation
.
(i) Except as set forth in
Schedule 4.7(d)
of the Company Disclosure Letter, the Company is not a party to any contract, agreement
or arrangement that is a nonqualified deferred compensation plan subject to Section 409A of the Code. Each such nonqualified deferred compensation plan, if any, has since January 1, 2005 been operated in compliance in all
material respects with Section 409A of the Code, and the applicable Treasury Regulations and IRS guidance thereunder so as to avoid any Tax pursuant to Section 409A of the Code. The document or documents that evidence each such plan
substantially conform to the provisions of Section 409A of the Code and the Treasury Regulations thereunder.
(e)
Additional Tax Representations
. Except as set forth on
Schedule 4.7(e)
of the Company Disclosure Letter, the Company is not a party to any Contract or any Company Benefit Arrangement that, to the knowledge of the Company, could give
rise to payments with respect to the performance of services that are nondeductible under Sections 162(m), 404 or 280G of the Code or subject to the excise tax under Section 4999 of the Code, and no amount payable as a result of or in
connection with the consummation of the Acquisition by any employee or director of the Company who is a disqualified individual (as such term is defined in proposed Treasury Regulation Section 1.280G-1) under any Company Employee
Plan could be characterized as an excess parachute payment (as defined in Section
280G(b)(1) of the Code).
4.8
Related Party Transactions
. None of the Group Companies
has, or, to the Knowledge of the Company, has been deemed to have for purposes of any Applicable Law, engaged in or been party to any transaction with any of its officers, directors, employees or direct or indirect shareholders or, to the Knowledge
of the Company, any member of their immediate families (i) acquired or have the use of property for proceeds greater than the fair market value thereof, (ii) received services or have the use of property for consideration other than the
fair market value thereof, or (iii) received interest or any other amount other than at a fair market value rate from any person with whom it does not deal at arms length within the meaning of applicable taxation acts. None of the Group
Companies has, or, to the Knowledge of the Company, has been deemed to have for purposes of any Applicable Law, engaged in or been party to any transaction with any of its officers, directors, employees or direct or indirect shareholders or, to the
Knowledge of the Company, any member of their immediate families (i) disposed of the property for proceeds less than the fair market value thereof, (ii) performed services for consideration other than the fair market value thereof or
(iii) paid interest or any other amount other than at a fair market value rate to any person with whom it does not deal at arms length within the meaning of applicable acts. To the Knowledge of the Company, none of the officers, directors
and employees of any Group Company, any Company Shareholder, nor any immediate family member of an officer, director, employee or such beneficial owner, has a direct ownership interest of more than five percent (5%) of the equity ownership of
any firm or corporation that competes with, or does business with, or has any contractual arrangement with, the Group Companies.
4.9
Company Financial Statements
.
(a)
Schedule 4.9(a)
of the Company Disclosure Letter includes the Company Financial Statements. The Company Financial Statements: (a) are derived from and are in accordance with the books and records of the Group Companies; (b) fairly
present in all material respects the financial condition of the Company and its Subsidiaries at the dates therein indicated and the results of operations and cash flows of the Group Companies for the periods therein specified; and (c) have been
prepared in accordance with GAAP (except that the unaudited Company Financial Statements do not have notes and are subject to normal recurring year-end adjustments, the effect of which are not, individually or in the aggregate, material to the Group
Companies). Except for (i) Liabilities shown on the Company Balance Sheet, (ii) Liabilities that were incurred after the Balance Sheet Date in the Ordinary Course of Business, (iii) executory Liabilities expressly provided for in any
of the Companys Contracts that have been made available to Buyer and that are not required to be reflected in the Company Financial Statements under GAAP, (iv) Liabilities incurred in connection with the negotiation, preparation or
execution of this Agreement, which have been or will be taken into account in the calculation of Transaction Fees and (v) Liabilities identified in the Company Disclosure Letter, the Group Companies have no
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Liabilities, individually or in the aggregate, that are or could reasonably be expected to have a Material Adverse Effect. All reserves established by the Group Companies that are set forth in or
reflected in the Company Balance Sheet have been established in accordance with GAAP.
(b) Except as disclosed in
Schedule
4.9(b)
of the Company Disclosure Letter, the Company has established and maintains a system of internal control over financial reporting (within the meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act) which is effective in providing
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements 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 management and the Board, and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. The Company has disclosed to the Companys outside auditors and Board (x) any Known significant deficiencies
and Known material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the Companys ability to record, process,
summarize and report financial information and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. A summary of any of
these disclosures made by management to the Companys auditors and Board is set forth as
Schedule 4.9(b)
of the Company Disclosure Letter. Except as disclosed in
Schedule 4.9(b)
of the Company Disclosure Letter, the Company does
not have any Knowledge of any significant deficiencies or material weaknesses (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Companys internal controls and procedures
that would reasonably be expected to adversely affect the Companys ability to record, process, summarize and report financial data.
(c) The Company has filed and published all its annual accounts in compliance with the Luxembourg Company Law.
4.10
Title to Properties
.
(a) The
Group Companies have good and valid title to, or in the case of leased assets and properties, valid leasehold interests in, all of the respective tangible assets and properties used, possessed or occupied by them (including those shown on the
Company Balance Sheet), free and clear of all Encumbrances, other than Permitted Encumbrances. Such assets are sufficient for the continued operation of the Company Business. All properties used in the operations of the Company Business are
reflected on the Company Balance Sheet to the extent required under GAAP to be so reflected. All machinery, vehicles, equipment and other tangible personal property owned or leased by each Group Company or used in the Company Business are in good
condition and repair, normal wear and tear excepted. All leases of real or personal property to which a Group Company is a party are fully effective and afford such Group Company, as applicable, a valid leasehold possession of the real or personal
property that is the subject of the lease.
Schedule 4.10(a)-1
of the Company Disclosure Letter sets forth a complete and accurate list of all real property owned by any Group Company, including rights equivalent to real property
(
grundstücksgleiche Rechte
) (the
Owned Real Property
).
Schedule 4.10(a)-2
of the Company Disclosure Letter sets forth a complete and accurate list of all real property leased or subleased to
any Group Company (the
Leased Real Property
and together with the Owned Real Property, the
Real Property
), with correct and completed copies of each lease or sublease thereof (the
Leases
) has
been delivered by the Company to Buyer.
Schedule 4.10(a)-3
of the Company Disclosure Letter sets forth a complete and accurate listing of the locations of all sales offices and any other offices or facilities of the Group Companies and a true
and complete and accurate list of all states or foreign jurisdictions in which any Group Company maintains employees.
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(b) With respect to each Owned Real Property listed in
Schedule 4.10(a)-1
of the
Company Disclosure Letter:
(i) the Group Company that is shown as the owner of such real property in
Schedule 4.10(a)-1
has good and marketable indefeasible fee simple title, free and clear of all Encumbrances, except for Permitted Encumbrances;
(ii) no Group Company has leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion
thereof;
(iii) there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real
Property or any portion thereof or interest therein; and
(iv)
Schedule 4.10(b)(iv)
contains up-to-date copies of any
land register (
Grundbuch
), register of heritable building rights (
Erbbaugrundbuch
) and public encumbrance register (
Baulastenverzeichnis
) existing in respect of Owned Real Property owned by TD Germany. No registrations or
applications for registration in such registers are pending and there are no matters which are not registered therein, but with respect to which a registration in any of such registers would be required or permitted under Applicable Law. No Owned
Real Property owned by TD Germany is encroached (
überbaut
) and no buildings on such Owned Real Property encroach over neighboring properties. None of the Group Companies has received any written notice from any Governmental Authority or
Person of any pending or threatened condemnations (
Enteignung
), planned public redevelopment measures (
Sanierungsmaßnahmen
), annexation, special assessments charged on the premises (
Erschließungskostenbeiträge
),
zoning or subdivision changes (
Änderungen der Bauleitplanung und Parzellierung
), affecting such Owned Real Property.
(c) With respect to each Lease listed in
Schedule 4.10(a)-2
of the Company Disclosure Letter:
(i) such Lease will continue to be legal, valid, binding, enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to
the Closing;
(ii) no Group Company is in breach or default under such leases or subleases, and to the Knowledge of the
Company, no other party thereto is in breach of default thereof, and no event has occurred which, with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder;
(iii) no Group Company has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(iv) to the Knowledge of the Company, the owner of the Leased Real Property has good and marketable title to
such Leased Property, and such owners of the sublessor of the Leased Real Property has full right, power and authority to lease the Leased Real Property and improvements thereon to the applicable Group Company on the terms set forth in such Lease;
and
(v) no Group Company is obligated to pay any leasing or brokerage commission relating to such lease or will have any
obligation to pay any leasing or brokerage commission upon the renewal of the lease.
(d) All facilities located on the Real
Property have received all approvals of Governmental Authorities (including licenses and permits) required in connection with the operation thereof and have been operated and maintained by the applicable Group Company in accordance with Applicable
Law.
(e) The Real Property is in compliance with all applicable building, zoning, subdivision, health and safety and other
land use laws, including, if applicable, the Americans with Disabilities Act of 1990, as amended, and all insurance requirements affecting such Real Property.
(f) All facilities located on the Real Property are supplied with all water, gas, electrical, sewer, storm and waste water systems and all other utilities and other services necessary for the operation of
said facilities, and such utilities and services are operational and sufficient.
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(g) All buildings, structures, fixtures, building systems and equipment located on the Real
Property and used in the business of the applicable Group Company are in good condition and repair and sufficient for the operation of the business of the applicable Group Company and there are no material defects in design, construction or
structure of any premises or other improvements utilized by applicable Group Company.
(h) There is no condemnation,
expropriation or other proceeding in eminent domain, pending or, to the Knowledge of the Company, threatened, affecting any parcel of Real Property or any portion thereof or interest therein.
(i) The Real Property comprises all of the real property used or intended to be used in the Company Business.
(j) With respect to each such owned personal property in
Schedule 4.10(a)-2
of the Company Disclosure Letter, to the Knowledge of
the Company, there are no Parties (other than the Group Companies and its officers, directors, employees, consultants and agents) who are in possession of or who are using any such item of personal property.
4.11
Absence of Certain Changes
. Since the Balance Sheet Date, the Company Business has been
operated in the Ordinary Course of Business, and since such date there has not been with respect to any Group Company any:
(a) Material Adverse Change or any change, event, circumstance, condition or effect that would reasonably be expected to result in a
Material Adverse Change;
(b) amendment or change in its Charter Documents;
(c) incurrence, creation or assumption of (i) any Encumbrance on any of its assets or properties (other than Permitted Encumbrances)
or (ii) any Liability as a guarantor or surety with respect to the obligations of any Person other than another Group Company;
(d) material damage, destruction or loss of any property or asset, whether or not covered by insurance;
(e) declaration, setting aside or payment of any dividend on, or the making of any other distribution in respect of, its capital stock, other than the issuance of Company Shares in connection with the
conversion of outstanding Debt to equity by the Company and the Company Shareholders prior to the Closing;
(f) any material
change with respect to its senior management or other key personnel;
(g) any actual or threatened material employee strikes,
work stoppages, slowdowns or lockouts or, to the Knowledge of the Company, any labor union organization activity;
(h) making
or entering into of any Contract with respect to any acquisition, sale or transfer of all or substantially all of the assets of the Company;
(i) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates or revenue recognition policies) or any revaluation of any of its assets;
(j) commencement of any action, suit, arbitration, mediation, proceeding, claim or investigation, or receipt notice of or, to
the Knowledge of the Company, a threat of any action, suit, arbitration, mediation, proceeding, claim or investigation against a Company Entity relating to any of its business, properties or assets;
(k) any negotiation with respect to, or any entry into, any Contract to do any of the things described in the preceding clauses (a) -
(j) (other than negotiations and agreements with Buyer and its representatives regarding the transactions contemplated by this Agreement).
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4.12
Contracts, Agreements,
Arrangements, Commitments and Undertakings
.
Schedule 4.12
of the Company Disclosure Letter sets forth a list of each of the following Contracts to which any Group Company is a party or to which any Group Company or any of its assets
or properties is bound:
(a) any material dealer, distributor, OEM (original equipment manufacturer), VAR (value added
reseller), sales representative or similar Contract under which any third party is authorized to sell, sublicense, lease, distribute, market or take orders for any of its products, services or technology;
(b) any Contract providing for the development of any software, content (including textual content and visual, photographic or graphics
content), technology or Intellectual Property for (or for the benefit or use of) it, or providing for the purchase by or license to (or for the benefit or use of) it of any software, content (including textual content and visual, photographic or
graphics content), technology or Intellectual Property, which software, content, technology or Intellectual Property is in any manner used or incorporated (or is contemplated by it to be used or incorporated) in connection with any aspect or element
of any product, service or technology of any Group Company;
(c) any Contract that relates to a partnership (including silent
partnership (
Stille Gesellschaft
), joint venture, joint marketing, joint development or similar arrangements with any other Person, and any cash-pooling agreements or similar agreements;
(d) any Company Employee Agreement or other Contract for or relating to the employment by it of any director, managing director, officer,
employee or consultant or any other type of Contract with any of its officers, employees or consultants that is not immediately, or, in the case of TD Germany, in compliance with such notice period as required under mandatory Applicable Law,
terminable by it without cost or other Liability, including any contract requiring it to make a payment to any director, managing director, officer, employee or consultant in connection with the Acquisition, any transaction contemplated by this
Agreement or any Contract that is entered into in connection with this Agreement;
(e) any Contract with any labor union,
organization or association or any works council, including any collective bargaining agreement, works agreement (
Betriebsvereinbarung
) or similar Contract with respect to employees of any Group Company;
(f) any indenture, mortgage, trust deed, promissory note, loan agreement, security agreement, guarantee or other Contract for or with
respect to the borrowing of money, a line of credit, any currency exchange, commodities or other hedging arrangement, or a leasing transaction of a type required to be capitalized in accordance with GAAP which will remain in place after the Closing;
(g) any Contract that, following the Closing, will restrict Buyer or any of its Subsidiaries from (i) engaging in any
aspect of its business, (ii) participating or competing in any line of business, market or geographic area, (iii) freely setting prices for its products, services or technologies (including most favored customer pricing provisions), or
(iv) soliciting potential employees, consultants, contractors or other suppliers or customers;
(h) any Contract under
which any Group Company grants any exclusive rights, non-competition rights, rights of refusal or rights of first negotiation to any Person;
(i) any Contract relating to the sale, issuance, grant, exercise, award, purchase, repurchase or redemption of any shares of its capital stock or other securities or any options, warrants or other rights
to purchase or otherwise acquire any such shares of capital stock, other securities or options, warrants or other rights therefor;
(j) any Contract with any labor union or works council or any collective bargaining agreement or works agreement or similar Contract with its employees or representatives of its employees
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(k) any Contract with a third party that leases temporary employees or independent
contractors to work for a Group Company;
(l) any settlement agreement (including any agreement under which any
employment-related claim is settled);
(m) any Contract of guarantee, support, indemnification, assumption or endorsement of,
or any similar commitment with respect to, the obligations, Liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any Person other than another Group Company;
(n) any Contract in which its officers, directors, employees or shareholders or, to the Knowledge of the Company, any member of their
immediate families is directly or indirectly interested (whether as a party or otherwise) other than a Company Employee Agreement;
(o) any Contract pursuant to which it has acquired a business or entity, or substantially all of the assets of a business or entity, whether by way of merger, consolidation, purchase of stock, purchase of
assets, license or otherwise;
(p) any Contract with any Person with whom any Group Company does not deal at arms
length;
(q) any Contract that involves the sharing of profits with other Persons or the payment of royalties to any other
Person other than another Group Company or an employee as part of their employment arrangements, excluding non-exclusive software licenses entered into in the Ordinary Course of Business;
(r) any Contract containing any support, maintenance or service obligations on the part of any Group Company that has been entered into
outside of the Ordinary Course of Business;
(s) any Contract that does not contain a limitation of the liability of a Group
Company for money damages thereunder for any purpose, or that purports to expose a Group Company to unlimited liability for money damages thereunder under any circumstances;
(t) any Contract that relates to any interest rate or currency, swap, cap, collar or other derivative or hedging arrangement;
(u) any Contract subjecting any Group Company to an employee or customer non-solicitation provision;
(v) any Contracts or subcontracts to which a Governmental Authority is a party; or
(w) any other Contract that is material to it or its business, operations, financial condition, properties or assets.
All Contracts to which any Group Company is a party are in written form.
4.13
No Default; No Restrictions
.
(a) Each of the Company Material Contracts is in full force and effect. Each Group Company is performing all of the obligations required
to be performed by it and is entitled to all of the benefits under, and is not alleged to be in default in respect of, any Company Material Contract to which it is a party or by which it is bound. There exists no default or event of default or
event, occurrence, condition or act, with respect to any Group Company or, to the Knowledge of the Company, with respect to any other contracting party, which, with the giving of notice or the lapse of time, would reasonably be expected to
(i) become a default or event of default under any Company Material Contract to which such Group Company is a party or by which such Group Company is
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bound or (ii) give any third party (A) the right to declare a default or exercise any remedy under such Company Material Contract, (B) the right to a rebate, chargeback, refund,
credit, penalty or change in delivery schedule under such Company Material Contract, (C) the right to accelerate the maturity or performance of any obligation of the Group Company under such Company Material Contract, or (D) the right to
cancel, terminate or modify such Company Material Contract. No Group Company has not received any written, or, to the Knowledge of the Company, oral notice or other communication regarding any actual or possible violation or breach of or default
under, or intention to cancel or modify, any Company Material Contract.
(b) No Group Company is a party to, nor any asset or
property of any Group Company is bound or affected by, any judgment, injunction, order or decree, that restricts or prohibits any Group Company or, following the Closing, will restrict or prohibit the Company or Buyer, from freely engaging in the
Company Business or from competing anywhere in the world (including any judgments, injunctions, orders or decrees, restricting the geographic area in which any Group Company may sell, license, market, distribute or support any products or technology
or provide services or restricting the markets, customers or industries that any Group Company may address in operating the Company Business or restricting the prices which any Group Company may charge for its products, technology or services
(including most favored customer pricing provisions)), or includes any grants by the Company of exclusive rights or licenses, non-competition rights, rights of refusal, rights of first negotiation or similar rights.
4.14
Intellectual Property
.
(a)
Schedule 4.14(a)(i)
of the Company Disclosure Letter contains a complete and accurate list of all Company Offerings,
including, where applicable, the title and most current version. Each of the Company Offerings or services performs in all material respects, free of significant defects, bugs or errors (other than those listed in any documentation delivered with
the Company Offerings or services, or which are disclosed in
Schedule 4.14(a)(ii)
of the Company Disclosure Letter), in compliance with the functions, performance and other requirements described in any applicable warranty, published
specifications or end user documentation provided by the Company or its Subsidiaries to customers of the Company or its Subsidiaries acquiring such Company Offerings or services.
(b)
Schedule 4.14(b)
of the Company Disclosure Letter contains a complete and accurate list of all Registered Company Intellectual
Property, in each case listing, as applicable: (i) for each Patent, the name of the current owner, the Patent number or application serial number and the jurisdiction in which each Patent was filed; (ii) for each registered Trademark or
Trademark application, the name of the applicant/registrant/creator, the jurisdiction where the application/registration/creation is located (by country, province and state) and the application serial number or registration number; (iii) for
each Domain Name, the name of the registrant and expiration date of the registration; and (iv) for each Copyright or Copyright application, the name of the applicant/registrant, the jurisdiction where the application/registration is located (by
country, province and state) and the application or registration number.
Schedule 4.14(b)
of the Company Disclosure Letter also contains a complete and accurate list of all material unregistered Trademarks used or held for use by the Company
and its Subsidiaries to indicate the source or origin of the Company Offerings and all material unregistered Copyrights that are
Company-Owned
Intellectual Property. All Registered Company Intellectual
Property is exclusively owned by and registered or applied for solely in the name of the Company or its Subsidiaries. All Registered Company Intellectual Property is valid, has not been abandoned and, except for applications for the foregoing, is
enforceable. There are no pending disputes regarding such Registered Company Intellectual Property, including disputes with regard to the validity of such right, the scope thereof, or any (alleged) violation thereof.
(c) Except as set forth in
Schedule 4.14(c)
of the Company Disclosure Letter: (i) all necessary registration, maintenance,
employee inventor and renewal fees with respect to the Registered Company Intellectual Property have been paid; (ii) and all documents and instruments necessary for the purposes of obtaining, maintaining, perfecting, preserving and renewing
such Registered Company Intellectual Property have been validly executed, delivered and filed with the appropriate Governmental Authority; (iii) each item of Registered Company
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Intellectual Property has been prosecuted in compliance with all applicable rules, policies, and procedures of the applicable Governmental Authority, and (iv) there are no actions that must
be taken for the purposes of obtaining, maintaining, preserving or renewing any Registered Company Intellectual Property within ninety (90) days following the date of this Agreement, including the payment of any registration, maintenance or
renewal fees or the filing of any affidavits, responses, recordations, certificates or other documents. Neither the Company, any of its Subsidiaries nor any of their respective employees, officers or directors has taken any actions or failed to take
any actions that would cause any of the Registered Company Intellectual Property to be invalid, unenforceable or not subsisting.
(d) To the Knowledge of the Company, there are no facts, circumstances, or information that would or reasonably could be expected to: (i) render any of the Intellectual Property Rights in the
Company-Owned
Intellectual Property invalid or unenforceable; or (ii) adversely affect, limit, restrict, impair, or impede the ability of the Company to use and practice the Company Intellectual Property upon
the Closing in the same or similar manner as currently used and practiced by the Company prior to the Closing.
(e)
Schedule 4.14(e)(i)
of the Company Disclosure Letter contains a complete and accurate list of all Contracts to which the Company or its Subsidiaries is a party, or by which the Company or its Subsidiaries is otherwise bound, under which the
Company or one of its Subsidiaries has granted or agreed to grant to any other Person any license, covenant, release, immunity or other right that applies to any
Company-Owned
Intellectual Property
(
Outbound Intellectual Property Contracts
), other than nondisclosure agreements entered into in the Ordinary Course of Business.
Schedule 4.14(e)(ii)
of the Company Disclosure Letter contains a complete and accurate list of
all Contracts to which the Company or its Subsidiaries is a party, or by which the Company or its Subsidiaries is otherwise bound, under which any other Person has granted or agreed to grant to the Company or its Subsidiaries any license, covenant,
release, immunity or other right with respect to Intellectual Property (
Inbound Intellectual Property Contracts
), other than non-exclusive inbound end user licenses of generally commercially available software with license fees
under $5,000 that do not relate to software incorporated into any Company Offering. The Inbound Intellectual Property Contracts and Outbound Intellectual Property Contracts, together, are referred to herein as the
Company Intellectual
Property Contracts
. All Company Intellectual Property Contracts are in full force and effect, and enforceable in accordance with their terms. The Company or its Subsidiaries, as applicable, is in compliance with, and have not breached any
term of, any such Company Intellectual Property Contracts and, to the Knowledge of the Company, all other Parties to such Company Intellectual Property Contracts are in compliance with, and have not breached any term of, such Company Intellectual
Property Contracts. There are no pending disputes regarding such Company Intellectual Property Contracts, including disputes with respect to the scope thereof, performance thereunder, or payments made or received in connection therewith. The
consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination or suspension of, acceleration of any payments or loss of any rights under, any of the Company
Intellectual Property Contracts.
(f) Neither this Agreement nor the transactions contemplated by this Agreement, including
the assignment to Buyer or the Company, by operation of law or otherwise, of any Contracts to which the Company or any of its Subsidiaries is a party, will result in: (i) any third party being granted rights or access to, or the placement in or
release from escrow, of any Intellectual Property; (ii) Buyer or the Company granting to any third party any right in any Intellectual Property; (iii) Buyer or the Company being bound by, or subject to, any non-compete or other restriction
on the operation or scope of their respective businesses; or (iv) Buyer or the Company being obligated to pay any amounts, or offer discounts, in connection with Intellectual Property, to any Person, in each case in a manner other than that in
which the Company or any of its Subsidiaries would be obligated had such transactions contemplated hereby not occurred.
(g)
The Company or one of its Subsidiaries solely and exclusively owns all right, title and interest in and to (including the sole right to enforce) the Company-Owned Intellectual Property, including any improvements made by or for the Company or one of
its Subsidiaries, free and clear of all Encumbrances (other than Permitted Encumbrances), and have not: (i) licensed any such Company-Owned Intellectual Property, or any other
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Company Intellectual Property, to any Person, except pursuant to an Outbound Intellectual Property Contract listed in
Schedule 4.14(e)(i)
of the Company Disclosure Letter, or a
nondisclosure agreement entered into in the Ordinary Course of Business; or (ii) exclusively licensed any such Company-Owned Intellectual Property, or any other Company Intellectual Property, to any Person. To the extent that any Company-Owned
Intellectual Property is not solely and exclusively owned by Company or one of its Subsidiaries, such Company-Owned Intellectual Property is licensed exclusively to Company or one of its Subsidiaries pursuant to an Inbound Intellectual Property
Contract for use in the manner in which it is currently used and is planned to be used by the Company or the applicable Subsidiary. All Licensed Company Intellectual Property is licensed to Company or one of its Subsidiaries pursuant to a Company
Intellectual Property Contract for use in the manner in which it is currently used and is planned to be used by the Company or the applicable Subsidiary.
(h) The Intellectual Property included in the Company-Owned Intellectual Property and Licensed Company Intellectual Property include all of the Intellectual Property that is necessary to enable Buyer and
the Company and its Subsidiaries to conduct the Company Business in the same manner as currently conducted by the Company and its Subsidiaries, and following the Closing, the Company and its Subsidiaries will own or have (pursuant to the Company
Intellectual Property Contracts) the same rights that the Company and its Subsidiaries have immediately prior to the Closing with respect to such Intellectual Property.
(i) The Company and its Subsidiaries have taken steps consistent with generally accepted industry standards, and in any event no less than reasonable steps, to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all information and materials not generally known to the public that are included in the Company Intellectual Property (including any Trade Secrets provided by or to third Persons). Neither the
Company nor any of its Subsidiaries has authorized the disclosure of any Trade Secret included in the Company Intellectual Property or Company-Owned Intellectual Property, nor has any such Trade Secret been disclosed, other than pursuant to a valid
and enforceable confidentiality agreement with respect thereto. No Person has misappropriated or made any unauthorized disclosure of any Trade Secret included in the Company Intellectual Property or Company-Owned Intellectual Property (or claimed or
understood to be so included), or breached any obligations of confidentiality with respect to the Company Intellectual Property or Company-Owned Intellectual Property.
(j) Each current, and to the Knowledge of the Company, each former, employee, officer, consultant and contractor of the Company and each of its Subsidiaries, who is or has been involved in the development
of any Company Intellectual Property or Company-Owned Intellectual Property, has executed and delivered to the Company or one of its Subsidiaries employment or contractor agreements, non-disclosure agreements, and assignment of invention and Works
of Authorship agreements that assign to the Company or one of its Subsidiaries all right, title and interest in and to any Intellectual Property arising from or developed or delivered to the Company or one of its Subsidiaries in connection with such
Persons work for or on behalf of the Company or one of its Subsidiaries and provide reasonable protection for Trade Secrets of the Company or its Subsidiaries. No current, or to the Knowledge of the Company, former, employee, officer,
consultant or contractor is party to any agreement, non-disclosure agreement, assignment agreement, or similar agreement with any Person, according to which any Person (including, but not limited to, any Governmental Authority, government-owned
institution, university, college, other educational institution or research center) has ownership, license or other right, title or interest, directly or indirectly, in whole or in part, in any Company Intellectual Property or Company-Owned
Intellectual Property. No current, or to the Knowledge of the Company, former, employee, officer, consultant or contractor is in default or breach of any material term of any employment or contractor agreement, non-disclosure agreement, assignment
agreement, or similar agreement. No current, or to the Knowledge of the Company, former, employee, officer, consultant or contractor of the Company or its Subsidiaries has any ownership, license or other right, title or interest, directly or
indirectly, in whole or in part, in any Company Intellectual Property or Company-Owned Intellectual Property. In each case in which the Company or one of its Subsidiaries has acquired ownership (or claimed or purported to acquire ownership) of any
Intellectual Property from any Person (including any employee, officer, consultant and contractor of the Company or one of its Subsidiaries), the Company or such Subsidiary has obtained a valid and
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enforceable written assignment sufficient to irrevocably transfer ownership of and all rights with respect to such Intellectual Property to the Company or such Subsidiary. No current, or to the
Knowledge of the Company, former, employee, officer, consultant or contractor of the Company or one of its Subsidiaries who was involved in, or who contributed to, the creation or development of any of the Company Intellectual Property or
Company-Owned Intellectual Property, has performed services for or was an employee of any Governmental Authority, government-owned institution, university, college, other educational institution or research center while such employee, consultant or
independent contractor was also performing services for the Company or such Subsidiary or during the time period in which such employee, consultant or independent contractor invented, created or developed any Company Intellectual Property or
Company-Owned Intellectual Property.
(k) No government funding, facilities or funding of a university, college, other
educational institution or research center or funding from a granting agency was used in the development of any Company-Owned Intellectual Property.
(l) The Company Business, including the design, development, use, provision, import, branding, advertising, promotion, marketing, manufacture and sale of any Company Offerings: (i) does not infringe,
misappropriate, use or disclose without authorization, or otherwise violate any Intellectual Property Rights of any third Person; and (ii) does not constitute unfair competition or trade practices under the laws of any relevant jurisdiction.
(m) Except as set out in
Schedule 4.14(m)
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has received any Claim (or notice of any related Action) that the Company, any Company Offering, Company-Owned Intellectual Property, Licensed Intellectual Property or Company Intellectual Property infringes, misappropriates, uses or
discloses without authorization, or otherwise violates any Intellectual Property Rights of any Person or constitutes unfair competition or trade practices under the laws of any jurisdiction (nor does the Company have Knowledge of any facts,
circumstances or information that could reasonably be the basis for such a Claim). No Claim of infringement of Intellectual Property Rights is pending or, to the Knowledge of the Company, threatened, against any Person who may be entitled to be
indemnified, defended, held harmless, or reimbursed by the Company or one of its Subsidiaries with respect to such Claim. Without limiting the foregoing, except as set out in
Schedule 4.14(m)
of the Company Disclosure Letter, the Company and
each of its Subsidiaries have not received any correspondence asking or inviting the Company or one of its Subsidiaries to enter into a Patent license or similar agreement, to obtain a release or a covenant not to sue for Patent infringement, or
otherwise to enter into other arrangements with respect to the Patents of any other Person.
(n)
Schedule 4.14(n)
of
the Company Disclosure Letter contains a complete and accurate list of all Open Source Materials incorporated into, distributed with or used in connection with the development of any Company Offerings, including a listing of the Open Source Licenses
applicable to each such Open Source Material and the manner in which such Open Source Material is used. Neither the Company nor any of its Subsidiaries has used or is using any Open Source Materials in connection with the software included in the
Company Offerings in such a manner that could cause any such software, in whole or in part, to be (i) disclosed, distributed, licensed or made available in source code form, (ii) licensed for the purpose of making derivative works,
(iii) made available for free or for a nominal fee or (iv) licensed, sold or otherwise made available on terms that limit the ability to charge fees for use or grant the rights to reverse engineer, decompile or otherwise derive source code
of such software. All use and distribution of Company Offerings or any Open Source Materials by or through the Company or one of its Subsidiaries is in full compliance with all Open Source Licenses applicable thereto, including all copyright notice
and attribution requirements.
(o) To the Knowledge of the Company no Person has infringed or misappropriated, or is
infringing or misappropriating, any Intellectual Property Right in the Company-Owned Intellectual Property. Except as set out in
Schedule 4.14(o)
of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has made any
Claims with respect to infringement of any Intellectual Property Right in the
Company-Owned
Intellectual Property against any Person, nor has the Company or its Subsidiaries issued any written communication
inviting
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any Person to take a license, ownership interest, release, covenant not to sue or the like with respect to any Intellectual Property Right in the Company-Owned Intellectual Property.
(p) To the Knowledge of the Company, the software included in the Company Offerings, or used by Company or each of its Subsidiaries to
provide the Company Offerings, and the internal computer systems used in connection with the operation of the Company Business (consisting of hardware, software, Databases or embedded control systems, collectively, the
Systems
)
are free of any material defects, bugs and errors in accordance with generally accepted industry standards, and does not contain or make available any disabling codes or instructions, backdoors, spyware, Trojan horses, worms, viruses or other
software routines that permit or cause unauthorized access to, or disruption, impairment, disablement, or destruction of, software, data or other materials. The Company and each of its Subsidiaries have taken commercially reasonable steps to
safeguard its Systems and restrict unauthorized access thereto.
(q) The Company and each of its Subsidiaries operate their
websites, communicate with customers and otherwise conduct the Company Business in compliance in all material respects with all Applicable Law and any contractual obligations relating to privacy, data protection, and the collection and use of
Personal Information.
4.15
Compliance with Laws
.
(a) Each Group Company has complied in all material respects, and is in material compliance, with all Applicable Law.
(b) All materials, products and services distributed or marketed by any Group Company have at all times made all material disclosures to
users or customers required by Applicable Law, and none of such disclosures made or contained in any such materials have been inaccurate, misleading or deceptive in any material respect.
(c) The Company holds all permits, licenses and approvals from, and have made all filings with, Governmental Authorities, that are
legally required to be held to conduct the Company Business without any violation of Applicable Law (
Governmental Permits
), and all such Governmental Permits are valid and in full force and effect. The Company has never received
any written notice or other written communication, or to the Knowledge of the Company, any oral notice or other oral communication, from any Governmental Authority regarding (i) any actual or possible violation of law or any Governmental Permit
or any failure to comply with any term or requirement of any Governmental Permit or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Governmental Permit.
4.16
Employees, ERISA and Other Compliance
.
(a)
Schedule 4.16(a)(i)
of the Company Disclosure Letter accurately lists all current managing directors or officers and employees
of each Group Company as of the Agreement Date, and for each such managing director, officer and employee, his or her: (i) job position, (ii) hourly rate of compensation or base salary (as applicable), and (iii) employing entity.
Schedule 4.16(a)(ii)
of the Company Disclosure Letter accurately lists all independent contractors and persons that have a consulting or advisory relationship of each Group Company and each of their respective Affiliates as of the Agreement
Date, and for each such independent contractor and person with a consulting or advisory relationship, his or her: (x) terms of compensation; and (y) contracting entity.
(b) Each Group Company has correctly classified employees as exempt employees and nonexempt employees under the Fair Labor Standards Act
and other Applicable Law. All employees of each Group Company are legally permitted to be employed by such Group Company in the jurisdiction in which such employee is employed in their current job capacities for the maximum period permitted by
Applicable Law. All independent contractors or persons that have a consulting or advisory relationship providing services to any Group Company have been properly classified as independent contractors for purposes of federal and applicable state tax
laws, laws applicable to employee benefits and other Applicable Law. No Group Company has any
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employment or consulting or advisory Contracts currently in effect that are not terminable at will (other than agreements with the sole purpose of providing for the confidentiality of proprietary
information or assignment of inventions) or, as applicable, by applying any mandatory notice period. No temporary worker has the right to demand employment by any Group Company.
(c) Each Group Company and each of its respective Affiliates and ERISA Affiliates: (i) are, and at all times have been, in
compliance in all material respects with all Applicable Law respecting employment, employment practices, terms and conditions of any managing directors service agreements, consulting or advisory agreements, agreements with free-lancers and
employment, employee safety and wages and hours, including the health care continuation requirements of COBRA, the requirements of the Family and Medical Leave Act of 1993, as amended, the requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and any similar provisions of state law; (ii) have withheld and reported all amounts required by Applicable Law or by Contract to be withheld and reported with respect to compensation, wages, salaries and
other payments to managing directors or officers, employees, consultants or advisors of such Group Company or Affiliate; (iii) are not liable for any arrears of wages or any taxes or any penalty for failure to comply with any Applicable Law;
and (iv) are not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or any other applicable social
insurance, or other benefits or obligations for managing directors, officers or employees of the Company or any Affiliate of the Company (other than routine payments to be made in the Ordinary Course of Business). There are no pending or, to the
Knowledge of the Company, threatened claims or Legal Proceedings against any Group Company or any of their respective Affiliates under any compensation policy or long-term disability policy.
(d) No Group Company is now, nor to the Knowledge of the Company has it ever been, subject to a union organizing effort. No Group Company
is subject to any collective bargaining agreement with respect to any of its employees, subject to any other Contract with any trade or labor union, employees association or similar organization, or subject to any current labor disputes. To
the Knowledge of the Company, no employee of any Group Company presently intends to terminate his or her employment with such Group Company and no employee of any Group Company has received an offer to join a business that may be competitive with
the Company Business.
(e) To the Knowledge of the Company, no Group Company has been a party to any action, or received
written notice of any threatened action, in which such Group Company was, or is, alleged to have violated any Contract or Applicable Law relating to employment, including, but not limited to, equal opportunity, discrimination, retaliation,
harassment, immigration, wages, hours, unpaid compensation, classification of employees as exempt from overtime or minimum wage laws, benefits, collective bargaining, works agreements, the payment of social security and similar taxes, occupational
safety and health, and/or privacy rights of employees.
(f) In the past two years, there has been no mass layoff,
employment loss, or plant closing as defined by the WARN Act or any similar Applicable Law in any jurisdiction in respect of any Group Company nor has any Group Company been affected by any transaction or engaged in any
lay-offs or employment terminations sufficient in number to trigger application of any such law.
(g) To the Knowledge of the
Company, no employee, consultant or advisor of any Group Company is in material violation of (i) any term of any employment or consulting Contract or (ii) any term of any other Contract or any restrictive covenant relating to the right of
any such employee, consultant or advisor to be employed by or to render services to such Group Company or to use trade secrets or proprietary information of others. To the Knowledge of the Company, the employment of any employee or engagement of any
consultant, advisor or temporary worker by each Group Company does not subject it to any Liability to any third party.
(h)
Schedule 4.16(h)
of the Company Disclosure Letter contains an accurate and complete list as of the Agreement Date of
each Company Employee Plan and each Company Employee Agreement (collectively, the
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Company Benefit Arrangements
and each a
Company Benefit Arrangement
). The Company has not
committed to establish or enter into any new Company
Benefit Arrangement, or to modify any Company Benefit Arrangement (except to conform any such Company Benefit Arrangement
to the requirements of any Applicable Law, in each case as previously disclosed to Buyer in writing or as required by this
Agreement).
(i) The Company has made available to Buyer: (i) correct and complete copies of all documents
establishing the terms of each Company Benefit Arrangement, including all amendments thereto and all related trust documents; (ii) the three most recent annual reports (Form Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA or the Code in connection with each Company Benefit Arrangement; (iii) if the Company Benefit Arrangement is subject to the minimum funding standards of Section 302 of ERISA, the most recent annual
and periodic accounting of Company Benefit Arrangement assets; (iv) the most recent summary plan description together with the summaries of material modifications thereto, if any, required under ERISA with respect to each Company Benefit
Arrangement; (v) for the past three (3) years, all correspondence to or from any Governmental Authority relating to any Company Benefit Arrangement; (vi) all COBRA forms and related notices; (vii) all insurance policies in the
possession of any Group Company or any of their respective Affiliates pertaining to fiduciary liability insurance covering the fiduciaries for each Company Benefit Arrangement; (viii) all discrimination tests required under the Code for each
Company Benefit Arrangement intended to be qualified under Section 401(a) of the Code for the three most recent plan years; and (ix) the most recent IRS determination (or opinion letter, as applicable) issued with respect to each Company
Benefit Arrangement intended to be qualified under Section 401(a) of the Code.
(j) To the Knowledge of the Company, each
Company Benefit Arrangement has been established and maintained in compliance in all material respects with its terms and with the requirements prescribed by any and all Applicable Law that is applicable to such Company Benefit Arrangement,
including ERISA and the Code. Each Group Company and each of their respective Affiliates have performed in all material respects all obligations required to be performed by them under each Company Benefit Arrangement and are not in default or
violation in any material respect of, and to the Knowledge of the Company there are no defaults or violations in any material respect by any other party to, the terms of any Company Benefit Arrangement. Each such Company Benefit Arrangement that is
intended to qualify under Section 401(a) of the Code has received a favorable opinion, advisory, notification and/or determination letter, as applicable, as to its qualified status under the Code, and nothing has occurred since the date of such
letter that would adversely affect such favorable determination. No prohibited transaction, within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Company Benefit Arrangement. There is no claim, suit, administrative proceeding, action or other litigation pending, or, to the Knowledge of the Company, threatened (other than routine claims for benefits),
against any Company Benefit Arrangement or against the assets of any Company Benefit Arrangement. Each Company Benefit Arrangement can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms and Applicable
Laws, without material Liability to Buyer, the Company or any ERISA Affiliate (other than ordinary administration expenses). There is no audit, inquiry, administrative proceeding, or action pending or, to the Knowledge of the Company, threatened by
the IRS, U.S. Department of Labor, or any other Governmental Authority with respect to any Company Benefit Arrangement. Neither the Company nor any ERISA Affiliate has ever incurred any penalty or tax with respect to any Company Benefit Arrangement
under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. No Company Benefit Arrangement shall be subject to any surrender fees or services fees upon termination other than the normal and reasonable administrative fees
associated with the termination of benefit plans.
(k) None of the Group Companies or any of their respective Affiliates or
any of their respective current or former ERISA Affiliates has ever maintained, established, sponsored, participated in, or contributed to any: (i) pension plan subject to Title IV of ERISA; (ii) a multiemployer plan within the
meaning of Section (3)(37) of ERISA; (iii) a multiple employer plan as defined in Section 413(c) of the Code; (iv) a plan subject to the minimum funding standards of Section 412 of the Code or Section 302 of
ERISA; or (v) a plan maintained in
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connection with any trust described in Section 501(c)(9) of the Code. None of the Group Companies or any of their respective Affiliates has ever maintained, established, sponsored,
participated in or contributed to, any Company Benefit Arrangement in which stock of any Group Company or any their respective Affiliates is or was held as a plan asset.
(l) All Contributions due from any Group Company or any of their respective Affiliates with respect to any of the Company Benefit Arrangements have been timely made or have been accrued on the Company
Balance Sheet as required under Applicable Law, and no further contributions shall be due or are required to be accrued thereunder as of the Closing Date (other than contributions accrued in the Ordinary Course of Business, after the Balance Sheet
Date as a result of the operations of the Company after the Balance Sheet Date).
(m) There has been no amendment to, written
interpretation or announcement (whether or not written) by any Group Company or any of their respective Affiliates relating to, or change in employee participation or coverage under, any Company Benefit Arrangement that would increase materially the
expense of maintaining such Company Benefit Arrangement above the level of the expense incurred in respect thereof during the calendar year 2013 (other than increased insurance premiums and/or statutory premiums), except any such amendments that are
required under Applicable Law.
(n) Unless otherwise indicated in
Schedule 4.16(n)
of the Company Disclosure Letter,
none of the Group Companies or any of their respective Affiliates is a party to any Company Benefit Arrangement: (i) with any current or former managing director, officer, employee, consultant or advisor of any Group Company or any of their
respective Affiliates (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving such Group Company or Affiliate in the nature of the Acquisition or any of the other
transactions contemplated by this Agreement or any Company Ancillary Agreement, (B) providing any term of employment or compensation guarantee, or (C) providing severance benefits or other benefits after the termination of employment of
such managing director, officer or employee (including death or medical benefits, whether or not insured, with respect to any former or current employer or any spouse or dependent of any such managing director, officer or employee) regardless of the
reason for such termination of employment other than as required by COBRA (or similar state laws) or other Applicable Law; or (ii) the benefits of which shall be materially increased, or the vesting of benefits of which shall be accelerated, by
the occurrence of the Acquisition or any of the other transactions contemplated by this Agreement, or any event subsequent to the Acquisition, or the value of any of the benefits of which shall be calculated on the basis of any of the transactions
contemplated by this Agreement. None of the Group Companies or any of their respective Affiliates has any obligation to pay any material amount or provide any material benefit to any former managing director, officer or employee, other than
obligations (1) for which the Company has established a reserve for such amount on the Company Balance Sheet and (2) pursuant to Contracts entered into after the Balance Sheet Date and disclosed on
Schedule 4.16(n)
of the Company
Disclosure Letter.
4.17
Books and Records
.
(a) The books, records and accounts of the Group Companies (i) are in all material respects true, complete and correct,
(ii) have been maintained in accordance with good business practices on a basis consistent with prior years, (iii) accurately and fairly reflect the basis for the Company Financial Statements and (iv) to the extent reasonably
requested by Buyer, have been made available to Buyer and its counsel.
(b) The minute books of the Company previously made
available to Buyer or its counsel accurately and adequately reflect in all material respects all action previously taken by the shareholders, the Board and any committees of the Board.
(c)
Schedule 4.17(c)
of the Company Disclosure Letter sets forth the names and locations of all banks, trust companies, savings
and loan associations and other financial institutions at which each Group Company
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maintains accounts of any nature and the names of all Persons authorized to draw thereon or make withdrawals therefrom.
(d) Each Group Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed by such Group Company in accordance with
managements general or specific authorization; (ii) transactions are recorded as necessary (1) to permit preparation of financial statements in conformity with GAAP and Applicable Law or any other criteria applicable to such
statements and (2) to maintain accountability for assets; and (iii) the amount recorded for assets on such Group Companys books and records is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
4.18
Insurance
. The Group Companies maintain the
policies of insurance and bonds set forth in
Schedule 4.18
of the Company Disclosure Letter, including all legally required workers compensation and other insurance, correct and complete copies of which have been made available to
Buyer.
Schedule 4.18
of the Company Disclosure Letter sets forth the name of the insurer under each such policy and bond, the type of policy or bond, and the coverage amount thereunder. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been timely paid, and the Company is otherwise in
compliance in all material respects with the terms of such policies and bonds. All such policies and bonds remain in full force and effect, and the Company has no Knowledge of any threatened termination of, or material premium increase with respect
to, any of such policies or bonds.
4.19
Environmental Matters
. Each Group Company and
its predecessors and Affiliates are in material compliance with all Environmental Laws, which compliance includes the possession by each Group Company of all Governmental Permits and other governmental authorizations required under Environmental
Laws and material compliance with the terms and conditions thereof. No Group Company has received any written notice or other written communication, whether from a Governmental Authority, citizens groups, employee or otherwise, that alleges that the
Company is not in compliance with any Environmental Law, and to the Knowledge of the Company, there are no circumstances that may prevent or interfere with the compliance by the Group Companies with any current Environmental Law in the future. No
current or prior owner of any property leased or possessed by any Group Company has received any written notice or other written communication, whether from a Governmental Authority, citizens group, employee or otherwise, that alleges that such
current or prior owner or any Group Company is not in compliance with any Environmental Law. All Governmental Permits held by the Group Companies pursuant to any Environmental Law (if any) are identified in
Schedule 4.19
of the Company
Disclosure Letter.
4.20
Customers and Suppliers
.
(a) The Company Offerings or services are only provided to third Parties under the terms of the warranty described in
Schedule
4.20(a)
of the Company Disclosure Letter.
(b)
Schedule 4.20(b)
of the Company Disclosure Letter sets forth the top
25 customers and distributors of the Group Companies based on payments received or due over the twelve (12) complete calendar months ended December 31, 2012 and the six (6) complete calendar months ended June 30, 2013 (each a
Significant Customer
). All Significant Customers are current in their payment of invoices and the Group Companies do not have, and have not had, any material disputes with any Significant Customer that arose or remained unresolved
during such period. To the Knowledge of the Company, there is no dissatisfaction on the part of any Significant Customer or any facts or circumstances that would reasonably be expected to lead to such material dissatisfaction. No Group Company has
received written or, to the Knowledge of the Company, oral notice from any Significant Customer that such customer will not continue as a customer or distributor, as the case may be, of a Group Company (or the Company or Buyer) or that such customer
or distributor, as the case may be, intends to terminate or request a material modification to existing Contracts with the a Group Company (or the Company or
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Buyer). None of any Group Companys products have been returned by any such Significant Customer except for normal warranty returns consistent with past history and such returns that would
not result in a reversal of any material amount of revenue by any Group Company.
(c)
Schedule 4.20(c)
of the Company
Disclosure Letter sets forth the top 25 suppliers of technical products and services to the Group Companies based on amounts paid or payable by any Group Company to such suppliers over the twelve (12) complete calendar months ended
December 31, 2012 and the six (6) complete calendar months ended June 30, 2013 (each, a
Significant Supplier
). The Group Companies are current in their payments to all Significant Suppliers and no Group Company has,
or has had, any material dispute concerning Contracts with or products or services provided by any Significant Supplier that arose or remained unresolved during such period. To the Knowledge of the Company, there is no material dissatisfaction on
the part of any Significant Supplier or any facts or circumstances that could reasonably lead to such material dissatisfaction. No Group Company has received any written or, to the Knowledge of the Company, oral notice from any Significant Supplier
that such supplier shall not continue as a supplier to a Group Company (or the Company or Buyer) or that such supplier intends to terminate or breach existing Contracts with a Group Company (or the Company or Buyer). The Company has access, on
commercially reasonable terms, to all products and services reasonably necessary to carry on the Company Business, and the Company has no Knowledge of any reasonable reason why it would not continue to have such access on commercially reasonable
terms.
4.21
Accounts Receivable
.
Schedule 4.21
of the Company Disclosure Letter
sets forth the accounts receivable listing of the Group Companies (other than accounts receivable from other Group Companies) as of June 30, 2013. All accounts receivable of the Group Companies are reflected properly on their books and records,
represent bona fide, current and valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business, subject to no material setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only to the allowance for doubtful accounts set forth in the Company Balance Sheet as adjusted for the passage of time through the Closing Date consistent with the past
custom and practice of the relevant Group Company. No Group Company has received written notice from any obligor of any material accounts receivable that such obligor is refusing to pay or contesting payment of which has not been resolved prior to
the date of this Agreement, other than in the Ordinary Course of Business under any Contract with any obligor of any accounts receivable.
4.22
Foreign Corrupt Practices Act
.
(a)
Each of the Group Companies and their respective officers, directors, employees, shareholders, Affiliates, agents, advisors (including any attorneys, financial advisors, investment bankers or accountants) or other representatives (collectively, the
Company Representatives
) are familiar with and are and have been in compliance with all Applicable Laws relating to anti-bribery, anti-corruption, anti-money laundering, record keeping and internal control laws (collectively, the
Compliance Laws
) including the Foreign Corrupt Practice Act of 1977, as amended (
FCPA
), as if it were a U.S. Person. Furthermore, no Public Official (i) holds an ownership or other economic interest, direct
or indirect, in any Group Company or in the contractual relationship formed by this Agreement, or (ii) serves as an officer, director or employee of any Group Company. Without limiting the foregoing, no Group Company or Company Representative
has, directly or indirectly, offered, authorized, promised, condoned, participated in, consummated, or received notice of any allegation of,
(i) the making of any gift or payment of anything of value to any Public Official by any Person to obtain any improper advantage, affect or influence any act or decision of any such Public Official, or
assist any Group Company in obtaining or retaining business for, or with, or directing business to, any Person;
(ii) the
taking of any action by any Person which (i) would violate the FCPA, if taken by an entity subject to the FCPA, or (ii) could reasonably be expected to constitute a violation of any applicable Compliance Law;
(iii) the making of any false or fictitious entries in the books or records of any Group Company by any Person; or
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(iv) the using of any assets of any Group Company for the establishment of any unlawful or
unrecorded fund of monies or other assets, or the making of any unlawful or undisclosed payment.
(b) No Group Company or any
Company Representative has ever been found by a Governmental Authority to have violated any criminal or securities law or is subject to any indictment or any government investigation for bribery. None of the beneficial owners of any Equity
Securities or other interest in any Group Company or the current or former Company Representatives are or were Public Officials.
(c) No Group Company or any Company Representative is a Prohibited Person, and no Prohibited Person will be given an offer to become an employee, officer, consultant or director of any Group Company. No
Group Company has conducted or agreed to conduct any business, or entered into or agreed to enter into any transaction with a Prohibited Person.
(d) If the Group Companies have beneficial owners or Company Representatives who are Public Officials, no such Public Official has been involved on behalf of a Governmental Authority in decisions as to
whether any Group Company would be awarded business or that otherwise could benefit any Group Company, or in the appointment, promotion, or compensation of persons who will make such decisions.
4.23
Export Controls
. Each Group Company has at all times conducted its export and related
transactions in all material respects in accordance with (i) all applicable U.S. export, re-export, and anti-boycott laws and regulations, including the Export Administration Regulations, the Arms Export Control Act and International Traffic in
Arms Regulations, and U.S. economic sanctions laws and regulations administered by the U.S. Treasury Departments Office of Foreign Assets Control and (ii) all other applicable import and export controls in the other countries in which
each Group Company conducts business. Without limiting the foregoing:
(a) Each Group Company has obtained all material export
licenses and other material consents, authorizations, waivers, approvals, and orders, and has made or filed any and all necessary notices, registrations, declarations and filings with any Governmental Authority, and has met the requirements of any
license exceptions or exemptions, as required by Applicable Law for any Group Company in connection with (i) the export and re-export of products, services, software or technologies, and (ii) releases of technology, technical data or
software to foreign nationals located in the United States and abroad (
Export Approvals
).
(b) Each Group
Company is in compliance in all material respects with the terms of all applicable Export Approvals.
(c) There are no pending
or, to the Knowledge of the Company, threatened inquiries, investigations, enforcement actions, voluntary disclosure or other claims against any Group Company with respect to Export Approvals.
(d) To the Knowledge of the Company, there are no actions, conditions or circumstances pertaining to any Group Companys export and
related transactions that may give rise to any future inquiries, investigations, enforcement actions, voluntary disclosures or other claims.
(e) No Export Approvals for the transfer of export licenses to Buyer or the Company are required, or such Export Approvals can be obtained expeditiously without material cost.
(f)
Schedule 4.23(f)
of the Company Disclosure Letter sets forth the true, complete and accurate export control classification
numbers applicable to the Group Companies products, services, software and technologies.
4.24
Product Warranty
. Each product designed, manufactured, processed, sold, distributed or
delivered by a Group Company or service provided by a Group Company has been in conformity with all applicable contractual commitments and specifications, government safety standards and other Applicable Law, all express and implied
A-36
warranties and are substantially free from contamination, deficiencies or defects. There has not been, nor is there under consideration by a Group Company, any product recall or post-sale warning
conducted by or on behalf of any Group Company concerning any product. No Group Company has any Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair thereof or other Damages in connection therewith, subject only to the reserve for product warranty claims set forth in the Company Balance Sheet. No product manufactured, sold, or
delivered by a Group Company is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease. The Company has provided Buyer with copies of the standard terms and conditions of sale used
by all Group Companies.
4.25
Inventory
. Subject to reserves reflected in the Company
Balance Sheet, the inventory of the Company and each Subsidiary is of good merchantable quality and salable (in the case of inventory held for sale) or usable (in the case of other inventory) in the Ordinary Course of Business. The value of damaged
or obsolete inventory and of inventory below standard quality has been written down on the Company Balance Sheet to ascertainable market value, and the value at which inventories are carried reflects the customary inventory valuation policy of the
Company or the Subsidiaries, as applicable. Since the Balance Sheet Date, the Company and each Subsidiary have continued to replenish inventories in a normal and customary manner consistent with past practices. Neither the Company nor any Subsidiary
has received written or, to the Knowledge of the Company, oral notice that it will experience in the foreseeable future any difficulty in obtaining, in the desired quantity and quality and at reasonable prices and upon reasonable terms and
conditions, the raw materials, supplies or component products required for the manufacture, assembly or production of its products.
4.26
No Existing Discussions
. None of the Group Companies or, to the Knowledge of the Company, any director, officer, shareholder, employee or agent (or any
investment banker, broker, finder or similar party) of any Group Company is engaged, directly or indirectly, in any discussions or negotiations with any third party relating to any Alternative Transaction.
4.27
Corporate Documents
. The Company has provided to Buyer for examination by posting prior to
the Agreement Date in the virtual data room maintained by the Group Companies and as to which Buyer and its representatives have been provided full access to all documents listed in the Company Disclosure Letter (including any Schedule thereto).
4.28
Transaction Fees
. Except for the fees payable to the Persons set forth on
Schedule 4.28
of the Company Disclosure Letter, none of the Group Companies or any Affiliate of any Group Company is obligated for the payment of any fees or expenses of any investment banker, broker, finder or similar party in connection
with the origin, negotiation or execution of this Agreement or in connection with the Acquisition or any other transaction contemplated by this Agreement. The legal and accounting advisors and any other persons to whom the Company currently expects
to owe fees and expenses that will constitute Transaction Fees are set forth on
Schedule 4.28
of the Company Disclosure Letter, and other than the Transaction Fees that will be due to the entities set forth on
Schedule 4.28
of the
Company Disclosure Letter, there are no Transaction Fees.
4.29
Disclosure
. The
representations and warranties in this Agreement (including the Company Disclosure Letter) and in each other document delivered or made available by any Group Company or the Company Shareholders to Buyer or its advisors in connection with this
Agreement do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which such statements were made, not
misleading. The information provided in writing to Buyer by or on behalf of the Company, any Company Shareholder or any of their respective Affiliates for inclusion in the Proxy Statement will not, at the time the Proxy Statement is first mailed to
the shareholders of Buyer or at the time of the Buyer Shareholders Meeting, and the Offer Documents will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY SHAREHOLDERS
Each Company Shareholder, jointly and severally, represents and warrants to Buyer that the statements contained in this
Article 5
are true and correct on and as of the Agreement Date and shall be
true and correct as of immediately prior to the Closing.
5.1
Organization of Company
Shareholders
. Each Company Shareholder is duly incorporated or organized, validly existing, and in good standing under the laws of Luxembourg with full entity power and authority to conduct its business as it is now being conducted.
5.2
Power, Authorization and Validity
.
(a)
Power and Authority
. Each Company Shareholder has all requisite corporate power and authority to enter into, execute, deliver
and perform its obligations under this Agreement and each of the Company Shareholder Ancillary Agreements and to consummate the Acquisition. The execution, delivery and performance by each Company Shareholder of this Agreement, each of the Company
Shareholder Ancillary Agreements and all other agreements, transactions and actions contemplated hereby or thereby have been duly and validly approved and authorized by all necessary corporate action on the part of each Company Shareholder.
(b)
No Consents
. No consent, approval, order or authorization of, or registration, declaration or filing with, any
Governmental Authority, or any other Person, governmental or otherwise, is necessary or required to be made or obtained by any Company Shareholder to enable it to lawfully execute and deliver, enter into, and perform its obligations under this
Agreement and each of the Company Shareholder Ancillary Agreements or to consummate the Acquisition, except for such consents, approvals, orders, authorizations, registrations, declarations and filings, if any, that if not made or obtained by any
Company Shareholder would not be material to such Company Shareholders ability to consummate the Acquisition or to perform their respective obligations under this Agreement and the Company Shareholder Ancillary Agreements.
(c)
Enforceability
. This Agreement has been duly executed and delivered by each Company Shareholder. This Agreement and each of
the Company Shareholder Ancillary Agreements are, or when executed by each Company Shareholder shall be, valid and binding obligations of such Company Shareholder, enforceable against such Company Shareholder in accordance with their respective
terms, subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to rights of creditors generally and (ii) rules of law and equity governing
specific performance, injunctive relief and other equitable remedies.
5.3
No Conflict
.
Neither the execution and delivery of this Agreement or any of the Company Shareholder Ancillary Agreements by each Company Shareholder, nor the consummation of the Acquisition or any other transaction contemplated hereby or thereby, shall conflict
with, or (with or without notice or lapse of time, or both) result in a termination, breach, impairment or violation of, or constitute a default under: (a) any provision of the Charter Documents of such Company Shareholder, each as currently in
effect; (b) any Applicable Law applicable to such Company Shareholder or any of their respective material assets or properties; or (c) any Contract to which such Company Shareholder is a party or by which such Company Shareholder or any of
their respective material assets or properties are bound, except in the cases of clauses (b) and (c) where such conflict, termination, breach, impairment, violation or default would not be material to such Company Shareholders
ability to consummate the Acquisition or to perform its obligations under this Agreement and the Company Shareholder Ancillary Agreements.
5.4
Company Interests
. Each Company Shareholder owns of record and beneficially the Company Interests set forth next to its name in
Schedule I
attached
hereto, and has good and marketable title to such Company Interests, free and clear of any Encumbrance whatsoever and with no restrictions on the rights and other incidents
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of record and beneficial ownership pertaining thereto. The Company Shares held by each Company Shareholder are duly authorized, validly issued and fully paid. None of the Company Shareholders is
a party to any option, warrant, right (preemptive or otherwise),call, or other Contract or commitment, oral or in writing, that could require the Company Shareholder to sell, assign, transfer, or otherwise dispose of any Company Interests. None of
the Company Shareholders is a party to any contract, right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement or shareholders agreement with respect to the purchase, sale or voting of any
Equity Securities of any Group Company.
5.5
Brokers Fees
. None of the Company
Shareholders is obligated for the payment of any fees or expenses of any investment banker, broker, finder or similar party in connection with the origin, negotiation or execution of this Agreement or in connection with the Acquisition or any other
transaction contemplated by this Agreement.
5.6
Information Supplied
. The information
provided in writing to Buyer by or on behalf of the Company Shareholders for inclusion in the Proxy Statement will not, at the time the Proxy Statement is first mailed to the shareholders of Buyer or at the time of the Buyer Shareholders Meeting,
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Subject to the exceptions set
forth in a numbered or lettered section of the disclosure letter of the Buyer addressed to the Company Shareholders, dated as of the Agreement Date and delivered to the Company Shareholders concurrently with the Parties execution of this
Agreement (the
Buyer Disclosure Letter
) specifically referencing a representation or warranty herein, Buyer represents and warrants to the Company Shareholders that the statements contained in this
Article 6
(each of which
exceptions and disclosures set forth in any section or subsection of the Buyer Disclosure Letter will apply to any other section or subsection of the Buyer Disclosure Letter to the extent the relevance to such other section or subsection is
reasonably apparent from a reading of the text of such disclosure to a reader unfamiliar with the business of Buyer and its Subsidiaries, taken as a whole) are true and correct on and as of the Agreement Date. For purposes of this Agreement, a
document shall be deemed to have been made available by the Buyer to the Company Shareholders only if it is publicly available through the EDGAR system or has been posted in the electronic data site at
https://omm.firmex.com/projects/59/documents
in connection with the Acquisition.
6.1
Organization, Good Standing and Qualification
. Each of Buyer and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own or lease its properties, in each case as described in the SEC Filings. Each of Buyer and its Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect.
6.2
Authorization
. Buyer has the corporate power and
authority to enter into this Agreement and, subject only to the approval of the issuance of the Acquisition Shares by the holders of a majority of the shares of Buyer Common Stock at the Buyer Shareholders Meeting (the
Buyer Shareholder
Approval
), has taken all requisite action on its part, its officers, directors and shareholders necessary for (i) the authorization, execution and delivery of this Agreement, (ii) the authorization of the performance of all
obligations of Buyer hereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Acquisition Shares. This Agreement constitutes the legal, valid and binding obligations of Buyer, enforceable against Buyer
in accordance with its terms,
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subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability, relating to or affecting creditors rights generally and to
general equitable principles.
6.3
Capitalization
. Buyer has duly and validly
authorized capital stock as set forth in the SEC Filings and in the Amended and Restated Articles of Incorporation of Buyer, as amended and as in effect as of the date of this Agreement (the
Articles of Incorporation
). All of the
issued and outstanding shares of Buyers capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights and were issued in full compliance with Applicable Law and any rights of third
parties. Except as described in the SEC Filings, all of the issued and outstanding shares of capital stock of each Subsidiary of Buyer have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights,
were issued in full compliance with applicable state and federal securities Law and any rights of third parties and are owned by Buyer, beneficially and of record, subject to no Encumbrance. Except as described in the SEC Filings, no Person is
entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of Buyer. Except as described in the SEC Filings, there are no outstanding warrants, options, convertible securities or other rights, agreements or
arrangements of any character under which Buyer or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither Buyer nor any of its Subsidiaries is currently in
negotiations for the issuance of any equity securities of any kind. Except as described in the SEC Filings, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among Buyer
and any of the security holders of Buyer relating to the securities of Buyer held by them. Except as described in the SEC Filings, no Person has the right to require Buyer to register any securities of Buyer under the Securities Act, whether on a
demand basis or in connection with the registration of securities of Buyer for its own account or for the account of any other Person.
Except as described in the SEC Filings, the issuance and sale of the Acquisition Shares hereunder will not obligate Buyer to issue shares of Common Stock or other securities to any other Person and will
not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.
Except as
described in the SEC Filings, Buyer does not have outstanding shareholder purchase rights or poison pill or any similar arrangement in effect giving any Person the right to purchase any equity interest in Buyer upon the occurrence of
certain events (a
Rights Plan
).
6.4
Valid Issuance
. Upon the
issuance of the Acquisition Shares in accordance with
Section 2.2(a)
, the shares of Buyer Common Stock constituting such Acquisition Shares will be validly issued, fully paid and nonassessable, and shall be free and clear of all Encumbrances
(other than any Encumbrances created by Applicable Law or the Company Shareholders).
6.5
Consents
. The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby require no consent of, action by or in respect of, or filing with, any Person, governmental body,
agency, or official other than filings that have been made pursuant to applicable state securities Laws and post-sale filings pursuant to applicable state and federal securities Laws which Buyer undertakes to file within the applicable time periods,
including the filing of the Proxy Statement with the SEC in accordance with the Exchange Act and such reports under the Exchange Act as may be required in connection with this Agreement, the Acquisition and the other transactions contemplated by
this Agreement.
6.6
Delivery of SEC Filings
; Business. Buyer has made available to the
Company and the Company Shareholders through the EDGAR system, true and complete copies of Buyers most recent Annual Report on Form 10-K for the fiscal year ended July 1, 2013 (as amended prior to the date of this Agreement, the
10-K
), and all other reports filed by Buyer pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act since the filing of the 10-K and during the twelve (12) months preceding the date of this Subscription Agreement
(collectively, the
SEC Filings
). The SEC Filings are the only filings required of Buyer pursuant to the Exchange Act for such period. Buyer and its Subsidiaries are engaged in all material respects only in the business
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described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of Buyer and its Subsidiaries, taken as a whole.
6.7
Absence of Certain Changes
. Between July 1, 2013 and the date of this Agreement, except
as described in the SEC Filings, there has not been with respect to Buyer, any:
(a) Material Adverse Change or any change,
event, circumstance, condition or effect that would reasonably be expected to result in a Material Adverse Change;
(b)
amendment or change in Buyers Charter Documents;
(c) incurrence, creation or assumption of (i) any Encumbrance on
any of its assets or properties (other than Permitted Encumbrances) or (ii) any Liability as a guarantor or surety with respect to the obligations of any Person other than a Subsidiary of Buyer;
(d) material damage, destruction or loss of any property or asset, whether or not covered by insurance;
(e) declaration, setting aside or payment of any dividend on, or the making of any other distribution in respect of, its capital stock;
(f) any material change with respect to its senior management or other key personnel;
(g) any actual or threatened material employee strikes, work stoppages, slowdowns or lockouts or, to the Knowledge of Buyer, any labor
union organization activity;
(h) making or entering into of any Contract with respect to any acquisition, sale or transfer of
all or substantially all of the assets of Buyer;
(i) any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates or revenue recognition policies) or any revaluation of any of its assets;
(j)
commencement of any action, suit, arbitration, mediation, proceeding, claim or investigation, or receipt notice of or, to the Knowledge of Buyer, a threat of any action, suit, arbitration, mediation, proceeding, claim or investigation against a
Buyer relating to any of its business, properties or assets;
(k) any negotiation with respect to, or any entry into, any
Contract to do any of the things described in the preceding clauses (a) - (j) (other than negotiations and agreements with the Company and its representatives regarding the transactions contemplated by this Agreement).
6.8
SEC Filings
.
(a) At the time of filing thereof, each of the SEC Filings complied as to form in all material respects with the requirements of the Exchange Act and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(b) Each registration statement and any amendment thereto filed by Buyer since January 1, 2010 pursuant to the Securities Act and
the rules and regulations thereunder, as of the date such statement or amendment became effective, complied as to form in all material respects with the Securities Act and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements made therein not misleading; and each prospectus filed pursuant to Rule 424(b) under the Securities Act, as of its issue date and as of the closing of any sale
of securities pursuant thereto did not contain
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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 the light of the
circumstances under which they were made, not misleading.
6.9
No Conflict, Breach,
Violation or Default
. The execution, delivery and performance of this Agreement by Buyer and the issuance of the Acquisition Shares will not (a) conflict with or result in a breach or violation of (i) any of the terms and provisions
of, or constitute a default under the Articles of Incorporation or the bylaws of Buyer, or (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over Buyer, any of
its Subsidiaries or any of their respective assets or properties, or (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Encumbrance upon
any of the properties or assets of Buyer or any of its Subsidiaries or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract, except in the case of
clauses (a)(i) and (b) above, such as could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.
6.10
Tax Matters
. Buyer and each of its Subsidiaries have prepared and filed (or filed applicable extensions therefor) all Tax Returns required to have been filed by
Buyer or any such Subsidiary with all appropriate Governmental Authorities and paid all Taxes shown thereon or otherwise due for payment, other than any such Taxes which Buyer or any Subsidiary are contesting in good faith and for which adequate
reserves have been provided and reflected in Buyers financial statements included in the SEC Filings. The charges, accruals and reserves on the books of Buyer in respect of Taxes for all fiscal periods are adequate in all material respects,
and there are no material unpaid assessments against Buyer or any of its Subsidiaries nor, to Buyers Knowledge, any basis for the assessment of any additional Taxes, penalties or interest for any fiscal period or audits by any federal, state
or local taxing authority except for any assessment which is not material to Buyer and its Subsidiaries, taken as a whole. All Taxes and other assessments and levies that Buyer or any of its Subsidiaries is required to withhold or to collect for
payment have been duly withheld and collected and paid to the proper Governmental Authority or third party when due, other than any such Taxes which Buyer or any of its Subsidiaries are contesting in good faith and for which adequate reserves have
been provided and reflected in Buyers financial statements included in the SEC Filings. There are no Tax liens or claims pending or, to Buyers Knowledge, threatened in writing against Buyer or any of its Subsidiaries or any of their
respective assets or property. Except as described in the SEC Filings, there are no outstanding Tax sharing agreements or other such arrangements between Buyer and any of its Subsidiaries, on the one hand, and any other corporation or entity, on the
other hand.
6.11
Title to Properties
. Except as disclosed in the SEC Filings, Buyer
and each of its Subsidiaries have good and marketable title to all real properties and all other properties and assets (excluding Intellectual Property assets which are the subject of
Section 6.14
) owned by it, in each case free from
Encumbrances that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings, Buyer and each of its Subsidiaries holds any leased
real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.
6.12
Certificates, Authorities and Permits
. Buyer and each of its Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate Governmental Authorities necessary to conduct the business now operated by it, except to the extent failure to possess such certificates, authorities or permits could not reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate, and neither Buyer nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to Buyer or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.
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6.13
Labor Matters
.
(a) Except as set forth in the SEC Filings, Buyer is not a party to or bound by any collective bargaining agreements or other agreements
with labor organizations. Buyer has not violated in any material respect any Laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any Laws, regulations or orders affecting
employment discrimination, equal opportunity employment, or employees health, safety, welfare, wages and hours.
(b) (i)
There are no labor disputes existing, or to Buyers Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by Buyers employees, (ii) there are
no unfair labor practices or petitions for election pending or, to Buyers Knowledge, threatened before the National Labor Relations Board or any other federal, state or local labor commission relating to Buyers employees, (iii) no
demand for recognition or certification heretofore made by any labor organization or group of employees is pending with respect to Buyer and (iv) to Buyers Knowledge, Buyer enjoys good labor and employee relations with its employees and labor
organizations.
(c) Buyer is, and at all times has been, in compliance with all Applicable Laws respecting employment
(including Laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. There are no claims pending against Buyer before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any
violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.
(d) To Buyers Knowledge, Buyer has no liability for the improper classification by Buyer of its employees as independent
contractors or leased employees prior to the date of this Agreement.
6.14
Intellectual
Property
. Buyer and its Subsidiaries own, or have obtained valid and enforceable licenses for, or other rights to use, the Intellectual Property necessary for the conduct of the business of Buyer and its Subsidiaries as currently conducted and
as described in the SEC Filings, except where the failure to own, license or have such rights could not reasonably be expected to result in a Material Adverse Effect, individually or in the aggregate. Except as described in the SEC Filings,
(i) to Buyers Knowledge, there are no third parties who have or will be able to establish rights to any Intellectual Property, except for the ownership rights of the owners of the Intellectual Property which is licensed to Buyer or where
such rights could not reasonably be expected to result in a Material Adverse Effect, individually or in the aggregate; (ii) there is no pending or, to Buyers Knowledge, threat of any, action, suit, proceeding or claim by others
challenging Buyer or any of its Subsidiaries rights in or to, or the validity, enforceability, or scope of, any Intellectual Property owned by or licensed to Buyer or any of its Subsidiaries or claiming that the use of any Intellectual
Property by Buyer or any Subsidiary in their respective businesses as currently conducted infringes, violates or otherwise conflicts with the intellectual property rights of any third party; and (iii) to Buyers Knowledge, the use by Buyer
or any of its Subsidiaries of any Intellectual Property by Buyer or any of its Subsidiaries in their respective businesses as currently conducted does not infringe, violate or otherwise conflict with the intellectual property rights of any third
party.
6.15
Environmental Matters
. To Buyers Knowledge, neither Buyer nor any of
its Subsidiaries is in violation of any Environmental Laws, owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and
there is no pending or, to Buyers Knowledge, threatened investigation that might lead to such a claim.
6.16
Litigation
. There are no pending actions, suits or proceedings against or affecting Buyer, any of its Subsidiaries or any of its or their properties; and to Buyers Knowledge, no such actions, suits or proceedings are
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threatened, except (i) as described in the SEC Filings or (ii) any such proceeding, which if resolved adversely to Buyer or any of its Subsidiaries, could not reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate. Neither Buyer nor any of its Subsidiaries, nor any director or officer thereof, is or since January 1, 2005 has been the subject of any action involving a claim of violation of
or liability under federal or state securities Laws or a claim of breach of fiduciary duty. There has not been, and to Buyers Knowledge, there is not pending or contemplated, any investigation by the SEC involving Buyer or any current or
former director or officer of Buyer. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by Buyer or any Subsidiary under the Securities Act or the Exchange Act.
6.17
Financial Statements
. The financial statements included in each SEC Filing comply in all
material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or to the extent corrected by a subsequent restatement) and present fairly, in all material
respects, the consolidated financial position of Buyer as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with GAAP (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the Exchange Act). Except as set forth in the SEC Filings, neither Buyer nor any of its Subsidiaries has incurred any
Liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate,
have had or could reasonably be expected to have a Material Adverse Effect.
6.18
Insurance
Coverage
. Buyer and each of its Subsidiaries maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by Buyer and its Subsidiaries.
6.19
Compliance with Nasdaq Continued Listing Requirements
. Except as disclosed in the
SEC Filings, (a) Buyer is in compliance with applicable Nasdaq continued listing requirements, (b) there are no proceedings pending or, to Buyers Knowledge, threatened against Buyer relating to the continued listing of the Buyer
Common Stock on Nasdaq, and (c) Buyer has not received any currently pending notice of the delisting of the Buyer Common Stock from Nasdaq other than the notice of deficiency received by Buyer on January 2, 2013.
6.20
Brokers and Finders
. Except for fees and expenses of Roth Capital Partners and of the
Companys legal counsel and independent auditors, no Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon Buyer or any of its Subsidiaries for any commission, fee
or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of Buyer.
6.21
Questionable Payments
.
Neither Buyer nor any of its Subsidiaries nor, to Buyers Knowledge, any of their respective current or former shareholders, directors, officers, employees, agents or other Persons acting on
behalf of Buyer or any of its Subsidiaries, has on behalf of Buyer or any of its Subsidiaries or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies
or other assets; (d) made any false or fictitious entries on the books and records of Buyer or any of its Subsidiaries; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
6.22
Board Approval
. The board of directors of Buyer, by resolutions duly adopted by
unanimous vote at a meeting of all directors of Buyer duly called and held and, as of the date hereof, not subsequently rescinded or modified in any way, has, as of the date hereof (i) determined that this Agreement and the transactions
contemplated hereby, including the Acquisition and the issuance of the Acquisition Shares to the Company
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Shareholders, are fair to, and in the best interests of, Buyer and Buyers shareholders, (ii) directed that the issuance of the Acquisition Shares to the Company Shareholders pursuant
to and in accordance with this Agreement be submitted to Buyers shareholders for approval, and (iii) resolved to recommend that Buyers shareholders approve the issuance of the Acquisition Shares to the Company Shareholders pursuant
to and in accordance with this Agreement (collectively, the Buyer Board Recommendation) and directed that such matter be submitted for consideration of the shareholders of Buyer at the Buyer Shareholders Meeting.
6.23
Proxy Statement
. The Proxy Statement will comply in all material respects with the
requirements of the Exchange Act and, on the date filed with the SEC, on the date first published, sent or given to Buyers shareholders and at the time of the Buyer Shareholder Meeting, the Proxy Statement will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that no representation or
warranty is made by Buyer with respect to any information provided in writing by or on behalf of the Company or the Company Shareholders for inclusion in the Proxy Statement.
6.24
Internal Controls
. Buyer is in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to Buyer. Buyer and its
Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with managements general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with managements general or specific authorization,
and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Buyer has established disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) for Buyer and designed such disclosure controls and procedures to ensure that material information relating to Buyer, including its Subsidiaries, is made known to the certifying officers by
others within those entities, particularly during the period in which Buyers most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. Buyers certifying officers have evaluated the effectiveness
of Buyers controls and procedures as of December 31, 2012 (such date, the
Evaluation Date
) and concluded that such controls and procedures are effective to ensure that material information relating to Buyer, including
its Subsidiaries, is made known to certifying officers in a timely, accurate and complete manner. Since the Evaluation Date, there have been no significant changes in Buyers internal controls (as such term is defined in Item 308 of
Regulation S-K) or, to Buyers Knowledge, in other factors that could significantly affect Buyers internal controls. Buyer maintains and will continue to maintain a standard system of accounting established and administered in accordance
with GAAP and the applicable requirements of the Exchange Act.
6.25
Investment
Company
. Buyer is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an investment company within the meaning of the Investment Company Act of
1940, as amended.
6.26
Compliance with Laws
. Buyer and each of its Subsidiaries is in
compliance in all material respects with all requirements imposed by Law, regulation or rule, whether foreign, federal, state or local, that are applicable to it, its operations, or its properties and assets, including applicable requirements of the
Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq.).
6.27
Disclosure
. No representation or warranty of Buyer or any of its Subsidiaries contained in this Agreement and none of the statements contained in any other document, certificate, report, financial statement or written statement furnished to
the Company by or on behalf of Buyer or any of its Subsidiaries pursuant to this Agreement contains any untrue statement of a material fact or omits to state a material fact (known to Buyer, in the case of any document not furnished by it) necessary
in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates
and assumptions believed by Buyer to be reasonable at the time made.
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6.28
Buyer 401(k) Plan
. Subject to the delivery to
Buyer of a currently effective IRS determination letter with respect to the 401(k) Plan, and to the extent necessary under the Buyer 401(k) Plan (as defined below) and Applicable Law, Buyer shall adopt (or shall cause there to be adopted), effective
as of the Closing Date, resolutions amending (or directing the appropriate officers of Buyer to amend) Buyers employee pension benefit plan intended to be qualified under Section 401(a) of the Code that includes a cash or deferred
arrangement intended to qualify under Section 401(k) of the Code (the
Buyer 401(k) Plan
) so as to permit such Buyer 401(k) Plan to accept rollover contributions attributable to the termination of the 401(k) Plan contemplated
by
Section 7.10
of this Agreement, including any promissory notes presently representing outstanding participant loans under such 401(k) Plan.
6.29
No Other Representations or Warranties
. Each of the Company and the Company Shareholders hereby acknowledges and agrees that neither Buyer nor any of its
Subsidiaries has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this
Article 6
.
ARTICLE 7
COMPANY COVENANTS
During the time period from the Agreement Date until the earlier to occur of (a) the Closing or (b) the
termination of this Agreement in accordance with the provisions of
Article 10
, the Company and the Company Shareholders, as applicable, covenant and agree with Buyer as follows:
7.1
Advice of Changes
. The Company shall promptly advise Buyer in writing of (a) any material
event occurring subsequent to the Agreement Date that would render any representation or warranty of the Company contained in
Article 4
untrue or inaccurate such that the condition set forth in
Section 9.2(a)
would not be satisfied,
(b) any breach of any covenant or obligation of the Company pursuant to this Agreement or any Company Ancillary Agreement such that the condition set forth in
Section 9.2(b)
would not be satisfied, (c) any Material Adverse Change in
the Company, or (d) any change, event, circumstance, condition or effect that would reasonably be expected to result in a Material Adverse Effect on the Company or cause any of the conditions set forth in
Section 9.2
not to be satisfied;
provided
,
however
, that the delivery of any notice pursuant to this
Section 7.1
shall not be deemed to amend or supplement the Company Disclosure Letter and shall not any right of Buyer to claim a failure of a condition to
Closing set forth in
Section 9.1
or
9.2
, as applicable, with respect to any matters disclosed pursuant to this
Section 7.1
.
7.2
Maintenance of Business
.
(a) The
Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to carry on and preserve the Company Business and its business relationships with customers, advertisers, suppliers, employees and others with whom each
Group Company has contractual relations. If the Company or any of its Subsidiaries becomes aware of any material deterioration in the relationship with any Significant Customer, Significant Supplier or employee of the Company or such Subsidiary, the
Company shall, and shall cause the relevant Subsidiary to, promptly bring such information to Buyers attention in writing and, if reasonably requested by Buyer, shall exert commercially reasonable efforts to promptly restore the relationship.
(b) The Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to assure that each
Contract to which the Company is a party that is entered into after the Agreement Date will not require the procurement of any consent, waiver or novation or provide for any material change in the obligations of any party in connection with, or
terminate as a result of the consummation of, the Acquisition.
(c) The Company shall, and shall cause each of its
Subsidiaries to, continue to collect accounts receivable and pay accounts payable with respect to the Company Business in the Ordinary Course of Business.
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7.3
Conduct of Business
. The Company shall, and shall
cause each of its Subsidiaries to, continue to conduct the Company Business in the Ordinary Course of Business and the Company shall not, and shall cause each of its Subsidiaries not to, without Buyers prior written consent:
(a) declare, set aside or pay any cash or stock dividend or other distribution (whether in cash, stock or property) in respect of its
capital stock, or redeem, repurchase or otherwise acquire any of its capital stock or other securities, or pay or distribute any cash or property to any of its shareholders or securityholders or make any other cash payment to any of its shareholders
or securityholders in their capacity as such;
(b) merge, consolidate or reorganize with, acquire, or enter into any other
business combination with any corporation, partnership, limited liability company or any other entity (other than Buyer or any of its Affiliates), acquire any portion of the assets of any such entity, or form any Subsidiary, or enter into any
negotiations, discussions or agreement for such purpose;
(c) amend its Charter Documents;
(d) change any of its accounting methods or practices;
(e) (i) agree to do any of the things described in the preceding clauses (a)-(d), (ii) take or agree to take any action which would reasonably be expected to make any of the Companys
representations or warranties contained in this Agreement materially untrue or incorrect, or (iii) take or agree to take any action which would reasonably be expected to prevent the Company from performing or cause the Company not to perform
one or more covenants required hereunder to be performed by the Company.
7.4
Regulatory
Approvals
. The Company shall promptly execute and file, or join in the execution and filing of, any application, notification or other document that may be necessary in order to obtain the authorization, approval or consent of any Governmental
Authority, whether federal, state, local or foreign, which may be required in connection with the consummation of the Acquisition and the other transactions contemplated by this Agreement or any Company Ancillary Agreement. The Company shall make
all filings required of it under any applicable antitrust laws with respect to the transactions contemplated hereby as promptly as reasonably practicable and shall comply as soon as reasonably practicable and to the extent necessary with any formal
or informal request under any applicable antitrust laws for additional information, documents or other materials received from any Governmental Authority acting pursuant to its antitrust authority. The Company shall use commercially reasonable
efforts to obtain, and to cooperate with Buyer to promptly obtain, all such authorizations, approvals and consents and shall pay any associated filing fees payable by the Company with respect to such authorizations, approvals and consents. The
Company shall promptly inform Buyer of any communication between the Company and any Governmental Authority regarding any of the transactions contemplated hereby. The Company shall consult with and cooperate with Buyer in advance of any such written
or oral communication to any Governmental Authority. The Company shall use commercially reasonable efforts to resolve questions or objections, if any, of any Governmental Authority and to take such actions as may be required to cause expiration of
the waiting periods under the applicable antitrust laws.
7.5
Necessary Consents
. The
Company shall use commercially reasonable efforts to obtain prior to the Closing such consents and authorizations of third Parties, give notices to third parties and take such other actions as may be necessary or appropriate in order to effect the
consummation of the Acquisition and the other transactions contemplated by this Agreement, to enable the Company (or Buyer) to carry on the Company Business immediately after the Closing, and to keep in effect and avoid the breach, violation of,
termination of, or adverse change to, any Contract to which the Company is party, including the consents, authorizations, notices and actions which are listed on
Schedule 7.5
of the Company Disclosure Letter.
7.6
Litigation
. The Company shall notify Buyer in writing promptly after learning of any material
claim, action, suit, arbitration, mediation, proceeding or investigation by or before any court, arbitrator or arbitration panel, board or governmental agency, initiated by or against it, or known by the Company to be pending or
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threatened against any Group Company or any of its officers, directors, employees or shareholders in their capacity as such.
7.7
No Other Negotiations
.
(a) The Company and the Company Shareholders shall not, and shall not authorize, encourage or permit any of its Subsidiaries or Company
Representatives to, directly or indirectly: (a) solicit, initiate, or knowingly encourage, facilitate or induce the making, submission or announcement of any inquiry, offer or proposal from any Person (other than Buyer) concerning any
Alternative Transaction; (b) furnish any nonpublic information regarding any Group Company to any Person (other than Buyer and its agents and advisors) in connection with or in response to any inquiry, offer or proposal for or regarding any
Alternative Transaction (other than to respond to such inquiry, offer or proposal solely by indicating that the Company is subject to this
Section 7.7
); (c) enter into, participate in, entertain, maintain or continue any discussions or
negotiations with any Person (other than Buyer and its agents and advisors) with respect to any Alternative Transaction (other than to respond to such inquiry, offer or proposal solely by indicating that the Company is subject to this
Section
7.7
); (d) otherwise cooperate with, facilitate or encourage any effort or attempt by any Person (other than Buyer and its agents and advisors) to effect any Alternative Transaction; or (e) execute, enter into or become bound by any
letter of intent, memorandum of understanding, other Contract or understanding between any Group Company and any Person (other than Buyer) that is related to, provides for or concerns any Alternative Transaction. If any Company Representative,
whether in his or her capacity as such or in any other capacity, takes any action that the Company is obligated pursuant to this
Section 7.7(a)
to cause such Company Representative not to take, then the Company shall be deemed for all
purposes of this Agreement to have breached this
Section 7.7(a)
.
(b) The Company or the Company Shareholders, as
applicable, shall notify Buyer within twenty-four (24) hours after receipt by the Company Shareholders or any Group Company or by any of the Company Representatives of any inquiry, offer or proposal that constitutes an Alternative Transaction,
or any other notice that any Person is considering making an Alternative Transaction, or any request for nonpublic information relating to any Group Company or for access to any of the properties, books or records of any Group Company by any Person
or Persons other than Buyer (which notice shall identify the Person or Persons making, or considering making, such inquiry, offer or proposal) in connection with a potential Alternative Transaction and shall keep Buyer fully informed of the status
and details of any such inquiry, offer or proposal and any correspondence or communications related thereto and shall provide to Buyer a correct and complete copy of such inquiry, offer or proposal and any amendments, correspondence and
communications related thereto, if it is in writing, or a written summary of the material terms thereof, if it is not in writing. The Company shall provide Buyer with forty-eight (48) hours prior notice (or such lesser prior notice as is
initially provided to the Board) of any meeting of the Board, at which the Board is reasonably expected to discuss any Alternative Transaction. The Company shall, and shall cause each of its Subsidiaries and the Company Representatives to,
immediately cease and cause to be terminated any and all existing activities, discussions and negotiations with any Persons conducted heretofore with respect to an Alternative Transaction.
7.8
Access to Information
. Subject to Applicable Law and reasonable notice, the Company shall
allow Buyer and its agents and advisors access at reasonable times to the files, books, records, technology, Contracts, personnel and offices of any Group Company, including any and all information relating to the Taxes, Contracts, Liabilities,
financial condition and real, personal and intangible property of any Group Company. The Company shall cause its accountants to cooperate with Buyer and Buyers agents and advisors in making available all financial information reasonably
requested by Buyer and its agents and advisors, including the right to examine all working papers pertaining to all financial statements prepared or audited by such accountants.
7.9
Satisfaction of Conditions Precedent
. The Company shall, and shall cause each other Group
Company to, use commercially reasonable efforts to satisfy or cause to be satisfied all the conditions precedent set forth in
Article 9
, and the Company shall use commercially reasonable efforts to cause the Acquisition and the other
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transactions contemplated by this Agreement to be consummated in accordance with the terms of this Agreement.
7.10
Company Benefit Arrangements
. The Board or the board of directors of Tandberg Data Corporation, a Delaware corporation (
TD Corp
), as
applicable, shall adopt (or shall cause there to be adopted) no later than the day before the Closing Date resolutions terminating each Company Benefit Arrangement intended to be qualified under Section 401(a) of the Code that includes a cash
or deferred arrangement intended to qualify under Section 401(k) of the Code (the
401(k) Plan
), such termination to be effective no later than the day before the Closing Date, and authorizing the appropriate officers of TD
Corp to make such amendments to the 401(k) Plan that is sufficient to assure that the tax-qualified status of such plan shall be maintained at the time of its termination. The Company shall provide a draft of such resolutions to Buyer prior to their
adoption and address, to the reasonable satisfaction of Buyer, any comments Buyer may have as to such resolutions. Immediately prior to such termination, the Company will cause TD Corp to make all necessary payments to the trust for the 401(k) Plan
to fund the contributions: (a) necessary or required to maintain the tax-qualified status of the 401(k) Plan; (b) for elective deferrals made pursuant to the 401(k) Plan for the period through and including the time of termination; and
(c) for all employer contributions (if any) for the period through and including the time of termination. All participants and former participants in such 401(k) Plan (and in any other Company Benefit Arrangement that is an employee
pension benefit plan as defined in Section 3(2) of ERISA) shall become fully vested in their account balances under the 401(k) Plan (and any other employee pension benefit plan) to the extent required by law.
7.11
Repayment of Debt
. On or prior to the Closing Date, the Company shall (i) convert, or
cause to be converted, the Debt into Company Shares;
provided
, that the Company shall repay in full all of the Debt set forth on
Schedule 7.11
, which shall not be converted into Company Shares; and (ii) obtain executed UCC-2 or
UCC-3 termination statements (or any other applicable termination statement) executed by each Person holding a security interest in any assets of any Group Company as of the Closing Date terminating any and all such security interests and evidence
reasonably satisfactory to Buyer that all Encumbrances on assets of any Group Company shall have been released prior to, or shall be released simultaneously with, the Closing.
7.12
Notices to Company Shareholders and Employees
.
(a) The Company shall timely provide to the Company Shareholders all advance notices required to be given to such Company Shareholders in connection with this Agreement, the Acquisition and the
transactions contemplated by this Agreement under the Charter Documents of the Company or other applicable Contracts and under Applicable Law.
(b) The Company shall give all notices and other information required to be given by the Company to the employees of the Company, any collective bargaining unit or any works council representing any group
of employees of the Company, and any applicable Governmental Authority under the WARN Act, the National Labor Relations Act, as amended, the Code, COBRA and other Applicable Law in connection with the transactions contemplated by this Agreement or
other applicable Contracts.
7.13
Closing Certificates
. The Company shall prepare and
deliver to Buyer a draft Closing Transaction Fees Certificate not later than five (5) Business Days prior to the scheduled Closing Date. The Company shall provide to Buyer copies of the documents or instruments evidencing the amounts set forth
on any such drafts and the Company shall consider in good faith any comments or proposed changes to such documents and certificates that may be suggested by Buyer in the period following delivery thereof but prior to the Closing.
7.14
Cooperation
. Each of the Group Companies and the Company Shareholders shall use commercially
reasonable efforts to, and shall cause each other Group Company (including internal and external legal and accounting representatives and outside auditors) to use commercially reasonable efforts to, provide all such reasonable assistance and
cooperation in connection with Buyers efforts to consummate the transactions
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contemplated hereby as may be reasonably requested by Buyer, including (i) furnishing Buyer with such pertinent and customary information, regarding the Group Companies as may be reasonably
requested by Buyer, (ii) furnishing Buyer financial statements and pro forma financial statements of the Group Companies that are reasonably requested by Buyer, (iii) furnishing any information reasonably requested by Buyer in connection
with any filings under the Securities Act or the Exchange Act in connection with the transactions contemplated by this Agreement and (iv) causing the Group Companies auditors to confer with Buyers auditors regarding the financial
statements of any of them. In addition the Company hereby consents to the use and disclosure of all information contained in the Companys financial statements and other financial or other information regarding the Company in any report or
registration statement required to be filed by Buyer under the Securities Act or the Exchange Act as may be deemed necessary or appropriate by Buyer in connection with the transactions contemplated hereby. The Company also hereby agrees that it will
provide (or will cause the other Group Companies to provide, as needed) and will not unreasonably withhold or delay the issuance of those representation letters as required under GAAP or other standards in connection with the issuance by
Buyers auditors of any pro forma or other financial statements or as may be otherwise necessary in connection with the filing of any document with the SEC under the Securities Act or the Exchange Act. If requested by Buyer, the Company shall
(and shall cause each other applicable Group Company to) use its reasonable best efforts to cause its auditors to consent to the inclusion of its financial statements in any registration statement or other filing required to be filed under the
Securities Act or the Exchange Act by the Company. The Company shall use commercially reasonable efforts to, and to cause the other Group Companies, internal accountants and auditors to, support Buyer and its auditors and legal advisors with respect
to information reasonably necessary to (i) respond to any inquiry of the SEC in connection with any filing by Buyer under the Securities Act or the Exchange Act and (ii) assist investor in ensuring that the Companys consolidated
financial statements comply with the provisions of Regulation S-X, or any applicable accounting standards or rules which have been introduced or become effective after the delivery by the Company of its financial statements.
7.15
Additional Financial Statements
.
(a) The Company, at its sole cost and expense, and commencing with the month ended October 31, 2013, will prepare and furnish to
Buyer as soon as they become available, but in any event, not later than twenty-five (25) calendar days after the end of the month of October 2013, and not later than fifteen (15) Business Days after the end of each month thereafter,
(i) an unaudited balance sheet and an unaudited income statement and an unaudited statement of cash flows for the Company for each full monthly period prior to the Closing and for the elapsed portion of the Companys fiscal year and
(ii) all other material or formal monthly reports delivered to management of the Company in the Ordinary Course of Business. The Company will prepare each of the additional unaudited financial statements on a basis consistent with the Company
Financial Statements.
(b) The Company, at its sole cost and expense, will prepare and furnish to Buyer as soon as they become
available, but in any event, not later than November 20, 2013, the Companys unaudited consolidated statements of operations, changes in shareholders equity and cash flows for the nine (9) months ended September 30, 2013.
The Company will prepare such unaudited financial statements on a basis consistent with the Company Financial Statements.
7.16
Nasdaq Listing
. The Company and FBC shall use their commercially reasonable efforts to assist Buyer in causing the Buyer Common Stock to be approved for listing on The Nasdaq Capital Market following the Closing and in causing the
Acquisition Shares to be listed on The Nasdaq Capital Market following the Closing.
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ARTICLE 8
BUYER COVENANTS
During the time period from the Agreement Date until the earlier to occur of (a) the Closing or (b) the termination of this Agreement in accordance with the provisions of
Article 10
,
Buyer covenants and agrees with the Company as follows:
8.1
Advice of Changes
. Buyer
shall promptly advise the Company in writing of (a) any event occurring subsequent to the Agreement Date that would render any representation or warranty of Buyer contained in
Article 6
untrue or inaccurate such that the condition set
forth in
Section 9.3(a)
would not be satisfied, or (b) any breach of any covenant or obligation of Buyer pursuant to this Agreement or any Buyer Ancillary Agreement such that the condition set forth in
Section 9.3(b)
would not be
satisfied.
8.2
Regulatory Approvals
. Buyer and the Company shall promptly execute and
file, or join in the execution and filing of, any application, notification or other document that may be necessary in order to obtain the authorization, approval or consent of any Governmental Authority, whether foreign, federal, state, local or
municipal, which may be required in connection with the consummation of the Acquisition and the other transactions contemplated by this Agreement or any Buyer Ancillary Agreement. Buyer shall make all filings required of it under applicable
antitrust laws with respect to the transactions contemplated hereby as promptly as reasonably practicable and shall comply as soon as reasonably practicable and to the extent necessary with any formal or informal request under applicable antitrust
laws for additional information, documents or other materials received from the Governmental Authority acting pursuant to its antitrust authority. Each Party shall use commercially reasonable efforts to obtain all such authorizations, approvals and
consents, and Buyer and the Company shall equally split any associated filing fees payable by either of them with respect to such authorizations, approvals and consents. Each Party shall promptly inform the other Parties of any communication between
the initiating Party and any Governmental Authority regarding any of the transactions contemplated hereby. Each Party shall use commercially reasonable efforts to resolve questions or objections, if any, of any Governmental Authority.
Notwithstanding anything in this Agreement to the contrary, if any administrative or judicial action or proceeding is instituted (or threatened in writing to be instituted) challenging any transaction contemplated by this Agreement as violative of
any Applicable Law, it is expressly understood and agreed that neither Buyer nor any of its Subsidiaries or Affiliates shall be under any obligation to: (a) litigate or contest any administrative or judicial action or proceeding or any decree,
judgment, injunction or other order, whether temporary, preliminary or permanent; or (b) make proposals, execute or carry out agreements or submit to orders providing for (i) the sale, divestiture or other disposition or holding separate
(through the establishment of a trust or otherwise) of any assets or categories of assets of Buyer, any of its Subsidiaries or Affiliates (including the Company) or the Company, or the holding separate of the Company Shares or (ii) the
imposition of any limitation on the ability of Buyer or any of its Subsidiaries or Affiliates to freely conduct their business or own such assets or to acquire, hold or exercise full rights of ownership of the Company Shares.
8.3
No Other Negotiations
.
(a) Buyer shall not, and shall not authorize, encourage or permit any of its Subsidiaries or any of their respective officers, directors,
employees, shareholders, Affiliates, agents, advisors (including any attorneys, financial advisors, investment bankers or accountants) or other representatives (collectively, the
Buyer Representatives
) to, directly or indirectly:
(a) solicit, initiate, or knowingly encourage, facilitate or induce the making, submission or announcement of any inquiry, offer or proposal from any Person (other than Cyrus, the Company Shareholders or the Company) concerning any Alternative
Buyer Transaction; (b) furnish any nonpublic information regarding Buyer to any Person (other than Buyer and its agents and advisors) in connection with or in response to any inquiry, offer or proposal for or regarding any Alternative Buyer
Transaction (other than to respond to such inquiry, offer or proposal solely by indicating that Buyer is subject to this
Section 8.3
); (c) enter into, participate in, entertain, maintain or continue any discussions or negotiations with
any Person (other than Cyrus, the Company Shareholders or the Company and their agents and advisors) with
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respect to any Alternative Buyer Transaction (other than to respond to such inquiry, offer or proposal solely by indicating that Buyer is subject to this
Section 8.3
); (d) otherwise
cooperate with, facilitate or encourage any effort or attempt by any Person (other than Cyrus, the Company Shareholders or the Company and their agents and advisors) to effect any Alternative Buyer Transaction; or (e) execute, enter into or
become bound by any letter of intent, memorandum of understanding, other Contract or understanding between Buyer and any Person (other than Cyrus, the Company Shareholders or the Company) that is related to, provides for or concerns any Alternative
Buyer Transaction. If any Buyer Representative, whether in his or her capacity as such or in any other capacity, takes any action that Buyer is obligated pursuant to this
Section 8.3(a)
to cause such Buyer Representative not to take, then
Buyer shall be deemed for all purposes of this Agreement to have breached this
Section 8.3(a)
. Buyer shall, and shall cause each of its Subsidiaries and the Buyer Representatives to, immediately cease and cause to be terminated any and all
existing activities, discussions and negotiations with any Persons conducted heretofore with respect to an Alternative Buyer Transaction.
(b) Notwithstanding the provisions of
Sections 8.3(a)
, at any time prior to the Closing, if the board of directors of Buyer receives a bona fide written proposal relating to an Alternative Buyer
Transaction (a
Takeover Proposal
) after the date of this Agreement that was not solicited by Buyer or the Buyer Representatives and did not otherwise result from a breach or deemed breach of
Sections 8.3(a)
and a majority
of the disinterested directors of the Company Board reasonably determines in its good faith judgment, after consultation with and based upon the advice from outside legal counsel, that it is required to take the actions specified in the following
clauses (x), (y) and/or (z) of this sentence with respect to such Takeover Proposal in order to avoid a breach of its fiduciary duties to the shareholders of Buyer under Applicable Law, then subject to providing written notice of its
decision to take such action to the Company, the board of directors of Buyer may (x) furnish information with respect to Buyer to the Person making such Takeover Proposal and its representatives and advisors, (y) participate in discussions
or negotiations with such Person and its representatives and advisors regarding any Takeover Proposal and (z) consummate an Alternative Buyer Transaction with respect to such Takeover Proposal.
(c) Except as set forth in this
Section 8.3
, neither the board of directors of Buyer nor any committee thereof shall:
(i) withhold, withdraw, qualify or modify, in a manner adverse to the Company, the Buyer Board Recommendation with respect to the issuance
of the Acquisition Shares, fail to include the Buyer Board Recommendation in the Proxy Statement, or adopt, approve or recommend or propose to adopt, approve or recommend (publicly or otherwise) an Alternative Buyer Transaction; or
(ii) make any recommendation or public statement in connection with a tender offer or exchange offer, other than a recommendation against
such offer or a stop, look and listen communication pursuant to
Rule 14d-9(f)
under the Exchange Act (it being understood that the board of directors of Buyer may refrain from taking a
position with respect to an Alternative Buyer Transaction until the close of business on the tenth (10th) Business Day after the commencement of a tender offer or exchange offer in connection with such Alternative Buyer Transaction pursuant to
Rule 14d-9(f) under the Exchange Act without such action being considered an adverse modification of the Buyer Board Recommendation) (each action set forth in clauses (i) and (ii) of this
Section 8.3(c)
, a
Change of
Recommendation
).
(d) Notwithstanding any other provisions of this
Section 8.3
to the contrary, at any time
prior to the time the Buyer Shareholder Approval is obtained, if the board of directors of Buyer has received a proposal relating to an Alternative Buyer Transaction (that has not been withdrawn) that the board of directors of Buyer determines
constitutes a Superior Proposal, the board of directors of Buyer may effect a Change of Recommendation or terminate this Agreement pursuant to
Section 10.2(d)(iii)
if, and only if, prior to the board of directors of Buyer taking any such
action:
(i) Buyer shall have (A) provided to FBC a written notice, which notice shall (1) state that Buyer has
received a proposal relating to an Alternative Buyer Transaction which the board of directors of the Company has
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determined is a Superior Proposal and that the board of directors of Buyer intends to take such action and (2) include the identity of the Person making such Superior Proposal, the most
current written draft agreement relating to the transaction that constitutes such Superior Proposal and all related transaction agreements, (B) provided such notice to FBC at least four (4) Business Days prior to taking any such action (it
being understood that any material amendment to the terms of such Superior Proposal shall require a new notice and a new two (2) Business Day period) and (C) if requested by FBC, negotiated in good faith with FBC during such four
(4) Business Day period regarding revisions to this Agreement which would permit Buyer not to effect a Change of Recommendation or take action pursuant to this
Section 8.3
in response to such a Superior Proposal; and
(ii) if FBC shall have delivered to Buyer, within four (4) Business Days after receipt by FBC of the notice described in
Section
8.3(d)(i)
, a written proposal capable of being accepted to amend the terms contemplated by this Agreement, the board of directors of Buyer shall have in good faith determined (after consultation with outside legal counsel), after considering the
terms of such proposal by FBC, that the proposal relating to an Alternative Buyer Transaction continues to constitute a Superior Proposal.
(e) The board of directors of Buyer may also effect a Change of Recommendation at any time prior to the time the Buyer Shareholder Approval is obtained in the absence of a Superior Proposal if an
Intervening Event shall have occurred and be continuing and prior to effecting such Change of Recommendation the board of directors of Buyer in good faith determines (after consultation with its outside legal counsel) that, in light of such
Intervening Event, the failure to take such action would reasonably be expected to result in a breach of the fiduciary duties of the board of directors of Buyer under Applicable Law.
(f) Nothing contained in this
Section 8.3
or elsewhere in this Agreement shall prohibit Buyer or its board of directors from
complying with Rule 14d-9, Rule 14e-2 or Item 1012 of Regulation M-A under the Exchange Act, or from making any disclosures to the holders of Buyer Common Stock if the board of directors of Buyer in good faith determines (after consultation
with its outside legal counsel) that the failure to make such disclosure would reasonably be expected to result in a breach of its fiduciary duties under applicable Law (including any stop, look and listen communication pursuant to Rule
14d-9(f) under the Exchange Act);
provided
,
however
, that any such disclosure shall be deemed to be a Change of Recommendation unless the board of directors of Buyer expressly reaffirms its recommendation to Buyers shareholders
to vote in favor of the adoption of this Agreement in such disclosure.
8.4
Shareholders
Meeting; Preparation of Proxy Materials
.
(a) As promptly as reasonably practicable following the date of this Agreement,
Buyer shall (i) prepare and file with the SEC a preliminary proxy statement (as amended or supplemented from time to time, the
Proxy
Statement
) with respect to the Buyer Shareholders Meeting; and (ii) set a record
date for the Buyer Shareholders Meeting. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the Proxy Statement prior to the filing thereof with the SEC and Buyer shall consider in good faith any comments
reasonably proposed by the Company and it counsel. The Company and the Company Shareholders shall furnish to Buyer all information regarding the Company and its Affiliates that may be required (pursuant to the Exchange Act and other applicable Laws)
to be set forth in the Proxy Statement. Buyer shall use its reasonable best efforts to have the Proxy Statement cleared by the SEC as promptly as practicable after the Proxy Statement is filed with the SEC. Buyer shall (to the extent required by
applicable federal securities Laws): (x) promptly correct any information provided by it for use in the Proxy Statement if and to the extent that such information shall have become false or misleading in any material respect and (y) take
all steps necessary to cause the Proxy Statement as so corrected to be filed with the SEC and to the extent required by Law, disseminated to the shareholders of Buyer. Buyer shall promptly provide the Company and its counsel with a copy of any
comments received by Buyer from the SEC or its staff with respect to the Proxy Statement. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the response to any comment letter and any amendment or
supplement to the Proxy Statement prior to the filing thereof with the SEC, and Buyer shall consider in good faith any comments reasonably proposed by the Company and its counsel.
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(b) As promptly as reasonably practicable after the SEC or its staff advises that it has no
further comments on the Proxy Statement or that Buyer may commence mailing the Proxy Statement, Buyer shall (subject to applicable Laws, rules and regulations of Nasdaq and the requirements of Buyers Charter Documents) take all action
reasonably necessary to convene the Buyer Shareholders Meeting and to cause the Proxy Statement to be mailed to Buyers shareholders. Notwithstanding anything to the contrary contained in this Agreement, Buyer may delay convening, postpone or
adjourn the Buyer Shareholders Meeting if Buyer determines in good faith that the delay, postponement or adjournment of Buyer Shareholders Meeting is necessary or appropriate in order to obtain sufficient votes to obtain the Buyer Shareholder
Approval or, with respect to disclosure matters, is required by Buyer to comply with Applicable Law. Without limiting the generality of the foregoing, Buyer agrees that its obligations pursuant to the first sentence of this
Section 8.4(b)
shall not be affected by the commencement, public proposal, public disclosure or communication to Buyer or any other Person of any Alternative Buyer Transaction or the occurrence of any Change of Recommendation.
(c) Subject to
Section 8.3
and
Section 8.4
, (i) the board of directors of Buyer shall include the Buyer Board
Recommendation in the Proxy Statement, and (ii) Buyer shall use reasonable best efforts to obtain the Buyer Shareholder Approval.
8.5
Board of Directors of Buyer
. Within three (3) Business Days after the Closing, Buyer shall cause the size of the board of directors of Buyer to be set at
seven (7) directors. In connection with the increase of the size of the board of directors of Buyer from five (5) directors to seven (7) directors, Buyer shall cause the board of directors of Buyer to appoint two (2) directors
approved by the Company Shareholders to fill the additional director positions. Such directors shall serve for the same term as the other directors, or until their earlier death, resignation or removal in accordance with the Charter Documents of
Buyer.
8.6
Conduct of Business
. Buyer shall, and shall cause each of its Subsidiaries
to, continue to conduct its business in the Ordinary Course of Business and Buyer shall not, and shall cause each of its Subsidiaries not to, without the Companys prior written consent:
(a) declare, set aside or pay any cash or stock dividend or other distribution (whether in cash, stock or property) in respect of its
capital stock, or redeem, repurchase or otherwise acquire any of its capital stock or other securities, or pay or distribute any cash or property to any of its shareholders or securityholders or make any other cash payment to any of its shareholders
or securityholders in their capacity as such;
(b) merge, consolidate or reorganize with, acquire, or enter into any other
business combination with any corporation, partnership, limited liability company or any other entity (other than the Company or any of its Affiliates), acquire any portion of the assets of any such entity, or form any Subsidiary, or enter into any
negotiations, discussions or agreement for such purpose;
(c) amend its Charter Documents;
(d) change any of its accounting methods or practices (which, for the avoidance of doubt, shall not include any change to Buyers
fiscal year or any fiscal month);
(e) (i) agree to do any of the things described in the preceding clauses (a)-(d),
(ii) take or agree to take any action which would reasonably be expected to make any of Buyers representations or warranties contained in this Agreement materially untrue or incorrect, or (iii) take or agree to take any action which
would reasonably be expected to prevent Buyer from performing or cause Buyer not to perform one or more covenants required hereunder to be performed by Buyer.
8.7
Satisfaction of Conditions Precedent
. Buyer shall use commercially reasonable efforts to satisfy or cause to be satisfied all of the conditions precedent set
forth in
Article 9
, and Buyer shall use its commercially reasonable efforts to cause the Acquisition and the other transactions contemplated by this Agreement to be consummated in accordance with the terms of this Agreement.
8.8
Litigation
. Buyer shall notify the Company Shareholders in writing promptly after learning of
any material claim, action, suit, arbitration, mediation, proceeding or investigation by or before any court, arbitrator
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or arbitration panel, board or governmental agency, initiated by or against it, or known by the Buyer to be pending or threatened against Buyer or any of its Subsidiaries or any of its officers,
directors, employees or shareholders in their capacity as such.
8.9
Rights Plan
.
Buyer shall amend or waive the provisions of the Rights Plan to the extent reasonably necessary to accommodate this Agreement and the transactions contemplated hereby, including the issuance of the Acquisition Shares, but not with respect to
any Alternative Buyer Transaction.
8.10
Nasdaq Listing
. Buyer shall use its
commercially reasonable efforts to cause the Buyer Common Stock to be approved for listing on The Nasdaq Capital Market following the Closing, and to cause the Acquisition Shares to be listed on The Nasdaq Capital Market following the Closing.
8.11
Evidence of Transfer of Company Shares
. After the Closing, Buyer shall cause the
Company to provide to the Company Shareholders evidence that the transfer of the Company Shares to Buyer has been registered and filed with the Luxembourg Register of Commerce and Companies.
ARTICLE 9
CONDITIONS TO CLOSING OF ACQUISITION
9.1
Conditions to Each Partys Obligation to Effect the Acquisition
. The respective obligations of each Party to this Agreement to effect the Acquisition shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a)
Governmental Approvals
. All authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental Authority shall have been filed, occurred or been obtained, and there shall have been taken all such other actions by any Governmental Authority or other regulatory
authority having jurisdiction over the Parties and the actions herein proposed to be taken, as may be required to consummate the Acquisition and the transactions contemplated hereby.
(b)
No Injunctions or Restraints; Illegality
. No temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory action, restraint or prohibition preventing or challenging the consummation of the Acquisition or limiting or restricting the conduct or operation of the business of any
Group Company by Buyer after the Acquisition shall have been issued, nor shall any proceeding brought by an administrative agency or commission or other Governmental Authority or other third party, seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Acquisition which makes the consummation of the Acquisition illegal.
9.2
Additional Conditions to Obligations of Buyer
. The obligations of Buyer to effect the
Acquisition are subject to the satisfaction of each of the following conditions, any of which may be waived in writing exclusively by Buyer:
(a)
Representations and Warranties
. (i) The representations and warranties of the Company set forth in this Agreement that are qualified by materiality or Material Adverse Effect shall
be true and correct in all respects, and the representations and warranties of the Company set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and
(except to the extent such representations speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, and Buyer shall have received a certificate of the Company to such effect, and (ii) all representations
and warranties of the Company Shareholders set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and (except to the extent such representations speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date.
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(b)
Performance of Obligations of the Company
. The Company shall have performed in
all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date; and Buyer shall have received a certificate of the Company to such effect.
(c)
No Material Adverse Effect
. From and after the Agreement Date, there shall not have occurred any event and no circumstance
shall exist which, alone or together with any one or more other events or circumstances has had, is having or would reasonably be expected to have a Material Adverse Effect.
(d)
Consulting Agreements
. Each of the Persons set forth in
Schedule 9.2(d)
shall have entered into and delivered to Buyer a Consulting Agreement in a form reasonably acceptable to Buyer.
(e)
Non-Solicitation Agreements
. Each of the employees set forth in
Schedule 9.2(e)
shall have entered into and
delivered to Buyer a Non-Solicitation Agreement in a form reasonably acceptable to Buyer.
(f)
Registration Rights
Agreement
. FBC shall have executed and delivered the Registration Rights Agreement.
(g)
Voting Agreement
. FBC
shall have executed and delivered the Voting Agreement.
(h)
Consents
. Buyer shall have received duly executed copies
of all third-party consents, approvals, assignments, notices, waivers, authorizations or other certificates set forth in
Schedule 9.2(h)
.
(i)
Termination, Modification or Satisfaction of Company Shareholder Documents and Rights
. Each of the agreements identified on
Schedule 9.2(i)
shall have been terminated, effective as of
the Closing, in accordance with their respective terms, and the Parties to the agreements identified on such
Schedule 9.2(i)
shall have waived all of their respective rights thereunder, effective as of, and contingent upon, the Closing.
(j)
Resignations of Directors and Officers
. Except as set forth on
Schedule IV
, the persons holding the
positions of a director or officer of each Group Company, including the Company, in office immediately prior to the Closing, shall have resigned from such positions in writing effective as of the Closing (for the avoidance of doubt, the persons set
forth on
Schedule IV
shall not be required to resign the positions held by such persons for the applicable Group Companies as set forth on
Schedule IV
).
(k)
Registered Office
. The registered office of the Company shall have been transferred effective as of the Closing, or the transfer of the Company Shares to Buyer and the change of control of the
Company resulting therefrom shall have been accepted by the trust company with which the office of the Company is registered in Luxembourg.
(l)
Closing Transaction Fees Certificate
. Buyer shall have received the Closing Transaction Fees Certificate from the Company,
provided
,
however
, that such receipt shall not be deemed
to be an agreement by Buyer that the Closing Transaction Fees Certificate is accurate and shall not diminish Buyers remedies hereunder if the Closing Transaction Fees Certificate is not accurate.
(m)
Good Standing Certificates
. Each Group Company shall have delivered to Buyer a certificate of good standing or other
applicable certificates or documents from such Group Companys jurisdiction of incorporation or formation (e.g., a certificate from the Luxembourg Register of Commerce and Companies for the Company) and each state or jurisdiction in which such
Group Company is qualified to do business as a foreign corporation, to the extent provided by any such jurisdiction, certifying as of a date no more than seven (7) Business Days prior to the Closing Date that such Group Company is in good
standing and, to the extent provided by any such jurisdiction, that all applicable Taxes and fees of such Group Company through such certification date have been paid.
(n)
Termination of Company Benefit Arrangements
. The Company shall have delivered to Buyer (i) a true, correct and complete copy of resolutions adopted by the Board and the board of directors
of TD Corp,
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certified by the Secretary of the Company, authorizing the termination of the 401(k) Plan, and terminating the 401(k) Plan, respectively, and authorizing the appropriate officers of TD Corp to
make such amendments to the 401(k) Plan that is sufficient to assure compliance with all applicable requirements of the Code and regulations thereunder so that the tax-qualified status of the 401(k) Plan shall be maintained at the time of its
termination.
(o)
Repayment of Debt
. Buyer shall have received evidence reasonably satisfactory to it that all of the
Debt converted or to be converted into Company Shares shall have been converted into Company Shares. Buyer shall have received evidence reasonably satisfactory to it that all of the Debt not converted or to be converted into Company Shares shall
have been repaid in full. Buyer shall have received evidence reasonably satisfactory to Buyer that all Encumbrances on assets of any Group Company shall have been released prior to, or shall be released simultaneously with, the Closing.
(p)
Termination of Agreements
. The agreements set forth on
Schedule 9.2(p)
shall have been terminated to the
satisfaction of Buyer.
9.3
Additional Conditions to Obligations of the Company
Shareholders
. The obligation of the Company Shareholders to effect the Acquisition is subject to the satisfaction of each of the following conditions, any of which may be waived, in writing, exclusively by the Company Shareholders:
(a)
Representations and Warranties
. The representations and warranties of Buyer set forth in this Agreement that are qualified by
materiality or Material Adverse Effect shall be true and correct in all respects, and the representations and warranties of Buyer set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such representations speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date; and the Company shall have received a certificate signed on behalf of
Buyer by an authorized officer or director of Buyer to such effect.
(b)
Performance of Obligations of Buyer
. Buyer
shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date; and the Company Shareholders shall have received a certificate signed on behalf of Buyer by an
authorized officer or director of Buyer to such effect.
(c)
Registration Rights Agreement
. Buyer shall have executed
and delivered the Registration Rights Agreement.
(d)
Voting Agreement
. Buyer shall have executed and delivered the
Voting Agreement.
(e)
No Material Adverse Effect
. From and after the Agreement Date, there shall not have occurred any
event and no circumstance shall exist which, alone or together with any one or more other events or circumstances has had, is having or would reasonably be expected to have a Material Adverse Effect.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1
Termination by Mutual Consent
. This Agreement may be terminated at any time prior to the Closing by the mutual written consent of Buyer and FBC.
10.2
Unilateral Termination
.
(a) Either
Buyer or FBC, by giving written notice to the other Parties, may terminate this Agreement if a court of competent jurisdiction or other Governmental Authority shall have issued a final judgment or taken any
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action (and the appeal of such judgment or action has been denied) having the effect of permanently restraining or enjoining or otherwise prohibiting the Acquisition or any other material
transaction contemplated by this Agreement.
(b) Either Buyer or FBC, by giving written notice to the other Parties, may
terminate this Agreement if the Acquisition shall not have been consummated by midnight California time on February 28, 2014;
provided
,
however
, that the right to terminate this Agreement pursuant to this
Section 10.2(b)
shall not be available to any Party whose breach of a representation or warranty or covenant made under this Agreement by such Party results in the failure of any condition set forth in
Article 9
to be fulfilled or satisfied on or before such
date.
(c) FBC, by giving written notice to the other Parties, may terminate this Agreement at any time prior to the Closing
if (i) Buyer has committed a breach of (A) any of the representations and warranties under
Article 6
, or (B) any of its covenants under or
Article 8
, and (x) has not cured such breach within ten (10) Business
Days after the Party seeking to terminate this Agreement has given the other Party written notice of such breach and its intention to terminate this Agreement pursuant to this
Section 10.2(c)
(
provided
,
however
, that no such
cure period shall be available or applicable to any such breach which by its nature cannot be cured) and (y) if not cured on or prior to the Closing Date, such breach would result in the failure of any of the conditions set forth in
Article
9
to be fulfilled or satisfied;
provided
,
however
, that the right to terminate this Agreement under this
Section 10.2(c)
shall not be available to FBC if the Company or any Company Shareholder is at that time in material
breach of this Agreement, or (ii) any event has occurred or any circumstance exists which, alone or together with any one or more other events or circumstances has had, is having or would reasonably be expected to have a Material Adverse Effect
on Buyer.
(d) Buyer, by giving written notice to the Company and the Company Shareholders, may terminate this Agreement at
any time prior to the Closing if (i) if the Company has committed a breach of (A) any of the representations and warranties under
Article 4
, or (B) any of its covenants under or
Article 7
, and (x) has not cured such
breach within ten (10) Business Days after the Party seeking to terminate this Agreement has given the other Party written notice of such breach and its intention to terminate this Agreement pursuant to this
Section 10.2(d)(i)
(
provided
,
however
, that no such cure period shall be available or applicable to any such breach which by its nature cannot be cured) and (y) if not cured on or prior to the Closing Date, such breach would result in the failure of
any of the conditions set forth in
Article 9
to be fulfilled or satisfied;
provided
,
however
, that the right to terminate this Agreement under this
Section 10.2(d)(i)
shall not be available to Buyer if Buyer is at that
time in material breach of this Agreement, (ii) any Company Shareholder has committed a material breach of any of such Company Shareholders representations and warranties under
Article 5
, (iii) Buyer elects to consummate an
Alternative Buyer Transaction pursuant to any Takeover Proposal or (iv) any event has occurred or any circumstance exists which, alone or together with any one or more other events or circumstances has had, is having or would reasonably be
expected to have a Material Adverse Effect.
(e) Either Buyer or FBC, by giving written notice to the other Parties, may
terminate this Agreement at any time prior to the Effective Time if the Buyer Shareholders Meeting is convened and the Buyer Shareholder Approval is not obtained.
10.3
Effect of Termination
.
(a) In the
event of termination of this Agreement as provided in
Section 10.2
, this Agreement shall forthwith become void and there shall be no Liability or obligation on the part of Buyer, the Company Shareholders or the Company or their respective
officers, directors, shareholders or Affiliates;
provided
,
however
, that (i) the provisions of this
Section 10.3
and
Article 11
shall remain in full force and effect and survive any termination of this Agreement and
(ii) subject to
Section 10.3(b)
, nothing herein shall relieve any Party hereto from Liability in connection with any fraud or willful or intentional breach of any of such Partys representations, warranties or covenants
contained herein.
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(b) If this Agreement is terminated by Buyer pursuant to
Section
10.2(d)(iii)
, then Buyer shall pay to the Company (by wire transfer of immediately available funds), at or prior to such termination, a fee of $900,000 (the
Termination Fee
). Notwithstanding anything to the contrary in this
Agreement, the Parties hereby acknowledge that in the event that the Termination Fee becomes payable and is paid by Buyer pursuant to this
Section 10.3(b)
, the Termination Fee shall be the sole and exclusive remedy of the Company and the
Company Shareholders under this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1
Survival; Indemnification
. None of the representations and warranties contained in this Agreement or in any instrument delivered under this Agreement will
survive the Closing;
provided
,
however
, that the representations and warranties of the Company set forth in
Section 4.29
and the representations and warranties of the Company Shareholders set forth in
Article 5
will
remain operative and in full force and effect, regardless of any investigation or disclosure made by or on behalf of any of the parties to this Agreement, without expiration. This
Section 11.1
does not limit any covenant of the Parties
to this Agreement which, by its terms, contemplates performance after the Closing. Each Company Shareholder shall jointly and severally indemnify and hold harmless Buyer, the Company and their respective officers, directors, agents, representatives,
shareholders and employees, and each Person, if any, who controls or may control Buyer within the meaning of the Securities Act or the Exchange Act from and against any Damages to Buyer or its Affiliates arising out of or resulting (directly or
indirectly) from (i) the failure of the representations and warranties of the Company set forth in
Section 4.29
and the representations and warranties of the Company Shareholders set forth in
Article 5
to be true and correct as of
the date of this Agreement or as of the Closing Date (as though such representation or warranty were made as of the Closing Date rather than the date of this Agreement, except in the case of any individual representation and warranty which by its
terms speaks only as of a specific date or dates), and (ii) any breach of any covenant, obligation or agreement of the Company or the Company Shareholders contained in this Agreement or any other certificate or instrument delivered pursuant to
this Agreement.
11.2
Governing Law; Resolution of Conflicts
. The internal laws
of the State of Delaware, irrespective of its conflicts of law principles, shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the Parties hereto.
11.3
Consent to Jurisdiction and Venue
. Each Party hereby irrevocably submits to the exclusive
jurisdiction of, and venue in, any state or federal court located in the State of Delaware for the purposes of any Action arising out of this Agreement or any transaction contemplated hereby, and shall commence any such Action only in such courts.
Each Party further agrees that service of any process, summons, notice or document by U.S. registered mail to such Partys respective address set forth herein will be effective service of process for any such Action. Each Party hereby
irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of this Agreement or any transaction contemplated hereby in such courts, and hereby irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum.
11.4
Assignment; Binding Upon Successors and Assigns
. This Agreement shall inure to the benefit of the successors and assigns of each Party, including any successor to, or assignee of, all or substantially all of the business and assets
of a Party. Except as set forth in the preceding sentence, no Party hereto may assign any of its rights or obligations hereunder without the prior written consent of the other Parties hereto;
provided
,
however
, that Buyer may assign
any of its rights and obligations hereunder (other than its obligation to issue the Acquisition Shares pursuant to
Section 2.2
) to Acquisition Subsidiary;
provided
,
further
, that Buyer shall not be relieved of any of its
obligations hereunder as a result of any such assignment to Acquisition Subsidiary. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Any assignment in
violation of this provision shall be void.
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11.5
Severability
. If any provision of this
Agreement, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, then the remainder of this Agreement and the application of such provision to other persons or circumstances shall be interpreted so as
reasonably to effect the intent of the Parties hereto. 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 the void or unenforceable provision.
11.6
Counterparts
. This Agreement may be executed in any number of counterparts (including via facsimile, .pdf or other electronic means), each of which shall be an original as regards any Party whose signature appears thereon and all of which
together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all Parties reflected hereon as signatories.
11.7
Other Remedies
. Except as otherwise expressly provided herein, any and all remedies herein
expressly conferred upon a Party hereunder shall be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law on such Party, and the exercise of any one remedy shall not preclude the exercise of any other. The Parties
hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction.
11.8
Amendments and Waivers
. Any term or provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only by a writing signed by Buyer, the Company and the Company Shareholders. The waiver by a Party of
any breach hereof or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. This Agreement may be amended by the Parties hereto as provided in this
Section 11.8
at any time before or after adoption of this Agreement by the Company Shareholders, but, after such adoption, no amendment shall be made which by Applicable Law requires the further approval of the Company Shareholders without obtaining such further
approval. At any time prior to the Closing, each of the Company and Buyer, by action taken by its board of directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the
other, (b) waive any inaccuracies in the representations and warranties made to it contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions for its benefit contained
herein. No such waiver or extension shall be effective unless signed in writing by the Party against whom such waiver or extension is asserted. The failure of any Party to enforce any of the provisions hereof shall not be construed to be a waiver of
the right of such Party thereafter to enforce such provisions. Notwithstanding the foregoing, the Parties agree to work together in good faith to agree any administrative modifications to this Agreement which may be required by any local Applicable
Law to give effect to the transactions contemplated by this Agreement.
11.9
Expenses
.
Except as expressly provided otherwise herein, whether or not the Acquisition is successfully consummated, each Party shall bear its respective legal, accountants, and financial advisory fees and other expenses incurred with respect to this
Agreement, the Acquisition and the transactions contemplated hereby, it being the intention of the Parties that if the Acquisition is consummated, the Transaction Fees be regarded for purposes of this
Section 11.9
as expenses of the Company
Shareholders and not of the Company.
11.10
Attorneys Fees
. Should suit be
brought to enforce or interpret any part of this Agreement, the prevailing Party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys fees to be fixed by the court (including costs, expenses
and fees on any appeal). The prevailing Party shall be entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment.
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11.11
Notices
. All notices and other communications
required or permitted under this Agreement shall be in writing and shall be either hand delivered in person, sent by facsimile, sent by electronic mail, sent by certified or registered first-class mail, postage pre-paid, or sent by nationally
recognized express courier service. Such notices and other communications shall be effective upon receipt if hand delivered or sent by facsimile or electronic mail, three (3) Business Days after mailing if sent by mail, and one
(1) Business Day after dispatch if sent by next-day courier service, to the following addresses, or such other addresses as any Party may notify the other Parties in accordance with this
Section 11.11
:
If to Buyer:
Overland Storage, Inc.
9112 Spectrum Center Boulevard
San Diego, CA 92123
Attention: Eric L. Kelly, Chief Executive Officer
Facsimile: +1 (858) 495 4267
with a copy (which
shall not constitute notice) to:
OMelveny & Myers LLP
2765 Sand Hill Road
Menlo Park, CA 95014
Attention: Steven Tonsfeldt, Esq.
Paul L.
Sieben, Esq.
Facsimile: +1 (650) 473-2601
If to the Company:
Tandberg Data Holdings S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
with a copy
(which shall not constitute notice) to:
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
Attention: Georgia M. Quenby
Facsimile: +44 20 3116 3999
If to Company Shareholders:
FBC Holdings S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
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Tandberg Data Management S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
in each case with
a copy (which shall not constitute notice) to:
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
Attention: Georgia M. Quenby
Fax No.:
+44 20 3116 3999
11.12
Waiver of Jury Trial
.
Each Party hereto 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 hereby irrevocably and unconditionally waives any right such Party may have to a trial by jury
in respect of any litigation directly or indirectly arising out of or relating to this Agreement or the transactions contemplated by this Agreement. Each Party hereto certifies and acknowledges that (i) no representative, agent or attorney of
any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each such Party understands and has considered the implications of this waiver,
(iii) each such Party makes this waiver voluntarily, and (iv) each such Party has been induced to enter into this Agreement by, among other things, the waivers and certifications in this
Section 11.12
.
11.13
Interpretation; Rules of Construction
. When a reference is made in this Agreement to
Exhibits, Sections or Articles, such reference shall be to an Exhibit to, Section of or Article of this Agreement, respectively, unless otherwise indicated. The words
include
,
includes
and
including
when used herein shall be deemed in each case to be followed by the words without limitation. When a reference is made to a specific law, act or statute, such reference shall include any regulations
promulgated thereunder. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The terms defined herein have the meanings assigned to them in this
Agreement and include plural as well as the singular. Terms to which a German translation has been added shall be interpreted throughout this Agreement according to the meaning assigned to them by the German translation. Pronouns of either gender or
neuter shall include, as appropriate, the other pronoun forms. The Parties hereto agree that they have been represented by legal counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document. References in this Agreement to dollars ($) shall be to United
States dollars and to cash shall be to cash in U.S. dollars. When a reference is made to FBC in reference to any time after the date hereof in which FBC is not the sole shareholder of the Company, such reference to FBC shall be deemed to refer to
all Company Shareholders at such time.
11.14
Third-Party Beneficiary Rights
. No
provisions of this Agreement are intended, nor shall be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any client, customer, employee, affiliate, shareholder, partner or any Party hereto or
any other Person unless specifically provided otherwise herein and, except as so provided, all provisions hereof shall be personal solely between the Parties to this Agreement.
11.15
Public Announcement
. Buyer may issue such press releases, and make such other disclosures
regarding the Acquisition, as it determines are required under applicable securities laws or regulatory rules or as,
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with the prior written consent of the Company, as it otherwise deems appropriate. The Company shall not make any public announcement relating to this Agreement or the transactions contemplated
hereby, without the prior written consent of Buyer.
11.16
Entire Agreement
. This
Agreement, the exhibits and schedules hereto, the Company Ancillary Agreements and the Buyer Ancillary Agreements constitute the entire understanding and agreement of the Parties hereto with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the Parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the
trade inconsistent with any of the terms hereof.
[S
IGNATURE
P
AGE
F
OLLOWS
]
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I
N
W
ITNESS
W
HEREOF
, the Parties hereto have
executed this Agreement as of the date first above written.
|
BUYER
OVERLAND STORAGE, INC.
|
|
/s/ Eric L. Kelly
|
Name: Eric L. Kelly
Title: President and Chief Executive Officer
|
[SIGNATURE PAGE TO ACQUISITION AGREEMENT]
I
N
W
ITNESS
W
HEREOF
, the Parties hereto have
executed this Agreement as of the date first above written.
|
|
|
COMPANY
|
|
By executing this Agreement, the Company, in
accordance with article 190 of the Luxembourg
Company Law and article 1690 of the
Luxembourg Civil Code, also accepts and
acknowledges the transfer of the Company
Interests from the Company Shareholders to
Buyer
and undertakes to record or cause to be
recorded, on the Closing Date, in its
shareholders register the ownership rights of
the Buyer in respect of the Company
Shares.
|
|
TANDBERG DATA HOLDINGS S.À R.L.
|
|
|
By:
|
|
/s/ Manacor Luxembourg
|
Name: Manacor (Luxembourg) S.A.
|
Title: Manager A
|
|
|
By:
|
|
/s/ James Tucker
|
Name: Cyrus Capital Partners L.P.
|
Title: Manager B
|
|
COMPANY SHAREHOLDER
FBC HOLDINGS S.À R.L.
|
|
|
By:
|
|
/s/ Manacor Luxembourg
|
Name: Manacor (Luxembourg) S.A.
|
Title: Manager A
|
|
|
By:
|
|
/s/ James Tucker
|
Name: Cyrus Capital Partners L.P.
|
Title: Manager B
|
|
COMPANY SHAREHOLDER
TANDBERG DATA MANAGEMENT S.À R.L.
|
|
|
By:
|
|
/s/ Manacor Luxembourg
|
Name: Manacor (Luxembourg) S.A.
|
Title: Manager A
|
|
|
By:
|
|
/s/ James Tucker
|
Name: Cyrus Capital Partners L.P.
|
Title: Manager B
|
[SIGNATURE PAGE TO ACQUISITION AGREEMENT]
SCHEDULE I
COMPANY SHAREHOLDERS
|
|
|
|
|
|
|
Company Shareholders
|
|
Company
Shares
|
|
ISL
|
|
Pro
Rata
Interest
|
FBC Holdings S.à r.l., a Luxembourg private limited
liability company (
société à responsabilité limitée
) having its registered office at L-1855 Luxembourg, 46A, avenue J.F. Kennedy
|
|
10,122
|
|
EUR
125,818.9
|
|
80.976%
|
Tandberg Data Management S.à r.l., a Luxembourg
private limited liability company
(société à responsabilité limitée
) having its registered office at L-1855 Luxembourg, 46A, avenue J.F. Kennedy
|
|
2,378
|
|
EUR
29,570.86
|
|
19.024%
|
SCHEDULE II
SUBSIDIARIES
The Company
Guangzhou Tandberg Electronic Components Co., Ltd.
Tandberg Data (Asia) Pte Ltd
Tandberg Data (Hong Kong) Limited
Tandberg Data
(Japan) Inc.
Tandberg Data Corporation
Tandberg Data GmbH
Tandberg Data Norge AS
Tandberg Data S.A.S.
SCHEDULE III
PERSONS INCLUDED IN THE DEFINITION OF KNOWLEDGE
Each of the Group Companies
Patrick Clarke, Chief Executive Officer
Nils Hoff, Chief Financial Officer
Kevin Devlin, Chief Operating Officer
Scott Petersen, Senior Vice President, Americas
Graham Paterson, Senior Vice President, EMEA
Buyer
Eric Kelly, Chief Executive
Officer
Kurt Kabfleisch, Chief Financial Officer
Jillian Mansolf, Senior Vice President of Marketing
Randy Gast, Senior Vice President of
Worldwide Operations and Service
SCHEDULE IV
CONTINUING OFFICERS AND DIRECTORS OF THE GROUP COMPANIES
Masayoshi Matsusawa (Tandberg Data
(Japan) Inc.)
K.T. Fok (Guangzhou Tandberg Electronic Components Co., Ltd. and Tandberg Data (Hong Kong) Limited)
Friedhelm Schopp (TD Germany)
Nils Hoff (TD
Germany)
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
Agreement
) is made as of the [] day of [], [], by and among
Overland Storage, Inc., a California corporation (the
Company
) and FBC Holdings S.àr.l. and Tandberg Data Management S.àr.l., each a private limited liability company (société à
responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg(together with any permitted assignees under Section 9, the
Shareholders
).
WITNESSETH
WHEREAS, the Company, the Shareholders and Cyrus Capital Partners, L.P. are parties to that certain Acquisition Agreement dated as of November 1, 2013 (the
Acquisition Agreement
),
pursuant to which, among other things, the Company will issue to the Shareholders at the Closing (as defined in the Acquisition Agreement) [] shares of common stock, no par value, of the Company (the
Registrable Shares
) on
the date hereof; and
WHEREAS, the obligations of the Company and the Shareholders under the Acquisition Agreement are
conditioned, among other things, upon the execution and delivery of this Agreement by the Shareholders and the Company.
NOW,
THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Definitions
. For purposes of this Agreement:
(a) The term
1934 Act
means the Securities Exchange Act of 1934, as amended.
(b) The term
Act
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
(c) The term
Form S-4
means such form under the Act as in effect on the date hereof or any successor registration form
under the Act subsequently adopted by the SEC.
(d) The term
Form S-8
means such form under the Act as in
effect on the date hereof or any successor registration form under the Act subsequently adopted by the SEC.
(e) The terms
register
,
registered
, and
registration
refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term
Rule 144
shall mean
Rule 144 under the Act.
(g) The term
SEC
shall mean the Securities and Exchange Commission.
(h) The term
securities
means securities as defined in Section 2(a)(1) of the Act and includes, with
respect to any person, such persons capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such persons capital stock.
2.
Company Registration
.
(a) If (but without any obligation to do so) the Company proposes to register any of its securities under the Act in connection with the public offering of such securities (other than a registration
relating solely to the
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sale of securities of participants in a Company stock plan, a registration effected on Form S-4 or Form S-8, and any registration pursuant to any registration statement that has been declared
effective on or prior to the date hereof together with any post-effective amendments or supplements thereto (other than such a registration statement pertaining to shares held by a Shareholder or its Affiliates)), the Company shall, at such time,
give each Shareholder written notice of such registration. Upon the written request of each Shareholder given within ten (10) Business Days after delivery of such notice by the Company in accordance with Section 12 (which request shall
specify the number of Registrable Shares proposed to be included in such registration), the Company shall, subject to the provisions of Section 2(c), use its commercially reasonable efforts to cause to be registered under the Act all such
Registrable Shares requested to be included in such registration to be included on the same terms and conditions as the securities otherwise being sold by the Company in such registration.
(b) The Company shall have the right to terminate or withdraw any registration initiated by it under this
Section 2
prior to
the effectiveness of such registration, or to terminate the effectiveness of any such registration, whether or not any Shareholder has elected to include Registrable Shares in such registration. The expenses of such withdrawn registration shall be
borne by the Company in accordance with
Section 5
hereof.
(c) In connection with any offering involving an
underwriting of shares of the Companys capital stock, the Company shall not be required under this
Section 2
to include any of the Shareholders securities in such underwriting unless the Shareholders accept the terms of the
underwriting as reasonably agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such underwriters, and
then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Shares, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Shares, that the underwriters determine in their sole discretion will not jeopardize the success of the offering. In no event shall any Registrable Shares be excluded from such
offering unless all other shareholders securities (other than Registrable Shares) have been first excluded.
(d) In the
event that less than all of the Registrable Shares requested to be registered can be included in such offering, then the number of Registrable Shares included in the offering shall equal the total number of Registrable Shares included in the
offering, as determined pursuant to the immediately preceding paragraph, multiplied by a fraction (i) the numerator of which is the number of Registrable Shares then held by all Shareholders that request to include Registrable Shares in the
offering and (ii) the denominator of which is the sum of the number of Registrable Shares then held by all Shareholders that request to include Registrable Shares in the offering. The number of Registrable Shares included in the offering
pursuant to the immediately preceding sentence shall be apportioned pro rata among the selling Shareholders based on the number of Registrable Shares held by all selling Shareholders or in such other proportions as shall mutually be agreed to by all
such selling Shareholders. For purposes of the preceding sentence concerning apportionment, for any selling shareholder that is a Shareholder holding Registrable Shares and that is a partnership or limited liability company, the partners and members
of such Shareholder, or the estates and family members of any such partners and members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single selling Shareholder, and any pro rata reduction with
respect to such selling Shareholder shall be based upon the aggregate amount of Registrable Shares owned by all such related entities and individuals.
3.
Obligations of the Company
. Whenever required under
Section 2
to effect the registration of any Registrable Shares, except as otherwise expressly provided herein, the Company shall,
as expeditiously as reasonably possible:
(a) prepare and file with the SEC such amendments and supplements to the registration
statement and the prospectus used in connection with such registration statement as may be necessary to comply with the
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provisions of the Act with respect to the disposition of all securities covered by such registration statement and provide copies to and permit counsel designated by the Shareholders to review
each Registration Statement and all amendments and supplements thereto no fewer than five (5) days prior to their filing with the SEC and not file any document to which such counsel reasonably objects;
(b) furnish to the Shareholders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Shares owned by them;
(c) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Shareholders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or
jurisdictions;
(d) in the event of any underwritten public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing underwriter of such offering;
(e) notify each
Shareholder of Registrable Shares covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances
then existing and promptly prepare, file with the SEC and furnish to each Shareholder a supplement to or an amendment of such prospectus as may be necessary so that such prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(f) cause all such Registrable Shares registered pursuant to
Section 2
to be listed on each securities exchange and trading system on which similar securities issued by the Company are then
listed; and
(g) provide a transfer agent and registrar (which may be the same entity) for all Registrable Shares registered
pursuant hereunder and a CUSIP number for all such Registrable Shares, in each case not later than the effective date of such registration.
Notwithstanding the provisions of this Agreement, the Company shall be entitled to postpone or suspend the filing, effectiveness or use of, or trading under, any registration statement at any time and for
any reason or no reason.
4.
Information from Shareholder
. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to
Section 2
with respect to the Registrable Shares of any selling Shareholder that such Shareholder shall furnish to the Company such information regarding itself, the Registrable Shares held by it,
and the intended method of disposition of such securities as shall be reasonably required to effect the registration of such Shareholders Registrable Shares.
5.
Expenses of Registration
. All expenses (other than (i) underwriting discounts and commissions relating to the Registrable Shares that are being sold by the Shareholders and (ii) fees
of any counsel for the selling Shareholders) that are incurred in connection with registrations, filings or qualifications pursuant to
Section 2
, including (without limitation) all registration, filing and qualification fees,
printers and accounting fees, fees and disbursements of counsel for the Company shall be borne by the Company.
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6.
Delay of Registration
. No Shareholder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.
7.
Indemnification
. In the event any Registrable Shares are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each Shareholder, the partners, officers, directors and
shareholders of each Shareholder, legal counsel and accountants for each Shareholder, any underwriter (as defined in the Act) for such Shareholder and each person, if any, who controls such Shareholder or underwriter within the meaning of the Act or
the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any
state securities laws, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a
Violation
):
(i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state in such registration statement a material fact required to be stated therein, or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the
Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any state securities laws, and the Company will reimburse each such Shareholder, underwriter, controlling person or other
aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred;
provided
,
however
, that
the indemnity agreement contained in this
Section 7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable to a person claiming indemnification in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Shareholder, underwriter, controlling person or other aforementioned person that is claiming indemnification.
(b) To the extent permitted by law, each selling Shareholder will, severally and not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, legal counsel and accountants for the Company, any underwriter, any other
Shareholder selling securities in such registration statement and any controlling person of any such underwriter or other Shareholder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Shareholder expressly for use in
connection with such registration; and each such Shareholder will reimburse any person intended to be indemnified pursuant to this
Section 7(b)
for any legal or other expenses reasonably incurred by such person in connection with
investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this
Section 7(b)
shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Shareholder (which consent shall not be unreasonably withheld), and provided that in no event shall any indemnity under this
Section 7(b)
exceed the net proceeds from the offering received by such Shareholder.
(c) Promptly after receipt
by an indemnified party under this
Section 7
of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to
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be made against any indemnifying party under this
Section 7
, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the
right to participate in and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of liability to
the indemnified party under this
Section 7
to the extent of such prejudice, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise
than under this
Section 7
.
(d) If the indemnification provided for in this
Section 7
is held by a
court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other hand in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that no contribution by
any Shareholder, when combined with any amounts paid by such Shareholder pursuant to
Section 7(b)
, shall exceed the net proceeds from the offering received by such Shareholder. The relative fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting
agreement entered into by any Shareholder claiming indemnification in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control with respect to such
Shareholder.
(f) The obligations of the Company and Shareholders under this
Section 7
shall survive the
completion of any offering of Registrable Shares in a registration statement under this Agreement or otherwise.
8.
Reports
Under the 1934 Act
. With a view to making available to the Shareholders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Shareholder to sell securities of the Company to the public without
registration, the Company agrees, to:
(a) make and keep public information available, as those terms are understood and
defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under
the Act and the 1934 Act after the date hereof;
(c) furnish to any Shareholder, so long as the Shareholder owns any
Registrable Shares, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to avail any Shareholder of any rule or regulation of the SEC that permits the selling of any such securities without registration.
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9.
Assignment of Registration Rights
. The rights to cause the Company to register
Registrable Shares pursuant to this Agreement may be assigned (but only with all related obligations) by a Shareholder to any transferee or assignee of such Registrable Shares;
provided
that: (a) prior to such transfer the Company is
furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and (b) prior to such transfer such transferee or assignee agrees in
writing to be bound by and subject to the terms and conditions of this Agreement pursuant to an agreement reasonably acceptable to the Company. Any permitted assignee under this
Section 9
shall, after the effective date of such
assignment, be deemed a Shareholder under this Agreement.
10.
Termination of Registration Rights
. No
Shareholder shall be entitled to exercise any right provided for in this Agreement (i) as to any Shareholder, such earlier time after the date of this Agreement during which such Shareholder (A) can sell all shares held by it in compliance
with Rule 144 and without restriction thereunder (including any restrictions imposed on affiliates of the issuer) or (B) holds one percent (1%) or less of the Companys outstanding Common Stock and all Registrable Shares held by such
Shareholder (together with any affiliate of the Shareholder with whom such Shareholder must aggregate its sales under Rule 144) can be sold in any three (3) month period without registration in compliance with Rule 144 and without restriction
thereunder or (ii) after such time at which such Shareholder receives freely-tradable securities in connection with any consolidation, reorganization or merger of the Company with or into any other corporation or corporations or a sale,
conveyance, or other disposition of all or substantially all of the Companys property or business.
11.
Successors
and Assigns
. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
12.
Notices
. All notices and other communications required or permitted under this Agreement shall be in writing and
shall be either hand delivered in person, sent by facsimile, sent by electronic mail, sent by certified or registered first-class mail, postage pre-paid, or sent by nationally recognized express courier service. Such notices and other communications
shall be effective upon receipt if hand delivered or sent by facsimile or electronic mail, three (3) business days after mailing if sent by mail, and one (1) business day after dispatch if sent by next-day courier service, to the following
addresses, or such other addresses as any party may notify the other parties in accordance with this
Section 12
:
If to the Company:
Overland Storage, Inc.
9112 Spectrum Center Boulevard
San Diego, CA 92123
Attention: Eric L. Kelly, Chief Executive Officer
Facsimile: +1 (858) 495
4267
with a copy (which shall not constitute notice) to:
OMelveny & Myers LLP
2765 Sand Hill Road
Menlo Park, CA 95014
Attention: Steven Tonsfeldt, Esq.
Paul L. Sieben, Esq.
Facsimile: +1 (650) 473-2601
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If to the Shareholders:
FBC Holdings S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
Tandberg Data
Management S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
in each case with
a copy (which shall not constitute notice) to:
Reed Smith LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2RS
|
Attention:
|
Georgia M. Quenby
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Fax No.:
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+44 20 3116 3999
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13.
Governing Law
. The internal laws of the State of California, irrespective of its conflicts of law principles, shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and
duties of the parties hereto.
14.
Specific Enforcement
. Each party hereto agrees that its obligations hereunder are
necessary and reasonable to protect the other parties to this Agreement, and each party expressly agrees and understands that monetary damages would inadequately compensate an injured party for the breach of this Agreement by any party, that this
Agreement shall be specifically enforceable, and that, in addition to any other remedies that may be available at law, in equity or otherwise, any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent
injunction or restraining order, without the necessity of proving actual damages. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.
15.
Attorneys Fees
. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
16.
Titles and Subtitles
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
17.
Entire Agreement
. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to
the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein. Each party expressly represents and warrants
that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.
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18.
Amendments and Waivers
. Any term hereof may be amended and the observance of any
term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (a) the Company and (b) the holders of a majority of the Registrable Shares.
19.
Enforceability/Severability
. The parties hereto agree that each provision of this Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law. If any provision of this Agreement shall nevertheless be held to be prohibited by or invalid under applicable law, (a) such provision shall be invalid only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement and (b) the parties shall, to the extent permissible by applicable law, amend this Agreement so as to make effective
and enforceable the intent of this Agreement.
20.
Counterparts
. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
hereinabove first written.
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COMPANY:
|
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OVERLAND STORAGE, INC.
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By:
|
|
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Name: Eric L. Kelly
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Title: President and Chief Executive Officer
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SHAREHOLDER:
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FBC HOLDINGS S.À R.L.
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By:
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Name:
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Title:
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[S
IGNATURE
P
AGE
TO
R
EGISTRATION
R
IGHTS
A
GREEMENT
]
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EXHIBIT B
FORM OF VOTING AGREEMENT
VOTING AGREEMENT
THIS VOTING AGREEMENT (this
Agreement
), by and among Overland Storage, Inc., a California corporation (the
Company
), on the one hand, and FBC Holdings S.àr.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg,
and Tandberg Data Management S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg (each, a
Shareholder
and together, the
Shareholders
), on the other hand, is entered into as of this [] day of [], [].
WITNESSETH
WHEREAS, the Company and the Shareholders are parties to that
certain Acquisition Agreement dated as of November 1, 2013 (the
Acquisition Agreement
), pursuant to which, among other things, the Company shall issue to the Shareholders [] shares of common stock, no par value, of the
Company (the
Acquisition Shares
) on or about the date hereof;
WHEREAS, the obligations of the Company and
the Shareholders under the Acquisition Agreement are conditioned, among other things, upon the execution and delivery of this Agreement by the Shareholders and the Company;
WHEREAS, the Companys Amended and Restated Bylaws (as amended from time to time, the
Bylaws
) provide that (i) the specific number of directors comprising the Companys
board of directors (the
Board
) shall be set by resolution of the Board or the shareholders and (ii) vacancies in the Board may be filled by a majority of the remaining directors; and
WHEREAS, the Company and the Shareholders desire to enter into this Agreement in order to provide for certain rights and obligations with
respect to the ownership of the Acquisition Shares by the Shareholders as set forth below.
NOW, THEREFORE, in consideration
of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Increase in Size of Board
. Effective upon the closing of the transactions contemplated by the Acquisition Agreement (the
Closing
), the Company shall cause the size of the
Board to be set at seven (7) directors by increasing increase the size of the Board from five (5) directors to seven (7) directors (the
Board Increase
). The Company agrees not to increase the size of the Board to
more than seven (7) directors without the written consent of the Shareholders.
2.
Board Appointments
. Effective
upon the Closing, the Company shall cause the Board to appoint [] and [] as directors of the Company (the
Appointed Directors
) to fill the vacancies created by the Board Increase, and each Appointed Director shall hold
office until the next annual meeting of the shareholders and until a successor has been elected and qualified, or until their earlier death, resignation or removal, in each case in accordance with the Bylaws.
3.
Director Nominations
.
(a) Until the earlier of (i) the filing by the Company of its annual report on Form 10-K for the fiscal year ending on or about June 30, 2015 with the U.S. Securities Exchange Commission or
(ii) September 30, 2015 (the
Expiration Date
), at each of meeting of shareholders of the Company at which members of the Board are to be elected, the Board or the Nominating and Corporate Governance Committee of the Board, as
applicable, shall nominate for election to the Board up to two (2) persons (the
Director Nominees
) who are designated by
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the Shareholders for election to the Board and who are reasonably acceptable to the then-current members of the Board (it being agreed that [] and [] shall be deemed acceptable);
provided
,
however
, that the Shareholders shall provide the Company the names of such Director Nominees and any other information with respect to such Director Nominees reasonably requested by the Company no later than the date (the
Nomination Deadline
) set forth in the Companys then most recently filed proxy statement for its annual meeting of shareholders before which shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended (the
Exchange Act
), must be submitted in order to be considered for inclusion in the Companys proxy materials for the applicable shareholder meeting;
provided
,
further
, that if persons
previously appointed or designated by the Shareholders are serving as directors of the Company, such individuals shall automatically be Director Nominees unless the Shareholders elect to designate another person to be a Director Nominee. The Company
agrees to provide the Shareholders with written notice specifying the Nomination Deadline at least thirty (30) days prior to each applicable Nomination Deadline. If a person designated by the Shareholders is not reasonably acceptable to the
Board, the Shareholders shall have thirty (30) days from written notice from the Board specifying the reasons a designee is not acceptable to refute such reasons or to designate another person to serve as a Director Nominee.
(b) Until the Expiration Date, neither the Shareholders nor any of their Affiliates (as defined in Rule 12b-2 under the Exchange Act)
shall nominate any person for election to the Board other than the Director Nominees pursuant to
Section 3(a)
of this Agreement.
(c) In the event an Appointed Director or a Director Nominee who has been elected or appointed to the Board, resigns, dies, is removed from or is otherwise unable to serve on the Board, the Company shall
cause the Board to promptly appoint a person designated by the Shareholders, who is reasonably acceptable to the then-current members of the Board, to fill the vacancy on the Board to hold office until the next annual meeting of the shareholders and
until a successor has been elected and qualified, or until their earlier death, resignation or removal.
4.
Agreement to
Vote
. Each Shareholder, as a holder of Acquisition Shares and/or any other shares of common stock and other voting securities of the Company currently held or subsequently acquired by such Shareholder (collectively, the
Shares
), including, without limitation, any securities of the Company issued with respect to, upon conversion of or in exchange or substitution of the Shares, hereby agrees to hold all of the Shares registered in its name subject
to, and to vote the Shares at meetings of shareholders and to give written consent with respect to such Shares in accordance with, and shall take all other reasonably necessary or desirable actions within its control (including attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings) in connection with, the provisions of this Agreement.
5.
Shareholder Votes for Directors
. Until the Expiration Date, in any election of members of the Board, the each Shareholder shall vote all Shares held by such Shareholder and eligible to vote in
such election (a) for the election of each nominee (other than the Director Nominees) for election to the Board in the same proportion that the number of shares of capital stock of the Company owned by Unaffiliated Shareholders (as defined
below) that are voted in favor of the election of such nominee bears to the total number of shares of capital stock of the Company held by Unaffiliated Shareholders voting with respect to the election of such nominee and (b) against the
election of each nominee (other than the Director Nominees) for election to the Board in the same proportion that the number of shares of capital stock of the Company owned by Unaffiliated Shareholders (as defined below) that are voted against the
election of such nominee bears to the total number of shares of capital stock of the Company held by Unaffiliated Shareholders voting with respect to the election of such nominee. For purposes of clarity, it is agreed that the Shareholders and their
Affiliates may vote all of their Shares in favor of the election or retention of the Director Nominees.
For purposes of the
foregoing,
Unaffiliated Shareholders
means holders of Shares other than the Shareholders and any of their respective Affiliates. The Company shall timely provide to each Shareholder
A-82
sufficient information to confirm the manner in which the Shares shall be, or have been, voted at any shareholder meeting pursuant to
Section 5
of
Section 6
.
6.
Proxy
. To secure the obligations to vote the Shares in accordance with the provisions of this Agreement, each Shareholder does
hereby constitute and appoint the then current Chief Executive Officer and the then current Chief Financial Officer, and either of them, as each of its true and lawful proxy and attorney-in-fact, with full power of substitution in its name,
place and stead to vote all of such Shareholders Shares in the manner provided in
Section 5
, but only to the extent provided herein, and to make, execute, sign, deliver and file all instruments, documents and certificates which may
from time to time be required by the laws of the United States of America, the State of California or any other state, or any political subdivision or agency thereof, to effectuate, implement and/or continue the provisions of
Section 5
,
but only to the extent provided herein. For purposes of clarity, it is expressly agreed that such proxies shall vote all of the Shareholders Shares in favor of the election or retention of the Director Nominees. It is expressly intended by the
Shareholders that the foregoing power of attorney is coupled with an interest, is irrevocable, and shall survive the death, incapacity, dissolution, bankruptcy or insolvency of any Shareholder or the transfer of any portion
of such Shareholders Shares.
7.
Prohibition of Certain Actions
. Until the Expiration Date, except as otherwise
specifically permitted by this Agreement or as specifically approved in advance by the Board, the Shareholders will not, directly or indirectly, through one or more intermediaries or otherwise, and will cause each of their Affiliates not to,
directly or indirectly, singly or as part of a partnership, limited partnership, syndicate (as those terms are used within the meaning of Section 13(d)(3) of the Exchange Act, which meanings shall apply for all purposes of this Agreement) or
other Group (each of the actions referred to in the following provisions of this
Section 7
being referred to as
Prohibited Actions
):
(a) make, or in any way participate in, any solicitation of proxies (as such terms are defined or used in Regulation 14A under the Exchange Act) with respect to any voting
securities of the Company (including by the execution of actions by written consent), become a participant in any election contest (as such terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the
Company or seek to advise, encourage or influence any person or entity (other than any Affiliate of the Shareholders, including for this purpose its officers and directors) with respect to the voting of any voting securities of the Company;
provided
,
however
, that the Shareholders shall not be prevented hereunder from being a participant in support of the management of the Company, by reason of the membership of the Appointed Directors or the Director Nominees
on the Board or the inclusion of the Director Nominees on the slate of nominees for election to the Board proposed by the Company;
(b) initiate, propose or otherwise solicit, or participate in the solicitation of shareholders for the approval of, one or more shareholders proposals with respect to the Company as described in Rule
14a-8 under the Exchange Act or knowingly induce any other individual or entity to initiate any shareholders proposal relating to the Company; or
(c) publicly disclose any proposal regarding any of the actions enumerated in this
Section 7
.
8.
Transfer of Shares
. Each Shareholder covenants and agrees that during the term of this Agreement, such Shareholder will not, directly or indirectly, transfer, assign, sell, pledge, encumber,
hypothecate or otherwise dispose (whether by sale, liquidation, dissolution, dividend or distribution) of or consent to any of the foregoing (
Transfer
), or cause to be Transferred, any of the Shares to (i) any of its
Affiliates or (ii) any person or entity who, immediately after such Transfer, would hold, together with its Affiliates, more than twenty percent (20%) of the outstanding voting securities of the Company, without, in either case, such
Affiliate or other Person first agreeing in writing to be bound by the terms of this Agreement as a Shareholder hereunder.
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9.
Representations and Warranties of each Shareholder
. Each Shareholder on its own
behalf hereby represents and warrants to the Company, severally and not jointly, with respect to such Shareholder and such Shareholders ownership of the Shares as follows:
(a) Such Shareholder has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by such Shareholder and constitutes a valid and binding obligation of such Shareholder enforceable in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law). Other than any
filings by Shareholder with the Securities and Exchange Commission, the execution, delivery and performance by such Shareholder of this Agreement does not require any consent, approval, authorization or permit of, action by, filing with or
notification to any governmental entity, other than any consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, be reasonably expected to prevent or
materially adversely affect such Shareholders ability to observe and perform such Shareholders obligations hereunder.
(b) Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance with the terms hereof, will violate, conflict with or result in a
breach of, or constitute a default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, license, judgment, order, notice, decree, statute, law, ordinance, rule or regulation applicable to such Shareholder or to such Shareholders property or assets.
(c) Such Shareholder is the record and beneficial owner of and has good and marketable title to the Shares set forth opposite such
Shareholders name on
Schedule A
hereto, free and clear of any and all security interests, liens, changes, encumbrances, equities, claims, options or limitations of whatever nature and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of such Shares), other than any of the foregoing that would not prevent or delay such Shareholders ability to perform such Shareholders obligations hereunder. Such
Shareholder does not own, of record or beneficially, any shares of capital stock of the Company other than the Shares set forth opposite such Shareholders name on
Schedule A
hereto (except that such Shareholder may be deemed to
beneficially own Shares owned by other Shareholders). The Shareholders have, and will have at the time of any applicable shareholder meeting, the sole right to vote or direct the vote of, or to dispose of or direct the disposition of, such Shares,
and none of the Shares is subject to any agreement, arrangement or restriction with respect to the voting of such Shares that would prevent or delay a Shareholders ability to perform its obligations hereunder. There are no agreements or
arrangements of any kind, contingent or otherwise, obligating such Shareholder to Transfer, or cause to be Transferred, any of the Shares set forth opposite such Shareholders name on
Schedule A
hereto (other than a Transfer from one
Shareholder to another Shareholder) and no person has any contractual or other right or obligation to purchase or otherwise acquire any of such Shares.
10.
Representations and Warranties of the Company
. The Company represents and warrants to the Shareholders as follows: The Company is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of California and has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board, and no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. The Company has duly and validly executed this Agreement, and this Agreement constitutes a 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 applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
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11.
Termination
. This Agreement shall terminate upon the earliest to occur of:
(a) the Expiration Date;
(b) the date on which no Shareholder (nor any of its Affiliates) holds any Shares or any other securities of the Company;
(d) the liquidation, dissolution or winding up of the Company; and
(e) upon
mutual agreement of such parties as would be required to amend this Agreement.
12.
No Liability for Election of
Directors
. None of the parties hereto and no officer, director, stockholder, partner, employee or agent of any party makes any representation or warranty as to the fitness or competence of the nominee of any party hereunder to serve on the Board
by virtue of such partys execution of this Agreement or by the act of such party in voting for such nominee pursuant to this Agreement.
13.
Amendments and Waivers
. Any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of (a) the Company and (b) the holders of at least a majority of the Acquisition Shares.
14.
Enforceability/Severability
. The parties hereto agree that each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If any
provision of this Agreement shall nevertheless be held to be prohibited by or invalid under applicable law, (a) such provision shall be invalid only to the extent of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement and (b) the parties shall, to the extent permissible by applicable law, amend this Agreement so as to make effective and enforceable the intent of this Agreement.
15.
Governing Law
. The internal laws of the State of California, irrespective of its conflicts of law principles, shall govern the
validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto.
16.
Successors and Assigns
. The provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto, including any successor to, or assignee of,
all or substantially all of the business and assets of a party.
17.
Notices
. All notices and other communications
required or permitted under this Agreement shall be in writing and shall be either hand delivered in person, sent by facsimile, sent by electronic mail, sent by certified or registered first-class mail, postage pre-paid, or sent by nationally
recognized express courier service. Such notices and other communications shall be effective upon receipt if hand delivered or sent by facsimile or electronic mail, three (3) business days after mailing if sent by mail, and one
(1) business day after dispatch if sent by next-day courier service, to the following addresses, or such other addresses as any party may notify the other parties in accordance with this
Section 17
:
If to the Company:
Overland Storage, Inc.
9112 Spectrum Center Boulevard
San Diego, CA 92123
Attention: Eric L. Kelly, Chief Executive Officer
Facsimile: +1 (858) 495
4267
A-85
with a copy (which shall not constitute notice) to:
OMelveny & Myers LLP
2765 Sand Hill Road
Menlo Park, CA 95014
Attention: Steven Tonsfeldt, Esq.
Paul L. Sieben, Esq.
Facsimile: +1 (650) 473-2601
If to the Shareholders:
FBC Holdings S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
Tandberg Data
Management S.à r.l.
46A, avenue J.F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
in each case with
a copy (which shall not constitute notice) to:
Reed Smith LLP The Broadgate Tower
20 Primrose Street
London EC2A 2RS
|
Attention:
|
Georgia M. Quenby
|
|
Fax No.:
|
+44 20 3116 3999.
|
18.
Entire Agreement
. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written
representations, warranties, covenants and agreements except as specifically set forth herein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of
this Agreement.
19.
Delays or Omissions
. It is agreed that no delay or omission to exercise any right, power or remedy
accruing to any party hereunder, upon any breach, default or noncompliance under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any partys part of any breach, default or noncompliance under the
Agreement or any waiver on such partys part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by
law or otherwise afforded to parties hereunder, shall be cumulative and not alternative.
20.
Titles and Subtitles
. The
titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
A-86
21.
Counterparts
. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22.
Specific
Enforcement
. Each party hereto agrees that its obligations hereunder are necessary and reasonable to protect the other parties to this Agreement, and each party expressly agrees and understands that monetary damages would inadequately compensate
an injured party for the breach of this Agreement by any party, that this Agreement shall be specifically enforceable, and that, in addition to any other remedies that may be available at law, in equity or otherwise, any breach or threatened breach
of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order, without the necessity of proving actual damages. Further, each party hereto waives any claim or defense that there is an adequate remedy at
law for such breach or threatened breach.
23.
Attorneys Fees
. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
[Remainder of page intentionally left blank]
A-87
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
hereinabove first written.
|
|
|
COMPANY:
|
|
OVERLAND STORAGE, INC.
|
|
|
By:
|
|
|
Name:
|
Title:
|
|
|
|
SHAREHOLDERS:
|
|
TANDBERG DATA HOLDINGS S.À R.L.
|
|
|
By:
|
|
|
Name:
|
Title:
|
|
|
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FBC HOLDINGS S.À R.L.
|
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|
By:
|
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Name:
|
Title:
|
[S
IGNATURE
P
AGE
TO
V
OTING
A
GREEMENT
]
A-88
SCHEDULE A
SHAREHOLDERS
|
|
|
Shareholders
|
|
Shares
|
|
|
FBC Holdings S.à r.l., a Luxembourg private limited liability company (
société à responsabilité limitée
) having its registered
office at L-1855 Luxembourg, 46A, avenue J.F. Kennedy
|
|
|
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|
Tandberg Data Management S.à r.l., a Luxembourg private limited liability company (
société à responsabilité limitée
) having its
registered office at L-1855 Luxembourg, 46A, avenue J.F. Kennedy
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|
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A-89
Annex B
October 31, 2013
CONFIDENTIAL
The Board of Directors
Overland Storage, Inc.
4820 Overland Ave.
San Diego, California 92123-1599
Members of the Board:
Roth Capital Partners,
LLC (Roth or we or us) understands that Overland Storage, Inc., a California corporation (the Company) proposes to acquire 100% of the outstanding equity (such acquisition, the Share
Exchange) of Tandberg Data Holdings S.À r.l. (Tandberg or the Target) from FBC Holdings S.à r.l., a Luxembourg private limited liability company, and Tandberg Data Management S.à r.l., a Luxembourg
private limited liability company (the Selling Shareholders) pursuant to an Acquisition Agreement (the Acquisition Agreement) among the Company, Tandberg and the Selling Shareholders. The Selling Shareholders are each
affiliated with Cyrus Capital Partners, L.P. (together with the Selling Shareholders, Cyrus). The aggregate consideration to be paid by the Company in the Share Exchange (the Aggregate Consideration) is, as of the date of
this opinion, expected to consist of 47,152,630 shares of Company common stock. We are advised by the Company that the foregoing shares, which will be issued to Cyrus, represent more than a majority of the Companys outstanding shares of common
stock after giving effect to the Share Exchange and to the expected issuance of shares of Company common stock (Conversion Shares) upon the conversion of, and in respect of the payment of interest on, certain convertible promissory
notes, and therefore the Share Exchange may be deemed to be a change of control of the Company.
The Board of Directors of the Company (the
Board) has requested that Roth provide an opinion to the Board (in its capacity as such) as to whether, as of the date hereof, the Aggregate Consideration to be paid by the Company in the Share Exchange is fair, from a financial point of
view, to the Company.
For purposes of the opinion set forth herein, we have, among other things:
|
(i)
|
reviewed and analyzed the financial terms of the draft Acquisition Agreement dated October 30, 2013 (the Latest Draft Agreement);
|
|
(ii)
|
reviewed certain internal financial statements and other financial and operating data concerning the Target prepared by the management of the Target;
|
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(iii)
|
reviewed certain pro forma financial projections prepared jointly by the management of the Company and the Target (the Forecasts);
|
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(iv)
|
compared selected market valuation metrics of certain publicly-traded companies with those same metrics implied by the Share Exchange;
|
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(v)
|
compared the financial terms, to the extent publicly available, of certain comparable acquisition transactions with those same metrics implied by the Share Exchange;
|
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(vi)
|
compared the financial performance of the Target with that of certain other publicly-traded companies we deemed comparable with the and its securities;
|
B-1
The Board of Directors of
Overland Storage, Inc.
October 31, 2013
Page
2
of 5
|
(vii)
|
compared the relative contributions of the Company and the Target to certain pro forma combined historical and forecasted income statement items with the pro forma
relative ownership implied by the Share Exchange;
|
|
(viii)
|
compared forecasted pro forma combined company financial performance prepared jointly by the management of the Company and the Target (the Forecast) with
the stand-alone financial forecasts of the Company;
|
|
(ix)
|
participated in certain discussions with management of the Company and the Target, and with representatives of the Board and its legal advisor; and
|
|
(x)
|
performed such other analyses, reviewed such other information and considered such other factors as we have deemed appropriate.
|
In conducting our review and arriving at our opinion, at your direction, we have not independently verified any of the foregoing information, and we have
assumed and relied upon such information being accurate and complete in all material respects, and we have further relied upon the assurances of management of the Company that they are not aware of any facts that would make any of the information
reviewed by us inaccurate, incomplete or misleading in any material respect. With respect to the Forecasts, we have assumed, upon the direction of the management of the Company, that they have been reasonably prepared on bases reflecting the best
currently available estimates and good faith judgments of the management of the Target and the Company as to the future financial performance of the Company and the Target. We have not been engaged to assess the achievability of any projections or
the assumptions on which they were based, and we express no view as to such projections or assumptions. In addition, we have not assumed any responsibility for any independent valuation or appraisal of the assets or liabilities, including any
ongoing litigation and administrative investigations, of the Target or the Company, nor have we been furnished with any such valuation or appraisal, nor have we made any physical inspection of the properties or assets of the Target or the Company.
We have not evaluated the solvency or creditworthiness of the Target or the Company under any applicable law relating to bankruptcy, insolvency, fraudulent transfer or similar matters. We express no opinion regarding the liquidation value of the
Target, the Company or any other entity. Without limiting the generality of the foregoing, we have undertaken no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent
liabilities, to which the Target, the Company or any of their affiliates is a party or may be subject, and at the direction of the Board and with its consent, our opinion makes no assumption concerning, and therefore does not consider, the possible
assertion of claims, outcomes or damages arising out of any such matters.
We also have assumed, at your direction, that (i) the
Aggregate Consideration will consist entirely of 47,152,630 shares of Company common stock (the Acquisition Shares) and that there will be no subsequent adjustment to the number of Acquisition Shares issued in the Share Exchange,
(ii) that the Company will issue 8,264,273 Conversion Shares at or prior to the closing of the Share Exchange and (iii) the Share Exchange will be consummated in accordance with the terms set forth in the Latest Draft Agreement and any
related documents (collectively the Transaction Documents) without waiver, modification or amendment of any material term, and in compliance with applicable federal, state and local statutes, rules, regulations and ordinances, that such
Transaction Documents are enforceable against each of the parties thereto in accordance with their respective terms, that the representations and warranties of each party in the Transaction Documents are true and correct, that each party will
perform on a timely basis all covenants and agreements required to be performed by it under the Transaction Documents and that all conditions to the consummation of the Share Exchange will be satisfied without waiver thereof. Additionally, we have
assumed, at your direction, that all necessary governmental,
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The Board of Directors of
Overland Storage, Inc.
October 31, 2013
Page
3
of 5
regulatory and other approvals, consents, releases and waivers required for the Share Exchange will be obtained and that in the course of obtaining any of the foregoing, no modification, delay,
limitation, restriction or condition will be imposed or waivers made that would have an adverse effect on the Company or on the contemplated benefits of the Share Exchange. We have further assumed, at your direction, that the Transaction Documents
when signed will conform to the last drafts of the Transaction Documents provided to us in all respects material to our analysis.
Our opinion
addresses only the fairness, from a financial point of view, to the Company, of the Aggregate Consideration to be paid by the Company in the Share Exchange to the holders of the capital stock of the Target in their capacity as such, and no opinion
or view is expressed with respect to any other consideration paid or received in connection with the Share Exchange or any other transaction by the holders of any class of securities, creditors or other constituencies of any party. Our opinion does
not in any manner address the post-closing ownership amounts of Cyrus or any other beneficial shareholder or any other term, condition, aspect or implication of the Share Exchange or the Acquisition Agreement (other than the Aggregate Consideration
to the extent expressly specified herein), including, without limitation, the form or structure of the Share Exchange, the timing or other terms or conditions related to the Share Exchange, any conversion of the convertible promissory notes due
February 2017 (the Notes) held by Cyrus into shares of the Company, any pre-closing payment of interest on the Notes in the form of shares of the Company, any issuance of convertible securities of the Company to Cyrus or any other person
or the conversion of any such securities into shares of the Company, any tender offer for any of the Companys shares, any distributions to the stockholders or other security holders of the Company, or any other transaction, agreement,
arrangement or understanding referenced in the Acquisition Agreement or related to the Share Exchange, the Acquisition Agreement or otherwise, including, without limitation, the fairness of the amount or nature of, or any other aspect relating to
any compensation to any officers, directors or employees of any party to the Share Exchange or any related transaction, or any class of such persons. Our opinion also does not address the relative merits of the Share Exchange as compared to any
alternative business strategies or transactions that might exist for the Company, the underlying business decision of the Company to proceed with the Share Exchange, or the effects of any other transaction in which the Company will or might engage.
Our opinion is necessarily based on economic, market and other conditions as they exist and can be evaluated on, and the information made available to us on, the date hereof. We express no opinion as to the underlying valuation, future performance
or long-term viability of the Target or the Company (either before or giving effect to the Share Exchange and any related transactions). In addition, we express no opinion or recommendation as to how any stockholder should vote or act in connection
with the Share Exchange, any related matter or any other transactions. No opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, tax or other similar professional advice. We have assumed that such
opinions, counsel or interpretation have been or will be obtained by the Company from the appropriate professional sources. Furthermore, we have relied, with your consent, on the assessments by the Company and its advisors, as to all legal,
regulatory, accounting and tax matters with respect to the Company and the Share Exchange.
We have acted as financial advisor to the Board in
connection with the Share Exchange and will receive a fee for our services, part of which is contingent upon the closing of the Share Exchange. The fee for this opinion is not contingent upon the consummation of the Share Exchange or any other
transaction. In addition, the Company has agreed to indemnify us for certain liabilities and other items arising out our engagement and to reimburse us for certain expenses in connection with our services.
Roth, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
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The Board of Directors of
Overland Storage, Inc.
October 31, 2013
Page
4
of 5
and unlisted securities, private placements and valuations for estate, corporate and other purposes. We and our affiliates have in the past have provided, are currently providing, and may
continue in the future provide investment banking and other financial services to the Company for which we and our affiliates have received and would expect to receive compensation, including serving as issuer agent, underwriter and/or financial
advisor on public or private capital raises and/or mergers and acquisitions. We are a full service securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and other financial services.
Accordingly, we may, in the future, provide investment banking and other financial services to entities that are affiliated with the Company, or other parties to the Acquisition Agreement, for which we would expect to receive compensation. In the
ordinary course of business, we and our affiliates may acquire, hold or sell, for our and our affiliates own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and
other obligations) of the Company and the other parties to the Acquisition Agreement, and, accordingly, may at any time hold a long or a short position in such securities.
This opinion is furnished for the use of the Board (in its capacity as such) in connection with its consideration of the Share Exchange and may not be used for any other purpose without our written
consent. The opinion is not intended to be, and does not constitute advice or a recommendation to, the Board, any shareholder or any other person as to how to vote or act on any matter relating to the Share Exchange or otherwise. This opinion may
not be reproduced, disseminated, quoted or referred to at any time, in any manner or for any purpose without our prior written consent, provided that it may be reproduced in its entirety in the proxy materials that the Company employs in connection
with the solicitation of its stockholders for the approval of the issuance of the Acquisition Shares as part of the Share Exchange, with the understanding that Roth and its advisors will be given a reasonable opportunity to review and comment on
such proxy materials prior to their dissemination to the Companys stockholders. In furnishing this opinion, we do not admit that we are experts within the meaning of the term experts as used in the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the Securities Act), nor do we admit that this opinion constitutes a report or valuation within the meaning of Section 11 of the Securities Act. Furthermore, this opinion shall not
be construed as creating or implying the existence of any fiduciary duty on Roths part to any party.
Our opinion is based on financial,
economic, monetary and other conditions and circumstances as in effect on, and the information made available to us as of, the date hereof. It should be understood that, although subsequent developments (including, without limitation, an adjustment
to the number of Acquisition Shares to be issued in the Share Exchange) may affect our opinion, we do not have any obligation to update, revise, reaffirm or withdraw our opinion, or otherwise comment on or consider events occurring after the date
hereof, and we expressly disclaim any responsibility to do so. The issuance of this opinion was approved by a committee which is authorized to approve opinions of this nature.
[Remainder of Page Intentionally Left Blank]
B-4
The Board of Directors of
Overland Storage, Inc.
October 31, 2013
Page
5
of 5
On the basis
of and subject to the foregoing, and such other factors as we deemed relevant, we are of the opinion as of the date hereof that the Aggregate Consideration to be paid by the Company in the Share Exchange is fair, from a financial point of view, to
the Company.
Very truly yours,
ROTH Capital Partners
B-5
Annex C
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF OVERLAND
STORAGE, INC.
Eric L. Kelly and Kurt L. Kalbfleisch certify that:
1. They are the President and Chief Executive Officer and the Chief Financial Officer and Secretary, respectively, of Overland Storage,
Inc., a California corporation (the Corporation).
2. Article III of the Corporations Articles of
Incorporation (the Articles) is hereby amended to read in its entirety as follows:
The
Corporation is authorized to issue two classes of shares to be designated Common Stock (Common Stock) and Preferred Stock (Preferred Stock). The total number of shares of Common Stock that the Corporation is authorized to
issue is one hundred twenty five million (125,000,000). The total number of shares of Preferred Stock that the Corporation is authorized to issue is one million (1,000,000).
Authority is vested in the Board of Directors to divide any or all of the authorized shares of Preferred Stock into series
and, within the limitations provided by law, to fix and determine the rights, preferences, privileges and restrictions of each such series, including but not limited to the right to fix and determine the designation of and the number of shares
issuable in each such series and any and all such other provisions as may be fixed or determined by the Board of Directors of the Corporation pursuant to California law; provided that the holders of shares of Preferred Stock will not be entitled
(A) to more than one vote per share, when voting as a class with the holders of shares of Common Stock, or (B) to vote on any matter separately as a class or series, except where expressly required by California law. The Board of Directors
may increase or decrease the number of shares of any series of Preferred Stock subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.
3. The foregoing amendment to the Articles has been duly approved by the Board of Directors of the Corporation.
4. The foregoing amendment to the Articles has been duly approved by the required vote of the shareholders of the Corporation in
accordance with Sections 902 and 903 of the California Corporations Code. At the record date for the meeting of shareholders at which the vote occurred, shares of Common Stock were issued and outstanding and no shares of Preferred Stock were issued
or outstanding. The number of shares of Common Stock voting in favor of the foregoing amendment equaled or exceeded the vote required. The percentage vote required was more than 50% of the shares of Common Stock.
The undersigned, Eric L. Kelly and Kurt L. Kalbfleisch, declare
this day
of , , at the City and County of San Diego, California,
under penalty of perjury under the laws of the State of California that each has read the foregoing certificate and knows the contents hereof and that the same is true of his own knowledge.
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|
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Eric L. Kelly
President
and Chief Executive Officer
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Kurt L. Kalbfleisch
Chief Financial Officer and Secretary
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C-1
Annex D
OVERLAND STORAGE, INC.
2009 EQUITY INCENTIVE PLAN
(AS AMENDED EFFECTIVE AUGUST 8, 2011)
(All share numbers herein are presented after giving effect to
the Companys December 2009
1-for-3
reverse stock
split)
TABLE OF CONTENTS
i
ii
iii
Overland Storage, Inc.
2009 Equity Incentive Plan
ARTICLE 1 INTRODUCTION.
The Board adopted the Plan effective as of the Effective Date conditioned upon and subject to approval by the Companys shareholders on or before the first anniversary of the Effective Date. The
purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to shareholder interests through increased stock ownership. The Plan
seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the laws of the State of California (except its
choice-of-law
provisions).
ARTICLE 2 ADMINISTRATION.
2.1
Committee Composition
. The Committee shall administer the Plan. The Committee shall
consist exclusively of two or more Directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy:
(a) Such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule
16b-3
(or its successor) under the Exchange Act; and
(b) Such requirements as the
Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under section 162(m)(4)(C) of the Code.
2.2
Committee Authority
. Subject to the specific provisions and limitations of the Plan, and Applicable Law, the Committee shall have the authority and power
to (a) select the Employees, Outside Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements, performance conditions (if any) and their degree of satisfaction, and other
features and conditions of such Awards, (c) correct any defect, supply any omission, and reconcile any inconsistency in the Plan or any Award agreement, (d) accelerate the vesting, or extend the post-termination exercise term, or waive
restrictions, of Awards at any time and under such terms and conditions as it deems appropriate, (e) interpret the Plan and any Award agreements, (f) adopt such plans or subplans as may be deemed necessary or appropriate to provide for the
participation by
non-U.S.
employees of the Company and its Subsidiaries and Affiliates, which plans and/or subplans shall be attached hereto as appendices, and (g) make all other decisions relating to the
operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan.
2.3
Committee for
Non-Officer
Grants
. The Board may also appoint a secondary committee of the Board, which shall be composed of two or more Directors of the Company who need not satisfy the
requirements of Sections 2.1(a) and 2.1(b). Such secondary committee may administer the Plan with respect to Employees and Consultants who are not Officers or Directors of the Company, may grant Awards under the Plan to such Employees and
Consultants and may determine all features and conditions of such Awards. Within the limitations of this Section 2.3, any reference in the Plan to the Committee shall include such secondary committee.
2.4
Scope of Discretion
. On all matters for which the Plan confers the authority, right or
power on the Board, the Committee, or a secondary committee to make decisions, that body may make those decisions in its
D-1
sole and absolute discretion. Those decisions will be final, binding and conclusive and shall be afforded the maximum deference under Applicable Law. In making its decisions, the Board, Committee
or secondary committee need not treat all persons eligible to receive Awards, all Participants, or all Awards the same way. Notwithstanding anything herein to the contrary, and except as provided in Section 16.2, the discretion of the Board,
Committee or secondary committee is subject to the specific provisions and specific limitations of the Plan, as well as all rights conferred on specific Participants by Award agreements and other agreements entered into pursuant to the Plan.
2.5
Rules of Interpretation
. Any reference to a Section or
Article, without more, is to a Section or Article of the Plan. Captions and titles are used for convenience in the Plan and shall not, by themselves, determine the meaning of the Plan. Except when otherwise indicated by the context, the
singular includes the plural and vice versa. Any reference to a statute is also a reference to the applicable rules and regulations adopted under that statute. Any reference to a statute, rule or regulation, or to a section of a statute, rule or
regulation, is a reference to that statute, rule, regulation, or section as amended from time to time, both before and after the Effective Date and including any successor provisions.
2.6
Unfunded Plan
. The Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants, any such accounts will be used merely as a convenience. The Company shall not be required to segregate any assets on account of the Plan, the grant of Awards, or the issuance of Common Shares. The Company
and the Committee shall not be deemed to be a trustee of stock or cash to be awarded under the Plan. Any obligations of the Company to any Participant shall be based solely upon contracts entered into under the Plan. No such obligations shall be
deemed to be secured by any pledge or other encumbrance on any assets of the Company. Neither the Company nor the Committee shall be required to give any security or bond for the performance of any such obligations.
2.7
Limitation of Liability
. The Company (or members of the Board, Committee or secondary
committee) shall not be liable to a Participant or other persons as to: (i) the
non-issuance
or sale of Common Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Companys counsel to be necessary to the lawful issuance and sale of any Common Shares hereunder; and (ii) any unexpected or adverse tax consequence realized by any Participant or other person due
to the grant, receipt, exercise or settlement of any Award granted hereunder.
2.8
Electronic Communications
. Subject to compliance with Applicable Law and/or regulations, an Award agreement or other documentation or notices relating to the Plan and/or Awards may be communicated to Participants by electronic media.
2.9
Indemnification
. To the maximum extent permitted by applicable law, each
member of the Committee, or of the Board, or any persons (including without limitation Employees and Officers) who are delegated by the Board or Committee to perform administrative functions in connection with the Plan, shall be indemnified and held
harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Companys
approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he
or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Companys Articles of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.
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2.10
Suspension or Termination of Awards
. If
at any time (including after a notice of exercise has been delivered) the Committee (or the Board), reasonably believes that a Participant has committed an act of Cause (which includes a failure to act), the Committee (or Board) may suspend the
Participants right to exercise any Option or SAR (or payment of a Cash Award or vesting of Restricted Stock Grants or Stock Units) pending a determination of whether there was in fact an act of Cause. If the Committee (or the Board) determines
a Participant has committed an act of Cause, neither the Participant nor his or her estate shall be entitled to exercise any outstanding Option or SAR whatsoever and all of Participants outstanding Awards shall then terminate without
consideration. Any determination by the Committee (or the Board) with respect to the foregoing shall be final, conclusive and binding on all interested parties.
2.11
Clawback Policy
. The Company may (i) cause the cancellation of any Award, (ii) require reimbursement of any Award by a Participant and
(iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with Company policies and/or applicable law (each, a Clawback Policy). In addition, a Participant may be
required to repay to the Company certain previously paid compensation, whether provided under this Plan or an Award Agreement or otherwise, in accordance with the Clawback Policy.
ARTICLE 3 SHARES AVAILABLE FOR GRANTS.
3.1
Basic Limitation.
Common Shares issued pursuant to the Plan shall be authorized but unissued or reacquired shares. The maximum aggregate number of Common
Shares reserved for issuance under the Plan is equal to the sum of: (i) 6,892,815 Common Shares plus (ii) any Common Shares subject to any outstanding awards under the Prior Plans that on or after the Shareholder Approval Date are either
forfeited or are repurchased at original cost by the Company plus any Common Shares that are not issued to the award holder as a result of a Prior Plan outstanding award being exercised or settled on or after the Shareholder Approval Date for less
than the full number of Common Shares that are subject to such exercise or settlement, subject to maximum of 1,404,769 Common Shares for this clause (ii). The aggregate number of Common Shares that may be issued under the Plan through ISOs is
8,297,584 Common Shares.
The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10.
3.2 Dividend Equivalents
. Any dividend equivalents paid or credited under the Plan shall not be
applied against the number of Common Shares available for Awards.
3.3 Share
Utilization
. If Common Shares issued upon the exercise of Options are forfeited, then such Common Shares shall again become available for Awards under the Plan. If Restricted Shares are forfeited, then such Common Shares shall again become
available for Awards under the Plan. If Options or SARs are forfeited or terminate for any other reason before being exercised, then the corresponding Common Shares shall again become available for Awards under the Plan. Subject to Article 12, if
Stock Units are forfeited or terminate for any other reason before being settled, then the corresponding Common Shares shall again become available for Awards under the Plan. Subject to Article 12, if Stock Units are settled, then only the number of
Common Shares (if any) actually issued in settlement of such Stock Units shall reduce the number of Common Shares available under Section 3.1 and the balance shall again become available for Awards under the Plan. If SARs are exercised, then
only the number of Common Shares (if any) actually issued in settlement of such SARs shall reduce the number of Common Shares available under Section 3.1 and the balance shall again become available for Awards under the Plan. The provisions of
this Section 3.3 shall be subject to adjustment pursuant to Article 10.
ARTICLE 4 ELIGIBILITY.
4.1
Incentive Stock Options
. Only Employees who are
common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.
D-3
4.2
Other Grants
. Employees, Outside Directors
and Consultants, including prospective Employees, Directors and Consultants conditioned on the beginning of their Service, shall be eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.
4.3
Section 162(m) Limitation
.
(a)
Options And SARs
. For so long as the Company is a publicly held corporation within the meaning of
Section 162(m) of the Code and with respect to grants of Options or SARs that are intended to qualify as performance-based compensation under Code Section 162(m), no Employee may be granted one or more SARs and Options within any Fiscal
Year under the Plan to purchase more than 1,300,000 Common Shares under Options or to receive compensation calculated with reference to more than that number of Common Shares under SARs, with such limit subject to adjustment pursuant to Article 10.
If an Option or SAR is cancelled without being exercised, that cancelled Option or SAR shall continue to be counted against the limit on Options and SARs that may be granted to any individual under this Section 4.3(a).
(b)
Cash Awards And Stock Awards
. Any Award intended as qualified performance-based compensation within the meaning of
section 162(m) of the Code must vest or become exercisable contingent on the achievement of one or more Objectively Determinable Performance Conditions. The Committee shall have the discretion to determine the time and manner of compliance with
section 162(m) of the Code.
ARTICLE 5 OPTIONS.
5.1
Stock Option Agreement
. Each grant of an Option under the Plan shall be evidenced by a
Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify
whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionees other compensation.
5.2
Number of Shares
. Each Stock Option Agreement shall specify the number of
Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with Article 10.
5.3
Exercise Price
. Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an Option shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant
(and shall not be less than 110% of the Fair Market Value for an ISO granted to a Ten Percent Shareholder).
5.4
Exercisability and Term
. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option;
provided that the term of an Option shall in no event exceed 10 years from the date of grant (and shall not exceed 5 years from the date of an ISO grant for a Ten Percent Shareholder). If an Optionee changes status from an Employee to a Consultant
or Outside Director, that Optionees ISOs will become NSOs if not exercised within the three-month period beginning with the Optionees termination of Service as an Employee for any reason other than the Optionees death or
Disability. An ISO shall be treated as an NSO if it remains exercisable after, and is not exercised within, the three-month period described above. If an Optionees Service terminates due to Disability, any ISO held by such Optionee shall be
treated as an NSO if it remains exercisable after, and is not exercised within, one year after termination of the Optionees Service. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionees death,
Disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionees Service. Options may be awarded in combination with SARs, and such an Award may provide that
the Options will not be exercisable unless the related SARs are forfeited. No Option granted to an individual who is subject to the overtime pay provisions of the Fair Labor Standards Act may be exercised before the expiration of six months after
the Grant Date.
D-4
5.5
Effect of Change in Control
. The Committee
may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common Shares subject to such Option in the event that a Change in Control occurs with respect to the Company or in
the event that the Optionee is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of exercisability may be required under Section 10.3.
5.6
Nonassignability of Options
. Except as determined by the Committee, no Option shall be
assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution. However, Options may be transferred and exercised in accordance with a Domestic Relations Order and may be exercised by a guardian or
conservator appointed to act for the Participant. No rights under an ISO may be transferred by the Participant, other than to a trust where under section 671 of the Code and other Applicable Law the Participant is considered the sole beneficial
owner of the Option while it is held in trust, or by will or the laws of descent and distribution. The Companys compliance with a Domestic Relations Order, or the exercise of an ISO by a guardian or conservator appointed to act for the
Participant, shall not violate this Section 5.6.
5.7
Substitute Options
.
The Board may cause the Company to grant Substitute Options in connection with the acquisition by the Company or a Parent, Subsidiary or Affiliate of equity securities of any entity (including by merger, tender offer, or other similar transaction)
or of all or a portion of the assets of any entity. Any such substitution shall be effective on the effective date of the acquisition. Substitute Options may be NSOs or ISOs. Unless and to the extent specified otherwise by the Board, Substitute
Options shall have the same terms and conditions as the options they replace, except that (subject to the provisions of Article 10) Substitute Options shall be Options to purchase Common Shares rather than equity securities of the granting entity
and shall have an Exercise Price adjusted appropriately, as determined by the Board.
5.8
Limitation on ISOs
. Options intended to be ISOs that are granted to any single Optionee
under all incentive stock option plans of the Company and its Parents or Subsidiaries, including ISOs granted under the Plan, may not first become exercisable for more than $100,000 in Fair Market Value of stock (measured on the grant dates of the
Options) during any calendar year.
ARTICLE 6 PAYMENT FOR OPTION SHARES.
6.1
General Rule
. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents denominated in U.S. dollars (except as specified by the Committee for
non-U.S.
Employees or
non-U.S.
sub-plans)
at the time when such Common Shares are purchased, except as follows:
(a) In the
case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article
6.
(b) In the case of an NSO granted under the Plan, the Committee may at any time permit payment to be made in any form(s)
described in this Article 6.
6.2
Exercise/Sale
. To the extent that this
Section 6.2 is made applicable to an Option by the Committee, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker
approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company; provided that to the extent the Company would be deemed to extend or arrange for the
extension of credit in the form of a personal loan to an Optionee under the foregoing procedure, no Officer or Director may use the foregoing procedure to pay the Exercise Price.
6.3
Other Forms of Payment
. To the extent that this Section 6.3 is made applicable to
an Option by the Committee, all or any part of the Exercise Price and any withholding taxes may be paid in any other form that is consistent with Applicable Law, regulations and rules.
D-5
ARTICLE 7 STOCK APPRECIATION RIGHTS.
7.1
SAR Agreement
. Each grant of a SAR under the Plan shall be evidenced by
a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered
into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionees other compensation.
7.2
Number of Shares
. Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Article 10.
7.3
Exercise Price
. Each SAR Agreement
shall specify the Exercise Price provided that the Exercise Price under a SAR shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant. A SAR Agreement may specify an Exercise Price that varies in
accordance with a predetermined formula while the SAR is outstanding.
7.4
Exercisability and Term
. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR provided that the term of a SAR shall in no event
exceed 10 years from the date of grant. The grant or vesting of a SAR may be made contingent on the achievement of performance conditions. A SAR Agreement may provide for accelerated exercisability in the event of the Optionees death,
Disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionees Service. SARs may be awarded in combination with Options, and such an Award may provide that
the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it
will be exercisable only in the event of a Change in Control.
7.5
Effect of Change
in Control
. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that the Company is subject to a Change in Control or in
the event that the Optionee is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of exercisability may be required under Section 10.3.
7.6
Exercise of SARs
. Upon exercise of a SAR, the Optionee (or any person having the right
to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Committee shall determine, over the period or periods set forth in the SAR
Agreement. A SAR Agreement may place limits on the amount that may be paid over any specified period or periods upon the exercise of a SAR, on an aggregate basis or as to any Participant. The amount of cash and/or the Fair Market Value of Common
Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price. If, on the date when a SAR expires,
the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such
portion.
7.7
Nonassignability of SARs
. Except as determined by the Committee,
no SAR shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution. However, SARs may be transferred and exercised in accordance with a Domestic Relations Order and may be exercised by a
guardian or conservator appointed to act for the Participant.
7.8
Substitute
SARs
. The Board may cause the Company to grant Substitute SARs in connection with the acquisition by the Company or a Parent, Subsidiary or Affiliate of equity securities of any entity (including by merger, tender offer, or other similar
transaction) or of all or a portion of the assets of any entity. Any such
D-6
substitution shall be effective on the effective date of the acquisition. Unless and to the extent specified otherwise by the Board, Substitute SARs shall have the same terms and conditions as
the SARs they replace, except that (subject to the provisions of Article 10) Substitute SARs shall be exercisable with respect to the Fair Market Value of Common Shares rather than equity securities of the granting entity and shall be on terms that,
as determined by the Board in its sole and absolute discretion, properly reflect that substitution.
ARTICLE 8 RESTRICTED SHARES.
8.1
Restricted Stock Agreement
. Each grant of Restricted Shares under the Plan shall be
evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.
8.2
Payment for Awards
. Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, labor
done, services actually rendered to the Company or for its benefit or in its reorganization, debts or securities cancelled, tangible or intangible property actually received either by the Company or a wholly-owned subsidiary, and promissory notes
(provided the recipient is an Employee who is not a Director or Officer at the time of grant). All cash and cash equivalents shall be dominated in U.S. dollars except as specified by the Committee for
non-U.S.
Employees or
non-U.S.
sub-plans.
8.3
Vesting Conditions
. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. The
Committee may include among such conditions the achievement of Objectively Determinable Performance Conditions A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participants death, Disability or retirement or
other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company or in the
event that the Participant is subject to an Involuntary Termination after a Change in Control.
8.4
Voting and Dividend Rights
. The holders of Restricted Shares awarded under the Plan
shall have the same voting, dividend and other rights as the Companys other shareholders. A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted
Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. Notwithstanding the foregoing, dividends awarded with respect to Restricted Shares
subject to unsatisfied performance-based conditions shall accumulate until all applicable performance-based conditions have been satisfied and will be paid, if at all, as soon as reasonably practicable following the satisfaction of the
applicable performance-based conditions.
8.5
Nonassignability of Restricted
Shares
. Except as determined by the Committee, no Restricted Shares shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution until such time as the Restricted Shares have vested.
Notwithstanding anything to the contrary herein, Restricted Shares may be transferred and exercised in accordance with a Domestic Relations Order.
8.6
Substitute Restricted Shares
. The Board may cause the Company to grant Substitute Restricted Shares in connection with the acquisition by the Company or a
Parent, Subsidiary or Affiliate of equity securities of any entity (including by merger) or all or a portion of the assets of any entity. Unless and to the extent specified otherwise by the Board, Substitute Restricted Shares shall have the same
terms and conditions as the restricted shares they replace, except that (subject to the provisions of Article 10) Substitute Restricted Shares shall be Common Shares rather than equity securities of the granting entity and shall be on terms that, as
determined by the Board in its sole and absolute discretion, properly reflect the substitution. Any such Substituted Restricted Shares shall be granted effective on the effective date of the acquisition.
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8.7
Section 162(m) Limitation
. For so
long as the Company is a publicly held corporation within the meaning of Section 162(m) of the Code and with respect to grants of Restricted Shares that are intended to qualify as performance-based compensation under Code
Section 162(m), no Employee may be granted within any Fiscal Year under the Plan more than 33,333 Restricted Shares which are subject to the achievement of Objectively Determinable Performance Conditions, with such limit subject to adjustment
pursuant to Article 10.
ARTICLE 9 STOCK UNITS.
9.1
Stock Unit Agreement
. Each grant of Stock Units under the Plan shall be evidenced by a
Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit
Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipients other compensation.
9.2
Payment for Awards
. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.
9.3
Vesting Conditions
. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. The Committee may include among such conditions the achievement of Objectively Determinable Performance Conditions.
A Stock Unit Agreement may provide for accelerated vesting in the event of the Participants death, Disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of
such Stock Units shall become vested in the event that the Company is subject to a Change in Control or in the event that the Participant is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of vesting may be
required under Section 10.3.
9.4
Voting and Dividend Rights
. The holders
of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committees discretion, carry with it a right to dividend equivalents. Such right entitles the holder to
be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the
form of cash, in the form of Common Shares, or in a combination of both, as determined by the Committee. Prior to distribution, any dividend equivalents that are not paid shall be subject to the same conditions and restrictions as the Stock
Units to which they attach. Notwithstanding the foregoing, dividend equivalents awarded with respect to Stock Units subject to unsatisfied performance-based conditions shall accumulate until all applicable performance-based conditions have
been satisfied and will be paid, if at all, as soon as reasonably practicable following the satisfaction of the applicable performance-based conditions.
9.5
Form and Time of Settlement of Stock Units
. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common Shares or
(c) any combination of both, as determined by the Committee, over the period or periods established by the Committee. A Stock Units Award may place limits on the amount that may be paid over any specified period or periods, on an aggregate
basis or as to any Participant. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on performance criteria. Methods of converting Stock Units into cash may include
(without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days. Distribution on settlement may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or
have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject
to adjustment pursuant to Article 10.
9.6
Death of Recipient
. Any Stock Units
Award that becomes payable after the recipients death shall be distributed to the recipients beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan
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shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company
at any time before the Award recipients death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipients death shall be distributed
to the recipients estate.
9.7
Creditors Rights
. A holder of Stock
Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.
9.8
Nonassignability of Stock Units
. Except as determined by the Committee, no Stock Units
Award shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution. Notwithstanding anything to the contrary herein, Stock Units Awards may be transferred and exercised in accordance with
a Domestic Relations Order.
9.9
Substitute Stock Units
. The Board may cause the
Company to grant Substitute Stock Units in connection with the acquisition by the Company or a Parent, Subsidiary or Affiliate of equity securities of any entity (including by merger) or all or a portion of the assets of any entity. Unless and to
the extent specified otherwise by the Board, Substitute Stock Units shall have the same terms and conditions as the stock units they replace, except that (subject to the provisions of Article 10) Substitute Stock Units shall be settled with respect
to the Fair Market Value of the Common Shares rather than equity securities of the granting entity and shall be on terms that, as determined by the Board in its sole and absolute discretion, properly reflect the substitution.
9.10
Section 162(m) Limitation
. For so long as the Company is a publicly held
corporation within the meaning of Section 162(m) of the Code and with respect to grants of Stock Units that are intended to qualify as performance-based compensation under Code Section 162(m), no Employee may be granted within any
Fiscal Year under the Plan more than 33,333 Stock Units which are subject to the achievement of Objectively Determinable Performance Condition, with such limit subject to adjustment pursuant to Article 10.
ARTICLE 10 PROTECTION AGAINST DILUTION.
10.1
Adjustments
. In the event of a subdivision of the outstanding Common Shares, a
declaration of a dividend payable in Common Shares, a declaration of a dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a combination or consolidation of the outstanding
Common Shares (by reclassification or otherwise) into a lesser number of Shares, a stock split, a reverse stock split, a reclassification or other distribution of the Common Shares without the receipt of consideration by the Company, of or on the
Common Stock, a recapitalization, a combination, a
spin-off
or a similar occurrence, the Committee shall make equitable and proportionate adjustments to:
(a) the maximum aggregate number of Common Shares reserved for issuance under the Plan as specified in Section 3.1 and to be issued
as ISOs as set forth under Section 3.1 and the number of Common Shares under the Prior Plans that may become available for award under this Plan pursuant to Section 3.1(ii);
(b) the number and kind of securities available for Awards (and which can be issued as ISOs) under Section 3.1;
(c) the limitations set forth in Sections 4.3(a), 8.7 and 9.10;
(d) the number and kind of securities covered by each outstanding Award;
(e) the
Exercise Price under each outstanding Option and SAR; or
(f) the number and kind of outstanding securities issued under the
Plan.
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In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a recapitalization, a
spin-off
or a similar occurrence, the Committee shall make such proportionate adjustments as it, in its sole discretion,
deems appropriate in one or more of the foregoing. Except as provided in this Article 10, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. Any adjustment of Common Shares pursuant to this Section 10.1 shall
be rounded down to the nearest whole number of Common Shares. Under no circumstances shall the Company be required to authorize or issue fractional shares and no consideration shall be provided as a result of any fractional shares not being issued
or authorized.
10.2
Dissolution or Liquidation
. To the extent not previously
exercised or settled, Options, SARs, unvested Restricted Shares and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company and be forfeited to the Company.
10.3 Reorganizations
. In the event that the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for (a) the continuation of the outstanding Awards by the Company, if the Company is a surviving
corporation, (b) the assumption of the outstanding Awards by the surviving entity or its parent or subsidiary, (c) the substitution by the surviving entity or its parent or subsidiary of its own awards for the outstanding Awards,
(d) full exercisability or vesting and accelerated expiration of the outstanding Awards, (e) settlement of the full value of the outstanding Awards in cash or cash equivalents followed by cancellation of such Awards (with the full
value of Options and SARs to be determined based on the spread of the Award at the time of the transaction), and in all cases without needing consent of any Participant. In the event of a Divestiture, the Board may, but need not, direct that
one or more of the foregoing actions be taken with respect to Awards held by, for example, Employees, Outside Directors or Consultants for whom the transaction or event resulted in a termination of Service. The Board need not adopt the same rules
for each Award or Participant.
ARTICLE 11 DEFERRAL OF AWARDS.
The Committee (in its sole discretion) may permit or require a Participant to:
(a) Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units
credited to a deferred compensation account established for such Participant by the Committee as an entry on the Companys books;
(b) Have Common Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or
(c) Have Common Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the
settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Companys books. Such amounts shall be determined by reference to the Fair Market
Value of such Common Shares as of the date when they otherwise would have been delivered to such Participant.
A deferred
compensation account established under this Article 11 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of
a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the
deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts
established under this Article 11.
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Any and all arrangements under this Article 11 must comply with the rules and requirements
of Section 409A of the Code including, without limitation, the requirements for the timing of deferral elections and the Delay In Payments to Specified Employees.
ARTICLE 12 AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may be settled in the form of Common Shares issued under the Plan. Such Common Shares shall be treated for all purposes under the
Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3. Notwithstanding the foregoing, each Common Share issued pursuant to this Article 12 shall be counted
against the Plan reserve in Section 3.1 as one (1) Common Share to the extent such shares are issued in respect of awards under other plans or programs that have substantially similar terms and conditions to Options or SARs granted under
the Plan, including, with respect to stock options or equivalent securities, an exercise price at least equal to the fair market value of the securities for which the stock option or equivalent security is exercisable, measured at the date of grant.
ARTICLE 13 PAYMENT OF DIRECTORS FEES IN SECURITIES.
13.1
Effective Date
. No provision of this Article 13 shall be effective unless and until the
Board has determined to implement such provision.
13.2
Elections to Receive NSOs,
Restricted Shares or Stock Units
. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as
determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Article 13 must be timely filed with the Company on the prescribed form.
13.3
Number and Terms of NSOs, Restricted Shares or Stock Units
. The number of NSOs,
Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The Board shall also determine the terms
of such NSOs, Restricted Shares or Stock Units.
ARTICLE 14 LIMITATION ON
RIGHTS.
14.1
Retention Rights
. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain an Employee, Outside Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the Service of any Employee, Outside Director or
Consultant at any time, with or without cause, subject to Applicable Law, the Companys articles of incorporation and
by-laws
and a written employment agreement (if any).
14.2
Shareholders Rights
. A Participant shall have no dividend rights, voting rights
or other rights as a shareholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such
Common Shares by satisfying all requirements for exercise at a time when the Company is obligated to deliver such Common Shares under the terms of the Award agreement and this Plan. No adjustment shall be made for cash dividends or other rights for
which the record date is prior to such time, except as expressly provided in the Plan.
14.3
Regulatory Requirements
. Any other provision of the Plan notwithstanding, the
obligation of the Company to issue Common Shares under the Plan shall be subject to all Applicable Law. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of
all Applicable Law relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.
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14.4
Code Section 409A
. Notwithstanding
anything in the Plan to the contrary, the Plan and Awards granted hereunder are intended to comply with the requirements of Code Section 409A and shall be interpreted in a manner consistent with such intention.
ARTICLE 15 WITHHOLDING TAXES.
15.1
General
. To the extent required by Applicable Law, a Participant or his or her
successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under
the Plan until such obligations are satisfied.
15.2
Share Withholding
. To the
extent that Applicable Law subjects a Participant to tax withholding obligations, the Committee may establish procedures that may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of
any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their Fair Market Value on the date when they are
withheld or surrendered.
ARTICLE 16 FUTURE OF THE PLAN.
16.1
Term of the Plan
. The Plan was effective on the Effective Date. The Plan, as may be
amended or restated from time to time, shall remain in effect until the tenth anniversary of the Effective Date or until such earlier date as provided under Section 16.2. Except as provided in Section 3.1, this Plan will not in any way
affect outstanding awards that were issued under the Prior Plans or other Company equity compensation plans. No further awards may be granted under the Prior Plans as of the date of approval of this Plan by the Companys shareholders.
16.2
Amendment or Termination
. The Board may, at any time and for any reason,
amend or terminate the Plan. An amendment of the Plan shall be subject to the approval of the Companys shareholders only to the extent required by Applicable Law. No Awards shall be granted under the Plan after the termination thereof. The
termination of the Plan, or any amendment thereof, shall not impair the rights of any Participant under any Award previously granted under the Plan unless the Participant consents to such amendment. The Board or the Committee may amend the terms of
any existing Award, prospectively or retroactively, but no such amendment shall impair the rights of any Participant unless the Participant consents to such amendment. The Board or the Committee may not amend the terms of any Option or SAR to reduce
the Exercise Price (except pursuant to Article 10), or cancel any Option or SAR and grant a new Option or SAR with a lower Exercise Price such that the effect would be the same as reducing the Exercise Price, without the approval of the
Companys shareholders. Notwithstanding anything herein to the contrary, no consent of a Participant shall be required if the Board determines, in its sole and absolute discretion, that the amendment, suspension, termination, or modification:
(a) is required or advisable in order for the Company, the Plan or the Award to satisfy Applicable Law, to meet the requirements of any accounting standard or to avoid any adverse accounting treatment, or (b) in connection with any
transaction or event described in Article 10, is in the best interests of the Company or its shareholders. The Board may, but need not, take the tax or accounting consequences to affected Participants into consideration in acting under the preceding
sentence. Those decisions shall be final, binding and conclusive. Termination of the Plan shall not affect the Committees ability to exercise the powers granted to it under the Plan with respect to Awards granted before the termination
notwithstanding that Awards become exercisable or are to be settled after the termination.
ARTICLE 17 DEFINITIONS.
17.1
Affiliate
means any entity other than a Subsidiary, if the Company and/or
one or more Subsidiaries own not less than 50% of such entity.
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17.2
Applicable Law
means any and
all laws of whatever jurisdiction, within or without the United States, and the rules of any stock exchange or quotation system on which Common Shares are listed or quoted, applicable to the taking or refraining from taking of any action under the
Plan, including the administration of the Plan and the issuance or transfer of Awards.
17.3
Award
means any award of an Option, a SAR, a Restricted Share or a Stock
Unit under the Plan.
17.4
Board
means the Companys Board of
Directors, as constituted from time to time.
17.5
Cause
means,
except as may otherwise be provided in an applicable Award agreement, (a) acts or omissions constituting gross negligence, recklessness or willful misconduct with respect to the Participants obligations or otherwise relating to the
business of the Company; (b) the Participants material breach of a written agreement between the Participant and the Company (or a Parent, Subsidiary or Affiliate); (c) conviction or entry of a plea of nolo contendere for fraud,
misappropriation or embezzlement, or any felony or crime of moral turpitude; (d) dishonesty or involvement in any conduct that adversely affects the Companys name or public image or is otherwise detrimental to the Companys business
interests; (e) willful neglect of duties; or (f) unauthorized use or disclosure of the confidential information or trade secrets of the Company, which use or disclosure causes material harm to the Company. The foregoing, however, shall not
be deemed an exclusive list of all acts or omissions that the Company (or the Parent, Subsidiary or Affiliate employing the Participant) may consider as grounds for the discharge of the Participant without Cause. The Committee shall be entitled to
determine Cause based on the Committees good faith belief.
17.6
Change in Control
means, except as may otherwise be provided in an applicable Award agreement:
(a) The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization
own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of
such continuing or surviving entity;
(b) The sale, transfer or other disposition of all or substantially all of the
Companys assets;
(c) A change in the composition of the Board over a period of
thirty-six
(36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of
individuals who are Continuing Directors;
(d) Any transaction as a result of which the direct or indirect acquisition by any
person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company)
of beneficial ownership (within the meaning of Rule
13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Companys outstanding
securities pursuant to a tender or exchange offer made directly to the Companys shareholders which a majority of the Continuing Directors who are not affiliated with the offeror do not recommend such shareholders accept; or
(e) A Divestiture; provided that a Divestiture shall be a Change in Control only to the extent that the Board determines that such
Divestiture constitutes a Change in Control, and then only for those Participants for whom the Board has expressly resolved that such Divestiture constitutes a Change in Control for such Participants. In making such determination, the Board need not
adopt the same rules for each Award or Participant.
A transaction shall not constitute a Change in Control if its sole purpose is to change
the state of the Companys incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Companys securities immediately before such transaction. The Committee shall
determine whether an event shall be treated as a Change in Control.
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17.7
Code
means the Internal
Revenue Code of 1986, as amended.
17.8
Committee
means a committee
of the Board, as described in Article 2.
17.9
Common Share
means
one share of the common stock of the Company.
17.10
Company
means
Overland Storage, Inc., a California corporation.
17.11
Consultant
means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor.
17.12
Continuing Directors
means members of the Board who either (i) have been Board members continuously for a period of at least
thirty-six
(36) months or (ii) have been Board members for less than
thirty-six
(36) months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.
17.13
Delay In Payments to Specified Employees
means if a
Participant is a specified employee (as defined under Code Section 409A) on separation from Service, to the extent any Award or arrangement needs to comply with Code Section 409A, then certain payments may be delayed and not be
paid during the first six months following the separation from Service but will instead be paid on the earlier of the first business day of the 7
th
month following the separation from Service, or ten (10) days after the Company receives written confirmation of
the Participants death. Any such delayed payments shall be made without interest.
17.14
Director
means a member of the Board of Directors of the Company.
17.15
Disability
means that the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve
(12) months. The Disability of a Participant shall be determined solely by the Committee on the basis of such medical evidence as the Committee deems warranted under the circumstances.
17.16
Divestiture
means a transaction or event where the Company or a Parent,
Subsidiary or Affiliate sells or otherwise transfers its equity securities to a person or entity other than the Company or a Parent, Subsidiary or Affiliate, or leases, exchanges or transfers all or any portion of its assets to such a person or
entity, where the Board specifies that such transaction or event constitutes a Divestiture.
17.17
Domestic Relations Order
means a domestic relations order as defined in, and otherwise meeting the requirements of, section 414(p) of the Code, except that reference to a plan in that
definition shall be to the Plan.
17.18
Effective Date
means
November 14, 2009 which was the date on which the Plan was adopted by the Board.
17.19
Employee
means a common law employee of the Company, a Parent, a
Subsidiary or an Affiliate. Notwithstanding the foregoing, individuals who are classified by the Company or a Parent, Subsidiary or Affiliate as (i) leased from or otherwise employed by a third party, (ii) independent contractors, or
(iii) intermittent or temporary workers, shall not be deemed Employees. The Companys or a Parents, Subsidiarys or Affiliates classification of an individual as an Employee (or as not an Employee)
for purposes of the Plan shall not be altered retroactively even if that classification is changed retroactively for another purpose as a result of an audit, litigation or otherwise. A Participant shall not cease to be an Employee due to transfers
between locations of the Company, or among the Company and a Parent, Subsidiary or Affiliate,
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or to any successor to the Company or a Parent, Subsidiary or Affiliate that assumes an Optionees Options under Section 10.3. Neither service as a Director nor receipt of a
directors fee shall be sufficient to make a Director an Employee.
17.20
Exchange Act
means the Securities Exchange Act of 1934, as amended.
17.21
Exercise Price
, in the case of an Option, means the amount
for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. Exercise Price, in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which
is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.
17.22
Fair Market Value
means the market price of a Common Share determined by the Committee as follows:
(i) If the Common Shares were traded on a stock exchange (such as the New York Stock Exchange, NYSE Amex, the NASDAQ Global Market or NASDAQ Capital Market) at the time of determination, then the Fair
Market Value shall be equal to the regular session closing price for such stock as reported by such exchange (or the exchange or market with the greatest volume of trading in the Common Shares) on the date of determination, or if there were no sales
on such date, on the last date preceding such date on which a closing price was reported;
(ii) If the Common Shares were
traded on the OTC Bulletin Board at the time of determination, then the Fair Market Value shall be equal to the last-sale price reported by the OTC Bulletin Board for such date of determination, or if there were no sales on such date, on the last
date preceding such date on which a sale was reported; and
(iii) If neither of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee in good faith using a reasonable application of a reasonable valuation method as the Committee deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported by the applicable exchange or the OTC Bulletin Board, as applicable, or a nationally
recognized publisher of stock prices or quotations (including an electronic
on-line
publication). Such determination shall be conclusive and binding on all persons.
17.23
Fiscal Year
means the Companys fiscal year.
17.24
Involuntary Termination
means the termination of the Participants
Service by reason of:
(a) The involuntary discharge of the Participant by the Company (or the Parent, Subsidiary or Affiliate
employing him or her) for reasons other than Cause; or
(b) The voluntary resignation of the Participant following (i) a
material adverse change in his or her title, stature, authority or responsibilities with the Company (or the Parent, Subsidiary or Affiliate employing him or her), (ii) a material reduction in his or her base salary or (iii) receipt of
notice that his or her principal workplace will be relocated by more than 90 miles.
17.25
ISO
means an incentive stock option described in section 422(b) of the
Code.
17.26
NSO
means a stock option not described in sections 422
or 423 of the Code.
17.27
Objectively Determinable Performance
Condition
shall mean a performance condition (i) that is established (A) at the time an Award is granted or (B) no later than the earlier of (1) 90 days after the beginning
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of the period of Service to which it relates, or (2) before 25% of the period of Service to which it relates has elapsed, (ii) that is substantially uncertain of achievement at the time
it is established, and (iii) the achievement of which would be determinable by a third party with knowledge of the relevant facts. Examples of measures that may be used in Objectively Determinable Performance Conditions include net order
dollars, net profit dollars, net profit growth, net revenue dollars, profit/loss or profit margin, operating profit, net operating profit, operating margin, working capital, sales or revenue, revenue growth, gross margin, cost of goods sold,
individual performance, cash, accounts receivables, writeoffs, cash flow, liquidity, income, net income, operating income, net operating income, earnings, earnings before interest, taxes, depreciation and/or amortization, earnings per share, growth
in earnings per share, price/earnings ratio, debt or
debt-to-equity,
economic value added, assets, return on assets, return on equity, stock price, shareholders
equity, total shareholder return, including stand-alone or relative to a stock market or peer group index, return on capital, return on assets or net assets, return on investment, return on operating revenue, any other financial objectives,
objective customer satisfaction indicators and efficiency measures, operations, research or related milestones, intellectual property (e.g., patents), product development, site, plant or building development, internal controls, policies and
procedures, information technology, human resources, corporate governance, business development, market share, strategic alliances, licensing and partnering, contract awards or backlog, expenses, overhead or other expense reduction, compliance
programs, legal matters, accounting and reporting, credit rating, strategic plan development and implementation, mergers and acquisitions and divestitures, financings, management, improvement in workforce diversity, or any similar criteria, each
with respect to the Company and/or a Parent, Subsidiary or Affiliate, and/or an individual business unit.
17.28
Officer
means an officer of the Company as defined in Rule
16a-1
adopted under the Exchange Act.
17.29
Option
means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares.
17.30
Optionee
means an individual or estate who holds an Option or SAR.
17.31
Outside Director
means a member of the Board who is not an
Employee.
17.32
Parent
means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
17.33
Participant
means (i) a person to whom an Award has been granted, including a holder of a Substitute Award; or (ii) a person to
whom an Award has been transferred in accordance with the applicable requirements of Sections 5.6, 7.7, 8.5, or 9.8
17.34
Plan
means this Overland Storage, Inc. 2009 Equity Incentive Plan, as amended from time to time.
17.35
Prior Plans
means the Companys 1995 Stock Option Plan, 1997 Executive Stock Option Plan, 2000 Stock Option Plan, 2001 Supplemental
Stock Option Plan, and 2003 Equity Incentive Plan, each as in effect on the Effective Date.
17.36
Restricted Share
means a Common Share awarded pursuant to Article 8 of
the Plan.
17.37
Restricted Stock Agreement
means the agreement
between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
17.38
SAR
means a stock appreciation right granted under the Plan.
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17.39
SAR Agreement
means the
agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.
17.40
Service
means service as an Employee, Outside Director or Consultant. Unless otherwise determined by the Committee or otherwise provided in
the Plan or Award agreement, Service shall continue notwithstanding a change in status from an Employee, Consultant or Outside Director to another such status. An event that causes a Parent, Subsidiary or Affiliate to cease having status as a
Parent, Subsidiary or Affiliate shall be deemed to discontinue the Service of that entitys Employees, Outside Directors and Consultants unless such persons retain the status of Employee, Outside Director or Consultant of the Company or a
remaining Parent, Subsidiary or Affiliate.
17.41
Shareholder Approval
Date
means January 5, 2010 which was the date on which the adoption of the Plan was approved by the Companys shareholders.
17.42
Stock Option Agreement
means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.
17.43
Stock Unit
means a
bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan.
17.44
Stock Unit Agreement
means the agreement between the Company and the
recipient of Stock Units that contains the terms, conditions and restrictions pertaining to such Stock Units.
17.45
Subsidiary
means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
17.46
Substitute
Award
means a Substitute Option, Substitute SAR, Substitute Restricted Share or Substitute Stock Unit granted in accordance with the terms of the Plan.
17.47
Substitute Option
means an Option granted in substitution for, or upon the conversion of, an option granted by another entity to purchase
equity securities in the granting entity.
17.48
Substitute SAR
means a SAR granted in substitution for, or upon the conversion of, a stock appreciation right granted by another entity with respect to equity securities in the granting entity.
17.49
Substitute Restricted Share
means a Restricted Share granted in
substitution for a restricted share granted by another entity with respect to equity securities in the granting entity.
17.50
Substitute Stock Unit
means a Stock Unit granted in substitution for, or upon the conversion of, a stock unit granted by another entity with respect to equity securities in the granting entity.
17.51
Ten Percent Shareholder
means any person who, directly or by attribution
under Section 424(d) of the Code, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary on the date of Option grant.
D-17
OVERLAND STORAGE, INC.
SPECIAL MEETING OF SHAREHOLDERS
, ,
p.m.
CityView Plaza Conference Center
100 W. San Fernando Street
San Jose, CA 95113
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Special Meeting Proxy
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
I appoint Eric L. Kelly and Kurt L. Kalbfleisch, or either
of them, with power of substitution to each, to vote all shares of common stock which I have power to vote at the special meeting of shareholders of Overland Storage, Inc. to be held on
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at ., or at any adjournment or postponement thereof, in accordance with the instructions on the reverse side of
this card and with the same effect as though I were present in person and voting such shares. My appointed proxies are authorized in their discretion to vote upon such other business as may properly come before the special meeting.
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE
SIDE)
Thank You For
Voting
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Shareowner Services
SM
P.O. Box
64945,
St. Paul, MN 55164-0945
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There are three ways
to vote your Proxy.
Your telephone or Internet vote authorizes the named proxies to
vote your shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE TOLL
FREE 1-800-560-1965
QUICK
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EASY
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IMMEDIATE
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Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week until 9:00 p.m., Pacific Time, on
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Please have your proxy card and the last four digits of your Social Security Number or Tax Payer Identification Number available. Follow the simple
instructions the voice provides you.
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VOTE VIA INTERNET http://www.eproxy.com/ovrl/
QUICK
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EASY
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IMMEDIATE
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Use the Internet to vote your proxy 24 hours a day, 7 days a week until 9:00 p.m., Pacific Time, on
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Please have your proxy card and the last four digits of your Social Security Number or Tax Payer Identification Number available. Follow the simple
instructions to obtain your records and create an electronic ballot.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Overland Storage, Inc., c/o Wells Fargo
Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873.
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TO VOTE BY MAIL
AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
ò
Please detach here
ò
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THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS VOTES FOR
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PROPOSALS 1, 2, 3, 4, 5 AND 6
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1.
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APPROVE THE ISSUANCE OF 47,152,630 SHARES OF OUR COMMON STOCK AS THE ACQUISITION SHARES AT THE CLOSING OF OUR PROPOSED ACQUISITION OF TANDBERG DATA HOLDINGS S.À
R.L.
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¨
For
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Against
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Abstain
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2.
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APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK FROM 90,200,000 SHARES TO
125,000,000 SHARES:
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For
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Against
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Abstain
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3.
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APPROVE THE ISSUANCE OF UP TO 17,192,304 SHARES OF THE COMPANYS COMMON STOCK, WHICH WERE ISSUED OR ARE ISSUABLE UPON THE CONVERSION OF OUTSTANDING PROMISSORY NOTES
ISSUED IN FEBRUARY 2013 AND NOVEMBER 2013 AND ADDITIONAL CONVERTIBLE PROMISSORY NOTES TO BE ISSUED PURSUANT TO THE NPA:
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For
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Against
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Abstain
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4.
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APPROVE THE PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT A SPECIFIC RATIO, RANGING FROM
ONE-FOR-TWO TO ONE-FOR-TEN, TO BE DETERMINED BY THE BOARD OF DIRECTORS AND EFFECTED, IF AT ALL, WITHIN ONE YEAR FROM THE DATE OF THE SPECIAL MEETING:
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For
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Against
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Abstain
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5.
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APPROVE THE AMENDMENTS TO OUR 2009 EQUITY INCENTIVE PLAN, INCLUDING AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR AWARD GRANT PURPOSES UNDER THE 2009
EQUITY INCENTIVE PLAN BY 7,000,000 SHARES OF COMMON STOCK:
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For
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Against
¨
Abstain
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6.
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APPROVE THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES:
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UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4, 5, AND 6, AND
IN THE DISCRETION OF THE APPOINTED PROXIES UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
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Address change? Mark box
¨
Indicate changes below
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Date
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Signature(s) in Box
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Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees,
administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.
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