UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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NATIONAL DENTEX CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
common stock, par value $.01 per share (
common stock
)
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(2)
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Aggregate number of securities to which transaction applies:
5,913,464 shares of common stock; options to purchase 698,761
shares of common stock; and restricted stock units with
respect to 10,762 shares of common stock.
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
The maximum aggregate value was determined based upon the sum
of (A) 5,913,464 shares of common stock multiplied by $17.00
per share; (B) options to purchase 698,761 shares of common
stock multiplied by $6.68 (which is the difference between
$17.00 and such options weighted average exercise price of
$10.32 per share); and (C) restricted stock units with respect
to 10,762 shares of common stock multiplied by $17.00 per
share. In accordance with Section 14(g) of the Securities
Exchange Act of 1934, as amended, the filing fee was
determined by multiplying 0.00007130 by the sum of the numbers
in the preceding sentence.
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(4)
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Proposed maximum aggregate value of transaction:
$105,379,898
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(5)
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Total fee paid:
$7,513.59
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and
the date of its filing.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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National Dentex Corporation
2 Vision Drive
Natick, Massachusetts 01760
(508) 907-7800
Dear Shareholders:
On April 5, 2010, National Dentex Corporation (
National Dentex
) announced that it had
entered into an Agreement and Plan of Merger (the
Merger Agreement
) among GDC Holdings, Inc.
(
Parent
), a Delaware corporation, Royal Acquisition Corp., a Delaware corporation and an indirect
wholly owned subsidiary of Parent and a direct wholly owned subsidiary of GeoDigm Corporation, a
Minnesota corporation (
Merger Sub
) and National Dentex. Pursuant to the Merger Agreement, Merger Sub
will be merged with and into National Dentex, with National Dentex being the surviving corporation
(the
Merger
). If the Merger is completed, each share of common stock of National Dentex will be
converted into the right to receive $17.00 in cash.
Our board of directors has unanimously determined that the Merger is advisable and in the best
interest of National Dentex and its shareholders and that the $17.00 per share consideration for
outstanding shares of National Dentex common stock is fair to our shareholders and recommends that
you vote FOR the adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger.
National Dentex will hold a special meeting of its shareholders to consider and vote on a proposal
to adopt and approve the Merger Agreement and the transactions contemplated thereby, including the Merger. You will find the notice of this meeting in the
attached documents.
Your vote is very important
. We cannot complete the Merger unless a majority
of the outstanding shares of National Dentex common stock entitled to vote on the Merger Agreement
and the transactions contemplated thereby, including the Merger, are voted
FOR
the proposal to
adopt and approve the Merger Agreement and the transactions contemplated thereby, including the
Merger. The failure of any shareholder to vote on the proposal to adopt and approve the Merger
Agreement and the transactions contemplated thereby, including the Merger, will have the same
effect as a vote against the adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger.
Whether or not you plan to attend the special meeting, please complete, date, sign and return,
as promptly as possible, the enclosed proxy in the accompanying reply envelope.
If you attend the
special meeting and vote in person, your vote by ballot will revoke any proxy card previously submitted.
Thank you in advance for your cooperation and continued support.
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Sincerely,
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/s/ David L. Brown
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David L. Brown
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Chairman and Chief Executive Officer
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS
APPROVED OR DISAPPROVED THE MERGER AGREEMENT OR THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF
THE MERGER AGREEMENT OR THE MERGER OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN
THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
NATIONAL DENTEX CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [
], 2010
Dear Shareholder:
A special meeting of the shareholders of National Dentex Corporation, a Massachusetts
corporation (
National Dentex
) will be held, unless postponed or adjourned, on [
], 2010, at [
],
local time at the offices of Posternak Blankstein & Lund LLP, at the Prudential Tower,
33
rd
Floor, 800 Boylston Street, Boston, MA, 02199, for the purpose of considering and
voting upon the following matters:
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To consider and vote on a proposal to adopt and approve the Agreement and Plan of
Merger, dated as of April 2, 2010 (the
Merger Agreement
) among GDC Holdings, Inc., a
Delaware corporation (
Parent
), Royal Acquisition Corp., a Delaware corporation, an
indirect wholly owned subsidiary of Parent and a direct wholly owned subsidiary of GeoDigm
Corporation, a Minnesota Corporation (
Merger Sub
), and National Dentex and the
transactions contemplated thereby, including the Merger. A copy of the Merger Agreement
is attached as
Annex A
to this proxy statement. Pursuant to the terms of the Merger
Agreement, Merger Sub will merge with and into National Dentex with National Dentex being
the surviving corporation (the
Merger
) and each outstanding share of National Dentexs
common stock, par value $0.01 per share (other than shares owned by National Dentex,
Parent or Merger Sub or any subsidiary of National Dentex, and shares held by shareholders who
validly perfect their appraisal rights in accordance with Massachusetts law, if
available), will be cancelled and extinguished and converted into the right to receive
$17.00 in cash, without interest and less any applicable withholding tax; and
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To consider and vote on a proposal to adjourn the special meeting, if necessary, to
solicit additional proxies in favor of the Merger Agreement and the transactions
contemplated thereby, including the Merger.
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We have fixed the close of business on [
], 2010 as the record date for determining those
shareholders entitled to notice of and to vote at the special meeting. Only National Dentex
shareholders of record at the close of business on that date are entitled to and are being
requested to vote at the special meeting. All shareholders of record are cordially invited to
attend the special meeting. This proxy statement is first being sent to shareholders on or about
[
], 2010.
Please vote as soon as possible.
To complete the Merger, the Merger Agreement and the
transactions contemplated thereby, including the Merger, must be adopted and approved by the
affirmative vote of the holders of a majority of the outstanding shares of National Dentex common
stock entitled to vote on such matter. Abstentions and shares that you have not authorized your
broker to vote will have the same effect as votes against the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger.
Whether or not you
intend to attend the special meeting, please vote as promptly as possible by completing, signing
and returning the enclosed proxy card in the postage-paid envelope provided. If your shares are
held in the name of a broker, bank or other nominee, please follow the instructions on the voting
instruction card provided by such person. If you attend the special meeting, you may vote in
person if you wish, even if you have previously returned your proxy card. If you wish to attend
the special meeting and vote in person and your shares are held in the name of a broker, bank or
other nominee, you must bring with you a proxy from the broker, trustee, bank or nominee to confirm
your beneficial ownership of the shares.
2
National Dentexs board of directors, by a unanimous vote, has determined that the Merger
Agreement and the transactions contemplated thereby, including the Merger, are advisable, and in
the best interests of National Dentex and our shareholders, that the $17.00 per share Merger
consideration for outstanding shares of National Dentex common stock is fair to our shareholders,
and recommends that National Dentex shareholders vote FOR adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, and FOR the approval
of the adjournment of the special meeting, if necessary, in order to solicit additional proxies in favor of
adoption and approval of the Merger Agreement and the transactions contemplated thereby, including
the Merger.
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By Order of the Board of Directors
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/s/ Richard F. Becker, Jr.
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Richard F. Becker, Jr.
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Executive Vice President, Treasurer, and Assistant Secretary
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Natick, Massachusetts
[
], 2010
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3
TABLE OF CONTENTS
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Page
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5
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13
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18
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A-1
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B-1
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C-1
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4
SUMMARY
This summary term sheet highlights selected information from this proxy statement and may not
contain all of the information that is important to you. To understand the Merger fully, and for a
more complete description of the terms of the Merger, you should carefully read this entire proxy
statement and the annexes attached to and other documents
incorporated by reference in this proxy statement. We have included page references to
direct you to a more complete description of the topics presented in this summary term sheet. In
this proxy statement, the terms National Dentex, the Company, we, us and our refer to
National Dentex Corporation, a Massachusetts corporation. In addition we refer to GDC Holdings,
Inc. as Parent, Royal Acquisition Corp. as Merger Sub, GeoDigm Corporation as GeoDigm, and
Welsh, Carson, Anderson & Stowe XI, L.P as Welsh Carson or Sponsor.
The Parties to the Merger Agreement
National Dentex Corporation, one of the largest owner/operators of dental laboratories in
North America, serves an active customer base of over 24,000 dentists through 44 dental
laboratories located in 30 states and one Canadian province. National Dentexs dental laboratories
provide a full range of custom-made dental prosthetic appliances, including dentures, crowns, and
fixed bridges, and other dental specialties. Upon completion of the Merger, we will be an indirect
wholly owned subsidiary of Parent and a direct wholly owned subsidiary of GeoDigm.
Parent is a Delaware corporation and is the sole stockholder of GeoDigm. Parent conducts no
other business activities other than those relating to owning the stock of GeoDigm. GeoDigm is a
Minnesota corporation based in Chanhassen, Minnesota and is a leading innovator in dental and
orthodontic imaging and manufacturing technology. GeoDigm deploys its proprietary,
digitally-enabled production system exclusively through its laboratories, delivering products and
services to its client base of over 5,000 dentists and orthodontists.
Merger Sub is a Delaware corporation formed by GeoDigm in anticipation of the Merger. Merger
Sub is a direct wholly owned subsidiary of GeoDigm and an indirect wholly owned subsidiary of
Parent. Subject to the terms and conditions of the Merger Agreement and in accordance with
Massachusetts and Delaware law, at the effective time of the Merger, Merger Sub will merge with and
into National Dentex and National Dentex will continue as the surviving corporation. Merger Sub
currently has de minimis assets and no operations. The address of Parent and Merger Sub is c/o
GeoDigm Corporation, 1630 Lake Drive West, Chanhassen, MN 55317.
Welsh Carson is a Delaware limited partnership with capital commitments of approximately $4
billion. Welsh Carson was organized by Welsh, Carson, Anderson & Stowe, one of the largest private
equity firms in the United States and the largest private equity firm in the world focused
exclusively on investment in the healthcare and information/business services industries. Since
its founding in 1979, Welsh, Carson, Anderson & Stowe has organized 15 investment partnerships with
total capital of over $20 billion and is currently making investments from Welsh Carson as well as
a separate dedicated subordinated debt fund. The address of Welsh Carson is c/o Welsh, Carson,
Anderson & Stowe, 320 Park Avenue, Suite 2500, New York, NY 10022.
The Merger Proposal (page 45)
You are being asked to vote on a proposal to adopt and approve the Agreement and Plan of
Merger, dated as of April 2, 2010, among Parent, Merger Sub and National Dentex, and the
transactions contemplated thereby, including the Merger. Pursuant to the Merger Agreement, upon
completion of the Merger, each outstanding share of our common stock, par value $0.01 per share
(other than shares owned by Parent, Merger Sub, National Dentex or any subsidiary of National
Dentex and shares held by shareholders who perfect appraisal rights in accordance with
Massachusetts law, if available), will be converted into the right to receive $17.00 in cash,
without interest, and Merger Sub will merge with and into National Dentex and National Dentex will
become a wholly owned subsidiary of GeoDigm. In the event that there are not sufficient votes
properly cast at the time of the special meeting to adopt and approve the Merger Agreement,
our shareholders may also be asked to vote on a proposal to adjourn the special meeting to solicit
additional proxies.
5
Reasons for the Merger (page 29)
Our board of directors has unanimously determined that the Merger is advisable and in the best
interests of National Dentex and our shareholders and that the $17.00 per share Merger consideration for outstanding
shares of our common stock is fair to our shareholders. Our board of directors has unanimously
adopted the Merger Agreement and unanimously recommends that our shareholders adopt and approve the
Merger Agreement and the transactions contemplated thereby, including the Merger.
ACCORDINGLY, OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ADOPTION AND APPROVAL OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
Opinion of Signal Hill (page 31)
In connection with the Merger, our board of directors received an opinion
from Signal Hill Capital Group LLC (
Signal
Hill
) as to the fairness, from a financial point of view and as of the date of such opinion, of
the $17.00 per share cash Merger consideration to be received by holders of our common stock in
accordance with the Merger Agreement. The full text of Signal Hills written opinion, dated April
2, 2010, is attached to this proxy statement as
Annex B
. You are encouraged to read this opinion
carefully in its entirety for a description of the assumptions made, procedures followed, matters
considered and limitations on the scope of review undertaken. Signal Hills opinion addressed only
the fairness of the Merger consideration to our shareholders from a financial point of view as of
the date of the opinion and did not address any other aspect of the Merger, including the merits of
the underlying decision by us to enter into the Merger Agreement. The opinion was addressed to the
board of directors for its information and use, but does not constitute a recommendation as to how
any shareholder should vote or act on any matter relating to the proposal to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the Merger.
The Special Meeting (page 19)
The special meeting will be held, unless postponed or adjourned, on [
], 2010, at [
], local
time at the offices of Posternak Blankstein & Lund LLP, at the Prudential Tower, 33
rd
Floor, 800 Boylston Street, Boston MA, 02199.
Record Date and Quorum (page 19)
You are entitled to vote at the special meeting if you were the record owner of shares of our
common stock at the close of business on [
], 2010, the record date for the special meeting. You
will have one vote for each share of our common stock that you owned on the record date. As of the
record date, there were [
] shares of our common stock entitled to vote at the special meeting. The
holders of a majority of the outstanding shares of our common stock at the close of business on the
record date represented in person or by proxy will constitute a quorum for purposes of the special
meeting.
Vote Required for Adoption and Approval (page 19)
The adoption and approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, requires the affirmative vote of the holders of a majority of the outstanding
shares of our common stock entitled to vote thereon. A failure to vote your shares of our common
stock or an abstention will have the same effect as voting against the adoption and approval of the
Merger Agreement and the transactions contemplated thereby, including the Merger.
Common Stock Ownership of Directors and Executive Officers (page 63)
As of the record date, the directors and executive officers of National Dentex held [
] shares
of our common stock entitled to vote at the special meeting. In the aggregate, these shares
represent approximately [
]% of the voting power necessary to adopt and approve the Merger
Agreement and the transactions contemplated thereby, including the Merger, at the special meeting.
6
Required Approvals and Consents (page 40)
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
HSR Act
), provides
that transactions such as the Merger may not be completed until certain information has been
submitted to the Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice and certain waiting period requirements have been satisfied. National Dentex and Welsh
Carson filed notification reports with the Department of Justice and the Federal Trade Commission
under the Hart-Scott-Rodino Act on [
], 2010.
Appraisal Rights (page 39)
We do not believe our shareholders will be entitled to appraisal rights under the
Massachusetts Business Corporation Act (the
MBCA
) in connection with the Merger. Section
13.02(a)(1) of the MBCA generally provides that shareholders of a Massachusetts corporation are
entitled to appraisal rights in the event of a Merger. However, an exception to the general rule in
Section 13.02(a)(1) of the MBCA provides that shareholders of a Massachusetts corporation are not
entitled to appraisal rights in a merger transaction in which the sole consideration they receive
consists of cash and so long as no director, officer or controlling shareholder of National Dentex
has a direct or indirect material financial interest in the Merger other than in: (i) his, her or
its capacity as a shareholder of the corporation; (ii) his, her or its capacity as a director,
officer, employee or consultant of the merging corporation or the surviving corporation or an
affiliate of the surviving corporation pursuant to bona fide arrangements with the merging
corporation or the surviving corporation or any affiliate thereof; or (iii) any other capacity so
long as the shareholder owns less than 5% of the voting securities of the corporation.
National Dentex believes that this exception applies to the Merger and that our
shareholders will not be entitled to appraisal rights in connection with the Merger. However, the
MBCA took effect on July 1, 2004 and Section 13.02 of the MBCA has not yet been the subject of
judicial interpretation. Accordingly, it is possible that a court could conclude that this
exception is not applicable in the present circumstances and that National Dentex shareholders are
entitled to appraisal rights under Massachusetts law.
Any shareholder who believes he, she or it is entitled to appraisal rights and who wishes to
preserve those rights should carefully review Sections 13.01 through 13.31 of Part 13 of the MBCA,
attached as
Annex C
to this proxy statement, which sets forth the procedures to be complied with in
perfecting such appraisal rights, if available. Failure to strictly comply with the procedures
specified in Part 13 of the MBCA would result in the loss of any appraisal rights to which such
shareholder may be entitled. Please read Part 13 of the MBCA carefully, because exercising appraisal rights
involves several procedural steps, and failure to follow appraisal procedures could result in the
loss of such rights, if any. Shareholders should consult with their advisors, including legal
counsel, in connection with any demand for appraisal.
Additionally, since National Dentex does not believe that our shareholders are entitled to
appraisal rights in connection with the Merger, National Dentex intends to take the position that
any of our shareholders who seek appraisal for their shares of common stock are not entitled to do
so under the MBCA and National Dentex does not intend to deliver the appraisal notice and form
called for by Section 13.22 of the MBCA to any of our shareholders seeking appraisal.
Financing and Equity Commitment Letter (page 56)
Parent and Merger Sub estimate that the total amount of funds necessary to consummate the
Merger and related transactions will be approximately $139,000,000
(including the pay off of net debt and payment of fees), which Parent and Merger Sub
expect will be funded by equity financing, debt financing, if available at the time of closing,
and, to the extent available at the time of closing, cash of National Dentex. Notwithstanding any
debt financing that Parent may seek to have in place at the closing, Parents and Merger Subs
obligations to consummate the Merger are not subject to any financing conditions (although funding
of the equity financing is subject to the satisfaction of the closing conditions set forth in the
Merger Agreement). Parent, Merger Sub and National Dentex are a party to an equity commitment
letter with Welsh Carson (the
Equity Commitment Letter
), pursuant to which, Welsh
Carson has agreed to provide up to a maximum of $139,000,000 of equity financing to finance the
Merger and other transactions contemplated by the Merger Agreement.
7
Treatment of Stock Options and Other Stock-Based Awards (page 45)
Stock Options
. Immediately prior to the effective time of the Merger, each then outstanding
option to acquire common stock of National Dentex shall become vested in full and exercisable for
shares of common stock of National Dentex. If not exercised at or prior to the effective time of
the Merger, each such outstanding option shall be terminated and converted into the right to
receive an amount, if any, equal to (i) the excess, if any, of (A) $17.00 over (B) the exercise
price per share of the applicable option, multiplied by (ii) the number of shares of common stock
subject to such option.
ESPP
. Our Employee Stock Purchase Plan (
ESPP
) will terminate as of the effective time of
the Merger. All ESPP deductions made in the current plan year beginning April 1, 2010 will be
refunded after the Merger is complete.
Restricted Stock
. Shares of common stock awarded pursuant to our equity incentive plans and
subject to vesting or other lapse restrictions (restricted stock) that are outstanding immediately
prior to the effective time of the Merger shall vest in full and become free of applicable lapse
restrictions as of the effective time of the Merger. As a result, if the Merger is completed, the
holder thereof shall be entitled to receive $17.00 per share with respect to each share of
restricted stock.
Restricted Stock Units
. Each award of a right to shares of common stock pursuant to our
equity incentive plans that is subject to vesting or other lapse restrictions (
RSUs
) that is
outstanding immediately prior to the effective time of the Merger shall vest in full and become
free of applicable lapse restrictions as of the effective time of the Merger. Such RSUs shall be
canceled and extinguished as of the consummation of the Merger, and the holder thereof shall be
entitled to receive from National Dentex an amount in cash equal to $17.00 per share with respect
to each share previously subject to such RSU and not previously delivered pursuant to such RSU.
Anticipated Closing of the Merger
We expect the Merger to be completed in our fiscal quarter ending June 30, 2010. However, the
timing of the completion of the Merger depends upon the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, by our shareholders, among other conditions.
Interests of Directors and Executive Officers in the Merger (page 40)
In considering the information contained in this proxy statement, you should be aware that
National Dentexs executive officers and directors have financial interests in the Merger that may
be different from, or in addition to, the interests of other National Dentex shareholders. These
additional or differing interests of National Dentexs executive officers and directors may create
potential conflicts of interest and may cause these persons to view the proposed transaction
differently than you may view it as a shareholder.
National Dentexs board of directors was aware of these interests and took them into account
in its decision to declare advisable the Merger Agreement and the transactions contemplated
thereby, including the Merger. For information concerning these interests, please see the
discussion under
The Merger Interests of Directors and Executive Officers in the
Merger
, beginning on page 40.
Alternative Acquisition Proposals by Third Parties (Page 52)
The Merger Agreement provides that, until 11:59 p.m., Eastern Standard Time, on May 12, 2010,
we are permitted to:
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initiate, solicit or encourage any alternative acquisition proposal to the Merger
Agreement (an alternative acquisition proposal), including by way of making public
disclosure relating to such solicitation and by providing non-public information
relating to National Dentex pursuant to an acceptable confidentiality agreement (as
more fully described below under
Alternative Acquisition Proposals by Third Parties
beginning on Page 52), provided that we must promptly
make available to Parent any non-public information that we so provide to another person
that was not previously delivered to Parent; and
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enter into, maintain, participate in or engage in any discussions or negotiations
with one or more persons or entities with respect to any alternative acquisition
proposal or otherwise cooperate with or assist in, participate in, or facilitate any
such inquiries, discussions or negotiations.
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From and after 11:59 p.m., Eastern Standard Time, on May 12, 2010, we have agreed not to:
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initiate, solicit, knowingly facilitate or encourage (including by way of providing
non-public information or access to our employees to initiate, solicit, knowingly
facilitate or encourage) an alternative acquisition proposal;
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engage in any discussions or negotiations with respect to an alternative acquisition
proposal (or that could reasonably be expected to lead to an alternative acquisition
proposal) or otherwise cooperate with, assist, participate in or facilitate any such
requests, proposals, offers, discussions or negotiations (except as permitted with a
Continuing Party, as discussed below);
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take any actions that make the provision of any state anti-takeover laws
inapplicable to an alternative acquisition proposal;
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adopt, approve or recommend, or resolve to or publicly propose to adopt, approve or
recommend, an alternative acquisition proposal, or enter into any merger agreement,
letter of intent, agreement in principle, acquisition agreement or agreement (other
than an acceptable confidentiality agreement) providing for or relating to an
alternative acquisition proposal or consummate any such transaction, or enter into any
agreement or understanding requiring us to abandon, terminate or fail to consummate the
Merger Agreement or the transactions contemplated thereby, including the Merger, or breach our obligations
thereunder; or
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terminate, amend, release, modify or fail to enforce any provision of, or grant any
permission, waiver or request under, any standstill, confidentiality or similar
agreement entered into by National Dentex in respect of or in contemplation of an
alternative acquisition proposal.
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Notwithstanding these restrictions, at all times during the period commencing as of 11:59
p.m., Eastern Standard Time, on May 12, 2010 and until the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, by our shareholders, we
may furnish information about National Dentex to and participate in discussions or negotiations
with:
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any person or entity that makes an alternative written acquisition proposal (other
than a written alternative acquisition proposal that was intentionally or knowingly
solicited in violation of the Merger Agreement or that directly or indirectly resulted
from a material breach of the no-shop provisions of the Merger Agreement) that our
board of directors believes in good faith to be bona fide and determines in good faith,
after consultation with its outside financial and legal advisors, that the failure to
furnish information or participate in discussions with such person would be
inconsistent with or in violation of the directors fiduciary duty under applicable
law, and that such acquisition proposal constitutes or could reasonably be expected to
result in a superior proposal to the transactions contemplated by the Merger Agreement;
provided, that we may not disclose or make available any non-public information to such
person without first entering into an acceptable confidentiality agreement, and we must
promptly make available to Parent any nonpublic information concerning National Dentex
provided or made available to such other or entity person which was not previously
provided or made available to Parent; or
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any person or entity that makes a written alternative acquisition proposal which we
receive after April 2, 2010 and before May 12, 2010 with whom we are then having
ongoing discussions or negotiations as of May 12, 2010 regarding such alternative
acquisition proposal, provided that, in each case, the board of directors believes in
good faith that such acquisition proposal is bona fide and determines in good faith,
after consultation with its outside financial and legal advisors, that such acquisition
proposal constitutes or would reasonably be expected to result in a superior proposal
to the transactions contemplated by the Merger Agreement.
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9
Conditions to the Merger (page 57)
The completion of the Merger depends on the satisfaction of the following conditions:
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the adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger, by our shareholders;
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any applicable waiting period (and any extension of the waiting period, if any)
under the HSR Act having expired or been terminated;
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no law or order having been enacted by a governmental authority of competent
jurisdiction that would render the Merger illegal or otherwise prohibit the
consummation of the Merger, and no governmental authority having initiated proceedings
seeking to prevent or impose adverse conditions with respect to the Merger;
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the accuracy of the representations and warranties of each party as of the closing
date of the Merger, except to the extent that any inaccuracy in any representation or
warranty does not, individually or in the aggregate, have a material adverse effect on
the party making the representation, except that certain or our representations related
to our good standing under applicable law, our capitalization, our indebtedness, our
board recommendation, a violation of our organizational documents with respect to the
Merger, the applicability of anti-takeover statutes, and the opinion of Signal Hill,
must be true and correct in all material respects at the closing date;
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the parties having performed in all material respects all obligations that are to be
performed under the Merger Agreement prior to the consummation of the Merger;
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no material adverse effect having occurred to National Dentex or our business since
April 2, 2010; and
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the parties having delivered closing certificates with respect to the satisfaction
of certain of the foregoing conditions relating to the accuracy of representations and
warranties, compliance with obligations and the absence of any material adverse effect
on National Dentex.
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Termination (page 58)
National Dentex and Parent may agree by mutual written consent at any time prior to the
effective time of the Merger to terminate the Merger Agreement and abandon the Merger, whether
before or after the adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger, by our shareholders.
National Dentex and Parent can decide individually, without the consent of the other, not to
complete the Merger in the following situations:
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the Merger is not consummated on or before 5:00 p.m. Eastern Standard Time on
September 15, 2010; provided, however, that this right is not available to a party
whose breach of the Merger Agreement has been the proximate cause of the failure to
consummate the Merger by such date;
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any governmental entity has issued a statute, rule, order, decree, or regulation or
taken any other action permanently restraining or prohibiting consummation of the
Merger or making the Merger illegal and the statute, rule, order, decree, regulation or
other action has become final and non-appealable;
provided,
however
that this right is
not available to a party whose breach of the Merger Agreement has been the proximate
cause of the imposition of such legal restraint; or
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our shareholders fail to adopt and approve the Merger Agreement and the transactions
contemplated thereby;
provided, however
, that this right is not available to National
Dentex if it has breached in any material respect any of its obligations with respect
to our shareholders meeting, this proxy statement
or the no-shop provisions and such breach is the proximate cause of the failure to
obtain the adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger, by our shareholders.
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In addition, Parent may terminate the Merger Agreement without our consent if:
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our board of directors (i) withdraws, withholds, qualifies, or modifies in a manner
adverse to Parent its recommendation in support of the Merger and Merger Agreement or
publicly proposes to do any of the foregoing; (ii) fails to include or publicly
proposes not to include its recommendation in support of the Merger and Merger
Agreement in this proxy statement; (iii) publicly proposes to accept an alternative
acquisition proposal; (iv) after May 12, 2010, fails to publicly reaffirm its
recommendation in support of the Merger and Merger Agreement within 48 hours after Parent so
requests in response to a publically proposed alternative acquisition proposal, except
during any time when it is in negotiations with Parent concerning Parent improving its
proposal to acquire National Dentex; (v) fails to recommend against any transaction
that would result in an acquisition of National Dentex by the third party and that is
subject to Regulation 14D under the Securities Exchange Act of 1934, as amended, in a
Solicitations/Recommendations Statement filed a Schedule 14D-9 or other public
communication;
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we enter into any letter of intent or similar document or any contract accepting an
alternative acquisition proposal; or
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we breach or fail to perform any of our representations, warranties, covenants, or
other agreements, such breach or failure to perform entitles Parent not to consummate
the Merger, and such breach or failure to perform is incapable of being cured by us or,
if curable, is not cured within twenty business days of receipt of written notice to us,
but in no event later than 5:00 p.m. Eastern Standard Time on September 15, 2010.
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We may terminate the Merger Agreement, prior to our shareholders adoption and approval of the
Merger Agreement and the transactions contemplated thereby, including the Merger, without Parent or
Merger Subs consent:
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in order to enter into a definitive agreement with another entity which constitutes
a superior proposal to the transactions contemplated by the Merger Agreement, so long
as such termination is made in accordance with and permitted by the non-solicitation
provisions of the Merger Agreement; or
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if either Parent or Merger Sub breaches or fails to perform any of its
representations, warranties, covenants, or other agreements, such breach or failure to
perform entitles us not to consummate the Merger and such breach or failure to perform
is incapable of being cured by Parent or Merger Sub or, if curable, is not cured within
twenty business days of receipt of written notice from National Dentex, but in no event
later than 5:00 p.m. Eastern Standard Time on September 15, 2010.
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Termination Fee and Expenses (page 60)
If the Merger Agreement is terminated:
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by National Dentex or Parent because our shareholders fail to adopt and approve the
Merger or Merger Agreement and the transactions contemplated thereby by the required vote at our
shareholders meeting; or
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by Parent following our uncured or incurable breach of the Merger Agreement as
described above in the section entitled
Termination,
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then we would be required to reimburse Parent for its out-of-pocket expenses incurred in connection
with the transactions contemplated by the Merger Agreement, up to a maximum of $2,000,000. The
amount of Parents expenses paid by us will be credited against any termination fee that becomes
payable by us in the future.
We are required to pay a termination fee of $4,150,000, less any amount we have previously
paid for Parents transaction expenses, if:
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Parent terminates the Merger Agreement because our board of directors has changed
its recommendation in favor of the Merger, our board of directors has adopted an
alternative acquisition
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proposal or we have entered into a letter of intent or other
agreement regarding an alternative acquisition proposal;
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we terminate the Merger Agreement prior to obtaining the requisite shareholder vote
in order to enter into an agreement regarding a superior proposal to the transactions
contemplated by the Merger Agreement;
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either National Dentex or Parent terminates the Merger Agreement because the Merger
has not been consummated by 5:00 p.m., Eastern Standard Time, on September 15, 2010; or
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our shareholders fail to adopt and approve the Merger at the shareholders meeting
or Parent terminates the Merger Agreement due to an uncured or incurable breach of the
Merger Agreement by National Dentex, as described above in the section entitled
Termination
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provided, however
, that the termination fee will be $3,150,000, less any amount we have previously
paid for Parents transaction expenses, if the alternative acquisition proposal leading to
termination is entered into with a party from which we received an alternative acquisition proposal
on or before May 12, 2010 and with whom we are having ongoing discussions as of May 12, 2010 and
who remains a Continuing Party (as defined in the Merger Agreement) under the Merger Agreement.
Parent is only entitled to the termination fee following termination for failure to consummate the
Merger by 5:00 p.m., Eastern Standard Time, on September 15, 2010, failure to obtain the required
shareholder vote, or our breach of the Merger Agreement, if, following such termination, we enter
into a definitive agreement with respect to an alternative acquisition proposal or consummate an
alternative acquisition proposal within one year of termination, in each case for more than 50% of
the equity or assets of National Dentex.
Remedies; Specific Performance (page 62)
In the event of a breach of the Merger Agreement by Parent or Merger Sub, or the Equity
Commitment Letter by Sponsor, our sole remedy is to seek specific performance (or, if the court
declines to award specific performance, to seek to recover money damages consistent with the Merger
Agreement), against Parent in order to enforce Parents obligations under the Merger Agreement,
including to consummate the Merger, and against Sponsor in order to enforce Sponsors obligations
under the Equity Commitment Letter, including Sponsors commitment to provide the cash
contributions to Parent to consummate the Merger or satisfy Parents or Merger Subs damages
liability for any breaches by them of the Merger Agreement, in all events not to exceed
$139,000,000, which is the maximum aggregate amount that is estimated to be necessary to consummate
the Merger and related transactions. If a final, non-appealable damages judgment is entered
against Parent and/or Sponsor, we may not enforce such judgment if Parent and Merger Sub
irrevocably commit in writing to us to consummate the Merger in accordance with the Merger
Agreement, Sponsor irrevocably commits to us in writing to consummate the transactions
contemplated by the Equity Commitment Letter in accordance with its terms, within ten days of such
judgment and the Merger is consummated within 15 days of such irrevocable commitment.
Accounting Treatment of the Merger
The Merger will be treated as a business combination using the acquisition method of
accounting with GeoDigm treated as the acquirer under generally accepted accounting principles, or
GAAP.
Material United States Federal Income Tax Consequences of the Merger (page 42)
For U.S. federal income tax purposes, the disposition of our common stock pursuant to the
Merger generally will be treated as a sale of the shares of our common stock for cash by each of
our shareholders. As a result, in general, each shareholder will recognize gain or loss equal to
the difference, if any, between the amount of cash received by such shareholder in the Merger and
such shareholders adjusted tax basis in the shares surrendered. Such gain or loss will be capital
gain or loss if the shares of common stock surrendered are held as capital assets in the hands of
the shareholder, and will be long-term capital gain or loss if the shares of common stock have a
holding period of more than one year at the effective time of the Merger. In certain circumstances,
all or a portion of any loss realized upon the disposition of shares will be disallowed if other
shares of our common stock are purchased within 30 days before or after the disposition. In such a
case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.
Shareholders may be subject to state, local, or foreign tax laws that are not disclosed in
this proxy statement.
We recommend that our shareholders consult their own tax advisors as to
the particular tax consequences to them of the Merger.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following are some questions that you, as a shareholder of National Dentex, may have
regarding the Merger and the special meeting of National Dentex shareholders, and brief answers to
such questions. We urge you to read carefully this entire proxy statement, because the information
in this section does not provide all the information that may be important to you with respect to
the adoption and approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger. Additional important information is also contained in the appendices to and documents
incorporated by reference into this
proxy statement.
What is the proposed transaction?
The proposed transaction is the merger of Merger Sub, an indirect wholly owned subsidiary of
Parent and direct wholly owned subsidiary of GeoDigm, with and into National Dentex pursuant to the
Merger Agreement. National Dentex will be the surviving corporation in the Merger and will become
a direct wholly owned subsidiary of GeoDigm and an indirect wholly owned subsidiary of Parent.
What matters will be voted on at the special meeting?
You will be asked to consider and vote on proposals to do the following:
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to adopt and approve the Merger Agreement and the transactions contemplated thereby,
including the Merger; and
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to adopt and approve the adjournment of the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time
of the meeting to adopt and approve Merger Agreement.
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As a National Dentex shareholder, what will I receive upon completion of the Merger?
If the Merger is completed, you will receive $17.00 in cash for each share of our common stock
that you own immediately prior to the effective time of the Merger, unless you exercise and perfect
your appraisal rights under Massachusetts law, if available.
What do I need to do now?
After you carefully read this proxy statement in its entirety, including its appendices,
consider how the Merger would affect you and then vote or provide voting instructions as described in
this proxy statement.
Who can vote and attend the special meeting?
All shareholders of record as of the close of business on [
], 2010, the record date for the
special meeting, are entitled to receive notice of and to attend and vote at the special meeting,
or any postponement or adjournment thereof. If you want to attend the special meeting and your
shares are held in an account at a brokerage firm, bank or other nominee, you must bring to the
special meeting a proxy from the record holder (your broker, bank or nominee) of the shares
authorizing you to vote at the special meeting.
When and where is the special meeting?
The special meeting of shareholders of National Dentex will be held, unless adjourned or
postponed, on [
], 2010, starting [
] local time, at the offices of Posternak Blankstein & Lund
LLP, at the Prudential Tower, 33rd Floor, 800 Boylston Street, Boston MA, 02199.
How many votes are required to adopt and approve Merger Agreement?
In order to adopt and approve the Merger Agreement and the transactions contemplated thereby,
including the Merger, our shareholders holding a majority of the outstanding shares of National Dentex
common stock entitled to vote on the Merger Agreement on the record date must vote
FOR
the Merger Agreement and the
transactions contemplated thereby, including the Merger. In order to adjourn the special meeting,
if necessary, to solicit additional proxies to vote in
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favor of the Merger Agreement and the transactions contemplated thereby, including the Merger,
the holders of shares of National Dentex common stock representing a majority of the votes cast on
the proposal to adjourn the special meeting must vote
FOR
the adjournment of the special meeting.
How does the National Dentex board of directors recommend I vote?
At a meeting held on April 2, 2010, the National Dentex board of directors by unanimous vote
(i) determined and declared that the Merger Agreement and the transactions contemplated thereby, including the Merger, are
advisable in and in the best interests of National Dentex and our shareholders, (ii) adopted the
Merger Agreement, (iii) directed that the Merger Agreement be submitted to shareholders of National
Dentex for their adoption and approval; (iv) determined the $17.00 per share cash price for
outstanding common stock was fair to our shareholders; and (v) resolved to
recommend that our shareholders adopt and approve the Merger Agreement and the
transactions contemplated thereby, including the Merger. Accordingly, the board of directors of
National Dentex unanimously recommends that you vote
FOR
the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, and
FOR
the proposal
to adjourn the special meeting, if necessary or appropriate to solicit additional proxies, if there
are not sufficient votes in favor of adoption and approval of the Merger Agreement and the
transactions contemplated thereby, including the Merger.
How do I vote?
Whether you plan to attend the special meeting or not, we urge you to vote by proxy. Voting by
proxy will not affect your right to attend or vote at the special meeting. Unless otherwise
provided, the following instructions assume that your shares are registered directly in your name
through our stock transfer agent, Registrar & Transfer Company, or you have stock certificates.
You may vote by mail.
You do this by completing and signing your proxy card and mailing it in
the enclosed, prepaid and addressed envelope. If you mark your voting instructions on the proxy
card, your shares will be voted as you instruct. If you return a signed card but do not provide
voting instructions, your shares will be voted
FOR
the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, and
FOR
any proposal
by our board of directors to adjourn the special meeting, if necessary or appropriate to solicit
additional proxies, if there are insufficient votes at the time of the special meeting to adopt and
approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The
failure to attend the special meeting in person or by proxy will count as a vote against the
adoption and approval of the Merger Agreement and the transactions contemplated thereby, including
the Merger, and will not affect the outcome of any proposal by our board of directors to adjourn
the special meeting, but will reduce the number of votes required to approve the adjournment. If
your shares are held in street name (held in the name of a bank, broker or other nominee), you
must provide your bank, broker or other nominee with instructions regarding how to vote your
shares, and receive directions from your bank, broker or other nominee explaining how to provide
such nominee with your voting instructions.
You may vote via telephone or the Internet.
If your shares are held in street name, you must
follow the instructions you receive from your bank, broker or other nominee to vote via telephone
or the Internet.
You may vote in person at the special meeting
. Written ballots will be passed out to anyone
who attends and wants to vote at the special meeting. If you hold your shares in street name, you
must request a legal proxy from your broker or other nominee and bring it to the special
meeting in order to vote at the special meeting. You will not be able to vote at the special
meeting unless you have a legal proxy from your broker.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts at the transfer agent and/or with brokers. Please
vote in the manner described above under
How do I vote?
for each account to ensure that all of your
shares are voted.
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What if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time before the polls close at the
special meeting. You may do this by:
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sending timely written notice to Richard F. Becker, Jr., Executive Vice President,
Treasurer and Assistant Secretary, National Dentex Corporation, 2 Vision Drive, Natick,
Massachusetts, 01760;
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signing, and returning to us in a timely manner, another proxy card with a later
date, or re-voting via telephone or the Internet (only your latest vote will be
counted);
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voting in person at the special meeting. Please note that attending the special
meeting in person will not in and of itself revoke a previously submitted proxy unless
you specifically request so; or
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if you have instructed a broker, bank or other nominee to vote your shares, by
following the directions received from your broker, bank or other nominee to change
those instructions.
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Will my shares be voted if I do not sign and return my proxy card?
No. If your shares are registered in your name or if you have stock certificates, they will
not be voted if you do not sign and return your proxy card by mail, or vote via telephone or the
Internet or in person as described above under
How do I vote?
If your shares are held in street name, your broker, bank or nominee will not be able to
vote your shares without instructions from you. Therefore, you should instruct your broker, bank or
nominee to vote your shares following the procedure provided by your broker, bank or nominee. Under
the rules of NASDAQ Global Market (
Nasdaq
), brokers who hold shares in street name for customers
have the authority to vote on routine proposals when they have not received instructions from
beneficial owners. However, brokers are precluded from exercising their voting discretion with
respect to approving non-routine matters, which includes the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, and the proposal to
adjourn the special meeting and, as a result, absent specific instructions from a beneficial owner
of shares, brokers are not empowered to vote those shares.
If you fail to submit a proxy or vote in person at the special meeting, or do not provide your
broker with instructions, as applicable, your shares of National Dentex common stock will not be
voted. This will have the same effect as a vote against the proposal to adopt and approve the
Merger Agreement and the transactions contemplated thereby, including the Merger, and will have no
effect on the proposal to adjourn the special meeting.
Is the Merger expected to be taxable to me for U.S. federal income tax purposes?
Generally, yes. The receipt of cash for each share of our common stock pursuant to the Merger
will be a taxable transaction for U.S. federal income tax purposes. For U.S. federal income tax
purposes, generally you will recognize gain or loss as a result of the Merger measured by the
difference, if any, between the Merger consideration received for each share and your adjusted tax
basis in that share. Gain or loss will be determined separately for each block of shares (that is,
shares acquired at the same cost in a single transaction).
You should read the section titled
Material United States Federal Income Tax Consequences
beginning on page 42 for a more complete discussion of the U.S. federal income tax consequences of
the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will
depend on the facts of your own situation. In addition, shareholders may be subject to state,
local, or foreign tax laws that are not disclosed in this proxy statement.
You should consult your
own tax advisor as to the tax consequences of the Merger to you.
Should I send in my National Dentex stock certificates now?
No. Promptly after the Merger is completed, each holder of record immediately prior to the
effective time of the Merger will be sent a letter of transmittal and written instructions for
exchanging share certificates for the cash Merger consideration. These instructions will tell you
how and where to send in your certificates or how to transfer ownership of book-entry shares, as
applicable, for the cash Merger consideration. You will receive your cash
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payment after the paying agent receives your stock certificates or a confirmation of a
book-entry transfer by Registrar & Transfer Company, as applicable, and any other documents
requested in the instructions. If your shares are held in street name by your brokerage firm,
bank, trust or other nominee, you will receive instructions from your brokerage firm, bank, trust
or other nominee as to how to effect the surrender of your street name shares in exchange for the
Merger consideration.
PLEASE DO NOT SEND YOUR CERTIFICATES IN NOW.
When can I expect to receive the Merger consideration for my shares?
Once the Merger is completed, you will be sent a letter of transmittal with instructions
informing you how to send your stock certificates or what to do if you hold shares in book-entry
form in order to receive the Merger consideration. Once you have submitted your properly completed
letter of transmittal, National Dentex stock certificates and other required documents to the
paying agent, the paying agent will send you the Merger consideration payable with respect to your
shares. If your shares are held in street name by your broker, bank or other nominee, your
broker, bank or other nominee will handle the exchange for the Merger consideration.
I do not know where my stock certificate is; how will I get cash?
The materials the paying agent will send you after completion of the Merger will include the
procedures that you must follow if you cannot locate your stock certificates. This will include an
affidavit and indemnity agreement that you will need to sign attesting to the loss of your
certificate. You may also be required to provide a bond to us in order to cover any potential
loss.
What happens if I sell my shares before the special meeting?
The record date for the special meeting is earlier than the special meeting and the date that
the Merger is expected to be completed. If you transfer your shares of National Dentexs common
stock after the record date but before the special meeting, you will retain your right to vote at
the special meeting, but will have transferred the right to receive $17.00 per share in cash to be
received by our shareholders in the Merger. In order to receive the $17.00 per share, you must hold
your shares through completion of the Merger.
When do you expect the Merger to be completed?
We are working toward completing the Merger promptly. We currently expect the Merger to be
completed in our fiscal quarter ending June 30, 2010, subject to obtaining shareholder approval and satisfying
all the other closing conditions contained in the Merger Agreement.
Am I entitled to appraisal rights?
We do not believe that our shareholders will be entitled to appraisal rights under the MBCA in
connection with the Merger. The MBCA provides that shareholders of a Massachusetts corporation are
not entitled to appraisal rights in a Merger transaction in which the sole consideration they
receive consists of cash so long as no director, officer or controlling shareholder of National
Dentex has a direct or indirect material financial interest in the Merger other than in: (i) his,
her or its capacity as a shareholder of the corporation; (ii) his, her or its capacity as a
director, officer, employee or consultant of the merging corporation or the surviving corporation
or an affiliate of the surviving corporation pursuant to bona fide arrangements with the merging
corporation or the surviving corporation or any affiliate thereof; or (iii) any other capacity so
long as the shareholder owns less than 5% of the voting securities of the corporation.
National Dentex believes that this exception applies to the Merger and that our
shareholders are not entitled to appraisal rights in connection with the Merger. However, the MBCA
took effect on July 1, 2004 and Section 13.02 of the MBCA has not yet been the subject of judicial
interpretation. Accordingly, it is possible that a court could conclude that this exception is not
applicable in the present circumstances and that National Dentex shareholders are entitled to
appraisal rights under Massachusetts law. We intend to take the position that any of our
shareholders that seek appraisal for their shares of common stock are not entitled to do so under
the MBCA and we do not intend to deliver the appraisal notice and form called for by Section 13.22
of the MBCA to any of our shareholders seeking appraisal. See the section
Appraisal Rights
beginning on page 39.
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Is my vote confidential?
Only the inspectors of election and certain employees of National Dentex will have access to
your proxy card. They will tabulate and certify the vote. Management will not know how you voted
unless it is necessary under legal requirements. We will, however, forward to management any
written comments you make on the proxy card or elsewhere. All comments will remain confidential
unless you ask that your name be disclosed.
What are the costs of soliciting these proxies?
We will split the costs of soliciting these proxies with Parent, unless the Merger Agreement
is terminated under certain conditions, in which case we will be solely responsible for the cost of
soliciting the proxies. Our directors and employees may solicit proxies by personal interview,
mail, e-mail, telephone, facsimile or other means of communications. We will pay these directors
and employees no additional compensation for these services. In addition, we have retained Morrow &
Co., LLC (
Morrow
) to assist in the solicitation. We have agreed to pay Morrow a fee of approximately
$6,500 for proxy solicitation services. We will ask banks, brokers and other institutions,
nominees and fiduciaries to forward these proxy materials to their principals and to obtain
authority to execute proxies. Upon request, we will then reimburse them for their expenses.
Who can help answer my questions?
If you would like additional copies, without charge, of this proxy statement or if you have
questions about the Merger, including the procedures for voting your shares, you should contact:
Morrow & Co., LLC
470 West Avenue 3
rd
Floor
Stamford, CT 06902
Shareholders may call toll free: (800) 460-1014
Banks and brokers may call toll free: (800) 662-5200
17
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the other documents to which we refer you in this proxy statement,
contain forward-looking statements about National Dentex made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not
historical or current facts, including statements about beliefs and expectations are
forward-looking statements. These statements often include the words may, could, would,
should, believes, expects, anticipates, estimates, intends, plans, targets,
potentially, probably, projects, outlook, objectives, strategies, goals or similar
expressions. You should read statements that contain these words carefully. They discuss our
future expectations or state other forward-looking information and may involve risks over which we
have no control. These risks include, without limitation:
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the satisfaction of the conditions to consummation of the Merger, including the
adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger, by our shareholders and the receipt of certain
governmental approvals;
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the occurrence of any event, change, occurrence, circumstance or development that
could give rise to the termination of the Merger Agreement, including a termination
under circumstances that could require us to pay a termination fee of up to $4,150,000
to Parent or reimburse Parents transactional expenses in an amount up to $2,000,000 if
the Merger Agreement is terminated under certain conditions;
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the effect of the announcement or pendency of the Merger on our business
relationships, operating results and business generally;
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the risk that the Merger may not be completed in a timely manner or at all, which
may adversely affect our business and the price of our common stock;
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the potential adverse effect on our business, properties and operations because of
certain restrictions we agreed to in the Merger Agreement;
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the risk that if Parent and/or Merger Sub breaches the Merger Agreement, or Sponsor
breaches the Equity Commitment Letter, specific performance may not be awarded to us,
damages may not fully compensate us for such breach and associated litigation may arise
and be costly and disturbing to our operations;
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the risk related to diverting managements attention from our ongoing business
operations and the potential difficulties in employee retention as a result of the
Merger; and
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other risks detailed in our filings with the Securities and Exchange Commission (the
SEC
), including Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 (See
Where You Can Find More Information
on page 66).
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We believe
that the assumptions on which the forward-looking statements in this
proxy statement have been made
are reasonable. However, we cannot assure you that the actual results or developments we
anticipate will be realized or, if realized, that they will have the expected effects on our
business or operations. In light of significant uncertainties inherent in the forward-looking
statements contained herein, readers should not place undue reliance on such statements. We
undertake no obligation, and expressly disclaim any obligation to update forward-looking statements
in this proxy statement to reflect events or circumstances after the date of this proxy statement
or to update reasons why actual results could differ from those anticipated in forward-looking
statements in this proxy statement. All subsequent written and oral forward-looking statements
concerning the Merger Agreement, the Merger or other matters addressed in this proxy statement and
attributable to us or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section. Forward-looking statements
speak only as of the date of this proxy statement. Except as required by applicable law or regulation, we do not undertake
to update these forward-looking statements to reflect future events or circumstances.
18
THE SPECIAL MEETING
Time, Place and Purpose of the Special Meeting
This proxy statement is being furnished to our shareholders as part of the solicitation of
proxies by our board of directors for use at the special meeting to be held, unless adjourned or
postponed, on [
], 2010, starting at [
] local time, at the offices of Posternak Blankstein & Lund
LLP, at the Prudential Tower, 33rd Floor, 800 Boylston Street, Boston MA, 02199 or at any
postponement or adjournment thereof. The purpose of the special meeting is for our shareholders to
consider and vote upon the adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger, and any proposal to adjourn the special meeting, if
necessary or appropriate to solicit additional proxies to vote in favor of the adoption and approval of the Merger Agreement and
the transactions contemplated thereby, including the Merger. Our shareholders must adopt and
approve the Merger Agreement in order for the Merger to occur. If we do not receive the requisite
vote of our shareholders to adopt and approve the Merger Agreement and the transactions
contemplated thereby, including the Merger, the Merger will not occur. A copy of the Merger
Agreement is attached to this proxy statement as
Annex A
. This proxy statement and the enclosed
form of proxy card are first being mailed to our shareholders on [
], 2010.
Record Date and Quorum
We have fixed the close of business on [
], 2010 as the record date for the special meeting,
and only holders of record of National Dentexs common stock on the record date are entitled to
vote at the special meeting and any adjournments or postponements thereof. On the record date,
there were [
] shares of our common stock outstanding and entitled to vote. Each share of our
common stock entitles its holder to one vote on all matters properly coming before the special
meeting.
A majority of the number of shares of our common stock, outstanding and entitled to vote at
the special meeting, present in person or by proxy, shall constitute a quorum for the purpose of
considering the proposals. Shares of our common stock represented at the special meeting in person
or by proxy, but for which shareholders have abstained, will be treated as present at the special
meeting for purposes of determining the presence or absence of a quorum for the transaction of all
business properly brought before the meeting. In the event that a quorum is not present at the
special meeting, it is expected that the meeting will be adjourned or postponed to solicit
additional proxies.
Vote Required
Adoption and approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, requires the affirmative vote of the holders of a majority of the outstanding
shares of National Dentexs common stock entitled to vote thereon. For the proposal to adopt and
approve the Merger Agreement and the transactions contemplated
thereby, including the Merger, you may vote
FOR
,
AGAINST
or
ABSTAIN
.
Abstentions and broker non-votes will have the same effect as a vote
AGAINST
the
adoption and approval of the Merger Agreement and the transactions contemplated thereby, including
the Merger.
We will only adjourn the special meeting if the proposal to adjourn the special meeting, if
necessary or appropriate for the purpose of soliciting additional proxies, is approved by the a
majority of the votes cast on the proposal to adjourn the special meeting. For any proposal to
adjourn the special meeting, if necessary or appropriate, you may vote
FOR
,
AGAINST
or
ABSTAIN
Abstentions and broker non-votes will have no effect on the vote to adjourn the special meeting.
Proxies and Revocation
If you submit a proxy, your shares will be voted at the special meeting as you indicate on
your proxy card. If you sign your proxy card without indicating your vote, your shares will be
voted
FOR
the adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger, and
FOR
any proposal to adjourn the special meeting, if necessary
or appropriate to solicit additional proxies. If your shares of National Dentexs common stock are
held in street name, you will receive instructions from your broker, bank or other nominee that
you must follow in order to have your shares voted.
19
Proxies received at any time before the special meeting, and not revoked or superseded before
being voted, will be voted at the special meeting. You have the right to change or revoke your
proxy at any time before the vote taken at the special meeting. You may do this by:
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sending timely written notice to Richard F. Becker, Jr., Executive Vice President,
Treasurer and Assistant Secretary, National Dentex Corporation, 2 Vision Drive, Natick,
Massachusetts, 01760;
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signing, and returning to us in a timely manner, another proxy card with a later
date, or re-voting via telephone or the Internet (only your latest vote will be
counted);
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voting in person at the special meeting. Please note that attending the special
meeting in person will not in and of itself revoke a previously submitted proxy unless
you specifically request so; or
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if you have instructed a broker, bank or other nominee to vote your shares, by
following the directions received from your broker, bank or other nominee to change
those instructions.
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Please do not send in your stock certificates with your proxy card.
When the Merger is
completed, a separate letter of transmittal will be mailed to you that will enable you to receive
the Merger consideration in exchange for your stock certificates.
Adjournments and Postponements
Although it is not currently expected, the special meeting may be adjourned or postponed for
the purpose of soliciting additional proxies. Any adjournment may be made without notice, other
than by an announcement made at the special meeting of the time, date and place of the adjourned
meeting date; provided, however, that notice must be provided to shareholders if a new record date
is fixed for the special meeting. If a quorum is present, we will only adjourn the special meeting
if the proposal to adjourn the special meeting, if necessary or appropriate for the purpose of
soliciting additional proxies, is adopted and approved by a majority of the votes cast. Any signed
proxies received by us in which no voting instructions are provided on such matter will be voted
FOR
any proposal to adjourn the special meeting. Any adjournment or postponement of the special
meeting for the purpose of soliciting additional proxies will allow National Dentex shareholders
who have already sent in their proxies to revoke them at any time prior to their use at the special
meeting as adjourned or postponed.
Solicitation of Proxies
This proxy solicitation is being made by the board of directors of National Dentex. We will
split equally the costs of soliciting these proxies with Parent, unless the Merger Agreement is terminated
under certain conditions, in which case we will be solely responsible for the cost of soliciting
the proxies. Our directors, officers and employees may also solicit proxies by personal interview,
mail, e-mail, telephone, facsimile or other means of communication. These persons will not be paid
additional remuneration for their efforts. In addition, we have retained Morrow & Co., LLC
(
Morrow
) to assist in the solicitation. We agreed to pay Morrow a fee of approximately $6,500 for
proxy solicitation services. In addition, we will indemnify Morrow against any losses arising out
of that firms proxy soliciting services on our behalf. We will also request brokers and other
fiduciaries to forward proxy solicitation material to the beneficial owners of shares of National
Dentexs common stock that the brokers and fiduciaries hold of record. Upon request, we will
reimburse them for their reasonable out-of-pocket expenses.
Questions and Additional Information
If you have more questions about the Merger or how to submit your proxy, or if you need
additional copies of this proxy statement or the enclosed proxy card or voting instructions, please
call Morrow toll-free at (800) 460-1014 (brokers and banks may call toll-free at (800) 662-5200).
20
THE MERGER
The discussion of the Merger is qualified in its entirety by reference to the Merger Agreement,
which is attached to this proxy statement as Annex A. You should read the entire Merger Agreement
carefully as it is the legal document that governs the Merger.
Background of the Merger
Our Company was established through the acquisition of 26 full service dental laboratories
from two separate companies in 1982 and 1983. Throughout our history, we have maintained a strategy
of growing our business principally through acquisitions and using financial and operational
synergies and operational improvement at acquired laboratories to create a competitive advantage
for our Company. Since 1983, we have completed the acquisition of an additional 37 dental
laboratories.
While our focus has traditionally been to seek increased shareholder value through
acquisitions and the growth of our existing laboratory businesses, our board and management team
regularly review our business and operations, our long-term strategic plans, goals and
alternatives, and our prospects as an independent company. This continuing review and analysis by
our board has included the evaluation of trends and conditions from time to time impacting our
industry and our Company and the markets and competitive environment in which we operate. In
recent years, our board has increasingly focused on certain trends that we believe could present
long-term risks to our competitive position and future prospects, including: (i) increased
competition from offshore laboratories, primarily those located in China, and (ii) the deployment
of technology-based solutions that allow dentists to fabricate their own restorations without the
use of a dental laboratory. Since early 2008, our board has also focused on the impact of
price-sensitive consumers postponing elective dental work due to the weakening economy and the
negative impact this has had on our revenues. As part of this ongoing review of our business, our
position in the dental laboratory industry and our prospects, our board has also regularly
evaluated strategic alternatives available to us, including, among other things, possible strategic
combinations, acquisitions and divestitures.
Historically, we have from time to time received unsolicited inquiries from third parties
regarding the potential acquisition of our Company. We received one
such written inquiry on
February 20, 2008 from Welsh, Carson, Anderson & Stowe X, L.P., a Welsh, Carson, Anderson & Stowe
investment partnership (
WCAS X
), indicating its preliminary interest in potentially acquiring our
Company at a price of $19.00 per share, which offer was subject to its further evaluation and due
diligence. This proposed price per share was a 20% premium over the closing price of our common
stock on the date of the letter from WCAS X, but lower than the 52 week high closing price for our
common stock from that date. At that time, WCAS X informed us that it was in discussions with
GeoDigm to make a significant equity infusion in GeoDigm as part of its investment strategy in the
dental laboratory industry, although WCAS X had did not have a
definitive agreement with GeoDigm regarding such investment at that
time. Assuming it consummated its investment in GeoDigm, WCAS X hoped to
combine our Company with GeoDigm. We had previously met representatives of GeoDigm as part of our
ongoing evaluation of new technologies that could be used in our dental laboratories.
On February 26, 2008, our board met at a regularly scheduled meeting. At this meeting,
management discussed with the board the business plan and budget for the 2008 fiscal year. After
reviewing the business plan and budget, the board discussed the trends and conditions affecting our
industry and our Company as well as recent inquiries relating to a possible acquisition of our
Company by other businesses or investors in our industry. The board reviewed the status of various
indications of interest, including the recent letter from WCAS X and another indication of interest
(without a price) that had recently been received from a potential strategic acquiror which was a
portfolio company of another private equity firm (who shall hereinafter be referred to as
Party
B
). Party Bs indication of interest stood out from other past unsolicited inquiries given the
strategic rationale for Party Bs interest in acquiring our Company and our understanding of the
financial resources of its sponsor. A representative of Posternak Blankstein & Lund LLP
(
Posternak
), our legal counsel, was in attendance at the meeting and advised the board members of
their fiduciary duties with respect to transactions involving a potential acquisition of our
Company. The board reviewed a range of strategic alternatives, including the pursuit of additional
accretive dental laboratory acquisitions, a stock buy-back program, a merger with a strategic
partner or a transaction with a financial investor. After reviewing these various alternatives
and considering our managements business plan and budget, the board determined not to pursue a
sale of our Company at that time, but rather to continue to pursue our existing operational plans
and acquisition strategy together with continuing to look at the possibility of restarting our
Companys stock buy-back program.
On or about March 3, 2008, we informed both WCAS X and Party B that we were not interested in
pursuing a merger transaction at that time. Representatives of WCAS X continued to contact management, in order to inform us of the status of GeoDigms technology
and to encourage us to consider a potential transaction involving
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GeoDigm and the acquisition of our Company. On April 10, 2008, WCAS X sent an email to Mr.
Harkins reaffirming its interest in pursuing a possible transaction involving GeoDigm and the
acquisition of our Company and advocating for the attractiveness of its proposed offer. During this time
period, our Chief Executive Officer, Mr. David Brown, received further inquiries from Party B about
a proposed acquisition of our Company by Party B.
In response to an invitation from GeoDigm, on May 6 and May 7, 2008, members of our management
team met with representatives of WCAS X and GeoDigm at GeoDigms principal offices at which time
our representatives were permitted to review GeoDigms technology to assess GeoDigms
technology platform. On May 8, 2008, representatives of Party B met with members of our management
to discuss Party Bs strategic plans and our Companys fit in Party Bs strategic plans.
On May 13, 2008, at a regularly scheduled meeting, our board again discussed various
acquisition opportunities under consideration by us, our long term strategy and challenges as well
as our potential strategic alternatives. The board also discussed the continued interest of both
WCAS X and Party B. Mr. Brown informed the board that management had recently reviewed the
technology of GeoDigm and met with Party B. Following this discussion, our board decided to
continue to explore these additional dental laboratory acquisition opportunities for our Company,
and to simultaneously interview investment banking firms in order to engage a suitable firm to
assist the board in its evaluation and assessment of possible strategic alternatives. A
representative of Posternak then discussed with the board members their fiduciary duties with
respect to transactions involving the potential acquisition of our Company. The board authorized
Mr. Harkins and Mr. Brown with the assistance of Posternak, to interview and make a recommendation
to the board on investment banking firms that could assist in this evaluation and assessment.
Following
the May 2008 board meeting, Mr. Brown and Mr. Harkins, with the assistance of Posternak,
interviewed five potential investment banking firms, including BB&T Capital Markets. During the
same time, Mr. Brown had various conversations with representatives of WCAS X and Party B about
their continued interest in pursuing a transaction with our Company. We were also in the process
of negotiating the acquisition of Dental Art Laboratories, a full service dental laboratory with
2007 sales in excess of $7,500,000, as well as continuing to explore the feasibility of restarting
the stock buy-back program.
On August 22, 2008, our board held a special meeting to discuss the strategic alternatives
available to us, whether to engage an investment banking firm, how to
respond to the continuing inquiries from
representatives of WCAS X and Party B and whether to pursue a transaction. After discussing the
results of the interviews of the various investment banking firms, Mr. Brown and Mr. Harkins
recommended to the board that it retain BB&T Capital Markets as our financial advisor, based upon
BB&T Capital Markets experience with similar sized transactions, its current work on our valuation,
the proposed process and the experience and quality of its team members. The board then discussed
whether (a) to initiate a competitive process with only WCAS X and Party B, or (b) to pursue a more
expanded process involving other potential acquirors and exposing our Company to the risks of such
an effort, such as the potential public exposure that could result from a broader solicitation of
potential purchasers and the effect that such exposure could have on our customers, employees and
stock price. The board determined that it would pursue the first option, which provided the
benefits of a competitive process without the risks of a more expanded process. The board also
decided to engage BB&T Capital Markets and to instruct them to contact WCAS X and Party B, provide
each of them with limited access to certain confidential information and allow them to meet with
our management, followed by a request for an indication of proposed valuation. The board further
determined that if this process resulted in one or more valuation proposals at a level acceptable
to it, the party or parties making such proposal or proposals would be allowed to complete
additional confirmatory due diligence and submit a formal bid proposal. The board also considered
that if the valuation proposals from WCAS X or Party B were not at a level acceptable to it, the
board could open up the process to other potential parties or determine not to proceed with a
potential transaction at that time. Based upon advice from representatives of Posternak who
attended the meeting at the request of the board, the board also determined that, if we were to
move forward with this limited process, any definitive acquisition agreement would
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have to include a go shop period, which would permit us to solicit alternative proposals for
a reasonable period after execution to ensure that the board could achieve the greatest value
reasonably available to our shareholders. The board also designated Mr. Harkins to serve as the
boards lead contact person with BB&T Capital Markets, Posternak and management between board
meetings, for the purpose of responding to questions, discussing any issues and providing feedback
on negotiations. The representatives of Posternak advised Mr. Brown that neither he nor any other
member of management should have separate discussions with either WCAS X or Party B concerning any
employment, equity interests or other arrangements.
On September 2, 2008, we completed the acquisition of Dental Art Laboratories for a purchase
price of approximately $10,000,000.
On September 5, 2008, our Company signed an engagement letter with BB&T Capital Markets.
Representatives of BB&T Capital Markets then contacted each of WCAS X and Party B to inform them of
the boards decision to explore the feasibility of a transaction and to determine whether each
would be willing to participate in the process as outlined at the boards August 22, 2008 meeting.
On September 10, 2008, Party B entered into a confidentiality agreement with us. On September 16,
2008, WCAS X and GeoDigm each entered into a separate confidentiality agreement with us.
Over the next two weeks, representatives of BB&T Capital Markets had multiple discussions with
representatives of each of WCAS X and Party B. The discussions
focused upon their requests for
non-public information about us and questions each party had concerning such provided information.
Among other points discussed, representatives of BB&T Capital Markets disclosed to each party that
there were two parties in the process, that any definitive agreement would include a go-shop
process and would not include any material contingencies to closing, including any financing
contingencies.
During that month of September, the overall U.S. economy took a significant downward turn.
During this same time period, our stock price declined from $9.42 per
share to $6.43 per share. On
September 15, 2008, Lehman Brothers filed for protection under Chapter 11 of the United States
bankruptcy code and shortly thereafter the U.S. government took emergency actions to attempt to
stabilize the financial markets. The U.S. economy was also experiencing an ongoing housing crisis
and a rising level of unemployment, and the resulting weakening economy was beginning to have a
negative impact on our Companys and our industrys performance.
On September 19, 2008, the board held a special meeting to discuss the progress on the
discussions with WCAS X and Party B. Representatives of BB&T Capital Markets informed the board
that due diligence sessions with management had been scheduled for the week of September 22, 2008
for each potential bidder. During the meeting, representatives of Posternak, who attended the
meeting at the request of the board, again advised the board members of their fiduciary duties with
respect to potential transactions involving the acquisition of our Company. After discussing the
progress, the board set a meeting for October 3, 2008 to discuss further the status of these
negotiations and due diligence.
On September 23, 2008, representatives of WCAS X and GeoDigm met with key members of our
management team at Posternaks office for purposes of conducting a due diligence meeting. On
September 26, 2008, representatives of Party B and its advisors met with the same key members of
our management team at Posternaks offices for purposes of conducting a due diligence meeting.
On September 25, 2008, Mr. Wayne Coll, our Chief Financial Officer, received an unsolicited
call from the chief financial officer of a competitor who expressed an informal interest in
engaging in a transaction to acquire us at a price of $12.00 per share. Mr. John Green, our then
Executive Vice President, followed up with a call to the competitor
and he was informed that
such interest was only an idea of the chief financial officer of the competitor and that the
competitors acquisition of our Company was not under serious consideration. After discussing the
matter with representatives of BB&T Capital Markets, we determined that this party was not
seriously interested in pursuing a transaction to acquire us.
On October 1, 2008, representatives of BB&T Capital Markets had a conference call with
representatives of Citigroup Global Markets, Inc. (
Citi
), the then financial advisor to GeoDigm.
Citi proposed a potential acquisition of our Company by GeoDigm, with equity financing from one or
more Welsh, Carson, Anderson &
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Stowe affiliated funds, at a valuation range of $12.50 to $13.75 per share for all of our
outstanding common stock. Representatives of BB&T Capital
Markets informed Citi that, in its opinion, the board
would likely not pursue a sale transaction at such price level. Citi explained that the offer
range was due to GeoDigms and WCAS Xs assessment that our performance had deteriorated and that
the financial markets and general economic conditions had worsened significantly since WCAS Xs
initial indication of interest in February, which would likely have a
negative impact on our future performance.
Representatives of BB&T Capital Markets had a subsequent conversation with representatives of WCAS
X to reaffirm that, in its opinion, the board would likely not pursue a transaction based upon the valuation range
that Citi provided.
On October 2, 2008, representatives of BB&T Capital Markets had a conference call with
representatives of Party B to discuss Party Bs valuation of our Company. Party B proposed a
valuation range of $10.50 to $12.50 per share. Representatives of BB&T Capital Markets informed
Party B that the range was below Party Bs prior informal
indications of value and that, in its opinion, the board would
likely not pursue a sale transaction based upon the proposed range.
On October 3, 2008, our board held a special meeting, attended by members of our management
and representatives of BB&T Capital Markets and Posternak. Mr. Brown reviewed with the board the
due diligence sessions that management had attended with GeoDigm, WCAS X and Party B and the
financial and other due diligence information provided to date to these parties. Representatives
of BB&T Capital Markets then discussed each potential bidders existing operations in the dental
space, financial resources and ability to proceed with a potential transaction involving our
Company. Representatives of BB&T Capital Markets reviewed the preliminary valuations received from
the two parties and indicated that they believed that it was likely that one or both of GeoDigm and
WCAS X or Party B would increase their offers. Representatives of BB&T Capital Markets also noted
that each party had indicated that it would need an exclusive period in order to perform further
due diligence and to negotiate a definitive agreement, if it were to increase its proposal.
Representatives of BB&T Capital Markets and the board reviewed together the potential value of our
Company based upon updated financial metrics, taking into account our Companys recent performance
and our updated projected financial results. Representatives of Posternak reviewed again the
boards fiduciary duties with respect to potential transactions involving the acquisition of our
Company. After discussion, the board asked BB&T Capital Markets
to contact both parties again and to obtain additional information
about how each had arrived at its valuation, their willingness to
increase their offers and to obtain additional insight into their
financial resources available to consummate any transaction.
Over
the next week, representatives of BB&T Capital Markets
contacted each party as instructed. During these conversations, Party B
increased its proposal range to $13.00 to $15.00 per share. On October 8, 2008, WCAS X sent a
written proposal to us indicating that it would be interested in acquiring all of our outstanding
common stock for $16.00 per share, with equity financing being provided by WCAS X and debt
financing being provided by an affiliated investment fund and other third party debt financing
sources. In its proposal, WCAS X confirmed that a WCAS X/GeoDigm transaction would not be subject
to any financing contingency and would permit a reasonable go-shop period during which we could
solicit superior proposals. At this time, WCAS X has not completed
its investment in GeoDigm.
On October 8, 2008, the board held a special meeting, attended by members of our management
and representatives of BB&T Capital Markets and Posternak. Representatives of BB&T Capital Markets
discussed WCAS Xs and Party Bs revised valuations. The board asked BB&T Capital Markets to
discuss further with representatives of WCAS X the status of and extent of its investment in
GeoDigm, so as to better understand Welsh, Carson, Anderson & Stowes commitment to our industry
and a potential transaction involving our Company.
On October 13, 2008, representatives of BB&T Capital Markets again spoke with representatives
of WCAS X to further discuss the assumptions behind WCAS Xs October 8, 2008 proposal and to
understand the status of WCAS Xs proposed equity investment in GeoDigm. Representatives of BB&T
Capital Markets communicated that the board would likely be willing to enter into an exclusivity
agreement with WCAS X and GeoDigm if WCAS X was willing to further raise its offer price. During
that phone call, WCAS X indicated orally to representatives of
BB&T Capital Markets that it would be willing to increase its
proposal from $16.00 per share to $17.00 per share, but the
representatives of WCAS X also expressed concern during this call
over how much debt financing would be required by GeoDigm to make
such proposed transaction attractive to WCAS X, as
WCAS X planned to obtain debt financing in the market (either
before or after closing).
On October 13, 2008, our board held a special meeting, attended by members of management and
representatives of Posternak and BB&T Capital Markets. Representatives of BB&T Capital Markets
discussed WCAS Xs revised valuation and the economic assumptions underlying that proposal. BB&T
Capital Markets also
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discussed Party Bs valuation of $13.00 to $15.00 per share. Management provided the board with the
preliminary results for the third fiscal quarter of 2008 and its outlook for the balance of 2008, down materially from earlier projections. The board discussed the impact of our Companys weakening performance in the third quarter
and the continued impact on business of the deterioration in the U.S. economy on a potential transaction, as well and the decline in our Companys stock price. The board also considered that each
of these proposals was still subject to completion of significant due diligence and our Companys
weakening performance, which had worsened even since the parties meetings with our
management in September. After weighing all of the foregoing, the board concluded that there was
too much uncertainty in the financial and capital markets, in the economy and in our Companys
performance at that time, and accordingly, it was unlikely that we would be able to consummate a
transaction consistent with these proposed prices with either of these parties or at a per share price that would
reflect an acceptable valuation of our Company. The board also determined that it did not want to
further disrupt our management team to work on a transaction that the board considered unlikely to
be completed for the foregoing reasons, reviewed our Companys financial position, and determined that exploring potentially accretive acquisitions, such as the recently completed Dental
Art Laboratories acquisition, and focusing on continuing to execute our business plan, managing
our expenses, and investigating integration of new technologies to improve productivity was a
superior use of our management teams time and resources and in the best interests of our
shareholders and the Company. The board instructed representatives of BB&T Capital Markets to inform each party that the board was terminating the process.
Following the board meeting, representatives of BB&T Capital Markets communicated the boards
decision to both parties and requested that the parties destroy the confidential information that
they had been provided (per the terms of the confidentiality agreements that they each had
executed). Both parties indicated a continued interest in remaining in communication with us.
In late February 2009, Welsh Carson and GeoDigm announced WCASs commitment to invest $100
million in GeoDigm, and GeoDigms completion of its first acquisition financed by Welsh Carson. At
such time, WCAS X, the investment fund that had previously engaged in discussions with our Company,
was no longer committing to new investments.
From time to time following our October 13, 2008 board meeting through December 2009, Mr.
Brown was contacted by representatives of GeoDigm, Welsh Carson and Party B and had various
informal discussions with such parties regarding their continued interest in our Company. In
December 2009, Andrew Hofmeister, GeoDigms Chief Executive Officer, visited Mr. Brown in Boston
and indicated that Welsh Carson and GeoDigm remained interested in acquiring our Company. In
January 2010, Mr. Brown had a lunch meeting with representatives of Party B during an industry
conference. At this meeting, the representatives of Party B indicated that Party B was still
interesting in pursuing an acquisition of our Company and that its board of directors was meeting
in mid February to discuss the matter and authorize a formal proposal at a range that it believed
our board would find attractive. On January 21, 2010, Mr. Brown received a letter from Welsh
Carson indicating that it was interested in exploring a transaction whereby GeoDigm would acquire
all of our then outstanding common stock for approximately $14.25 to $15.00 per share in a
transaction that would contain no financing contingency and permit our Company a reasonable go shop
period to solicit alternative proposals. In subsequent conversations with Mr. Brown, each of the
parties indicated their ability to pay a price in excess of the range quoted in Welsh Carsons
letter. During the next few days, Mr. Brown had a series of separate phone conversations with
representatives of Posternak and Mr. Harkins to discuss the recent inquiries from the two
interested parties. Mr. Harkins and Mr. Brown agreed that our Company should meet with BB&T
Capital Markets, given BB&T Capital Markets past representation of our Company, its familiarity with
the two parties, and its knowledge of our Company, to consider whether to re-engage the firm to
advise on strategic alternatives and how to respond to the inquiries from both Welsh Carson and
Party B.
On February 3, 2010, Mr. Brown, Mr. Harkins and representatives of BB&T Capital Markets and
Posternak held a conference call to discuss these recent inquiries from the two parties. They
reviewed the two parties possible motivations for acquiring our Company at that time, the synergies
that each might achieve from such a transaction and the increased availability of financing for
transactions. They also discussed whether there might be other strategic or financial buyers that
would be interested in a transaction with us and concluded that the
two parties were two of the best candidates and the two most
interested in acquiring our Company at an acceptable valuation. Mr. Brown then
scheduled a board meeting for the following week to discuss the matter with the full board.
On February 8, 2010, our board held a special meeting to discuss its strategic alternatives.
At the meeting, Mr. Brown recapped the recent contacts that he had had with the two parties.
Representatives of BB&T Capital Markets, who were in attendance at the request of the board, presented to the board BB&T Capital Markets updated
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analysis on valuation of our Company. The board discussed our Companys recent performance,
the continued lack of liquidity in our common stock, the current trading range of our common stock
and the difficulty in being a smaller public company. The board also considered that the price
ranges that both parties had communicated to our Company represented substantial premiums over the
then current market price of our common stock, which was then trading at about $8.00 per share.
Given the improving financing markets, the board concluded that there was a greater likelihood of
consummating a transaction at a favorable price that would reflect an acceptable valuation of our
Company. Representatives of BB&T Capital Markets then discussed initiating a process that was
similar to the process conducted in 2008. Representatives of Posternak, who were in attendance at
the request of the board, discussed with the board members their fiduciary duties with respect to
potential transactions involving the acquisition of our Company. The board discussed conducting a
broader process and determined that, again, it would conduct a competitive process with Welsh Carson/GeoDigm and Party B
to limit disruption to management and the risks that a broader solicitation of potential purchasers could entail.
The board also determined that the go-shop process previously discussed by the board in
the 2008 process would enable it to engage in an effective post signing market check on the
availability of other interested parties. After discussing the various options, the board
authorized management to engage BB&T Capital Markets to act as our financial advisor and authorized
BB&T Capital Markets to contact both Welsh Carson/GeoDigm and Party B. The board designated Mr.
Harkins to serve as the boards contact person to BB&T Capital Markets, Posternak and management in
between board meetings, for the purpose of responding to questions, discussing any issues and
providing feedback on negotiations. Representatives of Posternak also advised Mr. Brown that
neither he nor other members of management should have separate discussions with any party
interested in a sale transaction concerning any employment, equity interests or other arrangements.
On February 11, 2010, our Company signed a new engagement letter with BB&T Capital Markets.
Following the execution of the engagement letter, representatives of BB&T Capital Markets
contacted Welsh Carson and GeoDigm as well as Party B. Representatives of BB&T Capital Markets
informed the parties that upon signing new confidentiality agreements they would receive financial
and other due diligence items as well as limited access to our management team. Based upon their
receipt of public and non-public information, each party would be asked to submit a proposal and
supporting documentation for the acquisition of our Company. In its conversations with the two
parties, representatives of BB&T Capital Markets stressed that any proposal must be free of any
financing conditions or any other material contingency to closing and that the reliability and
certainty of a proposed transaction would be important in the boards assessment of any proposed
transaction. On February 12, 2010, Party B signed a confidentiality agreement. On February 19,
2010, Welsh Carson and GeoDigm each signed a confidentiality agreement. Once the confidentiality
agreements were signed, each of GeoDigm and Welsh Carson and Party B was provided a package of
financial and other due diligence materials that BB&T Capital Markets and we had prepared following
discussion and input from Mr. Harkins.
On February 22, 2010, representatives of BB&T Capital Markets sent out information packages to
Welsh Carson and GeoDigm as well as Party B that included a draft merger agreement, a form of
financial guarantee to be signed by Welsh Carson and the private equity sponsor of Party B, and a
description of the bid process. Each potential bidder was asked to submit its proposal package to
BB&T Capital Markets no later than March 5, 2010 and to include in its proposal (i) a specific
offer price per share for shares of our common stock, (ii) the identity and structure of the buyer,
(iii) a sources and uses table and description of the proposed financing for the transaction, (iv)
the level of and timing of confirmatory due diligence remaining to be completed, (v) a revised
merger agreement reflecting comments, (vi) the approval process necessary for the bidder, (vii) the
plans for the combined organization and (viii) a description of any other contingencies.
Both parties were invited to visit certain of our laboratories and meet with our management
team. During the week of March 1, 2010, representatives of GeoDigm visited
certain of our laboratories with members of our management team. On March 2, 2010, representatives
of Party B met with members of our management team.
On March 4, 2010, Party B called BB&T Capital Markets to request a one-week extension on
submission of its bid proposal package. BB&T Capital Markets discussed the extension with Mr.
Brown and Mr. Harkins and it was agreed that both parties would have until March 12, 2010 to submit
their bid proposals. As previously planned
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before the extension, on March 5, 2010, representatives of Welsh Carson met with Mr. Brown and
representatives of BB&T Capital Markets to discuss a potential transaction involving our Company. Welsh Carson
informed Mr. Brown and representatives of BB&T Capital Markets that on March 12, 2010 GeoDigm would
submit a bid proposal backed by Welsh Carson.
On March 9, 2010, the board conducted a regularly scheduled meeting. Representatives of BB&T
Capital Markets, who were in attendance at the meeting at the request of the board, reviewed with
our directors the profiles of the two potential bidders, which included information on their
respective financing capacity, the degree of effort expended by each potential bidder to date in
pursuing a potential transaction involving our Company, the strategic rationale for each potential
bidder in completing a transaction with us, each potential bidders track record for closing
transactions and its and its investors business reputations. Representatives of Posternak, who
were present at the meeting at the invitation of the board, advised our directors of their
fiduciary duties with respect to potential transactions involving the acquisition of our Company
and then reviewed the terms of the proposed merger agreement with the board.
On March 12, 2010, GeoDigm and Party B each submitted a bid proposal to BB&T Capital Markets.
The bid proposal from GeoDigm had an offer price of $15.75 per share, a request for a fourteen day
exclusivity period, a form of proposed equity commitment letter from Welsh Carson that, subject to
the terms and conditions therein, would be sufficient to fully fund a transaction with us in the
event debt financing was not available, and a mark-up of the draft merger agreement that included
the ability of our Company to specifically enforce the merger agreement and the equity commitment
letter. The bid proposal from Party B had an offer price of $13.50 per share, a request for a 40
day exclusivity period, and a mark up of the merger agreement that included a reverse termination
fee of 3% in lieu of specific performance. Party Bs bid proposal stated that its investment
banking advisor would be a potential debt financing source for the senior portions of the debt
financing needed for the transaction, and would act as an agent in raising the rest of the debt
financing necessary for the transaction, but did not include any debt commitment letters. Party B
indicated that it expected that at the end of its 40 day exclusivity period, it would be
able to sign a definitive merger agreement that would not include a financing contingency. Over
the next two days, representatives of BB&T Capital Markets and Posternak analyzed the two proposals
and prepared materials comparing the two proposals in order to assist the board in its evaluation
of the two proposals.
On March 14, 2010, Mr. Brown, Mr. Harkins, and representatives of BB&T Capital Markets and
Posternak met by telephone to review and discuss the two proposals. They compared the prices
offered by the two parties, the differences in the markups of the two merger agreements, the
significantly shorter exclusivity period sought by GeoDigm, the greater certainty of closing
afforded by Welsh Carsons equity commitment letter in contrast to Party Bs need to obtain third
party debt financing in order to close the transaction, and the remedy of specific performance
offered by Welsh Carson and GeoDigm as compared to an unwillingness to offer specific performance
and the 3% reverse termination fee proposed by Party B. Given the qualitative and quantitative
differences in the two bid proposals, BB&T Capital Markets recommended, and Mr. Harkins and Mr.
Brown concurred, that the best way to maximize shareholder value would be to negotiate with GeoDigm
and Welsh Carson, prior to the previously scheduled March 16 board meeting, in order
to determine if GeoDigm and WCAS would improve on the financial and legal aspects of the GeoDigm
and Welsh Carson proposal.
Over the course of the next two days, BB&T Capital Markets engaged in a series of negotiations
with Welsh Carson and GeoDigm. During these negotiations, Mr. Harkins and Mr. Brown received
updates and provided guidance on the discussions. During the course of these negotiations, GeoDigm
and Welsh Carson were informed by representatives of BB&T Capital Markets that the board would
likely not pursue a sale transaction at a price per share below $17.00. These negotiations
resulted in an increase of the offer price in a series of steps from $15.75 per share to $17.00 per
share.
On March 16, 2010, the board held a special meeting to discuss the two proposals.
Representatives of BB&T Capital Markets, who were in attendance at the meeting at the request of
the board, updated the board on the timeline of events since the March 9, 2010 board meeting,
including the series of price negotiations representatives of BB&T Capital Markets had with Welsh
Carson and GeoDigm. Representatives of BB&T Capital Markets reviewed its analysis of the two bid
proposals and the proposed financing for the transaction, as well as its views of the value of our
Company consistent with the valuation metrics discussed at the February 8, 2010 board meeting.
Representatives of Posternak, who were in attendance at the meeting at the request of the board,
reviewed with the
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board the differences in the legal terms of the two proposals and each partys proposed
revisions to the merger agreement. Representatives of Posternak then discussed with the board
members matters that they should consider when evaluating these bids to fulfill their fiduciary
duties in connection with the possible acquisition of our Company. Following further discussion,
the board unanimously authorized our management to sign an agreement with GeoDigm and Welsh Carson
that provided GeoDigm and Welsh Carson exclusivity through March 31, 2010 and to proceed to
negotiate a definitive merger agreement with them at the $17.00 per share price. The board
discussed engaging a separate financial advisor for the purpose of rendering a fairness opinion,
thereby providing the board with another independent confirmation of the fairness of the value of a
transaction to our shareholders from a financial point of view. After discussing the matter, the
board delegated to Mr. Harkins with assistance from Posternak, the duty of engaging a separate
financial advisor to render a fairness opinion.
On March 17, 2010, representatives BB&T Capital Markets informed Party Bs financial advisor
that we would not continue to consider a transaction with Party B at that time. On the same day, we
signed an exclusivity agreement with GeoDigm and Welsh Carson through March 31, 2010.
Representatives of Welsh Carson and GeoDigm were then provided access to our electronic data room
for confirmatory due diligence.
On March 18, 2010, representatives of Posternak and BB&T Capital Markets had a conference call
with representatives of Welsh Carson and GeoDigm and Welsh Carsons and GeoDigms legal counsel,
Ropes & Gray LLP, to discuss some high level legal and business issues in their proposed
transaction terms, as indicated in their markup of the proposed merger agreement and their draft
equity commitment letter, including the time period for the go-shop period, whether there would be
a two tiered termination fee, with a lower fee for termination of the merger agreement by us to
enter into a transaction with any Continuing Party that made a superior proposal during the go-
shop period, and the manner in which we could seek to enforce the provisions of the merger
agreement and equity commitment letter.
On March 19, 2010, our board authorized us to engage Signal Hill to provide a fairness opinion
to the board on the fairness of the merger consideration to our shareholders. Signal Hill would be
paid a one time fee of $200,000 (plus the reimbursement of reasonable expenses incurred up to
$25,000) that was not contingent on the transaction closing. In connection with rendering its
opinion, Signal Hill was, among other matters, provided access to our electronic data room and met
with management and representatives of BB&T Capital Markets.
On March 29, 2010, representatives of Posternak and Ropes & Gray met in person to review open
issues in the proposed merger agreement and equity commitment letter. After making significant
progress on most of the open material items, the parties attorneys agreed that Posternak would
revise the merger agreement and equity commitment letter and the parties would continue to discuss
the final terms of the merger agreement and equity commitment letter and move quickly to finish up
any confirmatory due diligence items.
On March 31, 2010, the board held a special meeting at Posternaks offices to discuss the
status of negotiations over the merger agreement and equity commitment letter and to meet with
representatives of Signal Hill who had been invited to attend the meeting. Representatives of
Posternak, who were in attendance at the request of the board, provided the board with a detailed
overview of the terms of the merger agreement and equity commitment letter that had been
negotiated, reviewing specifically the terms of the go shop and no shop provisions and other
material transaction terms, including the remedy of specific performance as to Welsh Carsons
equity commitment letter which (subject to its terms) required it to fund up to $139,000,000 (the
amount estimated to be required to complete the proposed transaction, including the payment of
transaction fees and expenses and related transaction expenses) in order to consummate the merger,
and the absence of any financing contingencies. Representatives of Posternak also reviewed the
remaining open deal terms still under negotiation. The representatives of Signal Hill present at
the meeting made a presentation of its financial analysis of the merger consideration to be
received by shareholders. Representatives of BB&T Capital Markets, who had been invited by the
board to attend the meeting, then presented the board with its proposed list of potential
acquisition parties that it would contact during the go shop period.
Over the course of the next two days, Posternak and Ropes & Gray continued to negotiate the
remaining items of the merger agreement and equity commitment letter. During this process Mr.
Harkins and Mr. Brown received updates and provided guidance on the issues under discussion.
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On April 2, 2010, our board convened a meeting to consider the proposed transaction.
Representatives of Posternak and BB&T Capital Markets attended the meeting at the request of the
board. Representatives of Posternak reported that the definitive agreements for a transaction with
Welsh Carson and GeoDigm had been fully negotiated and were ready for execution, if and when the
board chose to proceed, subject only to finalizing certain disclosure schedules. Posternak
reviewed the terms of the final definitive merger agreement and equity commitment letter, including
the price of $17.00 per share and an equity commitment from Welsh Carson which (pursuant to its
terms) required it to fund up to $139,000,000 (the amount estimated to be required to complete the
proposed transaction, including the payment of transaction fees and expenses and related
transaction expenses) enforceable pursuant to its terms by specific performance. Representatives
of Posternak then discussed with the board member the matters that they should consider in order to
fulfill their fiduciary duties in connection with the proposed transaction. After discussion, the
board indicated it was prepared to proceed. Representatives of Signal Hill reviewed with the board
Signal Hills financial analysis of the merger consideration to be paid pursuant to the merger
agreement and delivered Signal Hills opinion to the board to the effect that, as of that date and
based on and subject to the matters described in the opinion, the merger consideration to be
received by the holders of our common stock was fair, from a financial point of view, to such
holders. Signal Hills opinion is included as
Annex B
to this proxy statement. After further
discussion, the board unanimously approved the execution, delivery and performance of the merger
agreement (including the consummation of the merger) and the equity commitment letter and voted to
unanimously recommend to our shareholders that they adopt and approve the merger agreement and the
transactions contemplated thereby, including the proposed merger. Later that evening, our Company
and entities affiliated with GeoDigm executed the merger agreement and our Company and certain
entities affiliated with GeoDigm and Welsh Carson executed the equity commitment letter.
On April 5, 2010, the parties issued a press release announcing execution of the merger
agreement before the opening for trading on the Nasdaq Global Market.
Under the terms of the Merger Agreement, we are entitled to actively solicit alternative
acquisition proposals during a go-shop period ending 11:59 p.m. on May 12, 2010. Under the Merger
Agreement, we may under certain circumstances also consider unsolicited proposals at any time after
the end of the go shop period through the date of the special meeting of our shareholders. From
and after the date that the definitive merger agreement was announced, BB&T Capital Markets
proactively contacted 62 other parties that it identified as potential acquirers of our Company,
including Party B. These parties were selected by the board, in consultation with management and
BB&T Capital Markets, and include both potential strategic and potential private equity acquirers.
In addition, two other parties contacted either our Company or representatives of BB&T Capital
Markets following the announcement of the merger agreement to indicate interest in pursuing a
transaction involving our Company.
Reasons for the Merger
Board of Directors.
After discussions with its legal and financial advisors and after careful
consideration, our board of directors unanimously (1) determined that the Merger Agreement and the
transactions contemplated thereby, including the Merger, are advisable to and in the best interests
of the Company and the holders of our common stock, (2) determined that the Merger consideration
for outstanding shares of Company common stock is fair to the Companys shareholders and (3)
approved and adopted the Merger Agreement and the transactions contemplated thereby, including the
Merger. Accordingly, our board of directors recommends that shareholders vote
FOR
the proposal to
adopt and approve the Merger Agreement and the transactions contemplated thereby, including the
Merger, and
FOR
any adjournment proposal by the Companys board of directors.
Reasons for the Merger.
The material factors and potential benefits of the Merger considered
by our board of directors, each of which support the determination and recommendation set forth
above, include the following:
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the recent and historical market prices of the Companys common stock, including the
market price of the common stock relative to general market indices, and the fact that
the $17.00 per share cash Merger consideration represents a premium of approximately
70% over the closing price on April 1, 2010, the last trading day before the
announcement of the Merger Agreement, a premium of approximately 74%
over the average closing price of the Companys
Common Stock during the 30 trading days ending on April 1, 2010, and a premium of
approximately 91% based on the 90-day average price of the Companys common stock as of
such date;
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the increasing and disproportionate costs of operating as a smaller public company;
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the Companys performance relative to its plan and strategic goals including the effect of increased competition from offshore laboratories, including China, and technology changes occurring in our industry;
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the regular evaluation of strategic alternatives by our board of directors and our
boards familiarity with our business, operations, financial condition, competitive
position, business strategy, and prospects, and general industry, economic, and market
conditions, including the risks and uncertainties in our business, in each case on a
historical, current, and prospective basis;
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the strategic alternative process conducted by the Company and the possible
alternatives to the Merger (including the possibility of continuing to operate as an
independent company);
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the fact the Merger consideration is all cash, allowing our shareholders
to immediately realize at the closing of the Merger the fair value in cash of their
investment and certainty of value for the Companys shares;
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the absence of financing conditions in the Merger Agreement and the equity
commitment letter provided by Sponsor for up to $139,000,000 (the maximum aggregate
amount that is estimated to be necessary to consummate the Merger and related
transactions), which may be specifically enforced by the Company;
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the Companys right to conduct a post signing go-shop period through the end of
the day on May 12, 2010 where the Company is permitted to solicit interest in and
receive expressions of interest from third parties, including potential strategic and
financial buyers, and the fact that the termination fee associated with a termination
of the Merger Agreement by the Company to pursue a superior proposal to the
transactions contemplated by the Merger Agreement with a party identified in the
go-shop period is reduced;
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after such go-shop period, the Companys right to continue discussions with persons
or entities who submit qualifying alternative acquisition proposals during the go-shop
period and the Companys right to respond to unsolicited qualifying written alternative
acquisition proposals under certain circumstances;
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subject to compliance with the terms and conditions of the Merger Agreement, the
Companys board of directors being permitted to change its recommendation to vote in
favor of the proposal to adopt and approve the Merger Agreement and the transactions
contemplated thereby, including the Merger, and, prior to the adoption and approval of
the Merger Agreement and the transactions contemplated thereby, including the Merger,
by shareholders, to terminate the Merger Agreement due to the occurrence of an Intervening Event (as discussed in
Change of Company Recommendation
on page 53) or in order to enter into a definitive
agreement with a person or entity other than Parent, Merger Sub and their affiliates
with respect to a superior proposal to the transactions contemplated by the Merger
Agreement, upon the payment to Parent of either the $4,150,000 termination fee, or the
$3,150,000 termination fee with respect to a party identified in the go-shop period
in certain circumstances;
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our board of directors prohibition of our executive officers discussing their
compensation, equity participation or other aspects of their respective roles in the
Company following the proposed transaction; and
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the opinion and financial presentation dated April 2, 2010 of Signal Hill Capital
Group to the board of directors as to the fairness, from a financial point of view and
as of the date of the opinion, of the $17.00 per share Merger consideration to be
received by holders of the Companys common stock, as more fully described below under
Opinion of Signal Hill
beginning on page 35.
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Our board of directors also considered certain material risks or potentially adverse factors
in making its determination and recommendation, including the following:
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the fact that the $17.00 price per share will represent the maximum price per share
receivable by our shareholders unless the Merger Agreement is terminated in accordance
with its terms;
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the fact that the Company will cease to be a public company and its shareholders
will no longer participate in any future earnings or growth of the Company;
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the fact that the all cash purchase price will generally be taxable to the Companys
shareholders for U.S. federal income tax purposes;
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the effect that the payment of any termination fee or expense reimbursement would
have on the Companys liquidity and results of operations if it were required to make
such payments in the event that the Merger Agreement is terminated under certain
circumstances;
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the terms of the Merger Agreement that place limitations on the Companys ability to
consider competing proposals and to terminate the Merger Agreement to accept a superior
proposal to the transactions contemplated by the Merger Agreement;
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the possibility of disruption to the Companys operations following the announcement
of the Merger, the effect that the post signing covenants would have on its business
operations, and the risk to the
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Companys business if the Merger did not close, including the effect on employees,
dental clients and suppliers; and
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the fact that some of the Companys directors and named executive officers, as
stockholders, may have interests that may differ from those of the Companys other
shareholders (see
Interests of Directors and Executive Officers in the Merger
beginning on page 40 for more information).
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The foregoing summarizes the material factors considered by the board of directors in its
consideration of the Merger Agreement and the Merger. After considering these factors, the board of
directors concluded that the positive factors relating to the Merger Agreement and the Merger
outweighed the potential negative factors. In view of the wide variety of factors considered by our
board of directors and the complexity of these matters, the board of directors did not find it
practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition,
individual members of the board of directors may have assigned different weights to various
factors. The board of directors adopted and approved and declared the advisability of the Merger
Agreement based upon the totality of the information presented to and considered by it.
Our board of directors recommends that you vote FOR the adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, and FOR the proposal
to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies to vote
in favor of the Merger Agreement and the transactions contemplated thereby, including the Merger.
Opinion of Signal Hill
On April 2, 2010, Signal Hill rendered its opinion to the board of directors that, as of April
2, 2010 and based upon and subject to the factors and assumptions set forth therein, the
consideration per share to be received by the shareholders of National Dentex was fair from a
financial point of view to such shareholders, and subsequently issued its written opinion delivered
to the board of directors as attached hereto as
Annex B
(the
Opinion
). Signal Hill is a member of
the Financial Industry Regulatory Authority (
FINRA
) and provides a broad range of valuation,
investment banking and other advisory services. The Opinion did not state any other conclusion or
address any other aspect or implication of the Merger.
The summary of the Opinion in this proxy statement is qualified in its entirety by reference
to the full text of the written Opinion, which is included as
Annex B
to this proxy statement and
sets forth the procedures followed, assumptions made, qualifications and limitations on the review
undertaken, and other matters considered by Signal Hill in preparing the Opinion. Shareholders are
urged to read the Opinion in its entirety. Neither the Opinion nor the summary of
the Opinion and the related analyses set forth in this proxy statement are intended to be, and do
not constitute, advice or a recommendation to any shareholder as to how such shareholder should act
or vote with respect to the Merger Agreement or the other matters proposed in this proxy statement.
Scope of Analysis
In connection with the Opinion, Signal Hill made such reviews, analyses and inquiries as
Signal Hill deemed necessary and appropriate under the circumstances. Signal Hill also took into
account its assessment of general economic, market and financial conditions, as well as its
experience in securities and business valuation, in general, and with respect to similar
transactions, in particular. Signal Hills due diligence with regards to the Merger included, but
was not limited to, the items summarized below:
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Discussed with Companys management the background, operations, financial
performance, and future prospects of the Company;
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Reviewed certain publicly available financial statements and other business and
financial information of the Company and the dental industry in which the Company
operates;
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Reviewed certain internal financial statements and other financial and operating
data concerning National Dentex which have been identified as the most current
financial statements available;
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Reviewed certain financial forecasts as prepared by the management of the Company
and discussed with management of the Company the risks and uncertainties of achieving
the forecasts;
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Reviewed a draft of the Merger Agreement and the exhibits thereto;
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Reviewed the historical trading price and trading volume of the Companys publicly
traded securities, and the publicly traded securities of certain other companies that
Signal Hill deemed relevant;
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Compared the financial performance of the Company with that of certain other
publicly traded companies that Signal Hill deemed relevant;
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Compared certain financial terms of the Merger Agreement to financial terms, to the
extent publicly available, of certain other business combination transactions that
Signal Hill deemed relevant; and
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Conducted such other analyses and considered such other factors as Signal Hill
deemed appropriate.
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Assumptions, Qualifications and Limiting Conditions
In performing its analyses and rendering the Opinion with respect to the Merger, Signal Hill,
with the Companys consent:
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Relied upon and assumed the accuracy, completeness, and fair presentation of all
information, data, advice, opinions and representations obtained from public sources or
provided to it from private sources, including the Companys management, and did not
independently verify any such information;
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Assumed that any estimates, evaluations and projections (financial or otherwise)
furnished to Signal Hill were reasonably prepared and based upon the best currently
available information and good faith judgment of the management of the Company
furnishing the same;
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Assumed that the final versions of all documents reviewed by Signal Hill in draft
form (including, without limitation, the Merger Agreement) conform in all material
respects to the drafts reviewed;
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Assumed that all governmental, regulatory or other consents and approvals necessary
for the consummation of the Merger will be obtained without any adverse effect on the
Company or the Merger;
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|
Assumed without verification the accuracy and adequacy of the legal advice given
by its counsel to the Company on all legal matters with respect to the Merger in anticipation
of the Merger and assumed all procedures required by law to be taken in connection with
the Merger have been, or will be, duly, validly and timely taken and that the Merger
will be consummated in a manner that complies in all respects with the applicable
provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and all other applicable statutes, rules and regulations. Signal Hill
has not made, and assumes no responsibility to make, any representation, or render any
opinion, as to any legal matter;
|
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|
Assumed that all of the conditions required to implement the Merger will be
satisfied and that the Merger will be completed in accordance with the Merger
Agreement, without any amendments thereto or any waivers of any terms or conditions
thereof. Signal Hill assumed that all representations and warranties of each party to
the Merger Agreement are true and correct and that each party will perform all
covenants and agreements required to be performed by such party; and
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|
Did not make an independent evaluation or appraisal of the assets and liabilities
(including any contingent, derivative or off-balance sheet assets and liabilities) of
the Company (on a consolidated basis) and was not furnished with any such evaluation or
appraisal.
|
The Opinion should not be construed as a valuation opinion, credit rating, solvency opinion,
liquidation analysis, an analysis of either National Dentexs credit worthiness or otherwise as tax
advice, or as accounting
32
advice. Signal Hill has not been requested to, and did not, (a) negotiate the terms of the
Merger or (b) advise the board of directors or any other party with respect to alternatives to the
Merger.
In Signal Hills analysis and in connection with the preparation of the Opinion, Signal Hill
made numerous assumptions with respect to industry performance, general business, market and
economic conditions and other matters, many of which are beyond the control of any party involved
in the Merger. To the extent that any of the foregoing assumptions or any of the facts on which the
Opinion is based prove to be untrue in any material respect, the Opinion cannot and should not be
relied upon.
Signal Hill prepared the Opinion effective as of April 2, 2010. The Opinion is necessarily
based upon market, economic, financial and other conditions as they existed and can be evaluated as
of the date of the written Opinion, and Signal Hill disclaims any undertaking or obligation to
update the Opinion or advise any person of any change in any fact or matter affecting the Opinion
which may come or be brought to the attention of Signal Hill after the date of the written Opinion.
The basis and methodology for the Opinion have been designed specifically for the express
purposes of the board of directors and may not translate to any other purposes. The Opinion did
not recommend as to how the board of directors or any shareholder should vote or act with respect
to any matters relating to the Merger Agreement, or whether to proceed with the Merger or any
related transaction, nor did it indicate that the terms of (including the Merger consideration to
be paid with respect to) the Merger were the best attainable by the Company under any
circumstances. Further, Signal Hill was not requested to opine as to, and the Opinion did not in
any manner address, the underlying business decision of the Company to engage in the Merger or the
relative merits of the Merger as compared to any alternative business transaction or strategy.
Instead, it stated whether the Merger consideration provided for in the Merger Agreement was within
a range suggested by certain financial analyses. The Opinion should not be construed as creating any
fiduciary duty on the part of Signal Hill to any party. Other than this engagement, Signal Hill has
not had any material relationships during the past two years, or that are mutually understood to be
contemplated, in which compensation was received or was intended to be received as a result of the
relationship between Signal Hill and any party to the Merger. Without Signal Hills prior consent,
the Opinion may not be quoted from or referred to, in whole or in part, in any written document or
used for any other purpose, except that the Opinion may be included in its entirety in filings with
the SEC made by National Dentex in connection with the Merger.
National Dentex may summarize or otherwise reference the existence of the Opinion in such documents
provided that any such summary or reference language shall be subject to prior approval of Signal
Hill.
In preparing its written Opinion to our board of directors, Signal Hill performed a variety of
analyses, including those described below. The summary of Signal Hills valuation analyses is not a
complete description of the analyses underlying Signal Hills Opinion. The preparation of a
fairness opinion is a complex process involving various quantitative and qualitative judgments and
determinations with respect to the financial, comparative and other analytic methods employed and
the adaptation and application of these methods to the unique facts and circumstances presented. As
a consequence, neither a fairness opinion nor its underlying analyses are readily susceptible to
partial analysis or summary description. Signal Hill arrived at its Opinion based on the results of
all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions
from or with regard to any individual analysis, analytic method or factor. Accordingly, Signal Hill
believes that its analyses must be considered as a whole and that selecting portions of its
analyses, analytic methods, and factors, without considering all analyses and factors or the
narrative description of the analyses, could create a misleading or incomplete view of the
processes underlying its analyses and Opinion.
In performing its analyses, Signal Hill considered business, economic, industry, and market
conditions, financial and otherwise, and other matters as they existed on, and could be evaluated
as of, the date of the Opinion. No company, transaction, or business used in Signal Hills
analyses for comparative purposes is identical to National Dentex or the Merger. While the results
of each analysis were taken into account in reaching its overall conclusion with respect to
fairness, Signal Hill did not make separate or quantifiable judgments regarding individual
analyses. The implied reference range values indicated by Signal Hills analyses are illustrative
and not necessarily indicative of actual values or predictive of future results or values, which
may be significantly more or less favorable than those suggested by the analyses. In addition, any
analyses relating to the value of assets, businesses or securities do not purport to be appraisals
or to reflect the prices at which businesses or securities actually may be sold, which may depend
on a variety of factors, many of which are beyond our control and the control of Signal Hill. Much
of
33
the information used in, and accordingly the results of, Signal Hills analyses are inherently
subject to substantial uncertainty.
The Opinion and analyses were provided to our board of directors in connection with
its consideration of the Merger and were among many factors considered by our board of directors in
evaluating the Merger. Neither Signal Hills Opinion nor its analyses were determinative of the
Merger consideration or of the views of our board of directors with respect to the Merger. Signal
Hill is not a legal, regulatory, accounting or tax expert and assumed the accuracy and completeness
by the Company and its advisors with respect to legal, regulatory, accounting and tax matters.
Valuation Analysis Summary
The following is a summary of the material valuation analyses performed in connection with the
preparation and rendering of the Opinion. The information summarized below does not constitute a
complete description of the analyses performed by Signal Hill, and without considering the full
narrative description of the analyses, as well as the methodologies underlying the assumptions,
qualifications, and limitations affecting each analysis, could create a misleading or incomplete
view of Signal Hills analyses. Furthermore, the order of analysis set forth below does not
represent relative importance or weight given to these analyses.
For purposes of its analyses, Signal Hill reviewed a number of financial metrics including:
|
|
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Enterprise Value generally the value as of a specified date of the relevant
companys outstanding equity securities (taking into account any derivative or
convertible securities), plus the value of its minority interests, plus the value of
its net debt (the value of its outstanding indebtedness, preferred stock, and capital
lease obligations, less the amount of cash on its balance sheet) as of a specified
date;
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|
EBITDA generally the amount of the relevant companys earnings before interest,
taxes, depreciation, and amortization for a specified time period, subject to
adjustments for any non-recurring charges and income; and
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Unlevered Free Cash Flow generally the amount of free cash flow available to a
company before depreciation, amortization, interest, and taxes; and after changes in
working capital and capital expenditures (including internally financed acquisitions).
|
In preparing its analyses, Signal Hill noted the following:
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The financial forecasts and projections prepared by the management of National
Dentex with respect to the Companys Fiscal Year 2010 Budget
(Revenue of $157.0 million and EBITDA of $17.4 million) and the Companys
Five-Year Plan for Fiscal Years ended December 31, 2010 through 2014, included reliance
on certain growth forecasts due to expansion of labs, acquisitions, and price increases
consistent with market trends;
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Company management indicated that it expects to continue its growth strategy and has
included annual acquisitions into its five-year plan;
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Company management indicated that it has no pending material litigation claims; and
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Signal Hill calculated an implied enterprise value for the transaction based on an
offer price of $17.00 per common share, multiplied by the sum of (i) 5,761,363 shares
of National Dentex Common Stock outstanding; (ii) an estimated 105,436 ESPP shares to be issued at March
31, 2010; (iii) 10,762 accelerated restricted stock units; and (iv) 230,865 shares from
exercised stock options (741,511 options exercised at a $11.71 weighted average
exercise price, net of cash proceeds), resulting in an equity value of $103.8 million.
The Companys estimated net debt at June 30, 2010 is $24.8 million, yielding an
enterprise value of $128.7 million.
|
34
Valuation Methodologies
Selected Comparable Companies Trading Analysis
Signal Hill compiled and reviewed publicly available financial information and quoted market
prices in order to calculate certain financial multiples and ratios for selected publicly traded
companies in the dental industry. Equity values and enterprise values were calculated using the
closing price of the common stock of the selected companies listed below as of April 1, 2010.
The calculated multiples included:
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Enterprise value as a multiple of Revenue for the Calendar Year 2010 and Calendar
Year 2011;
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|
Enterprise value as a multiple of EBITDA for the Calendar Year 2010 and Calendar
Year 2011; and
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Equity value as a multiple of Net Income for the Calendar Year 2010 and Calendar
Year 2011.
|
There are no other publicly traded dental laboratory companies and as such Signal Hill
reviewed U.S. listed companies that operated in the dental distribution, manufacturing, and
services sectors (full list below) with equity market capitalizations above $100 million.
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Henry Schein (Nasdaq: HSIC)
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Patterson Companies (Nasdaq: PDCO)
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Danaher Corporation (NYSE: DHR)
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DENTSPLY International (Nasdaq: XRAY)
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Sirona Dental Systems (Nasdaq: SIRO)
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Align Technology (Nasdaq: ALGN)
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Young Innovations (Nasdaq: YDNT)
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American Dental Partners (Nasdaq: ADPI)
|
In particular, given National Dentexs margins and growth projections, Signal Hill believed
that the dental distributors and service providers represented the most comparable companies (Henry
Schein, Patterson Companies and American Dental Partners).
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Multiple
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|
NADX
1
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|
HSIC
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|
PDCO
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|
ADPI
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|
Enterprise Value/Revenue:
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|
|
|
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|
|
|
|
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|
CY2010
|
|
|
0.8x
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|
|
|
0.7x
|
|
|
|
1.2x
|
|
|
|
1.0x
|
|
CY2011
|
|
|
0.7x
|
|
|
|
0.7x
|
|
|
|
1.2x
|
|
|
|
1.0x
|
|
Enterprise Value/EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CY2010
|
|
|
7.4x
|
|
|
|
8.4x
|
|
|
|
9.7x
|
|
|
|
6.0x
|
|
CY2011
|
|
|
6.1x
|
|
|
|
7.6x
|
|
|
|
9.3x
|
|
|
|
5.7x
|
|
Price/EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CY2010
|
|
|
15.5x
|
|
|
|
16.9x
|
|
|
|
16.2x
|
|
|
|
19.3x
|
|
CY2011
|
|
|
11.0x
|
|
|
|
15.1x
|
|
|
|
15.1x
|
|
|
|
16.5x
|
|
|
|
|
1
|
|
National Dentexs multiples are based on $17.00 per share consideration and an implied
$128.7 million enterprise value, relative to the Companys 2010 Budget and 2011 projections.
|
Signal Hill focused its comparable companies analysis on comparable CY 2010 EBITDA
multiples. Based on these multiples, the selected comparable companies analysis indicated an
implied reference enterprise value range of
National Dentex of $104.2 million to $168.5 million, as compared to the proposed Merger
enterprise value consideration of $128.7 million.
35
Selected Transactions Analysis
Signal Hill compiled and reviewed publicly available financial information and estimated
purchase prices offered or paid in order to calculate certain financial multiples and ratios for
the selected publicly-announced transactions involving companies in the dental industry or
mail-order pharmacy services. These target companies were of similar representative size, scale,
operating performance and growth prospects as National Dentex, including certain National Dentex
acquisitions and related EBITDA multiples (prior to corporate overhead). Enterprise values for
companies used below were calculated as of the closing date of the relevant transaction based on
the purchase prices paid in the relevant transactions.
The calculated multiples included:
|
|
|
Enterprise value as a multiple of Last Twelve Months (
LTM
) Revenue; and
|
|
|
|
|
Enterprise value as a multiple of LTM EBITDA.
|
The selected transactions were as set forth below. These transactions were selected because
they involved companies whose main businesses were dental or mail-order pharmacy services related
and were completed since January 1, 2007. Within the dental lab industry, services are provided to
dentists via mail order as well as proximate market locations. Similar to the comparable companies
analysis, the acquired companies below were of similar size, scale and operating metrics to
National Dentex.
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|
H.I.G. Capitals acquisition of Allion Healthcare, Inc. closed in January 2010
(
ALLI
);
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|
American Dental Partners, Inc.s acquisition of Christie Dental Partners, Inc.,
closed in December 2009 (
CDP
);
|
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|
National Dentex Corporations acquisition of Dental Art Laboratories, Inc., closed
in September 2008 (
DAL
);
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|
SunLink Health Systems, Inc.s acquisition of Carmichael Cashway Pharmacy, Inc.,
closed in April 2008 (
CCP
); and
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|
American Dental Partners, Inc.s acquisition of Metropolitan Dental Holdings, Inc.,
closed in September 2007 (
MDH
).
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|
Multiple
|
|
NADX
1
|
|
|
ALLI
|
|
|
CDP
|
|
|
DAL
2
|
|
|
CCP
|
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|
MDH
|
|
Enterprise
Value/Last Twelve
Months:
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|
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|
|
|
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|
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|
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|
Revenue
|
|
|
0.8x
|
|
|
|
0.7x
|
|
|
|
1.1x
|
|
|
|
1.3x
|
|
|
|
0.5x
|
|
|
|
2.3x
|
|
EBITDA
|
|
|
7.4x
|
|
|
|
8.2x
|
|
|
NA
|
|
|
5.7x
|
|
|
|
6.4x
|
|
|
NM
|
|
|
|
1
|
|
National Dentexs multiples are based on $17.00 per share consideration and an implied $128.7 million enterprise value
|
|
2
|
|
EBITDA before field support and corporate overhead
|
Signal Hill focused its selected transaction analysis on comparable LTM EBITDA multiples.
Based on these multiples, the selected transactions analysis indicated an implied reference
enterprise value range of National Dentex of $99.2 million to $142.7 million, as compared to the
proposed Merger enterprise value consideration of $128.7 million.
Discounted Cash Flow Analysis
Signal Hill performed a discounted cash flow analysis of National Dentexs unlevered,
after-tax cash flows based on the Fiscal Year 2010 Budget and Fiscal Year 2011-2014 Plan
projections provided by National Dentex management. In performing this analysis, Signal Hill
utilized a range of discount rates of 16% to 18% based on the estimated weighted average cost of
capital (
WACC
) for National Dentex, which was based on (i) an estimated
36
pre-tax cost of debt of 5% (after tax cost of debt of 3%), (ii) an estimated cost of equity of approximately 21%, and (iii)
an estimated long term net debt as percentage of equity of 25%. The estimated cost of equity was
determined based on the Capital Asset Pricing Model (
CAPM
), a finance model widely used in
securities valuation to determine a theoretically appropriate required rate of return. In
determining a terminal value for National Dentex, Signal Hill used two commonly used methods: (i)
an EBITDA exit multiple applied to Fiscal Year 2014 EBITDA and (ii) the perpetuity growth rate
method, applied to Fiscal Year 2014 Free Cash Flow. Signal Hill used terminal value multiples
ranging from 6x to 8x of projected Fiscal Year 2014 EBITDA based on the multiples indicated by long
term trading and transaction valuations for comparable companies and 3% to 4% perpetuity growth
rates.
The discounted cash flow analysis (based on an EBITDA exit multiple) indicated an implied
reference enterprise value range of National Dentex of $98.7 million to $136.4 million and the
discounted cash flow analysis (based on the perpetuity growth rate) indicated an implied reference
enterprise value range of National Dentex of $70.1 million to $90.8 million, as compared to the
proposed Merger enterprise value consideration of $128.7 million.
M&A Premiums
Signal Hill performed an M&A premiums analysis based on premiums paid on precedent
transactions, then applied this to National Dentexs current and recent stock price. Signal Hill
reviewed completed M&A transactions of public healthcare companies since 2007, with enterprise
values equal to or less than $500, $250, and $150 million. The premium analysis was conducted with
the targets stock price one day prior and on its preceding 30-, 60-, and 90-day volume weighted
average price (
VWAP
). Having reviewed both adjusted mean (removing the highest and lowest data
points) and median premiums, Signal Hill applied a premium range of 36.9% to 62.4%.
The M&A premiums analysis indicated an implied reference enterprise value range (based on an
implied share price multiplied by diluted shares outstanding plus net debt) of National Dentex of
$107.2 million to $123.9 million, as compared to the proposed Merger enterprise value consideration
of $128.7 million.
Engagement and Compensation of Signal Hill
We engaged Signal Hill, pursuant to a letter agreement, dated as of March 19, 2010, to render
an opinion to our board of directors with respect to whether the merger consideration to be paid by
Parent in accordance with the terms of the Merger Agreement is fair to holders of our common stock
from a financial point of view. Signal Hill is regularly engaged to render financial opinions in
connection with mergers and acquisitions, financial restructuring, tax matters, corporate planning,
and for other purposes. Under the terms of the letter agreement, Signal Hill earned a fee of
$200,000 for its services. No portion of the fee was contingent upon the consummation of the Merger
or the conclusions set forth in Signal Hills Opinion. In addition, the Company has agreed to
reimburse Signal Hill for certain of its reasonable out-of-pocket expenses incurred in connection
with the service rendered by Signal Hill under its engagement letter with the Company, not to
exceed $25,000. The Company has also agreed to indemnify Signal Hill and certain related parties
for certain liabilities. Signal Hill has consented to the inclusion of its written Opinion as
Annex
B
to this proxy statement.
Certain Company Forecasts
We do not, as a matter of course, publicly disclose financial forecasts as to future
financial performance, earnings or other results and we are especially cautious of making financial
forecasts for extended periods due to unpredictability of the underlying assumptions and estimates.
However, in connection with the evaluation of a possible transaction involving us, our management
team prepared and provided or made available to Parent, Merger Sub, Party B and our advisors, including Signal Hill, certain non-public financial forecasts that were not
prepared with a view toward public disclosure.
A summary of these financial forecasts is not being included in this document to influence
your decision whether to vote for or against the proposal to adopt and approve the Merger Agreement
and the transactions contemplated therein, including the Merger, but because these financial forecasts were made
available to Parent, Merger Sub, the board of directors, and the board of directors advisors,
including Signal Hill. The inclusion of this information should not be regarded as an indication
that our board of directors, the board of directors advisors or any other person considered, or
now considers, such financial forecasts to be material or to be a reliable prediction
37
of actual future results. Our managements internal financial forecasts, upon which the
financial forecasts were based, are subjective in many respects. There can be no assurance that
these financial forecasts will be realized or that actual results will not be significantly higher
or lower than forecasted. The financial forecasts cover multiple years and such information by its
nature becomes subject to greater uncertainty with each successive year. As a result, the inclusion
of the financial forecasts in this proxy statement should not be relied on as necessarily
predictive of actual future events.
These projections were not prepared with a view toward public disclosure or toward complying with generally accepted
accounting principles, which we refer to as GAAP, the published guidelines of the SEC regarding
projections and the use of non-GAAP measures or the guidelines established by the American
Institute of Certified Public Accountants for preparation and presentation of prospective financial
information. The financial forecasts included below were prepared by, and are the responsibility
of, our management. Neither our independent registered public accounting firm, nor any other
independent accountants, have compiled, examined or performed any procedures with respect to the
financial forecasts contained herein, nor have they expressed any opinion or any other form of
assurance on such information or its achievability.
These financial forecasts were based on numerous variables and assumptions that are inherently
uncertain and may be beyond our control. Important factors that may affect actual results and cause
these financial forecasts to not be achieved include, but are not limited to, risks and
uncertainties relating to our business (including our ability to achieve strategic goals,
objectives and targets over the applicable periods), industry performance, the regulatory
environment, general business and economic conditions and other factors described under
Cautionary
Statement Regarding Forward-Looking Statements
beginning on page 18 of this proxy statement. In
addition, the forecasts do not reflect revised prospects for our business, changes in general
business or economic conditions, or any other transaction or event that has occurred or that may
occur and that was not anticipated at the time the financial forecasts were prepared. Accordingly,
there can be no assurance that these financial forecasts will be realized or that our future
financial results will not materially vary from these financial forecasts.
No one has made or makes any representation to any shareholder or anyone else regarding the
information included in the financial forecasts set forth below. Readers of this proxy statement
are cautioned not to rely on the forecasted financial information. We have not updated and do not
intend to update, or otherwise revise the financial forecasts to reflect circumstances existing
after the date when made or to reflect the occurrence of future events, even in the event that any
or all of the assumptions are shown to be in error. We have made no representation to, Parent,
Merger Sub or any other person in the Merger Agreement or otherwise, concerning these financial
forecasts. The financial forecasts are forward-looking statements. For information on factors that
may cause our future financial results to materially vary, see
Cautionary Statement Regarding
Forward-Looking Statements
on page 18.
38
The following is a summary of the financial forecasts prepared by our management and given to
Parent, the board of directors, and the board of directors advisors, including Signal Hill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Five Year Plan (1)
|
|
|
|
|
|
|
|
2010-2014
|
|
|
|
|
|
|
|
($000s except per share data)
|
|
|
|
Actual
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
Net Sales
|
|
$
|
161,195
|
|
|
$
|
161,000
|
|
|
$
|
178,627
|
|
|
$
|
193,026
|
|
|
$
|
210,401
|
|
|
$
|
228,641
|
|
|
Operating Income
|
|
|
24,973
|
|
|
|
24,686
|
|
|
|
28,597
|
|
|
|
31,489
|
|
|
|
34,832
|
|
|
|
38,269
|
|
% of Sales
|
|
|
15.49
|
%
|
|
|
15.33
|
%
|
|
|
16.01
|
%
|
|
|
16.31
|
%
|
|
|
16.56
|
%
|
|
|
16.74
|
%
|
Net Income
|
|
$
|
5,877
|
|
|
$
|
7,233
|
|
|
$
|
9,110
|
|
|
$
|
10,217
|
|
|
$
|
11,998
|
|
|
$
|
13,971
|
|
|
|
|
|
|
|
E.P.S.
|
|
$
|
1.02
|
|
|
$
|
1.23
|
|
|
$
|
1.54
|
|
|
$
|
1.72
|
|
|
$
|
2.00
|
|
|
$
|
2.31
|
|
|
EBITDA
|
|
$
|
17,401
|
|
|
$
|
17,684
|
|
|
$
|
21,239
|
|
|
$
|
23,969
|
|
|
$
|
26,887
|
|
|
$
|
30,114
|
|
|
|
|
(1)
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The Five Year Plan assumes one dental laboratory acquisition occurring January
1
st
of each year beginning January 1, 2011 with revenues for such dental laboratory
being $8,000,000 per year.
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Board of Directors and Management of Surviving Corporation Following Completion of the Merger
Each member of the board of directors of National Dentex will resign effective immediately
prior to the effective time of the Merger. Upon completion of the Merger, the current directors
and officers of Merger Sub are expected to continue as directors or officers, as the case may be,
of the surviving corporation.
Public Trading Markets
National Dentex common stock is quoted on Nasdaq under the symbol NADX. Upon completion of
the Merger, National Dentex common stock will be delisted from Nasdaq and thereafter will be
deregistered under the Securities Exchange Act of 1934, as amended.
Appraisal Rights
We do not believe our shareholders will be entitled to appraisal rights under the
Massachusetts Business Corporation Act, which we refer to as the MBCA, in connection with the
Merger. The MBCA generally provides that shareholders of a Massachusetts corporation are entitled
to appraisal rights in the event of a merger. However, an exception to the general rule in Section
13.02(a)(1) of the MBCA provides that shareholders of a Massachusetts corporation are not entitled
to appraisal rights in a merger transaction in which the sole consideration they receive consists
of cash so long as no director, officer or controlling shareholder of the corporation has a direct
or indirect material financial interest in the merger other than in:
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(i)
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his, her or its capacity as a shareholder of the corporation;
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(ii)
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his, her or its capacity as a director, officer, employee or consultant of the
merging corporation or the surviving corporation or an affiliate of the surviving
corporation pursuant to bona fide arrangements with the merging corporation or the
surviving corporation or any affiliate; or
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(iii)
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any other capacity so long as the shareholder owns less than 5% of the voting
securities of the corporation.
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National Dentex believes that this exception applies to the Merger and that National Dentex
shareholders will not be entitled to appraisal rights in connection with the Merger. However, the
MBCA took effect on July 1, 2004 and
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Section 13.02 of the MBCA has not yet been the subject of judicial interpretation. Accordingly, it
is possible that a court could conclude that this exception is not applicable in the present
circumstances and that National Dentex shareholders are entitled to appraisal rights under
Massachusetts law, in connection with the Merger.
If you believe you are entitled to appraisal rights under Massachusetts law, in order to
exercise these rights you must: (i) deliver to National Dentex, before the vote to adopt and
approve the Merger Agreement and the transactions contemplated thereby is taken, written notice of
your intent to demand payment for your shares if the Merger is consummated; (ii) not vote your
shares in favor of the proposal to adopt and approve the Merger Agreement and the transactions
contemplated thereby, including the Merger; and (iii) comply with the other procedures specified in
Part 13 of the MBCA. Because a submitted proxy not marked against or abstain will be voted FOR
the adoption and approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, and FOR the adjournment of the special meeting, if necessary or appropriate,
to solicit additional proxies, the submission of a proxy card not marked against or abstain
will result in the waiver of appraisal rights, to the extent such rights are available. If you hold
shares in the name of a broker, bank or other nominee and you want to attempt to assert appraisal
rights, you must instruct your nominee to take the steps necessary to enable you to assert
appraisal rights. If you or your nominee fails to follow all of the steps required by the statute,
you will lose your right of appraisal (to the extent such right otherwise would be available).
Since National Dentex does not believe that our shareholders are entitled to appraisal rights
in the Merger, National Dentex intends to take the position that any of shareholders who seek
appraisal for their shares of common stock are not entitled to do so under the MBCA and does not
intend to deliver the appraisal notice and form called for by Section 13.22 of the MBCA to any of
our shareholders seeking appraisal. Any shareholder who believes he, she or it is entitled to
appraisal rights and who wishes to preserve those rights should carefully review Sections 13.01
through 13.31 of Part 13 of the MBCA, attached as
Annex C
to this proxy statement, which sets forth
the procedures to be complied with in perfecting any such rights. Failure to strictly comply with
the procedures specified in Part 13 of the MBCA would result in the loss of any appraisal rights to
which such shareholder may be entitled in connection with the Merger. Please read Part 13 of the
MBCA carefully, because exercising appraisal rights involves several procedural steps, and failure
to follow appraisal procedures could result in the loss of such rights, if any. Shareholders should
consult with their advisors, including legal counsel, in connection with seeking appraisal. The
foregoing discussion is not a complete statement of the law pertaining to appraisal rights under
the MBCA and is qualified in its entirety by reference to Part 13 of the MBCA.
Required Approvals and Consents
National Dentex and Parent have agreed to use their respective reasonable best efforts to
obtain all regulatory approvals required to complete the Merger and the other transactions
contemplated by the Merger Agreement. As of the date of this proxy statement, we do not have any
reason to believe that any regulatory approvals are required to complete the Merger and the other
transactions contemplated by the Merger Agreement, other than certain waiting period requirements
under the HSR Act.
Interests of Directors and Executive Officers in the Merger
Certain Executive Officers May be Employed by GeoDigm and/or the Surviving Corporation to the
Merger Following the Merger
While certain of our executive officers may be employed following the completion of the
Merger by GeoDigm and/or the surviving corporation following the Merger, as of the date of this
proxy statement, neither we nor Parent, Merger Sub, Sponsor or, to our knowledge, any of their
respective affiliates have entered into any employment agreements or agreement to purchase or
participate in the equity of GeoDigm or its parent companies with our management in connection with
the Merger, nor amended or modified any existing employment agreements in connection with the
Merger.
Ownership of National Dentex Stock, Stock Options, and other Equity Awards
Our directors and executive officers own our common stock (including restricted stock) and,
like our other shareholders, will be entitled to receive the Merger consideration for their
shares. See below under the caption
Security Ownership of Certain Beneficial Owners and
Management
.
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In addition, our directors and executive officers hold stock options to purchase shares of our
common stock or RSUs. Like the other holders of our equity awards, our directors and executive
officers will be entitled to receive cash in exchange for the cancellation of their vested and
unexercised stock options and RSUs pursuant to the terms of the Merger Agreement. Further, our
board of directors has approved the lapse of restrictions on all shares of outstanding restricted
stock and the acceleration of vesting of all other equity awards if such awards allow for vesting
in the event of a change of control of National Dentex. These actions will be effective
immediately prior to the effective time of the Merger, including for restricted shares and equity
awards held by our directors and executive officers.
Our directors, other than Mr. Brown, would receive the following amounts in connection with
the cancellation of their vested restricted stock units and the lapse of restrictions on shares of
restricted stock they hold upon consummation of the Merger:
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Total Payment for
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Number of Restricted Stock
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Number of Shares of
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Restricted Stock Units and
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Name
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Units Subject to Vesting
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Restricted Stock (1)
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Restricted Stock
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David V. Harkins
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1,690
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$
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28,730
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Jack Crosby
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1,690
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28,730
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Thomas E. Callahan
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1,690
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28,730
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James E Mulvihill
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5,381
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(2)
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1,690
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120,207
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Norman F. Strate
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5,381
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(2)
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1,690
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120,207
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(1)
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The restricted stock vests on May 13, 2010 in accordance with its terms.
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(2)
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The restricted stock units are fully vested; however, their deferral will be accelerated
in connection the Merger.
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Our named executive officers would receive the following amounts in connection with the
cancellation of their vested and unexercised stock options upon consummation of the Merger
(assuming they do not exercise any such options prior to the effective time of the Merger):
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Number of Shares
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Subject to Vested
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Total Payment for
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Name
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Stock Options
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Vested Stock Options (1)
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David L. Brown
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263,334
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$
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1,245,207
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John W. Green, IV
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46,667
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391,935
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Richard F. Becker, Jr.
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90,167
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492,625
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Wayne M. Coll
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53,459
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397,555
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(1)
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Of the amounts reflected in the table above; (i) an aggregate of approximately $525,270 of
the payments to be made to Mr. Brown will result from the accelerated vesting of stock options
in connection with the Merger; (ii) an aggregate of approximately $305,744 of the payments to
be made to Mr. Green will result from the accelerated vesting of stock options in connection
with the Merger; (iii) an aggregate of approximately $305,744 of the payments to be made to
Mr. Becker will result from the accelerated vesting of stock options in connection with the
Merger; and (iv) an aggregate of approximately $289,079 of the payments to be made to Mr. Coll
will result from the accelerated vesting of stock options in connection with the Merger.
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Existing Employment Agreements and Change of Control and Severance Agreements.
As most recently amended in July 2008, Mr. Brown and Mr. Becker are each party to
employment agreements with the Company which provide for annual base salaries that may be increased at the
discretion of our board of directors. These agreements also provide for participation in our
executive incentive compensation plan, reimbursement of expenses, and the same types of benefits
that we generally offer to our other executives. In the event that either of those executives
terminate his employment with good reason, the Company terminates them without cause or
their death or disability (each as defined in their employment agreement), the Company will
continue to pay their current base salary and average bonus for a period of two years following the
date of termination, which amount may be reduced in the second year to the extent of compensation
received from other employment, and in the case of
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disability, may be reduced to the extent of any payments under the Companys long term
disability plan. The average bonus paid in each of these scenarios would be the average bonus paid
to these executives in the previous two years. In the event of such a termination, we will
also provide health and welfare benefits for the shorter of (i) two years following the termination
date or (ii) until Mr. Brown or Mr. Becker has commenced other employment. Mr. Brown and Mr. Becker
are also each subject to certain non-competition provisions covering the dental laboratory business. The
agreements automatically renew for one-year terms until such time as they may be terminated by
National Dentex or the named executive. The terms of the employment agreements with each of Mr. Brown and
Mr. Becker stipulate that in the event of a change in control the determination and payment of any
benefits following a qualified termination would be exclusively governed by the provisions of any
existing change in control severance agreement, as discussed below.
In July 2008, we entered into or amended our change of control and severance agreements with
each of Mr. Brown, Mr. Green, Mr. Becker, and Mr. Coll, which provide for a severance benefit upon
termination of employment within two years after a change in control (as defined in the
agreements) of National Dentex. The Merger would be a change of control under all of these
agreements. Other than with respect to Mr. Brown, these agreements provide that, in the event that the named
employee is terminated without cause (as defined in the agreements), or terminates his employment
for certain specified reasons constituting good reason (as defined in the agreement and
including, without limitation, a reduction in compensation or duties), within two years of a change
of control, the employee will receive severance benefits equal to two times his base salary in
effect immediately prior to the date of termination, plus two times the average amount of the bonus
paid for the two fiscal years ending on or immediately prior to the date of termination. In
Mr. Browns case, these severance benefits are three times salary and three times the average bonus
over the two preceding years. These agreements also provide for two years of post-termination
health and welfare benefits. The severance payments are payable in a lump sum within thirty
days of the qualifying termination following a change of control.
Existing Supplemental Employee Retirement Programs
Mr. Brown, Mr. Becker and Mr. Coll each participate in our Supplemental Executive Retirement Plans
(
SERPs
). These plans are generally designed to provide these participants with annual benefits
payable over a period of ten years beginning on the participants 65th birthday or the
participants date of retirement (whichever comes later), if the employee has elected to defer
retirement in accordance with the terms of the plan. In order to provide these benefits, we have
purchased life insurance contracts for each participating employee. Generally, the benefits for
each participant vests at ten years (except in the case of one SERP established for the benefit of
Mr. Brown to which Mr. Brown vests as to 20% of the benefits provided thereunder annually over a
period of five years). Our SERPs provide that in the event of a change of control (which includes
the Merger) the benefits which the employees are entitled to under the SERPs become fully vested.
Pursuant to this change of control provision, Mr. Brown will receive one year of vesting under one
of the SERPs that he participates in, which provides for ten annual payments of $125,000 beginning
at age 75 (plus health benefits for him and his wife for the remainder of their lives) and Mr. Coll
will receive one year of vesting under the SERP in which he participates, under which he would
receive ten annual payments currently estimated to be approximately $28,000 when he terminates
employment after attaining the age of 65, in accordance with the terms of the SERP. Mr. Beckers
SERPs are fully vested.
Neither our directors or Mr. Green participates in any of the SERPs.
Material United States Federal Income Tax Consequences of the Merger
The following is a discussion of certain material U.S. federal income tax consequences of the
Merger to U.S. holders (as defined below) whose shares of our common stock are converted into the
right to receive the Merger consideration. This discussion is for general information only and is
not tax advice. The discussion is based upon the Internal Revenue Code, Treasury regulations,
Internal Revenue Service published rulings and judicial and administrative decisions in effect as
of the date of this proxy statement, all of which are subject to change (possibly with retroactive
effect) and to differing interpretations. The following discussion does not purport to consider all
aspects of U.S. federal income taxation that might be relevant to our shareholders. This discussion
applies only to shareholders who, on the date on which the Merger is completed, hold shares of our
common stock as capital assets within the meaning of section 1221 of the Internal Revenue Code. The
following discussion does not address taxpayers subject to special treatment under U.S. federal
income tax laws, such as insurance companies, financial institutions, dealers in securities or
currencies, traders of securities that elect the mark-to-market method of accounting for their
securities, persons that have a functional currency other than the U.S. dollar, tax-exempt
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organizations, mutual funds, real estate investment trusts, S corporations or other
pass-through entities (or investors in an S corporation or other pass-through entity) and taxpayers
subject to the alternative minimum tax. In addition, the following discussion may not apply to
shareholders who acquired their shares of our common stock upon the exercise of stock options, ESPP
options, RSUs or otherwise as compensation for services or who hold their shares as part of a
hedge, straddle, conversion transaction or other integrated transaction. If our common stock is
held through a partnership, the U.S. federal income tax treatment of a partner in the partnership
will generally depend upon the status of the partner and the activities of the partnership. It is
recommended that partnerships that are holders of our common stock and partners in those
partnerships consult their own tax advisors regarding the tax consequences to them of the Merger.
The following discussion also does not address potential alternative minimum tax, foreign,
state, local and other tax consequences of the Merger. All shareholders should consult their own
tax advisors regarding the U.S. federal income tax consequences, as well as the foreign, state and
local tax consequences of the disposition of their shares in the Merger.
For purposes of this summary, a U.S. holder is a beneficial owner of shares of our common
stock, who or that is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) created or organized in or
under the laws of the United States, any state of the United States or the District of
Columbia;
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an estate, the income of which is subject to U.S. federal income tax regardless of
its source;
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a trust if (i) a U.S. court is able to exercise primary supervision over the trusts
administration and one or more U.S. persons are authorized to control all substantial
decisions of the trust; or (ii) it was in existence on August 20, 1996 and has a valid
election in place to be treated as a domestic trust for U.S. federal income tax
purposes; or
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otherwise is subject to U.S. federal income taxation on a net income basis.
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Except with respect to the withholding discussion below, this discussion is confined to the
tax consequences to a shareholder who or that, for U.S. federal income tax purposes, is a U.S.
holder.
For U.S. federal income tax purposes, the disposition of our common stock pursuant to the
Merger generally will be treated as a sale of our common stock for cash by each of our
shareholders. Accordingly, in general, the U.S. federal income tax consequences to a shareholder
receiving cash in the Merger will be as follows:
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The shareholder will generally recognize a capital gain or loss for U.S. federal
income tax purposes upon the disposition of the shareholders shares of our common
stock pursuant to the Merger. In certain circumstances, all or a portion of any loss
recognized under this disposition of shares will be disallowed if other shares of our
common stock are purchased within 30 days before or after the disposition.
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The amount of capital gain or loss recognized by each shareholder will be measured
by the difference, if any, between the amount of cash received by the shareholder in
the Merger (other than, in the case of a shareholder seeking appraisal rights (if
available), amounts, if any, which are deemed to be interest for U.S. federal income
tax purposes, which amounts will be taxed as ordinary income) and the shareholders
adjusted tax basis in the shares of our common stock surrendered in the Merger. Gain or
loss will be determined separately for each block of shares (i.e., shares acquired at
the same cost in a single transaction) surrendered for cash in the Merger.
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The capital gain or loss, if any, will be long-term with respect to shares of our
common stock that have a holding period for tax purposes in excess of one year at the
effective time of the Merger. Long-term capital gains of individuals are eligible for
reduced rates of taxation. There are limitations on the deductibility of capital
losses. A shareholder seeking appraisal rights (if available) may be required to
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recognize any gain or loss in the year the Merger closes, irrespective of whether a
shareholder seeking appraisal rights, if applicable, actually receives payment in that
year.
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Cash payments made pursuant to the Merger will be reported to our shareholders and the
Internal Revenue Service to the extent required by the Internal Revenue Code and applicable
Treasury regulations. Non-corporate shareholders may be subject to back-up withholding at a rate of
28% on any cash payments they receive. Shareholders who are U.S. holders generally will not be
subject to backup withholding if they: (1) furnish a correct taxpayer identification number and
certify that they are not subject to backup withholding on the substitute Form W-9 included in the
election form/letter of transmittal they are to receive or (2) are otherwise exempt from backup
withholding and comply with other applicable rules and certification requirements. Shareholders who
are not U.S. holders should complete and sign a Form W-8BEN (or other applicable tax form) and
return it to the paying agent in order to provide the information and certification necessary to
avoid withholding tax or otherwise establish an exemption from withholding tax. Certain of our
shareholders will be asked to provide additional tax information in the letter of transmittal for
the shares of our common stock.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding
rules generally will be allowed as a refund or a credit against your U.S. federal income tax
liability provided the required information is timely furnished to the Internal Revenue Service.
The U.S. federal income tax consequences described above are not intended to constitute a
complete description of all tax consequences relating to the Merger. Because individual
circumstances may differ, each shareholder should consult the shareholders tax advisor regarding
the applicability of the rules discussed above to the shareholder and the particular tax effects to
the shareholder of the Merger in light of such shareholders particular circumstances, the
application of state, local and foreign tax laws, and, if applicable, the tax consequences of the
receipt of cash in connection with the cancellation of options, ESPP options, or RSUs to purchase
shares of National Dentex common stock.
Indemnification and Insurance
The Merger Agreement requires (i) the surviving corporation to cause all rights to
indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the
completion of the Merger, to the extent provided under any indemnification agreement or the
respective certificates or articles of organization or bylaws (or comparable organizational
documents) of National Dentex or any of its subsidiaries in effect on the date of the Merger
Agreement, in favor of any current and former officers, directors and employees of National Dentex
or any of its subsidiaries and any person prior to the Merger serving at the request of any such
party as a director, officer, employee, fiduciary or agent of another corporation, partnership,
trust or other enterprise, to survive the Merger and continue in full force and effect for a period
of six years from the completion of the Merger and (ii) Parent to guarantee the payment and
performance by the surviving corporation of the indemnification and exculpation obligations set
forth in clause (i) above. The Merger Agreement also provides that we shall purchase, and following
the effective time of the Merger the Parent and surviving corporation shall maintain in effect for
a six year period after the effective time of the Merger without any lapse in coverage, a prepaid
or tail directors and officers liability insurance coverage not materially less favorable than
the directors and officers liability insurance coverage currently in effect. The maximum premium
for such a policy is 300% of 2009s annual premium for our existing directors and officers
liability insurance; provided however, that if the premium exceeds such percentage we may modify
the terms of coverage so long as the premium does not exceed such 300%.
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THE MERGER AGREEMENT
This section of the proxy statement describes the material provisions of the Merger Agreement
but it may not contain all of the information about the Merger Agreement that is important to you.
The Merger Agreement is attached as Annex A to this proxy statement and is incorporated into this
proxy statement by reference. We encourage you to read the Merger Agreement in its entirety. The
Merger Agreement is a document that establishes and governs the legal relations among us, Parent,
and Merger Sub with respect to the transactions described in this proxy statement.
Effective Time
The effective time of the Merger will occur at the time that we file articles of merger with
the Massachusetts Secretary of State and a certificate of merger with the Delaware Secretary of
State on the closing date of the Merger or on such later date as may be mutually agreed to by
Parent and us (or such later time as is provided in the articles of merger and the certificate of
merger). The closing date will occur no later than the second business day after all of the
conditions to the consummation of the Merger set forth in the Merger Agreement have been satisfied
or waived (other than those conditions that by their nature are to be satisfied on the closing
date), or on such other date as we and Parent mutually agree; provided that Parent may delay the
closing date not more than five business days (but not beyond September 15, 2010) to finalize any
debt financing it is obtaining in connection with the transactions contemplated by the Merger
Agreement.
Structure of the Merger
Subject to the terms and conditions of the Merger Agreement and in accordance with
Massachusetts and Delaware law, at the effective time of the Merger, Merger Sub, a direct wholly
owned subsidiary of GeoDigm and an indirect wholly owned subsidiary of Parent, will merge with and
into National Dentex. The separate corporate existence of Merger Sub will cease, and National
Dentex will continue as the surviving corporation, a direct wholly owned subsidiary of GeoDigm and
an indirect wholly owned subsidiary of Parent. The surviving corporation will be a privately held
corporation and our current shareholders will cease to have any ownership interest in the surviving
corporation following the Merger. As a result of the Merger, our current shareholders will not
participate in any future earnings or growth of the surviving corporation and will not benefit from
any appreciation in value of the surviving corporation.
Treatment of Stock, Stock Options and Other Stock-Based Awards
Common Stock
At the effective time of the Merger, each share of our common stock issued and outstanding
immediately prior to the effective time of the Merger will automatically be cancelled, will cease
to exist and will be converted into the right to receive $17.00 in cash, without interest and less
applicable withholding taxes, other than:
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shares of our common stock owned immediately prior to the effective time of the
Merger by Parent, Merger Sub, National Dentex or any subsidiary of National Dentex,
which shares will be cancelled without conversion or consideration; and
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shares of our common stock held by shareholders who have properly demanded and
perfected their appraisal rights in accordance with Massachusetts law (if available),
which shareholders will be entitled to obtain payment of the fair value of their shares
as determined in accordance with Massachusetts law to the extent they are entitled to
seek appraisal under Massachusetts law (if at all).
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Stock Options; Employee Stock Purchase Plan; Restricted Stock; Restricted Stock Units;
Stock Options
. Immediately prior to the effective time of the Merger, each then outstanding
option to purchase common stock of National Dentex will become vested in full and exercisable in
accordance with its terms immediately prior to the effective time of the Merger. If not exercised
at or prior to the effective time of the Merger,
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as of the effective time of the Merger, each such outstanding option will be terminated and
converted into the right to receive an amount, if any, equal to (i) the excess, if any, of (A)
$17.00 over (B) the exercise price per share of the applicable option, multiplied by (ii) the
number of shares of common stock subject to such option.
Employee Stock Purchase Plan.
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As of April 2, 2010, each individual holding an ESPP option is not permitted to
increase the amount of his or her rate of payroll contributions from the rate in effect
when such ESPP option was granted, or to make separate non-payroll contributions to the
ESPP.
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No individual who did not hold an outstanding ESPP option as of April 2, 2010 may
commence participation in the ESPP prior to the effective time of the Merger.
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Each outstanding ESPP option will be terminated prior to the effective time of the
Merger as provided in the ESPP.
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Each ESPP participants accumulated contributions under the ESPP will be refunded by
National Dentex promptly following the effective time of the Merger, and will not be
converted into shares of National Dentex common stock or the right to receive the
Merger consideration.
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The ESPP will terminate as of the effective time of the Merger.
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Restricted Stock
. Shares of common stock awarded pursuant to our equity incentive plans and
subject to vesting or other lapse restrictions outstanding immediately prior to the effective time
of the Merger will vest in full and become free of applicable lapse restrictions as of the
effective time of the Merger.
Restricted Stock Units
. Each award of a right to shares of common stock pursuant our equity
incentive plans that is subject to vesting or other lapse restrictions and that is outstanding
immediately prior to the effective time of the Merger will vest in full and become free of
applicable lapse restrictions as of the effective time of the Merger. Such RSUs will be canceled
and extinguished as of the effective time of the Merger, and the holder thereof will be entitled to
receive from National Dentex an amount in cash equal to $17.00 per share with respect to each share
previously subject to such RSU and not previously delivered pursuant to such RSU.
Payment for Options and RSUs.
No later than three days after the effective time of the
Merger, National Dentex will pay the holders of the options and RSUs all payments they are entitled
to, less amounts the surviving corporation is required to withhold under tax laws.
Certain Expiring Options
. Certain employees whose options were to expire as of April 5, 2010
will, to the extent that they did not exercise their options prior to April 5, 2010, be granted by
National Dentex a special cash bonus, described in the Merger Agreement, intended to compensate for
any lost opportunity to participate in the Merger. Such cash bonus will be paid no later than
three business days after the effective time of the Merger. No director or executive officer is
receiving any such special bonus.
Exchange and Payment Procedures
At or prior to the effective time of the Merger, Parent will designate a paying agent, which
will act as the agent for payment of the Merger consideration to the holders of National Dentex
common stock. At or before the effective time of the Merger, Parent and Merger Sub will cause to
be deposited with the paying agent for the benefit (as of the effective time of the Merger) of
National Dentexs shareholders cash in an aggregate amount equal to the product of (i) the number
of shares of National Dentex common stock issued and outstanding immediately before the effective
time of the Merger (other then shares held by National Dentex, our subsidiaries, Parent or Merger
Sub), and (ii) the $17.00 per share Merger consideration.
Instructions with regard to the surrender of certificates formerly representing shares of
National Dentex common stock or uncertificated shares of National Dentex common stock, together
with the letter of transmittal to be used for that purpose, will be mailed to our shareholders by
the paying agent promptly after the effective time of the Merger. Promptly following receipt from
the shareholder of a duly executed letter of transmittal, together with
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the applicable certificate(s) representing National Dentex common stock, and any other items
specified by the letter of transmittal, the paying agent will pay in cash to such shareholder an
amount equal to the product of the number of shares of National Dentex common stock represented by
such certificates remitted by the shareholder and the $17.00 per share Merger consideration,
without interest and less any applicable withholding tax.
No transfer of shares of National Dentex common stock will be made on the stock transfer books
of the surviving corporation after the effective time of the Merger. After the effective time of
the Merger, previous shareholders will have no rights with respect to shares of National Dentex
common stock except to receive the Merger consideration or statutory appraisal rights (if
available) if they have properly demanded and not withdrawn or lost such rights.
After one year following the effective time of the Merger, any amounts remaining in the
payment fund may be refunded to the surviving corporation of the Merger, and any previous holders
of certificates representing National Dentex common stock who have not complied with the applicable
provisions for payment summarized above will be entitled to payment of the Merger consideration
only from the surviving corporation, without interest.
For the payment agent to pay some or all of a portion of a shareholders Merger consideration
to someone other than the person in whose name the certificate is registered, the shareholders
certificate(s) must be properly endorsed or otherwise in proper form for transfer, and any transfer
or other taxes payable by reason of the transfer must be paid or it must be established to Parents
reasonable satisfaction that the taxes have been paid or are not required to be paid.
If a certificate has been lost, stolen, or destroyed, the paying agent will only issue the
portion of the Merger consideration applicable to such certificate if the person claiming the lost,
stolen, or destroyed certificate makes an affidavit of that fact. The surviving corporation may
also require the delivery of a bond in an amount that it directs as indemnity against any claim
that may be made against it with respect to the lost, stolen or destroyed certificate.
You should not return your stock certificates with the enclosed proxy card, and you should not
forward your stock certificates to the paying agent without a letter of transmittal.
Representations and Warranties
We have made various representations and warranties in the Merger Agreement with respect to
National Dentex and our subsidiaries. These include representations and warranties regarding:
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organization, good standing and qualification to do business;
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capitalization, including the number of shares of our common stock, stock options
and other equity-based interests issued and outstanding;
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amount of indebtedness;
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ownership of our subsidiaries;
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corporate power and authority to enter into the Merger Agreement and to consummate
the transactions contemplated by the Merger Agreement;
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the absence of violations of or conflicts with governing documents, applicable laws
or certain agreements as a result of entering into the Merger Agreement and
consummating the Merger;
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the required consents and approvals of governmental entities in connection with the
transactions contemplated by the Merger Agreement;
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the required consents, approvals, or notices of third parties in connection with the
transactions contemplated by the Merger Agreement;
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our SEC filings since December 31, 2006, including the financial statements
contained therein, and compliance of such reports and documents with applicable
requirements of federal securities laws and regulations;
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preparation of financial statements in accordance with generally accepted accounting
principals;
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internal controls and procedures over financial reporting;
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the absence of undisclosed liabilities;
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the conduct of our business, and absence of certain changes or events, since
December 31, 2009;
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the applicability of state anti-takeover statutes;
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the absence of a rights agreement, a poison pill or similar agreement or plan;
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pending and threatened litigation, investigations and administrative proceedings;
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possession of permits and licenses necessary to conduct our business;
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tax matters;
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compliance with laws;
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intellectual property and computer software;
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matters relating to employee benefits;
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employment and labor matters;
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matters relating to material contracts;
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environmental laws and regulations;
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real property;
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personal property;
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insurance;
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suppliers;
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affiliate and related party transactions;
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the receipt by National Dentex of a fairness opinion from Signal Hill;
and
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the absence of undisclosed brokers fees.
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Many of our representations and warranties are qualified by the absence of a material adverse
effect on National Dentex, or by the occurrence of any event which does not have, or would not
reasonably be expected to have, individually or in the aggregate, a material adverse effect on
National Dentex, which means, for purposes of the Merger Agreement, any effect, change, event,
occurrence, circumstance or development that (i) has, or would be reasonably expected to have, a
material adverse effect on the business, results of operations, properties or financial condition
of National Dentex and its subsidiaries taken as a whole or (ii) prevents, materially delays or
materially affects, or would reasonably be expected to prevent, materially delay or materially
affect, the ability of National Dentex to consummate the transactions contemplated by, or to
perform its obligations under, the Merger Agreement, subject to a number of customary exceptions.
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Parent and Merger Sub have made various representations and warranties in the Merger Agreement
with respect to Parent and Merger Sub. These include representations and warranties regarding:
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organization, good standing and qualification to do business;
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corporate or other power and authority to enter into the Merger Agreement and to
consummate the transactions contemplated by the Merger Agreement;
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the absence of any violation of or conflict with their governing documents,
applicable law or certain agreements as a result of entering into the Merger Agreement
and consummating the Merger;
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pending and threatened litigation and pending and threatened administrative proceedings;
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financing relating to their consummation of the Merger;
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the absence of any prior business activities of Merger Sub;
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the absence of undisclosed brokers fees;
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lack of ownership of our common stock;
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the solvency of Parent and Merger Sub as of the effective time of the Merger; and
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the absence of any arrangements between any officers or directors of National Dentex
and Parent, Merger Sub, Welsh Carson or any of their respective affiliates
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The representations and warranties of each of the parties to the Merger Agreement will expire
upon the effective time of the Merger. The assertions embodied in those representations and
warranties were made solely for purposes of the Merger Agreement and are subject to important
qualifications and limitations agreed by the parties in connection with negotiating its terms.
Moreover, some of those representations and warranties may not be accurate or complete as of any
particular date because they are used for the purpose of allocating risk between the parties to the
Merger Agreement rather than establishing matters of fact and may be subject to a contractual
standard of materiality or material adverse effect different from that generally applicable to
public disclosures to shareholders. For the foregoing reasons, you should not rely on the
representations and warranties contained in the Merger Agreement as statements of factual
information.
Conduct of Our Business Pending the Merger
We have undertaken certain customary covenants that place restrictions on us and our
subsidiaries until the effective time of the Merger. From the date of the Merger Agreement until
the effective time of the Merger, we have agreed to (and to cause our subsidiaries to) conduct our
and our subsidiaries business in the ordinary course of business consistent with past practices
and to use commercially reasonable efforts to preserve our and our subsidiaries business
organization and goodwill, keep available the services of our employees and officers, maintain our
existing relations with customers, suppliers, licensors, creditors, and other third parties, and
maintain our current insurance coverage.
In addition, we have agreed, with certain limited exceptions, not to do (and not to permit our
subsidiaries to do) any of the following, except as expressly contemplated by the Merger Agreement
or agreed to in writing by Parent:
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amend our or our subsidiaries organizational documents;
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declare, set aside, pay, or make any dividend or other distribution with respect to
our or our subsidiaries capital stock;
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(i) amend, suspend or terminate any provision of any benefit plan, except as
required by law, (ii) adopt or enter into any new benefit plan, (iii) increase or
accelerate the vesting or payment of the
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compensation, bonus opportunities or
severance, change in control or other benefits of or grant or pay any benefits to, any director, officer or employee or any other person, except, in the
case of this clause (iii), (A) to the extent required under the terms of any agreements
disclosed to Parent, (B) to the extent required by law or (C) in the ordinary course of
business, consistent with past practice, to non-executive employees of National Dentex
or our subsidiaries who receive less than $125,000 per year in base salary from National
Dentex and our subsidiaries, and (iv) grant any severance or termination pay to any
present or former director, officer or employee or consultant of National Dentex or our
subsidiaries, other than as required pursuant to a benefit plan already in effect;
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(i) purchase or redeem any shares of our capital stock or any other securities or
any rights, warrants or options to acquire any such shares or other securities, (ii)
adjust, split, reverse split, combine, subdivide or reclassify any of our capital stock
or any other securities or (iii) make any other changes in our capital structure;
except, in the case of (i) and (iii) only, the issuance of the conversion shares for
the 2009-2010 ESPP year, the issuance of common stock pursuant to the exercise of
options outstanding as of the close of business March 31, 2010, the settlement of any
RSUs outstanding as of the close of business on March 31, 2010, the forfeiture of any
restricted shares, the surrender of shares of common stock or the withholding of shares
of common stock by National Dentex to cover withholding obligations;
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except for the issuance of common stock upon the exercise of stock options, the
settlement of RSUs, and the shares to be issued pursuant to conversion of ESPP options,
in each case outstanding as of the close of business on March 31, 2010, (i) grant,
issue, or sell any shares of capital stock or other securities; (ii) issue any
securities convertible into or exchangeable for, any shares of capital stock, or (iii)
take any action with respect to stock plans, the ESPP, restricted shares, or RSUs that
is inconsistent with that treatment described above;
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incur any indebtedness beyond our current bank line of credit, and not incur
indebtedness of more than $27,500,000 under our current bank line of credit;
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merge or consolidate with any entity, purchase any real property, or purchase any
assets valued at more than $100,000;
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lease, sublease, license, mortgage, encumber, sell, transfer or dispose or
compromise or release any material properties, rights or assets;
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make or revoke any material tax election, change in a material respect any method of
tax accounting, settle or compromise any claim, assessment, or material liability for
taxes, enter into any closing agreement, file any amended tax return involving a
material amount of additional tax, surrender any right to claim a tax refund or consent
to any extension or waiver of the statute of limitations period applicable to any
income or any other material taxes; in each case, except as required by GAAP or
applicable law;
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settle any litigation, except where such settlement (i) involves potential payments
of less than $250,000 in the aggregate, (ii) does not require National Dentex to admit
liability, (iii) does not involve National Dentex consenting to non-monetary relief and
(iv) is not expected to have a material impact on Parent or the surviving corporation
after the effective date of the Merger;
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purchase any capital assets or make any capital expenditures in excess of $250,000
in the aggregate other than as contemplated in the capital expenditures budget
disclosed to Parent or those capital expenditures that require repair or replacement
and are funded by the proceeds of casualty insurance;
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implement or adopt any change in our material financial or tax accounting
principles, practices or methods, except to the extent required by generally accepted
accounting principles, the rules or policies of the Public Company Accounting Oversight
Board or Regulation S-X under the Securities Act of 1933, as amended;
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modify, amend, terminate or waive any material rights under any material contract or
enter into any contract that would be a material contract for purposes of the Merger
Agreement if entered into prior to
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the date of the Merger Agreement, or waive or assign
any rights or claims under a material contract, except in the ordinary course of business consistent with past practice; provided that
we may not enter into any material contract that: is a loan or credit agreement,
restricts the conduct of our business, relates to a joint venture, relates to the
acquisition of a material amount of the assets, business or equity interests of a person
or has indemnification provisions, involves licensing of material intellectual property,
or is a material employment, consulting, severance, change of control, or
indemnification agreement for an officer, director, or employee who makes more than
$125,000 per year; and provided further that we may not enter into any contract that
contains a change of control provision in favor of the other party or that would
otherwise give rights to any person or entity in connection with the Merger Agreement;
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waive, release, grant or transfer any right of material value, other than in the
ordinary course of business and consistent with past practice, or agree to modify in
any material adverse respect, or fail to enforce or consent to any material matter with
respect to which our consent is required, under any material confidentiality,
standstill or similar agreement to which we or our subsidiaries are party;
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adopt a plan or agreement of complete or partial liquidation or dissolution,
consolidation, restructuring, recapitalization or other reorganization;
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effectuate or permit a plant closing or mass layoff affecting in whole or in part
any site of employment, facility, operating unit or employee of National Dentex or our
subsidiaries;
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adopt a plan of complete or partial liquidation or dissolution;
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file our reports, statements and other documents with the SEC as required under
applicable law; or
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enter into any agreement to do any of the foregoing.
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Parent acknowledges that nothing in the Merger Agreement gives it the right to control our
business prior to the effective time of the Merger.
The Proxy Statement and Shareholders meeting
We are required to take all action that is reasonable and lawful to solicit from our
shareholders the requisite proxies in favor of the Merger, and our board of directors cannot
withhold its recommendation in favor of the Merger. Notwithstanding the above, we may postpone the
shareholders meeting (i) with Parents consent to ensure that any amendment to this proxy
statement reaches the shareholders; (ii) if no quorum would be present at the initially-scheduled
shareholders meeting; or (iii) for the duration of the four day notice period allowed pursuant to
the provisions regarding solicitation of other alternative acquisition proposals, and up to two
further business days beyond the four day notice period.
Further Information
Prior to the effective time of the Merger, we are required to allow Parent and its
representatives reasonable access to our officers, employees, properties, books and records,
provided that such reasonable access will be restricted to extent that we determine a trade secret
would be revealed.
Reasonable Best Efforts
Upon the terms and conditions set forth in the Merger Agreement, National Dentex, Parent and
Merger Sub agree to take, or cause to be taken, all actions reasonably necessary, and to do, or
cause to be done, and assist and cooperate with the other party or parties to the Merger Agreement
in doing, all things reasonably necessary, proper or advisable under applicable law to consummate
the Merger in the most expeditious manner reasonably practicable, including using reasonable best
efforts to cause the conditions of the Merger to be satisfied. Each of National Dentex and Welsh
Carson will file a Notification and Report Form under the HSR Act, and use commercially
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reasonably efforts to obtain early termination thereof. We are required to pay 50% of the fees related to the
HSR Act filings and to cooperate with Parent to effectuate the finalization of the HSR Act filings
and the early termination of all waiting periods related thereto.
Alternative Acquisition Proposals by Third Parties
The Go-Shop Period
Until 11:59 P.M., Eastern Standard Time, on May 12, 2010 (the Go-Shop Period End Date), we
have the right to:
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initiate, solicit and encourage alternative acquisition proposals to the
transactions contemplated by the Merger Agreement (alternative acquisition
proposals), including by providing access to non-public information to any person who
has entered into an acceptable confidentiality agreement, and
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enter into and maintain, or participate in, discussions or negotiations with respect
to alternative acquisition proposals or otherwise cooperate with or assist or
participate in, or facilitate any such inquiries, proposals, discussions or
negotiations.
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We are obligated to provide or make available to Parent any non-public information concerning
National Dentex that is provided or made available to any solicited person which was not previously
provided or made available to Parent.
The No-Shop Period
Subject to certain exceptions outlined below, from May 13, 2010 until the earlier of the effective time of
the Merger or the termination of the Merger Agreement, we shall not:
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initiate, solicit, knowingly facilitate or encourage the submission of any
alternative acquisition proposal, engage in any discussions or negotiations with
respect thereto, or otherwise cooperate with or assist or participate in or facilitate
any such requests, proposals, offers, discussions or negotiations;
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take any action to make the provisions of any moratorium, control share, fair
price, affiliate transactions, business combination or other anti-takeover laws
and regulations of any state inapplicable to any transactions contemplated by an
alternative acquisition proposal;
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adopt, approve or recommend, or resolve to or publicly propose to adopt, approve or
recommend, an alternative acquisition proposal, or enter into any merger agreement,
letter of intent, agreement in principle, acquisition agreement or agreement, other
than an acceptable confidentiality agreement, providing for or relating to an
alternative acquisition proposal or consummate any such transaction, or enter into any
agreement or understanding requiring National Dentex to abandon, terminate or fail to
consummate the Merger Agreement or the transactions contemplated hereby, including the Merger, or breach its
obligations hereunder; or
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terminate, amend, release, modify or fail to enforce any provision of, or grant any
permission, waiver or request under, any standstill, confidentiality or similar
agreement entered into in respect of or in contemplation of an alternative acquisition
proposal, or propose to do any of the foregoing.
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If, after May 12, 2010, but prior to obtaining shareholder approval of the Merger, we receive
a written alternative acquisition proposal from a third party that:
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was not solicited intentionally or knowingly in violation of the Merger Agreement or
that resulted from a material breach of the provisions of the Merger Agreement
regarding alternative acquisition proposals;
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our board of directors believes in good faith to be bona fide; and
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our board of directors determines in good faith, after consultation with our
financial and legal advisors, that the failure to furnish information to, and
participate in discussions with, the person making such alternative acquisition
proposal would be inconsistent with or in violation of the directors fiduciary duty
under applicable law, and that such alternative acquisition proposal constitutes or
could reasonably be expected to result in a superior proposal;
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then we may furnish information to, and participate in discussions with, the person making such
alternative acquisition proposal. We may not disclose any information to a person making such
alternative acquisition proposal until such person has entered into an acceptable confidentiality
agreement, and any information we do provide to such person must be provided to Parent within 48
hours.
We may also furnish information to, and participate in discussions with a person (a
Continuing Party
) that has made a written alternative acquisition proposal after April 2, 2010
and before 11:59 p.m., Eastern Standard Time, on May 12, 2010 and with whom we are having ongoing
discussions or negotiations as of such time regarding such alternative acquisition proposal. In
each case, the board of directors must believe in good faith that such Continuing Partys
alternative acquisition proposal is bona fide and determine in good faith, after consultation with
its financial and legal advisors, that such Continuing Partys alternative acquisition proposal
constitutes or would reasonably be expected to result in a superior proposal. We must keep Parent
informed of, and provide Parent copies of, all alternative acquisition proposals received from
Continuing Parties. We may not continue to furnish information to, or participate in discussion
with, any Continuing Parties if their proposal ceases to be bona fide or to constitute a superior
proposal to the transactions contemplated by the Merger Agreement, and such person or entity will
thereafter cease to be a Continuing Party.
As used herein, superior proposal means a bona fide written alternative acquisition proposal
made by any person or entity other than Parent or Merger Sub that the board of directors determines
in good faith, after consultation with its financial advisor and legal counsel, is more favorable
from a financial point of view to our shareholders (solely in their capacity as such) than the
transactions contemplated by the Merger Agreement or any amended proposal by Parent, after taking
into account all relevant factors, including all legal, financial (including the certainty of any
financing commitment thereto relative to the commitment set forth in the Equity Commitment Letter),
regulatory and other aspects of such proposal, and is reasonably likely to be consummated on the
terms proposed.
After May 12, 2010, we must notify Parent within 48 hours in writing if we receive:
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an alternative acquisition proposal from a person other than a Continuing Party or
written or verbal indication that such person is considering making an alternative
acquisition proposal, including the material terms and conditions thereof, to the
extent known;
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any request by any person for non-public information relating to National Dentex
other than requests in the ordinary course of business, consistent with past practices;
and
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any inquiry or request for discussions or negotiations regarding any alternative
acquisition proposal by any person.
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National Dentex is required to keep Parent reasonably informed within 24 hours as to the
status of any material developments, modifications, discussions, negotiations concerning all
alternative acquisition proposals from any such persons.
Change of Company Recommendation
Subject to the qualifications described below, our board of directors shall not:
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withdraw, withhold, qualify or modify in a manner adverse to Parent, publicly
propose or resolve to withhold, withdraw, qualify or modify in a manner adverse to
Parent, its approval of the Merger (the
Company Recommendation
, and a change therein,
a
Change in Company Recommendation
);
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fail to include, or publicly propose not to include, the Company Recommendation in
this proxy statement;
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publicly propose to accept an alternative acquisition proposal;
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after May 12, 2010, fail to publicly reaffirm the Company Recommendation within 48
hours after Parent so requests in writing in response to an alternative acquisition
proposal that has been publicly made or publicly disclosed or announced and not
withdrawn; provided, that our board of directors is not required to publicly reaffirm
the Company Recommendation during any pending four day notice period that Parent has
not elected to forego relating to an alternative acquisition proposal; or
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fail to recommend against any alternative acquisition proposal subject to Regulation
14D under the Securities Exchange Act of 1934, as amended, (whether or not applicable)
in a Solicitation/Recommendation Statement filed on Schedule 14D-9 or other public
communication by or on behalf of National Dentex with respect to such alternative
acquisition proposal;
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provided
, that at any time prior to obtaining the shareholder adoption and approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger, if we receive an
alternative acquisition proposal and our board of directors concludes in good faith, after
consultation with its financial and legal advisors, that such alternative acquisition proposal
constitutes a superior proposal to the transactions contemplated by the Merger Agreement and that
the failure to effect a Change in Company Recommendation would be inconsistent with the fulfillment
of its fiduciary duties under applicable law, our board of directors may
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terminate the Merger Agreement to concurrently enter into a definitive agreement
with respect to such superior proposal; and/or
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effect a Change in Company Recommendation;
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provided, however
, that we shall not terminate the Merger Agreement pursuant to the foregoing
clause unless concurrently with such termination we pay a termination fee equal to $4,150,000, or
$3,150,000 if the alternative acquisition proposal is submitted by a Continuing Party;
provided,
further
, that we may not terminate the Merger Agreement and effect a Change in Company
Recommendation unless we provide prior written notice to Parent, at least four business days in
advance, of our intention to effect a Change in Company Recommendation or terminate the Merger
Agreement to enter into a definitive agreement with respect to such superior proposal, which notice
must include a written summary of the material terms and conditions of such superior proposal.
During the four day notice period, we are required to negotiate with Parent and Merger Sub in good
faith (to the extent Parent and Merger Sub desire to negotiate) to make adjustments in the terms
and conditions of the Merger Agreement and Equity Commitment Letter, and the board of directors
shall take into account any changes to the financial and other terms of the Merger Agreement and
the Equity Commitment Letter proposed by Parent in response to any such written notice by National
Dentex in evaluating whether the alternative acquisition proposal ceases to constitute a superior
proposal to the transactions contemplated by the Merger Agreement. Any amendment to the financial
terms or other material terms of such superior proposal shall require a new written notice to
Parent and a new notice period, except that such new notice period shall be two business days.
Further, we can not terminate the Merger Agreement in order to accept a superior proposal to the
transactions contemplated by the Merger Agreement if such superior proposal was knowingly and
intentionally solicited in violation of the Merger Agreement, or that resulted from a material
breach of the provisions of the Merger Agreement regarding alternative acquisition proposals.
Notwithstanding anything to the contrary indicated here, our board of directors may, prior to
obtaining the shareholder adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger, and solely in response to a material change in the
results or operations of National Dentex that was unknown to our senior management or board of
directors prior to April 2, 2010 (an
Intervening Event
), effect a Change in Company
Recommendation, if the board of directors determines in good faith that the failure to take such
action would be inconsistent with the fulfillment of its fiduciary duties. Prior to taking such
action:
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our board of directors is required to have given Parent at least four business days
prior written notice of its intention to take such action and a description of the
Intervening Event;
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we are required to negotiate with Parent and Merger Sub in good faith (to the extent
Parent and Merger Sub desire to negotiate) to make adjustments in the terms and
conditions of the Merger Agreement and the Equity Commitment Letter; and
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our board of directors is obligated to have taken into account any changes to the
financial and other terms of the Merger Agreement proposed by Parent in response to any
such written notice by National Dentex and have determined in good faith, after
consultation with its legal advisors, that failure to effect a Change in Company
Recommendation in response to an Intervening Event would be inconsistent with the
directors fiduciary duties under applicable law.
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Indemnification of Directors and Officers; Insurance
The Merger Agreement requires (i) the surviving corporation to cause all rights to
indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the
completion of the Merger, to the extent provided under any indemnification agreement or the
respective certificates or articles of organization or bylaws (or comparable organizational
documents) of National Dentex or any of its subsidiaries in effect on April 2, 2010 in favor of any
current and former officers, directors and employees of National Dentex or any of its subsidiaries
and any person prior to the Merger serving at the request of any such party as a director, officer,
employee, fiduciary or agent of another corporation, partnership, trust or other enterprise, to
survive the Merger and continue in full force and effect for a period of six years from the
completion of the Merger and (ii) Parent to guarantee the payment and performance by the surviving
corporation of the indemnification and exculpation obligations described above. The Merger
Agreement also provides that we are required to purchase, and following the effective time of the
Merger, the Parent and surviving corporation shall maintain in effect for a six year period after
the effective time of the Merger without any lapse in coverage, a prepaid or tail directors and
officers liability insurance coverage not materially less favorable than the directors and
officers liability insurance coverage currently in effect. The maximum premium for such a policy
is 300% of the 2009s annual premium for our existing directors and officers liability insurance;
provided however, that if the premium exceeds such percentage we may modify the terms of coverage
so long as the premium does not exceed such 300%.
Employee Matters
For one year after the effective time of the Merger, Parent or the surviving corporation will:
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provide each employee of National Dentex who is employed by National Dentex and its
subsidiaries as of the effective time of the
Merger, to the extent that such employee remains employed by National Dentex, any subsidiary of National Dentex,
Parent, or any affiliate of Parent following the effective time of the
Merger, with at least the same level of base salary, cash incentive compensation and
other cash variable compensation (on an aggregate, not component-by-component, basis)
that was provided to each such continuing employees immediately prior to the effective
time of the Merger; and
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provide each such continuing employee with employee benefits (other than equity-based
compensation) that are no less favorable (determined in the aggregate on a plan-by-plan
basis) than those provided to each such continuing employee immediately prior to the
effective time of the Merger.
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This does not alter the at-will status of employees, to the extent that the employees are at-will.
Continuing employees will receive credit for all purposes under any employee benefit plan,
program or arrangement established or maintained by Parent or the surviving corporation or any of
their respective subsidiaries under which each continuing employee may be eligible to participate
on or after the effective time of the Merger for service with National Dentex to the same extent
recognized by National Dentex under comparable plans immediately prior to the effective time of the
Merger.
Supplemental Executive Retirement Plans and Deferred Compensation Plans
After the effective time of the Merger, Parent will guarantee the payment and performance of
all supplemental executive retirement plans and other deferred compensation plans of National
Dentex. Parent will not impair or
55
borrow against the supplemental executive retirement plans or other deferred compensation
plans, other than to effect payments to the beneficiaries under those plans in accordance with
those plans. Further, Parent will establish a Rabbi Trust prior to the effective date of the
Merger to separately hold each and every underlying insurance contract maintained to satisfy
obligations under the supplemental executive retirement plans.
Financing Commitments; Cooperation of National Dentex
Parent and Merger Sub estimate that the total amount of funds necessary to consummate the
Merger and related transactions will be approximately $139,000,000, which Parent and Merger Sub
expect will be funded by equity and debt financings. Parents and Merger Subs obligations to
consummate the Merger are not subject to any financing conditions (although funding of the equity
financing is subject to the satisfaction of the conditions set forth in the Equity Commitment
Letter under which the equity financing will be provided; the conditions in the Equity Commitment
Letter are limited to satisfaction of the closing conditions set forth in the Merger Agreement or a
final non-appealable judgment or settlement relating to the Merger Agreement being entered into or
awarded in favor of National Dentex). The following arrangements are in place for financing the
Merger, including the payment of related transaction costs, charges, fees and expenses:
Equity Financing
. Parent and Merger Sub have received the Equity Commitment Letter from the
Sponsor to, subject to its terms, provide equity financing of up to $139,000,000 (the maximum
aggregate amount that is estimated to be necessary to consummate the Merger and the other
transactions contemplated by the Merger Agreement) to consummate the transactions contemplated by
the Merger Agreement or to provide Parent funds so that it can satisfy any monetary judgment
awarded to the Company as a result of Parent and/or Merger Subs breach of the Merger Agreement.
Parent and Merger Sub have agreed to take or cause to be taken all actions necessary or advisable
to obtain the equity financing contemplated by the equity financing commitment and to fully enforce
the equity financing commitment.
Debt Financing
. We have agreed to provide all cooperation reasonably requested by Parent in
its efforts to obtain debt financing to finance the Merger, including by participating in due
diligence sessions, providing unaudited monthly financial statements and obtaining consents of
third parties to the Merger.
Additional Agreements
Mutual Agreements
In addition to the other agreements described elsewhere in this section of the proxy
statement, National Dentex, Parent and Merger Sub have agreed to the following:
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to consult with one another in the preparation and dissemination of any public
announcements relating to the Merger;
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to use commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws to consummate and make effective the transactions contemplated by the
Merger Agreement; and
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to use commercially reasonable efforts to defend any lawsuits or other legal
proceedings as a result of the Merger or the Merger Agreement.
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National Dentex Agreements
In addition to the other agreements described elsewhere in this section of the proxy
statement, we have agreed to:
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provide Parent and it agents and representatives access to certain information and
personnel; and
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56
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use commercially reasonable efforts to obtain all necessary consents, waivers and
approvals under any of our or our subsidiaries material agreements, contracts,
licenses or leases in connection with the Merger.
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Conditions to the Merger
Conditions of National Dentex, Parent and Merger Sub
The obligations of each party to effect the Merger are subject to the fulfillment at or before
the effective time of the Merger of the following conditions:
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adoption and approval of the Merger Agreement and the transactions contemplated
thereby, including the Merger, by the affirmative vote of the holders of a majority of
the outstanding shares of our common stock;
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absence of any law or order, or any action taken by any governmental entity that has
the effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger, or any action by a governmental entity that seeks to prevent, prohibit or
impose adverse conditions on the Merger; and
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the waiting period applicable to the Merger under the HSR Act shall have expired or
been terminated.
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Conditions of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger are subject to the fulfillment
or waiver, to the extent permitted by law, at or before the effective time of the Merger of the
following conditions:
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our representation and warranty regarding the absence of any material adverse effect
on us from January 1, 2010 through April 2, 2010 must be true and correct in all respects;
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our representations and warranties with respect to our good standing, our
capitalization, our indebtedness, the board recommendation of the Merger Agreement or
Merger, violation of our organizational documents, the applicability of anti-takeover
statutes and the opinion of Signal Hill, disregarding all qualifications therein
relating to materiality or material adverse effects on us, must be true and correct in
all material respects (with any inaccuracy or inaccuracies in our representations and
warranties on capitalization that causes the aggregate amount required by Parent to
consummate the Merger or refinance our indebtedness to increase by $500,000 or more
being deemed material for the purposes of the Merger Agreement) at the effective time
of the Merger as if made at the effective time of the Merger, except to the extent such
representations or warranties relate to a specific date, in which case the
representations and warranties shall be correct as of such specified date;
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all of our other representations and warranties, disregarding all qualifications
relating to materiality or material adverse effect on us, shall be true and correct at
and as of the effective time of the Merger as if made at and as of the effective time
of the Merger, except to the extent such representations or warranties relate to a
specific date, in which case the representations and warranties shall be correct as of
such specified date, and except to the extent the failure of such warranties and
representations to be true and correct would not reasonably be expected to have a
material adverse effect on us;
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we must have performed in all material respects all of our obligations that are to
be performed under the Merger Agreement prior to the consummation of the Merger;
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no material adverse effect shall have occurred to us or our business since April 2, 2010; and
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we must have delivered to Parent at closing a certificate with respect to the
satisfaction of the foregoing conditions relating to representations, warranties,
obligations, covenants, agreements and the non-occurrence of any material adverse
effect on us.
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57
Conditions of National Dentex
The obligations of National Dentex to effect the Merger are subject to the fulfillment or
waiver, to the extent permitted by law, at or before the effective time of the Merger of the
following conditions:
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the representations and warranties of Parent and Merger Sub set forth in the Merger
Agreement, disregarding all qualifications therein relating to materiality of material
adverse effect on Parent, being true and correct as of the effective time of the Merger
as if made at the effective time of the Merger, (except to the extent such
representations or warranties relate to a specific date, in which case the
representation shall be correct as of such specific date), except to the extent that
the failure of such representation or warranty to be correct would not, individually or
in the aggregate, be expected to have a material adverse effect on Parent;
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Parent and Merger Sub must have performed in all material respects all of their
obligations required to be performed by them under the Merger Agreement at or prior to
the effective time of the Merger; and
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Parent must have delivered to us at closing a certificate with respect to the
satisfaction of the foregoing conditions relating to representations, warranties,
obligations, covenants and agreements.
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Termination
Termination by Mutual Consent
The Merger Agreement may be terminated at any time prior to the effective time of the Merger,
whether before or after adoption and approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger, by our shareholders, by the mutual written consent of
us and Parent (and approved by our board of directors and Parents board of directors).
Termination by National Dentex or Parent
Either National Dentex or Parent may terminate the Merger Agreement, without the consent of
the other, in the event of any of the following:
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the Merger has not been consummated on or before 5:00 p.m., Eastern Standard Time,
on September 15, 2010,
provided, however
, that this right of termination is not
available to a party to the Merger Agreement that breached its obligations under the
Merger Agreement in any way that constituted a proximate cause of the failure of the
Merger to be consummated on or before that date;
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a law shall have been enacted, entered or promulgated prohibiting the consummation
of the Merger, or an order shall have been enacted, entered, promulgated or issued by a
governmental entity of competent jurisdiction permanently restraining or enjoining or
otherwise prohibiting the consummation of the Merger, and such order has become final
and non-appealable; in each case having the effect of causing the closing condition as
to legality of the Merger to be not be satisfied;
provided, however
, that this right of
termination shall not be available to any party whose breach of the Merger Agreement
shall have been a proximate cause of the imposition of such legal restraint; or
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our shareholders fail to adopt and approve the Merger Agreement and the transactions
contemplated by the Merger Agreement, including the Merger, by the required vote at the
shareholders meeting;
provided, however
, that this right of termination shall not be
available to us if we have breached in any material respect our obligations regarding
the shareholders meeting or solicitation of alternative acquisition proposals, and
such breach shall have been a proximate cause of the failure of the shareholders to
adopt and approve the Merger Agreement.
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58
Termination by Parent
Parent may terminate the Merger Agreement, without our consent, in the event of any of the
following:
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we breached or failed to perform any of our representations, warranties, covenants
or other agreements contained in the Merger Agreement, such breach or failure to
perform would entitle Parent not to consummate the Merger due to our failure to fulfill
Parents closing conditions regarding our representations and warranties and our
obligations, covenants and agreements; and such breach or failure to perform is
incapable of being cured by us prior to 5:00 p.m., Eastern Standard Time, on September
15, 2010, or, if such breach or failure to perform is capable of being cured by us by
that date, we have not cured such breach or failure to perform within twenty business
days after receipt of written notice thereof (but no later than September 15, 2010);
provided, however
, that this right of termination is not available to Parent if Parent
is then in material breach of its obligations, covenants or agreements, or its
representations and warranties under the Merger Agreement such that our conditions to
closing would not be satisfied; or
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if our board of directors shall have effected a Change in Company Recommendation (or
publicly proposed to take any such action); our board of directors shall have adopted,
approved or recommended to our shareholders an alternative acquisition proposal (or
shall have publicly proposed to do so); we shall have entered into any letter of intent
or similar document or any contract accepting an alternative acquisition proposal
(other than an acceptable confidentiality agreement), or we shall have publicly
announced our intention to do any of the foregoing.
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Termination by National Dentex
We may terminate the Merger Agreement:
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if Parent or Merger Sub breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in the Merger Agreement; such
breach or failure to perform would entitle National Dentex not to consummate the Merger
due to Parent or Merger Subs failure to fulfill our closing conditions regarding
Parent and Merger Subs representations and warranties and their obligations, covenants
and agreements; and such breach or failure to perform is incapable of being cured by
Parent or Merger Sub prior to 5:00 p.m., Eastern Standard Time, on September 15, 2010,
or, if such breach or failure to perform is capable of being cured by Parent or Merger
Sub prior to that date, Parent or Merger Sub have not cured such breach or failure to
perform within twenty business days after receipt of written notice thereof (but no
later than 5:00 p.m., Eastern Standard Time, on September 15, 2010);
provided, however
,
that this right of termination is not available to us if we are then in material breach
of our obligations, covenants or agreements, or our representations and warranties
under the Merger Agreement such that Parents conditions to closing would not be
satisfied; or
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prior to receipt of our required shareholder vote, in order to concurrently enter
into a definitive agreement with respect to a superior proposal to the transactions
contemplated by the Merger Agreement, in accordance with and to the extent permitted by
the terms of the Merger Agreement; provided however, that such termination shall not be
effective until we have paid the required termination fee.
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Effect of Termination by Mutual Consent
If the Merger Agreement is terminated as described above, then the Merger Agreement shall be
of no further force or effect without liability of any party to the Merger Agreement to the other
parties thereto except as to the provisions regarding:
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the provisions relating to costs and expenses associated with this proxy statement;
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public announcements by the parties regarding the transactions;
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59
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confidentiality;
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reimbursement by Parent of our costs associated with cooperation with obtaining the
debt financing;
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the effect of termination;
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amendment of the Merger Agreement;
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waiver of provisions of the Merger Agreement;
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expenses;
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notices;
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assignment;
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governing law, specific performance and remedies;
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third party beneficiaries; and
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limitation of the liability of Parent, Merger Sub and Sponsor.
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Subject to the application of termination fees, and the provisions of the Merger Agreement
regarding specific performance, remedies and the limitation on liability of Parent, Merger Sub and
Sponsor, neither we nor Parent or Merger Sub shall be relieved or released from any liabilities
arising out of a material breach of, or fraud in connection with, the Merger Agreement to the
extent such breach or fraud was a proximate cause of the failure of the Merger to be consummated
prior to termination. A party to the Merger Agreement may not seek punitive or multiple damages
against another party thereto.
Termination Fee and Expenses
Expenses
Under certain circumstances National Dentex is required to reimburse Parent for its expenses
incurred in connection with the transactions contemplated by the Merger Agreement, up to a maximum
of $2,000,000. This expense reimbursement would become payable if the termination fee described
below is not then payable and the Merger Agreement is terminated under either of the following
circumstances:
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the Merger Agreement is terminated by National Dentex or Parent because our
shareholders fail to adopt and approve the Merger Agreement and the transactions
contemplated by the Merger Agreement, including the Merger, by the required vote at the
shareholders meeting; or
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the Merger Agreement is terminated by Parent following our uncured or incurable
breach of the Merger Agreement as described in the section entitled
Termination By
Parent
above.
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The payment of any expense reimbursement to Parent will not relieve us of our obligation to pay a
termination fee, but the amount of any expense reimbursement paid to Parent would be deducted from
the amount of any termination fee that becomes payable by us pursuant to the terms of the Merger
Agreement.
Termination Fee
Under certain circumstances, National Dentex is required to pay Parent a termination fee,
which termination fee may be $4,150,000 or $3,150,000, less any amount we pay for Parents
transaction expenses, as described in the Section entitled
Expenses
above. The termination fee
would become payable if the Merger Agreement is terminated under any of the following
circumstances:
60
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Parent terminates the Merger Agreement because of any of the following:
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our board of directors shall have effected a Change in Company
Recommendation (or publicly proposed to take any such action);
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our board of directors shall have adopted, approved or recommended to
our shareholders an alternative acquisition proposal (or shall have publicly
proposed to do so);
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we shall have entered into any letter of intent or similar document or
any contract accepting an alternative acquisition proposal (other than an
acceptable confidentiality agreement; or
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we shall have publicly announced our intention to do any of the
foregoing;
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We terminate the Merger Agreement prior to receipt of the required shareholder vote,
in order to concurrently enter into a definitive agreement with respect to a superior
proposal to the transactions contemplated by the Merger Agreement in accordance with
the terms described above;
provided, however
, that such termination under shall not be
effective until we have paid the required termination fee;
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Either National Dentex or Parent terminate the Merger Agreement because:
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the Merger has not been consummated on or before September 15, 2010; or
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our shareholders fail to adopt and approve the Merger Agreement and the
transactions contemplated by the Merger Agreement, including the Merger, by the
required vote at the shareholders meeting;
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Parent is only entitled to the termination fee following termination for failure to
consummate the Merger by 5 p.m., Eastern Standard Time, on September 15, 2010, or
failure to obtain the required shareholder vote if, following such termination, we enter
into a definitive agreement with respect to an alternative acquisition proposal or
consummate an alternative acquisition proposal within one year of termination, in each
case for more than 50% of the equity or assets of National Dentex; or
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Parent terminates the Merger Agreement because all of the following have occurred:
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we shall have breached or failed to perform any of our representations,
warranties, covenants or other agreements contained in the Merger Agreement;
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such breach or failure to perform would entitle Parent not to
consummate the Merger due to our failure to fulfill Parents closing conditions
regarding our representations and warranties and our obligations, covenants and
agreements; and
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such breach or failure to perform is incapable of being cured by us
prior to September 15, 2010, or, if such breach or failure to perform is capable of
being cured by us by that date, we shall not have cured such breach or failure to
perform within twenty business days after receipt of written notice thereof (but no
later than 5 p.m., Eastern Standard Time, on September 15,); provided that Parent
is only entitled to the termination fee following any such termination if, following such
termination, we enter into a definitive agreement with respect to an alternative
acquisition proposal or consummate an alternative acquisition proposal within one
year of termination, in each case for more than 50% of the equity or assets of National
Dentex
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The termination fee will be $3,150,000 if the alternative acquisition proposal leading to
termination is entered into with a Continuing Party, as discussed above, and $4,150,000 if such
alternative acquisition proposal is with a party other than a Continuing Party.
61
Amendment and Waiver
The Merger Agreement may be amended by the parties at any time before or after adoption and
approval by our shareholders of the matters presented in connection with the Merger by an
instrument signed by each party. However, after adoption and approval by our shareholders of the
Merger Agreement and the transactions contemplated thereby, including the Merger, no amendment may
be adopted that would require approval of our shareholders without obtaining such approval. Any
party to the Merger Agreement may also:
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extend time for performance of the obligations of the other parties to the Merger
Agreement;
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waive any inaccuracies in the representations and warranties made by the other
parties to the Merger Agreement; and
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waive compliance with any of the agreements or covenants under the Merger Agreement.
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Remedies; Specific Performance
National Dentex, Parent and Merger Sub are each entitled to seek an injunction to prevent
breaches of the Merger Agreement and Equity Commitment Letter and to enforce specifically the terms
and provisions of the Merger Agreement and Equity Commitment Letter, in addition to any other legal
or equitable remedy to which they are entitled. Our right, however, to recover monetary damages or
other remedies besides specific performance is limited to a situation where specific performance of
the Merger Agreement or Equity Commitment Letter is denied by a court of competent jurisdiction,
the court grants monetary damages instead of specific performance and Parent, Merger Sub and
Sponsor have not agreed in the ten day period following the denial of the final appeal of such
decision to consummate the transactions contemplated by the Merger Agreement and the Equity
Commitment Letter.
The aggregate liability of Parent, Merger Sub, and Sponsor in connection with the Merger
Agreement and the Equity Commitment Letter is limited to $139,000,000 (and we may not pursue
certain types of damages), and we have agreed not to seek any damages of Parent, Merger Sub, and
Sponsor in excess of that amount. We have also agreed, among other things, not to seek relief of
any kind in connection with the Merger Agreement or the Equity Commitment letter against any person
or entity, other than Parent or Merger Sub pursuant to the Merger Agreement and Sponsor pursuant to
the Equity Commitment Letter.
62
MARKET PRICE OF COMMON STOCK
The NASDAQ Global Market (
Nasdaq
) is the principal market for our common stock, where our
shares are traded under the symbol NADX. Our common stock has been publicly traded since December
21, 1993.
The following table sets forth the range of high and low sale prices for our common stock for
each of the fiscal quarters indicated. The sale prices set forth below are based on information
provided by Nasdaq.
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Price
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Quarter Ending
|
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Low
|
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High
|
03/31/08
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$
|
11.50
|
|
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$
|
16.84
|
|
06/30/08
|
|
$
|
10.05
|
|
|
$
|
13.25
|
|
09/30/08
|
|
$
|
6.01
|
|
|
$
|
12.60
|
|
12/31/08
|
|
$
|
4.19
|
|
|
$
|
6.90
|
|
03/31/09
|
|
$
|
1.25
|
|
|
$
|
5.35
|
|
06/30/09
|
|
$
|
3.78
|
|
|
$
|
8.00
|
|
09/30/09
|
|
$
|
6.25
|
|
|
$
|
8.93
|
|
12/31/09
|
|
$
|
6.00
|
|
|
$
|
12.73
|
|
03/31/10
|
|
$
|
7.71
|
|
|
$
|
10.65
|
|
04/26/10
|
|
$
|
9.95
|
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$
|
17.02
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On April 1, 2010, which was the last trading day before we announced the execution of the
Merger Agreement and the potential Merger contemplated therein, the closing sales price for our
common stock on Nasdaq was $10.02 per share. On [
], 2010, the last trading day before the record
date of this proxy statement, the closing price of our common stock on Nasdaq was $[
] per share.
As of [
], 2010, there were [
] shares of our common stock held by approximately [
] holders of
record as reported by our transfer agent. We have never paid a cash dividend on our shares of
common stock and have no expectation of doing so for the foreseeable future.
SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT
The following table shows the number of shares of our common stock beneficially owned as of
April 16, 2010 by:
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each person known by us to own more than 5% of our common stock;
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each director;
|
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each of our executive officers; and
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all executive officers and directors as a group.
|
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Percentage of
|
|
|
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Number of
|
|
|
Outstanding
|
|
Name
|
|
Shares(1)
|
|
|
Shares(2)
|
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5% Stockholders:
|
|
|
|
|
|
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|
FMR LLC (3)
|
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|
747,449
|
|
|
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12.6
|
%
|
82 Devonshire Street
|
|
|
|
|
|
|
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|
Boston, MA 02109
|
|
|
|
|
|
|
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|
GAMCO Investors, Inc. (4)
|
|
|
558,200
|
|
|
|
9.4
|
%
|
One Corporate Center
|
|
|
|
|
|
|
|
|
Rye, New York 10580-1435
|
|
|
|
|
|
|
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|
Heartland Advisors, Inc. (3)
|
|
|
524,682
|
|
|
|
8.9
|
%
|
789 North Water Street
|
|
|
|
|
|
|
|
|
Milwaukee, WI 53202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Number of
|
|
|
Outstanding
|
|
Name
|
|
Shares(1)
|
|
|
Shares(2)
|
|
Artisan Partners Limited Partnership (3)
|
|
|
421,451
|
|
|
|
7.1
|
%
|
875 East Wisconsin Ave., #800
|
|
|
|
|
|
|
|
|
Milwaukee, WI 53202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ClearBridge Advisors, LLC (3)
|
|
|
325,797
|
|
|
|
5.5
|
%
|
620 Eighth Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wilen Management Company, Inc. (3)
|
|
|
304,351
|
|
|
|
5.1
|
%
|
2360 West Joppa Road, Suite 226
|
|
|
|
|
|
|
|
|
Lutherville, MD 21093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc. (3)
|
|
|
297,500
|
|
|
|
5.0
|
%
|
100 E. Pratt Street
|
|
|
|
|
|
|
|
|
Baltimore, MD 21202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
David V. Harkins (5)*
|
|
|
59,075
|
|
|
|
1.0
|
%
|
Jack R. Crosby (6)*
|
|
|
9,535
|
|
|
|
0.2
|
%
|
Norman F. Strate (7)*
|
|
|
16,083
|
|
|
|
0.3
|
%
|
Thomas E. Callahan (8)*
|
|
|
25,413
|
|
|
|
0.4
|
%
|
James E. Mulvihill, D.M.D. (9)*
|
|
|
4,380
|
|
|
|
0.1
|
%
|
David L. Brown (10)*
|
|
|
258,072
|
|
|
|
4.2
|
%
|
John W. Green IV (11)
|
|
|
45,249
|
|
|
|
0.8
|
%
|
Richard F. Becker, Jr. (12)
|
|
|
80,941
|
|
|
|
1.4
|
%
|
Wayne M. Coll (13)
|
|
|
25,251
|
|
|
|
0.4
|
%
|
All executive officers and directors as a group (9 persons)
|
|
|
523,999
|
|
|
|
8.5
|
%
|
|
|
|
*
|
|
Director. The address of this person is c/o National Dentex Corporation, 2 Vision Drive,
Natick MA 01760.
|
|
|
|
Executive officer. The address of this person is c/o National Dentex Corporation, 2 Vision
Drive, Natick, MA 01760.
|
|
(1)
|
|
The number of shares beneficially owned by each entity, person, director, or named
executive officer is determined under applicable SEC rules, particularly Rule 13d-3, and the
information is not necessarily indicative of beneficial ownership for any other purposes.
Under such rules, each entity or individual is considered the beneficial owner of any shares
as to which they have the sole or shared voting power or investment power. Such persons are
also deemed under the same rules to beneficially own any shares that they have the right to
acquire within 60 days of April 16, 2010, through the exercise of stock options or other
similar rights. This stock ownership information is based upon information furnished to us
by the persons named on the table. Unless otherwise indicated, these individuals have sole
voting and dispositive power over the shares indicated.
|
|
(2)
|
|
Ownership percentage is reported based on 5,913,464 shares of common stock outstanding on
April 16, 2010, which number includes, as to each holder thereof and no other person, the
number of shares (if any) that such person has the right to acquire within 60 days of April
16, 2010, through the exercise of stock options or other similar rights.
|
|
(3)
|
|
Information as to the number of shares is as of December 31, 2009 and is furnished in
reliance on the most recently filed Schedule 13G of the named beneficial owner, as follows:
|
|
|
|
Based solely on a 13G filed on February 12, 2010, FMR LLC is the parent company of
Fidelity Management & Research Company (
Fidelity
). Fidelity is the beneficial owner
of 747,449 shares as a result of acting as an investment advisor to various funds.
Edward Johnson and FMR LLC, through their control of Fidelity and the funds, each have
the sole power to dispose of these shares.
|
|
|
|
|
Based solely on a 13G filed on February 10, 2010, Heartland Advisors, Inc. shares
voting and dispositive power over these shares with William Nasgovitz, as a result of
his ownership interest in Heartland Advisors, Inc. Heartland Advisors and William
Nasgovitz each specifically disclaim beneficial ownership of these shares.
|
|
|
|
|
Based solely on a 13G filed on February 11, 2010, Artisan Partners Limited
Partnership (
Artisan Partners
) and its controlling persons have shared voting power
over 382,151 shares of common stock and shared dispositive power over 421,451 shares of
common stock. The general partner of Artisian Partners is Artisan Investment Corporation, whose sole stockholder is ZFIC, Inc. The
principal stockholders of ZFIC, Inc. are Andrew A. Ziegler and Carlene M. Ziegler.
|
64
|
|
|
Based solely on a 13G filed on February 12, 2010, ClearBridge Advisors, LLC has sole
power to vote 296,490 shares of common stock and sole power to dispose 325,797 shares of
common stock.
|
|
|
|
|
Based solely on a 13G filed on January 15, 2010, Wilen Management Company, Inc. has
sole power to vote and sole power to dispose 304,351 shares of common stock.
|
|
|
|
|
Based solely on a 13G filed on February 11, 2010, T. Rowe Price Associates, Inc.
(Price Associates)
has sole power to vote 4,800 shares of common stock and sole power
to dispose 297,500 shares of common stock. These shares are owned by various individual
and institutional investors which Price Associates serves as an investment adviser with
power to direct investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Security Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
|
|
|
|
(4)
|
|
Based solely on a 13 D/A filed on April 16, 2010, Mario Gabelli is deemed to have beneficial
ownership of the shares of National Dentex common stock owned beneficially by each of the
following reporting persons: (a) GAMCO Asset Management, Inc., which owns 99,500 shares; (b)
Gabelli Funds, LLC, which owns 365,000 shares; (c) Gabelli Securities, Inc., which owns 20,000
shares; and (d) Teton Advisors, Inc., which owns 73,700 shares. Each of the reporting persons
and directors and executive officers thereof has the sole power to vote or direct the vote and
sole power to dispose or to direct the disposition of the shares of common stock reported for
it, either for its own benefit or for the benefit of its investment clients or its partners,
except that (i) Gabelli Funds, LLC has sole dispositive and voting power with respect to the
shares of National Dentex held by certain funds Gabelli Funds, LLC manages so long as the
aggregate voting interest of all joint filers does not exceed 25% of their total voting
interest in National Dentex and, in that event, the proxy voting committee of each such fund
shall respectively vote that funds shares, (ii) at any time, the proxy voting committee of
each such fund may take and exercise in its sole discretion the entire voting power with
respect to the shares held by such fund under special circumstances such as regulatory
considerations, and (iii) the power of Mario Gabelli, GAMCO Asset Management, Inc., and GGCP,
Inc. is indirect with respect to National Dentex common stock beneficially owned directly by
other reporting persons.
|
|
(5)
|
|
Mr. Harkins owns 59,075 shares of common stock, of which 1,690 shares are restricted stock.
The restricted stock vests on May 13, 2010.
|
|
(6)
|
|
Mr. Crosby owns 9,535 shares of common stock, of which 1,690 shares are restricted stock.
The restricted stock vests on May 13, 2010.
|
|
(7)
|
|
Mr. Strate owns 16,083 shares of common stock, of which 1,690 shares are restricted stock.
The restricted stock vests on May 13, 2010. He also owns 5,381 restricted stock units, the
receipt of which has been deferred and are not included in the above table.
|
|
(8)
|
|
Mr. Callahan owns 25,413 shares of common stock, of which 1,690 shares are restricted stock.
The restricted stock vests on May 13, 2010.
|
|
(9)
|
|
Dr. Mulvihill owns 4,380 shares of common stock, of which 1,690 shares are restricted stock.
The restricted stock vests on May 13, 2010. He also owns 5,381 restricted stock units, which
have been deferred, and are not included in the above table.
|
|
(10)
|
|
Mr. Brown owns 68,072 shares of common stock, which he holds jointly with his wife, and holds
options for 263,334 shares, of which 190,000 shares are exercisable within 60 days of April
16, 2010.
|
|
(11)
|
|
Mr. Green owns 38,583 shares of common stock, and holds options for 46,667 shares, 6,666
shares of which are exercisable within 60 days of April 16, 2010.
|
|
(12)
|
|
Mr. Becker owns 30,775 shares of common stock, which he holds jointly with his wife, and
holds options for 90,167 shares, 50,166 shares of which are exercisable within 60 days of
April 16, 2010.
|
|
(13)
|
|
Mr. Coll owns 8,460 shares of common stock, which he holds indirectly with his wife, and
holds options for 53,459 shares, 16,791 shares of which are exercisable within 60 days of
April 16, 2010.
|
65
OTHER MATTERS
As of the date of this proxy statement, our board of directors knows of no
matters that will be presented for consideration at the special meeting other than as described in
this proxy statement. Our shareholders may, however, be asked to vote on a proposal
to adjourn the special meeting including, if necessary, to allow more time to solicit votes to
adopt and approve the Merger Agreement and the transactions contemplated thereby, including the
Merger. If any other matters properly come before the National Dentex special meeting, or any
adjournments or postponements of that meeting, and are voted upon, the enclosed proxies will be
deemed to confer discretionary authority on the individuals that they name as proxies to vote the
shares represented by these proxies as to any of these matters. The individuals named as proxies
intend to vote or not to vote in accordance with the recommendation of the management of National
Dentex.
SUBMISSION OF SHAREHOLDER PROPOSALS
-
2010 NATIONAL DENTEX ANNUAL MEETING
If the Merger is consummated, we will not have public shareholders and there will be no public
participation in any future meeting of our shareholders. However, if the Merger is not completed or
if we are otherwise required to do so under applicable law, we would hold a special meeting of our
shareholders in lieu of our 2010 annual meeting of shareholders. The deadline of December 10, 2009,
by which shareholder proposals were required to be submitted in order to be considered for
inclusion in National Dentexs proxy statement and proxy card relating to that meeting, has passed.
SHAREHOLDERS SHARING AN ADDRESS
Some banks, brokers and other nominee record holders may be participating in the practice of
householding proxy statements and annual reports. This means that only one copy of National
Dentexs proxy statement may have been sent to multiple shareholders in your household. National
Dentex will promptly deliver a separate copy of the document to you if you write or call National
Dentex at the following address or phone number: Richard F. Becker, Jr., Executive Vice President,
Treasurer, and Assistant Secretary, National Dentex Corporation, 2
Vision Drive, Natick, Massachusetts 01760, telephone (508) 907-7800. If you
want to receive separate copies of the proxy statement in the future, or if you are receiving
multiple copies and would like to receive only one copy for your household, you should contact your
bank, broker or other nominee record holder, or you may contact National Dentex at the above
address.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SECs public reference room located at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our SEC filings are also available to the public at the
SECs website at http://www.sec.gov. You also may obtain free copies of the documents National
Dentex files with the SEC by going to the Investors Relations section of our website at
www.nationaldentex.com. Our website address is provided as an inactive textual reference only. The
information provided on our website is not part of this proxy statement, and therefore is not
incorporated by reference.
We are incorporating by reference information into this proxy statement, meaning that
we are disclosing important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered to be part of this
proxy statement, except to the extent that the information is superseded by information in this
proxy statement.
The following documents contain important information about us and our financial condition and
operating results, and are hereby incorporated by reference:
|
1)
|
|
Annual Report on Form 10-K for the year ended December 31,
2009, filed with the SEC on March 12, 2010; and
|
|
|
3)
|
|
Current Report on Form 8-K, filed with the SEC on April 5, 2010.
|
We also incorporate by reference any documents filed by us pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this proxy statement and prior to the date of the
special meeting. The information contained in any of these documents will be considered part of
this proxy statement from the date these documents are filed. The information we file later with
the SEC will automatically update and supersede the information contained in this proxy statement.
Any person, including any beneficial owner, to whom this proxy statement is delivered may
request copies of this proxy statement, the reports, opinions or agreements attached to this proxy
statement or any of the documents incorporated by reference in this
proxy statement or other information concerning us, without charge, by written or telephonic request
directed to Richard F. Becker, Jr., Executive Vice President,
Treasurer, and Assistant Secretary, National Dentex Corporation 2 Vision Drive, Natick,
Massachusetts, 01760, telephone (508) 907-7800, on our website at http://www.nationaldentex.com,
from the SEC through the SECs website at the address provided above or from our proxy solicitor,
Morrow & Co., LLC
470 West Avenue 3
rd
Floor
Stamford, CT 06902
Shareholders may call toll free: (800) 460-1014
Banks and brokers may call toll free: (800) 662-5200
66
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM
ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED
[
], 2010. 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 SHAREHOLDERS DOES
NOT CREATE ANY IMPLICATION TO THE CONTRARY.
67
Annex A
EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
DATED AS OF
APRIL 2, 2010
AMONG
GDC HOLDINGS, INC.,
ROYAL ACQUISITION CORP.
AND
NATIONAL DENTEX CORPORATION
A-1
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE 1 THE MERGER
|
|
|
A-7
|
|
Section 1.1.
|
|
The Merger
|
|
|
A-7
|
|
Section 1.2.
|
|
Closing
|
|
|
A-7
|
|
Section 1.3.
|
|
Effective Time
|
|
|
A-8
|
|
Section 1.4.
|
|
Effects of the Merger
|
|
|
A-8
|
|
Section 1.5.
|
|
Articles of Organization
|
|
|
A-8
|
|
Section 1.6.
|
|
Bylaws
|
|
|
A-8
|
|
Section 1.7.
|
|
Officers and Directors
|
|
|
A-8
|
|
Section 1.8.
|
|
Effect on Capital Stock
|
|
|
A-8
|
|
Section 1.9.
|
|
Company Stock Options; Company ESPP; Other Company Equity Awards
|
|
|
A-9
|
|
Section 1.10.
|
|
Certain Adjustments
|
|
|
A-10
|
|
|
|
|
|
|
ARTICLE 2 CONVERSION
OF SHARES
|
|
|
A-11
|
|
Section 2.1.
|
|
Paying Agent
|
|
|
A-11
|
|
Section 2.2.
|
|
Payment Procedures
|
|
|
A-11
|
|
Section 2.3.
|
|
Undistributed Merger Consideration
|
|
|
A-11
|
|
Section 2.4.
|
|
No Liability
|
|
|
A-11
|
|
Section 2.5.
|
|
Investment of Merger Consideration
|
|
|
A-11
|
|
Section 2.6.
|
|
Lost Certificates
|
|
|
A-12
|
|
Section 2.7.
|
|
Withholding Rights
|
|
|
A-12
|
|
Section 2.8.
|
|
Further Assurances
|
|
|
A-12
|
|
Section 2.9.
|
|
Stock Transfer Books
|
|
|
A-12
|
|
Section 2.10.
|
|
Dissenting Shares
|
|
|
A-12
|
|
|
|
|
|
|
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
|
A-13
|
|
Section 3.1.
|
|
Organization and Qualification
|
|
|
A-13
|
|
Section 3.2.
|
|
Capitalization
|
|
|
A-13
|
|
Section 3.3.
|
|
Authorization
|
|
|
A-15
|
|
Section 3.4.
|
|
No Violation
|
|
|
A-15
|
|
Section 3.5.
|
|
Filings with the SEC; Financial Statements
|
|
|
A-16
|
|
Section 3.6.
|
|
Undisclosed Liabilities
|
|
|
A-17
|
|
Section 3.7.
|
|
Absence of Certain Changes
|
|
|
A-17
|
|
Section 3.8.
|
|
Anti-takeover Statutes; No Rights Agreement
|
|
|
A-18
|
|
Section 3.9.
|
|
Litigation; Orders
|
|
|
A-18
|
|
Section 3.10.
|
|
Permits; Compliance with Laws
|
|
|
A-18
|
|
Section 3.11.
|
|
Tax Matters
|
|
|
A-19
|
|
Section 3.12.
|
|
Intellectual Property
|
|
|
A-20
|
|
Section 3.13.
|
|
Employee Benefits
|
|
|
A-21
|
|
Section 3.14.
|
|
Employee Matters
|
|
|
A-23
|
|
Section 3.15.
|
|
Contracts
|
|
|
A-23
|
|
Section 3.16.
|
|
Environmental
|
|
|
A-24
|
|
Section 3.17.
|
|
Company Real Property
|
|
|
A-25
|
|
Section 3.18.
|
|
Insurance
|
|
|
A-25
|
|
Section 3.19.
|
|
Suppliers
|
|
|
A-26
|
|
Section 3.20.
|
|
Affiliate Transactions
|
|
|
A-26
|
|
Section 3.21.
|
|
Opinion of Financial Advisor
|
|
|
A-26
|
|
Section 3.22.
|
|
No Brokers or Finders
|
|
|
A-26
|
|
A-2
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
|
|
A-26
|
|
Section 4.1.
|
|
Organization and Qualification
|
|
|
A-26
|
|
Section 4.2.
|
|
Authorization
|
|
|
A-26
|
|
Section 4.3.
|
|
No Violation
|
|
|
A-27
|
|
Section 4.4.
|
|
Litigation
|
|
|
A-27
|
|
Section 4.5.
|
|
Available Funds
|
|
|
A-27
|
|
Section 4.6.
|
|
No Brokers or Finders
|
|
|
A-27
|
|
Section 4.7.
|
|
No Prior Activities of Merger Sub
|
|
|
A-28
|
|
Section 4.8.
|
|
No Ownership of Stock of Company
|
|
|
A-28
|
|
Section 4.9.
|
|
Solvency
|
|
|
A-28
|
|
Section 4.10.
|
|
Management Arrangements
|
|
|
A-28
|
|
|
|
|
|
|
ARTICLE 5
PRE-CLOSING COVENANTS
|
|
|
A-29
|
|
Section 5.1.
|
|
Covenants of the Company
|
|
|
A-29
|
|
Section 5.2.
|
|
Proxy Statement; Company Stockholders Meeting
|
|
|
A-31
|
|
Section 5.3.
|
|
Further Information
|
|
|
A-33
|
|
Section 5.4.
|
|
Reasonable Best Efforts
|
|
|
A-34
|
|
Section 5.5.
|
|
Acquisition Proposals
|
|
|
A-35
|
|
Section 5.6.
|
|
Indemnification; Directors and Officers Insurance
|
|
|
A-38
|
|
Section 5.7.
|
|
Public Announcements
|
|
|
A-40
|
|
Section 5.8.
|
|
State Takeover Laws
|
|
|
A-40
|
|
Section 5.9.
|
|
Notification of Certain Matters
|
|
|
A-40
|
|
Section 5.10.
|
|
Confidentiality
|
|
|
A-40
|
|
Section 5.11.
|
|
Employee Matters
|
|
|
A-40
|
|
Section 5.12.
|
|
Financing
|
|
|
A-42
|
|
Section 5.13.
|
|
Stockholder Litigation
|
|
|
A-43
|
|
|
|
|
|
|
ARTICLE 6 CONDITIONS
TO THE MERGER
|
|
|
A-43
|
|
Section 6.1.
|
|
Conditions to Each Partys Obligation to Effect the Merger
|
|
|
A-43
|
|
Section 6.2.
|
|
Additional Conditions to Obligations of Parent and Merger Sub
|
|
|
A-43
|
|
Section 6.3.
|
|
Additional Conditions to Obligation of the Company
|
|
|
A-44
|
|
|
|
|
|
|
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
|
|
|
A-44
|
|
Section 7.1.
|
|
Termination
|
|
|
A-44
|
|
Section 7.2.
|
|
Effect of Termination
|
|
|
A-45
|
|
Section 7.3.
|
|
Amendment
|
|
|
A-47
|
|
Section 7.4.
|
|
Waiver
|
|
|
A-47
|
|
|
|
|
|
|
ARTICLE 8
MISCELLANEOUS
|
|
|
A-47
|
|
Section 8.1.
|
|
Non-Survival of Representations, Warranties and Agreements
|
|
|
A-47
|
|
Section 8.2.
|
|
Expenses
|
|
|
A-47
|
|
Section 8.3.
|
|
Notices
|
|
|
A-47
|
|
Section 8.4.
|
|
Entire Agreement
|
|
|
A-48
|
|
Section 8.5.
|
|
Assignment; Binding Effect
|
|
|
A-49
|
|
Section 8.6.
|
|
Governing Law; Waiver of Jury Trial; Specific Performance;
Remedies; Jurisdiction
|
|
|
A-49
|
|
Section 8.7.
|
|
Severability
|
|
|
A-51
|
|
Section 8.8.
|
|
Third Party Beneficiaries
|
|
|
A-51
|
|
Section 8.9.
|
|
Disclosure Schedule
|
|
|
A-51
|
|
Section 8.10.
|
|
Counterparts
|
|
|
A-52
|
|
Section 8.11.
|
|
Headings
|
|
|
A-52
|
|
Section 8.12.
|
|
Interpretation
|
|
|
A-52
|
|
Section 8.13.
|
|
No Presumption
|
|
|
A-52
|
|
Section 8.14.
|
|
Undertaking by Parent
|
|
|
A-52
|
|
Section 8.15.
|
|
Limitation of Liability
|
|
|
A-52
|
|
Section 8.16.
|
|
Definitions
|
|
|
A-53
|
|
A-3
INDEX OF
DEFINED TERMS
|
|
|
|
|
Defined Term
|
|
Section
|
|
Acceptable Confidentiality Agreement
|
|
|
8.16(a)
|
|
Acquisition Proposal
|
|
|
8.16(b)
|
|
Affiliates
|
|
|
8.16(c)
|
|
Agreement
|
|
|
Preamble
|
|
Applicable Consents
|
|
|
3.4(b)
|
|
Applicable Date
|
|
|
3.5(a)
|
|
Articles of Merger
|
|
|
1.3
|
|
Bankruptcy and Equity Exception
|
|
|
3.3
|
|
Business Day
|
|
|
8.16(d)
|
|
Capitalization Date
|
|
|
3.2(a)
|
|
Certificate
|
|
|
1.8(c)
|
|
Certificate of Merger
|
|
|
1.3
|
|
Change in Company Recommendation
|
|
|
5.5(f)
|
|
Claim
|
|
|
5.6(a)
|
|
Closing Date
|
|
|
1.2
|
|
Closing
|
|
|
1.2
|
|
Code
|
|
|
2.7
|
|
Company
|
|
|
Preamble
|
|
Company Benefit Plan
|
|
|
3.13(a)
|
|
Company Common Stock
|
|
|
Preamble
|
|
Company Copyrights
|
|
|
3.12(a)
|
|
Company Damages
|
|
|
8.15
|
|
Company Disclosure Schedule
|
|
|
8.9(a)
|
|
Company Equity Awards
|
|
|
8.16(e)
|
|
Company ESPP
|
|
|
1.9(b)
|
|
Company Intellectual Property
|
|
|
3.12(a)
|
|
Company Licenses
|
|
|
3.12(b)
|
|
Company Patents
|
|
|
3.12(a)
|
|
Company Permits
|
|
|
3.10(a)
|
|
Company Recommendation
|
|
|
5.2(a)
|
|
Company Requisite Stockholder Vote
|
|
|
3.3(a)
|
|
Company Restricted Shares
|
|
|
1.9(c)
|
|
Company RSUs
|
|
|
1.9(d)
|
|
Company SEC Reports
|
|
|
3.5(a)
|
|
Company Stock Options
|
|
|
1.9(a)
|
|
Company Stock Plans
|
|
|
8.16(f)
|
|
Company Stockholders Meeting
|
|
|
5.2(b)
|
|
Company Trademarks
|
|
|
3.12(a)
|
|
Company Voting Debt
|
|
|
3.2(a)
|
|
Confidentiality Agreement
|
|
|
5.10
|
|
Continuing Employees
|
|
|
5.11(a)
|
|
Continuing Party
|
|
|
5.5(d)
|
|
Contracts
|
|
|
8.16(g)
|
|
A-4
|
|
|
|
|
Defined Term
|
|
Section
|
|
Control
|
|
|
8.16(c)
|
|
Conversion Shares
|
|
|
3.2(a)
|
|
Credit Agreement
|
|
|
5.1(vii)
|
|
D&O Insurance
|
|
|
5.6(b)
|
|
DGCL
|
|
|
1.1
|
|
Dissenting Shares
|
|
|
2.10(a)
|
|
DOJ
|
|
|
5.4(b)
|
|
DSOS
|
|
|
1.3
|
|
Effective Time
|
|
|
1.3
|
|
Environmental Claim
|
|
|
8.16(h)
|
|
Environmental Laws
|
|
|
8.16(i)
|
|
Environmental Permits
|
|
|
8.16(j)
|
|
Equity Commitment Letter
|
|
|
Preamble
|
|
ERISA
|
|
|
8.16(k)
|
|
ERISA Affiliate
|
|
|
8.16(l)
|
|
ESPP Option
|
|
|
1.9(b)
|
|
Exchange Act
|
|
|
3.4(b)
|
|
Exchange Fund
|
|
|
2.1
|
|
Excluded Shares
|
|
|
1.8(a)
|
|
Expenses
|
|
|
5.6(a)
|
|
FTC
|
|
|
5.4(b)
|
|
GAAP
|
|
|
3.5(b)
|
|
Go-Shop Period End Date
|
|
|
5.5(a)
|
|
Governmental Entity
|
|
|
3.4(b)
|
|
Guarantee
|
|
|
8.16(m)
|
|
Hazardous Substance
|
|
|
8.16(n)
|
|
HSR Act
|
|
|
3.4(b)
|
|
Indebtedness
|
|
|
8.16(o)
|
|
Indemnified Persons
|
|
|
5.6(a)
|
|
Intellectual Property Rights
|
|
|
3.12(b)
|
|
Internal Use Software
|
|
|
3.12(d)
|
|
Intervening Event
|
|
|
8.16(p)
|
|
knowledge
|
|
|
8.16(1)
|
|
Law
|
|
|
3.4(a)
|
|
Leased Property
|
|
|
3.17(b)
|
|
Licensed Intellectual Property
|
|
|
3.12(b)
|
|
Lien
|
|
|
8.16(r)
|
|
Litigation
|
|
|
3.9
|
|
Material Adverse Effect on Parent
|
|
|
8.16(s)
|
|
Material Adverse Effect on the Company
|
|
|
8.16(t)
|
|
MBCA
|
|
|
1.1
|
|
Merger Consideration
|
|
|
1.8(a)
|
|
Merger Sub
|
|
|
Preamble
|
|
Merger
|
|
|
Preamble
|
|
A-5
|
|
|
|
|
Defined Term
|
|
Section
|
|
MSOS
|
|
|
1.3
|
|
Multiemployer Plan
|
|
|
8.16(u)
|
|
Notice Period
|
|
|
5.5(f)
|
|
Off the Shelf Software
|
|
|
3.12(b)
|
|
Order
|
|
|
3.4(a)
|
|
Outside Counsel Only
|
|
|
5.4(c)
|
|
Owned Property
|
|
|
3.17(a)
|
|
Parent
|
|
|
Preamble
|
|
Parent Disclosure Schedule
|
|
|
8.9(a)
|
|
Parent Expenses
|
|
|
7.2(b)
|
|
Parent Liability Limitation
|
|
|
8.15
|
|
Parent Parties
|
|
|
8.15
|
|
Parent Welfare Benefit Plans
|
|
|
5.11(d)
|
|
Paying Agent
|
|
|
2.1
|
|
Permitted Lien
|
|
|
8.16(v)
|
|
Person
|
|
|
8.16(w)
|
|
Personal Property
|
|
|
3.17(e)
|
|
Plan
|
|
|
3.13(a)
|
|
Preferred Stock
|
|
|
3.2(a)
|
|
Premium Limit
|
|
|
5.6(b)
|
|
Proxy Statement
|
|
|
5.2(a)
|
|
Real Property Lease
|
|
|
3.17(b)
|
|
Representatives
|
|
|
8.16(x)
|
|
Sarbanes-Oxley Act
|
|
|
3.5(a)
|
|
SEC
|
|
|
3.5(a)
|
|
SERPs
|
|
|
5.11(b)
|
|
Securities Act
|
|
|
3.5(a)
|
|
Solicited Person
|
|
|
5.5(a)
|
|
Solvent
|
|
|
4.9
|
|
Sponsor
|
|
|
Preamble
|
|
Subsidiaries
|
|
|
8.16(y)
|
|
Superior Proposal
|
|
|
8.16(z)
|
|
Surviving Corporation
|
|
|
1.1
|
|
Tax Return
|
|
|
8.16(aa)
|
|
Taxes
|
|
|
8.16(bb)
|
|
Termination Date
|
|
|
7.1(b)
|
|
Termination Fee
|
|
|
7.2(c)
|
|
Trade Secrets
|
|
|
3.12(e)
|
|
WARN
|
|
|
3.14(b)
|
|
A-6
AGREEMENT
AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of April 2,
2010 (this
Agreement
), is among GDC Holdings,
Inc., a Delaware corporation
(Parent)
, Royal
Acquisition Corp., a Delaware corporation, an indirect wholly
owned subsidiary of Parent and a direct wholly owned subsidiary
of GeoDigm Corporation, a Minnesota corporation
(Merger
Sub
), and National Dentex Corporation, a Massachusetts
corporation (the
Company
). Capitalized terms
used but not defined elsewhere herein have the meanings assigned
to them in
Section 8.16
.
The respective Boards of Directors of Parent and Merger Sub and
the Board of Directors of the Company desire that Parent, Merger
Sub and the Company enter into a transaction whereby Merger Sub
will merge with and into the Company (the
Merger
), and each issued and outstanding
share of the Companys common stock, par value $0.01 per
share
(Company Common Stock)
, not owned
directly or indirectly by the Company, Parent, Merger Sub or any
Subsidiary of the Company will, by virtue of the Merger, be
converted into the right to receive the Merger Consideration.
In furtherance thereof, the respective Boards of Directors of
Parent and Merger Sub and the Board of the Directors of the
Company have determined that entering into this Agreement and
the consummation of the transactions contemplated hereby,
including the Merger, are advisable. The Board of Directors of
the Company has (i) determined and declared that this
Agreement and the transactions contemplated hereby, including
the Merger, are advisable and fair to, and in the best interests
of, the Company and its stockholders, (ii) adopted this
Agreement, (iii) directed that this Agreement be submitted
to the Companys stockholders for their approval and
(iv) resolved to recommend that the Companys
stockholders adopt and approve this Agreement and the Merger.
Parent, Merger Sub and the Company desire to make certain
representations, warranties and agreements in connection with,
and to prescribe certain conditions to, the Merger.
Concurrently with the execution and delivery of this Agreement,
Welsh, Carson, Anderson & Stowe XI, L.P., a Delaware
limited partnership (the
Sponsor
), is
entering into an equity commitment letter with Parent, the sole
stockholder of Parent, and the Company (the
Equity
Commitment Letter
), pursuant to which, among other
things, the Sponsor is committing, subject to the terms of the
Equity Commitment Letter, to invest up to $139,000,000 in equity
securities of Parent (or its parent company) in order to allow
Parent to satisfy its obligations under this Agreement.
In consideration of the foregoing and the mutual covenants,
representations, warranties and agreements set forth herein, and
intending to be legally bound, the parties agree as follows:
ARTICLE 1
THE MERGER
Section 1.1.
The
Merger
.
Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the Massachusetts Business Corporation Act (the
MBCA
) and the General Corporation Law of the
State of Delaware (the
DGCL
), Merger Sub
shall be merged with and into the Company at the Effective Time
and the separate corporate existence of Merger Sub shall
thereupon cease. The Company shall be the surviving corporation
in the Merger (the
Surviving Corporation
) and
shall continue to be governed by the Laws of the Commonwealth of
Massachusetts, and the separate corporate existence of the
Company, with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as
otherwise provided herein.
Section 1.2.
Closing
.
The
closing of the Merger (the
Closing
) shall
occur as promptly as practicable after the satisfaction or
waiver of the conditions set forth in
Article 6
, and
in any event no later than 10:00 a.m., local time, on the
second Business Day after the satisfaction or waiver of the
conditions set forth in
Article 6
, in each case,
other than conditions which by their nature are to be satisfied
at Closing (but subject to the fulfillment or waiver of such
conditions), or such other time and date as Parent and the
Company may agree in writing, unless this Agreement has been
theretofore terminated pursuant to its terms
A-7
(the actual time and date of the Closing is referred to as the
Closing Date
);
provided
, that Parent
may, by written notice given to the Company, delay the Closing
and the Closing Date until the earlier of (A) the
Termination Date or (B) a date selected by Parent that is
not more than five (5) Business Days after the latest
Closing Date otherwise permitted by this Section 1.2, if
Parent determines that such delay is necessary or appropriate in
order to finalize any debt financing in connection with the
consummation of the Merger and the other transactions
contemplated by this Agreement. The Closing shall be held at the
offices of Posternak Blankstein & Lund LLP, 800
Boylston Street, The Prudential Tower, Boston, MA 02199 or such
other place as Parent and the Company may agree in writing.
Section 1.3.
Effective
Time
.
At the Closing and subject to the terms
and conditions of this Agreement, the parties hereto shall:
(a) file articles of merger in the form required by
Section 11.06 of the MBCA (the
Articles of
Merger
) with the Secretary of State of the
Commonwealth of Massachusetts (the
MSOS
) as
provided in Section 11.06 of the MBCA; (b) duly make
all other filings and recordings required by the MBCA in order
to effectuate the Merger; (c) file a certificate of merger
in the form required by Section 252 of the DGCL (the
Certificate of Merger
) with the Secretary of
State of the State of Delaware (the
DSOS
) as
provided by Section 252 of the DGCL; and (d) duly make
all other filings and recordings required by the DGCL in order
to effectuate the Merger. The Merger shall become effective at
the later of (i) when the Articles of Merger have been duly
filed with, and accepted for record by, the MSOS and
(ii) when the Certificate of Merger has been duly filed
with, and accepted for record by, the DSOS, or at such later
time as may be agreed to by Parent and the Company in writing
and specified in the Articles of Merger and the Certificate of
Merger (the date and time that the Merger becomes effective is
referred to as the
Effective Time
).
Section 1.4.
Effects
of the Merger
.
The Merger shall have the
effects set forth in this Agreement and Section 11.07 of
the MBCA and Section 252 of the DGCL.
Section 1.5.
Articles
of Organization
.
At the Effective Time, the
restated articles of organization of the Company, as amended,
shall be the articles of organization of the Surviving
Corporation, until thereafter amended in accordance with
applicable Law.
Section 1.6.
Bylaws
.
At
the Effective Time, the bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be the bylaws of
the Surviving Corporation (with such changes, to be effective at
the Effective Time, as Parent proposes), until thereafter
amended in accordance with applicable Law.
Section 1.7.
Officers
and Directors
.
The officers of the Company
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be. The directors of
Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.8.
Effect
on Capital Stock
.
At the Effective Time,
pursuant to this Agreement and by virtue of the Merger and
without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Merger
Sub:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
shares canceled pursuant to
Section 1.8(d)
below
(the
Excluded Shares
) and any Dissenting
Shares) shall be canceled and converted into the right to
receive an amount in cash equal to $17.00, without interest (the
Merger Consideration
), payable to the holder
thereof in accordance with
Article 2
.
(b) All shares of Company Common Stock (other than the
Dissenting Shares) shall cease to be outstanding and shall be
automatically canceled and retired and shall cease to exist.
(c) Each holder of a certificate that, immediately prior to
the Effective Time, represented any shares of Company Common
Stock other than Dissenting Shares and Excluded Shares (a
Certificate
) shall cease to have any rights
with respect to such shares of Company Common Stock, other than
the right to
A-8
receive the Merger Consideration. Each Dissenting Share shall be
treated in accordance with
Section 2.10
below.
(d) Each share of Company Common Stock that is owned
directly or indirectly by Parent, Merger Sub, the Company or any
Subsidiary of the Company immediately prior to the Effective
Time shall be automatically canceled and retired and shall cease
to exist, and no consideration shall be made or delivered in
exchange therefor.
(e) Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation, which shall
constitute the only outstanding shares of capital stock of the
Surviving Corporation.
Section 1.9.
Company
Stock Options; Company ESPP; Other Company Equity Awards
.
(a) All outstanding options to acquire shares of Company
Common Stock from the Company (collectively,
Company
Stock Options
) heretofore granted under any Company
Stock Plan shall become in accordance with their terms
exercisable and vested in full immediately prior to the
Effective Time and, if not exercised at or prior to the
Effective Time, shall be terminated and converted at the
Effective Time, in settlement and cancellation thereof, into the
right to receive a lump sum cash payment from the Surviving
Corporation, in accordance with
Section 1.9(e)
, of
an amount, if any, equal to: (i) the excess, if any, of
(A) the per share Merger Consideration over (B) the
exercise price per share of Company Common Stock subject to such
Company Stock Option,
multiplied by
(ii) the number
of shares of Company Common Stock subject to such Company Stock
Option.
(b) As soon as practicable following the date of this
Agreement, the Companys Board of Directors (or, if
appropriate, any committee administering the Companys
Employees Stock Purchase Plan (the
Company
ESPP
)) shall adopt such resolutions or take such other
actions as may be required to provide that, with respect to the
Company ESPP: (i) each individual holding an
Option (as defined in the Company ESPP) under the
Company ESPP (an
ESPP Option
) as of the date
of this Agreement shall not be permitted (x) to increase
the amount of his or her rate of payroll contributions
thereunder from the rate in effect when such ESPP Option was
granted, or (y) to make separate non-payroll contributions
to the Company ESPP on or following the date of this Agreement;
(ii) no individual who does not hold an outstanding ESPP
Option as of the date of this Agreement may commence
participation in the Company ESPP prior to the Effective Date;
(iii) each outstanding ESPP Option shall be terminated
prior to the Effective Date as provided in the Company ESPP;
(iv) each Company ESPP participants accumulated
contributions under the Company ESPP shall be refunded by the
Surviving Corporation promptly following the Effective Time in
accordance with the terms of the Company ESPP, and will not be
converted into shares of Company Common Stock or the right to
receive the Merger Consideration and (v) the Company ESPP
shall terminate as of the Effective Date and no further rights
shall be granted or exercised under the Company ESPP thereafter.
(c) As of the Effective Time, shares of Company Common
Stock awarded pursuant to a Company Stock Plan and made subject
to vesting or other lapse restrictions
(Company
Restricted Shares
) outstanding immediately prior to
the Effective Time shall vest in full and become free of
applicable lapse restrictions as of the Effective Time.
(d) As of the Effective Time, each award of a right to
shares of Company Common Stock pursuant to a Company Stock Plan
that is subject to vesting or other lapse restrictions
(Company RSUs
) that is outstanding
immediately prior to the Effective Time shall vest in full and
become free of applicable lapse restrictions as of the Effective
Time and shall, as of the Effective Time, be canceled and
extinguished, and the holder thereof shall be entitled to
receive from the Surviving Corporation (in accordance with
Section 1.9(e)) an amount in cash equal to the Merger
Consideration with respect to each share previously subject to
such RSU and not previously delivered pursuant to such Company
RSU.
(e) Promptly after the Effective Time and not later than
three (3) Business Days after the Closing Date (unless
additional time is required to process payments under the
Companys payroll systems), Parent shall cause the
Surviving Corporation payroll agent to pay to each holder of
Company Stock Options and Company
A-9
RSUs the cash payments specified in this
Section 1.9
. The Companys payroll processor
shall be instructed by the Surviving Corporation to promptly pay
the holders of Company Stock Options and Company RSUs the
amounts they are entitled to receive hereunder, less any amounts
required to be withheld under any applicable law in accordance
with
Section 2.7
. No interest shall be paid or
accrue on the cash payments contemplated by this
Section 1.9
. Parent shall at all times from and
after the Effective Time cause the Surviving Corporation to have
(and the Surviving Corporation shall maintain) sufficient liquid
funds to satisfy the Surviving Corporations obligations to
holders of Company Equity Awards pursuant to this
Section 1.9
.
(f) Prior to the Effective Time, the Company, the Board of
Directors of the Company and the Compensation Committee of the
Board of Directors of the Company, as applicable, to the extent
permitted by the terms of the Company Stock Plans and any
agreement governing the terms of the Company Equity Awards,
shall take all actions reasonably necessary to effectuate the
provisions of this
Section 1.9
, including the
vesting of awards and the conversion of each Company Stock
Option and Company RSUs into the right to receive an amount in
cash as described in
Sections 1.9(a)
and
1.9(d)
respectively.
(g) The Company shall take all necessary actions as may be
required to cause to be exempt under
Rule 16b-3
promulgated under the Exchange Act any dispositions of Company
Common Stock (including derivative securities with respect to
Company Common Stock) in connection with the transactions
contemplated by this Agreement by each individual who is subject
to the reporting requirements of Section 16(a) of the
Exchange Act.
(h) For the avoidance of doubt, as of the Effective Time,
all Company Equity Awards that are issued and outstanding
immediately prior to the Effective Time shall no longer be
outstanding and shall be canceled and retired and shall cease to
exist in accordance with
Article 1
hereof. The
consideration paid pursuant to this
Section 1.9
upon
the surrender or exchange of all Company Equity Awards shall be
deemed to have been paid in full satisfaction of all rights
pertaining to such Company Equity Awards, and, from and after
the Effective Time, there shall be no further registration of
transfers on the records of the Company of Company Stock Options
or Company RSUs which were outstanding immediately prior to the
Effective Time. Prior to the Closing, the Company shall take all
steps necessary (including any amendments thereto as are
necessary) so that as of the Effective Time, the Company Stock
Plans (and all outstanding award agreements and other agreements
relating to Company Equity Awards) shall terminate, and the
provisions in any other Contract or Company Benefit Plan
providing for the issuance, transfer or grant of any Company
Common Stock shall be void and of no effect as of and from the
Effective Time, and the Company shall take all necessary actions
(including any amendments thereto as are necessary) to ensure
that, after the Effective Time, no holder of any Company Equity
Award or any participant in or a party to the Company Stock
Plans or other Contract or Company Benefit Plan shall have any
right thereunder to acquire, in respect of Company Equity Awards
or benefits granted prior to the Effective Time, any Company
Common Stock or any other equity interest in the Surviving
Corporation.
(i) Promptly following the Effective Date and not later
than three (3) Business Days after the Closing Date, Parent
shall cause Surviving Corporations payroll agent to pay
each of the individuals named on
Section 1.9(i)
of
the Company Disclosure Schedule a cash bonus in the amount set
forth opposite each such individuals name on
Section 1.9(i)
of the Company Disclosure Schedule;
provided
, however, that if any such individual exercises
any of such individuals options set forth on
Section 1.9(i)
of the Company Disclosure Schedule in
whole or in part, the cash bonus to be paid to such individual
listed on
Section 1.9(i)
of the Company Disclosure
Schedule shall be reduced
dollar-for-dollar
by an amount equal to the excess, if any, of the (i) Merger
Consideration payable with respect to the Shares issuable upon
exercise
over
(ii) the exercise price paid by such
individual for such exercised option shares.
Section 1.10.
Certain
Adjustments
.
If, between the date of this
Agreement and the Effective Time: (a) the outstanding
shares of Company Common Stock shall have been increased,
decreased, or changed into or exchanged for a different number
of shares or different class, in each case, by reason of any
reclassification, recapitalization, stock split,
split-up,
reverse split, combination or exchange of shares; (b) a
stock dividend or dividend payable in any other securities of
the Company shall be declared with a record date within such
period; or (c) any similar event shall have occurred, then
in each instance referred to in the preceding
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clauses (a) through (c) the Merger Consideration shall
be appropriately adjusted to provide the holders of shares of
Company Common Stock (and Company Equity Awards) the same
economic effect as contemplated by this Agreement prior to such
event.
ARTICLE 2
CONVERSION
OF SHARES
Section 2.1.
Paying
Agent
.
At or prior to the Effective Time,
Parent shall designate, and enter into an agreement with, a bank
or trust company reasonably acceptable to the Company to act as
paying agent in the Merger (the
Paying
Agent
). At or prior to the Effective Time, Parent
shall deposit, or cause to be deposited, with the Paying Agent,
for the benefit of the holders of shares of Company Common
Stock, cash sufficient to effect the payment of the Merger
Consideration to which such holders are entitled pursuant to
Section 1.8(a), Section 1.9
and this
Article 2
(including any interest or other earnings
therein, the
Exchange Fund
).
Section 2.2.
Payment
Procedures
.
As promptly as practicable, but
in no event later than three (3) Business Days after the
Effective Time, Parent shall cause the Paying Agent to mail to
each holder of shares of Company Common Stock immediately prior
to the Effective Time, whose shares were converted into the
right to receive the Merger Consideration pursuant to
Section 1.8(a)
: (a) a letter of transmittal in
customary form as reasonably agreed to by the Company and Parent
(which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent); and
(b) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent,
together with such letter of transmittal, duly executed and
completed, and such other documents as the Paying Agent may
reasonably require, the holder of such Certificate shall be
entitled to receive the Merger Consideration in exchange for
each share of Company Common Stock formerly represented by such
Certificate in the form of a check, to be promptly mailed, and
the Certificate so surrendered shall forthwith be canceled. No
interest shall be paid or accrue on the Merger Consideration. If
any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the applicable
surrendered Certificate is registered, then it shall be a
condition to the payment of such Merger Consideration that
(i) the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and
(ii) the Person requesting such payment shall have
(A) paid any transfer and other Taxes required by reason of
such payment in a name other than that of the registered holder
of the Certificate surrendered or (B) established to the
reasonable satisfaction of Parent that any such Taxes are not
payable. Subject to
Section 2.10
hereof, the Merger
Consideration paid in accordance with the terms of this
Article 2
shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Company Common
Stock represented thereby.
Section 2.3.
Undistributed
Merger Consideration
.
Any portion of the
Exchange Fund that remains undistributed to holders of
Certificates on the date that is one year after the Effective
Time shall be delivered to the Surviving Corporation, and any
holders of Certificates who have not theretofore complied with
this
Article 2
shall thereafter look only to the
Surviving Corporation for the Merger Consideration to which such
holders are entitled pursuant to
Section 1.8(a)
and
this
Article 2
. Any portion of the funds made
available to the Paying Agent pursuant to
Section 2.1
that remains unclaimed by holders of Certificates on such
date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental
Entity shall, to the extent permitted by Law, become the
property of the Surviving Corporation, free and clear of all
claims or interests of any Person previously entitled thereto.
Section 2.4.
No
Liability
.
None of Parent, Merger Sub, the
Company, the Surviving Corporation, the Paying Agent nor their
respective directors, officers, employees and representatives
shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
Section 2.5.
Investment
of Merger Consideration
.
The Paying Agent
shall invest the Exchange Funds as directed by Parent or
Surviving Corporation on a daily basis in obligations of or
guaranteed by the United States of America and backed by the
full faith and credit of the United States of America;
provided
, however,
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that no gain or loss thereon shall affect the amounts payable to
holders of Certificates pursuant to
Section 1.8(a)
and this
Article 2
. To the extent that there are
any losses with respect to any investments of the Exchange Fund,
the Exchange Fund diminishes for any reason below the level
required for the Paying Agent to promptly pay the cash amounts
contemplated by this
Article 2
, or all or any
portion of the Exchange Fund is unavailable to promptly pay the
amounts contemplated by this
Article 2
for any
reason, Parent shall, or shall cause the Surviving Corporation
to, promptly replace or restore the cash in the Exchange Fund so
as to ensure that the Exchange Fund is at all times fully
available for distribution and maintained at a level sufficient
for the Paying Agent to make such payments contemplated by this
Article 2. Any interest and other income resulting from
such investments shall become part of the Exchange Fund, and any
amounts in excess of the amounts payable under
Section 1.8(a)
and this
Article 2
shall
promptly be paid to Surviving Corporation.
Section 2.6.
Lost
Certificates
.
If any Certificate shall have
been lost, stolen or destroyed, then, upon the making of an
affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby.
Section 2.7.
Withholding
Rights
.
The Paying Agent, the Surviving
Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock or a
Company Equity Award such amount that any of them is required to
deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the
Code
), or any provision of any other Tax Law.
To the extent that amounts are so deducted and withheld by the
Paying Agent, Surviving Corporation or Parent (i) such
amounts shall be paid over to the appropriate taxing authority
and (ii) the amounts so deducted and withheld shall be
treated for all purposes of this Agreement as having been paid
to the former holder of such shares of Company Common Stock or
Company Equity Award in respect of which such deduction and
withholding was made by the Paying Agent, Surviving Corporation
or Parent, as the case may be, and the Paying Agent, the
Surviving Corporation or Parent shall provide to the former
holder of such securities written notice of the amounts so
deducted or withheld.
Section 2.8.
Further
Assurances
.
At and after the Effective Time,
the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of
the Company or Merger Sub, all deeds, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of
the Company or Merger Sub, all other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving
Corporation all right, title and interest in, to and under all
of the rights, properties or assets acquired or to be acquired
by the Surviving Corporation as a result of, or in connection
with, the Merger.
Section 2.9.
Stock
Transfer Books
.
The stock transfer books of
the Company shall be closed immediately upon the Effective Time,
and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the
Company. At or after the Effective Time, any Certificates
presented to the Paying Agent, Parent or the Surviving
Corporation for any reason shall, subject to compliance with the
provisions of this
Article 2
by the holder thereof,
be canceled and converted into the right to receive the Merger
Consideration with respect to the shares of Company Common Stock
formerly represented thereby.
Section 2.10.
Dissenting
Shares
.
(a) Notwithstanding anything to the contrary contained in
this Agreement, shares of Company Common Stock held by a holder
who is entitled to demand and has prior to the vote for the
approval of this Agreement at the Companys Stockholders
Meeting, given notice of his, her or its intent to demand for
appraisal of such shares in accordance with, and to the extent
provided in, the MBCA and has not voted in favor of the approval
of this Agreement (any such shares being referred to as
Dissenting Shares
until such time as such
holder fails to perfect or otherwise loses such holders
appraisal rights under the MBCA with respect to such shares)
shall not be converted into or represent the right to receive
Merger Consideration in accordance with
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Section 2.1
, but shall be entitled only to such
rights as are granted by the MBCA to a holder of Dissenting
Shares.
(b) The Company will give Parent: (i) prompt notice of
any written demand for appraisal received by the Company prior
to the Effective Time pursuant to the MBCA, any withdrawal of
any such demand, and any other demand, notice or instrument
delivered to the Company prior to the Effective Time pursuant to
the MBCA that relate to such demand and (ii) the
opportunity to participate in all negotiations and proceedings
with respect to any such demand, notice or instrument prior to
the Effective Date, and to direct all such negotiations and
proceedings after the Effective Date. The Company will not,
except with the prior written consent of Parent, make any
payment or settlement offer prior to the Effective Time with
respect to any such demand, notice or instrument.
(c) If the Dissenting Shares lose their status as such
(through failure to perfect or otherwise), then, as of the later
of the Effective Time or the date of loss of such status, such
shares shall automatically be converted into and shall represent
only the right to receive Merger Consideration in accordance
with
Section 2.1
, without interest thereon, upon
surrender of the Certificates representing such shares in
accordance with this
Article 2
. Parent shall or
shall cause the Surviving Corporation to comply in all respects
with Section 13 of the MBCA.
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as set forth in (i) the Company Disclosure Schedule
(which shall be prepared in accordance with, and qualify such
representations and warranties in the manner and to the extent
provided in,
Section 8.9
) or (ii) other than
with respect to the representations and warranties contained in
Section 3.2
, the Company SEC Reports filed after
March 11, 2009 and prior to the date hereof (other than any
disclosure in such Company SEC Reports (A) that is set
forth in any Risk Factors or Forward Looking
Statements sections thereof, or (B) any other
disclosures in such Company SEC Reports which are
forward-looking in nature), in each case, if, and only if, the
nature and content of the applicable disclosure in such Company
SEC Report is such that its applicability to a representation or
warranty contained in this
Article 3
is reasonably
apparent from a reading of such disclosure, the Company
represents and warrants to Parent and Merger Sub as follows:
Section 3.1.
Organization
and Qualification
.
Each of the Company and
its Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation or organization. Each
of the Company and its Subsidiaries has full corporate or other
power and authority to own, operate and lease the properties
owned or used by it and to carry on its business as and where
such is now being conducted, except where the failure to be in
such standing has not had, and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries
is duly licensed or qualified to do business as a foreign
corporation, and is in good standing as a foreign corporation,
in each jurisdiction wherein the character of the properties
owned or leased by it, or the nature of its business, makes such
licensing or qualification necessary, except where the failure
to be so licensed or qualified has not had, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The copies
of the articles of organization and the bylaws, or similar
organizational documents, of the Company and its Subsidiaries,
including any amendments or restatements thereto, that have been
made available by the Company to Parent prior to the date of
this Agreement are correct and complete copies of such
instruments as presently in effect.
Section 3.2.
Capitalization
.
(a) The authorized capital stock of the Company consists
entirely of 8,000,000 shares of Company Common Stock and
500,000 shares of Preferred Stock, par value $0.01 per
share (the
Preferred Stock
). As of the close
of business on March 31, 2010 (the
Capitalization
Date
), 5,870,714 shares of Company Common Stock
were issued and outstanding and no shares of Preferred Stock are
issued and outstanding, which number of outstanding shares of
Company Common Stock includes 109,351 shares to be issued
pursuant to the conversion of Company ESPP Options effective as
of March 31, 2010 (the
Conversion
Shares
). No shares of Company Common Stock are held in
the Company treasury or by any Subsidiary of
A-13
the Company. Since the Capitalization Date, no shares of capital
stock of the Company, no capital stock or other equity interests
of any of its Subsidiaries, and no other securities directly or
indirectly convertible into, or exchangeable or exercisable for,
capital stock of the Company, or capital stock or other equity
interests of any of its Subsidiaries, have been issued, other
than shares of Company Common stock issued upon the exercise of
Company Stock Options outstanding as of the close of business on
the Capitalization Date or the settlement of Company RSUs
outstanding as of the close of business on the Capitalization
Date and the Conversion Shares. All issued and outstanding
shares of capital stock of the Company and all outstanding
shares of capital stock or other equity interests in its
Subsidiaries are validly issued, fully paid and nonassessable.
As of the close of business on the Capitalization Date, there
were issued and outstanding (w) Company Stock Options
representing in the aggregate the right to acquire
741,511 shares of Company Common Stock under the Company
Stock Plans, (y) Company Restricted Shares relating to, in
the aggregate, 8,450 shares of Company Common Stock (which,
for the avoidance of doubt, are included in the number of issued
and outstanding shares of Company Common Stock set forth in the
second sentence of this
Section 3.2(a)
) and
(z) Company RSUs relating to, in the aggregate,
10,762 shares of Company Common Stock. As of the close of
business on March 31, 2010, the plan year for the Company
ESPP beginning on April 1, 2009 concluded and participants
in such plan year purchased and are entitled to receive the
number of Conversion Shares noted above. The enrollment period
for the Company ESPP plan year commencing on April 1, 2010,
closed on March 22, 2010, and 274 employees of the
Company and its Subsidiaries elected to participate in the
Company ESPP for such plan year, and all contributions to the
Company ESPP for such plan year will be treated in the manner
described in
Section 1.9(b). Section 3.2(a)
of
the Company Disclosure Schedule sets forth a correct and
complete list, as of the close of business on the Capitalization
Date, of the number of shares of Company Common Stock subject to
outstanding Company Stock Options and RSUs (vested and
unvested), the number of outstanding unvested Company Restricted
Shares, the number of outstanding rights to purchase shares of
Company Common Stock or other outstanding rights to purchase or
receive Company Common Stock, or benefits based on the value of
Company Common Stock, granted under the Company Stock Plans, and
for each category of shares or rights, the holders thereof, the
dates of grant, the exercise prices thereof and the vesting
provisions thereof (if any). The Company has made available to
Parent copies of all award agreements, grant documents or
similar documents related to any and all Company Equity Awards
and any other outstanding rights to purchase or receive Company
Common Stock, or benefits based on the value of Company Common
Stock. No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any
matters on which holders of capital stock of the Company may
vote
(Company Voting Debt
) are issued or
outstanding. There are no outstanding obligations of the Company
or its Subsidiaries, contingent or otherwise, to repurchase,
redeem or otherwise acquire any shares of capital stock or other
equity or voting interests of the Company or any of its
Subsidiaries or any obligations binding on the Company or any of
its Subsidiaries to grant or extend such rights. Except as set
forth above, no shares of capital stock or other voting
securities of the Company have been issued or reserved for
issuance or are outstanding, other than the shares of Company
Common Stock reserved for issuance under the Company Stock Plans
and the Company ESPP and the Conversion Shares. Except as set
forth above, there are no options, warrants, rights, convertible
or exchangeable securities, phantom stock rights,
stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by
which any of them is bound: (A) obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock
or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or any of its Subsidiaries
or any Company Voting Debt; (B) obligating the Company or
any of its Subsidiaries to issue, grant, extend or enter into
any such option, warrant, call, right, security, unit,
commitment, Contract, arrangement or undertaking or
(C) pursuant to which any Person is or may be entitled to
receive any payment or other consideration or value based upon
or valued by reference to the capital stock of the Company or
capital stock or other equity interests of its Subsidiaries,
dividends paid on the capital stock of the Company or dividends
paid or distributions made on the capital stock or other equity
interests of its Subsidiaries or the revenue, financial
performance, stock or equity performance or other attribute of
the Company or any of its Subsidiaries (other than ordinary
course payments to employees of the Company or its Subsidiaries
(including bonus payments)). The Company has prior to the date
of this
A-14
Agreement provided Parent with a correct and complete copy of
each Company Stock Plan. Neither the Company nor any of its
Subsidiaries is party to or, to the knowledge of the Company,
bound by any Contracts or understandings with respect to the
voting (including voting trusts and proxies) or sale or transfer
(including agreements imposing transfer restrictions) of any
shares of its capital stock or other equity interests.
(b) As of the close of business on April 1, 2010,
there was no outstanding Indebtedness of the Company or its
Subsidiaries other than Indebtedness identified in
Section 3.2(b)
of the Company Disclosure Schedule.
(c) The Company owns, directly or indirectly, beneficially
and of record, all of the issued and outstanding shares of
capital stock and other equity interests of its Subsidiaries,
free and clear of all Liens. No shares of capital stock or other
voting securities of any Subsidiary of the Company has been
reserved for issuance to anyone other than the Company or any of
its Subsidiaries. A correct and complete list of all of the
Companys Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary and the
holder(s) of their respective outstanding capital stock or other
equity interests is set forth in
Section 3.2(b)
of
the Company Disclosure Schedule. Except for its interest in the
Subsidiaries, the Company does not own, directly or indirectly,
any capital stock interest, equity membership interest,
partnership interest, joint venture interest or other equity
interest in any Person. Neither the Company nor any of its
Subsidiaries is obligated to make any contribution to the
capital of, make any loan to or guarantee the debts of any
Person (excluding the Companys wholly-owned Subsidiaries).
No shares of capital stock of, or other equity interests in, any
Subsidiary of the Company are reserved for issuance.
Section 3.3.
Authorization
.
The
Company has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby, subject,
in the case of the consummation of the Merger, to the approval
and adoption of this Agreement and the Merger by the affirmative
vote of the holders of at least a majority of the outstanding
shares of Company Common Stock entitled to vote on the Merger
(the
Company Requisite Stockholder Vote
) and
the filing and recordation of appropriate merger documents as
required by the MBCA and the DGCL. Without limiting the
generality of the foregoing, the Board of Directors, at a
meeting duly called and held on April 2, 2010, by unanimous
vote of all directors (i) determined and declared that this
Agreement and the transactions contemplated hereby, including
the Merger, are advisable and in the best interests of the
Company and its stockholders, (ii) adopted this Agreement,
(iii) directed that this Agreement be submitted to the
stockholders of the Company for their adoption and approval;
(iv) the Merger Consideration for outstanding shares of
Company Common Stock is fair to the Companys stockholders
and (v) resolved to recommend that the stockholders of the
Company approve this Agreement and the Merger. The execution and
delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder, and the consummation
by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
the Company, and no other corporate proceedings on the part of
the Company or its stockholders are necessary to authorize this
Agreement and to consummate the transactions contemplated
hereby, other than, with respect to the consummation of the
Merger, the approval of this Agreement and the Merger by the
Company Requisite Stockholder Vote and the filing and
recordation of appropriate merger documents as required by the
MBCA and the DGCL. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Parent and Merger
Sub, constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, subject (as to enforceability) to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting
creditors rights and to general equity principles in a
proceeding at law or in equity (the
Bankruptcy and
Equity Exception
).
Section 3.4.
No
Violation
.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its
obligations hereunder and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not:
(i) constitute or result in any violation of any provision
of the articles of organization, bylaws or similar
organizational document of the Company or any of its
Subsidiaries, as amended or restated; or (ii) except as set
forth on
Section 3.4(a)
of the Company Disclosure
Schedule,
A-15
subject to obtaining or making the consents, approvals, Orders,
authorizations, registrations, declarations and filings referred
to in
Section 3.4(b)
(or any section of the Company
Disclosure Schedule relating thereto), (A) conflict with,
or result in any violation of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a
right of termination, modification, cancellation or acceleration
of any obligation or loss of material benefit) under, require a
consent or waiver under, constitute a change in control under,
require a payment of a material penalty under or result in the
imposition of any Lien (other than a Permitted Lien) on the
Companys or any of its Subsidiaries properties,
rights or assets under, any of the terms, conditions or
provisions of any Company Benefit Plan, Contract or insurance
policy to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their respective
properties, rights or assets may be bound; or (B) violate,
result in a breach of or constitute a default under, or result
in a right of revocation or termination under or loss of, any
judgment, injunction, ruling, order, arbitral award or decree
(each, an
Order
), any material Company
Permit, or any constitution, treaty, statute, law, principle of
common law, ordinance, rule or regulation of any Governmental
Entity (each, a
Law
) applicable to the
Company or any of its Subsidiaries or any of their respective
properties, rights and assets, except, in the case of this
clause (ii), as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
(b) No consent, approval, Order or authorization of, notice
to, or registration, declaration or filing with, any
supranational, national, state, provincial, municipal, local or
foreign government, any instrumentality, subdivision, court,
arbitrator, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body
exercising any regulatory, judicial, administrative, taxing,
importing or other governmental, quasi-governmental authority or
any stock market or stock exchange on which shares of the
Company Common Stock are listed for trading (each, a
Governmental Entity
), or any other Person is
required with respect to the Company or any of its Subsidiaries
or their respective properties, rights or assets in connection
with the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations
hereunder or the consummation of the Merger and the other
transactions contemplated hereby, except for those required
under or in relation to: (i) the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR
Act
); (ii) the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder
(the
Exchange Act
); (iii) the MBCA with
respect to the filing and recordation of the Articles of Merger;
(iv) the DGCL with respect to the filing and recordation of
the Certificate of Merger; (v) those items identified on
Section 3.4(b)
of the Company Disclosure Schedule;
(vi) the requirements of the NASDAQ Global Market with
respect to the Merger
;
and (vii) such consents,
approvals, Orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Consents,
approvals, Orders, authorizations, registrations, declarations
and filings required under or in relation to any of
clauses (i) through (vii) above are referred to as the
Applicable Consents
.
Section 3.5.
Filings
with the SEC; Financial Statements
.
(a) The Company has filed all forms, certifications,
reports, statements and other documents (including all exhibits,
supplements and amendments thereto) required to be filed by it
with the Securities and Exchange Commission (the
SEC
) since December 31, 2006 (the
Applicable Date
) (collectively, with any
amendments thereto filed prior to the date of this Agreement,
the
Company SEC Reports
). No Subsidiary of
the Company was or is required to file any registration
statement, prospectus, report, schedule, form, statement or
other document with the SEC. None of the Company SEC Reports, as
of their respective filing dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the
date of such filing), contained any untrue statement of a
material fact or omitted 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. All of the Company SEC Reports, as of their
respective filing dates (and as of the date of any amendment to
the respective Company SEC Report), complied as to form in all
material respects with the applicable requirements of the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the
Securities
Act
), the Exchange Act and the Sarbanes-Oxley Act of
2002, as amended (the
Sarbanes-Oxley Act
), as
the case may be, and the rules and regulations thereunder
applicable
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to such SEC Reports. As of the date of this Agreement, there are
no outstanding or unresolved comments in comment letters
received from the SEC.
(b) Each of the financial statements (including, in each
case, the related notes and schedules thereto) of the Company
included in the Company SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective
Company SEC Report) complied as to form in all material respects
with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been
prepared in all material respects in accordance with generally
accepted accounting principles in the United States
(GAAP)
(except, in the case of unaudited
statements, as permitted by the SEC on
Form 10-Q
under the Exchange Act) applied on a consistent basis during the
periods and the dates involved (except as may be disclosed in
the notes thereto) and fairly present, in all material respects,
the consolidated financial position and consolidated results of
operations and cash flows and changes in stockholders
equity of the Company and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, subject,
in the case of the unaudited interim financial statements, to
the absence of notes and normal year-end adjustments.
(c) The Company has disclosed, based on the most recent
evaluation of internal control over financial reporting, to the
Companys auditors and the audit committee of the
Companys Board of Directors (A) all significant
deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are known to the Company and that are reasonably likely to
adversely affect the Companys ability to record, process,
summarize and report financial information and (B) any
fraud, known to the Company, whether or not material, that
involves management or other employees who have a significant
role in the Companys and its Subsidiaries internal
control over financial reporting. Since the Applicable Date and
as of the date hereof, to the knowledge of the Company, no
material complaints from any source regarding accounting,
internal accounting controls or auditing matters, and no
concerns from Company employees regarding questionable
accounting or auditing matters, have been received by the
Company. The Company has made available or provided access to or
otherwise disclosed to Parent all matters referred to in the
first sentence of this
Section 3.5(c)
.
(d) The Company has designed disclosure controls and
procedures (as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act) intended to ensure that material
information relating to the Company, including its Subsidiaries,
is made known to its principal executive officer and principal
financial officer by others within those entities. As of the
date of this Agreement, neither the Company nor any of its
Subsidiaries has outstanding, extensions of credit
to directors or executive officers of the Company within the
meaning of Section 402 of the Sarbanes-Oxley Act. The
Company is in compliance in all material respects with the
applicable listing and other rules and regulations of The Nasdaq
Global Market.
Section 3.6.
Undisclosed
Liabilities
.
Except (i) to the extent
disclosed or reserved or reflected in the consolidated balance
sheet of the Company as of December 31, 2009 (including the
notes thereto) included in the Company SEC Reports filed prior
to the date of this Agreement, (ii) liabilities incurred on
behalf of the Company or any Subsidiary in conjunction or
accordance with or as contemplated by this Agreement,
(iii) liabilities incurred in the ordinary course of
business, consistent with past practices, since
December 31, 2009 or (iv) as set forth on
Section 3.6
of the Company Disclosure Schedule,
neither of the Company nor its Subsidiaries have any
liabilities, absolute or contingent, required by GAAP to be set
forth in a consolidated balance sheet of the Company or in the
notes thereto, except for any such liabilities which do not
have, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company.
Section 3.7.
Absence
of Certain Changes
.
Except as set forth on
Section 3.7
of the Company Disclosure Schedule,
since December 31, 2009 through the date of this Agreement,
except for the execution and performance of this Agreement and
the discussions and negotiations related thereto, the Company
and each of its Subsidiaries has conducted its business in all
material respects only in the ordinary course of business
consistent with past practice and there has not been or occurred:
(a) any change, event, occurrence or circumstance, that has
had, or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company; and
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(b) any other action or event that would have been
prohibited by (assuming the Parent did not consent thereto) the
provisions of
Section 5.1
had such action or event
occurred after the date of this Agreement and prior to the
Effective Date.
Section 3.8.
Anti-takeover
Statutes; No Rights Agreement
.
(a) The Company and the Board of Directors of the Company
have taken all action necessary to exempt this Agreement, the
Merger and the transactions contemplated hereby from the
requirements of the provisions of Chapter 110C and
Chapter 110F of the Massachusetts General Laws and any
other takeover, anti-takeover, moratorium, fair
price, control share, or similar Law that may
be applicable to the Company or any of its Subsidiaries. To the
knowledge of the Company, other than Chapters 110C and 110F
of the Massachusetts General Laws, there are no takeover,
anti-takeover, moratorium, fair price, control
share, or similar Laws that are applicable to the Company
or any of its Subsidiaries. The Company has validly opted out of
the requirements and provisions of Chapter 110D of the
Massachusetts General Laws in its Restated Articles of
Organization and therefore Chapter 110D is not applicable
to this Agreement, the Merger and the transactions contemplated
hereby. There are no anti-takeover provisions in the
Companys Restated Articles of Organization or bylaws or
similar documents of any Subsidiary of the Company.
(b) The Company is not party to or subject to a rights
agreement, a poison pill or similar agreement or
plan.
Section 3.9.
Litigation;
Orders
.
Except as set forth in
Section 3.9
of the Company Disclosure Schedule,
there is no claim, action, suit, arbitration, proceeding,
investigation or inquiry, whether civil, criminal or
administrative
(Litigation)
, pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, except as does not have, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. None of the
Company, any of its Subsidiaries or any of their respective
businesses or assets is subject to any Order of any Governmental
Entity that does have, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company. To the knowledge of the Company, no director or
officer of the Company or any of its Subsidiaries is a defendant
in any material Litigation to which the Company or any of its
Subsidiaries is not also a defendant, including as a nominal
defendant, in connection with his or her status as a director or
officer of the Company or any of its Subsidiaries. Except as set
forth in
Section 3.9
of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a
party to any material settlement agreement with material ongoing
obligations relating to any Litigation involving the Company or
any of its Subsidiaries or any of their respective businesses or
assets.
Section 3.10.
Permits;
Compliance with Laws
.
(a) Except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, the Company and its Subsidiaries
hold all permits, licenses, franchises, variances, exemptions,
certificates, Orders and approvals of all Governmental Entities
that are necessary for the operation of their respective
businesses as now being conducted (collectively, the
Company Permits
), and no suspension or
cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened. The Company and each of
its Subsidiaries has been and is in compliance with the Company
Permits, except, for instances of noncompliance where the
failure to comply does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(b) The Company and its Subsidiaries are, and since the
Applicable Date have been, in compliance with any applicable
Laws and Orders, except for failures to comply or violations
that do not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company. Without limiting the foregoing, each of the Company
and its Subsidiaries is, and has been, in compliance with the
applicable provisions of all state and federal health care Laws,
state and federal privacy and security Laws applicable to
individually identifiable patient information, and the Federal
Food, Drug, and Cosmetic Act, as amended, and the applicable
rules, regulations, and requirements adopted by the Governmental
Entities related
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to such Laws, except where non-compliance does not have, and
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Section 3.11.
Tax
Matters
.
Except as would not reasonably be
expected, individually or in the aggregate, to be material to
the Company or its Subsidiaries:
(a) Each of the Company and its Subsidiaries have timely
filed (taking into account valid extensions of time within which
to file) with the appropriate Tax authorities all income and
other Tax Returns required to be filed by the Company and its
Subsidiaries. All such Tax Returns when filed were complete and
accurate. Except as set forth in
Section 3.11(a)
of
the Company Disclosure Schedule, all Taxes of the Company and
its Subsidiaries (whether or not shown on Tax Returns), except
those not yet due and payable, have been paid. Neither the
Company nor any of its Subsidiaries has received written notice
of any claim by any authority in a jurisdiction where neither
the Company nor its Subsidiaries files any Tax Returns that
either is or may be subject to the imposition of any Tax by that
jurisdiction and, to the Companys knowledge, no such claim
has been made verbally.
(b) There is no Litigation now pending, or to the
Companys knowledge, threatened against the Company or any
of its Subsidiaries with respect to any liability for Taxes of
the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency. Neither the Company nor any
of its Subsidiaries has issued to any Person a power of attorney
with respect to any Tax of the Company or any of its
Subsidiaries.
(c) The Company and each of its Subsidiaries has timely
withheld and paid to the appropriate Governmental Entity all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third Person, and the Company and
each of its Subsidiaries has complied with all associated
reporting and recordkeeping requirements.
(d) Except as set forth on
Section 3.11(d)
of
the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries (nor any predecessor) has been a member of an
affiliated group of corporations (within the meaning of
section 1502 of the Code) filing a consolidated federal
income Tax Return (other than a group the common parent of which
has been the Company). Neither the Company nor any of its
Subsidiaries has any liability for the Taxes of any Person
(other than the Company and its Subsidiaries) under Treasury
Regulations
Section 1.1502-6
(or any analogous or similar provision of state, local or
foreign law or regulation), as a transferee or successor, by
contract, or otherwise.
(e) Neither the Company nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of
any: (i) change in method of accounting for a taxable
period (or portion thereof) ending on or prior to the Closing
Date, (ii) closing agreement as described in
section 7121 of the Code (or any corresponding or similar
provision of state, local or foreign law),
(iii) installment sale or open transaction disposition made
on or prior to the Closing Date or (iv) prepaid amount
received on or prior to the Closing Date.
(f) The Company has made available to Parent or its
representatives true and complete copies of (i) all Tax
Returns of the Company and each of its Subsidiaries, including
any such Tax Returns filed or included in any consolidated Tax
Returns of the Company for the past three (3) years and for
any other tax year with respect to which there is a pending
audit, and (ii) all written communications relating to any
Tax Returns or to any deficiency or claim proposed
and/or
asserted with respect thereto, irrespective of the outcome of
such matter. Except as set forth in
Section 3.11(f)
of the Company Disclosure Schedule, there are no pending
audits of any Tax Returns.
(g) Except as set forth in
Section 3.11(g)
of
the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries (i) is or has ever been a partner in a
partnership or an owner of an interest in an entity classified
or treated as a partnership for federal income Tax purposes,
(ii) is subject to
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Section 999 of the Code, (iii) is a party to an
agreement relating to the sharing, allocation, or payment of, or
indemnity for, Taxes.
(h) There are no Liens (other than Permitted Liens) for
Taxes upon any of the assets of the Company and its
Subsidiaries, taken as a whole.
(i) Neither the Company nor any of it Subsidiaries has been
a distributing corporation or a controlled
corporation within the meaning of Code
section 355(a)(1)(A).
(j) Neither the Company nor any of it Subsidiaries has
participated in any reportable or listed transaction as defined
under Treasury Regulations
section 1.6011-4.
(k) Neither the Company nor any of its Subsidiaries has
been a United States real property holding corporation within
the meaning of section 897(c)(2) of the Code during the
applicable period specified in section 897(c)(l)(A)(ii) of
the Code.
(l) Except as set for on
Section 3.11(l)
of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is obligated to make any payment in the nature of
compensation that would not be deductible under Code
section 162.
Section 3.12.
Intellectual
Property
.
(a)
Section 3.12(a)
of the Company Disclosure
Schedule lists all patents and patent applications owned by the
Company or any of its Subsidiaries that are material to the
Companys operations
(Company Patents)
;
all registered trademarks and registrations and applications
therefor and all unregistered trademarks owned by the Company or
any of its Subsidiaries that are material to the Companys
operations
(Company Trademarks)
; and all
registered copyrights and unregistered copyrights owned by the
Company or any of its Subsidiaries that are material to the
Companys operations
(Company
Copyrights)
. Except as does not have, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company:
(i) the Company Patents and all claims incorporated
therein, and all Company Trademarks and Company Copyrights, are
valid, subsisting and enforceable in the jurisdictions in which
they are filed or issued; (ii) the Company and its
Subsidiaries have good title to the Company Patents, Company
Trademarks, and Company Copyrights; (iii) to the knowledge
of the Company, with respect to items other than the Company
Patents, Company Trademarks and Company Copyrights, the Company
and its Subsidiaries have sufficient rights to use such
Intellectual Property Rights in the conduct of their respective
businesses (together with the Company Patents, Company
Trademarks and Company Copyrights, all of the foregoing items
are hereinafter referred to as the
Company Intellectual
Property
); and (iv) except as listed on
Section 3.12(a)
of the Company Disclosure Schedule,
to the knowledge of the Company, the Company and its
Subsidiaries are the sole owners of all Company Intellectual
Property, and none of the Company Intellectual Property is in
the possession, custody, or control of any Person other than the
Company or a Subsidiary of the Company.
(b)
Section 3.12(b)
of the Company Disclosure
Schedule identifies each material item of Intellectual Property
Rights
(Licensed Intellectual Property)
that
is used by the Company or any of its Subsidiaries pursuant to
any license, sublicense or other agreement, other than licenses
arising from the purchase of off the shelf software
products or any software embedded in any equipment or product
purchased by the Company from a third Person
(Off the
Shelf Software
, and the licenses required to be set
forth on
Section 3.12(b)
of the Company Disclosure
Schedule, the
Company Licenses)
and
identifies, to the extent applicable, each Company License
pursuant to which such Licensed Intellectual Property is
licensed. Except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company: (i) the Company and its
Subsidiaries use the Intellectual Property Rights of third
parties only pursuant to valid, effective written license
agreements; (ii) the Company Licenses are in full force and
effect; and (iii) the transactions contemplated by this
Agreement will not affect the right of the Company or any of its
Subsidiaries to use, license, or sell any Licensed Intellectual
Property.
(c) Except as set forth on
Schedule 3.12(c)
of
the Company Disclosure Schedule, as of the date hereof, neither
the Company nor any of its Subsidiaries has received any
written, or to the knowledge of the Company,
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any oral, charge, complaint, claim, demand or notice alleging
any interference, infringement, misappropriation or violation by
the Company or any of its Subsidiaries with any of the
Intellectual Property Rights of any other Person (including any
claim that the Company or any of its Subsidiaries must license
or refrain from using any Intellectual Property Rights of any
third party in connection with the conduct of the business of
the Company and its Subsidiaries or the use of the Company
Intellectual Property or Licensed Intellectual Property). To the
knowledge of the Company, neither the Company nor any of its
Subsidiaries requires any material Intellectual Property Rights
to conduct the business of the Company and its Subsidiaries
substantially as presently conducted that the Company and its
Subsidiaries do not already own or license or could purchase or
license on commercial terms. The Company has no knowledge of any
infringement or misappropriation by others of material
Intellectual Property Rights owned by the Company or any of its
Subsidiaries. To the knowledge of the Company, the conduct of
the businesses of the Company and its Subsidiaries does not
infringe on or misappropriate any material Intellectual Property
Rights of others, except where such infringement or
misappropriation does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) Except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, (i) the Company and its
Subsidiaries own or have valid and enforceable rights to use all
computer software and all source code, object code and related
documentation thereof used by them in the operation of their
respective businesses
(Internal Use
Software
), without any known conflict with the
Intellectual Property Rights of other Persons; (ii) to the
knowledge of the Company, the Company or a Subsidiary of the
Company possesses or controls the source code, object code and
documentation for all Internal Use Software other than Off the
Shelf Software; (iii) the Company and its Subsidiaries have
disclosed source code to Internal Use Software that is
proprietary to the Company and other than Off the Shelf Software
only pursuant to written confidentiality terms that reasonably
protect the Company or any of its Subsidiaries rights in
such Internal Use Software; (iv) no Internal Use Software
is subject to any obligation that would require the Company or
its Subsidiaries to divulge to any person any source code or
trade secret that is part of any material Software and that is
also proprietary to the Company, or make payments for the use
thereof, except for license fees and (v) the Internal Use
Software owned or licensed by the Company and any of its
Subsidiaries, and the rights of the Company and its Subsidiaries
with respect to the Internal Use Software are adequate in all
material respects to serve the needs of the business of the
Company and its Subsidiaries as currently conducted.
(e) For purposes of this Agreement,
Intellectual
Property Rights
means all (i) trademarks, service
marks, brand names, certification marks, collective marks,
d/b/as, Internet domain names, software, logos, symbols,
trade dress, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all
goodwill associated therewith and symbolized thereby, including
all renewals of same; (ii) inventions and all patents,
registrations, invention disclosures and applications therefor,
including divisions, continuations,
continuations-in-part
and renewal applications, renewals, extensions and reissues;
(iii) confidential information, trade secrets and know-how,
including processes, schematics, business methods, formulae,
drawings, prototypes, models and designs (collectively,
Trade Secrets
); and (iv) published and
unpublished works of authorship, whether copyrightable or not,
copyrights therein and thereto, and registrations and
applications therefor, and all renewals, extensions,
restorations and reversions thereof.
Section 3.13.
Employee
Benefits
.
(a)
Section 3.13(a)
of the Company Disclosure
Schedule sets forth a complete and accurate list of all material
Plans which the Company or any of its Subsidiaries maintains or
sponsors in whole or in part, or to which the Company or any of
its Subsidiaries contributes or is obligated to contribute, or
under which the Company or any of its Subsidiaries has or may
have any liability, or which benefits any current or former
employee, officer or director, consultant or independent
contractor of the Company, any of its Subsidiaries, or the
beneficiaries or dependents of any such Person (each, a
Company Benefit Plan
). For purposes of this
Agreement, the term
Plan
means any plan,
program, agreement or arrangement that is: (i) an
employee welfare benefit plan within the meaning of
Section 3(1) of ERISA; (ii) an employee pension
benefit plan within the meaning of Section 3(2) of
ERISA; (iii) a stock bonus, stock purchase, stock option,
restricted stock or similar equity-based plan; or (iv) any
other deferred-compensation, retirement, welfare-benefit, bonus,
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incentive or fringe-benefit plan or similar arrangement,
agreement, practice or policy. For purpose of this
Section 3.13
, any reference to Company or Subsidiary
shall be deemed to refer also to any entity which is under
common control or affiliated with the Company within the meaning
of Section 4001 of ERISA, and the rules and regulations
promulgated thereunder
and/or
Sections 414(b), (c), (m) or (o) of the Code.
(b) The Company has made available to Parent true, correct
and complete copies of all documents, summary plan descriptions,
insurance contracts, third party administration contracts and
all other documentation created to embody, or relating to, all
material Company Benefit Plans (including, where applicable, the
most recent determination letter from the IRS).
(c) Except as otherwise disclosed in
Section 3.13(c)
of the Company Disclosure Schedule,
each Company Benefit Plan is in compliance in all material
respects with the terms of such Company Benefit Plan, the
applicable requirements of the Code, ERISA and all other
applicable Law, except as does not have, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. To the
Companys knowledge, each Company Benefit Plan intended to
be qualified under Section 401(a) of the Code and each
related trust intended to be exempt from tax pursuant to
Section 501(a) of the Code satisfies, both in form and
operation, the requirements for such qualification and exemption
in all material respects.
(d) There are no pending, or to the Companys
knowledge, threatened claims, suits, proceedings, prosecutions,
inquiries, hearings, audits, investigations or disputes under
the terms of, or in connection with, the Company Benefit Plans
other than routine claims for benefits which are payable in the
ordinary course of business consistent with past practice.
(e) Except as set forth in
Section 3.13(e)
of
the Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) entitle any
Person to (or accelerate the timing of) any material payment,
forgiveness of Indebtedness, vesting, distribution, or material
increase in benefits under or with respect to any Company
Benefit Plan or (ii) trigger any obligation to fund any
Company Benefit Plan. Except as set forth in
Section 3.13(e)
of the Company Disclosure Schedule,
no payment to be made in connection with a change in control
contemplated by this Agreement would fail to be deductible by
reason of Code section 280G or result in the imposition of
an excise tax on any Person pursuant to Code section 4999.
(f) No liability has been or would reasonably be expected
to be incurred by the Company under or pursuant to Title I
or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code or ERISA relating to
the Company Benefit Plans and, to the Companys knowledge,
no event, transaction or condition has occurred or exists that
could result in such liability of the Company or, following the
Effective Time, the Surviving Corporation, Parent or any such
Company Benefit Plan.
(g) At no time has the Company contributed to, been
required to contribute to, or incurred any withdrawal liability
(within the meaning of Section 4201 of ERISA) with respect
to any Plan which is a Multiemployer Plan.
(h) Each group health plan (within the meaning
of Section 4980B of the Code) maintained by the Company has
been administered, in all material respects, in compliance with
the coverage continuation requirements contained in the
Consolidated Omnibus Budget Reconciliation Act of 1985 and as
provided under Section 4980B of the Code, except would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(i) Except as disclosed on
Section 3.13(i)
of
the Company Disclosure Schedule or as required under
Section 601
et seq.
of ERISA, no Company Benefit
Plan provides benefits or coverage in the nature of life or
disability insurance or health or medical benefits (whether or
not insured) following retirement or other termination of
employment.
(j) Except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, each nonqualified deferred
compensation plan (within the meaning of Code
section 409A(d)(1) and applicable regulations) with respect
to any service provider to
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the Company (i) complies, in all respects, and has been
operated in compliance, in all respects, with the requirements
of Code section 409A and regulations promulgated thereunder
or (ii) is exempt from compliance under the
grandfather provisions of IRS Notice
2005-1
and
applicable regulations and has not been materially
modified (within the meaning of IRS Notice
2005-1
and
Treasury Regulations §1.409A-6(a)(4)) subsequent to
October 3, 2004.
(k) Except as disclosed on
Section 3.13(k)
of
the Company Disclosure Schedule, each Company Benefit Plan and
any related Contracts may be amended or terminated without
material penalty other than (i) the payment of benefits,
fees or charges accrued or incurred through the date of
termination and (ii) as may be prohibited by the express
terms thereof.
(l) With respect to each Company Benefit Plan that is
subject to legal requirements of a jurisdiction outside the
United States, except as does not have, and would not reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, such plan has been
established and administered, in all respects, in accordance
with such requirements and has been registered (if applicable)
and is, and has been, in good standing with applicable
Governmental Entities.
Section 3.14.
Employee
Matters
.
(a) Neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement and to
the Companys knowledge there are no labor unions or other
organizations representing, purporting to represent or
attempting to represent any employees of the Company or its
Subsidiaries. During the last three (3) years, there has
not occurred nor, to the Companys knowledge, has there
been threatened any strike, slowdown, picketing, walkouts, work
stoppage, concerted refusal to work overtime or other similar
material labor activity with respect to any employees of the
Company or its Subsidiaries. There are no labor disputes
currently subject to any grievance procedure, arbitration or
Litigation and there is no representation petition pending or,
to the Companys knowledge, threatened with respect to any
employee of the Company or any of its Subsidiary seeking
recognition of a bargaining representative.
(b) The Company and its Subsidiaries are in compliance with
all Laws relating to labor and employment, including those
relating to wages, hours, overtime, collective bargaining,
unemployment compensation, workers compensation, equal
employment opportunity, discrimination, retaliation, immigration
control, employee classification as exempt or non-exempt for
overtime purposes, classification of Persons as independent
contractors or employees, information privacy and security,
payment and withholding of Taxes and continuation coverage with
respect to group health plans and occupational health and
safety, except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act
(WARN
) or any similar state or local Law
which remains unsatisfied, and neither the Company nor any of
its Subsidiaries has planned or announced any plant
closing, workforce reduction or mass layoff as
contemplated by WARN affecting any site of employment or
facility of the Company or any of its Subsidiaries. As of the
date hereof, there is no Order that limits or restricts in any
material respect the Company or any of its Subsidiaries from
relocating or closing any of the material operations of the
Company or any of its Subsidiaries.
Section 3.15.
Contracts
.
(a)
Section 3.15
of the Company Disclosure
Schedule lists the following Contracts to which the Company or
any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries, or any of their respective properties
or assets, is bound (each a
Material
Contract
):
(i) any loan or credit agreement, indenture, note,
debenture, mortgage, pledge, security agreement or capital lease
or any surety or guarantee relating to any Indebtedness or any
Guarantee;
(ii) any Contract (other than a purchase order for
supplies, raw materials or inventory entered into in the
ordinary course of business consistent with past practice and
that does not contain any minimum purchase or similar
requirement) that by its terms calls for, or would reasonably be
expected to result in
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aggregate payments by or to the Company or any of its
Subsidiaries under such Contract of more than $125,000 per annum;
(iii) any Contract that is filed with the SEC under
Item 6.01 of
Regulation S-K
of the Exchange Act or disclosed on a Current Report on
Form 8-K;
(iv) any Contract that by its terms materially restricts
the conduct of any current or future line of business by the
Company or any of its Subsidiaries or Affiliates, or, after the
Effective Time, would by its terms materially restrict the
conduct of any current or future line of business by Parent or
any of its Subsidiaries or Affiliates or would prevent any of
them from entering into any territory, market or field, or any
Contract that includes a grant to any Person of most-favored
nation rights or similar rights;
(v) any Contract that provides for or otherwise relates to
a material joint venture, partnership, strategic alliance or
similar arrangement;
(vi) any Contract involving the acquisition or disposition,
directly or indirectly (by merger or otherwise), of a material
amount of the assets of any Person, business or of capital stock
or other equity interests that (A) is currently in effect
or (B) pursuant to which the Company has continuing
indemnification, earn-out or other liabilities or
obligations (other than acquisitions or dispositions of
inventory in the ordinary course of business consistent with
past practices);
(vii) any Company License;
(viii) (A) any employment or consulting agreement or
bonus agreement, (B) any Contract providing for the
payment, increase or vesting of any material benefits or
compensation in connection with the transactions contemplated
hereby, (C) any Contract providing for change of control
benefits, severance or a similar arrangement and (D) any
Contract providing for indemnification, in each of
clauses (A) through (D), with any executive officer or any
other employee of the Company or any of its Subsidiaries earning
a base annual salary in excess of $125,000, or a member of the
Companys or any of its Subsidiaries board of
directors or similar governing body;
(ix) any Real Property Lease;
(x) any Contract that prohibits payment of dividends or
distributions in respect of the capital stock or equity
interests of the Company or any of its Subsidiaries, prohibits
the pledging of the Companys or any of its
Subsidiaries capital stock or equity interests, or
prohibits the issuance of guarantees by the Company or any of
its Subsidiaries; and
(xi) any other material Contract not entered into in the
ordinary course of business consistent with past practices.
The Company has made available to Parent a true and complete
copy of each Material Contract required to be listed on
Section 3.15(a)
of the Company Disclosure Schedule.
(b) Except as does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company: (i) each Material Contract
to which the Company or any of its Subsidiaries is a party is in
full force and effect and is valid and binding on and
enforceable against the Company
and/or
its
Subsidiaries, as applicable, in accordance with their terms and,
to the knowledge of the Company, no other Person that is a party
thereto has alleged that it is not binding on and enforceable to
them; (ii) neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party to any
such Material Contract, is in material breach thereof or
material default thereunder, and no event has occurred that,
with the giving of notice or the lapse of time or both, would
constitute a material breach thereof or material default
thereunder; and (iii) each of the Company and its
Subsidiaries and, to the knowledge of the Company, the other
Person or Persons party thereto has materially performed all of
its material obligations required to be performed by it under
each Material Contract to which the Company or any of its
Subsidiaries is a party.
Section 3.16.
Environmental
.
Except
as does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company, (i) the Company and each of its
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Subsidiaries are and have been in material compliance with all
applicable Environmental Laws and have obtained all
Environmental Permits necessary for their operations as
currently conducted; (ii) to the knowledge of the Company,
there have been no Releases of any Hazardous Substance that
could form the basis of any Environmental Claim against the
Company or any of its Subsidiaries; (iii) to the knowledge
of the Company, there are no Environmental Claims pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries; and (iv) neither the Company nor
any of its Subsidiaries is subject to any written order,
judgment, decree, letter or memorandum by or with any
Governmental Entity imposing any liability or obligation under
any Environmental Law on the Company or any of its Subsidiaries.
Section 3.17.
Company
Real Property
.
(a)
Section 3.17(a)
of the Company Disclosure
Schedule sets forth a true, correct and complete list of all of
the real property owned in fee by the Company or any of its
Subsidiaries (the
Owned Property
), including
the address of the Owned Property and the name of the fee owner.
The Company or one of its Subsidiaries has good, valid, and
marketable title in fee simple to all of the Owned Property,
free and clear of Liens, except for Permitted Liens. With such
exceptions as do not have, and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Company, to the knowledge of the Company, neither
the Company nor any of its Subsidiaries is in material default
under any restrictive covenants, declarations or restrictions
affecting the Owned Property, which default remains uncured.
(b)
Section 3.17(b)
of the Company Disclosure
Schedule sets forth a true, correct and complete list of all of
the real property leased, subleased, or otherwise occupied by
the Company or any of its Subsidiaries (the
Leased
Property
), including the address of such Leased
Property, and identifying the applicable lease or other
agreement, including the landlord tenant and expiration date of
the current term (each, a
Real Property
Lease
). The Company has made available to Parent true,
correct and complete copies of the Real Property Leases,
including all amendments, extension notices, estoppels,
subordination, non-disturbance and attornment agreements. The
Company or one of its Subsidiaries has a valid leasehold
interest and right to the use and occupancy of each Leased
Property, and except as does not have, and would not reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, neither the Company or
any of its Subsidiaries nor, to the knowledge of the Company,
any other Person, party to such Real Property Lease in question,
is in material breach of, or material default under, any such
Real Property Lease, and no event has occurred that, with the
giving of notice or the lapse of time or both, would constitute
a material breach of, or material default under, any such Real
Property Lease.
(c) Other than the rights of owners of the Leased
Properties and the rights of the Company and its Subsidiaries,
to the knowledge of the Company and subject to matters of
record, the Owned Property and the Leased Property are free of
any right of possession or claim of right of possession of any
other party.
(d) There is no pending or, to the knowledge of the
Company, threatened eminent domain, condemnation or similar
proceeding affecting any Owned Property or, to the knowledge of
the Company, there is no pending or threatened eminent domain,
condemnation or similar proceeding affecting any Leased Property.
(e) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company, the Company and each of its Subsidiaries has good
and marketable title to, or, in the case of property held under
a lease or other Contract, an enforceable leasehold interest in,
or right to use, all of the personal properties, rights and
assets, whether tangible or intangible currently used in the
operation of its business
(Personal
Property
). Except as disclosed in
Section 3.17(e)
of the Company Disclosure Schedule,
none of the Personal Property is subject to any Lien, except for
Permitted Liens and such matters which do not have, and would
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The
property and equipment of the Company and its Subsidiaries that
are used in the operations of business are in materially good
operating condition (subject to normal wear and tear), except as
does not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
Section 3.18.
Insurance
.
Section 3.18
of the Company Disclosure Schedule sets forth a complete and
accurate list of all currently effective insurance policies
issued in favor of the Company and its Subsidiaries.
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Such policies are valid and, to the knowledge of the Company,
are customary and adequate for companies of similar size in the
industries and locations in which the Company and its
subsidiaries operate. Neither the Company nor any of its
Subsidiaries has received any written notice of cancellation or
modification, and there is no existing default or event which,
with the giving of notice or lapse of time or both, would
constitute a default, by any insured thereunder, except for
defaults that do not have, and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Company. To the knowledge of the Company, there is
no material claim pending under any of such policies as to which
coverage has been questioned, denied or disputed by the
underwriters of such policies and there has been no threatened
termination of, or material premium increase with respect to,
any such policies.
Section 3.19.
Suppliers
.
The
Company and its Subsidiaries have adequate sources of supply for
the operation of the business of the Company and its
Subsidiaries as presently conducted. Except as does not have,
and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company, the
Company has not received any written notice of the intention of
any material supplier to: (a) cease doing business or
reduce or adversely alter in any material respect the business
transacted with the Company or any of its Subsidiaries or
(b) terminate any contract with the Company or any of its
Subsidiaries.
Section 3.20.
Affiliate
Transactions
.
All transactions, agreements,
or arrangements between the Company or any of its Subsidiaries,
on the one hand, and any Affiliate of the Company (other than
its Subsidiaries), on the other hand, that are required to be
disclosed in the Company SEC Reports in accordance with
Item 404 of
Regulation S-K
under the Securities Act have been so disclosed.
Section 3.21.
Opinion
of Financial Advisor
.
The Board of Directors
of the Company has received the written opinion of Signal Hill
Capital Group LLC, dated April 2, 2010, to the effect that,
as of the date of such opinion and based upon and subject to the
factors and assumptions set forth therein, the Merger
Consideration is fair, from a financial point of view, to the
holders of shares of Company Common Stock, and a copy of such
opinion has been delivered to Parent.
Section 3.22.
No
Brokers or Finders
.
With the exception of the
engagement of BB&T Capital Markets and Signal Hill Capital
Group LLC by the Company, none of the Company and its
Subsidiaries has any liability or obligation to pay any fees or
commissions to any financial advisor, broker, finder or agent
with respect to the transactions contemplated hereby. The
Company has prior to the date of this Agreement provided Parent
with a correct and complete copy of any engagement letter or
other Contract between (i) the Company and BB&T
Capital Markets relating to the Merger and the other
transactions contemplated hereby, and (ii) the Company and
Signal Hill Capital Group LLC relating to the issuance of a
fairness opinion with respect to the Merger and the other
transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and
warrant to the Company as follows:
Section 4.1.
Organization
and Qualification
.
Each of Parent and Merger
Sub is a corporation that is duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its
incorporation and has full corporate power and authority to own,
operate and lease the properties and assets owned or used by it
and to carry on its business as and where such is now being
conducted and is qualified, licensed or admitted to do business
and is in good standing as a foreign corporation in each
jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such
qualification, license or admission, except where the failure to
be so qualified, licensed or admitted or to have such power or
authority would not reasonably be expected to have a Material
Adverse Effect on Parent. Parent has made available to the
Company complete and correct copies of Parents
organizational documents, each as amended to the date hereof,
and each as delivered is in full force and effect.
Section 4.2.
Authorization
.
Each
of Parent and Merger Sub has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution
A-26
and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub, and no
other corporate proceedings on the part of Parent, Merger Sub
and no vote or other actions of their respective stockholders
are necessary to authorize this Agreement and to consummate the
transactions contemplated hereby. Parent, Merger Sub and GeoDigm
Corporation, as sole stockholder of Merger Sub, have taken all
action necessary to approve this Agreement, the Merger and the
other transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Merger Sub and,
assuming due authorization, execution and delivery of this
Agreement by the Company, constitutes a valid and legally
binding obligation of Parent and Merger Sub enforceable against
Parent and Merger Sub in accordance with its terms, subject to
the Bankruptcy and Equity Exception.
Section 4.3.
No
Violation
.
(a) The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby
will not, conflict with or result in any violation of, or
constitute a default (with or without notice or lapse of time,
or both) under, or give rise to a right of, or result by its
terms in the, termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit
under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or create any
obligation to make a payment to any other Person under, or
result in the creation of a Lien on, or the loss of, any assets
of Parent or any of its Subsidiaries pursuant to: (i) any
provision of the organizational documents of Parent, Merger Sub
or any of their respective Subsidiaries; or (ii) subject to
obtaining or making the consents, approvals, Orders,
authorizations, registrations, declarations and filings referred
to in
Section 4.3(b)
of the Parent Disclosure
Schedule, any Contract to which Parent, Merger Sub or any of its
Subsidiaries is a party or by which any of their respective
properties or assets is bound or any Order or Law applicable to
Parent, Merger Sub or any of their respective Subsidiaries or
their respective properties or assets, except, in the case of
this clause (ii), as would not prevent or delay the consummation
of the transactions contemplated hereby.
(b) Except as set forth on
Section 4.3(b)
of
the Parent Disclosure Schedule, no consent, approval, Order or
authorization of, or registration, declaration or filing with,
any Governmental Entity or any other Person is required by or
with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or
the consummation of the Merger and the other transactions
contemplated hereby, except for the Applicable Consents.
Section 4.4.
Litigation
.
There
is no Litigation pending or, to the knowledge of Parent or
Merger Sub, threatened against Parent, Merger Sub or any of
their Affiliates or any of their respective officers or
directors (in such capacity) or any of their respective
businesses or assets, at law or in equity, before or by any
Governmental Entity, whether or not covered by insurance, except
as would not reasonably be expected to have a Material Adverse
Effect on Parent.
Section 4.5.
Available
Funds
.
Assuming the accuracy of the
representations and warranties set forth in Section 3.2 and
the Companys performance of its obligations, covenants and
agreements contained in
Section 5.1
, Parent and
Merger Sub will have as of the Effective Time available to them,
when combined with the Companys cash and cash equivalents,
all funds necessary to consummate the Merger and the other
transactions contemplated hereby and to perform their
obligations hereunder. As of the date of this Agreement,
(i) the Equity Commitment Letter has not been amended or
modified, and (ii) the commitments contained therein have
not been withdrawn or rescinded in any respect. As of the date
of this Agreement, the Equity Commitment Letter, in the form so
delivered, is in full force and effect and is a legal, valid and
binding obligation of Parent and Sponsor. No event has occurred
which, with or without notice, lapse of time or both, would
constitute a default or breach on the part of Parent, Merger Sub
or Sponsor under any term or condition of the Equity Commitment
Letter.
Section 4.6.
No
Brokers or Finders
.
No financial advisor,
broker or finder is entitled to any fee or commission with
respect to the transactions contemplated hereby based on
arrangements made by or on behalf of Parent or Merger Sub.
A-27
Section 4.7.
No
Prior Activities of Merger Sub
.
Except for
obligations or liabilities incurred in connection with its
incorporation or the negotiation and consummation of this
Agreement and the transactions contemplated hereby (including
any financing), Merger Sub has not incurred any obligations or
liabilities, and has not engaged in any business or activities
of any type or kind whatsoever, or entered into any agreements
or arrangements with any Person or entity. As of the Effective
Time, Merger Subs common stock will be the only class or
series of its capital stock that is issued and outstanding and
all of such stock shall be owned directly by Parent or by a
wholly-owned Subsidiary of Parent.
Section 4.8.
No
Ownership of Stock of Company
.
Neither
Parent, nor Sponsor, nor, to the knowledge of Parent, their
respective Affiliates, including Merger Sub, taken together as a
group, beneficially own in excess of 1% of the lesser of the
aggregate number of outstanding Company Common Stock and neither
Parent, nor Sponsor, nor to the knowledge of Parent, any of
their respective Affiliates, including Merger Sub, is or has
been deemed to be, within three years prior to the date of this
Agreement an interested stockholder or an
affiliate of an interested stockholder for purposes
of Chapter 110F of the General Laws of Massachusetts.
Section 4.9.
Solvency
.
Assuming
(a) that the Company is Solvent immediately prior to the
Effective Time, (b) the satisfaction of the conditions to
Parents and Merger Subs obligations to consummate
the Merger, or waiver of such conditions, (c) the accuracy
and completeness of the representations and warranties of the
Company set forth in
Article 3
(without giving
effect to any knowledge, materiality or Material Adverse
Effect on the Company qualifications or exceptions
contained therein or in the defined terms used therein) and
(d) that the Company financial statements set forth in the
SEC Reports fairly present in all material respects the
consolidated financial condition of the Company as of the end of
the periods covered thereby and the consolidated results of
operations of the Company for the periods covered thereby, and
after giving effect to the Merger, including the payment of the
aggregate Merger Consideration, payment of all amounts required
by this Agreement to be paid in connection with the consummation
of the Merger, and payment of all related fees and expenses
(with respect to fees and expenses of the Company incurred prior
to the Effective Time, assuming the material accuracy of the
estimates set forth on
Section 4.9
of the Company
Disclosure Schedule), each of Parent and the Surviving
Corporation will be Solvent as of the Effective Time and
immediately after the consummation of the Merger and the
transactions contemplated thereby. For the purposes of this
Agreement, the term
Solvent
when used with
respect to any Person means that, as of any date of
determination, (i) the amount of the fair saleable
value of the assets of such Person will, as of such date,
exceed (A) the value of all liabilities of such Person that
have been disclosed to, or are otherwise known to, Parent,
including contingent and other liabilities that have been
disclosed to, or are otherwise known to, Parent, as of such
date, as such terms are generally determined in accordance with
applicable Laws governing determinations of the insolvency of
debtors, and (B) the amount that will be required to pay
the known and probable liabilities of such Person on its
existing debts (including contingent and other liabilities that
have been disclosed to, or are otherwise known to, Parent) as
such debts become absolute and mature, (ii) such Person
will not have, as of such date, an unreasonably small amount of
capital for the operation of the businesses in which it is
engaged or proposed to be engaged following such date and
(iii) such Person will be able to pay its liabilities,
including contingent and other liabilities that have been
disclosed to, or are otherwise known to, Parent, as they mature.
For purposes of this definition, not have an unreasonably
small amount of capital for the operation of the businesses in
which it is engaged or proposed to be engaged and
able to pay its known liabilities, including contingent
and other liabilities that have been disclosed to, or are
otherwise known to, Parent, as they mature means that such
Person will be able to generate enough cash from operations,
asset dispositions or refinancing, or a combination thereof, to
meet such obligations as they become due.
Section 4.10.
Management
Arrangements
.
As of the date of this
Agreement, none of Parent, Merger Sub, Sponsor nor any of
Sponsors Affiliates, or, to the knowledge of Parent, any
of the other Affiliates of Parent or Merger Sub (other than
Sponsor and its Affiliates), has entered into any contract,
agreement, arrangement or understanding, oral or written, with
any of the officers or directors of the Company, or any Person
known by Parent to be an Affiliate of any director or officer of
the Company, that is currently in effect
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or that would become effective in the future (upon consummation
of this Agreement and transactions contemplated thereby or
otherwise) and that has not been disclosed to the board of
directors of the Company.
ARTICLE 5
PRE-CLOSING
COVENANTS
Section 5.1.
Covenants
of the Company
.
(a) During the period commencing on the date of this
Agreement and continuing until the Effective Time, except as
specifically contemplated and permitted by this Agreement,
described in
Section 5.1
of the Company Disclosure
Schedule or as otherwise approved in advance by Parent in
writing (such approval not to be unreasonably withheld,
conditioned or delayed);
provided
,
however
, that
consent of Parent shall be deemed to have been given if Parent
does not object within five (5) Business Days from the date
on which written request for such consent is provided by the
Company to Parent:
(i)
Ordinary Course
.
The Company
shall, and shall cause each of its Subsidiaries to, conduct its
business in all material respects in the ordinary and usual
course of business consistent with past practice. The Company
shall, and shall cause each of its Subsidiaries to, use its
commercially reasonable efforts to: (A) preserve
substantially intact the business organization of the Company
and its Subsidiaries and their respective material rights and
material properties, (B) to keep available the services of
their respective present officers and key employees,
(C) operate in all material respects in compliance with all
applicable Laws, (D) maintain and preserve, in all material
respects, the current relationships of the Company and its
Subsidiaries with customers, licensees, suppliers and other
Persons with which the Company and its Subsidiaries has a
business relationship and (E) maintain in effect the
current insurance coverage set forth on
Schedule 3.18
of the Company Disclosure Schedule maintained by the Company
or any of its Subsidiaries or comparable replacement insurance
coverage.
(ii)
Governing Documents
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, make any change or amendment to its articles of
organization, bylaws or similar organizational documents.
(iii)
Dividends
.
The Company shall
not, and shall not permit any of its Subsidiaries to, declare,
set aside, pay or make any dividend or other distribution or
payment (whether in cash, stock or other property) with respect
to any shares of its capital stock or any other voting
securities, other than dividends and distributions by a
Subsidiary to the Company or another Subsidiary of the Company.
(iv)
Changes in Share Capital
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, (i) purchase or redeem any shares of its capital stock
or any other securities or any rights, warrants or options to
acquire any such shares or other securities, (ii) adjust,
split, reverse split, combine, subdivide or reclassify any of
its capital stock or any other securities or (iii) make any
other changes in its capital structure (except, in the case of
clauses (i) and (iii) only, the issuance of the
Conversion Shares, the issuance of the Company Common Stock
pursuant to the exercise of Company Stock Options outstanding as
of the close of business on the Capitalization Date, the
settlement of any Company RSUs outstanding as of the close of
business on the Capitalization Date, the forfeiture of any
Company Restricted Shares, the surrender of shares of Company
Common Stock to the Company or the withholding of shares of
Company Common Stock by the Company to cover withholding
obligations).
(v)
Company Benefit Plans
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, (i) amend, suspend or terminate any provision of any
Company Benefit Plan, except to the extent necessary to comply
with applicable Law, (ii) adopt or enter into any
arrangement that would be a Company Benefit Plan,
(iii) increase or accelerate the vesting or payment of the
compensation, bonus opportunities or severance, change in
control or other benefits of or grant or pay any benefits to,
any director, officer or employee or any other Person, or take
any similar action, except, in the case of this clause (iii),
(A) to the extent required under the terms of any
agreements, trusts, plans, funds or other arrangements existing
as of the date of this Agreement and listed on
Section 3.13(a)
of the Company
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Disclosure Schedule, (B) to the extent required by
applicable Law or (C) in the ordinary course of business,
consistent with past practice, to non-executive employees of the
Company or its Subsidiaries who receive less than $125,000 per
year in base salary from the Company and its Subsidiaries, and
(iv) grant any severance or termination pay to any present
or former director, officer or employee or consultant of the
Company or its Subsidiaries, other than as required pursuant to
a Company Benefit Plan in effect as of the effectiveness of this
Agreement and disclosed in the Company Disclosure Schedule.
(vi)
Issuance of
Securities
.
Except for the issuance of
Company Common Stock upon the exercise of Company Stock Options,
the settlement of Company RSUs, and the issuance of the
Conversion Shares, in each case outstanding as of the close of
business on the Capitalization Date in accordance with their
current terms, the Company shall not, and shall not permit any
of its Subsidiaries to: (i) grant, issue or sell any shares
of capital stock or any other securities, including Company
Voting Debt, (ii) issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls or commitments of any character
whatsoever relating to, or enter into any Contract with respect
to the issuance of, any shares of capital stock or any other
securities, including Company Voting Debt or (iii) take any
action under or amend the terms of the Company Stock Plans,
Employee Benefit Plans or otherwise with respect to Company
Stock Options, Company Restricted Shares, Company RSUs, or
options under the Company ESPP that is inconsistent with the
treatment contemplated by
Section 1.9
.
(vii)
Indebtedness
.
The Company
shall not, and shall not permit any of its Subsidiaries to,
incur or otherwise become liable for any Indebtedness or
guarantee Indebtedness of another Person other than borrowings
under Second Amended and Restated Loan Agreement by and between
Bank of America, N.A., the Company and the Subsidiaries of the
Company therein named (as amended from time to time, the
Credit Agreement
) so long as the aggregate
outstanding borrowings or other extensions of credit thereunder
do not exceed $27,500,000.
(viii)
No Acquisitions
.
Except for
(A) purchases of inventory items or supplies in the
ordinary course of business consistent with past practice or
(B) capital expenditures in compliance with
Section 5.1(a)(xii)
, the Company shall not, and
shall not permit any of its Subsidiaries to, acquire:
(i) by merging or consolidating with, or by purchasing
stock or assets of, or by making any investment in or loan or
advance to, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof, (ii) any real property or
(iii) assets with an aggregate value greater than $100,000.
(ix)
No Dispositions
.
The Company
shall not, and shall not permit any of its Subsidiaries to,
lease, sublease, license, mortgage or otherwise encumber, or
sell, transfer or otherwise dispose of or compromise or release,
any of its material properties, rights or assets (including
capital stock or other equity interests of Subsidiaries of the
Company), except for sales of inventory in the ordinary course
of business consistent with past practice, or fail to renew or
extend the term of any Real Property Lease where the option or
right to renew or extend the term thereof is required to be
renewed or extended prior to the Effective Time.
(x)
Taxes
.
The Company shall not,
and shall not permit any of its Subsidiaries to, make revoke or
change any material Tax election, change in any material respect
any method of Tax accounting or Tax accounting period, settle or
compromise any audit, claim or assessment or material liability
for Taxes, enter into any closing agreement, file any amended
Tax Return involving a material amount of additional Tax,
surrender any right to claim a Tax refund or consent to any
extension or waiver of the statue of limitations period
applicable to any income and any other material Taxes, in each
case except as required by GAAP or applicable Law.
(xi)
Settlement of Litigation
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, settle any Litigation, except where such settlement
(i) involves potential payments of less than $250,000, in
the aggregate, by the Company or its Subsidiaries,
(ii) does not require the Company or any of its
Subsidiaries to admit liability, (iii) does not involve the
Company or any of its Subsidiaries consenting to non-monetary
relief and (iv) is not expected to have a material impact
on Parent or the Surviving Corporation after the Closing Date.
A-30
(xii)
Capital Expenditures
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, make or commit to make any capital expenditures in respect
of any capital expenditure project, other than: (i) as
contemplated by the capital expenditure budget attached as
Section 5.1(a)(xii)
of the Company Disclosure
Schedule, (ii) those capital expenditures for the repair or
replacement of the Companys property that has been damaged
or destroyed and is funded by the proceeds of any casualty
insurance covering such property and (iii) other capital
expenditures not exceeding $250,000 in the aggregate.
(xiii)
Accounting Methods
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, implement or adopt any change in its material financial or
tax accounting principles, practices or methods, except to the
extent required by GAAP, the rules or policies of the Public
Company Accounting Oversight Board or
Regulation S-X
under the Securities Act.
(xiv)
Material Contracts
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, (i) modify, amend, terminate or waive any material
rights under any Material Contract, (ii) enter into any
Contract, which if entered into prior to the date of this
Agreement would have been a Material Contract (other than in the
ordinary course of business consistent with past practices and
not of the type referred to in
Section 3.15(a)(i)
,
(iv)
,
(v)
,
(vi), (viii)
,
(x)
or
(xi)
) or (iii) enter into any new Contract that
contains a change of control or similar provision in favor of
the other party or parties thereto or would otherwise require a
payment to or give rise to any rights to such other party or
parties in connection with the transactions contemplated by this
Agreement.
(xv)
Confidentiality
Agreements
.
The Company shall not, and shall
not permit any of its Subsidiaries to (A) waive, release,
grant or transfer any right of material value, other than in the
ordinary course of business and consistent with past practice or
(B) agree to modify in any material adverse respect, or
fail to enforce or consent to any material matter with respect
to which the Companys or its Subsidiaries consent is
required, under any material confidentiality, standstill or
similar agreement to which the Company or its Subsidiaries are
party.
(xvi)
WARN
.
The Company shall not,
and shall not permit any of its Subsidiaries to, effectuate or
permit a plant closing or mass layoff,
as those terms are defined in WARN, affecting in whole or in
part any site of employment, facility, operating unit or
employee of the Company or any of its Subsidiaries.
(xvii)
Dissolution and
Reorganization
.
The Company shall not, and
shall not permit any of its Subsidiaries to, adopt a plan or
agreement of complete or partial liquidation or dissolution,
consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries.
(xviii)
SEC Filings
.
The Company
shall file its reports, statements and other documents with the
SEC as required under the Securities Act or the Exchange Act or
the rules and regulations promulgated thereunder.
(xix)
No Related Actions
.
The
Company shall not, and shall not permit any of its Subsidiaries
to, authorize or enter into any agreement, commitment, or
arrangement to do any of the foregoing set forth in
Sections 5.1(a)(ii)
-
(xviii)
.
(b)
No Control of the Companys
Business
.
Parent acknowledges and agrees
that: (i) nothing contained in this Agreement shall give
Parent, directly or indirectly, the right to control or direct
the Companys or the Companys Subsidiaries
operations prior to the Effective Time and (ii) prior to
the Effective Time, the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and
supervision over its and its Subsidiaries respective
operations.
Section 5.2.
Proxy
Statement; Company Stockholders Meeting
.
(a) As soon as practicable (and, in any event, within
fifteen (15) Business Days) after the date of this
Agreement, the Company shall prepare and file with the SEC a
preliminary proxy statement and proxy card with respect to the
Merger and the other transactions contemplated hereby
(collectively, including all amendments or supplements thereto,
the
Proxy Statement
). Subject to
Section 5.5,
the Board of Directors,
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shall include in the Proxy Statement the recommendation of the
Board of Directors that the stockholders of the Company vote to
approve the Merger and this Agreement (the
Company
Recommendation
) and will use reasonable best efforts
to include the written opinion referred to in
Section 3.21
. Parent, Merger Sub and the Company
shall cooperate with each other and provide reasonable
assistance to each other in connection with the preparation of
the Proxy Statement and shall promptly provide to each other any
information regarding such party that is necessary to include in
the Proxy Statement. Without limiting the generality of the
foregoing, (i) the Company shall provide Parent a
reasonable opportunity to review and comment on the Proxy
Statement and shall consider in good faith and include such
comments reasonably proposed by Parent and (ii) each of
Parent and Merger Sub will furnish to the Company in writing the
information relating to it required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in
the Proxy Statement. Parent shall ensure that such information
supplied by it in writing specifically for inclusion in the
Proxy Statement will not, on the date it is first mailed to the
stockholders of the Company and at the time of the Company
Stockholders Meeting, contain any statement which, at the time
and in the light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of a proxy for the same meeting or subject
matter which has become false or misleading. Subject to
Parents and Merger Subs compliance with this
Section 5.2(a)
, the Company shall use its reasonable
best efforts to have the Proxy Statement cleared by the SEC and
mailed to its stockholders as promptly as practicable after its
filing with the SEC;
provided
, however, that the Company
shall not be required to mail the Proxy Statement to its
stockholders or to call, give written notice of, convene and
hold the Company Stockholders Meeting on or prior to the Go-Shop
Period End Date. The Company shall, as promptly as practicable
after receipt thereof, provide Parent with copies of all written
comments, and advise Parent of all oral comments, with respect
to the Proxy Statement received from the SEC and the Company
shall provide Parent a reasonable opportunity to review and
comment on such comments to the Proxy Statement and shall
consider in good faith and include such comments reasonably
proposed by Parent. If, at any time prior to the Effective Time,
any information relating to the Company, or any of its
Subsidiaries, officers or directors, should be discovered by
Parent or the Company that is required to be set forth in an
amendment or supplement to the Proxy Statement so that such
document would not include any statement which, at the time and
in the light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of a proxy for the same meeting or subject
matter which has become false or misleading, then the party that
discovers such information shall promptly notify the other
parties hereto and, to the extent required by Law, the Company
shall promptly file with the SEC and disseminate to its
stockholders an appropriate amendment or supplement describing
such information. Prior to filing or mailing the Proxy Statement
(or any amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, the Company shall
provide Parent with a reasonable opportunity to review and
comment on such document or response and consider in good faith
and include such comments reasonably proposed by Parent. The
Company shall ensure that the Proxy Statement (i) will not,
on the date that it is first mailed to stockholders of the
Company and as of the time of the Company Stockholders Meeting,
contain any statement which, at the time and in the light of the
circumstances under which it is made, is false or misleading
with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements therein
not false or misleading or necessary to correct any statement in
any earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter which has become
false or misleading, and (ii) comply as to form in all
material respects with the applicable requirements of the
Exchange Act. Notwithstanding the foregoing, the Company shall
not be responsible for information supplied by or on behalf of
Parent or Merger Sub in writing specifically for inclusion in
the Proxy Statement.
(b) The Company shall use its reasonable best efforts to
have the SEC confirm that it has no further comments on the
Proxy Statement as soon as reasonably practicable after its
filing with the SEC and, as soon as reasonably practicable after
the SEC confirms that it has no further comments on the Proxy
Statement, duly take, in accordance with all applicable Law, the
articles of organization and bylaws of the Company and the
A-32
Rules of The Nasdaq Global Market, all action necessary to call,
give written notice of, convene and hold a meeting of its
stockholders (the
Company Stockholders
Meeting
) for the purpose of obtaining the Company
Requisite Stockholder Vote with respect to the transactions
contemplated hereby and shall take all reasonable and lawful
action to solicit the approval and adoption of this Agreement by
the Company Requisite Stockholder Vote;
provided
,
however, that the Company will not be required to mail the Proxy
Statement to its stockholders, call, give written notice of,
convene and hold the Company Stockholders Meeting on or prior to
the Go-Shop Period End Date. The Company (and its Board of
Directors and any special committee thereof formed to evaluate
an Acquisition Proposal): (a) shall take all action that is
reasonable and lawful to solicit from the stockholders of the
Company proxies in favor of this Agreement and the Merger and
shall take all other action reasonably necessary or advisable to
secure the Company Requisite Stockholder Vote in the manner
required by the rules of The Nasdaq Global Market and the MBCA
to obtain such approvals and (b) subject to
Section 5.5(f)
and
Section 5.5(g)
, shall
not withhold, withdraw or modify, or publicly propose or resolve
to withhold or modify, the Company Recommendation.
Notwithstanding anything to the contrary contained in this
Agreement, the Company, after consultation with Parent, may
adjourn or postpone the Company Stockholders Meeting
(i) with Parents consent, as necessary to ensure that
any required supplement or amendment to the Proxy Statement is
provided to the Companys stockholders within a reasonable
amount of time in advance of the Company Stockholders Meeting,
(ii) if as of the time for which the Company Stockholders
Meeting is originally scheduled (as set forth in the Proxy
Statement) there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company
Stockholders Meeting or (iii) for the duration and pendency
of any Notice Period then in effect and for a reasonable time
thereafter (not to exceed two (2) Business Days) in order
to permit notification to be sent to the Companys
stockholders regarding such adjournment or postponement
(
provided
, however, this clause (iii) shall not
apply if Parent, in its sole and absolute discretion, elects in
a written notice to the Company to forego any such pending
Notice Period). For the avoidance of doubt, unless this
Agreement is terminated pursuant to
Section 7.1
, the
Company shall be obligated to undertake the foregoing actions
described in this
Section 5.2
irrespective of
whether a Change in Company Recommendation shall have occurred.
Parent and the Company shall each be responsible to pay fifty
percent (50%) of any and all fees and expenses incurred,
indirectly or directly, by the Company in connection with the
filing, printing and mailing of the Proxy Statement and the
holding of the Company Stockholders Meeting, unless this
Agreement is terminated pursuant to
Section 7.1(b)
,
7.1(d), 7.1(e)
,
7.1(g)
or
7.1(h)
, in which
case the Company shall be solely responsible for such fees and
expenses.
Section 5.3.
Further
Information
.
Prior to the Effective Time, the
Company shall, and shall cause its Subsidiaries to, upon
reasonable notice, afford Parent and its counsel, accountants,
consultants, other authorized Representatives and prospective
lenders, financing sources and their Representatives reasonable
access, during normal business hours, subject in each case to
such reasonable limitations on the time of day and the manner of
the access to maintain confidentiality, to the officers,
employees, properties, books and records of the Company and its
Subsidiaries;
provided
, that Parent and its
Representatives shall conduct their review in such a manner as
not to unreasonably interfere with the business or operations of
the Company and its Subsidiaries; and
provided
further
, however, that the foregoing shall not require
the Company to permit any inspection or disclose any information
that in the reasonable judgment of the Company would result in
the disclosure of any trade secrets of third parties in
violation of a confidentiality obligation of the Company or any
of its Subsidiaries. Without limitation of the foregoing, the
Company shall cause its and its Subsidiaries officers and
employees to furnish such financial and operating data and other
information as may be reasonably requested by Parent from time
to time. All of the requirements of this
Section 5.3
shall be subject to: (i) any prohibitions or
limitations of applicable Law, (ii) the terms of any
Contract entered into prior to the date hereof to which the
Company or any of its Subsidiaries is a party to the extent
disclosure thereof to Parent would reasonably be expected to
violate the terms of such Contract (it being agreed that the
parties shall use their reasonable efforts to cause such
information to be provided in a manner that does not cause such
violation or prohibition), (iii) any restrictions which the
Company reasonably believes are necessary to preserve the
attorney-client privilege of the Company or any of its
Subsidiaries and (iv) the Confidentiality Agreement.
A-33
Section 5.4.
Reasonable
Best Efforts
.
(a) Subject to
Sections 5.4(c)
and
5.5
,
each of the Company and Parent shall reasonably cooperate with
and assist the other party, and shall (and shall cause their
respective Subsidiaries and Representatives to) use all of their
respective reasonable best efforts, to promptly: (i) take,
or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable
Law to consummate the transactions contemplated hereby as soon
as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of
information, applications and other documents and
(ii) obtain and maintain all (A) approvals, consents,
registrations, permits, authorizations and other confirmations
required to be obtained from any other Person, including any
Governmental Entity, that are necessary, proper or advisable to
consummate the Merger and other transactions contemplated hereby
and (B) any notices or consents disclosed or required to be
disclosed on the Company Disclosure Schedule or required to
prevent the occurrence of an event reasonably likely to have an
adverse effect on the Company or its Subsidiaries (or their
respective rights, properties or assets) after the Effective
Time, in each case, in the most expeditious manner practicable,
but in any event before the Termination Date. Subject to
Section 5.4(c)
, except as otherwise expressly
contemplated hereby, each of the Company and Parent shall not,
and shall cause its respective Subsidiaries not to, take any
action or knowingly omit to take any action within its
reasonable control where such action or omission would, or would
reasonably be expected to, result in (A) any of the
conditions to the Merger set forth in
Article 6
not
being satisfied prior to the Termination Date or (B) a
material delay in the satisfaction of such conditions.
(b) In furtherance and not in limitation of the foregoing,
as soon as reasonably practicable following the execution of
this Agreement, each party hereto shall (and/or, if applicable,
cause its ultimate parent to) file with the Antitrust Division
of the Department of Justice (the
DOJ
) and
the Federal Trade Commission (the
FTC
) a
Notification and Report Form relating to the Merger and the
transactions contemplated hereunder pursuant to the HSR Act, and
use commercially reasonable efforts to obtain early termination
thereunder;
provided
, however, that the parties shall not
be required to file such Notification and Report Forms until the
second Business Day after the Go-Shop Period End Date unless
Parent shall elect otherwise and notifies the Company in writing
a reasonable period of time prior to filing. Each party shall
promptly supply the other party with any information which may
be required in order to effectuate such filing and supply as
promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR
Act. Parent and the Company shall each pay fifty percent (50%)
of all filing fees under the HSR Act.
(c) In connection with this
Section 5.4
, the
parties hereto shall (and/or, if applicable, cause its ultimate
parent to) (i) cooperate in all respects with each other in
connection with any filing, submission, investigation or inquiry
related to the Merger and other transactions contemplated
hereby, (ii) promptly inform the other party of any
communication (written or oral) received by such party from, or
given by such party to, the DOJ, FTC or any other Governmental
Entity and of any material communication (written or oral)
received or given in connection with any proceeding by a private
party, in each case, regarding any of the transactions
contemplated hereby, (iii) have the right to review in
advance, and to the extent practicable, each shall consult the
other on, any filing made with, or written materials to be
submitted to, the DOJ, the FTC or any other Governmental Entity
or, in connection with any proceeding by a private party, any
other Person, in connection with any of the transactions
contemplated hereby and (iv) consult with each other in
advance of any meeting, discussion, telephone call or conference
with the DOJ, the FTC or any other Governmental Entity or, in
connection with any proceeding by a private party, with any
other Person, and to the extent not expressly prohibited by the
DOJ, the FTC or any other Governmental Entity or Person, give
the other party the opportunity to attend and participate in
such meetings and conferences, in each case, regarding any of
the transactions contemplated hereby;
provided
, that all
such obligations pursuant to clause (i)-(iv) above shall be
deemed void or limited if or to the extent such actions would in
the opinion of the applicable partys outside legal counsel
violate any applicable Law; and
provided
, further, that
no party shall be required to, and the Company (and, with
respect to the effects listed in clauses (i) and
(ii) below, Parent) shall not and shall cause its
Subsidiaries not to (without the prior written consent of Parent
or the Company, as the case may be), enter into any agreements
or commitments or take any other actions to resolve any such
objections or actions if such agreement, commitment or other
action would reasonably be expected, individually or in the
aggregate,
A-34
to (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) result in any of the
transactions contemplated by this Agreement being rescinded
following the Effective Time, (iii) limit or otherwise
adversely affect the right of Parent (or any Affiliate thereof)
to own or vote any shares of capital stock of the Surviving
Corporation, control the Surviving Corporation or operate all or
any portion of the business of the Company and its Subsidiaries
or (iv) require or compel the Company, any of the
Companys Subsidiaries, Parent or any Affiliate of Parent
to dispose of all or any portion of its properties or assets.
The parties hereto may, as each deems advisable and necessary,
reasonably designate any competitively sensitive material
provided to the other under this
Section 5.4
as
Outside Counsel Only
. Such materials and the
information contained therein shall be given only to the outside
legal counsel (and experts and consultants retained by such
outside counsel) of the recipient and will not be disclosed by
such outside counsel to employees, officers or directors of the
recipient unless express permission is obtained in advance from
the source of the materials (the Company or Parent, as the case
may be) or its legal counsel. Notwithstanding anything to the
contrary in this
Section 5.4
, materials provided to
the other party or its counsel may be redacted to remove
references concerning the valuation of the Company and its
Subsidiaries.
Section 5.5.
Acquisition
Proposals
.
(a) Notwithstanding any other provision of this Agreement
to the contrary, during the period beginning on the date of this
Agreement and continuing until 11:59 p.m., Boston,
Massachusetts time, on May 12, 2010 (the
Go-Shop
Period End Date
), the Company and its Subsidiaries and
their respective Representatives shall have the right, acting
under the direction of the Companys Board of Directors, to
directly or indirectly: (i) initiate, solicit and encourage
(including in any press release announcing this transaction),
Acquisition Proposals, including by way of making public
disclosure relating to such solicitation and by way of providing
access to non-public information to any Person (each a
Solicited Person
), subject to first entering
into an Acceptable Confidentiality Agreement with each such
Solicited Person;
provided
, that the Company shall
promptly (and in any event within 48 hours) provide or make
available to Parent any non-public information concerning the
Company or its Subsidiaries that is provided or made available
to any Solicited Person given such access which was not
previously provided or made available to Parent; and
(ii) enter into and maintain, or participate in,
discussions or negotiations with respect to Acquisition
Proposals or otherwise cooperate with or assist or participate
in, or facilitate any such inquiries, proposals, discussions or
negotiations.
(b) Subject to
Sections 5.5(c), (d),
and
(f)
, from the Go-Shop Period End Date until the Effective
Time or, if earlier, the termination of this Agreement in
accordance with
Article 7
, the Company shall not,
and shall cause its Subsidiaries and its and their respective
officers and directors not to, and shall instruct and use
reasonable best efforts to cause its and its Subsidiaries
other Representatives not to, directly or indirectly:
(i) initiate, solicit, knowingly facilitate or encourage
(including by way of providing non-public information or access
to its employees to initiate, solicit, knowingly facilitate or
encourage an Acquisition Proposal) the submission of any
Acquisition Proposal (or inquiries or requests that relate
thereto or could reasonably be expected to lead thereto) or
engage in any discussions or negotiations with respect thereto
(or that could reasonably be expected to lead to an Acquisition
Proposal) or otherwise cooperate with or assist or participate
in or facilitate any such requests, proposals, offers,
discussions or negotiations, (ii) take any action to make
the provisions of any moratorium, control
share, fair price, affiliate
transactions, business combination or other
anti-takeover laws and regulations of any state, including,
without limitation, the provisions of Chapter 110F of the
Massachusetts General Laws, as amended, inapplicable to any
transactions contemplated by an Acquisition Proposal,
(iii) adopt, approve or recommend, or resolve to or
publicly propose to adopt, approve or recommend, an Acquisition
Proposal, or enter into any merger agreement, letter of intent,
agreement in principle, acquisition agreement or agreement
(other than an Acceptable Confidentiality Agreement) providing
for or relating to an Acquisition Proposal or consummate any
such transaction, or enter into any agreement or understanding
requiring the Company to abandon, terminate or fail to
consummate this Agreement or the transactions contemplated
hereby or breach its obligations hereunder, or
(iv) terminate, amend, release, modify or fail to enforce
any provision of, or grant any permission, waiver or request
under, any standstill, confidentiality or similar agreement
entered into by the Company in respect of or in contemplation of
an Acquisition Proposal, or propose to do any of the foregoing.
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(c) If at any time following the Go-Shop Period End Date
and prior to obtaining the Company Requisite Stockholder Vote,
the Company or any of its Subsidiaries has received a written
Acquisition Proposal from a third party (other than a written
Acquisition Proposal that was intentionally or knowingly
solicited in violation of this Agreement or that directly or
indirectly resulted from a material breach of this
Section 5.5
) that (i) the Board of Directors
believes in good faith to be bona fide and (ii) the Board
of Directors determines in good faith, after consultation with
its outside financial and legal advisors, that the failure to
take such action would be inconsistent with or in violation of
the directors fiduciary duty under applicable Law and that
such Acquisition Proposal constitutes or could reasonably be
expected to result in a Superior Proposal, then, the Company may
(A) furnish information with respect to the Company to the
Person making such Acquisition Proposal and (B) participate
in discussions or negotiations (including, as a part thereof,
making any counterproposals) with the Person making such
Acquisition Proposal regarding such Acquisition Proposal;
provided
, that the Company (x) shall not, and shall
not allow any of its Subsidiaries or its or their respective
Representatives to, disclose or make available any non-public
information to such Person without first entering into an
Acceptable Confidentiality Agreement, and (y) will promptly
(and in any event within 48 hours) provide or make
available to Parent any nonpublic information concerning the
Company provided or made available to such other Person which
was not previously provided or made available to Parent.
(d) (i) Notwithstanding the provisions of
Section 5.5(b)
, the Company may take any of the
actions described in
Section 5.5(c)
from and after
the Go-Shop Period End Date and prior to obtaining the Company
Requisite Stockholder Vote with respect to any party or any of
its Affiliates (each such party, a
Continuing
Party
) that has made a written Acquisition Proposal
which was received by the Company after the date hereof and
prior to the Go-Shop Period End Date and with whom the Company
is having ongoing discussions or negotiations as of the Go-Shop
Period End Date regarding such Acquisition Proposal,
provided
that, in each case, the Board of Directors
believes in good faith that such Acquisition Proposal is bona
fide and determines in good faith, after consultation with its
outside financial and legal advisors, that such Acquisition
Proposal constitutes or would reasonably be expected to result
in a Superior Proposal. Any determination by the Board of
Directors that any such Acquisition Proposal received prior to
the Go-Shop Period End Date meets the requirements described in
this
Section 5.5(d)(i)
shall be made not later than
48 hours after the Go-Shop Period End Date. No later than
72 hours following the Go-Shop Period End Date, the Company
shall notify Parent, in writing, of the identity of each
Continuing Party and shall provide Parent a copy of each
Acquisition Proposal received from any Continuing Party. From
and after the Go-Shop Period End Date, the Company shall keep
Parent reasonably informed on a current basis (and in any event
within 24 hours) as of the status of any material
developments, modifications, discussions and negotiations
concerning all Acquisition Proposals from Continuing Parties.
(ii) Notwithstanding anything contained in this
Section 5.5(d)
to the contrary, any Continuing Party
shall cease to be a Continuing Party for all purposes under this
Agreement at such time as its Acquisition Proposal fails to
satisfy the requirements of
Section 5.5(c)(i)
and
(ii)
or otherwise expires or is withdrawn. The
Company shall promptly (and in any event within 24 hours)
notify Parent in writing when a Continuing Party ceases to be a
Continuing Party. Subject to
Section 5.5(c),
at the
Go-Shop Period End Date, other than with respect to Continuing
Parties, the Company shall, and shall cause its Subsidiaries and
Representatives to, immediately cease and cause to be terminated
any solicitation, encouragement, discussion or negotiation with
any Person conducted theretofore by the Company, its
Subsidiaries or any of their respective Representatives with
respect to any Acquisition Proposal and use its (and will cause
its Subsidiaries and their respective Representatives to use
their) commercially reasonable efforts to cause to be returned
or destroyed all confidential information provided or made
available to such Person on behalf of the Company.
(e) After the Go-Shop Period End Date, the Company shall
promptly (and in any event within 48 hours) notify Parent
in writing if it receives (or after it becomes aware that one of
its Representatives has received): (A) an Acquisition
Proposal from a Person or group of related Persons (other than a
Continuing Party) or written or verbal indication that such
Person or group is considering making an Acquisition Proposal,
including the material terms and conditions thereof and the
identity of the Person making or proposing to make such
Acquisition Proposal, to the extent known, (B) any request
by any Person or group of related Persons for non-public
information relating to the Company other than requests in the
ordinary course of
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business, consistent with past practices, and reasonably
believed by the Company to be unrelated to an Acquisition
Proposal or (C) any inquiry or request for discussions or
negotiations regarding any Acquisition Proposal by any Person or
group of related Persons. Without limiting the foregoing, the
Company shall inform Parent in writing within 48 hours, in
the event that it determines to begin providing information or
engaging in discussions or negotiations concerning an
Acquisition Proposal pursuant to
Section 5.5(c)
. The
Company shall keep Parent reasonably informed on a current basis
(and in any event within 24 hours) as to the status of any
material developments, modifications, discussions, negotiations
concerning all Acquisition Proposals from any such Persons.
(f) Subject to
Section 5.5(g)
, the Board of
Directors shall not directly or indirectly (i) withdraw,
withhold, qualify or modify in a manner adverse to Parent,
publicly propose or resolve to withhold, withdraw, qualify or
modify in a manner adverse to Parent, the Company
Recommendation, (ii) fail to include, or publicly propose
not to include, the Company Recommendation in the Proxy
Statement, (iii) publicly propose to accept an Acquisition
Proposal (iv) after the Go-Shop Period End Date, fail to
publicly reaffirm the Company Recommendation within
48 hours after Parent so requests in writing in response to
an Acquisition Proposal that has been publicly made or publicly
disclosed or announced and not withdrawn;
provided
, that
the Company shall not be required to publicly reaffirm the
Company Recommendation during any pending Notice Period; and
provided further
, the foregoing proviso shall not apply
if Parent, in its sole and absolute discretion, elects in a
written notice to the Company to forego any such pending Notice
Period), or (v) fail to recommend against any Acquisition
Proposal subject to Regulation 14D under the Exchange Act
(whether or not applicable) in a Solicitation/Recommendation
Statement filed on
Schedule 14D-9
or other public communication by or on behalf of the Company
with respect to such Acquisition Proposal (it being understood
and agreed that a stop, look and listen or similar
communication of the type contemplated by
Rule 14d-9(f)
under the Exchange Act shall not constitute a failure for
purposes of clause (iv) above or this clause (v)) (each of
the actions or omissions described in clauses (i) through
(v) above, a
Change in Company
Recommendation
);
provided
, that at any time
prior to obtaining the Company Requisite Stockholder Vote, if
the Company receives an Acquisition Proposal (including from a
Continuing Party) after the date hereof and the Board of
Directors concludes in good faith, after consultation with its
outside financial and legal advisors, that such Acquisition
Proposal constitutes a Superior Proposal and that the failure to
effect a Change in Company Recommendation would be inconsistent
with the fulfillment of its fiduciary duties under applicable
Law, the Board may (i) cause the Company to terminate this
Agreement pursuant to
Section 7.1(h)
to concurrently
enter into a definitive agreement with respect to such Superior
Proposal
and/or
(ii) effect a Change in Company Recommendation;
provided
, however, that the Company shall not terminate
this Agreement pursuant to the foregoing clause (i) and any
purported termination pursuant to the foregoing clause (i)
shall be void and of no force and effect, unless concurrently
with such termination the Company pays the Termination Fee
payable pursuant to
Section 7.2(c)
;
provided
,
further
, that the Company may not terminate this
Agreement pursuant to the foregoing clause (i) and the
Board of Directors may not effect a Change in Company
Recommendation pursuant to the foregoing clause (ii) unless
the Company shall have provided prior written notice to Parent,
at least four (4) Business Days in advance (the
Notice Period
), of its intention to effect a
Change in Company Recommendation or terminate this Agreement to
enter into a definitive agreement with respect to such Superior
Proposal, which notice shall include a written summary of the
material terms and conditions of such Superior Proposal
(including the identity of the Person or group of Persons making
such Superior Proposal), and shall have contemporaneously
provided a copy of the relevant proposed transaction agreements
with the Person or group of Persons making such Superior
Proposal and any other material documents relating thereto.
During the Notice Period, the Company shall, and shall cause its
Representatives to, negotiate with Parent and Merger Sub in good
faith (to the extent Parent and Merger Sub desire to negotiate)
to make adjustments in the terms and conditions of this
Agreement and the Equity Commitment Letter, and the Board of
Directors shall take into account any changes to the financial
and other terms of this Agreement and the Equity Commitment
Letter proposed by Parent in response to any such written notice
by the Company in evaluating whether the Acquisition Proposal
ceases to constitute a Superior Proposal (it being understood
and agreed that any amendment to the financial terms or other
material terms of such Superior Proposal shall require a new
written notice by the Company and a new Notice Period, except
that such new Notice Period shall be two (2) Business Days;
and
provided
, further, that the Company shall not be
permitted
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to terminate this Agreement pursuant to the foregoing
clause (i) in order to accept a Superior Proposal (and any
purported termination pursuant to the foregoing clause (i)
shall be void and of no force and effect) if such Superior
Proposal was knowingly and intentionally solicited in violation
of this Agreement or that directly or indirectly resulted from a
material breach of this
Section 5.5
).
(g) Notwithstanding anything to the contrary contained in
this
Section 5.5
or elsewhere in this Agreement, the
Board of Directors may, prior to obtaining the Company Requisite
Stockholder Vote and solely in response to an Intervening Event,
effect a Change in Company Recommendation, if the Board of
Directors determines in good faith (after consultation with its
outside legal advisors) that the failure to take such action
would be inconsistent with the fulfillment of its fiduciary
duties;
provided
, however, that prior to taking such
action, (i) the Board of Directors shall have given Parent
at least four (4) Business Days prior written notice
of its intention to take such action and a description of the
Intervening Event, (ii) the Company shall, and shall cause
its Representatives to, negotiate with Parent and Merger Sub in
good faith (to the extent Parent and Merger Sub desire to
negotiate) to make adjustments in the terms and conditions of
this Agreement and the Equity Commitment Letter and
(iii) the Board of Directors shall have taken into account
any changes to the financial and other terms of this Agreement
proposed by Parent in response to any such written notice by the
Company and shall have determined in good faith, after
consultation with its outside legal advisors, that failure to
effect a Change in Company Recommendation in response to an
Intervening Event would be inconsistent with the directors
fiduciary duties under applicable Law.
(h) Nothing contained in this
Section 5.5
or
elsewhere in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position
contemplated by
Rule 14d-9
or
Rule 14e-2(a)
promulgated under the Exchange Act (whether or not applicable)
or from otherwise making any disclosure to its stockholders that
is required by applicable Law;
provided
, however, that
any communications to stockholders under such rules other than a
stop, look and listen or similar communication of
the type contemplated by
Rule 14d-9(f)
under the Exchange Act (whether or not applicable), an express
rejection of any applicable Acquisition Proposal or an express
reaffirmation of its recommendation in favor of the Merger,
shall be deemed to be a Change of Company Recommendation.
(i) For purposes of this
Section 5.5
,
Board or Board of Directors means the
Board of Directors of the Company or a special committee of the
Board of Directors appointed by the Board of Directors to
evaluate any Acquisition Proposal.
Section 5.6.
Indemnification;
Directors and Officers Insurance
.
(a) Without limiting any additional rights that any
director, officer, trustee, employee, agent, or fiduciary may
have under any employment or indemnification agreement or under
the respective articles of organization, certificates or
articles of incorporation or bylaws (or comparable
organizational documents) of the Company or any of its
Subsidiaries, for a period of six (6) years from and after
the Effective Time, Parent and the Surviving Corporation shall:
(i) indemnify and hold harmless current and former officers
and directors of the Company or any of its Subsidiaries, and any
Person prior to the Effective Time serving at the request of the
Company or a Subsidiary of the Company as a director or officer
(or similar fiduciary agent of another corporation, partnership,
trust, employee benefit plan or other enterprise), as provided
in the respective certificates or articles of incorporation or
bylaws (or comparable organizational documents) of the Company
or any of its Subsidiaries (collectively, the
Indemnified Persons
) to the fullest extent
authorized or permitted by applicable Law, as now or hereafter
in effect, in connection with any Claim and any judgments,
fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in
connection with or in respect of such judgments, fines,
penalties or amounts paid in settlement) resulting therefrom;
and (ii) promptly pay on behalf of each of the Indemnified
Persons, to the fullest extent authorized or permitted by
applicable Law, as now or hereafter in effect, any Expenses
incurred in defending, serving as a witness with respect to, or
otherwise participating in any Claim in advance of the final
disposition of such Claim, including payment on behalf of or
advancement to the Indemnified Person of any Expenses incurred
by such Indemnified Person in connection with enforcing any
rights with respect to such indemnification
and/or
advancement, in each case without the requirement of any bond or
other security, but subject to Parents or the Surviving
Corporations, as applicable, receipt of an undertaking by
or on behalf of such Indemnified Person,
A-38
if required or permitted by applicable Law, to repay such
Expenses if it is ultimately determined under applicable Law
that such Indemnified Person is not entitled to be indemnified.
The indemnification and advancement obligations of Parent and
the Surviving Corporation pursuant to this
Section 5.6(a)
shall extend to acts or omissions
occurring at or before the Effective Time and any Claim relating
thereto (including with respect to any acts or omissions
occurring in connection with the approval of this Agreement and
the consummation of the transactions contemplated hereby,
including the consideration and approval thereof and the process
undertaken in connection therewith and any Claim relating
thereto). All rights to indemnification and advancement
conferred hereunder shall continue as to a person who has ceased
to be a director or officer of the Company or the Subsidiaries
after the date hereof and shall inure to the benefit of such
persons heirs, executors and personal and legal
representatives. For purposes of this
Section 5.6(a)
: (x) the term
Claim
means any threatened, asserted, pending
or completed claim, proceeding, investigation or inquiry,
whether instituted by any party hereto, any Governmental Entity
or any other party, that any Indemnified Person in good faith
reasonably believes might lead to the institution of any such
claim, proceeding, investigation or inquiry, whether civil,
criminal, administrative, investigative or other, including any
arbitration or other alternative dispute resolution mechanism,
arising out of or pertaining to matters that relate to such
Indemnified Persons duties or service as a director or
officer of the Company or any of the Subsidiaries, at or prior
to the Effective Time at the request of the Company or any of
the Subsidiaries; and (y) the term
Expenses
means reasonable attorneys
fees and all other reasonable
out-of-pocket
costs, expenses and obligations (including, without limitation,
experts fees, travel expenses, court costs, retainers,
transcript fees, duplicating, printing and binding costs, as
well as telecommunications, postage and courier charges) paid or
incurred in connection with investigating, defending, being a
witness in or participating in at the request of Parent or
Surviving Corporation (including on appeal), or preparing to
investigate, defend, be a witness in or participate in at the
request of Parent or Surviving Corporation, any Claim for which
indemnification is authorized pursuant to this
Section 5.6(a)
, including any action relating to a
claim for indemnification or advancement brought by an
Indemnified Person. Neither Parent nor the Surviving Corporation
shall settle, compromise or consent to the entry of any judgment
in any Claim in respect of which indemnification has been sought
by such Indemnified Person hereunder unless: (i) such
settlement, compromise or judgment includes an unconditional
release of such Indemnified Person from all liability arising
out of such Claim, (ii) such Indemnified Person otherwise
consents thereto, or (iii) Parent or the Surviving
Corporation acknowledges that such Claim is subject to this
Section 5.6
.
(b) Prior to the Effective Time, the Company shall
purchase, and following the Effective Time, Parent and the
Surviving Corporation shall maintain in effect for a term of six
(6) years after the Effective Time, without any lapse in
coverage, one or more so called tail or
run-off directors and officers liability insurance
policies with respect to wrongful acts
and/or
omissions committed or allegedly committed by the Indemnified
Persons at or prior to the Effective Time (including, but not
limited to, any acts or omissions in connection with this
Agreement and the consummation of the transactions contemplated
hereby)
(D&O Insurance
). Such D&O
Insurance shall have a maximum premium of 300% of last
years annual premium for the Companys existing
directors and officers liability insurance policy (the
Premium Limit
), an aggregate coverage limit
over the term of such policy at least as great as the aggregate
annual coverage limit under the Companys existing
directors and officers liability insurance policy,
with a term of at least six (6) years and shall also be as
near as possible in all other material respects to such existing
policy; provided, however, that if the premium for six
(6) years of D&O Insurance on such terms will exceed
the Premium Limit, the Company may modify the term or coverage
amounts so long as the premium does not exceed the Premium Limit.
(c) Parent shall cause the Surviving Corporation to possess
sufficient assets in order for the Surviving Corporation to
fulfill its obligations under this Section 5.6, provided,
however, that to the extent the Surviving Corporation is unable
to fulfill its obligations hereunder, Parent shall assume all
such obligations. The provisions of this
Section 5.6
shall survive the consummation of the Merger for a period of
six years and are expressly intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Persons and
their respective heirs and representatives; provided, however,
that in the event that any claim or claims for indemnification
set forth in this
Section 5.6
are asserted or made
within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until
disposition of any and all such
A-39
claims. If Parent
and/or
the
Surviving Corporation, or any of their respective successors or
assigns (i) consolidates with or merges into any other
Person, or (ii) transfers or conveys all or substantially
all of their businesses or assets to any other Person, then, in
each such case, (A) to the extent necessary, a proper
provision shall be made so that the successors and assigns of
Parent
and/or
Surviving Corporation, as the case may be, shall assume the
obligations of Parent and Surviving Corporation set forth in
this
Section 5.6
and (B) prompt notice thereof
shall be provided to the Indemnified Persons.
(d) For a period of six (6) years from and after the
Effective Date, the articles of organization and by-laws of the
Surviving Corporation shall contain provisions no less favorable
with respect to indemnification, advancement of expenses and
exculpation of individuals who were directors and officers prior
to the Effective Time than are presently set forth in the
Companys restated articles of organization, as amended,
and bylaws, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective
Date in any manner that would adversely affect the rights
thereunder of any such individuals.
Section 5.7.
Public
Announcements
.
Subject to the Companys
rights under
Section 5.5(a)
, neither Parent nor the
Company shall issue any press release or otherwise make any
public statement with respect to the transactions contemplated
hereby without the prior written consent of the other (which
consent shall not be unreasonably withheld, conditioned or
delayed), unless Parent or the Company (as the case may be)
determines that the issuance of such press release or the making
of such other public statement is required by applicable Law or
by obligations pursuant to any applicable listing agreement with
any national securities exchange, in which case the party
required to make the release or announcement shall use its
reasonable best efforts to allow the other party reasonable time
to comment on such release or announcement in advance of such
issuance.
Section 5.8.
State
Takeover Laws
.
If any moratorium,
control share acquisition, fair price,
affiliate transaction, business
combination or similar Law is or shall become applicable
to the transactions contemplated hereby, then each of Parent,
Merger Sub the Company and the Board of Directors of the Company
shall, to the extent within their power or control, grant such
approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly
as practicable on the terms contemplated hereby and otherwise
act to minimize the effects of any such statute or similar Law
on the transactions contemplated hereby.
Section 5.9.
Notification
of Certain Matters
.
Parent shall use its
reasonable best efforts to give prompt written notice to the
Company, and the Company shall use its reasonable best efforts
to give prompt written notice to Parent, of: (a) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which such party is aware and that would be
reasonably likely to cause the conditions set forth in
Section 6.1, 6.2
or
6.3
not to be satisfied
or result in such satisfaction being materially delayed or
(b) any material failure of such party or of any officer,
director, employee or Representative thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement;
provided
,
however, that the delivery of any notice pursuant to this
Section 5.9
shall not limit or otherwise affect the
remedies available under this Agreement to the party giving or
receiving such notice; and
provided
further, that no
party shall have the right not to close the Merger or the right
to terminate this Agreement as a result of the failure of
delivery of such a notice by another party hereto if the
underlying breach would not result in such party having such
rights under the terms of
Articles 6
and
7
hereof.
Section 5.10.
Confidentiality
.
Each
of the Company and Parent acknowledges and confirms that
(a) the Company, Sponsor and Parent have entered into a
Confidentiality Agreement, dated February 19, 2010 (the
Confidentiality Agreement
), (b) all
information provided by a party hereto to another party hereto
pursuant to this Agreement is subject to the terms of the
Confidentiality Agreement and (c) the Confidentiality
Agreement shall remain in full force and effect in accordance
with its terms and conditions.
Section 5.11.
Employee
Matters
.
(a) Parent hereby agrees that, for a period of one year
immediately following the Effective Time, it shall, or it shall
cause the Surviving Corporation to, (i) provide each
employee of the Company and its Subsidiaries who remains
employed with the Surviving Corporation, Parent or any other
Affiliate of Parent (the
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Continuing Employees
) as of the Effective
Time, during such continued employment (if any), with at least
the same level of base salary, cash incentive compensation and
other cash variable compensation (on an aggregate, not
component-by-component,
basis) that was provided to each such Continuing Employee
immediately prior to the Effective Time, and (ii) provide
the Continuing Employees with employee benefits (other than
equity-based compensation) that are no less favorable,
determined in the aggregate on a
Plan-by-Plan
basis, than those provided to such Continuing Employees
immediately prior to the Effective Time (provided, that
Parents obligations under the preceding clauses (i)
and (ii) shall be limited to compensation and employee
benefits disclosed to Parent and its Representatives by the
Company not later than the date of this Agreement). The Company,
Parent and Merger Sub agree that this
Section 5.11
is not intended to, and does not, alter the at-will nature
of the employment of any Continuing Employee, to the extent that
the employment of such Continuing Employee prior to the
Effective Time is at-will in nature.
(b) From and after the Effective Time, Parent and its
successors and assigns, shall guarantee the payment and
performance of the Surviving Corporation with respect to, and
cause the Surviving Corporation, and any successors or assigns,
to assume, honor, perform and pay, in accordance with their
terms, all supplemental employee retirement plans and other
deferred compensation plans of the Company and its Subsidiaries
as in effect immediately prior to the Effective Time that are
applicable to any current or former employees or directors of
the Company or any of its Subsidiaries. Parent shall not and
shall cause the Surviving Corporation not to impair, encumber,
borrow against or otherwise take any actions adverse to the
beneficiaries of the Companys supplemental employee
retirement plans and other deferred compensation plans,
including such life insurance policies that are maintained
solely to satisfy identified obligations under such plans, other
than borrowings against the policies that are used solely to
make payments to the beneficiaries in accordance with the terms
of the plans as and when required thereunder. Parent, and its
successors and assigns, shall cause the Surviving Corporation
and any and all of its successors and assigns to expressly
assume the Companys Supplemental Executive Retirement
Plans described in
Section 3.13(a)
of the Company
Disclosure Schedule (the
SERPs
). Parent shall
establish a Rabbi Trust prior to the Effective Date, in form and
substance reasonably acceptable to the Company, to separately
hold each and every underlying insurance contract maintained
solely to satisfy identified obligations under any SERP. In no
event shall Parent (or any of its successors, assigns or
Affiliates) allow any Lien or other security interest of any
nature or kind to attach to any of the life insurance policies
that are maintained solely to satisfy identified obligations
under the SERPs (except as may arise under applicable Law).
(c) Continuing Employees shall receive credit for all
purposes (including, for purposes of eligibility to participate,
vesting and eligibility to receive benefits) under any employee
benefit plan, program or arrangement (including vacation plans,
programs and arrangements) established or maintained by Parent,
the Surviving Corporation or any of their respective
subsidiaries under which each Continuing Employee may be
eligible to participate on or after the Effective Time for
service with the Company and any ERISA Affiliate through the
Effective Time to the same extent recognized by the Company and
any ERISA Affiliate under comparable Plans immediately prior to
the Effective Time. Such employee benefit plan, program or
arrangement shall credit each such Employee for service accrued
or deemed accrued on or prior to the Effective Time with the
Company and any ERISA Affiliate; provided, however, that such
crediting of service shall not operate to duplicate any benefit
or the funding of any such benefit.
(d) With respect to the welfare benefit plans, programs and
arrangements maintained, sponsored or contributed to by Parent
or the Surviving Corporation
(Parent Welfare Benefit
Plans
) in which a Continuing Employee may be eligible
to participate on or after the Effective Time, Parent shall,
subject to applicable Law, (a) use reasonable efforts to
waive, or cause its insurance carrier to waive, all limitations
as to preexisting and at-work conditions, if any, with respect
to participation and coverage requirements applicable to each
Employee under any Parent Welfare Benefit Plan to the same
extent waived under a comparable Company Benefit Plan, and
(b) provide credit to each Continuing Employee for any
co-payments, deductibles and
out-of-pocket
expenses paid by such Employee under the Company Benefit Plans
during the relevant plan year, up to and including the Effective
Time.
(e) Nothing in this
Section 5.11
, whether
express or implied, shall confer upon any current or former
employee of the Company or any of its Subsidiaries or
Affiliates, any rights or remedies including any right to
A-41
employment or continued employment for any specified period, of
any nature or kind whatsoever under or by reason of this
Section 5.11
. No provision of this
Section 5.11
is intended to modify, amend or create
any employee benefit plan of the Company, Parent or any of their
respective Subsidiaries or Affiliates.
Section 5.12.
Financing
.
(a) Parent and Merger Sub shall take (or cause to be taken)
all actions, and do (or cause to be done) all things, necessary,
proper or advisable to obtain the Equity Financing contemplated
by the Equity Commitment Letter, including (i) maintaining
in effect the Equity Commitment Letter, (ii) using their
reasonable best efforts to satisfy on a timely basis all
conditions applicable to Parent and Merger Sub set forth in the
Equity Commitment Letter that are within their control and
(iii) subject to the conditions set forth therein to
consummate the financing contemplated by the Equity Commitment
Letter on the terms and conditions set forth therein.
(b) The Company shall provide all cooperation reasonably
requested by Parent in its efforts to obtain debt financing in
connection with the transactions contemplated by this Agreement,
provided that such requested cooperation does not unreasonably
interfere with the ongoing operations of the Company and its
Subsidiaries. Without limiting the generality of the preceding
sentence, prior to the Closing, the Company shall, and shall
cause its officers, Subsidiaries and other Representatives to
(i) when requested by Parent, participate on a timely basis
in a reasonable number of meetings during normal business hours
with potential providers of debt financing to Parent, a
reasonable number of due diligence sessions during normal
business hours and a reasonable number of sessions with rating
agencies during normal business hours and provide direct contact
between executives of the Company and the Companys other
Representatives and potential providers of the debt financing to
Parent during normal business hours, (ii) furnish Parent
and potential providers of debt financing to Parent with
unaudited monthly financial statements of the Company and its
Subsidiaries when requested in writing when available,
(iii) assist Parent with the preparation of bank
information memoranda, lender presentations, rating agency
presentations and similar documents and materials as may be
reasonably requested by Parent, and (iv) use commercially
reasonable efforts to obtain such consents and instruments which
may be reasonably requested by Parent in connection with the
debt financing, including customary payoff letters, Lien
releases, and landlord consents and access agreements, and use
commercially reasonable efforts to facilitate the pledging of
collateral, including cooperating in obtaining appraisals,
financial analyses, surveys, environmental assessments, third
party consents and estoppels, mortgage financeability and title
insurance;
provided
, that the Company shall not be
required to pay any costs of any appraisals, surveys or
environmental assessments or any commitment or similar fee in
connection with such financing prior to the Effective Time; and
provided
further
that the Companys failure
to obtain any of the foregoing, after using commercially
reasonable efforts to do so, shall not constitute a breach of
this
Section 5.12(b)
nor a failure to satisfy the
conditions to closing set forth in
Section 6.2(b)
.
The Company hereby consents to the use of its logo in connection
with the potential debt financing described in this
Section 5.12
, provided that its logo is used solely
in a manner that is not intended to or reasonably likely to harm
or disparage the Company or its Subsidiaries, or the reputation
and good will of the Company and its Subsidiaries. Parent and
Merger Sub each acknowledge and agree that the obtaining of any
debt financing in connection with the transactions contemplated
by this Agreement is not a condition to the Closing. All
non-public information provided by the Company or any of its
Subsidiaries or their Representatives in accordance with this
Section 5.12
shall be kept confidential in
accordance with the Confidentiality Agreement.
(c) In the event this Agreement is terminated pursuant to
Section 7.1
, Parent agrees to promptly (and in any
event within two (2) Business Days), upon request by the
Company, reimburse the Company for all reasonable and documented
out-of-pocket
costs incurred by the Company and its Subsidiaries in complying
with this
Section 5.12
, and shall indemnify and hold
harmless the Company, its Subsidiaries and their respective
Representatives from and against any all losses, damages,
claims, costs or expenses suffered or incurred by any of them in
connection with or arrangement of any such debt financing and
any information used in connection herewith, except with respect
to any information prepared or provided by the Company or any of
its Subsidiaries.
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Section 5.13.
Stockholder
Litigation
.
The Company shall give Parent
prompt (and in any event within 24 hours) notice of, and
copies of any documents filed or served in, any stockholder
litigation against the Company
and/or
its
directors relating to this Agreement and the transactions
contemplated hereby. The Company shall give Parent and its
Representatives the opportunity to participate in the defense
and settlement of any stockholder litigation against the Company
or its directors relating to this Agreement and the transactions
contemplated hereby and no such settlement shall be agreed to
without Parents prior written consent such consent not to
be unreasonably withheld, delayed or conditioned.
ARTICLE 6
CONDITIONS
TO THE MERGER
Section 6.1.
Conditions
to Each Partys Obligation to Effect the
Merger
.
The respective obligations of Parent,
Merger Sub and the Company to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of the
following conditions:
(a)
Stockholder Approval
.
The
Merger and this Agreement shall have been approved and adopted
by the Company Requisite Stockholder Vote at a Company
Stockholders Meeting where a quorum is present in accordance
with applicable Law.
(b)
Legality
.
No Law or Order
(whether temporary, preliminary or permanent) shall have been
enacted, entered, promulgated, adopted, issued or enforced by
any Governmental Entity that has the effect of making the Merger
illegal or otherwise prohibiting the consummation of the Merger,
and no Governmental Entity shall have initiated proceedings
seeking to prevent, prohibit or impose adverse conditions with
respect to the Merger.
(c)
HSR Act
.
The waiting period
applicable to the Merger under the HSR Act shall have expired or
been terminated.
Section 6.2.
Additional
Conditions to Obligations of Parent and Merger
Sub
.
The respective obligations of Parent and
Merger Sub to effect the Merger shall be further subject to the
satisfaction or waiver (where permissible) on or prior to the
Closing Date of the following conditions:
(a)
Representations and
Warranties
.
The representations and
warranties (i) set forth in
Section 3.7(a)
shall be true and correct in all respects, (ii) set
forth in
Sections 3.1 (first sentence only
)
,
3.2(a)
,
3.2(b), Section 3.3
,
3.4(a)(i)
,
3.8
and
3.21
disregarding all qualifications
therein (or in defined terms used therein) relating to
materiality or the term Material Adverse Effect on the Company,
shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of the Effective Time
(except to the extent such representations and warranties relate
to a specific date, in which case the representation and
warranty shall be true and correct as of such specified date)
and (iii) set forth in Article 3 hereof (other than
the Sections of Article 3 described in clause (i) or
(ii) above), disregarding all qualifications contained
therein (or in defined terms used therein) relating to
materiality or the term Material Adverse Effect on the Company,
shall be shall be true and correct at and as of the Effective
Time as if made at and as of the Effective Time (except to the
extent such representations and warranties relate to a specific
date, in which case the representation shall be true and correct
as of such specified date), except, in the case of this
clause (iii) only, to the extent the failure of any such
representation and warranty to be true and correct would not
reasonably be expected to have (taken together with all other
breaches or violations of representations, warranties, covenants
and agreements of the Company hereunder), individually or in the
aggregate, a Material Adverse Effect on the Company. Solely for
the purposes of clause (ii) above, if one or more
inaccuracies in
Section 3.2(a)
or
3.2(b)
would cause the aggregate amount required to be paid by
Parent to effectuate the Merger or refinance the Companys
Indebtedness and consummate the related transactions to be
consummated on the Closing Date and pay all fees and expenses in
connection therewith, including pursuant to
Section 1.9
or
Article 2
to increase by $500,000 or more,
such inaccuracy or inaccuracies will be considered material for
purposes of clause (iii) of this
Section 6.2(a)
.
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(b)
Covenants
.
The Company shall
have performed in all material respects its obligations and
complied in all material respects with its covenants required by
this Agreement to be performed or complied with by it on or
prior to the Closing Date.
(c)
Material Adverse Effect on the
Company
.
Since the date of this Agreement,
there shall not have occurred any effect, change, event,
occurrence, circumstance or development that, individually or in
the aggregate, has had, or would reasonably be expected to have,
a Material Adverse Effect on the Company.
(d)
Officers
Certificate
.
The Company shall have delivered
to Parent a certification of the Chief Executive Officer or the
Chief Financial Officer of the Company certifying that each of
the conditions specified in
Sections 6.2(a)
,
(b)
and
(c)
is satisfied in all respects.
Section 6.3.
Additional
Conditions to Obligation of the Company
.
The
obligation of the Company to effect the Merger shall be further
subject to the satisfaction or waiver (where permissible) on or
prior to the Closing Date of the following conditions:
(a)
Representations and
Warranties
.
The representations and
warranties made by Parent and Merger Sub in this Agreement shall
be true and correct in all respects (disregarding all
qualifications therein (or in defined terms used therein)
relating to materiality or the defined term Material Adverse
Effect on Parent) at and as of the Effective Time as if made at
and as of the Effective Time (except to the extent they relate
to a specific date, in which case the representation shall be
true and correct as of such specified date) except to the extent
the failure of any such representation and warranty to be true
and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Parent.
(b)
Covenants
.
Parent and Merger
Sub shall have performed in all material respects their
obligations and complied in all material respects with their
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
(c)
Officers
Certificate
.
Parent shall have delivered to
the Company a certification of the Chief Executive Officer or
the Chief Financial Officer of Parent to the effect that each of
the conditions specified above in
Sections 6.3(a)
and
(b)
is satisfied in all respects.
ARTICLE 7
TERMINATION,
AMENDMENT AND WAIVER
Section 7.1.
Termination
.
This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time and, except as provided in
Section 7.1(h)
below, whether before or after
receipt of the Company Requisite Stockholder Vote:
(a) By mutual written consent of the Company and Parent;
(b) By either Parent or the Company, if the Merger shall
not have been consummated on or prior to 5:00 p.m. (Boston,
Massachusetts time) on September 15, 2010, or such other
date as Parent and the Company may agree in writing (the
Termination Date
);
provided
, however, that the right to terminate this
Agreement pursuant to this
Section 7.1(b)
shall not
be available to any party that has breached its obligations
under this Agreement in any manner that shall have been a
proximate cause of the failure of the Merger to be consummated
on or before the Termination Date;
(c) By either Parent or the Company, if (i) a Law
shall have been enacted, entered or promulgated prohibiting the
consummation of the Merger on the terms contemplated hereby, or
(ii) an Order shall have been enacted, entered, promulgated
or issued by a Governmental Entity of competent jurisdiction
permanently restraining or enjoining or otherwise prohibiting
the consummation of the Merger on the terms contemplated hereby,
and such Order has become final and non-appealable; in each case
having the effect of causing the condition
Section 6.1(b)
to not be satisfied;
provided
,
however that the right to
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terminate this Agreement pursuant to this
Section 7.1(c)
shall not be available to any party whose breach of this
Agreement shall have been a proximate cause of the imposition of
such legal restraint;
(d) By either Parent or the Company, if the Company
Requisite Stockholder Vote shall not have been obtained by
reason of the failure to obtain such required vote at a Company
Stockholders Meeting at which a vote on such approval was taken
(provided, that the right to terminate this Agreement under this
Section 7.1(d)
shall not be available to the Company
if the Company has breached in any material respect any of its
obligations under
Sections 5.2
or
5.5
and
such breach shall have been a proximate cause of the failure to
obtain the Company Requisite Stockholder Vote);
(e) By Parent (unless Parent is then in material breach of
its obligations, covenants or agreements, or its representations
and warranties under this Agreement that would result in the
conditions to Closing set forth in
Section 6.3(a)
or
Section 6.3(b)
not being satisfied), if all of the
following shall have occurred: (i) the Company shall have
breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this
Agreement, (ii) such breach or failure to perform would
entitle Parent not to consummate the Merger under
Section 6.2(a)
or
6.2(b)
and (iii) such
breach or failure to perform is incapable of being cured by the
Company prior to the Termination Date or, if such breach or
failure to perform is capable of being cured by the Company
prior to the Termination Date, the Company shall not have cured
such breach or failure to perform within twenty
(20) Business Days after receipt of written notice thereof
(but no later than the Termination Date);
(f) By the Company (unless the Company is then in material
breach of its obligations, covenants or agreements, or its
representations and warranties under this Agreement, that would
result in the conditions to Closing set forth in
Section 6.2(a) or 6.2(b)
not being satisfied), if
all of the following shall have occurred: (i) Parent or
Merger Sub shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements
contained in this Agreement, (ii) such breach or failure to
perform would entitle the Company not to consummate the Merger
under
Section 6.3(a)
or
6.3(b
) and
(iii) such breach or failure to perform is incapable of
being cured by Parent or Merger Sub prior to the Termination
Date or, if such breach or failure to perform is capable of
being cured by Parent or Merger Sub prior to the Termination
Date, Parent or Merger Sub shall not have cured such breach or
failure to perform within twenty (20) Business Days after
receipt of written notice thereof (but no later than the
Termination Date);
(g) By Parent, if (i) the Companys Board of
Directors or a special committee thereof shall have effected a
Change in Company Recommendation (or publicly proposed to take
any such action), whether or not permitted by the terms of this
Agreement, (ii) the Companys Board of Directors or a
special committee thereof shall have adopted, approved or
recommended to the stockholders of the Company an Acquisition
Proposal (or shall have publicly proposed to do so), whether or
not permitted by the terms of this Agreement, (iii) the
Company shall have entered into any letter of intent or similar
document or any contract accepting an Acquisition Proposal
(other than an Acceptable Confidentiality Agreement), whether or
not permitted by the terms of this Agreement, or (iv) the
Company, its Board of Directors or any special committee thereof
shall have publicly announced its intention to do any of the
foregoing; or
(h) By the Company, prior to receipt of the Company
Requisite Stockholder Vote, in order to concurrently enter into
a definitive agreement with respect to a Superior Proposal
pursuant to, in accordance with and to the extent permitted by
Section 5.5(f)
;
provided
however, that such
termination under this
Section 7.1(h)
shall not be
effective until the Company has paid the Termination Fee as
required by
Section 7.2(c)
.
Any party desiring to terminate this Agreement pursuant to
Section 7.1(b)
through
7.1(h)
shall give
written notice of such termination to the other parties
specifying the provision hereof pursuant to which such
termination is made.
Section 7.2.
Effect
of Termination
.
(a) In the event of the termination of this Agreement
pursuant to
Section 7.1
, this Agreement shall be of
no further force or effect without liability of any party or
parties hereto, as applicable (or any partner, member,
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stockholder, director, officer, employee, affiliate, agent or
other Representative of such party or parties) to the other
party or parties hereto, as applicable, except (a) for the
terms of
Section 5.2(b)
(last sentence only),
Section 5.7
,
Section 5.10
,
Section 5.12(c)
, this
Section 7.2
,
Section 7.3
,
Section 7.4
and
Article 8
, each of which shall survive the
termination of this Agreement, and (b) subject to
Section 7.2(b)
,
Section 7.2(c)
,
Section 7.2(d)
,
Section 8.6
and
Section 8.15
, neither the Company nor Parent or
Merger Sub shall be relieved or released from any liabilities
arising out of its material breach of, or fraud in connection
with, this Agreement to the extent such breach or fraud was a
proximate cause of the failure of the Merger to be consummated
prior to the termination of this Agreement;
provided
,
that a party may not seek punitive or multiple damages against
another party. For the avoidance of doubt, no termination of
this Agreement shall affect the obligations of the parties
hereto set forth in the Confidentiality Agreement, all of which
obligations shall survive the termination of this Agreement in
accordance with its terms.
(b) If (i) Parent or the Company terminates this
Agreement pursuant to
Section 7.1(d)
or Parent
terminates this Agreement pursuant to
Section 7.1(e)
, in either case, under circumstances
in which the Termination Fee (as defined in
Section 7.2(c)
) is not then payable pursuant to
Section 7.2(c), then the Company shall pay as promptly as
possible (but in any event within five (5) Business Days
following receipt of a reasonably detailed invoice therefor) all
of the actual and reasonably documented
out-of-pocket
fees and expenses (including reasonable and documented legal
fees and expenses and fees and expenses of accountants,
financial advisors, consultants, lenders and other agents and
advisors) actually incurred by Parent and its Affiliates on or
prior to such termination of this Agreement in connection with
the transactions contemplated hereby and the related financing
transactions (Parent Expenses) as directed by Parent
in writing, which amount shall not be greater than $2,000,000;
provided, that (A) the existence of circumstances which
could require the Termination Fee to become subsequently payable
by the Company pursuant to Section 7.2(c) shall not relieve
the Company of its obligations to pay the Parent Expenses
pursuant to
this Section 7.2(b); (B) the payment by the Company of
Parent Expenses pursuant to this Section 7.2(b) shall not
relieve (except as provided in clause (C) of this proviso)
the Company of any subsequent obligation to pay the Termination
Fee pursuant to Section 7.2(c); and (C) if the Company
has paid the Parent Expenses under this Section 7.2(b) and
is subsequently required to pay the Termination Fee under
Section 7.2(c), the Termination Fee payable under Section
7.2(c) shall be reduced by the full amount of Parent Expenses
previously paid by the Company under this Section 7.2(b).
(c) If (i) Parent terminates this Agreement pursuant
to
Section 7.1(g)
, (ii) the Company terminates
this Agreement pursuant to
Section 7.1(h)
or
(iii) Parent or the Company terminates this Agreement
pursuant to
Section 7.1(b)
or
Section 7.1(d)
or Parent terminates this Agreement pursuant to
Section 7.1(e)
and, in the case of any such
termination pursuant to
Section 7.1(b)
,
7.1(d)
or
7.1(e)
, (A) at any time after the date of
this Agreement and prior to such termination an Acquisition
Proposal shall have been publicly announced or otherwise
publicly communicated to the senior management, Board of
Directors or stockholders of the Company and (B) prior to
the date that is twelve months after the effective date of such
termination, the Company shall enter into a definitive agreement
with respect to an Acquisition Proposal or an Acquisition
Proposal is consummated (in each case regardless of whether the
Acquisition Proposal is the same one referred to in clause (A)),
then, subject to clause (C) of the proviso contained in
Section 7.2(b)
, the Company shall pay to Parent a
termination fee equal to $4,150,000 (the
Termination
Fee
),
provided
, however, that Termination
Fee shall mean $3,150,000 if the Acquisition Proposal that
directly results in the action or event that forms the basis for
such termination is submitted by a Continuing Party or any
Affiliate of a Continuing Party. The Company shall satisfy its
obligation under the preceding sentence by the wire transfer of
immediately available funds to an account that Parent designates
(x) in the case of a termination pursuant to
clause (i) above, not later than 2 Business Days following
such termination, (y) in the case of termination pursuant
to clause (ii) above, not later than the date of such
termination and (z) in the case of clause (iii) above,
not later than the date on which the Company executes and
delivers a definitive agreement with respect to (or, if earlier,
consummates) an Acquisition Proposal. For purposes of
clause (B) of item (iii) of this
Section 7.2(c)
only, references in the definition of
Acquisition Proposal
to 20% or
more shall be deemed to be references to 50% or
more. In no event shall payment of more than one
Termination Fee be made. Notwithstanding anything to the
contrary contained in this Agreement, but subject to
Sections 7.2(b)
,
7.2(d)
and
8.6(g)
,
from and after the time that this Agreement has been terminated
pursuant to
Section 7.1
and Parent
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becomes entitled to receive and has received such Termination
Fee, Parents receipt of the Termination Fee pursuant to
this
Section 7.2(c)
shall be Parents sole and
exclusive remedy against the Company or any of its Affiliates,
stockholders, directors, officers, employees, agents or
Representatives for any loss, claim, damage, liability or
expense suffered as a result of the failure of the Merger or any
of the transactions contemplated hereby to be consummated in
circumstances giving rise to the obligation of the Company to
pay the Termination Fee under this
Section 7.2(c)
.
(d) Each of Parent and the Company acknowledges that the
agreements contained in
Sections 7.2(b) and 7.2(c)
are an integral part of the transactions contemplated hereby
and that, without these agreements, the parties would not enter
into this Agreement. Accordingly, if the Company fails to pay
the amounts payable under
Section 7.2(b)
or
7.2(c)
then the Company shall pay to Parent all costs and
expenses (including reasonable attorneys fees and
expenses) incurred by Parent and its Affiliates in connection
with the collection of such overdue amounts and the enforcement
of its rights under
Section 7.2(b)
or
7.2(c)
,
as applicable, together with interest on such overdue amounts at
a rate per annum equal to the
prime rate
(as
announced by the Wall Street Journal or any successor thereto)
in effect on the date on which such payment was required to be
made.
Section 7.3.
Amendment
.
This
Agreement may be amended by Parent and the Company, by action
taken or authorized by their respective Boards of Directors, at
any time before or after the Company Requisite Stockholder Vote
is obtained;
provided
, however, that after the Company
Requisite Stockholder Approval is obtained, this Agreement may
not be amended in a manner that would require further approval
by the stockholders of the Company under applicable Law, without
obtaining such further stockholder approval. This Agreement may
not be amended except by a written instrument signed on behalf
of each of the parties hereto.
Section 7.4.
Waiver
.
At
any time before the Effective Time, any party hereto may,
subject to applicable Law, by action taken or authorized by its
board of directors, (a) extend the time for the performance
of any of the obligations or other acts of the other parties
hereto under or pursuant to this Agreement, (b) waive any
inaccuracies in the representations and warranties made by the
other parties hereto in this Agreement or in any document
delivered pursuant hereto and (c) waive compliance with any
of the agreements or covenants hereunder made by the other
parties hereto, or any of the conditions benefiting such waiving
party contained, in this Agreement. Any agreement on the part of
any party hereto to any such extension or waiver shall be valid
only as against such party and only if set forth in a written
instrument signed on behalf of such party. In addition, no
failure or delay by any party in exercising any right under this
Agreement shall operate as a waiver thereof, and no such
extension or waiver shall apply to any time for performance,
inaccuracy in any representation or warranty, or non-compliance
with any agreement, covenant or condition, as the case may be,
other than that which is specified in the signed written
extension or waiver.
ARTICLE 8
MISCELLANEOUS
Section 8.1.
Non-Survival
of Representations, Warranties and
Agreements
.
None of the representations,
warranties, covenants and agreements contained in this Agreement
or in any document delivered pursuant hereto shall survive the
Effective Time, except that any covenant or agreement of Parent,
Merger Sub or the Company that by its terms contemplates
performance after the Effective Time, including, but not limited
to, the agreements set forth in
Section 1.9
(Company
Stock Option; Company ESPP; and Other Company Equity Awards),
Article 2
,
Section 5.6
(Indemnification;
Directors and Officers Insurance),
5.11
(Employee
Matters) and
Article 8
shall survive the Effective
Time.
Section 8.2.
Expenses
.
Whether
or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement, the Merger and the
other transactions contemplated hereby shall be paid by the
party incurring such expenses, except as otherwise provided in
Sections 5.2(b)
(last sentence only),
5.4(b),
5.12(c), 7.2(b), 7.2(c), 7.2(d)
and
8.6
.
Section 8.3.
Notices
.
All
notices and other communications hereunder shall be in writing
and shall be deemed duly given or made as of the date of receipt
if delivered personally, on the day of confirmation of
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receipt if sent by facsimile prior to 5:00 pm Boston,
Massachusetts time on any Business Day (or the first Business
Day following such confirmed receipt if the date of such receipt
is not a Business Day or such receipt occurs after 5:00 pm
Boston, Massachusetts time on any Business Day), one Business
Day after being sent for next Business Day delivery, fees
prepaid, if sent via a reputable nationwide overnight courier or
four Business Days after being sent by registered or certified
mail (return receipt requested, postage prepaid), in each case,
to the parties at the following addresses or facsimile numbers
(or at such other address or facsimile number for a party as
shall be specified by like notice):
If to the Company:
National Dentex Corporation
2 Vision Drive
Natick, MA 01760
Attention: David L. Brown, Chief Executive Officer
Facsimile:
(508) 907-6050
with a copy (which shall not constitute notice) to:
Posternak Blankstein & Lund LLP
The Prudential Tower
800 Boylston Street,
33
rd
Floor
Boston, MA 02199
Attention: Donald H. Siegel, P.C.
David
M. Barbash, Esq.
Facsimile:
(617) 367-2315
If to Parent or Merger Sub:
c/o GeoDigm
Corporation
1630 Lake Drive West
Chanhassen, MN 55317
Attention: Andrew Hofmeister
Facsimile:
(952) 556-5891
with a copy (which shall not constitute notice) to:
Welsh, Carson, Anderson & Stowe
320 Park Avenue
Suite 2500
New York, NY 10022
Attention: Sean M. Traynor
Facsimile:
(212) 893-9583
with a copy (which shall not constitute notice) to:
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY
10036-8704
Attention: Christopher W. Rile
Facsimile:
(212) 596-9090
Section 8.4.
Entire
Agreement
.
This Agreement, the Equity
Commitment Letter and the Confidentiality Agreement constitute
the entire agreement, and supersede all prior understandings,
agreements or representations, by or among the parties hereto
with respect to the subject matter hereof and thereof.
EACH
PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND
MERGER SUB, ON THE ONE HAND, NOR THE COMPANY, ON THE OTHER HAND,
MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, AND EACH
PARTY HEREBY DISCLAIMS ANY OTHER
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REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OR AS TO
THE ACCURACY OR COMPLETENESS OF ANY OTHER INFORMATION, MADE (OR
MADE AVAILABLE) BY ITSELF OR ANY OF ITS REPRESENTATIVES WITH
RESPECT TO, OR IN CONNECTION WITH, THE NEGOTIATION, EXECUTION OR
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER
OR THE OTHERS REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
Section 8.5.
Assignment;
Binding Effect
.
No party hereto may assign
this Agreement or any of its rights, interests or obligations
hereunder (whether by operation of Law or otherwise) without the
prior written approval of the other parties hereto, and any
attempted assignment without such prior written approval shall
be void and without legal effect;
provided
, however, that
Parent or Merger Sub may assign its rights or its obligations
hereunder to a direct or indirect wholly-owned Subsidiary of
Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
permitted successors and permitted assigns.
Section 8.6.
Governing
Law; Waiver of Jury Trial; Specific Performance; Remedies;
Jurisdiction
.
(a)
THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND
IN ACCORDANCE WITH, AND ANY CLAIM DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF
LAW PRINCIPLES THEREOF INSOFAR AS SUCH PRINCIPLES WOULD CAUSE
THE LAWS OF ANOTHER JURISDICTION TO APPLY, EXCEPT THAT MATTERS
RELATING TO THE FIDUCIARY DUTIES OF THE BOARD AND INTERNAL
CORPORATE AFFAIRS OF THE COMPANY SHALL BE GOVERNED BY THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF INSOFAR AS SUCH PRINCIPLES
WOULD CAUSE THE LAWS OF ANOTHER JURISDICTION TO APPLY.
(b)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY DIRECTLY OR INDIRECTLY ARISE OUT OF OR
RELATE TO 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, THE
EQUITY COMMITMENT LETTER OR THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY.
(c) The Parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed by the parties hereto in accordance with
their specific terms or were otherwise breached. Accordingly,
the parties agree that money damages or any other remedy at law
would not be a sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement or the Equity
Commitment Letter by them and that, in addition to all other
remedies available pursuant to this Agreement, each party shall
be entitled, to the fullest extent permitted by applicable Law,
to seek an injunction or injunctions restraining such actual or
threatened breach, violation or default and to any other
equitable relief, including specific performance and to seek to
enforce specifically the terms and provisions of this Agreement
and the Equity Commitment Letter to the fullest extent
permissible by applicable Laws and this right shall include the
right of the Company to cause Parent and Merger Sub to seek to
fully enforce the terms of the Equity Commitment Letter against
the Sponsor to the fullest extent permissible pursuant to the
Equity Commitment Letter and applicable Laws and to thereafter
cause the Merger and the transactions contemplated by the Merger
to be consummated on the terms and subject to the conditions
thereto set forth in this Agreement. Each of the parties hereto
hereby waives and agrees not to assert any defense in any action
for specific performance that a remedy at law would be adequate.
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(d) Notwithstanding
Section 8.6(c)
above, the
Company hereby covenants and agrees that specific performance of
this Agreement by Parent and Merger Sub and specific performance
of the Equity Commitment Letter by Sponsor shall be the
Companys sole and exclusive remedies (but for the
avoidance of doubt, the Company may, subject to this
Section 8.6(d)
and
Section 8.6(e)
below
and Section 8(d) and Section 8(e) of the Equity
Commitment Letter, plead and seek monetary damages solely as
alternative relief if specific performance were to be denied)
under or in connection with this Agreement, the Equity
Commitment Letter, any document or instrument delivered in
connection herewith or therewith, and the transactions
contemplated hereby and thereby and, except as provided in
Section 8.6(e)
below and in
Section 8(e)
of the Equity Commitment Letter, that it may not seek or
accept any other form of relief that might otherwise be
available under or in connection with this Agreement, the Equity
Commitment Letter, any document or instrument delivered in
connection herewith or therewith, or the transactions
contemplated hereby and thereby (including monetary damages).
(e) If a court of competent jurisdiction described in
Section 8.6(f)
below has declined to specifically
enforce the obligations of Parent and Merger Sub to consummate
the Merger and the obligations of Sponsor under the Equity
Commitment Letter pursuant to a claim for specific performance
brought by the Company against Parent, Merger Sub and Sponsor
under
Section 8.6(d)
above and Section 8(d) of
the Equity Commitment Letter, the Company shall, as an
alternative remedy, be entitled to seek monetary damages. If
such court has under such circumstance entered a judgment
awarding damages against Parent or Merger Sub, the Company may
enforce such judgment as its sole remedy;
provided
, that
the Company covenants and agrees that it will not seek to
enforce such judgment without giving effect to
Section 8.15
and until ten (10) Business Days
after such judgment is no longer subject to appeal or other
review, and then only if Parent and Merger Sub have not within
such ten (10) Business Day period irrevocably committed in
writing to the Company to consummate the Merger in accordance
with the terms and provisions of this Agreement and Sponsor has
not within such ten (10) Business Day period irrevocably
committed in writing to the Company to consummate the
transactions contemplated by the Equity Commitment Letter in
accordance with the terms and provisions of the Equity
Commitment Letter, in each case, as promptly as practicable.
Should Parent, Merger Sub and the Sponsor express such
irrevocable commitments, the parties hereto will cooperate with
one another to consummate the Merger as promptly as practicable
and in any event within fifteen (15) Business Days of the
giving of such irrevocable commitments. If the Merger is not
consummated within such fifteen (15) Business Day period as
the result of the failure of Parent, Merger Sub or the Sponsor
to comply with such irrevocable commitments, the Company shall
be entitled to enforce such judgment. The Company agrees to
cause any pending proceeding to be dismissed with prejudice at
such time as Parent and Merger Sub consummate the Merger in
accordance with this Agreement. For the avoidance of doubt, each
of the parties hereto acknowledges and agrees that the
provisions of this Agreement and the Equity Commitment Letter
are intended to and shall allow the Company only a single
recovery against Parent, Merger Sub and the Sponsor, which
recovery under no circumstances shall exceed, in the aggregate,
the Parent Liability Limitation.
(f) The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement, the
Equity Commitment Letter, or the transactions contemplated
hereby or thereby shall be exclusively brought, heard and
decided in the Delaware Court of Chancery (or (i) if, but
only if, the Delaware Court of Chancery has declined to accept
jurisdiction over such suit, action or proceeding, the United
States District Court for the District of Delaware or
(ii) if, but only if, the Chancery Court and the United
States District Court for the District of Delaware each declined
to accept jurisdiction over such suit, action or proceeding, the
United States District Court for the District of Massachusetts,
or (iii) if, but only if, such Chancery Court, and each
such United States District Court have declined to accept
jurisdiction over such suit, action or proceeding, the Business
Litigation Session of the Massachusetts Superior Court located
in Boston, Massachusetts), and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest
extent permitted by applicable Law, any objection that it may
now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such
suit, action or proceeding brought in any such court has been
brought in an inconvenient forum;
provided
, that any
party may institute a suit, action or proceeding in a court
other than the above-named courts solely for the purpose of
enforcing an Order of one of the above-named
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courts, and
further provided
, that in the event that, and
for so long as, the Delaware Court of Chancery does not decline
to accept jurisdiction over a particular suit, action or
proceeding, the parties hereto waive any right that they may
have to remove such suit, action or proceeding to a federal
court, under 28 U.S.C. Section 1441 or otherwise.
Process in any such suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the
jurisdiction of any such court, consistent with applicable Law.
Without limiting the foregoing, each party agrees that service
of process on such party by personal delivery or by overnight
courier as provided in
Section 8.3
shall be deemed
effective service of process on such party. The parties further
agree that each will jointly request or consent to a motion
brought by another party that any such suit, action or
proceeding brought pursuant to
Section 8.6(d)
hereof
(or appeal therefrom) be heard and decided in an expedited
manner as may be permitted by the rules of the court in which
such suit, action or proceeding is pending.
(g) If any party commences any suit, action or proceeding
pursuant to this Agreement, in addition to any amounts that may
be owed pursuant to this Agreement, the prevailing party (as
determined by the court) shall recover its costs and expenses
reasonably incurred in connection therewith, including
reasonable fees and expenses of attorneys and experts.
Section 8.7.
Severability
.
If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any Law or public
policy, then all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the
transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 8.8.
Third
Party Beneficiaries
.
Except for (i)
(A) the rights of the Companys stockholders to
receive the Merger Consideration pursuant to and in accordance
with
Article 2
, (B) the rights of the holders
of the Company Restricted Shares, Company Stock Options and
Company RSUs, and participants in the Company ESPP to receive
the amounts described in
Section 1.9
and
(C) the rights of the Indemnified Persons under
Section 5.6
and (ii) the rights of the Parent
Parties under
Section 8.15
, Parent, Merger Sub and
the Company hereby agree that their respective representations,
warranties, agreements and covenants set forth herein are solely
for the benefit of the other parties hereto, and this Agreement
is not intended to, and does not, confer upon any Person other
than the parties hereto and their successors and permitted
assigns any rights or remedies hereunder, including the right to
rely upon the representations and warranties set forth herein.
The parties hereto further agree that the rights of third party
beneficiaries described in clause (i) of the first sentence
of this
Section 8.8
shall not arise unless and until
the Effective Time occurs. The representations and warranties in
this Agreement are the product of negotiations among the parties
hereto and are for the sole benefit of the parties hereto and
their successors and permitted assigns. Any inaccuracies in such
representations and warranties are subject to waiver by the
parties hereto in accordance with
Section 7.4
without notice or liability to any other Person. In some
instances, the representations and warranties in this Agreement
may represent an allocation among the parties hereto of risks
associated with particular matters regardless of the knowledge
of any of the parties hereto. Consequently, Persons (other than
the parties hereto) may not rely upon the representations and
warranties in this Agreement as characterizations of actual
facts or circumstances as of the date of this Agreement or as of
any other date.
Section 8.9.
Disclosure
Schedule
.
(a) The disclosure schedule delivered by the Company to
Parent prior to the execution and delivery of this Agreement
(the
Company Disclosure Schedule
) and the
disclosure schedules delivered by Parent to the Company prior to
the execution and delivery of this Agreement (the
Parent Disclosure Schedule
) shall be arranged
in sections and subsections corresponding to the numbered
Sections and lettered subsections of this Agreement, and the
exceptions and disclosures in each such section and subsection
of the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be, shall apply to the correspondingly
numbered Section and lettered subsection of this Agreement and
to each other numbered Section(s) or lettered
A-51
subsection(s) of the Agreement to the extent it is readily
apparent on the face of each disclosure that such disclosure is
responsive to such other Section(s) or subsection(s).
(b) The inclusion of any information in the Company
Disclosure Schedule or the Parent Disclosure Schedule
accompanying this Agreement will not be deemed an admission or
acknowledgment, in and of itself, solely by virtue of the
inclusion of such information in such schedules, that such
information is required to be listed in such schedules or that
such information is material to any party or the conduct of the
business of any party.
Section 8.10.
Counterparts
.
This
Agreement may be executed by facsimile or electronic
transmission in pdf format and in one or more counterparts, each
of which shall be deemed an original but all of which together
will constitute one and the same instrument, and shall become
effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.11.
Headings
.
The
Article and Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.12.
Interpretation
.
Any
reference to any supranational, national, state, provincial,
municipal, local or foreign Law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the
context otherwise requires, and in each case as amended or
otherwise modified from time to time. When a reference is made
in this Agreement to Sections, Schedules or Exhibits, such
reference shall be to a Section of or Schedule or Exhibit to
this Agreement unless otherwise indicated. Whenever the words
include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation. Whenever the phrase made available
is used in this Agreement, such phrase shall mean made
available, provided access to or otherwise disclosed in writing
prior to 8:30 pm on April 2, 2010.
Section 8.13.
No
Presumption
.
With regard to each and every
term and condition of this Agreement, the parties hereto
understand and agree that the same have or has been mutually
negotiated, prepared and drafted, and if at any time the parties
hereto desire or are required to interpret or construe any such
term or condition or any agreement or instrument subject hereto,
no consideration shall be given to the issue of which party
hereto actually prepared, drafted or requested any term or
condition of this Agreement or any agreement or instrument
subject hereto.
Section 8.14.
Undertaking
by Parent
.
Parent shall cause Merger Sub to
perform when due all of Merger Subs obligations under this
Agreement.
Section 8.15.
Limitation
of Liability
.
Notwithstanding anything in
this Agreement to the contrary, the maximum aggregate liability
of Parent and Merger Sub under or in connection with this
Agreement and the transactions contemplated hereby shall be
limited to $139,000,000 (the
Parent Liability
Limitation
)
and in no event shall the Company seek
multiple or punitive damages against Parent or Merger Sub, or
any recovery, judgment or damages or any kind against Parent or
Merger Sub in excess of the Parent Liability Limitation. The
Company acknowledges, covenants and agrees that it has and shall
have no right of recovery against, and no liability shall attach
to, including in each case with respect to any actual or claimed
loss or damages of any kind of the Company and its Subsidiaries,
Affiliates, Representatives or stockholders or any other Person
claiming by, through or for the benefit of the Company
(
Company Damages
)
, any of the Parent
Parties (as defined below) (other than the Companys right
to recover against Parent and Merger Sub to the extent provided
in this Agreement or against the Sponsor to the extent provided
in the Equity Commitment Letter), through Parent or otherwise,
whether by or through attempted piercing of the corporate,
limited partnership or limited liability company veil, by or
through a claim by or on behalf of Parent, by the enforcement of
any assessment or by any legal or equitable proceeding, by
virtue of any applicable Law, through a claim based in tort,
contract, statute or otherwise. Specific performance of the
Sponsors obligations to the Company under the Equity
Commitment Letter shall (subject to the Companys right to
receive damages pursuant to the terms, conditions and
limitations of Section 8(e) of the Equity Commitment
Letter) be the sole and exclusive remedy of the Company and its
Subsidiaries, Affiliates, Representatives and stockholders, and
any other Person claiming by, through or for the benefit of the
Company, against the Sponsor and any other Parent Party (other
than Parent and Merger Sub to the extent provided in this
Agreement) in respect of any liabilities or
A-52
obligations arising under, or in connection with, this
Agreement, the Equity Commitment Letter, any document or
instrument delivered in connection herewith or therewith, or the
transactions contemplated hereby or thereby, including any claim
for Company Damages. For purposes hereof,
Parent
Parties
shall mean, collectively, Parent, Merger
Sub, the Sponsor, any debt financing sources of Parent, and any
and all of their respective former, current or future, direct or
indirect directors, officers, employees, agents, equity holders
or investors (whether such investor or holder is a limited or
general partner, member, stockholder or otherwise), controlling
persons, general or limited partners, managers, management
companies, members, stockholders, Affiliates or assignees, any
former, current or future directors, officers, employees,
agents, general or limited partners, managers, management
companies, members, stockholders, Affiliates or assignees of any
of the foregoing, and any and all former, current or future
heirs, executors, administrators, successors or assigns of any
of the foregoing.
Section 8.16.
Definitions
.
For
purposes of this Agreement,
(a)
Acceptable Confidentiality Agreement
means a confidentiality agreement substantially in the form
approved by the Board of Directors of the Company or a special
committee thereof;
provided
, that such Acceptable
Confidentiality Agreement shall contain (i) standstill
provisions that are no less favorable to the Company than those
contained in the Confidentiality Agreement and at least as long
in duration as those set forth in the Confidentiality Agreement,
and (ii) provisions concerning the confidentiality of
non-public information no less favorable to the Company than
those contained in the Confidentiality Agreement.
(b)
Acquisition Proposal
means any
inquiry, proposal or offer from any Person or groups of Persons
other than Parent or Merger Sub or any of their respective
Affiliates (in each case, whether or not in writing and whether
or not delivered to the stockholders of the Company generally)
relating to: (i) any direct or indirect acquisition or
purchase of a business or assets of the Company or any of its
Subsidiaries that constitute 20% or more of the consolidated
revenues, net income or assets of the Company or of 20% or more
of any class of equity securities of the Company or any of its
Subsidiaries (whether by merger, reorganization, share exchange,
consolidation, business combination, sale of assets,
recapitalization, liquidation, dissolution or other form of
transaction or series of related transactions); (ii) any
tender offer or exchange offer that, if consummated, would
result in any Person beneficially owning 20% or more of any
class of equity securities of the Company; and (iii) any
merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or other
form of transaction (or series of related transactions)
involving the Company or any of its Subsidiaries pursuant to
which any Person or the stockholders of any such Person would
own 20% or more of any class of equity securities of the Company
or any successor entity.
(c)
Affiliates
means, as to any Person,
any other Person that, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person. As
used in this definition,
Control
(including,
with its correlative meanings, controlled by and
under common control with) means the possession,
directly or indirectly, of the powers to direct or cause the
direction of management or policies of a Person, through the
ownership of securities or partnership or other ownership
interests, by contract or otherwise.
(d)
Business Day
means any day on which
banks are not required or authorized to close in the City of
Boston, Massachusetts or New York, New York.
(e)
Company Equity Awards
means the RSUs
and the Company Stock Options.
(f)
Company Stock Plans
means the 1992
Long Term Incentive Plan, the Amended and Restated 2001 Stock
Plan and the Employees Stock Purchase Plan, each as amended.
(g)
Contracts
means any written or
binding oral agreement, contract, loan or credit agreement,
note, mortgage, bond, indenture, lease, benefit plan, permit,
franchise, license or other legally binding instrument or
arrangement.
(h)
Environmental Claim
means a notice
from any Person (i) that the Company or its Subsidiaries
has been identified by the EPA or similar state authority as a
potentially responsible party under CERCLA or any comparable
State law with respect to a site listed or proposed to be listed
on the National Priorities List, as in effect as of
the Closing Date, of hazardous waste sites or any similar state
list; or (ii) that Hazardous
A-53
Materials which the Company has generated, transported, or
disposed of has been found at any site at which a Person has
conducted, is in the process of conducting or has ordered that
the Company conduct a remedial investigation, removal, or other
response action pursuant to any Environmental Laws.
(i)
Environmental Laws
means any
federal, state or local law, the purpose of which is the
protection of the environment, including, without limitation,
the Federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), as amended, 42 U.S.C. 9601 et
seq., the Federal Toxic Substances Control Act, 15 U.S.C.
2601 et seq., the Federal Resource Conservation and Recovery Act
as amended, 42 U.S.C. 6901 et seq., the Federal Hazardous
Material Transportation Act, the Federal Clean Air Act, and the
Federal Water Pollution Control Act.
(j)
Environmental Permits
means permits
that are required by Environmental Laws for the operation of the
Company as currently conducted.
(k)
ERISA
means the Employee Retirement
Income Security Act of 1974, as amended.
(l)
ERISA Affiliate
means any entity
required to be aggregated with the Company under
section 414(b), (c), (m), or (o) of the Code.
(m)
Guarantee
means, with respect to any
Person, (a) any guarantee of the payment or performance of,
or any contingent obligation in respect of, any Indebtedness or
other liability of any other Person, (b) any other
arrangement whereby credit is extended to any obligor (other
than such Person) on the basis of any promise or undertaking of
such Person (i) to pay the Indebtedness or other liability
of such obligor, (ii) to purchase any obligation owed by
such obligor, (iii) to purchase or lease assets under
circumstances that are designed to enable such obligor to
discharge one or more of its obligations or (iv) to
maintain the capital, working capital, solvency or general
financial condition of such obligor and (c) any liability
as a general partner of a partnership or as a venturer in a
joint venture in respect of Indebtedness or other liabilities of
such partnership or venture.
(n)
Hazardous Substance
means:
(i) any petroleum, hazardous or toxic petroleum-derived
substance or petroleum product, flammable or explosive material,
radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, foundry sand
or polychlorinated biphenyls (PCBs); (ii) any chemical or
other material or substance that is regulated, classified or
defined as or included in the definition of hazardous
substance, hazardous waste, hazardous
material, extremely hazardous substance,
restricted hazardous waste, toxic
substance, toxic pollutant,
pollutant or contaminant under any
applicable Law, or any similar denomination intended to classify
substance by reason of toxicity, carcinogenicity, ignitability,
corrosivity or reactivity under any applicable Law; or
(iii) any other chemical or other material, waste or
substance, exposure to which is prohibited, limited or regulated
by or under any applicable Law.
(o)
Indebtedness
means, with respect to
any Person, all obligations (including all obligations in
respect of principal, accrued interest, penalties, fees and
premiums) of such Person (without duplication): (i) for
borrowed money (including obligations in respect of drawings
under overdraft facilities), (ii) evidenced by notes,
bonds, debentures or similar Contracts, (iii) for the
deferred purchase price of property, goods or services (other
than trade payables or accruals incurred in the ordinary course
of business consistent with past practices), (iv) under
capital leases (in accordance with GAAP), (v) in respect of
outstanding letters of credit and bankers acceptances or
(vi) for Contracts relating to interest rate protection,
swap agreements and collar agreements.
(p)
Intervening Event
means a material
event on or relating to the business, results of operations or
financial condition of the Company and its Subsidiaries taken as
a whole that was not known to the Board of Directors or senior
management of the Company on the date of this Agreement (or if
known, the consequences of which were not known to or reasonably
foreseeable by the Board of Directors or senior management of
the Company as of the date hereof), which event, or any material
consequences thereof, becomes known to the Board of Directors of
the Company prior to the time at which the Company receives the
Company Requisite Stockholder Approval;
provided
,
however, that (i) in no event shall the receipt, existence
or terms of a Acquisition Proposal or any matter relating
thereto or consequence thereof constitute an Intervening Event
and
A-54
(ii) in no event shall the Company meeting or exceeding any
internal or published estimates, projections, forecasts or
predictions relating to revenues, earnings or profits for any
period constitute an Intervening Event.
(q)
knowledge
or
known
means, with respect to the Company, the
actual conscious awareness of one or more of the individuals set
forth on
Section 8.16(q)
of the Company Disclosure
Schedule and, with respect to Parent, the actual conscious
awareness of one or more of the individuals set forth on
Section 8.16(q)
of the Parent Disclosure Schedule.
(r)
Lien
means a lien, pledge, charge,
easement, covenant, restriction or other similar matter
affecting title, encumbrance or other security interest of any
nature whatsoever.
(s)
Material Adverse Effect on Parent
means any effect, change, event, occurrence, circumstance or
development that, individually or in the aggregate, prevents,
materially delays or materially affects, or would reasonably be
expected to prevent, materially delay or materially affect, the
ability of Parent or Merger Sub to consummate the transactions
contemplated by, or to perform its obligations under, this
Agreement prior to the Termination Date;
provided
,
however, that, a
Material Adverse Effect on
Parent
shall not be deemed to mean or include any such
change, effect, condition, factor or circumstance to the extent
arising as a result of the pendency
and/or
investigation of the Merger by a Governmental Entity.
(t)
Material Adverse Effect on the
Company
means any effect, change, event, occurrence,
circumstance or development that (i) has, or would be
reasonably expected to have, a material adverse effect on the
business, results of operations, properties or financial
condition of the Company and its Subsidiaries taken as a whole
or (ii) prevents, materially delays or materially affects,
or would reasonably be expected to prevent, materially delay or
materially affect, the ability of the Company to consummate the
transactions contemplated by, or to perform its obligations
under, this Agreement prior to the Termination Date;
provided
,
however
, that, a
Material
Adverse Effect on the Company
shall not be deemed to
mean or include any such change, effect, condition, factor,
circumstance or development to the extent arising as a result
of: (i) general changes, factors or developments in the
industries in which the Company and its Subsidiaries operate,
except, in each case, to the extent those changes, factors or
developments that disproportionately impact (relative to
similarly situated businesses) the business, results of
operations, properties or financial condition of the Company and
its Subsidiaries taken as a whole; (ii) changes, after the
date of this Agreement, in Laws of general applicability or
interpretations thereof by courts or other Governmental
Entities, except to the extent any of the same materially
disproportionately impacts the Company as compared to other
companies in the industry in which the Company and its
Subsidiaries operate; (iii) changes, after the date of this
Agreement, in GAAP or the rules or policies of the Public
Company Accounting Oversight Board; (iv) any act or
omission by the Company or any of its Subsidiaries taken with
the prior written consent of Parent in contemplation of the
Merger; (v) costs or expenses reasonably incurred or
accrued in connection with the Merger (and not otherwise in
breach of this Agreement); (vi) a change to the United
States economy in general or global economic conditions that do
not disproportionately affect the Company and its Subsidiaries
as compared to other similarly situated companies in the
Companys industry; (vii) the announcement, of this
Agreement or the Merger, including the identity of Sponsor,
Parent, and Merger Sub, the execution, delivery or performance
of this Agreement, including, without limitation in any such
case, the impact thereof on relationships with customers,
employees or suppliers to the extent caused by such
announcement, execution or performance (in each case, other than
as relates to any breach of any representation or warranty
contained in
Section 3.4
or any other
representations and warranties relating to required notices,
waivers, consents or approvals arising from or relating to a
change in ownership or control of the Company or any of its
Subsidiaries, the consummation of the Merger and other
transactions contemplated hereby or the execution, delivery or
performance of this Agreement); (viii) any failure by the
Company to meet any internal or published estimates,
projections, forecasts or predictions relating to revenues,
earnings or losses for any period ending on or after the date of
this Agreement and prior to the Closing (provided, that the
underlying causes of such failure or changes shall not be
excluded, unless excluded by another clause of this proviso);
(ix) a decline in the stock price of the Company Common
Stock on The NASDAQ Global Market or the delisting of the
Company Common Stock from the NASDAQ Global Market (provided,
that the underlying causes of such decline or delisting shall
not be excluded, unless excluded by another clause of this
proviso); or (x) the outbreak or escalation of hostilities
involving the United States, the declaration by the United
States of a national
A-55
emergency or war or the occurrence of any other calamity or
crisis, including an act of terrorism in each case, occurring
after the date hereof.
(u)
Multiemployer Plan
means any
multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA.
(v)
Permitted Liens
shall mean
(a) statutory liens for Taxes, assessments or other charges
by Governmental Entities not yet due and payable or the amount
or validity of which is being contested in good faith and by
appropriate proceedings and for which adequate reserves have
been established in the financial statements contained in the
Company SEC Reports, (b) mechanics,
materialmens, carriers, workmens,
warehousemans, repairmens, landlords and
similar liens granted or which arise in the ordinary course of
business and which are not delinquent or the amount or validity
of which is being contested in good faith and by appropriate
proceedings and for which adequate reserves have been
established in the financial statements contained in the Company
SEC Reports, (c) with respect to property other than Owned
Property or Leased Property, such other liens, encumbrances or
imperfections that are not material in amount or do not
materially detract from the value of or materially impair the
existing use of the property affected by such lien, encumbrance
or imperfection and (d) with respect to any parcel of Owned
Property or Leased Property, (i) easements,
rights-of-way,
encroachments, restrictions, conditions and other similar
encumbrances incurred or suffered in the ordinary course of
business and which, individually or in the aggregate,
(y) are not material in character, amount or extent in
relation to the applicable Owned Property or Leased Property and
(z) do not and would not reasonably be expected to
materially impair the use (or contemplated use), utility or
value of the applicable Owned Property or Leased Property or
otherwise materially impair the present or contemplated business
operations at such location by the Company or any Subsidiary
thereof and (ii) zoning, entitlement, building and other
land use regulations imposed by Governmental Entities having
jurisdiction over such Owned Property or Leased Property, which
are not violated by the current use and operation of such Owned
Property or Leased Property.
(w)
Person
means an individual, a
corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization,
including a Governmental Entity.
(x)
Representatives
means with respect
to any Person, that Persons officers, directors,
employees, auditors, investment bankers, counsel, agents and
other representatives.
(y)
Subsidiaries
of any Person means any
corporation or other form of legal entity with respect to which
such Person owns or controls, directly or indirectly through one
or more of its Subsidiaries, an amount of the outstanding voting
securities that is sufficient to elect at least a majority of
its board of directors or other governing body or the right to
receive 50% or more of the residual net assets of such entity
available for distributions to the holders of outstanding equity
interests upon a liquidation or dissolution of such entity.
(z)
Superior Proposal
means a bona fide
written Acquisition Proposal made by any Person or group of
Persons other than Parent or Merger Sub or any of their
respective Affiliates that the Board of Directors of the Company
or a special committee of the Board of Directors formed to
evaluate such Acquisition Proposal determines in good faith,
after consultation with its financial advisor and outside legal
counsel, is more favorable from a financial point of view to the
Companys stockholders (solely in their capacity as such)
than the transactions contemplated hereby (including, to the
extent applicable, any proposal or offer by Parent for an
adjustment to the terms and conditions of this Agreement
pursuant to
Section 5.5(f)
), after taking into
account all relevant factors, including all legal, financial
(including, the certainty of any financing commitment therefor
relative to the commitment set forth in the Equity Commitment
Letter), regulatory and other aspects of such proposal, and is
reasonably likely to be consummated on the terms proposed;
provided
, that for purposes of the definition of
Superior Proposal, the references to 20%
in the definition of Acquisition Proposal shall be deemed to be
references to 50%.
(aa)
Tax Return
means a return, report,
estimate, claim for refund or other information, form or
statement relating to, or required to be filed or supplied in
connection with, any Taxes, including, where permitted or
required, combined or consolidated returns for a group of
entities and including any amendment thereof, including any
schedule or attachment thereto.
A-56
(bb)
Taxes
means (i) all taxes,
charges, fees, levies, or other assessments, of any kind
whatsoever, imposed by any Governmental Entity, including
income, excise, real property, personal property, sales, use,
transfer, escheat, franchise, capital stock, license, payroll,
withholding, social security, unemployment, disability,
estimated, value added, alternative or add-on minimum or other
taxes, including any interest and penalties (civil or criminal)
on or additions thereto, whether disputed or not, and
(ii) any liability for the payment of the amounts specified
in clause (i) of this definition as a result of being a
member of an affiliated, consolidated, combined or unitary group
for any period, or a result of transferee or successor liability
in respect of Taxes imposed by contract, tax sharing agreement,
tax indemnity agreement or any similar agreement or otherwise.
A-57
[The next
page is the signature page.]
A-58
The parties hereto have executed this Agreement and Plan of
Merger under seal as of the date first written above.
GDC HOLDINGS, INC.
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By:
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/s/ Andrew
Hofmeister
|
Name: Andrew Hofmeister
|
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|
Title:
|
President and Chief Executive Officer
|
ROYAL ACQUISITION CORP.
|
|
|
|
By:
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/s/ Andrew
Hofmeister
|
Name: Andrew Hofmeister
|
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Title:
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President and Chief Executive Officer
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NATIONAL DENTEX CORPORATION
Name: David L. Brown
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Title:
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Chairman and Chief Executive Officer
|
A-59
ANNEX B
FAIRNESS OPINION OF SIGNAL HILL CAPITAL GROUP LLC
B-1
April 2, 2010
Board of Directors
National Dentex Corporation
2 Vision Drive
Natick, MA 01760
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view to the holders of
the outstanding shares of Common Stock, par value $0.01 per share (the Shares), of National
Dentex Corporation (the Company), of the $17.00 per Share in cash to be received by such holders
(the Merger Consideration) pursuant to the Agreement and Plan of Merger dated as of April 2, 2010
(the Merger Agreement) among GDC Holdings, Inc. (the Parent), Royal Acquisition Corp., an
indirect wholly owned subsidiary of Parent and a wholly owned subsidiary of GeoDigm Corporation
(Merger Sub), and the Company, as result of which the Merger Sub will be merged with and into the
Company (the Merger). The terms and conditions of the Merger are more fully set forth in the
Merger Agreement.
In connection with this opinion, we have reviewed certain publicly available financial and other
information concerning the Company and the Parent and certain internal analyses and other
information furnished to us by the Company. We have also reviewed projected non-public financial
and operating data related to the Company as prepared by management and held discussions with
members of the senior management of the Company regarding the business and prospects of the
Company. In addition, we have (i) reviewed the reported prices and trading activity for the
Shares, (ii) compared certain financial and stock market information for the Company with similar
information for certain other companies whose securities are publicly traded, (iii) reviewed the
financial terms of certain recent business combinations which we deemed comparable in whole or in
part, (iv) reviewed the terms of a draft of the Merger Agreement dated April 2, 2010, and (v)
performed such other studies and analyses and considered such other factors as we considered
appropriate.
We have relied on the accuracy and completeness of all of the financial, accounting, legal, tax and
other information discussed with or reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. With respect to the financial forecasts and projections
made available to us, we have assumed that they have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the management of the Company. We express
no view as to the reasonableness of such forecasts and projections or the assumptions on which they
are based. We have not conducted a physical inspection of any of the properties or assets of the
Company, and have not prepared or obtained any independent evaluation or appraisal of any of the
assets or liabilities of the Company. We have not independently verified the information supplied
to us by the Company or its representatives. Our opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made available to us as of, the date
hereof.
For the purposes of rendering our opinion, we have assumed that, in all respects material to our
analysis, the representations and warranties of the Company, the Parent, and the Merger Sub
contained in the Merger Agreement are true and correct, the Company, the Parent, and the Merger Sub
will each perform all of the covenants and agreements to be performed by it under the Merger
Agreement and all conditions to the obligations of each of the Company, the Parent, and the Merger
Sub to consummate the Merger will be satisfied without any waiver thereof. We have also assumed
that all material governmental, regulatory or other approvals and consents required in connection
with the consummation of the Merger will be obtained and that in connection with obtaining any
necessary governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which either the Company or
the Parent is a party or is subject or by which it is bound, no limitations, restrictions, or
conditions will be imposed or amendments, modifications or waivers made that would have a material
adverse effect on the Company or the Parent or materially reduce the contemplated benefits to the
Company of the Merger. We have also assumed that the final form of the Merger Agreement will not
differ in any material respects from the draft of the Merger Agreement, dated April 2, 2010,
reviewed by us.
B-2
In arriving at our opinion, we were not authorized to solicit, and did not solicit, interest from
any party with respect to the acquisition of the Company or any of its assets, nor did we negotiate
with any parties. In formulating our opinion, we have considered only the Merger Consideration for
the Companys Shares as is described above. We have not considered, and this opinion does not
address any compensation or other such payments that may be made in the connection with, or as a
result of, the Merger to the Companys officers, directors, employees, or others in connection with
the Merger. The delivery of this opinion has been approved by our Fairness Opinion Committee.
This opinion is provided at the request and for the information of the Board of Directors of the
Company. This opinion may not be quoted or referred to or used for any other purpose without prior
written consent, except that this opinion may be disclosed in and filed with the proxy statement
used in connection with the Merger provided that this opinion is quoted in full in any such proxy
statement. This opinion may be provided to Parent in accordance with Section 3.21 of the Merger
Agreement. This opinion is limited to the fairness from a financial point of view of the Merger
Consideration to holders of the Shares. We express no opinion as to the merits of the underlying
decision by the Company to engage in the Merger. This opinion is not a recommendation to the
holders of the Shares to approve the Merger. Our opinion is based upon market, economic, financial,
and other circumstances and conditions existing and disclosed to us as of April 2, 2010 and any
material change in such circumstances and conditions, or subsequent developments, would require a
revaluation of this opinion. We do not have any obligation to update, revise, or reaffirm this
opinion.
We will be paid a fee for our services in connection with the Merger. Our fee is not contingent on
completion of the Merger. Except for our engagement by the Company in connection with rendering
this opinion, we have not previously been engaged by the Company and no prior material relationship
has existed between us and the Company or any party to the Merger Agreement that is the subject of
this opinion.
We are not legal, regulatory, accounting or tax experts and have assumed the accuracy and
completion of assessments by the Company and its advisors as to such matters.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger
Consideration to be received by holders of the Shares pursuant to the Merger Agreement is fair,
from a financial point of view, to such holders.
Very truly yours,
/s/ Signal Hill Capital Group LLC
SIGNAL HILL CAPITAL GROUP LLC
B-3
ANNEX C
APPRAISAL RIGHTS PROCEDURES RELATING TO NATIONAL DENTEXS COMMON STOCK
GENERAL LAWS OF MASSACHUSETTS
PART 13
SUBDIVISION A.
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
C-1
Chapter 156D: Section 13.01. Definitions
Section 13.01. DEFINITIONS
In this PART the following words shall have the following meanings unless the context requires
otherwise:
Affiliate, any person that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control of or with another person.
Beneficial shareholder, the person who is a beneficial owner of shares held in a voting trust or
by a nominee as the record shareholder.
Corporation, the issuer of the shares held by a shareholder demanding appraisal and, for matters
covered in sections 13.22 to 13.31, inclusive, includes the surviving entity in a merger.
Fair value, with respect to shares being appraised, the value of the shares immediately before
the effective date of the corporate action to which the shareholder demanding appraisal objects,
excluding any element of value arising from the expectation or accomplishment of the proposed
corporate action unless exclusion would be inequitable.
Interest, interest from the effective date of the corporate action until the date of payment, at
the average rate currently paid by the corporation on its principal bank loans or, if none, at a
rate that is fair and equitable under all the circumstances.
Marketable securities, securities held of record by, or by financial intermediaries or
depositories on behalf of, at least 1,000 persons and which were
(a) listed on a national securities exchange,
(b) designated as a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or
(c) listed on a regional securities exchange or traded in an interdealer quotation system or other
trading system and had at least 250,000 outstanding shares, exclusive of shares held by officers,
directors and affiliates, which have a market value of at least $5,000,000.
Officer, the chief executive officer, president, chief operating officer, chief financial
officer, and any vice president in charge of a principal business unit or function of the issuer.
Person, any individual, corporation, partnership, unincorporated association or other entity.
Record shareholder, the person in whose name shares are registered in the records of a
corporation or the beneficial owner of shares to the extent of the rights granted by a nominee
certificate on file with a corporation.
Shareholder, the record shareholder or the beneficial shareholder.
Chapter 156D: Section 13.02. Right to appraisal
Section 13.02. RIGHT TO APPRAISAL
(a) A shareholder is entitled to appraisal rights, and obtain payment of the fair value of his
shares in the event of, any of the following corporate or other actions:
(1) consummation of a plan of merger to which the corporation is a party if shareholder approval is
required for the merger by section 11.04 or the articles of organization or if the corporation is a
subsidiary that is merged with its parent under section 11.05, unless, in either case, (A) all
shareholders are to receive only cash for their shares in amounts equal to what they would receive
upon a dissolution of the corporation or, in the case of shareholders already holding marketable
securities in the merging corporation, only marketable securities of the surviving corporation
and/or cash and (B) no director, officer or controlling shareholder has a direct or indirect
material
C-2
financial interest in the merger other than in his capacity as (i) a shareholder of the
corporation, (ii) a director, officer, employee or consultant of either the merging or the
surviving corporation or of any affiliate of the surviving corporation if his financial interest is
pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any
other capacity so long as the shareholder owns not more than five percent of the voting shares of
all classes and series of the corporation in the aggregate;
(2) consummation of a plan of share exchange in which his shares are included unless: (A) both his
existing shares and the shares, obligations or other securities to be acquired are marketable
securities; and (B) no director, officer or controlling shareholder has a direct or indirect
material financial interest in the share exchange other than in his capacity as (i) a shareholder
of the corporation whose shares are to be exchanged, (ii) a director, officer, employee or
consultant of either the corporation whose shares are to be exchanged or the acquiring corporation
or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide
arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long
as the shareholder owns not more than five percent of the voting shares of all classes and series
of the corporation whose shares are to be exchanged in the aggregate;
(3) consummation of a sale or exchange of all, or substantially all, of the property of the
corporation if the sale or exchange is subject to section 12.02, or a sale or exchange of all, or
substantially all, of the property of a corporation in dissolution, unless:
(i) his shares are then redeemable by the corporation at a price not greater than the cash to be
received in exchange for his shares; or
(ii) the sale or exchange is pursuant to court order; or
(iii) in the case of a sale or exchange of all or substantially all the property of the corporation
subject to section 12.02, approval of shareholders for the sale or exchange is conditioned upon the
dissolution of the corporation and the distribution in cash or, if his shares are marketable
securities, in marketable securities and/or cash, of substantially all of its net assets, in excess
of a reasonable amount reserved to meet unknown claims under section 14.07, to the shareholders in
accordance with their respective interests within one year after the sale or exchange and no
director, officer or controlling shareholder has a direct or indirect material financial interest
in the sale or exchange other than in his capacity as (i) a shareholder of the corporation, (ii) a
director, officer, employee or consultant of either the corporation or the acquiring corporation or
of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide
arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long
as the shareholder owns not more than five percent of the voting shares of all classes and series
of the corporation in the aggregate;
(4) an amendment of the articles of organization that materially and adversely affects rights in
respect of a shareholders shares because it:
(i) creates, alters or abolishes the stated rights or preferences of the shares with respect to
distributions or to dissolution, including making non-cumulative in whole or in part a dividend
theretofore stated as cumulative;
(ii) creates, alters or abolishes a stated right in respect of conversion or redemption, including
any provision relating to any sinking fund or purchase, of the shares;
(iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other
securities;
(iv) excludes or limits the right of the holder of the shares to vote on any matter, or to cumulate
votes, except as such right may be limited by voting rights given to new shares then being
authorized of an existing or new class; or
(v) reduces the number of shares owned by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for cash under section 6.04;
(5) an amendment of the articles of organization or of the bylaws or the entering into by the
corporation of any agreement to which the shareholder is not a party that adds restrictions on the
transfer or registration or any outstanding shares held by the shareholder or amends any
pre-existing restrictions on the transfer or registration of his shares in a manner which is
materially adverse to the ability of the shareholder to transfer his shares;
C-3
(6) any corporate action taken pursuant to a shareholder vote to the extent the articles of
organization, bylaws or a resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to appraisal;
(7) consummation of a conversion of the corporation to nonprofit status pursuant to subdivision B
of PART 9; or
(8) consummation of a conversion of the corporation into a form of other entity pursuant to
subdivision D of PART 9.
(b) Except as otherwise provided in subsection (a) of section 13.03, in the event of corporate
action specified in clauses (1), (2), (3), (7) or (8) of subsection (a), a shareholder may assert
appraisal rights only if he seeks them with respect to all of his shares of whatever class or
series.
(c) Except as otherwise provided in subsection (a) of section 13.03, in the event of an amendment
to the articles of organization specified in clause (4) of subsection (a) or in the event of an
amendment of the articles of organization or the bylaws or an agreement to which the shareholder is
not a party specified in clause (5) of subsection (a), a shareholder may assert appraisal rights
with respect to those shares adversely affected by the amendment or agreement only if he seeks them
as to all of such shares and, in the case of an amendment to the articles of organization or the
bylaws, has not voted any of his shares of any class or series in favor of the proposed amendment.
(d) The shareholders right to obtain payment of the fair value of his shares shall terminate upon
the occurrence of any of the following events:
(i) the proposed action is abandoned or rescinded; or
(ii) a court having jurisdiction permanently enjoins or sets aside the action; or
(iii) the shareholders demand for payment is withdrawn with the written consent of the
corporation.
(e) A shareholder entitled to appraisal rights under this chapter may not challenge the action
creating his entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
Chapter 156D: Section 13.03. Assertion of rights by nominees and beneficial owners
Section 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert appraisal rights as to fewer than all the shares registered in
the record shareholders name but owned by a beneficial shareholder only if the record shareholder
objects with respect to all shares of the class or series owned by the beneficial shareholder and
notifies the corporation in writing of the name and address of each beneficial shareholder on whose
behalf appraisal rights are being asserted. The rights of a record shareholder who asserts
appraisal rights for only part of the shares held of record in the record shareholders name under
this subsection shall be determined as if the shares as to which the record shareholder objects and
the record shareholders other shares were registered in the names of different record
shareholders.
(b) A beneficial shareholder may assert appraisal rights as to shares of any class or series held
on behalf of the shareholder only if such shareholder:
(1) submits to the corporation the record shareholders written consent to the assertion of such
rights no later than the date referred to in subclause (ii) of clause (2) of subsection (b) of
section 13.22; and
(2) does so with respect to all shares of the class or series that are beneficially owned by the
beneficial shareholder.
Chapter 156D: Section 13.20. Notice of appraisal rights
Section 13.20. NOTICE OF APPRAISAL RIGHTS
C-4
(a) If proposed corporate action described in subsection (a) of section 13.02 is to be submitted to
a vote at a shareholders meeting or through the solicitation of written consents, the meeting
notice or solicitation of consents shall state that the corporation has concluded that shareholders
are, are not or may be entitled to assert appraisal rights under this Part and refer to the
necessity of the shareholder delivering, before the vote is taken, written notice of his intent to
demand payment and to the requirement that he not vote his shares in favor of the proposed action.
If the corporation concludes that appraisal rights are or may be available, a copy of this Part
shall accompany the meeting notice sent to those record shareholders entitled to exercise appraisal
rights.
(b) In a merger pursuant to section 11.05, the parent corporation shall notify in writing all
record shareholders of the subsidiary who are entitled to assert appraisal rights that the
corporate action became effective. Such notice shall be sent within 10 days after the corporate
action became effective and include the materials described in section 13.22.
Chapter 156D: Section 13.21. Notice of intent to demand payment
Section 13. Section 13.21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action requiring appraisal rights under section 13.02 is submitted to
vote at a shareholders meeting, a shareholder who wishes to assert appraisal rights with respect
to any class or series of shares:
(1) shall deliver to the corporation before the vote is taken written notice of the shareholders
intent to demand payment if the proposed action is effectuated; and
(2) shall not vote, or cause or permit to be voted, any shares of such class or series in favor of
the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to
payment under this chapter.
Chapter 156D: Section 13.22. Appraisal notice and form
Section 13.22. APPRAISAL NOTICE AND FORM
(a) If proposed corporate action requiring appraisal rights under subsection (a) of section 13.02
becomes effective, the corporation shall deliver a written appraisal notice and form required by
clause (1) of subsection (b) to all shareholders who satisfied the requirements of section 13.21
or, if the action was taken by written consent, did not consent. In the case of a merger under
section 11.05, the parent shall deliver a written appraisal notice and form to all record
shareholders who may be entitled to assert appraisal rights.
(b) The appraisal notice shall be sent no earlier than the date the corporate action became
effective and no later than 10 days after such date and must:
(1) supply a form that specifies the date of the first announcement to shareholders of the
principal terms of the proposed corporate action and requires the shareholder asserting appraisal
rights to certify (A) whether or not beneficial ownership of those shares for which appraisal
rights are asserted was acquired before that date and (B) that the shareholder did not vote for the
transaction;
(2) state:
(i) where the form shall be sent and where certificates for certificated shares shall be deposited
and the date by which those certificates shall be deposited, which date may not be earlier than the
date for receiving the required form under subclause (ii);
(ii) a date by which the corporation shall receive the form which date may not be fewer than 40 nor
more than 60 days after the date the subsection (a) appraisal notice and form are sent, and state
that the shareholder shall have waived the right to demand appraisal with respect to the shares
unless the form is received by the corporation by such specified date;
C-5
(iii) the corporations estimate of the fair value of the shares;
(iv) that, if requested in writing, the corporation will provide, to the shareholder so requesting,
within 10 days after the date specified in clause (ii) the number of shareholders who return the
forms by the specified date and the total number of shares owned by them; and
(v) the date by which the notice to withdraw under section 13.23 shall be received, which date
shall be within 20 days after the date specified in subclause (ii) of this subsection; and
(3) be accompanied by a copy of this chapter.
Chapter 156D: Section 13.23. Perfection of rights; right to withdraw
Section 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW
(a) A shareholder who receives notice pursuant to section 13.22 and who wishes to exercise
appraisal rights shall certify on the form sent by the corporation whether the beneficial owner of
the shares acquired beneficial ownership of the shares before the date required to be set forth in
the notice pursuant to clause (1) of subsection (b) of section 13.22. If a shareholder fails to
make this certification, the corporation may elect to treat the shareholders shares as
after-acquired shares under section 13.25. In addition, a shareholder who wishes to exercise
appraisal rights shall execute and return the form and, in the case of certificated shares, deposit
the shareholders certificates in accordance with the terms of the notice by the date referred to
in the notice pursuant to subclause (ii) of clause (2) of subsection (b) of section 13.22. Once a
shareholder deposits that shareholders certificates or, in the case of uncertificated shares,
returns the executed forms, that shareholder loses all rights as a shareholder, unless the
shareholder withdraws pursuant to said subsection (b).
(b) A shareholder who has complied with subsection (a) may nevertheless decline to exercise
appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing
by the date set forth in the appraisal notice pursuant to subclause (v) of clause (2) of subsection
(b) of section 13.22. A shareholder who fails to so withdraw from the appraisal process may not
thereafter withdraw without the corporations written consent.
(c) A shareholder who does not execute and return the form and, in the case of certificated shares,
deposit that shareholders share certificates where required, each by the date set forth in the
notice described in subsection (b) of section 13.22, shall not be entitled to payment under this
chapter.
Chapter 156D: Section 13.24. Payment
Section 13.24. PAYMENT
(a) Except as provided in section 13.25, within 30 days after the form required by subclause (ii)
of clause (2) of subsection (b) of section 13.22 is due, the corporation shall pay in cash to those
shareholders who complied with subsection (a) of section 13.23 the amount the corporation estimates
to be the fair value of their shares, plus interest.
(b) The payment to each shareholder pursuant to subsection (a) shall be accompanied by:
(1) financial statements of the corporation that issued the shares to be appraised, consisting of a
balance sheet as of the end of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of changes in shareholders equity for that
year, and the latest available interim financial statements, if any;
(2) a statement of the corporations estimate of the fair value of the shares, which estimate shall
equal or exceed the corporations estimate given pursuant to subclause (iii) of clause (2) of
subsection (b) of section 13.22; and
(3) a statement that shareholders described in subsection (a) have the right to demand further
payment under section 13.26 and that if any such shareholder does not do so within the time period
specified therein, such shareholder shall be deemed to have accepted the payment in full
satisfaction of the corporations obligations under this chapter.
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Chapter 156D: Section 13.25. After-acquired shares
Section 13.25. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by section 13.24 from any shareholder who
did not certify that beneficial ownership of all of the shareholders shares for which appraisal
rights are asserted was acquired before the date set forth in the appraisal notice sent pursuant to
clause (1) of subsection (b) of section 13.22.
(b) If the corporation elected to withhold payment under subsection (a), it must, within 30 days
after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due,
notify all shareholders who are described in subsection (a):
(1) of the information required by clause (1) of subsection (b) of section 13.24;
(2) of the corporations estimate of fair value pursuant to clause (2) of subsection (b) of said
section 13.24;
(3) that they may accept the corporations estimate of fair value, plus interest, in full
satisfaction of their demands or demand appraisal under section 13.26;
(4) that those shareholders who wish to accept the offer shall so notify the corporation of their
acceptance of the corporations offer within 30 days after receiving the offer; and
(5) that those shareholders who do not satisfy the requirements for demanding appraisal under
section 13.26 shall be deemed to have accepted the corporations offer.
(c) Within 10 days after receiving the shareholders acceptance pursuant to subsection(b), the
corporation shall pay in cash the amount it offered under clause (2) of subsection (b) to each
shareholder who agreed to accept the corporations offer in full satisfaction of the shareholders
demand.
(d) Within 40 days after sending the notice described in subsection (b), the corporation must pay
in cash the amount if offered to pay under clause (2) of subsection (b) to each shareholder
deserved in clause (5) of subsection (b).
Chapter 156D: Section 13.26. Procedure if shareholder dissatisfied with payment or offer
Section 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A shareholder paid pursuant to section 13.24 who is dissatisfied with the amount of the payment
shall notify the corporation in writing of that shareholders estimate of the fair value of the
shares and demand payment of that estimate plus interest, less any payment under section 13.24. A
shareholder offered payment under section 13.25 who is dissatisfied with that offer shall reject
the offer and demand payment of the shareholders stated estimate of the fair value of the shares
plus interest.
(b) A shareholder who fails to notify the corporation in writing of that shareholders demand to be
paid the shareholders stated estimate of the fair value plus interest under subsection (a) within
30 days after receiving the corporations payment or offer of payment under section 13.24 or
section 13.25, respectively, waives the right to demand payment under this section and shall be
entitled only to the payment made or offered pursuant to those respective sections.
Chapter 156D: Section 13.30. Court action
Section 13.30. COURT ACTION
(a) If a shareholder makes demand for payment under section 13.26 which remains unsettled, the
corporation shall commence an equitable proceeding within 60 days after receiving the payment
demand and petition the court to determine the fair value of the shares and accrued interest. If
the corporation does not commence the proceeding
C-7
within the 60-day period, it shall pay in cash to each shareholder the amount the shareholder
demanded pursuant to section 13.26 plus interest.
(b) The corporation shall commence the proceeding in the appropriate court of the county where the
corporations principal office, or, if none, its registered office, in the commonwealth is located.
If the corporation is a foreign corporation without a registered office in the commonwealth, it
shall commence the proceeding in the county in the commonwealth where the principal office or
registered office of the domestic corporation merged with the foreign corporation was located at
the time of the transaction.
(c) The corporation shall make all shareholders, whether or not residents of the commonwealth,
whose demands remain unsettled parties to the proceeding as an action against their shares, and all
parties shall be served with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law or otherwise as ordered by the court.
(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is
plenary and exclusive. The court may appoint 1 or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers shall have the powers
described in the order appointing them, or in any amendment to it. The shareholders demanding
appraisal rights are entitled to the same discovery rights as parties in other civil proceedings.
(e) Each shareholder made a party to the proceeding is entitled to judgment (i) for the amount, if
any, by which the court finds the fair value of the shareholder s shares, plus interest, exceeds
the amount paid by the corporation to the shareholder for such shares or (ii) for the fair value,
plus interest, of the shareholders shares for which the corporation elected to withhold payment
under section 13.25.
Chapter 156D: Section 13.31. Court costs and counsel fees
Section 13.31. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under section 13.30 shall determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers appointed by the
court. The court shall assess the costs against the corporation, except that the court may assess
cost against all or some of the shareholders demanding appraisal, in amounts the court finds
equitable, to the extent the court finds such shareholders acted arbitrarily, vexatiously, or not
in good faith with respect to the rights provided by this chapter.
(b) The court in an appraisal proceeding may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) against the corporation and in favor of any or all shareholders demanding appraisal if the
court finds the corporation did not substantially comply with the requirements of sections 13.20,
13.22, 13.24 or 13.25; or
(2) against either the corporation or a shareholder demanding appraisal, in favor of any other
party, if the court finds that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.
(c) If the court in an appraisal proceeding finds that the services of counsel for any shareholder
were of substantial benefit to other shareholders similarly situated, and that the fees for those
services should not be assessed against the corporation, the court may award to such counsel
reasonable fees to be paid out of the amounts awarded the shareholders who were benefited.
(d) To the extent the corporation fails to make a required payment pursuant to sections 13.24,
13.25, or 13.26, the shareholder may sue directly for the amount owed and, to the extent
successful, shall be entitled to recover from the corporation all costs and expenses of the suit,
including counsel fees.
C-8
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PLEASE MARK VOTES
AS IN THIS EXAMPLE
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REVOCABLE PROXY
NATIONAL DENTEX CORPORATION
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PROXY FOR THE SPECIAL MEETING
OF SHAREHOLDERS ON [
], 2010
THIS PROXY IS BEING SOLICITED BY
THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Special Meeting of Shareholders
and Proxy Statement of National Dentex Corporation (the Company), hereby appoint(s) David V.
Harkins, David L. Brown, and Richard F. Becker, Jr. or any one of them, proxies for the
undersigned, with full power of substitution in each of them, to represent the undersigned at the
Special Meeting of Shareholders of the Company to be held at Posternak Blankstein & Lund LLP,
Prudential Tower, 800 Boylston Street, 33rd Floor, Boston, Massachusetts, 02199 at [
] on [
], 2010
and at any adjournment or postponement thereof, and thereat, to vote and act in regard to all
matters which may properly come before said meeting upon and in respect of all shares of common
stock of the Company upon or in respect of which the undersigned would be entitled to vote or act
and with all powers the undersigned would possess, if personally present, and especially (but
without limiting the general authorization and power hereby given) to vote and act as indicated
hereon.
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Please be sure to date and sign this
proxy card in
the box below.
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Date
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Sign above
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For
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Against
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Abstain
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1.
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The adoption and approval of the Agreement and Plan of Merger, dated as of April 2, 2010,
among GDC Holdings, Inc., a Delaware corporation (Parent), Royal Acquisition Corp., a
Delaware corporation and an indirect wholly owned subsidiary of Parent (Merger Sub), and
National Dentex Corporation, pursuant to which National Dentex Corporation and Merger Sub
will merge (the Merger), and the transactions contemplated thereby, including the Merger.
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For
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Against
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Abstain
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2.
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The approval of the adjournment of the Special Meeting, if necessary, to permit National
Dentex Corporation to solicit additional proxies if there are insufficient votes or to adopt
and approve the Agreement and Plan of Merger.
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Mark box at right if an address change or comment has been noted on the bottom portion of this card.
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Please check the box at right if you plan to attend the meeting on [
], 2010.
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
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Detach above card, sign, date and mail in postage paid envelope provided.
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NATIONAL DENTEX CORPORATION
The above signed hereby confer(s) upon said proxies, and each of them, discretionary authority to vote upon any other matters or
proposals not known at the time of solicitation of this proxy which may properly come before the meeting.
Attendance of the above signed at said meeting or at any adjournment or postponement thereof will not be deemed to revoke this proxy
unless the above signed shall affirmatively indicate thereat his or her intention to vote said shares in person. If a fiduciary capacity is
attributed to the above signed hereon, this proxy will be deemed signed by the above signed in that capacity.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN
THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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