You are
cordially invited to attend a special meeting of stockholders of Houston Wire & Cable Company, a Delaware corporation
(the “Company”), which will be held on Tuesday, June 15, 2021, at 10:00 a.m., Central Time. Due to the continuing
impact of the COVID-19 pandemic on public health, and out of concern for the health and safety of our stockholders, employees
and directors, the special meeting will be a virtual meeting of stockholders rather than an in-person meeting. You will be
able to attend the special meeting online by visiting www.virtualshareholdermeeting.com/HWCC2021SM.
At the special meeting,
our stockholders will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger that we entered into
on March 24, 2021, which we refer to as the “merger agreement,” providing for the acquisition of the Company by Omni
Cable, LLC in a transaction that we refer to as the “merger.” If the merger agreement is adopted and the merger is
completed, each share of our common stock (other than certain shares specified in the merger agreement) will be converted into
the right to receive $5.30 per share in cash, without interest and subject to any required withholding taxes, representing a premium
of approximately 36% over the trailing 30-day volume weighted average price of our common stock for the period ended March 24,
2021.
The enclosed proxy
statement describes the merger agreement, the merger and related matters, and includes a copy of the merger agreement. We urge
stockholders to read the entire proxy statement carefully, as it sets forth the details of the merger agreement and other important
information related to the merger.
On behalf of the entire
board of directors, I want to thank you for your continued support.
The accompanying proxy statement is dated
May 11, 2021 and is being mailed to Company stockholders on or about May 14, 2021.
For purposes of this
discussion, we use the term “U.S. holder” to mean a beneficial owner of shares of Company common stock that is, for
U.S. federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes)
created or organized under the laws of the United States, any state thereof or the District of Columbia;
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a trust that (i) is subject to the supervision of a court within the United States and the
control of one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) or (ii) has a valid
election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
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an estate that is subject to U.S. federal income tax on its income regardless of its source.
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We use the term “non-U.S.
holder” to mean a beneficial owner of Company common stock (other than a partnership or other entity or arrangement treated
as a partnership for U.S. federal income tax purposes) that is not a U.S. holder.
If a partnership (including
an entity or arrangement treated as a partnership for U.S. federal income tax purposes) beneficially owns shares of Company
common stock, the tax treatment of the partnership and its partners generally will depend on the status of the partners and the
activities of the partnership. A partner in a partnership holding shares of Company common stock should consult such partner’s
tax advisor.
U.S. Holders
General. A U.S. holder’s
receipt of cash in exchange for shares of Company common stock pursuant to the merger will be a taxable transaction for U.S. federal
income tax purposes, and a U.S. holder who receives cash in exchange for shares of Company common stock in the merger will
recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. holder’s adjusted
tax basis in the shares. A U.S. holder’s adjusted tax basis in a share generally will be equal to the amount the U.S. holder
paid for the share. Generally, gain or loss will be determined separately for each block of
shares of Company common
stock (that is, shares acquired at the same cost in a single transaction). Such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the U.S. holder’s holding period for the shares is more than one year at the
effective time. Long-term capital gain recognized by individuals and other non-corporate persons that are U.S. holders generally
is subject to tax at a reduced rate of U.S. federal income tax. There are limitations on the deductibility of capital losses.
Information Reporting
and Backup Withholding. A U.S. holder may be subject to information reporting. In addition, all payments to which a U.S. holder
would be entitled pursuant to the merger will be subject to backup withholding at the statutory rate unless such holder (i) is
a corporation or other exempt recipient (and, when required, demonstrates this fact), or (ii) provides a taxpayer identification
number (“TIN”) and certifies, under penalty of perjury, that the U.S. holder is not subject to backup withholding,
and otherwise complies with applicable requirements of the backup withholding rules. A U.S. holder that does not otherwise
establish exemption should complete, sign and deliver to the appropriate person an IRS Form W-9, Request for Taxpayer Identification
Number and Certification, in order to provide the information and certification necessary to avoid backup withholding and possible
penalties. If a U.S. holder does not provide a correct TIN, such U.S. holder may be subject to backup withholding and
penalties imposed by the IRS.
Any amount paid as
backup withholding does not constitute an additional tax and will be creditable against a U.S. holder’s U.S. federal
income tax liability, provided the required information is given to the IRS in a timely manner. If backup withholding results in
an overpayment of tax, a U.S. holder may obtain a refund by filing a U.S. federal income tax return in a timely manner.
U.S. holders are urged to consult their tax advisors as to qualifications for exemption from backup withholding and the procedure
for obtaining the exemption.
Non-U.S. Holders
General. A non-U.S.
holder’s receipt of cash for shares of Company common stock pursuant to the merger generally will not be subject to U.S. federal
income tax unless:
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the non-U.S. holder is an individual who was present in the United States for 183 days or more
during the taxable year of the merger and certain other conditions are met;
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the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business
in the United States and, if required by an applicable tax treaty, is attributable to a permanent establishment maintained by the
non-U.S. holder in the United States; or
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we are or have been a United States real property holding corporation, or “USRPHC,”
for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the merger
or the period that the non-U.S. holder held our shares, and, in the case where our shares are regularly traded on an established
securities market, the non-U.S. holder has owned, directly or constructively, more than five percent (5%) of our stock at any time
within the shorter of the five-year period preceding the date of the merger or the period during which the non-U.S. holder held
our shares. There can be no assurance that our stock is or has been treated as regularly traded on an established securities market
for this purpose.
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Gain described
in the first bullet point above generally will be subject to tax at a flat rate of 30% (or such lower rate as may be specified
under an applicable income tax treaty), net of applicable U.S.-source losses from sales or exchanges of other capital assets recognized
by such non-U.S. holder during the taxable year even though the individual is not considered a resident of the United States, provided
the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. Unless a tax treaty provides
otherwise, gain described in the second bullet point above will be subject to U.S. federal income tax on a net income basis
in the same manner as if the non-U.S. holder were a U.S. holder. A non-U.S. holder that is a foreign corporation also may
be subject to a 30% branch profits tax (or applicable lower treaty rate). Non-U.S. holders are urged to consult their tax advisors
as to any applicable tax treaties that might provide for different rules.
With respect to the
third bullet point above, the determination of whether we are a USRPHC depends on the fair market value of our United States real
property interests relative to the fair market value of our other trade or business assets and our United States and foreign real
property interests. We believe that we have not been a USRPHC for U.S. federal income tax purposes at any time during the
five-year period ending on the date of the merger.
Information Reporting
and Backup Withholding. Information reporting and backup withholding will generally apply to payments made pursuant to the
merger to a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder
certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise establishes an exemption. Dispositions
effected through a non-U.S. office of a U.S. broker or a non-U.S. broker with substantial U.S. ownership or operations
generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. A non-U.S. holder
must generally submit a duly completed and signed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding and Reporting (Individuals), or W-8BEN-E, Certificate of Status of Beneficial Owner for United
States Tax Withholding and Reporting (Entities) (or other applicable IRS Form W-8), attesting to its exempt foreign status
in order to qualify as an exempt recipient. Any amount paid as backup withholding does not constitute an additional tax and will
be creditable against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is given
to the IRS in a timely manner. If backup withholding results in an overpayment of tax, a non-U.S. holder may obtain a refund by
filing a U.S. federal income tax return in a timely manner. Non-U.S. holders are urged to consult their tax advisors as to
qualifications for exemption from backup withholding and the procedure for obtaining the exemption. Copies of information returns
that are filed with the IRS may also be made available under an applicable tax treaty or information exchange agreement to the
tax authorities of the country in which the non-U.S. holder resides or is established.
THE FOREGOING SUMMARY
DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS OF SHARES OF COMPANY
COMMON STOCK. HOLDERS OF SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT
OF CASH FOR THEIR SHARES PURSUANT TO THE MERGER UNDER ANY U.S. FEDERAL, STATE, FOREIGN, LOCAL OR OTHER TAX LAWS, OR UNDER
ANY APPLICABLE INCOME TAX TREATY.
Litigation Relating to the Merger
Following the filing
of the preliminary proxy statement, four separate lawsuits were filed related to the proxy statement. The first suit, styled Stein
v. Houston Wire & Cable Company, et al., No. 1:21-cv-00571-UNA, and the second suit, styled Perkey v. Houston Wire
& Cable Company, et al., No. 1:21-cv-00589-UNA, were filed in the United States District Court for the District of Delaware.
The third suit, styled Friedman v. Houston Wire & Cable Company, et al., No. 1:21-cv-02405, was filed in the United
States District Court for the Eastern District of New York. The fourth suit, styled Davenport v. Houston Wire & Cable Company,
et al., No. 1:21-cv-04127, was filed in the United States District Court for the Southern District of New York. All four lawsuits
assert claims against the Company and the Company’s directors on behalf of individual plaintiffs. All four lawsuits assert
a cause of action against the Company and the directors under Section 14(a) of the Exchange Act and its implementing regulations
and a “control person” claim against the directors under Section 20(a) of the Exchange Act based on the alleged Section
14(a) violations, and one of the lawsuits includes a claim against the directors for breach of their fiduciary duty of candor/disclosure.
Each lawsuit alleges that the proxy statement omits material information on certain topics, including reconciliation of non-GAAP
financial metrics, data used by the Company to make financial projections, input data for Johnson Rice’s analysis, Johnson
Rice’s past services provided to the Company and, in certain of the lawsuits, the terms of William Blair’s engagement
and the expected executive structure of the post-merger company, and each case seeks to enjoin the defendants from proceeding
with the proposed merger, rescind the merger or award damages if the merger is consummated, and award plaintiff costs and attorney’s
fees. Certain of the lawsuits also seek judgment directing the individual defendants to disseminate a proxy statement that complies
with Section 14(a) and Rule 14a-9 promulgated thereunder and declaring that defendants violated Sections 14(a) and/or 20(a) and
Rule 14a-9. The Company believes the allegations in these actions are without merit.
THE AGREEMENT AND
PLAN OF MERGER
Explanatory Note
Regarding the Merger Agreement
The summary of the
material provisions of the merger agreement set forth below and elsewhere in this proxy statement is qualified in its entirety
by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and is incorporated
by reference in this proxy statement. This summary does not purport to be complete and may not contain all of the information about
the merger agreement that is important to you. We encourage you to read the merger agreement carefully in its entirety.
The merger agreement
is described in this proxy statement and included as Annex A only to provide you with information regarding its terms and
conditions and is not intended to be a source of factual, business or operational information about the Company, OmniCable or Merger
Sub. Such information can be found elsewhere in this proxy statement or, in the case of the Company, in the public filings that
the Company makes with the SEC, which are available without charge through the SEC’s website at www.sec.gov. See the
section entitled “Where You Can Find More Information,” on page 74.
The representations,
warranties and covenants made in the merger agreement by the Company, OmniCable and Merger Sub are qualified and subject to important
limitations agreed to by the Company, OmniCable and Merger Sub in connection with negotiating the terms of the merger agreement.
In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary,
it is important to bear in mind that the representations and warranties were negotiated for purposes of establishing the circumstances
in which a party to the merger agreement may have the right not to close the merger if the representations and warranties of the
other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger
agreement. The representations and warranties may also be subject to contractual standards of materiality that differ from those
generally applicable to stockholders and reports and documents filed with the SEC, and in some cases were qualified by a disclosure
letter delivered by the Company in connection with the merger agreement (which we refer to as the “Company disclosure letter”),
which disclosures are not reflected in the text of the merger agreement. Moreover, information concerning the subject matter of
the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed
since the date of the merger agreement, and subsequent developments or new information qualifying a representation or warranty
may or may not have been included in this proxy statement.
The Merger
The merger agreement
provides that, upon the terms and subject to the conditions set forth in the merger agreement and the applicable provisions of
the DGCL, at the effective time, Merger Sub will be merged with and into the Company, whereupon the separate corporate existence
of Merger Sub will cease and the Company will continue as the surviving corporation. As a result of the merger, the Company, as
the surviving corporation, will succeed to and assume all of the rights and obligations of Merger Sub and the Company in accordance
with the DGCL, as a wholly-owned subsidiary of OmniCable.
Closing; Effective
Time of the Merger
The closing of
the merger will take place within three business days after each of the conditions set forth in the merger agreement is
satisfied or, to the extent permitted by law, waived by the party entitled to waive such condition (other than those
conditions that, by their terms, are only capable of being satisfied on the closing date), unless the merger agreement has
been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties to the merger
agreement (the date on which the closing occurs is the “closing date”).
Concurrently with the
closing, the Company will cause a certificate of merger with respect to the merger to be executed, acknowledged and filed with
the Secretary of State of the State of Delaware as provided in the DGCL. The merger will become effective on the date and at the
time the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such later time as may
be agreed upon by the parties to the merger agreement in writing and set forth in the certificate of merger in accordance with
the DGCL.
Organizational Documents;
Directors and Officers
At the effective time,
(i) the certificate of incorporation of the surviving corporation will be amended and restated to read as set forth in Exhibit
A to the merger agreement, and (ii) the by-laws of Merger Sub will be the by-laws of the surviving
corporation (except that
references to the name of Merger Sub will be replaced by references to the name of the surviving corporation) until thereafter
amended in accordance with applicable law and the applicable provisions of the amended and restated certificate of incorporation
and the by-laws of the surviving corporation.
Additionally, at the
effective time, the board of directors and officers of Merger Sub as of immediately prior to the effective time will be the directors
and officers, respectively, of the surviving corporation effective until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the amended and restated certificate of incorporation and
the by-laws of the surviving corporation.
Merger Consideration
Outstanding Company Common
Stock
At the effective time,
each share of Company common stock issued and outstanding immediately prior to the effective time, other (i) than shares owned
by OmniCable or the Company (as treasury stock or otherwise) or any of their respective direct or indirect wholly-owned subsidiaries
as of immediately prior to the effective time and (ii) dissenting shares (as defined below), will be cancelled and automatically
converted into the right to receive $5.30 in cash, without interest, subject to any applicable withholding taxes.
Any shares of Company
common stock owned by OmniCable or the Company (as treasury stock or otherwise) or any of their respective direct or indirect wholly-owned
subsidiaries as of immediately prior to the effective time will automatically be cancelled and retired and will cease to exist,
and no consideration will be delivered in exchange therefor.
Merger Sub Capital Stock
At the effective time,
each issued and outstanding share of common stock of Merger Sub will be automatically converted into and become one validly issued,
fully paid and non-assessable share of common stock, par value $0.01 per share, of the surviving corporation.
Dissenting Shares
Shares of Company common
stock issued and outstanding immediately prior to the effective time that are held by a person who did not vote in favor of or
consent to the adoption of the merger agreement and who have properly demanded appraisal of such shares and complied in all respects
with all the applicable provisions of the DGCL (which we refer to as “dissenting shares”) will not be converted into
the right to receive the merger consideration but instead will have such rights as are granted by Section 262 of the DGCL. We refer
to a holder of dissenting shares as a “dissenting stockholder.” If a dissenting stockholder withdraws its demand for
appraisal or fails to perfect or otherwise waives, withdraws, or loses its right of appraisal, in any case pursuant to Section
262 of the DGCL, its shares will be deemed to be converted as of the effective time into the right to receive the merger consideration,
without interest, subject to any applicable withholding taxes.
The merger agreement
provides that the Company will give OmniCable prompt written notice of any demands received by the Company for appraisal of shares
of Company common stock received, any waiver or withdrawals of such demands and any other demands, notices or instruments served
on the Company pursuant to Section 262 of the DGCL, and OmniCable will have the opportunity to direct all negotiations and proceedings
with respect to such demands. The Company will not, without the prior written consent of OmniCable, make any payment with respect
to, or settle or offer to settle, any such demands.
Treatment of Outstanding
Equity Awards and Deferred Compensation
Company Stock Options
The merger agreement
requires the Company to take all necessary action so that, at the effective time, each outstanding Company stock option will be
fully vested and cancelled, and each holder of a cancelled Company stock option will receive a cash payment based on the excess,
if any, of the merger consideration over the per share exercise price under such Company stock option. Since the per share exercise
price under all outstanding Company stock options is greater than the merger consideration, all Company stock options will be cancelled
as of the effective time without any payment to the holders.
Company Restricted Shares
The merger agreement
requires the Company to take all necessary action so that, at the effective time, each outstanding share of Company restricted
stock will fully vest and become free of restrictions and will be cancelled and converted into the right to receive the merger
consideration, less any taxes required to be withheld.
Company Restricted Stock
Units
The merger agreement
requires the Company to take all necessary action so that, at the effective time, each outstanding Company restricted stock unit,
whether or not then vested, will be cancelled and converted into the right to receive a payment in cash, without interest, equal
to the product of (i) the aggregate number of shares of Company common stock subject to such Company restricted stock unit multiplied
by (ii) the merger consideration, less any taxes required to be withheld.
Company Performance Stock
Units
The merger agreement
requires the Company to take all necessary action so that, at the effective time, each outstanding Company performance stock unit,
whether or not then vested, will be cancelled and converted into the right to receive a payment in cash, without interest, equal
to the product of (i) the aggregate number of shares of Company common stock subject to such Company performance stock unit, assuming
that 100% of the applicable target had been achieved and the performance period had ended, in each case as of immediately prior
to the effective time, multiplied by (ii) the merger consideration, less any taxes required to be withheld.
Company Non-employee
Directors’ Deferred Stock Units
The merger
agreement requires the Company to take all necessary action so that, at the effective time, each deferred stock unit
outstanding under the Company’s Nonemployee Directors’ Deferred Compensation Plan, all of which are
fully vested, will be cancelled and converted into the right to receive a payment in cash, without interest, equal to the
product of (i) the aggregate number of shares of Company common stock subject to such deferred stock unit multiplied by (ii)
the merger consideration, less any taxes required to be withheld.
Section 409A of the Internal
Revenue Code
With respect to any
Company restricted stock units, performance stock units or deferred stock units that the Company, in consultation with OmniCable,
has determined constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code and payment for
which is not permitted to be made at the effective time without triggering a tax or penalty under Section 409A of the Internal
Revenue Code, such payment shall be made at the earliest time permitted under the applicable stock plan and award agreement, if
any, that will not trigger a tax or penalty under Section 409A of the Internal Revenue Code.
Payment Procedures
Promptly
following the effective time, OmniCable will deposit, or cause to be deposited, with a paying agent (referred to in this
proxy statement as the “paying agent”) in trust for the benefit of holders of shares of Company common stock cash
sufficient to pay the aggregate merger consideration.
OmniCable will mail,
or cause the paying agent to mail, to each holder of record of a certificate or certificates that immediately prior to the effective
time represented outstanding shares of Company common stock, other than shares cancelled at the effective time and dissenting shares,
a letter of transmittal and instructions for effecting the surrender of such certificates to the paying agent in exchange for payment
of the merger consideration (without interest and subject to any required withholding taxes). Upon surrender to the paying agent
of certificates, together with the letter of transmittal, duly completed and validly executed, and such other customary documents
as may be reasonably required, the holder of such certificates will be entitled to receive payment of the merger consideration
which the holder is entitled to pursuant to the merger agreement in respect of each share formerly represented by such certificate
(without interest and subject to any required withholding taxes).
No holder of book-entry
shares of Company common stock will be required to deliver a certificate or letter of transmittal to the paying agent to receive
the merger consideration. In lieu thereof, the registered holder of each book-entry share of Company common stock will automatically
upon the effective time be entitled to receive, and, upon receipt by the paying agent of an
“agent’s message” in customary form (or such other evidence, if any, as the paying agent may reasonably
request),
OmniCable will or will cause the surviving corporation to cause the paying agent to pay and deliver in exchange
therefor as soon as reasonably practicable after the effective time, the merger consideration (without interest and subject
to any required withholding taxes).
YOU SHOULD NOT SEND
IN YOUR STOCK CERTIFICATE(S) WITH YOUR PROXY FORM. A LETTER OF TRANSMITTAL WITH INSTRUCTIONS FOR THE SURRENDER OF CERTIFICATES
REPRESENTING SHARES OF COMPANY COMMON STOCK WILL BE MAILED TO STOCKHOLDERS HOLDING CERTIFICATED SHARES OF COMPANY COMMON STOCK
IF THE MERGER IS COMPLETED.
Lost, Stolen and Destroyed
Certificates
If any certificate
will have been lost, stolen or destroyed, upon the marking of an affidavit in form and substance reasonably acceptable to the paying
agent of that fact by the person claiming such certificate to be lost, stolen or destroyed, the paying agent or the surviving corporation,
as applicable, will issue in exchange for such lost, stolen or destroyed certificate the portion of the aggregate merger consideration
into which the shares formerly represented by such certificate were converted pursuant to the merger agreement. However, the paying
agent may, in its reasonable discretion and as a condition precedent to the payment of such merger consideration, require the owner
of such lost, stolen or destroyed Company stock certificate to provide a bond in a customary amount.
Voting Agreements
All directors
and executive officers of the Company have entered into voting agreements pursuant to which they have agreed, among other
things, to vote the shares of Company common stock they beneficially own for adoption of the merger agreement and approval of
the merger. The voting agreements cover approximately 19% of the outstanding shares of Company common stock as of May 4, 2021.
The voting agreements terminate automatically if the merger agreement is terminated and may be terminated by mutual consent
of the parties.
Representations and
Warranties
The Company, on the
one hand, and OmniCable and Merger Sub, on the other hand, have made representations and warranties to each other in the merger
agreement. The representations and warranties of each of the parties to the merger agreement will expire at the effective time.
Representations and Warranties
of the Company
The Company has made
customary representations and warranties to OmniCable and Merger Sub in the merger agreement regarding aspects of the Company’s
business and various other matters pertinent to the merger. The topics covered by the Company’s representations and warranties
include the following:
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the organization, qualification to do business and good standing of the Company;
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the Company’s subsidiaries, including, among other things, the organization, qualification
to do business, good standing, capital structure and absence of restrictions with respect to the capital stock of such subsidiaries;
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the capital structure, outstanding stock and outstanding equity awards of the Company;
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the Company’s authority to enter into, and, subject to receipt of the Company stockholder
approval, consummate the transactions contemplated by the merger agreement;
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the absence of conflicts with, or violations of, laws, organizational documents or contracts, in
each case as a result of the Company’s execution or delivery of the merger agreement or the performance by the Company of
its covenants under, or the consummation by the Company of the transactions contemplated by, the merger agreement;
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the governmental and regulatory approvals required to complete the merger;
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the Company’s board’s approval of the merger agreement and recommendation that the
Company’s stockholders adopt the merger agreement;
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the Company’s SEC filings, the financial statements contained in such filings and off-balance
sheet arrangements;
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the Company’s and its subsidiaries’ systems of internal control over financial reporting
and disclosure controls and procedures;
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the absence of certain changes and events since December 31, 2020;
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tax matters related to the Company and its subsidiaries;
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the Company’s and its subsidiaries’ intellectual property;
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compliance with law and governmental permits;
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pending or threatened litigation, audits, inquiries or investigations;
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broker’s, finder’s or investment banker’s fees in connection with the transactions
contemplated by the merger agreement;
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the absence of transactions with related persons;
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employee benefits matters related to the Company and its subsidiaries;
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labor and employment matters related to the Company and its subsidiaries;
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the Company’s and its subsidiaries’ owned and leased real property;
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environmental matters related to the Company and its subsidiaries;
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insurance coverage related to the Company and its subsidiaries;
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anti-corruption matters related to the Company and its subsidiaries;
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the absence of pending or threatened product recalls or investigations;
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compliance with the laws governing the Company’s loan under the Paycheck Protection Program;
and
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the opinion of the Company’s financial advisor.
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Some of the Company’s
representations and warranties are qualified by the concept of a “Company material adverse effect.” Under the terms
of the merger agreement, a Company material adverse effect means any event, occurrence, fact, condition, or change that is, or
would reasonably be expected to become, individually or in the aggregate, materially adverse to: (a) the business, results of operations,
financial condition or assets of the Company and its subsidiaries, taken as a whole; or (b) the ability of the Company to consummate
the transactions contemplated by the merger agreement on a timely basis, provided, however, that, for the purposes of clause (a),
a Company material adverse effect shall not be deemed to include events, occurrences, facts, conditions or changes arising out
of, relating to, or resulting from: (i) changes generally affecting the economy, financial or securities markets, or political
conditions; (ii) the announcement or pendency of the transactions contemplated by the merger agreement (it being understood and
agreed that this clause shall not apply with respect to any representation or warranty that is intended to address the consequences
of the announcement or the pendency of the merger agreement); (iii) any changes in applicable law or GAAP or other applicable accounting
standards; (iv) acts of war or terrorism or the escalation thereof; (v) natural disasters, pandemics and acts of God; (vi) general
conditions in the industry in which the Company and its subsidiaries operate; (vii) any failure, in and of itself, by the Company
to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other
financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing
to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably
be expected to become, a Company material adverse effect, to the extent permitted by this definition and not otherwise excepted
by another clause of
this proviso); (viii) any change, in and of itself, in the market
price or trading volume of the Company’s securities (it being understood that the facts or occurrences giving rise to or
contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would
reasonably be expected to become, a Company material adverse effect, to the extent permitted by this definition and not otherwise
excepted by another clause of this proviso); or (ix) actions taken as required or specifically permitted by the merger agreement
or actions or omissions taken with OmniCable’s consent; provided further, however, that any event, change and effect referred
to in clauses (i), (iii), (iv), (v), or (vi) shall be taken into account in determining whether a Company material
adverse effect has occurred or would reasonably be expected to occur to the extent that such event, change or effect has a disproportionate
effect on the Company and its subsidiaries, taken as a whole, compared to other participants in the industries in which the Company
and its subsidiaries conduct their businesses.
Representations and Warranties
of OmniCable and Merger Sub
OmniCable and Merger
Sub made customary representations and warranties to the Company in the merger agreement, in each case, subject to customary qualifications
and limitations, including representations and warranties relating to the following:
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the organization and good standing of OmniCable and Merger Sub;
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each of OmniCable’s and Merger Sub’s authority to enter into and consummate the transactions
contemplated by the merger agreement;
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the absence of conflicts with, or violations of, laws, organizational documents or certain material
contracts and instruments to which OmniCable or Merger Sub is a party, in each case as a result of OmniCable’s and Merger
Sub’s execution or delivery of the merger agreement or the performance by OmniCable and Merger Sub of their respective covenants
under, or the consummation by OmniCable and Merger Sub of the transactions contemplated by, the merger agreement;
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the governmental and regulatory approvals required to complete the merger;
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the information contained in this proxy statement;
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the financial capability of OmniCable and Merger Sub;
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the absence of pending or threatened litigation and outstanding orders which would reasonably be
expected to prevent or materially delay the merger;
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the absence of ownership of shares of Company common stock by OmniCable, Merger Sub or any of their
respective subsidiaries or their respective affiliates or associates; and
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the absence of broker’s, finder’s or investment banker’s fees in connection with
the transactions contemplated by the merger agreement.
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Covenants Regarding
Conduct of Business by the Company Prior to the Merger
Under the merger agreement,
the Company agreed that, until the earlier of the effective time or the termination of the merger agreement in accordance with
its terms, except as set forth in the Company disclosure letter, as required by applicable law, as expressly required by any provision
of the merger agreement or except as OmniCable may agree in writing (which agreement may not be unreasonably withheld, delayed
or conditioned), the Company will use commercially reasonable efforts to, and will cause each of its subsidiaries to use commercially
reasonable efforts to, conduct its operations in all material respects in the ordinary course of business consistent with past
practice.
Further, the Company
agreed that, until the earlier of the effective time or the termination of the merger agreement in accordance with its terms, except
as set forth in the Company disclosure letter, as required by applicable law, as expressly permitted or required by any provision
of the merger agreement or as OmniCable may agree in writing (which agreement may not be unreasonably withheld, delayed or conditioned),
the Company will not, and will not permit its subsidiaries to:
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amend or propose to amend the certificate of incorporation or by-laws of the Company or the organizational
documents of any subsidiary of the Company;
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split, combine, or reclassify any securities of the Company or its subsidiaries;
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repurchase, redeem, or otherwise acquire, or declare set aside or pay any dividend or distribution
in respect of, any shares of capital stock of the Company or its subsidiaries, other than dividends from a direct or indirect wholly-owned
subsidiary;
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issue, sell, pledge, dispose of or encumber any securities of the Company or its subsidiaries,
other than the issuance of shares of Company common stock upon the exercise of any Company equity award outstanding as of the date
of the merger agreement in accordance with its terms;
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except as required by any Company employee plan or contract in effect as of the date of the merger
agreement, (i) grant or increase the severance or termination pay to any current or former director, employee, agent or consultant
of the Company or any of its subsidiaries, (ii) execute any employment, consultancy, deferred compensation or other similar agreement
(or any amendment to any such existing agreement) with any such director, employee, agent or consultant of the Company or its subsidiaries;
(iii) increase the compensation, bonus or benefits payable or that could become payable by the Company or any of its subsidiaries
to directors, officers, or employees, other than increases in compensation made to non-officer employees in the ordinary course
of business consistent with past practice, (iv) lend or advance any money or other property to any present or former director or
employee of the Company or its subsidiaries; (v) promote any officers or employees, except in connection with the Company’s
annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, (vi)
enter into any collective bargaining agreement or other labor agreement; or (vii) establish, adopt, enter into, amend, terminate,
exercise any discretion (except in the ordinary course of business) under, or take any action to accelerate rights under any Company
employee plans, or make any contribution to any Company employee plan, other than contributions required by law, the terms of such
Company employee plans as in effect on the date of the merger agreement, or that are made in the ordinary course of business consistent
with past practice;
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other than for cause, terminate the employment of any officer or employee with the title of vice
president or above, or undertake any material reduction in force or any reduction in force that would be subject to the Worker
Adjustment and Retraining Notification Act of 1988, in each case, in respect of employees of the Company and its subsidiaries;
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acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or
person or division thereof or make any loans, advances, or capital contributions to or investments in any person;
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transfer, license, sublicense, sell, lease, sublease or otherwise dispose of, or pledge, encumber
or otherwise subject to any lien (other than certain permitted liens), any assets, including the capital stock or other equity
interests in any subsidiary of the Company, other than dispositions of obsolete equipment or assets and grants of non-exclusive
licenses for intellectual property in the ordinary course of business consistent with past practice;
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adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization,
or other reorganization;
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repurchase, prepay, or incur any indebtedness for borrowed money or guarantee any such indebtedness
of another person, issue or sell any debt securities or options, warrants, calls, or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any debt securities of another person, enter into any “keep well”
or other contract to maintain any financial statement condition of any other person (other than any wholly-owned subsidiary of
it) or enter into any arrangement having the economic effect of any of the foregoing, other than in connection with the financing
of ordinary course trade payables consistent with past practice and except for up to $5.0 million of additional indebtedness under
the credit agreement than what was outstanding as of the date of the merger agreement;
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enter into or amend or modify in any material respect, or consent to the termination of (other
than at its stated expiry date), any material contract or any lease with respect to real property;
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institute, settle, compromise or otherwise resolve in whole or in part any legal action involving
the payment of monetary damages by the Company or any of its subsidiaries of any amount exceeding $100,000 for any individual legal
action, other than (i) any legal action brought against OmniCable or Merger Sub arising out of a breach or alleged breach of the
merger agreement by OmniCable or Merger Sub, and (ii) the settlement of claims, liabilities, or obligations
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reserved against on
the Company’s balance sheet as of December 31, 2020, provided that such settlement does not involve a conduct remedy or injunctive
or similar relief or have a restrictive impact on the Company’s business;
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make any material change in any method of financial accounting principles or practices, in each
case except for any such change required by a change in GAAP or applicable law;
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settle or compromise any material tax claim, audit, or assessment for an amount materially in excess
of the amount reserved or accrued on the Company’s balance sheet as of December 31, 2020, (ii) make, change or rescind any
material tax election, change any annual tax accounting period, or adopt or change any method of tax accounting, (iii) amend any
material tax returns or file claims for material tax refunds, or (iv) enter into any material closing agreement, surrender any
right to claim a material tax refund, offset or other reduction in tax liability or consent to any extension or waiver of the limitation
period applicable to any material tax claim or assessment relating to the Company or its subsidiaries;
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enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding
or similar contract with respect to any joint venture, strategic partnership or alliance;
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waive, release, assign or fail to exercise or pursue any material right, claim or benefit of the
Company or any of its subsidiaries under any restrictive covenant with any officer or employee;
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engage in any related person transaction;
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except in connection with actions permitted by the merger agreement, take any action to exempt
any person from, or make any acquisition of securities of the Company by any person not subject to, any state takeover statute
or similar statute or regulation that applies to the Company with respect to a takeover proposal or otherwise, including the restrictions
on “business combinations” set forth in Section 203 of the DGCL, except for OmniCable, Merger Sub or any of their respective
subsidiaries or affiliates, or the transactions contemplated by the merger agreement;
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abandon, allow to lapse, sell, assign, transfer, grant any security interest in, otherwise encumber
or dispose of any Company intellectual property, or grant any right, license or sublicense to any Company intellectual property
other than pursuant to non-exclusive licenses or sublicenses entered into in the ordinary course of business consistent with past
practice, or divulge, furnish to or make accessible any trade secrets within Company intellectual property to any third party,
except under appropriate protections for the confidentiality thereof;
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terminate or modify in any material respect, or fail to exercise renewal rights with respect to,
any material insurance policy;
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make or commit to make any capital expenditures, other than for the repair or replacement of property
and equipment in the ordinary course of business; or
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agree or commit to do any of the foregoing.
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Access to Information
From the date of the
merger agreement to the effective time, pursuant to the terms of the merger agreement, the Company agreed that it will, and will
cause each of its subsidiaries to, provide to OmniCable and Merger Sub and their respective representatives reasonable access during
normal business hours to the officers, employees, properties, offices and other facilities of the Company and its subsidiaries
and to all of the books and records of the Company and its subsidiaries.
The “Go-Shop”
Period—Solicitation of Other Takeover Proposals
Under the merger agreement,
from the date of the merger agreement until the no-shop period start date, the Company and its representatives had the right to
initiate, solicit, encourage, discuss and negotiate with respect to any proposal, inquiry or offer from any person that would
constitute, or would reasonably be expected to lead to, a competing takeover proposal, subject to such person entering into a confidentiality
agreement similar to the confidentiality agreement between the Company and DFH, and provided that the Company delivered to OmniCable
any non-public information relating to the Company that was not previously made available to OmniCable promptly after it was made
available to any person in connection with a competing proposal.
During
the go-shop period that began on the date of the merger agreement and expired at 11:59 p.m., Eastern Time, on April 24,
2021, at the direction of the board representatives of Willian Blair communicated with 17 additional parties to gauge such
parties’ interest in making an alternative takeover proposal. None of those parties expressed an interest in discussing
a transaction that had the potential of becoming a superior proposal. No party made an alternative takeover proposal prior to
the no-shop period start date.
The “No-Shop” Period—No Solicitation of
Other Takeover Proposals
The Company has agreed
that, except as may relate to any excluded party, from the no-shop period start date until the earlier of the effective time or
termination of the merger agreement, it will not, will cause its subsidiaries not to, and will not authorize or permit its
and its subsidiaries’ respective directors, officers, employees, investment bankers, attorneys, accountants and other advisors
or representatives to, directly or indirectly:
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solicit, initiate or knowingly facilitate or encourage the submission of any takeover
proposal or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover
proposal;
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conduct or engage in any discussions or negotiations with, disclose any non-public
information relating to the Company to, afford access to the business, properties, books or records of the Company to, or
knowingly assist, participate in, facilitate or encourage any third party that is seeking to make or has made an takeover
proposal;
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amend or waive any standstill or similar agreement with respect to the Company common stock or
take any action to make the provisions of any takeover statute inapplicable to any transactions contemplated by any takeover proposal;
or
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enter into any other agreement in principle, letter of intent, term sheet, acquisition agreement,
merger agreement, option agreement, joint venture agreement, partnership agreement or similar agreement (other than an acceptable
confidentiality agreement) with respect to an takeover proposal.
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A “takeover
proposal” is defined in the merger agreement to mean any inquiry, proposal, offer or indication of interest from
any person or group (other than OmniCable, Merger Sub or any of their respective affiliates) relating to:
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a direct or indirect acquisition of assets of the Company or its subsidiaries (including any
voting equity interests of subsidiaries, but excluding sales of assets in the ordinary course of business) equal to 15% or
more of the fair market value of the Company’s and its subsidiaries’ consolidated assets or to which 15% or more
of the Company’s and its subsidiaries’ net revenues or net income on a consolidated basis are attributable;
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a direct or indirect acquisition of 15% or more of the voting equity interests of the Company
or any of its subsidiaries whose business constitutes 15% or more of the consolidated net revenues, net income, or assets of
the Company and its subsidiaries, taken as a whole;
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a tender offer or exchange offer that if consummated would result in any person or group (as
defined in Section 13(d) of the Exchange Act) beneficially owning (within the meaning of Section 13(d) of the Exchange Act)
15% or more of the voting power of the Company;
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a merger, consolidation, other business combination, or similar transaction involving the
Company or any of its subsidiaries, pursuant to which such person or group (as defined in Section 13(d) of the Exchange Act)
would own 15% or more of the consolidated net revenues, net income, or assets of the Company and its subsidiaries, taken as
a whole;
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a liquidation, dissolution (or the adoption of a plan of liquidation or dissolution), or
recapitalization or other significant corporate reorganization of the Company or one or more of its subsidiaries
which, individually or in the aggregate, generate or constitute 15% or more of the consolidated net revenues, net income, or
assets of the Company and its subsidiaries, taken as a whole; or
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any combination of the foregoing.
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Existing Discussions
or Negotiations –“Excluded Parties”
Within one
business day after the no-shop period start date, the Company had to notify OmniCable in writing of the receipt of any
takeover proposal after the date of the merger agreement, or of any inquiry that would reasonably be expected to lead to a
takeover proposal, and deliver to OmniCable copies of any written proposals, term sheets or similar documents relating to any
such takeover proposal. Pursuant to the merger agreement, an “excluded party” means any person or group from whom
the Company or any of its representatives has received, prior to the no-shop period start date, a written bona fide takeover
proposal that the Company’s board of directors has determined in good faith, within one business day after the no-shop
period start date (after consultation with its outside counsel and its financial advisors) is or would reasonably be expected
to lead to a “superior proposal” (as defined below), provided that a person or group will cease to be an excluded
party if the ultimate equity holders of such person as of the no-shop period start date cease to provide (directly or
indirectly) in the aggregate at least 25% of the equity financing (measured by value) of such person or group. As noted
above, no party made an alternative takeover proposal prior to the no-shop period start date. Accordingly, no person or group
is an excluded party for purposes of the merger agreement.
Receipt of Takeover Proposals
At any time following
the no-shop period start date and prior to the time the Company stockholder approval is obtained, if (i) the Company, directly
or indirectly through one or more of its representatives, receives a bona fide, unsolicited takeover proposal in writing that the
board believes in good faith, after consultation with its outside legal counsel and its financial advisors, constitutes a superior
proposal, and (ii) the board further determines in good faith, after consultation with its outside legal counsel, that the failure
to take such action would cause the board to be in breach of its fiduciary duties under applicable law, then the board and its
representatives may:
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participate in negotiations or discussions with any third party that has made (and not withdrawn)
such takeover proposal;
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furnish to such third party non-public information relating to the Company and its subsidiaries
pursuant to an acceptable confidentiality agreement, provided that a copy of such acceptable confidentiality agreement is provided
to OmniCable;
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following receipt of and on account of a superior proposal, withdraw, amend, modify or qualify,
in a manner adverse to OmniCable, its recommendation that the Company’s stockholders adopt the merger agreement; and
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take any action that any court of competent jurisdiction orders the Company to take.
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The board may take
the foregoing actions only after it has delivered to OmniCable a written notice advising OmniCable that the Company intends to
take such action. The Company must notify OmniCable within 24 hours after learning of the receipt by the Company or its representative
of any takeover proposal, any inquiry that could reasonably be expected to lead to a takeover proposal or any request from a third
party for non-public information relating to the Company or its subsidiaries or for access to their businesses, properties, assets,
books or records. Such notice must identify the third party making, and details of the material terms and conditions of, any such
takeover proposal, indication or request, including any proposed financing. The Company must keep OmniCable fully informed of the
status and material terms of any such takeover proposal, indication or request and must give OmniCable at least 48 hours’
prior notice (or such lesser notice as is provided to the members of the Company’s board) of any meeting at which the board
is reasonably expected to consider any takeover proposal. The Company must also promptly provide OmniCable with a list of any non-public
information concerning the Company’s and its subsidiaries’ business, present or future performance, financial condition
or results of operations provided to any third party and, to the extent such information has not been previously provided to OmniCable,
copies of such information.
The merger agreement
defines a “superior proposal” as a bona fide written proposal to acquire at least 50.1% of the stock or assets of
the Company or assets to which at least 50.1% of the Company’s consolidated net revenues or net income are attributable
that the Company’s board determines in good faith (after consultation with outside legal counsel and the Company’s
financial advisor) is more favorable from a financial point of view to the holders of Company common stock than the transactions
contemplated by the merger agreement, taking into account: (a) all financial considerations; (b) the identity of the third party
making such takeover proposal; (c) the anticipated timing, conditions (including any financing condition or the reliability of
any debt or equity funding commitments) and prospects for completion of such takeover proposal; (d) the other terms and conditions
of such takeover proposal and the implications thereof on the Company, including relevant legal,
regulatory, and other aspects of such proposal deemed relevant by the board (including any conditions
relating to financing, stockholder approval, regulatory approvals, or other events or circumstances beyond the control of the
party invoking the condition); and (e) any revisions to the terms of the merger agreement and the merger proposed by
OmniCable.
None of the restrictions
on the Company regarding takeover proposals will prevent the board from disclosing to the Company’s stockholders a position
contemplated by Rule 14d-9 and Rule 14e-2(a) under the Exchange Act with respect to a takeover proposal if the Company
determines, after consultation with outside legal counsel, that failure to disclose such position would constitute a violation
of applicable law.
Change in Board Recommendation
The Company’s
board of directors has unanimously recommended that the Company’s stockholders vote “FOR” the proposal to adopt the
merger agreement.
Except as expressly
permitted by the merger agreement, the board may not:
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withdraw, amend, modify or materially qualify, in a manner adverse to OmniCable, the board’s
recommendation that the Company’s stockholders adopt the merger agreement (referred to in this proxy statement as the “Company
board recommendation”);
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fail to include the Company board recommendation in this proxy statement;
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recommend a takeover proposal;
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fail to recommend against acceptance of any tender offer or exchange offer for the shares of Company
common stock within 10 business days after the commencement of the offer;
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fail to reaffirm (publicly, if OmniCable so requests) the Company board recommendation within 10
business days after the date any takeover proposal (or material modification thereto) is first publicly disclosed;
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make any public statement inconsistent with the Company board recommendation; or
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resolve or agree to take any of the foregoing actions.
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The actions described
in the foregoing bullet points are referred to in this proxy statement as a “change of recommendation.”
However, before receipt
of the Company stockholder approval, the board may make a change of recommendation or enter into an acquisition agreement relating
to a takeover proposal only if:
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the Company notifies OmniCable in writing at least five business days before making a change
of recommendation or entering into an alternative acquisition agreement that it intends to take such action (referred to in this
proxy statement as a “notice of change of recommendation”), which notice must state expressly that the Company has received
a takeover proposal that the board intends to declare a superior proposal and that the Company intends to make a change of recommendation
and/or enter into an acquisition agreement;
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the Company specifies the identity of the party making the superior proposal and the material terms
and conditions thereof and provides an unredacted copy of the takeover proposal and the most current version of any proposed agreement
for such superior proposal and any related documents, including financing documents, to the extent provided by the party making
the superior proposal;
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during the five business day notice period, the Company and its representatives negotiate
with OmniCable in good faith to make such adjustments in the terms and conditions of the merger agreement so that such
takeover proposal ceases to constitute a superior proposal, if OmniCable, in its discretion, proposes to make such
adjustments, provided that if there is any material revision to the superior proposal, such five business day notice period
will be extended until at least five business days after the Company notifies OmniCable of any material revision to the
superior proposal; and
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the board determines in good faith, after consultation with its outside legal counsel and its financial
advisors, that such takeover proposal continues to constitute a superior proposal after taking into account any adjustments made
by OmniCable in the terms and conditions of the merger agreement.
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Proxy Statement and
Stockholders Meeting
The Company has
agreed to take all action necessary to convene a meeting of the Company’s stockholders as soon as reasonably
practicable following the date of the merger agreement to consider and vote on the adoption of the merger agreement and to
mail a proxy statement to the Company’s stockholders in advance of such meeting. Such proxy statement must include the
Company board recommendation, except to the extent that the Company has made a change in recommendation as permitted by the
merger agreement. The Company shall use reasonable best efforts to: (i) solicit from the holders of Company common stock
proxies in favor of the adoption of the merger agreement and approval of the merger; and (ii) take all other actions
necessary or advisable to secure the vote or consent of the holders of Company common stock required by applicable law to
obtain such approval. Once the Company stockholders meeting has been called and noticed, the Company may not postpone or
adjourn the meeting without the consent of OmniCable, other than to obtain a quorum of its stockholders or to allow
reasonable additional time after the filing and mailing of any supplemental or amended disclosures to the Company’s
proxy statement for compliance with applicable legal requirements.
If the Company board
makes a change of recommendation, unless the merger agreement is terminated in accordance with its terms, the Company will still
be obligated to submit the adoption of the merger agreement to the holders of Company common stock
at the Company stockholders meeting.
Employee Matters
OmniCable has agreed
that, from the effective time until December 31, 2021 (or if earlier, the date of the employee’s termination of employment
with OmniCable and its subsidiaries), and to the extent consistent with the terms of the governing plan documents, it will cause
the surviving corporation and each of its subsidiaries, as applicable, to provide the Company employees who continue employment
with the surviving corporation or its subsidiaries with (i) the same annual base salary or wage level and the same annual target
bonus opportunities (excluding equity-based compensation) as provided by the Company and its subsidiaries as of immediately prior
to the effective time, and (ii) employee benefits (excluding any retiree health or defined benefit retirement benefits) that are,
in the aggregate, no less favorable than the employee benefits (excluding any retiree health or defined benefit retirement benefits)
provided by the Company and its subsidiaries on the date of the merger agreement. OmniCable has further agreed to credit, or to
cause the surviving corporation to credit, all service of such Company employees with the Company or its subsidiaries as if it
were service with OmniCable for purposes of eligibility to participate in any employee benefit plans of OmniCable or its subsidiaries
in which such employees may participate as of the effective time.
For purposes of determining
satisfaction of any co-payments, annual deductible limitation and out-of-pocket maximum that may apply under an employee benefit
plan of OmniCable or one of its subsidiaries, each Company employee who continues employment with the surviving corporation or
its subsidiaries will be credited for covered expenses paid by him or her under the corresponding Company employee benefit plan
during the then current annual period of coverage.
Director and Officer
Indemnification and Insurance
Pursuant to the merger
agreement, the surviving corporation will assume all rights to indemnification, advancement of expenses and exculpation currently
existing in favor of each of the Company’s current or former directors and officers as provided in the Company’s certificate
of incorporation and by-laws, as in effect as of the date of the merger agreement, and in any indemnification agreements in effect
on the date of the merger agreement and disclosed to OmniCable. Further, for a period of six years after the effective time, OmniCable
will cause the surviving corporation to maintain in effect rights to exculpation, indemnification and advancement of expenses equivalent
to the provisions of the Company’s certificate of incorporation and by-laws, as in effect immediately prior to the effective
time, with respect to acts or omissions occurring prior to the effective time, and shall not amend, repeal, or otherwise modify
any such provisions in any manner that would adversely affect the rights thereunder of any person entitled to be indemnified by
the Company, provided all rights to indemnification in respect of any claim for indemnification made within such period will continue
until the disposition of such action or resolution of such claim.
Prior to the effective
time, the Company shall (and, if the Company fails to do so, OmniCable will cause the surviving corporation to) obtain and fully
pay the premium for a non-cancelable extension of the directors’ and officers’ liability coverage of the Company’s
existing directors’ and officers’ insurance policies and the Company’s existing fiduciary liability insurance
policies, in each case for a claims reporting or discovery period for at least six years from and after the effective time for
events occurring prior to the effective time. The Company will give OmniCable a reasonable opportunity to participate in the selection
of such tail policy and will give reasonable and good faith consideration to any comments made by OmniCable with respect thereto.
If
the Company or the surviving corporation for any reason fails to obtain such “tail” insurance policies as of the
effective time, the surviving corporation shall, and OmniCable shall cause the surviving corporation to, continue to maintain
in effect, for a period of at least six years from and after the effective time, the Company’s existing
directors’ and officers’ insurance and fiduciary liability insurance policies in place as of the date hereof with
the Company’s current insurance carrier or with an insurance carrier with the same or better credit rating as the
Company’s current insurance carrier with respect to such insurance policies with terms, conditions, retentions and
limits of liability that are no less favorable than the coverage provided under the Company’s existing policies as of
the date of the merger agreement, provided that in no event shall the surviving corporation be required to expend for such
policies an annual premium amount in excess of $250,000. If such insurance coverage cannot be obtained at an annual premium
equal to or less than $250,000, the surviving corporation will obtain, and OmniCable will cause the surviving corporation to
obtain, the greatest coverage available for a cost not exceeding an annual premium of $250,000.
Efforts to Complete
the Merger
Each of the Company,
OmniCable and Merger Sub has agreed to, and to cause its subsidiaries to, use their reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper, or advisable to consummate and make effective, and to satisfy all conditions to, in the most expeditious manner
practicable, the transactions contemplated by the merger agreement, including: (i) obtaining all necessary permits, waivers, and
actions or nonactions from governmental entities and making all necessary registrations and filings; (ii) obtaining all necessary
consents or waivers from third parties; and (iii) executing any additional instruments necessary to consummate the merger and to
fully carry out the purposes of the merger agreement. The Company and OmniCable have agreed, subject to applicable law, to promptly
cooperate with, supply information to and coordinate with the other in taking the actions contemplated by the merger agreement,
and to promptly inform the other of any communication from any governmental entities regarding any of the transactions contemplated
by the merger agreement. If the Company, on the one hand, or OmniCable or Merger Sub, on the other hand, receives a request for
additional information or documentary material, or request for a telephone call or meeting, from any governmental entities with
respect to the transactions contemplated by the merger agreement, then it shall use reasonable best efforts to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with
such request, and, if permitted by applicable law and by the applicable governmental entity, provide the other party’s counsel
with advance notice and the opportunity to attend and participate in any meeting with any governmental entity in connection with
any filing made in respect of the transactions contemplated by the merger agreement.
Other Covenants and
Agreements
Under the merger agreement,
the Company and OmniCable have made certain other covenants to, and agreements with, each other regarding various other matters,
including:
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public statements and disclosures concerning the merger agreement and the merger;
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delisting and deregistration of the Company common stock;
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seeking forgiveness of the Company’s loan under the Paycheck Protection Program;
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termination of all Company indebtedness, except as provided in the merger agreement, including
release of all liens and guarantees in connection with such indebtedness; and
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preparation of this proxy statement.
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Financing
The Company has agreed
to use, to cause its subsidiaries to use, and to use its reasonable best efforts to cause its and their respective representatives
to use), its and their respective reasonable best efforts to provide all cooperation as may be reasonably requested by OmniCable
in arranging, obtaining and syndicating any third party indebtedness for borrowed money to be raised by OmniCable or its subsidiaries
for the purpose of financing the merger consideration and any other amounts required to be paid in connection with the merger.
OmniCable has agreed
to reimburse the Company for all reasonable costs and expenses incurred by the Company and its subsidiaries in connection with
such cooperation and to indemnify the Company, its subsidiaries and their respective
representatives
against any and all losses incurred in connection with the debt financing and any information used in connection with such financing.
Conditions to the Merger
Conditions to Each Party’s
Obligations
The Company’s,
OmniCable’s and Merger Sub’s respective obligations to effect the merger are subject to the satisfaction or waiver
(where permitted by applicable law) of the following conditions:
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the Company having received the Company stockholder approval;
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receipt of any required regulatory approvals; and
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no governmental entity of competent jurisdiction having issued, entered, enforced or promulgated
any law or order that is in effect and renders the consummation of the merger illegal, or prohibits, enjoins, restrains or otherwise
prevents the consummation of the merger.
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Conditions to OmniCable’s
and Merger Sub’s Obligations
The obligations of
OmniCable and Merger Sub to effect the merger are also subject to the satisfaction or waiver (where permitted by applicable law)
by OmniCable at or prior to the effective time of the following additional conditions:
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subject to materiality qualifiers in certain instances, the accuracy of the representations and
warranties of the Company contained in the merger agreement as of the date of the merger agreement and as of immediately prior
to the effective time, as if made at and as of such time;
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the Company having performed in all material respects all obligations, and complied in all material
respects with all agreements and covenants, in the merger agreement required to be performed or complied with by the Company at
or prior to the closing;
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the absence of any Company material adverse effect or any event, change, or effect that would,
individually or in the aggregate, reasonably be expected to have a Company material adverse effect;
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the aggregate net tangible book value of the Company’s electrical distribution and Vertex
fastener distribution divisions, as calculated in accordance with the merger agreement, being at least $80,829,000 as of immediately
prior to the closing, provided that for purposes of this calculation the net tangible book value of the Vertex division will not
be greater than $19,380,000;
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OmniCable having received a certificate, signed by an officer of the Company, certifying as to
the satisfaction of the conditions described above;
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the Company’s aggregate indebtedness under its credit agreement including any outstanding
letters of credit and other bank debt, excluding that portion of the Paycheck Protection Program loan expected to be forgiven and
borrowings incurred to pay taxes, as of immediately prior to the closing not exceeding $18,247,000; and
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the Company having (i) disposed of two parcels of real estate used by the Company’s former
Southwest Wire Rope division, and (ii) purchased and paid for a premises pollution liability policy on the property having terms
and conditions reasonably satisfactory to OmniCable.
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Conditions to the Company’s
Obligations
The obligations of
the Company to effect the merger are also subject to the satisfaction or waiver (where permitted by applicable law) by the Company
at or prior to the effective time of the following additional conditions:
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subject to materiality qualifiers in certain instances, the accuracy of the representations and
warranties of OmniCable and Merger Sub contained in the merger agreement as of the date of the merger agreement and as of immediately
prior to the effective time, as if made at and as of such time;
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OmniCable and Merger Sub having performed in all material respects all obligations, and complied
in all material respects with the agreements and covenants, in the merger agreement required to be performed by or complied with
by them at or prior to the closing; and
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the Company having received a certificate, signed by an officer of OmniCable, certifying as to
the as to the satisfaction of the conditions described above.
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Termination of the
Merger Agreement
Termination Rights Exercisable
by Either OmniCable or the Company
The merger agreement
may be terminated at any time prior to the effective time, whether before or after receipt of the Company stockholder approval,
by the mutual written consent of OmniCable, Merger Sub and the Company. In addition, either the Company or OmniCable may terminate
the merger agreement:
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if the merger is not consummated on or before the end date, which is September 30, 2021, provided
that this right to terminate the merger agreement shall not be available to any party whose breach of any representation, warranty,
covenant or agreement contained in the merger agreement was the cause of, or resulted in, the failure to consummate the merger
by the end date;
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if any governmental entity of competent jurisdiction enacts, issues, promulgates, enforces or
enters any law or order making illegal, permanently enjoining or otherwise permanently prohibiting the consummation of the
merger and such law or order becomes final and non-appealable, provided that this right to terminate the merger agreement
will not be available to any party whose breach of any representation, warranty, covenant or agreement contained in the
merger agreement is the cause of, or resulted in, the issuance, promulgation, enforcement or entry of any such law or order;
or
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if the Company did not obtain the Company stockholder approval upon a vote taken at the stockholder
meeting, including any adjournments or postponements thereof.
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Termination Rights Exercisable
by OmniCable
OmniCable may also
terminate the merger agreement:
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if, at any time prior to the Company’s receipt of the Company stockholder approval, the board
effects a change in recommendation or the Company breaches its covenants and agreements with respect to takeover proposals; or
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if (i) the Company breaches any of its representations, warranties, covenants or
agreements contained in the merger agreement, in any case such that an applicable condition to the merger described above
would not be satisfied, and (ii) either such breach or failure to perform is not capable of cure or at least 20 days
elapse after the date of delivery of written notice of such breach to the Company without such breach or failure to perform
having been
cured,
provided that such right to terminate the merger agreement is not available if OmniCable is in material breach of any
of its representations, warranties, covenants or agreements contained in the merger agreement, in any case such that an
applicable condition to the merger described above would not be satisfied.
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Termination Rights Exercisable
by the Company
The Company may also
terminate the merger agreement:
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if, at any time prior to the receipt of the Company stockholder approval, the board effects a change
in recommendation in accordance with the terms of the merger agreement in order to accept a superior proposal and enter into a
definitive agreement with respect thereto, but only if the Company has complied in all respects with its go-shop and no-shop obligations
and obligations with respect to accepting a superior proposal under the merger agreement (in each case, other than any breach that
was immaterial and unintentional) and pays OmniCable a termination fee of $4 million prior to or concurrently with such termination;
or
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if (i) OmniCable or Merger Sub breaches any of its representations, warranties, covenants
or agreements contained in the merger agreement, in any case such that an applicable condition to the merger described above would
not be satisfied,
and (ii) either such breach or failure to perform is not capable of cure or at least 20 days elapse after the date of
delivery of written notice of such breach to OmniCable without such breach or failure to perform having been cured, provided
that such right to terminate the merger agreement is not available if the Company is in material breach of any of
its representations, warranties, covenants or agreements contained in the merger agreement, in any case such that an
applicable condition to the merger described above would not be satisfied.
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Effect of Termination
If the merger agreement
is terminated by the Company or OmniCable, the merger agreement will become void and there will be no liability or obligations
on the part of OmniCable, Merger Sub or the Company or their respective subsidiaries, officers or directors, except that the following
obligations would survive such termination:
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the obligations under the confidentiality agreement;
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the obligations of the Company to pay OmniCable a termination fee (as applicable); and
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any liabilities or damages incurred or suffered by a party, to the extent such liabilities or damages
were the result of fraud or the willful breach by another party of any of its representations, warranties, covenants, or other
agreements set forth in the merger agreement.
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Expenses; Termination
Fee
Except as otherwise
provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement and the merger will be
paid by the party incurring such expense.
The Company has agreed
to pay OmniCable a termination fee of $4 million if:
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OmniCable validly terminates the merger agreement as described in the first bullet in the section
entitled “The Agreement and Plan of Merger—Termination of the Merger Agreement—Termination Rights Exercisable
by OmniCable,” above;
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the Company validly terminates the merger agreement as described in the first bullet in the section
entitled “The Agreement and Plan of Merger—Termination of the Merger Agreement—Termination Rights Exercisable
by the Company,” above; or
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OmniCable or the Company validly terminates the merger agreement as described in the first
or third bullets in the section entitled “The Agreement and Plan of Merger—Termination of the Merger
Agreement—Termination Rights Exercisable by Either OmniCable or the Company,” above; or
(ii) OmniCable
validly terminates the merger agreement as described in the second bullet in the section entitled “The Agreement and
Plan of Merger—Termination of the Merger Agreement—Termination Rights Exercisable by OmniCable,” above and
(A) prior to such termination a takeover proposal was publicly disclosed or made known to the
Company or any of its subsidiaries and not withdrawn and (B) within 12 months after such termination of the merger agreement, the Company has
entered into a definitive agreement with respect to any takeover proposal or any takeover proposal is
consummated (in each case regardless of whether the same takeover proposal that was originally disclosed or made known),
then the Company must pay OmniCable the termination fee concurrently with the consummation of such
takeover proposal; provided that for purposes of this bullet, all percentages in the definition
of “takeover proposal” on page 57 are increased to “more than 25%”.
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Specifically, the termination
fee will be payable if the merger agreement is terminated by (1) Omni, if the HWCC board changes its recommendation with respect
to the merger, (2) Omni, if HWCC breaches or fails to perform, in accordance with the merger agreement, in any material respect
its obligations under the alternative acquisition solicitation provisions in the merger agreement or fails to present the merger
for a stockholder vote, or (3) HWCC, if the HWCC board authorizes the acceptance of a superior proposal and such proposal was not
solicited in breach of the alternative acquisition solicitation provisions in the merger agreement. The termination fee will also
be payable in certain circumstances if (1) HWCC has failed to obtain the required approval of its stockholders and the merger agreement
is terminated (a) by either Omni or HWCC because the merger is not completed by September 30, 2021 or because of such vote failure
or (b) by Omni because of a material breach of HWCC’s
representations, warranties or covenants in a manner that would cause
the related closing conditions to not be satisfied, (2) prior to such termination a proposal, generally speaking, to acquire at least 25% of HWCC’s stock or assets
is publicly announced or disclosed by a third party and (3) within one year of such termination HWCC consummates, or enters into
a preliminary or definitive agreement providing for, a transaction involving the acquisition of at least 25% of its stock or assets.
Amendment
The merger agreement
may be further amended by the parties at any time before or after receipt of the Company stockholder approval (but prior to the
consummation of the merger) by an instrument in writing signed on behalf of each of the parties. However, after receipt of the
Company stockholder approval, there may not be any amendment of the merger agreement that requires further approval by the stockholders
of the Company without such further approval.
APPRAISAL RIGHTS
If the merger is completed,
HWCC stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided that they strictly comply with the
requirements of Section 262 of the DGCL.
Under the DGCL, if
you do not wish to accept the merger consideration of $5.30 for each share of Company common stock provided for in the merger agreement,
you have the right to seek appraisal of your shares of Company common stock and to receive payment in cash for the “fair
value” of your shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, as
determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair
value, provided that you strictly comply with the requirements of Section 262 of the DGCL. The “fair value” of your
shares of Company common stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the $5.30
per share that you are otherwise entitled to receive under the terms of the merger agreement. These rights are known as appraisal
rights. HWCC stockholders who do not vote in favor of the proposal to adopt the merger agreement and who properly demand appraisal
for their shares in compliance with the provisions of Section 262 of the DGCL and who do not thereafter fail to perfect, withdraw
or otherwise lose such rights will be entitled to appraisal rights. Strict compliance with the statutory procedures in Section
262 of the DGCL is required. Failure to timely and properly comply with the statutory requirements will result in the loss of your
appraisal rights.
This section is
intended only as a summary of certain provisions of the Delaware statutory procedures that a stockholder must follow in order
to demand and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements and the
law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by reference to Section 262 of the DGCL, the
full text of which appears in Annex C to this proxy statement and is incorporated into this proxy statement by reference.
The following summary does not constitute any legal or other advice, nor does it constitute a recommendation that stockholders
exercise their appraisal rights under Section 262 of the DGCL. All references in Section 262 of the DGCL and in this summary to
a “stockholder” or a “holder” are to the record holder of the shares of Company common stock as to which
appraisal rights are asserted.
Under Section 262
of the DGCL, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation must, not
less than 20 days before the meeting, notify the stockholders who were stockholders of record on the record date for notice of
such meeting with respect to shares for which appraisal rights are available that appraisal rights will be available. A copy of
Section 262 of the DGCL must be included with such notice. This proxy statement constitutes the Company’s notice to stockholders
that appraisal rights are available in connection with the merger and the full text of Section 262 of the DGCL, in compliance
with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully
review the text of Section 262 of the DGCL contained in Annex C. Failure to comply timely and properly with the requirements
of Section 262 of the DGCL will result in the loss of your appraisal rights under the DGCL. Moreover, because of the complexity
of the procedures for exercising the right to seek appraisal of shares of Company common stock, the Company believes that if a
stockholder is considering exercising such rights, such stockholder should seek the advice of legal counsel.
Any stockholder wishing
to demand appraisal of his, her or its shares of Company common stock must deliver to the Company at the address in the next paragraph
below a written demand for appraisal of his, her or its shares of Company common stock before the vote is taken to adopt the merger
agreement, which written demand must reasonably inform us of the identity of the stockholder and that the stockholder intends to
demand appraisal of his, her or its shares of Company common stock. A stockholder’s failure to deliver to HWCC the written
demand for appraisal prior to the taking of the vote on the proposal to adopt the merger agreement at the special meeting will
result in the loss of appraisal rights. A stockholder seeking to perfect appraisal rights must not vote or submit a proxy in favor
of the proposal to adopt the merger agreement. A stockholder who submits a proxy and who wishes to exercise appraisal rights must
either submit a proxy containing instructions to vote “AGAINST” the proposal to adopt the merger agreement or abstain
from voting on the proposal to adopt the merger agreement. Voting against or abstaining from voting or failing to vote on the proposal
to adopt the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL.
The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal to adopt the merger
agreement. A stockholder seeking to exercise appraisal rights must hold of record the shares of Company common stock on the date
the written demand for appraisal is made and must continue to hold the shares of Company common stock of record through the effective
time. A stockholder will lose his, her or its appraisal rights if the stockholder transfers the shares for which he, she or it
is seeking appraisal rights before the effective time.
All demands for
appraisal should be addressed to the Corporate Secretary at 10201 North Loop East, Houston, Texas 77029 and must be delivered to
the Company before the vote is taken to adopt the merger agreement at the special meeting, and must be executed by, or on behalf
of, the record holder of the shares of Company common stock.
Only a holder of record
of shares of Company common stock is entitled to demand an appraisal of the shares registered in that holder’s name. Accordingly,
a demand for appraisal must be executed by or on behalf of the record stockholder. The demand should set forth, fully and correctly,
the record stockholder’s name as it appears in the transfer agent’s records and should specify the stockholder’s
mailing address and the number of shares registered in the stockholder’s name. The demand must state that the stockholder
intends to demand appraisal of the stockholder’s shares in connection with the merger. The demand cannot be made by the beneficial
owner. A beneficial owner of shares of Company common stock held in “street name” who wishes to exercise appraisal
rights should take such actions as may be necessary to ensure that a timely and proper demand for appraisal is made by the record
holder of the shares. The beneficial holder must have the registered owner, such as a bank, brokerage firm or other nominee, submit
the required demand in respect of those shares of Company common stock. If the shares are held through a brokerage firm, bank or
other nominee that in turn holds the shares through a central securities depository nominee, a demand for appraisal of such shares
must be made by or on behalf of the depository nominee and must identify the depository nominee as the record stockholder. If
you hold your shares of Company common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal
rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the
making of a demand for appraisal by the nominee.
If shares of Company
common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for
appraisal must be made in that capacity. If the shares of Company common stock are owned of record by more than one person, as
in a joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including
an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the
agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting
as agent for the record owner or owners. A record owner, such as a bank, brokerage firm or other nominee, who holds shares of Company
common stock as a nominee for others, may exercise his, her or its right of appraisal with respect to the shares of Company common
stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written
demand should state the number of shares of Company common stock as to which appraisal is sought. Where no number of shares of
Company common stock is expressly mentioned, the demand will be presumed to cover all shares of Company common stock held in the
name of the record owner. If a stockholder holds shares of Company common stock through a broker who in turn holds the shares through
a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf
of the depository nominee and must identify the depository nominee as record owner. Stockholders who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are urged to consult with their brokers or other nominees
to determine the appropriate procedures for the making of a demand for appraisal by the nominee.
Within 10 days after
the effective time, the surviving corporation in the merger must give notice of the date that the merger became effective to each
of the Company’s record stockholders who has submitted a demand in compliance with Section 262 of the DGCL and who did not
vote in favor of the proposal to adopt the merger agreement. At any time within 60 days after the effective time of the merger,
any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the stockholder’s
demand and accept the consideration specified by the merger agreement for that stockholder’s shares of Company common stock
by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw
the demand made more than 60 days after the effective time of the merger will require written approval of HWCC, as the surviving
corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any
stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the
Delaware Court of Chancery deems just. If a petition for appraisal is filed and the surviving corporation does not approve a request
to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such
stockholder’s right to appraisal in accordance with the proviso in the immediately preceding sentence, if the Delaware Court
of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only payment
of the “fair value” of such stockholder’s shares of Company common stock, exclusive of any element of value arising
from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest,
if any, to be paid upon the amount determined to be fair value. The fair value of the shares of Company common stock determined
in any such appraisal proceeding could be less than, equal to or more than the consideration offered pursuant to the merger agreement.
Within 120 days after
the effective time, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements
of Section 262 of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal proceeding
by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of Company common
stock held by all such stockholders. Upon the filing of the petition by a stockholder, service of a copy of such petition will
be made upon the surviving corporation. None of OmniCable, Merger Sub or HWCC, as the surviving corporation, has any obligation
to file such a petition or has any present intention to file such a petition, and holders should not assume that any of the foregoing
will file a petition. If a petition for appraisal is not timely filed, then the right to appraisal will cease. Accordingly, it
is the obligation of the holders of Company common stock to initiate all necessary petitions to perfect their appraisal rights
in respect of shares of Company common stock within the time prescribed in Section 262 of the DGCL and the failure of a stockholder
to file such a petition within the period specified in Section 262 of the DGCL will result in the loss of appraisal rights.
Any stockholder who
has properly complied with the requirements of Section 262 of the DGCL and who did not vote in favor of the proposal to adopt the
merger agreement is, within 120 days after the effective time of the merger, entitled upon written request to receive from the
surviving corporation a statement setting forth the aggregate number of shares of Company common stock not voted in favor of the
proposal to adopt the merger agreement and with respect to which demands for appraisal have been received and the aggregate number
of holders of such shares. The statement must be mailed within 10 days after such written request has been received by the surviving
corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person
who is the beneficial owner of shares of Company common stock held either in a voting trust or by a nominee on behalf of such person
may, in such person’s own name, file a petition for appraisal or request from the surviving corporation such statement.
If a petition for appraisal
is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation
will be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery
a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares of Company
common stock and with whom agreements as to the value of their shares have not been reached. After notice to stockholders who have
demanded appraisal from the Register in Chancery, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court
of Chancery will conduct a hearing upon the petition and determine those stockholders who have complied with Section 262 of the
DGCL and who have become entitled to the appraisal rights provided by Section 262 of the DGCL. Notwithstanding the foregoing, upon
application by the surviving corporation or any stockholder entitled to participate in the appraisal proceeding, the Delaware Court
of Chancery may, in its discretion, proceed to trial on the appraisal prior to final determination of the stockholders entitled
to an appraisal. The Delaware Court of Chancery may require stockholders who have demanded payment for their shares of Company
common stock to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that
stockholder. In addition, the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are
otherwise entitled to appraisal rights unless (1) the total number of shares of Company common stock entitled to appraisal exceeds
1% of the outstanding shares of Company common stock, or (2) the value of the consideration provided in the merger for such total
number of shares of Company common stock exceeds $1,000,000.
The Delaware Court
of Chancery will then conduct an appraisal proceeding to determine the fair value of the shares of Company common stock as of the
effective time of the merger exclusive of any element of value arising from the accomplishment or expectation of the merger, together
with interest, if any, to be paid upon the amount determined to be the fair value. When the fair value has been determined, the
Delaware Court of Chancery will direct the payment of such value, together with interest, if any, on the amount so determined to
be the fair value by the surviving corporation to the stockholders entitled thereto. Payment will be so made to holders of shares
represented by certificates upon surrender to the surviving corporation of the certificates representing such stock and, in the
case of holders of uncertificated stock, forthwith. Unless the Delaware Court of Chancery in its discretion determines otherwise
for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded
quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time
during the period between the effective time and the date of payment of the judgment. At any time before the entry of judgment
in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case
interest will accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid
and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless
paid at that time.
You should be
aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be
received in a sale transaction, such as the merger, is not an opinion as to fair value under Section 262 of the DGCL.
Although we believe that the merger consideration is fair, no representation is made as to the outcome of the appraisal of
fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could
result in a determination of a value higher or lower than, or the same as, the merger consideration. Moreover, none of
OmniCable, Merger Sub or HWCC, as the surviving corporation, anticipates offering more than the merger consideration to any
stockholder exercising appraisal rights, and they reserve the right to assert, in any appraisal proceeding, that, for
purposes of Section 262 of the DGCL, the “fair value” of a share of HWCC common stock is less than or equal to
the merger consideration. In determining “fair value,” the Delaware Court of Chancery is required to take into
account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could
be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or
methods which are generally considered acceptable in the financial community and otherwise admissible in court” should
be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a
company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must
consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts
which could be ascertained as of the date of the merger which throw any light on future prospects of the merged corporation.
Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the
accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court
stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which
rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger,
the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which
are known or susceptible of proof as of the date of the merger and not the product of speculation, may be
considered.”
Costs of the appraisal
proceeding (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court
of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. Upon the application
of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection
with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts
used in the appraisal proceeding, to be charged pro rata against the value of all shares of Company common stock entitled to appraisal.
Any stockholder who demanded appraisal rights will not, after the effective time, be entitled to vote shares of Company common
stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those
shares of Company common stock, other than with respect to payment as of a record date prior to the effective time. If no petition
for appraisal is filed within 120 days after the effective time, or if the stockholder otherwise fails to perfect, validly withdraws
or otherwise loses such holder’s right to appraisal, then the right of that stockholder to appraisal will cease and that
stockholder’s shares of Company common stock will be deemed to have been converted at the effective time into the right to
receive the $5.30 per share cash payment (without interest and subject to any applicable withholding taxes) for his, her or its
shares of Company common stock pursuant to the merger agreement.
Failure to comply
strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss of a stockholder’s appraisal
rights.
In view of the complexity
of Section 262 of the Delaware General Corporation Law, HWCC stockholders who may wish to pursue appraisal rights should consult
their legal and financial advisor.
MARKET PRICE DATA
Company common
stock is traded on the Nasdaq Global Market under the symbol “HWCC.” As of the close of business on May
10, 2021, the latest full trading day prior to the date of this proxy statement, there were 16,882,557 shares
of Company common stock outstanding and entitled to vote, held by 2,223 holders of record. The following table presents
the high and low sale prices of Company common stock for the periods indicated in published financial sources:
|
|
|
High
|
|
|
Low
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
6.58
|
|
|
$
|
4.97
|
|
|
Second Quarter
|
|
|
6.32
|
|
|
|
5.15
|
|
|
Third Quarter
|
|
|
5.46
|
|
|
|
3.55
|
|
|
Fourth Quarter
|
|
|
4.73
|
|
|
|
3.65
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
4.50
|
|
|
|
1.67
|
|
|
Second Quarter
|
|
|
3.26
|
|
|
|
2.00
|
|
|
Third Quarter
|
|
|
2.90
|
|
|
|
2.27
|
|
|
Fourth Quarter
|
|
|
3.24
|
|
|
|
2.40
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
5.68
|
|
|
|
2.71
|
|
|
Second Quarter (through May 10, 2021)
|
|
|
5.33
|
|
|
|
5.21
|
|
The following
table presents the closing per share sales price of Company common stock, as reported on the Nasdaq Global Market on March
24, 2021, the last full trading day prior to the public announcement of the merger agreement, and on May 10, 2021, the
last full trading day prior to the date of this proxy statement:
|
March 24, 2021
|
|
$
|
3.80
|
|
|
May 10, 2021
|
|
$
|
5.23
|
|
You are encouraged
to obtain current market prices of Company common stock in connection with voting your shares. Following the merger, there will
be no further market for Company common stock, and Company common stock will be delisted from the Nasdaq Global Market and deregistered
under the Exchange Act.
The
Company paid a quarterly cash dividend from August 2007 until August 2016. The board determined to suspend the regular dividend
in November 2016, to redeploy funds for other purposes. The Company does not intend to resume the payment of cash dividends in
the foreseeable future.
STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table
sets forth the beneficial ownership of shares of our common stock for each stockholder who is known by us to own beneficially more
than 5% of the outstanding shares of our common stock.
|
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of
Class
|
|
|
Nierenberg Investment Management Company, Inc. (1)
|
|
|
|
|
|
|
|
|
|
19605 NE 8th St.
|
|
|
|
|
|
|
|
|
|
Camas, WA 98607
|
|
|
2,043,358
|
|
|
|
12.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC (2)
|
|
|
|
|
|
|
|
|
|
245 Summer Street
|
|
|
|
|
|
|
|
|
|
Boston, MA 02210
|
|
|
1,598,621
|
|
|
|
9.47
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Royce & Associates, LP (3)
|
|
|
|
|
|
|
|
|
|
745 Fifth Avenue
|
|
|
|
|
|
|
|
|
|
New York, NY 10151
|
|
|
1,208,781
|
|
|
|
7.16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP (4)
|
|
|
|
|
|
|
|
|
|
Building One 6300 Bee Cave Road
|
|
|
|
|
|
|
|
|
|
Austin, TX 78746
|
|
|
926,291
|
|
|
|
5.49
|
%
|
|
|
(1)
|
As reported in an amendment to Statement on Schedule 13D filed with the SEC on behalf of The D3
Family Fund, L.P., The D3 Family Bulldog Fund, L.P., Haredale Ltd., Nierenberg Investment Management Company, Inc. and David Nierenberg,
on March 26, 2021. Each of Nierenberg Investment Management Company, Inc. and its president, David Nierenberg, is deemed to be
the beneficial owner of these shares on behalf of various investment companies registered under the Investment Company Act of 1940.
One of those investment companies, The D3 Family Bulldog Fund, L.P., beneficially owned 1,314,254 shares, or 7.78% of our common
stock. Each of Nierenberg Investment Management Company, Inc. and Mr. Nierenberg had shared voting and shared dispositive power
with respect to all 2,043,358 shares reported as beneficially owned.
|
|
|
(2)
|
As reported in an amendment to Statement on Schedule 13G filed with the SEC on behalf of FMR LLC
and Abigail P. Johnson, its chairman, on February 8, 2021. Fidelity Management & Research Company, a wholly-owned subsidiary
of FMR LLC, is deemed to be the beneficial owner of these shares as a result of acting as investment adviser to various investment
companies registered under the Investment Company Act of 1940. One of those investment companies, Fidelity Series Intrinsic Opportunities
Fund, beneficially owned 1,348,500 shares, or 7.99%, of our common stock. Fidelity Management & Research Company had sole voting
power with respect to 30,449 shares, shared voting power with respect to no shares and sole dispositive power with respect to all
1,598,621 shares reported as beneficially owned.
|
|
|
(3)
|
As reported in an amendment to Statement on Schedule 13G filed with the SEC on behalf of Royce
& Associates, LP on January 27, 2021. Royce & Associates, LP is deemed to be the beneficial owner of these shares as a
result of its acting as investment adviser to various accounts. One of those investment companies, Royce Value Trust, Inc., beneficially
owned 877,363 shares, or 5.20% of our common stock. Royce & Associates, LP had sole voting and sole dispositive power for all
1,208,781 shares reported as beneficially owned.
|
|
|
(4)
|
As reported in an amendment to Statement on Schedule 13G filed with the SEC on behalf of Dimensional
Fund Advisors LP on February 12, 2021. Dimensional Fund Advisors LP is deemed to be the beneficial owner of these shares as a result
of its acting as investment adviser to various investment companies registered under the Investment Company Act of 1940. Dimensional
Fund Advisors LP has sole voting power with respect to 880,661 shares, shared voting power with respect to no shares and sole dispositive
power with respect to all 926,291 shares reported as beneficially owned.
|
The following
table sets forth the beneficial ownership of shares of our common stock for (i) each of our directors, (ii) each of our
executive officers and (iii) all of our directors and executive officers as a group. Except as noted below, the nature of
beneficial ownership for shares shown in this table is sole voting and sole dispositive power. The information below is as of
May 4, 2021, unless otherwise indicated.
|
Amount and Nature of Beneficial Ownership
|
|
|
Name of Beneficial Owner
|
|
Shares Owned
|
|
|
Shares Under
Options/
Restricted
Stock Units
Exercisable/
Vesting Within
60 Days (1)
|
|
|
Total Number
of Shares
|
|
|
Percent of
Class
|
|
|
Eric W. Davis
|
|
|
77,652
|
(2)
|
|
|
5,000
|
|
|
|
82,652
|
|
|
|
*
|
|
|
Roy W. Haley
|
|
|
349,930
|
(3)
|
|
|
25,316
|
|
|
|
375,246
|
|
|
|
2.22
|
%
|
|
Margaret S. Laird
|
|
|
500
|
(4)
|
|
|
9,820
|
|
|
|
10,320
|
|
|
|
*
|
|
|
David Nierenberg
|
|
|
2,043,358
|
(5)
|
|
|
0
|
|
|
|
2,043,358
|
|
|
|
12.10
|
%
|
|
James L. Pokluda III
|
|
|
674,047
|
(6)
|
|
|
72,910
|
|
|
|
746,957
|
|
|
|
4.41
|
%
|
|
Sandford W. Rothe
|
|
|
24,000
|
(7)
|
|
|
14,770
|
|
|
|
38,770
|
|
|
|
*
|
|
|
William H. Sheffield
|
|
|
30,000
|
(8)
|
|
|
54,557
|
|
|
|
84,557
|
|
|
|
*
|
|
|
G. Gary Yetman
|
|
|
29,718
|
|
|
|
51,428
|
|
|
|
81,146
|
|
|
|
*
|
|
|
Jerry M. Zurovchak
|
|
|
2,604
|
(9)
|
|
|
0
|
|
|
|
2,604
|
|
|
|
*
|
|
|
All directors and executive officers as a group (9 persons)
|
|
|
3,231,809
|
|
|
|
233,801
|
|
|
|
3,465,610
|
|
|
|
20.25
|
%
|
|
|
(1)
|
Excludes share units under the Nonemployee Directors’ Deferred Compensation Plan as follows:
Mr. Haley – 57,048 shares; and Mr. Sheffield – 11,507 shares.
|
|
|
(2)
|
Includes 61,143 unvested restricted shares.
|
|
|
(3)
|
Owned by Mr. Haley’s individual retirement accounts.
|
|
|
(4)
|
Ms. Laird has shared voting power and shared dispositive power with her spouse.
|
|
|
(5)
|
Mr. Nierenberg has shared voting power and shared dispositive power with Nierenberg Investment
Management Company, Inc. See table on page 71.
|
|
|
(6)
|
Includes 318,212 unvested restricted shares.
|
|
|
(7)
|
Owned by Mr. Rothe’s individual retirement account.
|
|
|
(8)
|
Mr. Sheffield has shared voting power and shared dispositive power with respect to 7,000 of these
shares.
|
|
|
(9)
|
Includes 2,604 unvested restricted shares.
|
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 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 MAY 11, 2021. 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 STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO THE CONTRARY.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
Eric W. Davis
|
|
|
Vice President, Chief Financial Officer,
|
|
|
Treasurer and Secretary
|
Dated: May 11, 2021
ANNEX A
AGREEMENT AND PLAN OF MERGER
By and Among
Omni Cable, LLC,
OCDFH Acquisition Sub Inc.
and
Houston Wire & Cable Company
Dated as of March 24, 2021
TABLE OF CONTENTS
|
|
Page
|
|
Article I. THE MERGER
|
A-1
|
|
Section 1.01
|
The Merger
|
A-1
|
|
Section 1.02
|
Closing
|
A-2
|
|
Section 1.03
|
Effective Time
|
A-2
|
|
Section 1.04
|
Effects of the Merger
|
A-2
|
|
Section 1.05
|
Certificate of Incorporation; By-Laws
|
A-2
|
|
Section 1.06
|
Directors and Officers
|
A-2
|
|
|
|
|
Article II. EFFECT OF THE MERGER ON CAPITAL STOCK; PAYMENT FOR SHARES
|
A-2
|
|
Section 2.01
|
Effect of the Merger on Capital Stock
|
A-2
|
|
Section 2.02
|
Surrender and Payment
|
A-3
|
|
Section 2.03
|
Dissenting Shares
|
A-4
|
|
Section 2.04
|
Adjustments
|
A-4
|
|
Section 2.05
|
Withholding Rights
|
A-4
|
|
Section 2.06
|
Lost Certificates
|
A-5
|
|
Section 2.07
|
Treatment of Stock Options and Other Stock-Based Compensation
|
A-5
|
|
|
|
|
|
Article III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
A-6
|
|
Section 3.01
|
Organization; Standing and Power; Charter Documents; Subsidiaries
|
A-6
|
|
Section 3.02
|
Capital Structure
|
A-7
|
|
Section 3.03
|
Authority; Non-Contravention; Governmental Consents; Board Approval; Anti-Takeover Statutes
|
A-8
|
|
Section 3.04
|
SEC Filings; Financial Statements; Sarbanes-Oxley Act Compliance; Undisclosed Liabilities; Off-Balance Sheet Arrangements
|
A-9
|
|
Section 3.05
|
Absence of Certain Changes or Events
|
A-11
|
|
Section 3.06
|
Taxes
|
A-11
|
|
Section 3.07
|
Intellectual Property
|
A-12
|
|
Section 3.08
|
Compliance; Permits
|
A-14
|
|
Section 3.09
|
Litigation
|
A-15
|
|
Section 3.10
|
Brokers’ and Finders’ Fees
|
A-15
|
|
Section 3.11
|
Related Person Transactions
|
A-15
|
|
Section 3.12
|
Employee Matters
|
A-15
|
|
Section 3.13
|
Real Property and Personal Property Matters
|
A-17
|
|
Section 3.14
|
Environmental Matters
|
A-18
|
|
Section 3.15
|
Material Contracts
|
A-19
|
|
Section 3.16
|
Insurance
|
A-20
|
|
Section 3.17
|
Proxy Statement
|
A-21
|
|
Section 3.18
|
Anti-Corruption Matters
|
A-21
|
|
Section 3.19
|
Products
|
A-21
|
|
Section 3.20
|
PPP Loan.
|
A-21
|
|
Section 3.21
|
Fairness Opinion
|
A-21
|
|
|
|
|
|
Article IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
A-21
|
|
Section 4.01
|
Organization
|
A-22
|
|
Section 4.02
|
Authority; Non-Contravention; Governmental Consents; Board Approval
|
A-22
|
|
Section 4.03
|
Proxy Statement
|
A-23
|
|
Section 4.04
|
Financial Capability
|
A-23
|
|
Section 4.05
|
Legal Proceedings
|
A-23
|
|
Section 4.06
|
Ownership of Company Common Stock
|
A-23
|
|
Section 4.07
|
Brokers
|
A-23
|
|
|
|
|
|
Article V. COVENANTS
|
A-23
|
|
Section 5.01
|
Conduct of Business of the Company
|
A-23
|
|
Section 5.02
|
Other Actions
|
A-26
|
|
Section 5.03
|
Access to Information; Integration Planning; Confidentiality
|
A-26
|
|
Section 5.04
|
Solicitation of Takeover Proposals
|
A-26
|
|
Section 5.05
|
Stockholders Meeting; Preparation of Proxy Materials; Approval by Sole Stockholder of Merger Sub
|
A-28
|
|
Section 5.06
|
Notices of Certain Events; Stockholder Litigation; No Effect on Disclosure Letter
|
A-29
|
|
Section 5.07
|
Employees; Benefit Plans
|
A-30
|
|
Section 5.08
|
Directors’ and Officers’ Indemnification and Insurance
|
A-31
|
|
Section 5.09
|
Reasonable Best Efforts
|
A-32
|
|
Section 5.10
|
Public Announcements
|
A-33
|
|
Section 5.11
|
Anti-Takeover Statutes
|
A-33
|
|
Section 5.12
|
Section 16 Matters
|
A-33
|
|
Section 5.13
|
Stock Exchange Delisting; Deregistration
|
A-33
|
|
Section 5.14
|
PPP Loan
|
A-34
|
|
Section 5.15
|
Obligations of Merger Sub
|
A-34
|
|
Section 5.16
|
Treatment of Certain Company Indebtedness.
|
A-34
|
|
Section 5.17
|
Financing Cooperation
|
A-34
|
|
Section 5.18
|
Further Assurances
|
A-35
|
|
|
|
|
|
Article VI. CONDITIONS
|
A-36
|
|
Section 6.01
|
Conditions to Each Party’s Obligation to Effect the Merger
|
A-36
|
|
Section 6.02
|
Conditions to Obligations of Parent and Merger Sub
|
A-36
|
|
Section 6.03
|
Conditions to Obligation of the Company
|
A-36
|
|
|
|
|
|
Article VII. TERMINATION, AMENDMENT, AND WAIVER
|
A-37
|
|
Section 7.01
|
Termination by Mutual Consent
|
A-37
|
|
Section 7.02
|
Termination by Either Parent or the Company
|
A-37
|
|
Section 7.03
|
Termination by Parent
|
A-38
|
|
Section 7.04
|
Termination by the Company
|
A-38
|
|
Section 7.05
|
Notice of Termination; Effect of Termination
|
A-38
|
|
Section 7.06
|
Fees Following Termination
|
A-38
|
|
Section 7.07
|
Amendment
|
A-39
|
|
Section 7.08
|
Extension; Waiver
|
A-40
|
|
|
|
|
|
Article VIII. MISCELLANEOUS
|
A-40
|
|
Section 8.01
|
Interpretation; Construction
|
A-40
|
|
Section 8.02
|
Survival
|
A-40
|
|
Section 8.03
|
Governing Law
|
A-40
|
|
Section 8.04
|
Submission to Jurisdiction
|
A-41
|
|
Section 8.05
|
Waiver of Jury Trial
|
A-41
|
|
Section 8.06
|
Notices
|
A-41
|
|
Section 8.07
|
Entire Agreement
|
A-42
|
|
Section 8.08
|
No Third-Party Beneficiaries
|
A-42
|
|
Section 8.09
|
Severability
|
A-42
|
|
Section 8.10
|
Assignment
|
A-42
|
|
Section 8.11
|
Remedies
|
A-42
|
|
Section 8.12
|
Specific Performance
|
A-42
|
|
Section 8.13
|
Counterparts; Effectiveness; Electronic Transmission of Signatures
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A-43
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Section 8.14
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Definitions
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A-43
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Exhibit A:
Amended and Restated Certificate of Incorporation of Surviving Company
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A-A-1
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Exhibit B: Form of Voting Agreement
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A-B-1
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INDEX OF DEFINED TERMS
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Agreement
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A-1
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Financing
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A-35
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Bank Debt
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A-34
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Maximum Premium
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A-31
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Book-Entry Share
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A-2
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Merger
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A-1
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Cancelled Shares
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A-2
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Merger Consideration
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A-2
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Certificate
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A-2
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Merger Sub
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A-1
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Certificate of Merger
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A-2
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Other Governmental Approvals
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A-9
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Company
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A-1
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Parent
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A-1
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Company Board Recommendation
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A-9
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Paying Agent
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A-2
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Company Debt
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A-36
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Payment Fund
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A-2
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Company Material Contract
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A-19
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Payoff Amount
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A-34
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Company Securities
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A-7
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Payoff Letter
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A-34
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Company Subsidiary Securities
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A-8
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Subsidiary NBV
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A-37
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Consent
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A-9
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Superior Proposal Notice Period
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A-28
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Credit Agreement Termination
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A-34
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Surviving Corporation
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A-1
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D&O Insurance
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A-31
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Dissenting Shares
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A-4
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AGREEMENT AND PLAN OF MERGER
This Agreement and
Plan of Merger (this “Agreement”) is made and entered into as of March 24, 2021 by and among Houston Wire &
Cable Company, a Delaware corporation (the “Company”), Omni Cable, LLC, a Pennsylvania limited liability company
(“Parent”), and OCDFH Acquisition Sub Inc., a Delaware corporation and a wholly-owned Subsidiary of Parent
(“Merger Sub”). Capitalized terms used herein (including in the immediately preceding sentence) and not otherwise
defined herein shall have the meanings set forth in Section 8.14 hereof.
RECITALS
A. The
parties intend that Merger Sub be merged with and into the Company, with the Company surviving that merger on the terms and subject
to the conditions set forth herein.
B. In
the Merger, upon the terms and subject to the conditions of this Agreement, each share of Company Common Stock will be converted
into the right to receive the Merger Consideration except as otherwise provided in this Agreement.
C. The
Company Board has unanimously: (i) determined that it is in the best interests of the Company and its stockholders, and declared
it advisable, to enter into this Agreement with Parent and Merger Sub; (ii) approved the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby, including the Merger; and (iii) resolved,
subject to the terms and conditions set forth in this Agreement, to recommend adoption of this Agreement by the stockholders of
the Company; in each case, in accordance with the DGCL.
D. The
respective Boards of Directors and Managers of Parent and Merger Sub have each unanimously: (i) determined that it is in the
best interests of Parent or Merger Sub, as applicable, and their respective stockholders and members, and declared it advisable,
to enter into this Agreement; and (ii) approved the execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby, including the Merger; in each case, in accordance with the DGCL.
E. Each
member of the Company Board of Directors and each officer of the Company has entered into the Voting Agreement pursuant to which
they have agreed, among other things, to vote the shares of Company Common Stock they beneficially own for adoption of this Agreement
and approval of the Merger.
F. The
parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and the other
transactions contemplated by this Agreement and also to prescribe certain terms and conditions to the Merger.
AGREEMENT
In consideration of
the foregoing and of the representations, warranties, covenants, and agreements contained in this Agreement, the parties, intending
to be legally bound, agree as follows:
Article I.
THE MERGER
Section 1.01 The
Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL,
at the Effective Time: (a) Merger Sub will merge with and into the Company (the “Merger”);
(b) the separate corporate existence of Merger Sub will cease; and (c) the Company will continue its corporate
existence under the DGCL as the surviving corporation in the Merger and a wholly-owned Subsidiary of Parent (sometimes
referred to herein as the “Surviving Corporation”).
Section 1.02 Closing.
Upon the terms and subject to the conditions set forth herein, the Closing will take place at 9:00 A.M., St. Louis,
Missouri time, as soon as practicable (and, in any event, within three Business Days) after the satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent
permitted hereunder, waiver of all such conditions), unless this Agreement has been terminated pursuant to its terms or
unless another time or date is agreed
to in writing by the parties hereto. The
Closing shall take place remotely by exchange of documents and signatures (or their electronic counterparts), unless another place
is agreed to in writing by the parties hereto.
Section 1.03 Effective
Time. Subject to the provisions of this Agreement, at the Closing, the Company, Parent, and Merger Sub will cause a
certificate of merger (the “Certificate of Merger”) to be executed, acknowledged, and filed with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger will become effective at such time as the Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware or at such later date or time as may be agreed by the Company and Parent in writing
and specified in the Certificate of Merger in accordance with the DGCL.
Section 1.04 Effects
of the Merger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights,
privileges, immunities, powers, franchises, licenses, and authority of the Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, and duties of the Surviving Corporation.
Section 1.05 Certificate
of Incorporation; By-Laws. At the Effective Time: (a) the certificate of incorporation of the Surviving Corporation
shall be amended and restated so as to read in its entirety as set forth in Exhibit A, and, as so amended and restated,
shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the terms thereof
or as provided by applicable Law; and (b) the by-laws of Merger Sub as in effect immediately prior to the Effective Time shall
be the by-laws of the Surviving Corporation, except that references to Merger Sub’s name shall be replaced with references
to the Surviving Corporation’s name, until thereafter amended in accordance with the terms thereof, the certificate of incorporation
of the Surviving Corporation, or as provided by applicable Law.
Section 1.06 Directors
and Officers. The directors and officers of Merger Sub, in each case, immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death, resignation, or removal in accordance with the
certificate of incorporation and by-laws of the Surviving Corporation.
Article II.
EFFECT OF THE MERGER ON CAPITAL STOCK; PAYMENT FOR SHARES
Section 2.01 Effect
of the Merger on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part
of Parent, Merger Sub, or the Company or the holder of any capital stock of Parent, Merger Sub, or the Company:
(a) Cancellation
of Certain Company Common Stock. Each share of Company Common Stock that is owned by Parent or the Company (as treasury stock
or otherwise) or any of their respective direct or indirect wholly-owned Subsidiaries as of immediately prior to the Effective
Time (“Cancelled Shares”) will automatically be cancelled and retired and will cease to exist, and no consideration
will be delivered in exchange therefor.
(b) Conversion
of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time
(other than Cancelled Shares and Dissenting Shares) will be converted into the right to receive $5.30 in cash, without interest
(the “Merger Consideration”).
(c) Cancellation
of Shares. At the Effective Time, all shares of Company Common Stock will no longer be outstanding and all shares of Company
Common Stock will be cancelled and retired and will cease to exist, and, subject to Section 2.03, each holder of: (i) a
certificate formerly representing any shares of Company Common Stock (each, a “Certificate”); or (ii) any
book-entry shares which immediately prior to the Effective Time represented shares of Company Common Stock (each, a “Book-Entry
Share”) will, subject to applicable Law in the case of Dissenting Shares, cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in accordance with Section 2.02 hereof.
(d) Conversion
of Merger Sub Capital Stock. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable share of common
stock, par value $0.01 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time,
all certificates
representing
shares of Merger Sub common stock shall be deemed for all purposes to represent the number of shares of common stock of the Surviving
Corporation into which they were converted in accordance with the immediately preceding sentence.
Section 2.02 Surrender
and Payment.
(a) Paying
Agent; Payment Fund. Prior to the Effective Time, Parent shall appoint a paying agent (the “Paying Agent”)
to act as the agent for the purpose of paying the Merger Consideration for: (i) the Certificates; and (ii) the Book-Entry
Shares. Promptly following the Effective Time, Parent shall deposit, or cause the Surviving Corporation to deposit, with the Paying
Agent, sufficient funds to pay the aggregate Merger Consideration that is payable in respect of all of the shares of Company Common
Stock represented by the Certificates and the Book-Entry Shares (other than: (A) shares to be cancelled and retired in accordance
with Section 2.01(a); and (B) Dissenting Shares) (the “Payment Fund”) in amounts and at the
times necessary for such payments. If for any reason (including losses) the Payment Fund is inadequate to pay the amounts to which
holders of shares shall be entitled under Section 2.01(b), Parent shall take all steps necessary to enable or cause
the Surviving Corporation promptly to deposit in trust additional cash with the Paying Agent sufficient to make all payments required
under this Agreement. The Payment Fund shall not be used for any other purpose. The Surviving Corporation shall pay all charges
and expenses, including those of the Paying Agent, in connection with the exchange of shares of Company Common Stock for the Merger
Consideration. Promptly after the Effective Time, Parent shall send, or shall cause the Paying Agent to send, to each record holder
of shares of Company Common Stock at the Effective Time, whose Company Common Stock was converted pursuant to Section 2.01(b)
into the right to receive the Merger Consideration, a letter of transmittal and instructions (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Book-Entry
Shares to the Paying Agent, and which letter of transmittal will be in customary form and have such other provisions as Parent
and the Surviving Corporation may reasonably specify) for use in such exchange.
(b) Procedures
for Surrender; No Interest. Each holder of shares of Company Common Stock that have been converted into the right to receive
the Merger Consideration shall be entitled to receive the Merger Consideration in respect of the Company Common Stock represented
by a Certificate or Book-Entry Share upon: (i) surrender to the Paying Agent of a Certificate, together with a duly completed
and validly executed letter of transmittal and such other documents as may reasonably be requested by the Paying Agent; or (ii) receipt
of an “agent’s message” by the Paying Agent (or such other evidence, if any, of transfer as the Paying Agent
may reasonably request) in the case of Book-Entry Shares. Until so surrendered or transferred, as the case may be, and subject
to the terms set forth in Section 2.03, each such Certificate or Book-Entry Share, as applicable, shall represent after
the Effective Time for all purposes only the right to receive the Merger Consideration payable in respect thereof. No interest
shall be paid or accrued on the cash payable upon the surrender or transfer of any Certificate or Book-Entry Share. Upon payment
of the Merger Consideration pursuant to the provisions of this Article II, each Certificate or Certificates or Book-Entry
Share or Book-Entry Shares so surrendered or transferred, as the case may be, shall immediately be cancelled.
(c) Investment
of Payment Fund. Until disbursed in accordance with the terms and conditions of this Agreement, the cash in the Payment Fund
will be invested by the Paying Agent, as directed by Parent or the Surviving Corporation , in: (i) obligations of or fully
guaranteed by the United States; (ii) short-term commercial paper rated the highest quality by Moody’s Investors Service,
Inc. or Standard & Poor’s Corporation; (iii) certificates of deposit, bank repurchase agreements, or banker’s
acceptances of commercial banks with capital exceeding $10 billion (based on the most recent financial statements of such bank
that are then publicly available); or (iv) money market funds having a rating in the highest investment category granted by
a recognized credit rating agency at the time of acquisition or a combination of the foregoing. No losses with respect to any investments
of the Payment Fund will affect the amounts payable to the holders of Certificates or Book-Entry Shares. Any income from investment
of the Payment Fund will be payable to Parent or the Surviving Corporation, as Parent directs.
(d) Payments
to Non-Registered Holders. If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose
name the surrendered Certificate or the transferred Book-Entry Share, as applicable, is registered, it shall be a condition to
such payment that: (i) such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such
Book-Entry Share shall be properly transferred; and (ii) the Person requesting such payment shall pay to the Paying Agent
any transfer or other similar Tax required as a result of
such payment
to a Person other than the registered holder of such Certificate or Book-Entry Share, as applicable, or establish to the reasonable
satisfaction of the Paying Agent that such Tax has been paid or is not payable.
(e) Full
Satisfaction. All Merger Consideration paid upon the surrender of Certificates or transfer of Book-Entry Shares in accordance
with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock formerly represented by such Certificate or Book-Entry Shares, and from and after the Effective Time, there shall
be no further registration of transfers of shares of Company Common Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation, they shall be cancelled
and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this Article II.
(f) Termination
of Payment Fund. Any portion of the Payment Fund that remains unclaimed by the holders of shares of Company Common Stock six
months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged shares of Company
Common Stock for the Merger Consideration in accordance with this Section 2.02 prior to that time shall thereafter
look only to Parent (subject to abandoned property, escheat, or other similar Laws), as general creditors thereof, for payment
of the Merger Consideration without any interest. Notwithstanding the foregoing, Parent shall not be liable to any holder of shares
of Company Common Stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat, or similar
Laws. Any amounts remaining unclaimed by holders of shares of Company Common Stock one year after the Effective Time, or such earlier
date immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Entity shall
become, to the extent permitted by applicable Law, the property of Parent free and clear of any claims or interest of any Person
previously entitled thereto.
(g) Dissenting
Shares Merger Consideration. Any portion of the Merger Consideration made available to the Paying Agent in respect of any Dissenting
Shares shall be returned to Parent, upon demand.
Section 2.03 Dissenting
Shares. Notwithstanding any provision of this Agreement to the contrary, including Section 2.01, shares
of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares cancelled in accordance
with Section 2.01(a)) and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto
in writing and who is entitled to demand and has properly exercised appraisal rights of such shares in accordance with Section 262
of the DGCL (such shares of Company Common Stock being referred to collectively as the “Dissenting Shares” until
such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the
DGCL with respect to such shares) shall not be converted into a right to receive the Merger Consideration, but instead shall be
entitled to only such rights as are granted by Section 262 of the DGCL; provided, however, that if, after the Effective
Time, such holder fails to perfect, waives, withdraws, or loses such holder’s right to appraisal pursuant to Section 262
of the DGCL or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by
Section 262 of the DGCL, such shares of Company Common Stock shall be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Consideration in accordance with Section 2.01(b), without interest thereon,
upon surrender of such Certificate formerly representing such share or transfer of such Book-Entry Share, as the case may be. The
Company shall provide Parent prompt written notice of any demands received by the Company for appraisal of shares of Company Common
Stock, any waiver or withdrawal of any such demand, and any other demand, notice, or instrument delivered to the Company prior
to the Effective Time that relates to such demand, and Parent shall have the opportunity and right to direct all negotiations and
proceedings with respect to such demands. Except with the prior written consent of Parent, the Company shall not make any payment
with respect to, or settle, or offer to settle, any such demands.
Section 2.04 Adjustments.
Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and
the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur (other than the issuance of
additional shares of capital stock of the Company as permitted by this Agreement), including by reason of any reclassification,
recapitalization, stock split (including a reverse stock split), or combination, exchange, readjustment of shares, or similar transaction,
or any stock dividend or distribution paid in stock, the Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted to reflect such change; provided, however, that this sentence shall not be construed to
permit the Company to take any action with respect to its securities that is prohibited by the terms of this Agreement.
Section 2.05 Withholding
Rights. Each of the Paying Agent, Parent, Merger Sub, and the Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this Article II such amounts as may be
required to be deducted and withheld with respect to the making of such payment under any Tax Laws. To the extent
that amounts are so deducted
and withheld and remitted to the applicable Governmental Entity by the Paying Agent, Parent, Merger Sub, or the Surviving Corporation,
as the case may be, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect
of which the Paying Agent, Parent, Merger Sub, or the Surviving Corporation, as the case may be, made such deduction and withholding.
Section 2.06 Lost
Certificates. If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by Parent, the posting by such Person
of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent will issue, in exchange for such lost, stolen, or destroyed Certificate, the Merger Consideration
to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated under this
Article II.
Section 2.07 Treatment
of Stock Options and Other Stock-Based Compensation.
(a) Company
Stock Options. The Company shall take all requisite action so that, at the Effective Time, each Company Stock Option that is
outstanding under any Company Stock Plan immediately prior to the Effective Time, whether or not then vested or exercisable, shall
be, by virtue of the Merger and without any action on the part of the holder thereof, cancelled and converted into the right to
receive from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in
cash, without interest, equal to the product of: (i) the aggregate number of shares of Company Common Stock subject to such
Company Stock Option; multiplied by (ii) the excess, if any, of the Merger Consideration over the per share exercise price
under such Company Stock Option, less any Taxes required to be withheld in accordance with Section 2.05. For the avoidance
of doubt, in the event that the per share exercise price under any Company Stock Option is equal to or greater than the Merger
Consideration, such Company Stock Option shall be cancelled as of the Effective Time without payment therefor and shall have no
further force or effect.
(b) Company
Restricted Shares. The Company shall take all requisite action so that, at the Effective Time, each Company Restricted Share
that is outstanding under any Company Stock Plan immediately prior to the Effective Time shall, by virtue of the Merger and without
any action on the part of the holder thereof, vest in full and become free of restrictions and shall be cancelled and converted
automatically, in accordance with the procedures set forth in this Agreement, into the right to receive from Parent and the Surviving
Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the
Merger Consideration, less any Taxes required to be withheld in accordance with Section 2.05.
(c) Company
Restricted Stock Units. The Company shall take all requisite action so that, at the Effective Time, each Company RSU that is
outstanding under any Company Stock Plan immediately prior to the Effective Time, whether or not then vested, shall be, by virtue
of the Merger and without any action on the part of the holder thereof, cancelled and converted into the right to receive from
Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without
interest, equal to the product of: (i) the aggregate number of shares of Company Common Stock subject to such Company RSU;
multiplied by (ii) the Merger Consideration, less any Taxes required to be withheld in accordance with Section 2.05;
provided that with respect to any Company RSUs that the Company, in consultation with Parent, has determined constitute
nonqualified deferred compensation subject to Section 409A of the Code and that are not permitted to be paid at the Effective
Time without triggering a Tax or penalty under Section 409A of the Code, such payment shall be made at the earliest time permitted
under the applicable Stock Plan and award agreement that will not trigger a Tax or penalty under Section 409A of the Code.
(d) Company
Performance Stock Units. The Company shall take all requisite action so that, at the Effective Time, each Company PSU that
is outstanding under any Company Stock Plan immediately prior to the Effective Time, whether or not then vested, shall be, by virtue
of the Merger and without any action on the part of the holder thereof, cancelled and converted into the right to receive from
Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without
interest, equal to the product of: (i) the aggregate number of shares of Company Common Stock subject to such Company PSU
(assuming for these purposes that 100% of the applicable target had been achieved thereunder and the performance period had ended,
in each case, immediately prior to the Effective Time); multiplied by (ii) the Merger Consideration, less any Taxes required
to be withheld in accordance with Section 2.05; provided that with respect to any Company PSUs that the Company,
in consultation with Parent, has determined constitute nonqualified deferred compensation subject
to Section 409A
of the Code and that are not permitted to be paid at the Effective Time without triggering a Tax or penalty under Section 409A
of the Code, such payment shall be made at the earliest time permitted under the applicable Stock Plan and award agreement that
will not trigger a Tax or penalty under Section 409A of the Code.
(e) Company
Stock Units. The Company shall take all requisite action so that, at the Effective Time, each Company DSU that is outstanding
under the Directors Deferred Compensation Plan immediately prior to the Effective Time, whether or not then vested, shall be, by
virtue of the Merger and without any action on the part of the holder thereof, cancelled and converted into the right to receive
from Parent and the Surviving Corporation, as promptly as reasonably practicable after the Effective Time, an amount in cash, without
interest, equal to the product of: (i) the aggregate number of shares of Company Common Stock subject to such Company DSU;
multiplied by (ii) the Merger Consideration, less any Taxes required to be withheld in accordance with Section 2.05;
provided that with respect to any Company DSUs that the Company, in consultation with Parent, has determined constitute
nonqualified deferred compensation subject to Section 409A of the Code and that are not permitted to be paid at the Effective
Time without triggering a Tax or penalty under Section 409A of the Code, such payment shall be made at the earliest time permitted
under the applicable Stock Plan and award agreement that will not trigger a Tax or penalty under Section 409A of the Code.
(f) Resolutions
and Other Company Actions. At or prior to the Effective Time, the Company, the Company Board, and the compensation committee
of such board, as applicable, shall adopt any resolutions and take any actions (including obtaining any employee consents) that
may be necessary to effectuate the provisions of this Section 2.07.
Article III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth
in the Company Disclosure Letter, the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 3.01 Organization;
Standing and Power; Charter Documents; Subsidiaries.
(a) Organization;
Standing and Power. The Company and each of its Subsidiaries is a corporation, limited liability company, or other legal entity
duly organized, validly existing, and in good standing (to the extent that the concept of “good standing” is applicable
in the case of any jurisdiction outside the United States) under the Laws of its jurisdiction of organization, and has the requisite
corporate, limited liability company, or other organizational, as applicable, power and authority to own, lease, and operate its
assets and to carry on its business as now conducted. Each of the Company and its Subsidiaries is duly qualified or licensed to
do business as a foreign corporation, limited liability company, or other legal entity and is in good standing (to the extent that
the concept of “good standing” is applicable) in each jurisdiction where the character of the assets and properties
owned, leased, or operated by it or the nature of its business makes such qualification or license necessary, except where the
failure to be so qualified or licensed or to be in good standing, would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
(b) Charter
Documents. The Company has delivered or made available to Parent a true and correct copy of the Charter Documents, of the Company
and each of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its Charter
Documents.
(c) Subsidiaries.
Section 3.01(c)(i) of the Company Disclosure Letter lists each of the Subsidiaries of the Company as of the date
hereof and its place of organization. Section 3.01(c)(ii) of the Company Disclosure Letter sets forth, for each
Subsidiary that is not, directly or indirectly, wholly-owned by the Company: (i) the number and type of any capital stock
of, or other equity or voting interests in, such Subsidiary that is outstanding as of the date hereof; and (ii) the number
and type of shares of capital stock of, or other equity or voting interests in, such Subsidiary that, as of the date hereof, are
owned, directly or indirectly, by the Company. All of the outstanding shares of capital stock of, or other equity or voting interests
in, each Subsidiary of the Company that is owned directly or indirectly by the Company have been validly issued, were issued free
of pre-emptive rights, are fully paid and non-assessable, and are free and clear of all Liens, including any restriction on the
right to vote, sell, or otherwise dispose of such capital stock or other equity or voting interests, except for any Liens: (A) imposed
by applicable securities Laws; or (B) arising pursuant to the Charter Documents of any non-wholly-owned Subsidiary of the
Company. Except
for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly,
any capital stock of, or other equity or voting interests in, any Person.
Section 3.02 Capital
Structure.
(a) Capital
Stock. The authorized capital stock of the Company consists of: (i) 100,000,000 shares of Company Common Stock; and (ii) 5,000,000
shares of Company Preferred Stock. As of the date of this Agreement: (A) 16,882,826 shares of Company Common Stock were issued
and outstanding (not including shares held in treasury); (B) 4,106,126 shares of Company Common Stock were issued and held
by the Company in its treasury; and (C) no shares of Company Preferred Stock were issued and outstanding or held by the Company
in its treasury. All of the outstanding shares of capital stock of the Company are, and all shares of capital stock of the Company
which may be issued as contemplated or permitted by this Agreement will be, when issued, duly authorized, validly issued, fully
paid, and non-assessable, and not subject to any pre-emptive rights. No Subsidiary of the Company owns any shares of Company Common
Stock.
(b) Stock
Awards.
(i) As
of the date of this Agreement, an aggregate of 1,631,123 shares of Company Common Stock were reserved for issuance pursuant to
Company Equity Awards not yet granted under the Company Stock Plans. As of the date of this Agreement, 85,410 shares of Company
Common Stock were reserved for issuance pursuant to outstanding Company Stock Options, all of which have an exercise price higher
than the Merger Consideration, 441,221 Company Restricted Shares were issued and outstanding (and included in shares issued and
outstanding), 178,996 Company RSUs were issued and outstanding, 52,910 Company PSUs were issued and outstanding, and 68,555 Company
DSUs were issued and outstanding. Section 3.02(b)(i) of the Company Disclosure Letter sets forth as of the date
of this Agreement a list of each outstanding Company Equity Award granted under the Company Stock Plans and the Directors Deferred
Compensation Plan and: (A) the name of the holder of such Company Equity Award; (B) the number of shares of Company Common
Stock subject to such outstanding Company Equity Award; (C) if applicable, the exercise price, purchase price, or similar
pricing of such Company Equity Award; (D) the date on which such Company Equity Award was granted or issued; (E) the
applicable vesting, repurchase, or other lapse of restrictions schedule, and the extent to which such Company Equity Award is vested
and exercisable as of the date hereof; and (F) with respect to Company Stock Options, the date on which such Company Stock
Option expires. All shares of Company Common Stock subject to issuance under the Company Stock Plans or the Directors Deferred
Compensation Plan, upon issuance in accordance with the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid, and non-assessable.
(ii) Except
as set forth in Section 3.02(b)(ii) of the Company Disclosure Letter, there are no Contracts to which the Company is
a party obligating the Company to accelerate the vesting of any Company Equity Award as a result of the transactions contemplated
by this Agreement (whether alone or upon the occurrence of any additional or subsequent events). Other than the Company Equity
Awards, as of the date hereof, there are no outstanding: (A) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for Voting Debt or shares of capital stock of the Company; (B) options, warrants, or other agreements
or commitments to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries
to issue, any Voting Debt or shares of capital stock of (or securities convertible into or exchangeable for shares of capital stock
of) the Company; or (C) restricted shares, restricted stock units, stock appreciation rights, performance shares, profit participation
rights, contingent value rights, “phantom” stock, or similar securities or rights that are derivative of, or provide
economic benefits based, directly or indirectly, on the value or price of, any shares of capital stock of the Company, in each
case that have been issued by the Company or its Subsidiaries (the items in clauses (A), (B), and (C), together with the capital
stock of the Company, being referred to collectively as “Company Securities”). All outstanding shares of Company
Common Stock, all outstanding Company Equity Awards, and all outstanding shares of capital stock, voting securities, or other ownership
interests in any Subsidiary of the Company, have been issued or granted, as applicable, in compliance in all material respects
with all applicable securities Laws.
(iii) There
are no outstanding Contracts requiring the Company or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any Company
Securities or Company Subsidiary Securities. Neither the Company nor any of its Subsidiaries is a party to any voting agreement
with respect to any Company Securities or Company Subsidiary Securities.
(c) Voting
Debt. No Voting Debt is issued or outstanding.
(d) Company
Subsidiary Securities. As of the date hereof, there are no outstanding: (i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for Voting Debt, capital stock, voting securities, or other ownership interests in any Subsidiary
of the Company; (ii) options, warrants, or other agreements or commitments to acquire from the Company or any of its Subsidiaries,
or obligations of the Company or any of its Subsidiaries to issue, any Voting Debt, capital stock, voting securities, or other
ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities, or other ownership
interests in) any Subsidiary of the Company; or (iii) restricted shares, restricted stock units, stock appreciation rights,
performance shares, profit participation rights, contingent value rights, “phantom” stock, or similar securities or
rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital
stock or voting securities of, or other ownership interests in, any Subsidiary of the Company, in each case that have been issued
by a Subsidiary of the Company (the items in clauses (i), (ii), and (iii), together with the capital stock, voting securities,
or other ownership interests of such Subsidiaries, being referred to collectively as “Company Subsidiary Securities”).
Section 3.03 Authority;
Non-Contravention; Governmental Consents; Board Approval; Anti-Takeover Statutes.
(a) Authority.
The Company has all requisite corporate power and authority to enter into and to perform its obligations under this Agreement and,
subject to, in the case of the consummation of the Merger, adoption of this Agreement by the Requisite Company Vote, to consummate
the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery
of this Agreement or to consummate the Merger and the other transactions contemplated hereby, subject only, in the case of consummation
of the Merger, to the receipt of the Requisite Company Vote. The Requisite Company Vote is the only vote or consent of the holders
of any class or series of the Company’s capital stock necessary to approve and adopt this Agreement, approve the Merger,
and consummate the Merger and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by
the Company and, assuming due execution and delivery by Parent and Merger Sub, constitutes the legal, valid, and binding obligation
of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, and other similar Laws affecting creditors’ rights generally and by general principles of equity.
(b) Non-Contravention.
Except as set forth in Section 3.03(b) of the Company Disclosure Letter, the execution, delivery, and performance of
this Agreement by the Company, and the consummation by the Company of the transactions contemplated by this Agreement, including
the Merger, do not and will not: (i) subject to obtaining the Requisite Company Vote, contravene or conflict with, or result
in any violation or breach of, the Charter Documents of the Company or any of its Subsidiaries; (ii) assuming that all Consents
contemplated by clauses (i) through (v) of Section 3.03(c) have been obtained or made and, in the case of the
consummation of the Merger, obtaining the Requisite Company Vote, conflict with or violate any Law applicable to the Company, any
of its Subsidiaries, or any of their respective properties or assets; (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the Company’s or any of its
Subsidiaries’ loss of any benefit or the imposition of any additional payment or other liability under, or alter the rights
or obligations of any third party under, or give to any third party any rights of termination, amendment, acceleration, or cancellation,
or require any Consent under, any Contract (including any Lease) to which the Company or any of its Subsidiaries is a party or
otherwise bound as of the date hereof; or (iv) result in the creation of a Lien (other than Permitted Liens) on any of the
properties or assets of the Company or any of its Subsidiaries, except, in the case of each of clauses (ii), (iii), and (iv), for
any conflicts, violations, breaches, defaults, loss of benefits, additional payments or other liabilities, alterations, terminations,
amendments, accelerations, cancellations,
or Liens that,
or where the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(c) Governmental
Consents. No consent, approval, order, or authorization of, or registration, declaration, or filing with, or notice to (any
of the foregoing being a “Consent”), any Governmental Entity is required to be obtained or made by the Company
in connection with the execution, delivery, and performance by the Company of this Agreement or the consummation by the Company
of the Merger and other transactions contemplated hereby, except for: (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; (ii) the filing of the Company Proxy Statement in definitive form with the SEC
in accordance with the Exchange Act, and such reports under the Exchange Act as may be required in connection with this Agreement,
the Merger, and the other transactions contemplated by this Agreement; (iii) such Consents as may be required under applicable
state securities or “blue sky” Laws and the securities Laws of any foreign country or the rules and regulations of
Nasdaq; (iv) the other Consents of Governmental Entities listed in Section 3.03(c) of the Company Disclosure Letter
(the “Other Governmental Approvals”); and (v) such other Consents which if not obtained or made would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Board
Approval. The Company Board, by resolutions duly adopted by a unanimous vote at a meeting of all directors of the Company duly
called and held, and not subsequently rescinded or modified in any way, has: (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair to, and in the
best interests of, the Company and the Company’s stockholders; (ii) approved and declared advisable this Agreement,
including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by this Agreement,
including the Merger, upon the terms and subject to the conditions set forth herein; (iii) directed that this Agreement be
submitted to a vote of the Company’s stockholders for adoption at the Company Stockholders Meeting; and (iv) resolved
to recommend that Company stockholders vote in favor of adoption of this Agreement in accordance with the DGCL (collectively, the
“Company Board Recommendation”).
(e) Anti-Takeover
Statutes. No “fair price,” “moratorium,” “control share acquisition,” “supermajority,”
“affiliate transactions,” “business combination,” or other similar anti-takeover statute or regulation
enacted under any federal, state, local, or foreign laws applicable to the Company is applicable to this Agreement, the Merger,
or any of the other transactions contemplated by this Agreement.
Section 3.04 SEC
Filings; Financial Statements; Sarbanes-Oxley Act Compliance; Undisclosed Liabilities; Off-Balance Sheet Arrangements.
(a) SEC
Filings. The Company has timely filed with or furnished to, as applicable, the SEC all Company SEC Documents through EDGAR.
To the extent that any Company SEC Document available on EDGAR contains redactions pursuant to a request for confidential treatment
or otherwise, the Company has made available to Parent the full text of all such Company SEC Documents that it has so filed or
furnished with the SEC. As of their respective filing dates or, if amended or superseded by a subsequent filing prior to the date
hereof, as of the date of the last such amendment or superseding filing (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), each of the Company SEC Documents
complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the
Sarbanes-Oxley Act, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents. None of the Company
SEC Documents, including any financial statements, schedules, or exhibits included or incorporated by reference therein at the
time they were filed (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last
such amendment or superseding filing), contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading. To the Knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review or
outstanding SEC investigation, and there are no outstanding or unresolved comments received from the SEC with respect to any of
the Company SEC Documents. None of the Company’s Subsidiaries is required to file or furnish any forms, reports, or other
documents with the SEC.
(b) Financial
Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained
in or incorporated by reference into the Company SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto
as of their
respective dates; (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted
by the SEC for Quarterly Reports on Form 10-Q); and (iii) fairly presented in all material respects the consolidated financial
position and the results of operations, changes in stockholders’ equity, and cash flows of the Company and its consolidated
Subsidiaries as of the respective dates of and for the periods referred to in such financial statements, subject, in the case of
unaudited interim financial statements, to normal and year-end audit adjustments as permitted by GAAP and the applicable rules
and regulations of the SEC.
(c) Internal
Controls. The Company and each of its Subsidiaries has established and maintains a system of “internal controls over
financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that is reasonably designed
to provide assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP including policies and procedures that: (i) require the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
GAAP and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate
authorizations of the Company’s management and the Company Board; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the assets of the Company and its Subsidiaries.
(d) Disclosure
Controls and Procedures. The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) are designed to ensure that all information (both financial and non-financial) required to
be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated
and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the chief executive officer and chief financial officer of the Company required under the Exchange Act
with respect to such reports. Neither the Company nor, to the Knowledge of the Company, the Company’s independent registered
public accounting firm has identified or been made aware of: (i) any “significant deficiency” or “material
weakness” (each as defined in Rule 12b-2 of the Exchange Act) in the system of internal control over financial reporting
utilized by the Company and its Subsidiaries that has not been subsequently remediated; or (ii) any fraud that involves the
Company’s management or other employees who have a role in the preparation of financial statements or the internal control
over financial reporting utilized by the Company and its Subsidiaries.
(e) Undisclosed
Liabilities. Neither the Company nor any of its Subsidiaries has any Liabilities other than Liabilities that: (i) are
reflected or reserved against in the Company Balance Sheet (including in the notes thereto); (ii) were incurred since the
date of the Company Balance Sheet in the ordinary course of business consistent with past practice; (iii) are incurred in
connection with the transactions contemplated by this Agreement; (iv) are incurred under (A) Contracts that either are
listed or not required to be listed in Section 3.15 of the Company Disclosure Letter; provided that such Liabilities
are not for breach of any such Contract, or (B) the Company Stock Plans or the Directors Deferred Compensation Plan; or (v) individually
or in the aggregate, are not material.
(f) Off-Balance
Sheet Arrangements. Except set forth in Section 3.04(f) of the Company Disclosure Letter or as described in the
Company SEC Documents filed as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a party to, or
has any commitment to become a party to: (i) any joint venture, off-balance sheet partnership, or any similar Contract or
arrangement (including any Contract or arrangement relating to any transaction or relationship between or among the Company or
any of its Subsidiaries, on the one hand, and any other Person, including any structured finance, special purpose, or limited purpose
Person, on the other hand); or (ii) any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation
S-K under the Exchange Act).
(g) Sarbanes-Oxley
and Nasdaq Compliance. Each of the principal executive officer and the principal financial officer of the Company (or each
former principal executive officer and each former principal financial officer of the Company, as applicable) has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to
the Company SEC Documents, and the statements contained in such certifications are true and accurate in all material respects.
For purposes of
this Agreement,
“principal executive officer” and “principal financial officer” shall have the meanings given to such terms
in the Sarbanes-Oxley Act. The Company is also in compliance with all of the other applicable provisions of the Sarbanes-Oxley
Act and the applicable listing and corporate governance rules of Nasdaq, except for any non-compliance that would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(h) Accounting,
Securities, or Other Related Complaints or Reports. Since January 1, 2018: (i) none of the Company or any of its
Subsidiaries nor any director or officer of the Company or any of its Subsidiaries has received any oral or written complaint,
allegation, assertion, or claim regarding the financial accounting, internal accounting controls, or auditing practices, procedures,
methodologies, or methods of the Company or any of its Subsidiaries or any oral or written complaint, allegation, assertion, or
claim from employees of the Company or any of its Subsidiaries regarding questionable financial accounting or auditing matters
with respect to the Company or any of its Subsidiaries; and (ii) no attorney representing the Company or any of its Subsidiaries,
whether or not employed by the Company or any of its Subsidiaries, has reported credible evidence of any material violation of
securities Laws, breach of fiduciary duty, or similar material violation by the Company, any of its Subsidiaries, or any of their
respective officers, directors, employees, or agents to the Company Board or any committee thereof, or to the chief executive officer,
chief financial officer, or general counsel of the Company.
Section 3.05 Absence
of Certain Changes or Events. Since the date of the Company Balance Sheet, except in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby, the business of the Company and each of
its Subsidiaries has been conducted in the ordinary course of business consistent with past practice and there has not been or
occurred:
(a) any
Company Material Adverse Effect or any event, condition, change, or effect that could reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; or
(b) except
in connection with the sale of the Company’s former Southwest Wire Rope division, any event, condition, action, or effect
that, if taken during the period from the date of this Agreement through the Effective Time, could constitute a breach of Section 5.01.
Section 3.06 Taxes.
(a) Tax
Returns and Payment of Taxes. The Company and each of its Subsidiaries have duly and timely filed or caused to be filed (taking
into account any valid extensions) all material Tax Returns required to be filed by them. Such Tax Returns are true, complete,
and correct in all material respects. Neither the Company nor any of its Subsidiaries is currently the beneficiary of any extension
of time within which to file any Tax Return other than extensions of time to file Tax Returns obtained in the ordinary course of
business consistent with past practice. All material Taxes due and owing by the Company or any of its Subsidiaries (whether or
not shown on any Tax Return) have been timely paid or, where payment is not yet due, the Company has made an adequate provision
for such Taxes in the Company’s financial statements included in the Company SEC Documents (in accordance with GAAP). The
Company’s most recent financial statements included in the Company SEC Documents reflect an adequate reserve (in accordance
with GAAP) for all material Taxes payable by the Company and its Subsidiaries through the date of such financial statements. Neither
the Company nor any of its Subsidiaries has incurred any material Liability for Taxes since the date of the Company’s most
recent financial statements included in the Company SEC Documents outside of the ordinary course of business or otherwise inconsistent
with past practice.
(b) Availability
of Tax Returns. The Company has made available to Parent complete and accurate copies of all federal, state, local, and foreign
income, franchise, and other material Tax Returns filed by or on behalf of the Company or its Subsidiaries for any Tax period ending
after January 1, 2016.
(c) Withholding.
The Company and each of its Subsidiaries have withheld and timely paid each material Tax required to have been withheld and paid
in connection with amounts paid or owing to any Company Employee, creditor, customer, stockholder, or other party (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any state, local,
and foreign Laws), and materially complied with all information reporting and backup withholding provisions of applicable Law.
(d) Liens.
There are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries other than for current Taxes not yet due
and payable or for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP has been made in the Company’s most recent financial statements included in the Company SEC Documents.
(e) Tax
Deficiencies and Audits. No deficiency for any material amount of Taxes which has been proposed, asserted, or assessed in writing
by any taxing authority against the Company or any of its Subsidiaries remains unpaid. There are no waivers or extensions of any
statute of limitations currently in effect with respect to Taxes of the Company or any of its Subsidiaries. There are no audits,
suits, proceedings, investigations, claims, examinations, or other administrative or judicial proceedings ongoing or pending with
respect to any Taxes of the Company or any of its Subsidiaries.
(f) Tax
Jurisdictions. Since January 1, 2015, no claim has been made in writing by any taxing authority in a jurisdiction where the
Company and its Subsidiaries do not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to Tax in
that jurisdiction.
(g) Tax
Rulings. Neither the Company nor any of its Subsidiaries has requested or is the subject of or bound by any private letter
ruling, technical advice memorandum, or similar ruling or memorandum with any taxing authority with respect to any material Taxes,
nor is any such request outstanding.
(h) Consolidated
Groups, Transferee Liability, and Tax Agreements. Neither the Company nor any of its Subsidiaries: (i) has been a member
of a group filing Tax Returns on a consolidated, combined, unitary, or similar basis, other than a group of which the Company is
a parent; (ii) has any material liability for Taxes of any Person (other than the Company or any of its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any comparable provision of local, state, or foreign Law), as a transferee or successor,
by Contract, or otherwise; or (iii) is a party to, bound by or has any material liability under any Tax sharing, allocation,
or indemnification agreement or arrangement with any Person other than the Company and its Subsidiaries.
(i) Change
in Accounting Method. Neither Company nor any of its Subsidiaries has agreed to make, nor is it required to make, any material
adjustment under Section 481(a) of the Code or any comparable provision of state, local, or foreign Tax Laws by reason of
a change in accounting method or otherwise.
(j) Post-Closing
Tax Items. The Company and its Subsidiaries will not be required to include any material item of income in, or exclude any
material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a
result of any: (i) “closing agreement” as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax Law) executed prior to the Closing; (ii) installment sale or open
transaction disposition made prior to the Closing; (iii) prepaid amount received prior to the Closing; (iv) any income
under Section 965(a) of the Code, including as a result of any election under Section 965(h) of the Code with
respect thereto; or (v) election under Section 108(i) of the Code.
(k) Section 355.
Neither the Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation”
in connection with a distribution described in Section 355 of the Code within the past five years.
(l) CARES
Act. Seller has not (i) deferred the payment of any payroll Taxes pursuant to Section 2302 of the CARES Act, the Payroll Tax
Executive Order or any other provision of applicable Law, or (ii) utilized any payroll Tax credits pursuant to any provision of
the CARES Act.
(m) Reportable
Transactions. Neither Company nor any of its Subsidiaries has been a party to, or a material advisor with respect to, a “reportable
transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).
Section 3.07 Intellectual
Property.
(a) Scheduled
Company-Owned IP. Section 3.07(a) of the Company Disclosure Letter contains a true and complete list, as of the
date hereof, of all: (i) Company-Owned IP that is the subject of any issuance, registration, certificate, application, or
other filing by, to or with any Governmental Entity or authorized private
registrar,
including patents, patent applications, trademark registrations and pending applications for registration, copyright registrations
and pending applications for registration, and internet domain name registrations, and any Intellectual Property (whether or not
abandoned or expired) which provides a direct or indirect priority basis for any of the foregoing; and (ii) material unregistered
trademarks included in the Company-Owned IP.
(b) Right
to Use; Title. The Company or one of its Subsidiaries is the sole and exclusive legal and beneficial owner of all right, title,
and interest in and to the Company-Owned IP, and has the valid and enforceable right to use all Company IP, in each case, free
and clear of all Liens other than Permitted Liens, except as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(c) Validity
and Enforceability. The Company and its Subsidiaries’ rights in the Company-Owned IP are valid, subsisting, and enforceable,
except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company
and each of its Subsidiaries have taken reasonable steps to maintain the Company-Owned IP and to protect and preserve the confidentiality
of all trade secrets included in the Company-Owned IP, except where the failure to take such actions would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Non-Infringement.
Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the
conduct of the businesses of the Company and any of its Subsidiaries has not infringed, misappropriated, or otherwise violated,
and is not infringing, misappropriating, or otherwise violating, any Intellectual Property of any other Person; and (ii) to
the Knowledge of the Company, no third party is infringing upon, violating, or misappropriating any Company-Owned IP.
(e) IP
Legal Actions and Orders. Except as set forth in Section 3.09 of the Company Disclosure Letter, there are no Legal
Actions pending or, to the Knowledge of the Company, threatened: (i) alleging any infringement, misappropriation, or violation
by the Company or any of its Subsidiaries of the Intellectual Property of any Person; (ii) challenging the validity, enforceability,
or ownership of any Company-Owned IP or the Company’s or any of its Subsidiaries’ rights with respect to any Company
IP; or (iii) asserting any droit moral or similar rights against Company or any Subsidiary, in each case except for such
Legal Actions that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
The Company and its Subsidiaries are not subject to any outstanding Order that restricts or impairs the use of any Company-Owned
IP, except where compliance with such Order would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(f) Company
IT Systems. Section 3.07(f) of the Company Disclosure Letter contains a correct, current and complete list of all
Company IT Systems Contracts, other than for Off-the-Shelf Solutions: (i) under which custom development work has been or is being
performed by or for the Company or any of its Subsidiaries or where custom developed products or services are being utilized by
the Company or any of its Subsidiaries; (ii) under which the Company or any of its Subsidiaries is a licensee of an IT product
or service; or (iii) where licensing or use rights are granted or paid for under a scheme other than number of users or number
of systems (for avoidance of doubt, all revenue-based or consumption-based licenses should be listed). Each Company IT Systems
Contract is valid and binding on the Company or the applicable Subsidiary(ies) in accordance with its terms and is in full
force and effect, and no party to any Company IT Systems Contract is, or is alleged to be, in breach of or default under, or has
provided or received any notice of breach of, default under, or intention to terminate (for reasons other than non-renewal), any
Company IT Systems Contract, with any over-utilization or improperly implementation of any software or service utilized by Company
or any of its Subsidiaries being deemed a breach of such agreement, in each case except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. In the past five (5) years, there has been no disruption,
malfunction, failure, continued substandard performance, denial-of-service, or other cyber incident, including any cyberattack,
or other impairment of the Company IT Systems, in each case except as would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, none of the Company IT Systems contain any
viruses, worms, Trojan horses, bugs, faults or other devices, errors, contaminants or effects that (A) materially disrupt or adversely
affect the functionality of any Company IT Systems, except as disclosed in their documentation or terms of use, or (B) enable or
assist any Person to access without authorization any Company IT Systems (or portion thereof). The Company and its Subsidiaries
have taken commercially reasonable efforts to safeguard the confidentiality, availability, security, continuity and integrity of
the Company IT Systems,
including implementing
and maintaining appropriate backup, disaster recovery, and software and hardware support arrangements, in each case except as would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(g) Privacy
and Data Security. The Company and each of its Subsidiaries have complied with all applicable Laws, payment card industry data
security standards applicable to the Company and each Subsidiary, contractual and/or fiduciary obligations as to the protection
and/or security of personal information processed by, or in or under the possession or control of, the Company or any of its Subsidiaries,
and all internal or publicly posted policies, notices, and statements pertaining to the collection, use, processing, storage, transfer,
disclosure, and security of personal information, data protection and e-commerce in the conduct of the Company’s and its
Subsidiaries’ businesses, in each case except as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. The Company and each of its Subsidiaries are in compliance with all Privacy Agreements, and
each such Privacy Agreement is valid and binding on the Company or the applicable Subsidiary(ies) in accordance with its terms
and is in full force and effect, in each case except as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. In the past five (5) years, the Company and its Subsidiaries have not: (i) experienced
any actual, alleged, or suspected data breach or other security incident involving personal information in their possession, control
or otherwise processed by the Company or any of its Subsidiaries; or (ii) been subject to or received any notice of any audit,
investigation, complaint, or other Legal Action by any Governmental Entity or other Person concerning the Company’s or any
of its Subsidiaries’ collection, use, processing, storage, transfer, disclosure or protection of personal information or
actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and
to the Company’s Knowledge, there are no facts or circumstances that could reasonably be expected to give rise to any such
Legal Action, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(h) IP
Transfer Agreements. The Company and its Subsidiaries, as applicable, have entered into binding, valid and enforceable written
contracts with each current and former employee and independent contractor who is or was involved in or has contributed to the
invention, creation, or development of any Company-Owned IP during the course of employment or engagement with Company and/or its
Subsidiaries, whereby such employee or independent contractor (i) acknowledges Company’s or its Subsidiary’s exclusive
ownership of the Company-Owned IP invented, created or developed by such employee or independent contractor within the scope of
his or her employment or engagement with Company or its Subsidiary; and (ii) grants to Company or its Subsidiary a present, irrevocable
assignment of any ownership interest such employee or independent contractor may have in or to such Company-Owned IP, in each case
except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.08 Compliance;
Permits.
(a) Compliance.
The Company and each of its Subsidiaries are and, since January 1, 2016, have been in compliance in all material respects
with all material Laws or Orders applicable to the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries
or any of their respective businesses or properties is bound. Since January 1, 2016, no Governmental Entity has issued any
written notice or notification stating that the Company or any of its Subsidiaries or any of their respective businesses or properties
is not in compliance with any Law in any material respect. To the extent that other sections of this Article III relate to compliance
with particular laws, this Section 3.08(a) shall be deemed to be subject to any qualifications and exceptions in such other
sections.
(b) Permits.
The Company and its Subsidiaries hold, to the extent necessary to operate their respective businesses and properties as such businesses
and properties are being operated as of the date hereof, all Permits, except for any Permits for which the failure to obtain or
hold would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. No suspension,
cancellation, non-renewal, or adverse modifications of any Permits of the Company or any of its Subsidiaries is pending or, to
the Knowledge of the Company, threatened, except for any such suspension or cancellation which would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and each of its Subsidiaries is and,
since January 1, 2016, has been in compliance with the terms of all Permits, except where the failure to be in such compliance
would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.09 Litigation.
Except as set forth in Section 3.09 of the Company Disclosure Letter, there is no Legal Action pending, or to the Knowledge
of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties or assets or, to
the Knowledge of the Company, any officer or director of the Company or any of its Subsidiaries in their capacities as such other
than any such Legal Action that: (a) does not involve an amount in controversy in excess of $50,000; and (b) does not
seek material injunctive or other material non-monetary relief. None of the Company or any of its Subsidiaries or any of their
respective properties or assets is subject to any Order, which would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. To the Knowledge of the Company, there are no SEC inquiries or investigations, other governmental
inquiries or investigations, or internal investigations pending or, to the Knowledge of the Company, threatened, in each case regarding
any accounting practices of the Company or any of its Subsidiaries or any malfeasance by any officer or director of the Company.
Section 3.10 Brokers’
and Finders’ Fees. Except for fees payable to the Company Financial Advisors pursuant to engagement letters listed
in Section 3.10 of the Company Disclosure Letter, correct and complete copies of which have been provided to Parent,
neither the Company nor any of its Subsidiaries has incurred, nor will it incur, directly or indirectly, any liability for investment
banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection with this Agreement
or any transaction contemplated by this Agreement.
Section 3.11 Related
Person Transactions. There are, and since January 1, 2018, there have been, no Contracts, transactions, arrangements,
or understandings between the Company or any of its Subsidiaries, on the one hand, and any Affiliate (including any director, officer,
or employee or any of their respective family members) thereof or any holder of 5% or more of the shares of Company Common Stock
(or any of their respective family members), but not including any wholly-owned Subsidiary of the Company, on the other hand, that
would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in the Company’s Form
10-K or proxy statement pertaining to an annual meeting of stockholders.
Section 3.12 Employee
Matters.
(a) Schedule.
Section 3.12(a) of the Company Disclosure Letter contains a true and complete list, as of the date hereof, of each
Company Employee Plan.
(b) Documents.
The Company has made available to Parent correct and complete copies (or, if a plan or arrangement is not written, a written description)
of all Company Employee Plans and amendments thereto, and, to the extent applicable: (i) all related trust agreements, funding
arrangements, insurance contracts, and service provider agreements now in effect; (ii) the most recent determination letter
received regarding the tax-qualified status of each Company Employee Plan; (iii) the most recent financial statements for
each Company Employee Plan; (iv) the Form 5500 Annual Returns/Reports and Schedules for the most recent plan year for each
Company Employee Plan; (v) the current summary plan description for each Company Employee Plan; and (vi) all actuarial
valuation reports related to any Company Employee Plans.
(c) Employee
Plan Compliance. (i) Except as set forth in Section 3.12(c) of the Company Disclosure Letter, each Company
Employee Plan has been established, administered, and maintained in all material respects in accordance with its terms and in material
compliance with applicable Laws, including but not limited to ERISA and the Code; (ii) all the Company Employee Plans that
are intended to be qualified under Section 401(a) of the Code are so qualified and have received timely determination
letters from the IRS and no such determination letter has been revoked nor, to the Knowledge of the Company, has any such revocation
been threatened, or with respect to a prototype plan, can rely on an opinion letter from the IRS to the prototype plan sponsor,
to the effect that such qualified retirement plan and the related trust are exempt from federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and to the Knowledge of the Company no circumstance exists that is likely to result in the loss
of such qualified status under Section 401(a) of the Code; (iii) the Company and its Subsidiaries, where applicable,
have timely made all contributions, benefits, premiums, and other payments required by and due under the terms of each Company
Employee Plan and applicable Law and accounting principles, and all benefits accrued under any unfunded Company Employee Plan have
been paid, accrued, or otherwise adequately reserved to the extent required by, and in accordance with GAAP; (iv) except to
the extent limited by applicable Law, each Company Employee Plan can be amended, terminated, or otherwise discontinued after the
Effective Time in accordance with its terms, without material liability to Parent, the Surviving Corporation or any of its Subsidiaries
(other than ordinary administration expenses and in respect of accrued benefits thereunder); (v) there are no investigations,
audits, inquiries or enforcement actions pending or, to the Knowledge of the Company, threatened by the IRS, U.S. Department of
Labor, Health and Human Services, Equal Employment Opportunity Commission,
or any similar
Governmental Entity with respect to any Company Employee Plan; (vi) there are no material Legal Actions pending or, to the
Knowledge of the Company, threatened with respect to any Company Employee Plan (in each case, other than routine claims for benefits);
and (vii) to the Knowledge of the Company, neither the Company nor any of its Company ERISA Affiliates has engaged in a transaction
that would reasonably be expected to subject the Company or any Company ERISA Affiliate to a material tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA. No Company Employee Plan provides benefits to employees
or other services providers located in a country other than the United States or is subject to the Laws of any country other than
the United States.
(d) Plan
Liabilities. Neither the Company nor any Company ERISA Affiliate has: (i) incurred or reasonably expects to incur any
liability under Title I or Title IV of ERISA, or related provisions of the Code or foreign Law relating to any Company Employee
Plan and, to the Knowledge of the Company, nothing has occurred that could constitute grounds under Title IV of ERISA to terminate,
or appoint a trustee to administer, any Company Employee Plan; (ii) except for payments of premiums to the PBGC which have
been timely paid in full, not incurred any liability to the PBGC in connection with any Company Employee Plan covering any active,
retired, or former employees or directors of the Company or any Company ERISA Affiliate, including, without limitation, any liability
under Sections 4069 or 4212(c) of ERISA or any penalty imposed under Section 4071 of ERISA; (iii) failed in
any material respect to satisfy the health plan compliance requirements under the Affordable Care Act, including related information
reporting requirements; (iv) failed in any material respect to comply with Section 601 et. seq. of ERISA and Section 4980B
of the Code, regarding the health plan continuation coverage requirements under COBRA; or (v) failed in any material respect
to comply with the privacy, security, and breach notification requirements under HIPAA. No complete or partial termination of any
Company Employee Plan has occurred.
(e) Certain
Company Employee Plans. With respect to each Company Employee Plan:
(i) no
such plan is a “multiemployer plan” within the meaning of Section 3(37) of ERISA or a “multiple employer
plan” within the meaning of Section 413(c) of the Code and since January 1, 2016 neither the Company nor any of
its Company ERISA Affiliates has contributed to, sponsored, maintained, or had any liability or obligation in respect of any such
multiemployer plan or multiple employer plan;
(ii) no
Legal Action has been initiated by the PBGC to terminate any such Company Employee Plan or to appoint a trustee for any such Company
Employee Plan;
(iii) no
Company Employee Plan is subject to the minimum funding standards of Section 302 of ERISA or Sections 412, 418(b), or
430 of the Code, and none of the assets of the Company or any Company ERISA Affiliate is the subject of any lien arising under
Section 303 of ERISA or Sections 430 or 436 of the Code; and
(iv) no
“reportable event,” as defined in Section 4043 of ERISA, for which the notice requirement has not been waived
has occurred, or is reasonably expected to occur, with respect to any such Company Employee Plan.
(f) No
Post-Employment Obligations. Except as may be required by COBRA or other applicable Law, or except as set forth on Section 3.12(a)
of the Company Disclosure Letter, no Company Employee Plan provides post-termination or retiree health, life or other welfare benefits
to any person for any reason, and neither the Company nor any Company ERISA Affiliate has any Liability to provide post-termination
or retiree health benefits to any person.
(g) Potential
Governmental or Lawsuit Liability. Other than routine claims for benefits: (i) there are no pending or, to the Knowledge
of the Company, threatened claims by or on behalf of any participant in any Company Employee Plan, or otherwise involving any Company
Employee Plan or the assets of any Company Employee Plan; and (ii) no Company Employee Plan is presently or has within the
three years prior to the date hereof, been the subject of an examination or audit by a Governmental Entity or is the subject of
an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction, or similar program sponsored
by any Governmental Entity.
(h) Effect
of Transaction. Except as set forth on Section 3.12(h) of the Company Disclosure Letter, neither the execution or delivery
of this Agreement, the consummation of the Merger, nor any of the other transactions contemplated by this Agreement will (either
alone or in combination with any other event): (i) except as provided in Section 2.07, accelerate the timing of
payment, funding, or vesting, or increase the amount, of compensation or any other amounts due or payable to any such individual;
(ii) result in any other material obligation pursuant to any Company Employee Plan, or (iii) entitle any current or former
employee, officer or director of the Company or any of its Subsidiaries to severance pay, termination pay, separation pay, retention
pay or “change-in-control” or “change-of-control” payments. No amount reasonably expected to be received
(whether in cash or property or the vesting of any property) as a result of the consummation of the transactions contemplated by
this Agreement by any employee, director, or other service provider of the Company under any Company Employee Plan or otherwise
would not be deductible by reason of Section 280G of the Code nor would be subject to an excise tax under Section 4999
of the Code.
(i) Employment
Law Matters. The Company and each of its Subsidiaries: (i) is in compliance with all applicable Laws and agreements regarding
hiring, employment, termination of employment, plant closing and mass layoff, employment discrimination, harassment, retaliation,
and reasonable accommodation, leaves of absence, paid leave and workplace protections relating to COVID-19, terms and conditions
of employment, wages and hours of work, employee classification, employee health and safety, use of genetic information, leasing
and supply of temporary and contingent staff, engagement of independent contractors, including proper classification of same, payroll
taxes, and immigration with respect to Company Employees and contingent workers; and (ii) is in compliance with all applicable
Laws relating to the relations between it and any labor organization, trade union, work council, or other body representing Company
Employees, except, in the case of clauses (i) and (ii) immediately above, where the failure to be in compliance with
the foregoing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(j) Labor.
Except as set forth in Section 3.12(j) of the Company Disclosure Letter, neither Company nor any of its Subsidiaries is
or ever has been party to, or subject to, any collective bargaining agreement or other agreement with any labor organization, work
council, or trade union with respect to any of its or their operations. No work stoppage, slowdown, or labor strike against the
Company or any of its Subsidiaries with respect to employees who are employed within the United States is pending, threatened,
or has occurred in the last two years, and, to the Knowledge of the Company, no material work stoppage, slowdown, or labor strike
against the Company or any of its Subsidiaries with respect to employees who are employed outside the United States is pending,
threatened, or has occurred in the last two years. None of the current Company Employees is represented by a labor organization,
work council, or trade union and, to the Knowledge of the Company, there is no organizing activity, Legal Action, election petition,
union card signing or other union activity, or union corporate campaigns of or by any labor organization, trade union, or work
council directed at the Company or any of its Subsidiaries, or any Company Employees. Neither the Company nor any of its Subsidiaries
has experienced any reduction in force during the 90 days before the date of this Agreement, that, individually or in the aggregate,
would result in a duty to comply with the notice provisions of the WARN Act. Except as set forth in Section 3.12(j) of the
Company Disclosure Letter, all individuals employed by the Company or any Subsidiary are terminable at will without the requirement
to pay any severance or other termination payment beyond final wages. Except as set forth in Section 3.09 of the Company
Disclosure Letter, there are no Legal Actions, government investigations, or labor grievances pending, or, to the Knowledge of
the Company, threatened relating to any employment related matter involving any Company Employee or applicant, including, but not
limited to, charges of unlawful discrimination, retaliation or harassment, failure to provide reasonable accommodation, denial
of a leave of absence, failure to provide compensation or benefits, unfair labor practices, or other alleged violations of Law,
except for any of the foregoing which would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.13 Real
Property and Personal Property Matters.
(a) Owned
Real Estate. The Company or one or more of its Subsidiaries has good and marketable fee simple title to the Owned Real Estate
free and clear of any Liens other than the Permitted Liens. Section 3.13(a) of the Company Disclosure Letter contains
a true and complete list by address of the Owned Real Estate as of the date hereof. Other than with respect to the Cain Circle
Property, neither the Company nor any of its Subsidiaries: (i) lease or grant any Person the right to use or occupy all or
any part of the Owned Real Estate; (ii) other than to Parent, has granted any Person an option, right of first offer, or right
of first refusal to purchase such Owned Real Estate or any
portion thereof
or interest therein; or (iii) has received written notice of any pending, and to the Knowledge of the Company threatened,
condemnation proceeding affecting any Owned Real Estate or any portion thereof or interest therein. Neither the Company nor any
Subsidiary is a party to any agreement or option to purchase any real property or interest therein.
(b) Leased
Real Estate. Section 3.13(b) of the Company Disclosure Letter contains a true and complete list of all Leases (including
all amendments thereto) as of the date hereof for each such Leased Real Estate (including the dates and names of the parties to
such Lease documents, and, as to any oral Lease, a complete description of the material terms of such Lease). The Company has delivered
to Parent a true and complete copy of each such Lease (including all amendments, extensions, renewals, guaranties and other agreements
with respect thereto). Except as set forth on Section 3.13(b) of the Company Disclosure Letter, with respect to each
of the Leases: (i) such Lease is legal, valid, binding and enforceable against the Company or its Subsidiary and in full force
and effect; (ii) neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any other party to
the Lease, is in breach or default under such Lease, and no event has occurred or circumstance exists which, with or without notice,
lapse of time, or both, would constitute a breach or default under such Lease; (iii) the Company’s or its Subsidiary’s
possession and quiet enjoyment of the Leased Real Estate under such Lease has not been disturbed, and to the Knowledge of the Company,
there are no disputes with respect to such Lease; (iv) there are no Liens on the estate created by such Lease other than Permitted
Liens; and (v) no Lease has been amended or modified except as listed in Section 3.13(b) of the Company Disclosure Letter.
Neither the Company nor any of its Subsidiaries has assigned, pledged, mortgaged, hypothecated, or otherwise transferred any Lease
or any interest therein nor has the Company or any of its Subsidiaries subleased, licensed, or otherwise granted any Person (other
than another wholly-owned Subsidiary of the Company) a right to use or occupy such Leased Real Estate or any portion thereof. Neither
the Company nor any Subsidiary has been a party to any lease, license or occupancy agreement related to any real property that
was assigned by the Company or Subsidiary to a third party (without a release of the Company or such Subsidiary from the obligations
thereunder).
(c) Real
Estate Used in the Business. The Owned Real Estate identified in Section 3.13(a) of the Company Disclosure Letter
and the Leased Real Estate identified in Section 3.13(b) of the Company Disclosure Letter comprise all of the real
property used or intended to be used in, or otherwise related to, the business of the Company or any of its Subsidiaries. All of
the Real Estate and the improvements and fixtures thereon, are in operating condition (subject to ordinary wear and tear) without
material structural defects, and all mechanical and other building systems located thereon are in operating condition (subject
to ordinary wear and tear) and adequate in all material respects for their current use, in each case except as would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Personal
Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and each of its Subsidiaries are in possession of and have good and marketable title to, or valid leasehold
interests in or valid rights under contract to use, the machinery, equipment, furniture, fixtures, and other tangible personal
property and assets owned, leased, or used by the Company or any of its Subsidiaries, free and clear of all Liens other than Permitted
Liens. To the Knowledge of the Company, all of the personal property of the Company and its Subsidiaries is in good condition and
repair (normal wear and tear excepted), and adequate for the purposes for which such personal property is being used by the Company
and its Subsidiaries, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.14 Environmental
Matters. Except for such matters as would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect:
(a) Compliance
with Environmental Laws. The Company and its Subsidiaries are, and have been, in compliance with all Environmental Laws, which
compliance includes the possession, maintenance of, compliance with, or application for, all Permits required under applicable
Environmental Laws for the operation of the business of the Company and its Subsidiaries as currently conducted.
(b) No
Disposal, Release, or Discharge of Hazardous Substances. Neither the Company nor any of its Subsidiaries has disposed of, released,
or discharged any Hazardous Substances on, at, under, in, or from any real property currently or, to the Knowledge of the Company,
formerly owned, leased, or operated by it or any of its Subsidiaries or at any other location that is: (i) currently subject
to any investigation, remediation, or monitoring; or
(ii) reasonably
likely to result in liability to the Company or any of its Subsidiaries, in either case of (i) or (ii) under any applicable
Environmental Laws.
(c) No
Production or Exposure of Hazardous Substances. Neither the Company nor any of its Subsidiaries has: (i) produced, processed,
manufactured, generated, transported, treated, handled, used, or stored any Hazardous Substances, except in compliance with Environmental
Laws, at any Real Estate or real property formerly owned, leased or operated by the Company or any of its Subsidiaries; or (ii) exposed
any employee or any third party to any Hazardous Substances under circumstances reasonably expected to give rise to any material
Liability or obligation under any Environmental Law.
(d) No
Legal Actions or Orders. Except as set forth in Section 3.14(d) of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries has received written notice of any, and there is no, Legal Action pending, or to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries, alleging any Liability or responsibility under or non-compliance
with any Environmental Law or seeking to impose any financial responsibility for any investigation, cleanup, removal, containment,
or any other remediation or compliance under any Environmental Law. Neither the Company nor any of its Subsidiaries is subject
to any Order, settlement agreement, or other written agreement by or with any Governmental Entity or third party imposing any material
Liability or obligation with respect to any of the foregoing.
(e) Environmental
Encumbrance. Neither the Owned Real Estate, the Leased Real Estate not the Company’s or its Subsidiaries’ formerly
owned or leased real property is subject to any environmental Lien, environmental covenant, engineering or institutional control
or use limitation or similar restriction.
(f) No
Assumption of Environmental Law Liabilities. Neither the Company nor any of its Subsidiaries has expressly assumed or retained
any Liabilities under any applicable Environmental Laws of any other Person, including in any acquisition or divestiture of any
property or business.
Section 3.15 Material
Contracts.
(a) Material
Contracts. For purposes of this Agreement, “Company Material Contract” shall mean the following to which
the Company or any of its Subsidiaries is a party or any of the respective assets are bound (excluding any Leases):
(i) any
“material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act), whether or
not filed by the Company with the SEC;
(ii) any
employment or consulting Contract (in each case with respect to which the Company has continuing obligations as of the date hereof)
with any current or former (A) officer of the Company, (B) member of the Company Board, or (c) Company Employee
or consultant providing for an annual base salary or payment in excess of $100,000;
(iii) any
Contract providing for indemnification or any guaranty by the Company or any Subsidiary thereof, in each case that is material
to the Company and its Subsidiaries, taken as a whole, other than (A) any guaranty by the Company or a Subsidiary thereof
of any of the obligations of (1) the Company or another wholly-owned Subsidiary thereof or (2) any Subsidiary (other
than a wholly-owned Subsidiary) of the Company that was entered into in the ordinary course of business pursuant to or in connection
with a customer Contract, or (B) any Contract providing for indemnification of customers or other Persons pursuant to Contracts
entered into in the ordinary course of business;
(iv) any
Contract that purports to limit in any material respect the right of the Company or any of its Subsidiaries (or, at any time after
the consummation of the Merger, Parent or any of its Subsidiaries) (A) to engage in any line of business, (B) compete
with any Person or solicit any client or customer, or (C) operate in any geographical location;
(v) any
Contract relating to the disposition or acquisition, directly or indirectly (by merger, sale of stock, sale of assets, or otherwise),
by the Company or any of its Subsidiaries after the date of this
Agreement of
assets or capital stock or other equity interests of any Person, in each case with a fair market value in excess of $250,000;
(vi) any
Contract that grants any right of first refusal, right of first offer, or similar right with respect to any material assets, rights,
or properties of the Company or any of its Subsidiaries;
(vii) any
Contract that provides for the payment of rebates either to suppliers or customers;
(viii) any
Contract that contains any provision that requires the purchase of all or a material portion of the Company’s or any of its
Subsidiaries’ requirements for a given product or service from a given third party, which product or service is material
to the Company and its Subsidiaries, taken as a whole;
(ix) any
Contract that obligates the Company or any of its Subsidiaries to conduct business on an exclusive or preferential basis or that
contains a “most favored nation” or similar covenant with any third party or upon consummation of the Merger will obligate
Parent, the Surviving Corporation, or any of their respective Subsidiaries to conduct business on an exclusive or preferential
basis or that contains a “most favored nation” or similar covenant with any third party;
(x) any
partnership, joint venture, limited liability company agreement, or similar Contract relating to the formation, creation, operation,
management, or control of any material joint venture, partnership, or limited liability company, other than any such Contact solely
between the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries;
(xi) any
mortgages, indentures, guarantees, loans, or credit agreements, security agreements, or other Contracts, in each case relating
to indebtedness for borrowed money, whether as borrower or lender, in each case in excess of $250,000, other than (A) accounts
receivables and payables, and (B) loans to direct or indirect wholly-owned Subsidiaries of the Company;
(xii) any
employee collective bargaining agreement or other Contract with any labor union;
(xiii) any
Company IP Agreement other than Contracts for Off-the-Shelf Solutions;
(xiv) any
other Contract under which the Company or any of its Subsidiaries is obligated to make payment or incur costs in excess of $100,000
in any year and which is not otherwise described in clauses (i)–(xii) above; or
(xv) any
Contract which is not otherwise described in clauses (i)-(xiv) above that is material to the Company and its Subsidiaries,
taken as a whole.
(b) Schedule
of Material Contracts; Documents. Section 3.15(b) of the Company Disclosure Letter sets forth a true and complete
list as of the date hereof of all Company Material Contracts. The Company has made available to Parent correct and complete copies
of all Company Material Contracts, including any amendments thereto.
(c) No
Breach. (i) All the Company Material Contracts are legal, valid, and binding, enforceable against the Company or one of
its Subsidiaries in accordance with its terms, and is in full force and effect; (ii) neither the Company nor any of its Subsidiaries
nor, to the Knowledge of the Company, any third party has violated in any material respect any provision of, or failed to perform
any obligation required under the provisions of, any Company Material Contract, which violation or failure has not been cured;
and (iii) neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any third party is in breach,
or since January 1, 2018 has received written notice of breach, of any Company Material Contract.
Section 3.16 Insurance.
Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all insurance
policies of the Company and its Subsidiaries are in full force and effect and provide insurance in such amounts and against such
risks as the Company reasonably has determined to be prudent, taking into account the industries in which the Company and its Subsidiaries
operate, and as is sufficient to comply with applicable Law. Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, neither the
Company nor any of its
Subsidiaries is in breach or default, and neither the Company nor any of its Subsidiaries has taken any action or failed to take
any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification
of, any of such insurance policies. Except as would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect and to the Knowledge of the Company: (i) no insurer of any such policy has been declared insolvent
or placed in receivership, conservatorship, or liquidation; and (ii) no notice of cancellation or termination, other than
pursuant to the expiration of a term in accordance with the terms thereof, has been received with respect to any such policy.
Section 3.17 Proxy
Statement. None of the information included or incorporated by reference in the Company Proxy Statement will, at the
date it is first mailed to the Company’s stockholders or at the time of the Company Stockholders Meeting or at the time of
any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Merger Sub expressly for inclusion or incorporation by reference in the Company
Proxy Statement.
Section 3.18 Anti-Corruption
Matters. Since January 1, 2016, none of the Company, any of its Subsidiaries or any director, officer or, to the Knowledge
of the Company, employee or agent of the Company or any of its Subsidiaries has: (i) used any funds for unlawful contributions,
gifts, entertainment, or other unlawful payments relating to an act by any Governmental Entity; (ii) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iii) made any other unlawful payment under
any applicable Law relating to anti-corruption, bribery, or similar matters. Since January 1, 2016, neither the Company nor any
of its Subsidiaries has disclosed to any Governmental Entity that it violated or may have violated any Law relating to anti-corruption,
bribery, or similar matters. To the Knowledge of the Company, no Governmental Entity is investigating, examining, or reviewing
the Company’s compliance with any applicable provisions of any Law relating to anti-corruption, bribery, or similar matters.
Section 3.19 Products.
(a) Recalls.
Since January 1, 2018, there has not been any recall, and there is no pending or, to the Company’s Knowledge, threatened
recall or investigation, with respect to any of the products and services sold from time to time by the Company and its Subsidiaries.
(b) Notices.
Since January 1, 2018, neither the Company nor any of its Subsidiaries have received any written notice or, to the Company’s
Knowledge, other communication from any Governmental Entity, of any actual or alleged violation of any applicable Law governing
product recalls, product safety, product defects, or the content of product materials or packaging and labeling of products.
Section 3.20 PPP
Loan. The Company and each of its Subsidiaries has complied in all material respects with all Applicable PPP Laws,
in applying for, calculating the permitted amount of, receiving and using the funds borrowed under the PPP Loans. All funds borrowed
under the PPP Loans have been used solely for approved purposes in accordance with the Applicable PPP Laws. Other than the PPP
Loans, the Company and its Subsidiaries have not incurred any indebtedness pursuant to the Applicable PPP Laws. The Company’s
Subsidiary submitted to the PPP Lender a PPP Loan Forgiveness Application (SBA Form 3508) with respect to the PPP Loan on March
11, 2021.
Section 3.21 Fairness
Opinion. The Company has received the opinion of a Company Financial Advisor (and, if it is in writing, has provided
a copy of such opinion to Parent) to the effect that, as of the date of this Agreement and based upon and subject to the qualifications
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, as of the date of this Agreement, such opinion has not been withdrawn, revoked, or modified.
Article IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub
hereby jointly and severally represent and warrant to the Company as follows:
Section 4.01 Organization.
Each of Parent and Merger Sub is a limited liability company and, respectively, corporation duly organized, validly existing, and
in good standing under the Laws of the jurisdiction of its incorporation.
Section 4.02 Authority;
Non-Contravention; Governmental Consents; Board Approval.
(a) Authority.
Each of Parent and Merger Sub has all requisite limited liability company or corporate power and authority to enter into and to
perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement, subject to, in
the case of the consummation of the Merger, the adoption of this Agreement by Parent as the sole stockholder of Merger Sub. The
execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions
contemplated by this Agreement have been duly authorized by all necessary limited liability company or corporate action on the
part of Parent and Merger Sub and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize
the execution and delivery of this Agreement or to consummate the Merger and the other transactions contemplated hereby, subject
only, in the case of the consummation of the Merger, to the adoption of this Agreement by Parent as the sole stockholder of Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due execution and delivery by the
Company, constitutes the legal, valid, and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar
Laws affecting creditors’ rights generally and by general principles of equity.
(b) Non-Contravention.
The execution, delivery, and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated by this Agreement, do not and will not: (i) contravene or conflict with, or result in any
violation or breach of, the certificate of incorporation or by-laws of Parent or Merger Sub; (ii) assuming that all of the
Consents contemplated by clauses (i) through (v) of Section 4.02(c) have been obtained or made, conflict
with or violate any Law applicable to Parent or Merger Sub or any of their respective properties or assets; (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result
in Parent’s or any of its Subsidiaries’ loss of any benefit or the imposition of any additional payment or other liability
under, or alter the rights or obligations of any third party under, or give to any third party any rights of termination, amendment,
acceleration, or cancellation, or require any Consent under, any Contract to which Parent or any of its Subsidiaries is a party
or otherwise bound as of the date hereof; or (iv) result in the creation of a Lien (other than Permitted Liens) on any of
the properties or assets of Parent or any of its Subsidiaries, except, in the case of each of clauses (ii), (iii), and (iv), for
any conflicts, violations, breaches, defaults, loss of benefits, additional payments or other liabilities, alterations, terminations,
amendments, accelerations, cancellations, or Liens that, or where the failure to obtain any Consents, in each case, would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect on Parent’s and Merger Sub’s ability
to consummate the transactions contemplated by this Agreement.
(c) Governmental
Consents. No Consent of any Governmental Entity is required to be obtained or made by Parent or Merger Sub in connection with
the execution, delivery, and performance by Parent and Merger Sub of this Agreement or the consummation by Parent and Merger Sub
of the Merger and other transactions contemplated hereby, except for: (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; (ii) the filing with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement, the Merger, and the other transactions contemplated by this Agreement; (iii) such
Consents as may be required under applicable state securities or “blue sky” Laws and the securities Laws of any foreign
country or the rules and regulations of Nasdaq; (iv) the Other Governmental Approvals; and (v) such other Consents which
if not obtained or made would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on
Parent’s and Merger Sub’s ability to consummate the transactions contemplated by this Agreement.
(d) Board
Approval.
(i) The
managers of Parent by resolutions duly adopted by a unanimous vote at a meeting of all managers of Parent duly called and held
and, not subsequently rescinded or modified in any way, has (A) determined that this Agreement and the transactions contemplated
hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair to, and in the best interests
of, Parent and Parent’s member, and (B) approved and declared advisable this Agreement, including the execution,
delivery,
and performance thereof, and the consummation of the transactions contemplated by this Agreement, including the Merger, upon the
terms and subject to the conditions set forth herein.
(ii) The
board of directors of Merger Sub by resolutions duly adopted by a unanimous vote at a meeting of all directors of Merger Sub duly
called and held and, not subsequently rescinded or modified in any way, has (A) determined that this Agreement and the transactions
contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair to, and in the
best interests of, Merger Sub and Parent, as the sole stockholder of Merger Sub, (B) approved and declared advisable this
Agreement, including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by
this Agreement, including the Merger, upon the terms and subject to the conditions set forth herein, and (C) resolved to recommend
that Parent, as the sole stockholder of Merger Sub, approve the adoption of this Agreement in accordance with the DGCL.
Section 4.03 Proxy
Statement. None of the information with respect to Parent or Merger Sub that Parent or any of its Representatives furnishes
in writing to the Company expressly for use or incorporation in the Company Proxy Statement, will, at the date such Proxy Statement
is first mailed to the Company’s stockholders or at the time of the Company Stockholders Meeting or at the time of any amendment
or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made by Parent or Merger Sub with respect to statements
made or incorporated by reference therein based on information supplied by the Company or its Representatives.
Section 4.04 Financial
Capability. Parent has or will have, and will cause Merger Sub to have, prior to the Effective Time, sufficient funds
to pay the aggregate Merger Consideration contemplated by this Agreement and to perform the other obligations of Parent and Merger
Sub contemplated by this Agreement.
Section 4.05 Legal
Proceedings. As of the date hereof, there is no pending or, to the Knowledge of Parent, threatened, Legal Action against
Parent or any of its Subsidiaries, including Merger Sub, nor is there any Order imposed upon Parent or any of its Subsidiaries,
including Merger Sub, in each case, by or before any Governmental Entity, that would, individually or in the aggregate, reasonably
be expected to have a material adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated
by this Agreement.
Section 4.06 Ownership
of Company Common Stock. Neither Parent nor any of its Affiliates “owns” (as defined in Section 203(c)(9)
of the DGCL) any shares of Company Common Stock.
Section 4.07 Brokers.
Neither Parent, Merger Sub, nor any of their respective Affiliates has incurred, nor will it incur, directly or indirectly, any
liability for investment banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection
with this Agreement or any transaction contemplated by this Agreement for which the Company would be liable in connection with
the Merger.
Article V.
COVENANTS
Section 5.01 Conduct
of Business of the Company. During the period from the date of this Agreement until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, except as expressly contemplated by this Agreement or as required by applicable
Law or with the prior written consent of Parent, conduct its business in the ordinary course of business consistent with past practice,
and, to the extent consistent therewith, the Company shall, and shall cause each of its Subsidiaries to, use its reasonable best
efforts to maintain and preserve intact its and its Subsidiaries’ business organizations, to keep available the services
of its and its Subsidiaries’ current officers and employees, to maintain and preserve intact its and its Subsidiaries’
present relationships and goodwill with customers, suppliers, distributors, licensors, licensees, and other Persons having business
relationships with it. Without limiting the generality of the foregoing, between the date of this Agreement and the Effective Time,
except as otherwise expressly contemplated by this Agreement, as set forth in Section 5.01 of the Company Disclosure
Letter, or as required by applicable Law, the Company shall not, nor shall it permit any of its Subsidiaries to, without the prior
written consent of Parent:
(a) amend
or propose to amend its Charter Documents;
(b) (i) split,
combine, or reclassify any Company Securities or Company Subsidiary Securities, (ii) repurchase, redeem, or otherwise acquire,
or offer to repurchase, redeem, or otherwise acquire, any Company Securities or Company Subsidiary Securities, or (iii) declare,
set aside, set a record date for or pay any dividend or
distribution
(whether in cash, stock, property, or otherwise) in respect of, or enter into any Contract with respect to the voting of, any shares
of its capital stock (other than dividends from its direct or indirect wholly-owned Subsidiaries);
(c) issue,
sell, pledge, dispose of, or encumber any Company Securities or Company Subsidiary Securities, other than the issuance of shares
of Company Common Stock upon the exercise of any Company Equity Award outstanding as of the date of this Agreement in accordance
with its terms;
(d) except
as required by applicable Law or by any Company Employee Plan or Contract in effect as of the date of this Agreement (i) grant
or increase the severance or termination pay to any current or former director, employee, agent or consultant of the Company or
any of its Subsidiaries, (ii) execute any employment, consultancy, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any such director, employee, agent or consultant of the Company or its Subsidiaries; (iii)
increase the compensation, bonus or benefits payable or that could become payable by the Company or any of its Subsidiaries to
directors, officers, or employees, other than increases in compensation made to non-officer employees in the ordinary course of
business consistent with past practice, (iv) lend or advance any money or other property to any present or former director
or employee of the Company or its Subsidiaries; (v) promote any officers or employees, except in connection with the Company’s
annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, or
(vi) enter into any collective bargaining agreement or other labor agreement; (vii) establish, adopt, enter into, amend, terminate,
exercise any discretion (except in the ordinary course of business) under, or take any action to accelerate rights under any Company
Employee Plans or any plan, agreement, program, policy, trust, fund, or other arrangement that would be a Company Employee Plan
if it were in existence as of the date of this Agreement, or make any contribution to any Company Employee Plan, other than contributions
required by Law, the terms of such Company Employee Plans as in effect on the date hereof, or that are made in the ordinary course
of business consistent with past practice;
(e) (A)
other than any termination by the Company or any of its Subsidiaries for cause, terminate the employment of any officer or employee
with the title of vice president or above, or (B) undertake (1) any material reduction in force, (2) any reduction in force that
would result in any liability by the Company or any of its Subsidiaries for noncompliance with the notice provisions of the WARN
Act, or (C) any reduction in force that is subject to the WARN Act, in each case, in respect of employees of the Company and its
Subsidiaries;
(f) acquire,
by merger, consolidation, acquisition of stock or assets, or otherwise, any business or Person or division thereof or make any
loans, advances, or capital contributions to or investments in any Person;
(g) (i) transfer,
license, sublicense, sell, lease, sublease or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets,
or otherwise) or pledge, encumber, or otherwise subject to any Lien (other than a Permitted Lien), any assets, including the capital
stock or other equity interests in any Subsidiary of the Company; provided, that the foregoing shall not prohibit the Company
and its Subsidiaries from transferring, selling, leasing, or disposing of obsolete equipment or assets being replaced, or granting
non-exclusive licenses under the Company IP or the Company-Owned IP, in each case in the ordinary course of business consistent
with past practice, or (ii) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization,
or other reorganization;
(h) repurchase,
prepay, or incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt
securities or options, warrants, calls, or other rights to acquire any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial
statement condition of any other Person (other than any wholly-owned Subsidiary of it) or enter into any arrangement having the
economic effect of any of the foregoing, other than in connection with the financing of ordinary course trade payables consistent
with past practice and except for up to $5.0 million of additional indebtedness under the Credit Agreement than what is outstanding
as of the date of this Agreement (it being understood that such $5.0 million shall be in addition to indebtedness incurred in connection
with the financing of ordinary course trade payables);
(i) enter
into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any
Company Material Contract or any Lease with respect to Real Estate or any other
Contract or
Lease that, if in effect as of the date hereof would constitute a Company Material Contract or Lease with respect to Real Estate
hereunder;
(j) institute,
settle, compromise or otherwise resolve in whole or in part any Legal Action involving the payment of monetary damages by the Company
or any of its Subsidiaries of any amount exceeding $100,000 for any individual Legal Action, other than (i) any Legal Action
brought against Parent or Merger Sub arising out of a breach or alleged breach of this Agreement by Parent or Merger Sub, and (ii) the
settlement of claims, liabilities, or obligations reserved against on the Company Balance Sheet; provided, that neither
the Company nor any of its Subsidiaries shall settle or agree to settle any Legal Action which settlement involves a conduct remedy
or injunctive or similar relief or has a restrictive impact on the Company’s business;
(k) make
any material change in any method of financial accounting principles or practices, in each case except for any such change required
by a change in GAAP or applicable Law;
(l) (i) settle
or compromise any material Tax claim, audit, or assessment for an amount materially in excess of the amount reserved or accrued
on the Company Balance Sheet (or most recent consolidated balance sheet included in the Company SEC Documents), (ii) make,
change or rescind any material Tax election, change any annual Tax accounting period, or adopt or change any method of Tax accounting,
(iii) amend any material Tax Returns or file claims for material Tax refunds, or (iv) enter into any material closing
agreement, surrender any right to claim a material Tax refund, offset or other reduction in Tax liability or consent to any extension
or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or its Subsidiaries;
(m) enter
into any material agreement, agreement in principle, letter of intent, memorandum of understanding, or similar Contract with respect
to any joint venture, strategic partnership, or alliance;
(n) waive,
release, assign or fail to exercise or pursue any material right, claim or benefit of the Company or any of its Subsidiaries under
any restrictive covenant with any officer or employee;
(o) engage
in any transaction or series of transactions with any Affiliate that would be required to be disclosed under Item 404 of Regulation
S-K of the Securities Act, without regard to any monetary thresholds therein;
(p) except
in connection with actions permitted by Section 5.04 hereof, take any action to exempt any Person from, or make any
acquisition of securities of the Company by any Person not subject to, any state takeover statute or similar statute or regulation
that applies to the Company with respect to a Takeover Proposal or otherwise, including the restrictions on “business combinations”
set forth in Section 203 of the DGCL, except for Parent, Merger Sub, or any of their respective Subsidiaries or Affiliates,
or the transactions contemplated by this Agreement;
(q) abandon,
allow to lapse, sell, assign, transfer, grant any security interest in, otherwise encumber or dispose of any Company IP, or grant
any right, license or sublicense to any Company IP other than pursuant to non-exclusive licenses or sublicenses entered into in
the ordinary course of business consistent with past practice, or divulge, furnish to or make accessible any trade secrets within
Company IP to any third party, except under appropriate protections for the confidentiality thereof;
(r) terminate
or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy;
(s) make
or commit to make any capital expenditures, other than for the repair or replacement of property and equipment in the ordinary
course of business; or
(t) agree
or commit to do any of the foregoing.
Without in any way
limiting any party’s rights or obligations under this Agreement, the parties understand and agree that (a) nothing contained
in this Agreement shall give Parent or the Company, directly or indirectly, the right to control or direct the other party’s
operations prior to the Effective Time and (b) prior to the Effective Time, each of the Company and Parent shall exercise,
consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.
Section 5.02 Other
Actions. From the date of this Agreement until the earlier to occur of the Effective Time or the termination of this
Agreement in accordance with the terms set forth in Article VII, the Company and Parent shall not, and shall not permit
any of their respective Subsidiaries to, take, or agree or commit to take, any action (except as otherwise expressly permitted
by Section 5.04 of this Agreement) that would reasonably be expected to, individually or in the aggregate, prevent,
materially delay, or materially impede the consummation of the Merger or the other transactions contemplated by this Agreement.
Section 5.03 Access
to Information; Integration Planning; Confidentiality.
(a) Access
to Information. From the date of this Agreement until the earlier to occur of the Effective Time or the termination of this
Agreement in accordance with the terms set forth in Article VII, the Company shall, and shall cause its Subsidiaries
to, afford to Parent and Parent’s Representatives reasonable access, at reasonable times and in a manner as shall not unreasonably
interfere with the business or operations of the Company or any Subsidiary thereof, to the officers, employees, accountants, agents,
properties, offices, and other facilities, and to all books, records, contracts, and other assets of the Company and its Subsidiaries,
and the Company shall, and shall cause its Subsidiaries to, furnish promptly to Parent such other information concerning the business
and properties of the Company and its Subsidiaries as Parent may reasonably request from time to time. Neither the Company nor
any of its Subsidiaries shall be required to provide access to or disclose information where such access or disclosure would jeopardize
the protection of attorney-client privilege or contravene any Law (it being agreed that the parties shall use their reasonable
best efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention). No
investigation shall affect the Company’s representations, warranties, covenants, or agreements contained herein, or limit
or otherwise affect the remedies available to Parent or Merger Sub pursuant to this Agreement.
(b) Integration
Planning. From and after the date hereof until the Effective Time, the Company and Parent shall, and shall cause their Subsidiaries
and Representatives to, use their reasonable best efforts, subject to applicable Law, to cooperate with the other party in connection
with planning the integration of the business operations of the Surviving Corporation and Parent and their respective Subsidiaries
following the Closing by, among other matters, the Company facilitating meetings between Parent and the employees of the Company
and its Subsidiaries. In furtherance of the foregoing, promptly following the date hereof, each of Parent and the Company shall
designate at least one individual to serve on an integration committee, with such committee meeting at least weekly and as otherwise
reasonably requested by Parent, to conduct transition and integration planning.
(c) Confidentiality.
Parent and the Company shall comply with, and shall cause their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement, which shall survive the termination of this Agreement in accordance with the terms
set forth therein.
Section 5.04 Solicitation
of Takeover Proposals.
(a) Go-Shop
Period. Notwithstanding anything to the contrary set forth in this Agreement, during the period commencing with the execution
and delivery of this Agreement and continuing until 12:01 a.m. Eastern Time on the No-Shop Period Start Date, the Company and its
Representatives will have the right to, directly or indirectly, (i) initiate, solicit, propose, induce or encourage the making,
submission or announcement of one or more Takeover Proposals from any Person or its Representatives, or knowingly encourage, facilitate
or assist, any proposal, inquiry or offer that would constitute, or would reasonably be expected to lead to, a Takeover Proposal,
including by furnishing to any Person or its Representatives any non-public information relating to the Company or by affording
to any Person or its Representatives access to the business, properties, assets, books, records or other non-public information,
or to the personnel, of the Company, in each case pursuant to one or more Acceptable Confidentiality Agreements; (ii) continue,
enter into, participate in or engage in any discussions or negotiations with any Person or its Representatives with respect to
one or more Takeover Proposals or any other proposals that could lead to a Takeover Proposal; (iii) otherwise cooperate
with, assist or take any action to facilitate any Takeover Proposal or any other proposals that could lead to any Takeover Proposal;
provided that the Company shall promptly (and in any event within 24 hours) make available to Parent any non-public information
concerning the Company or its Subsidiaries that is provided to any Person given such access that was not previously made available
to the Parent, and (iv) engage in, enter into or otherwise participate in any discussions or negotiations with any Persons
or group of Persons with respect to any Takeover Proposals and cooperate with or assist or participate in or facilitate any such
inquiries, proposals, discussions or negotiations or any effort or attempt to make any Takeover Proposals. No later than one (1)
Business Day after the No-Shop Period Start Date, the Company shall (x) notify Parent in writing of
the receipt
of any Takeover Proposal after the execution of this Agreement and prior to the No-Shop Period Start Date, or any inquiry or request
with respect to, or that would reasonably be expected to lead to, a Takeover Proposal (including the identity of the Person or
group making such Takeover Proposal, the price per share, structure, closing conditions, and regulatory and financing provisions)
and (y) deliver to Parent copies of all written proposals, letters of interest, term sheets, commitment letters, proposed definitive
documents or similar documents relating to any Takeover Proposal received by the Company or its Representatives from any such Person
or group or its or their Representatives. The Company shall keep Parent informed in all material respects of any material
developments with respect to any such Takeover Proposal (and any subsequent amendments or modifications thereto) and deliver to
Parent copies of revised or newly received documents received by the Company or its Representatives from any such Person or group
or its or their Representatives, in each case, as soon as is reasonably practicable and in any event within 24 hours of receipt,
provision or occurrence thereof.
(b) No
Solicitation or Negotiation after No-Shop Period Start Date. Except as expressly permitted by this Section 5.04,
from and after the No-Shop Period Start Date, the Company shall and shall cause its Subsidiaries and each of its and their Representatives
to cease immediately and cause to be terminated, and shall not authorize or knowingly permit any of its or their Representatives
to continue, any and all existing activities, discussions, or negotiations, if any, with any third party conducted prior to the
No-Shop Period Start Date with respect to any Takeover Proposal and shall use its reasonable best efforts to cause any such third
party (or its agents or advisors) in possession of non-public information in respect of the Company or any of its Subsidiaries
that was furnished by or on behalf of the Company and its Subsidiaries to return or destroy (and confirm destruction of) all such
information.
(c) Takeover
Proposal. Except as may relate to any Excluded Party (for so long as such Person or group is an Excluded Party) or as expressly
permitted by this Section 5.04, subject to the terms of Section 5.04(d), from and after the No-Shop Period
Start Date, the Company shall not, and shall cause its Subsidiaries not to, and shall not authorize or permit its and its Subsidiaries’
Representatives to, directly or indirectly, solicit, initiate, or knowingly take any action to facilitate or encourage the submission
of any Takeover Proposal or the making of any proposal that could reasonably be expected to lead to any Takeover Proposal, or,
subject to Section 5.04(d): (i) conduct or engage in any discussions or negotiations with, disclose any non-public
information relating to the Company or any of its Subsidiaries to, afford access to the business, properties, assets, books, or
records of the Company or any of its Subsidiaries to, or knowingly assist, participate in, facilitate, or encourage any effort
by, any third party (or its potential sources of financing) that is seeking to make, or has made, any Takeover Proposal; (ii) (A)
amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of
the Company or any of its Subsidiaries, or (B) approve any transaction under, or any third party becoming an “interested
stockholder” under, Section 203 of the DGCL; or (iii) enter into any Company Acquisition Agreement. Except as expressly
permitted by this Section 5.04, the Company Board shall not effect a Company Adverse Recommendation Change.
(d) Superior
Proposal. Notwithstanding Section 5.04(c), prior to the receipt of the Requisite Company Vote, the Company Board,
directly or indirectly through any Representative, may, subject to Section 5.04(e): (i) participate in negotiations
or discussions with any third party that has made (and not withdrawn) a bona fide, unsolicited Takeover Proposal in writing that
the Company Board believes in good faith, after consultation with outside legal counsel and the Company Financial Advisor, constitutes
a Superior Proposal; (ii) thereafter furnish to such third party non-public information relating to the Company or any of
its Subsidiaries pursuant to an executed confidentiality agreement that constitutes an Acceptable Confidentiality Agreement (a
copy of which confidentiality agreement shall be promptly (in all events within 24 hours) provided for informational purposes only
to Parent); (iii) following receipt of and on account of a Superior Proposal, make a Company Adverse Recommendation Change; and/or
(iv) take any action that any court of competent jurisdiction orders the Company to take (which order remains unstayed), but in
each case referred to in the foregoing clauses (i) through (iv), only if the Company Board determines in good faith, after consultation
with outside legal counsel, that the failure to take such action would cause the Company Board to be in breach of its fiduciary
duties under applicable Law. Nothing contained herein shall prevent the Company Board from disclosing to the Company’s stockholders
a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to a Takeover Proposal,
if the Company determines, after consultation with outside legal counsel, that failure to disclose such position would constitute
a violation of applicable Law.
(e) Notification
to Parent. The Company Board shall not take any of the actions referred to in clauses (i) through (iv) of Section 5.04(d)
unless the Company shall have delivered to Parent a prior written notice advising Parent that it intends to take such action. The
Company shall notify Parent promptly (but in no event later than 24 hours) after it obtains Knowledge of the receipt by the Company
(or any of its Representatives) of any Takeover Proposal, any inquiry that could reasonably be expected to lead to a Takeover Proposal,
any request for non-public information relating to the Company or any of its Subsidiaries or for access to the business, properties,
assets, books, or records of the Company or any of its Subsidiaries by any third party. In such notice, the Company shall identify
the third party making, and details of the material terms and conditions of, any such Takeover Proposal, indication or request,
including any proposed financing. The Company shall keep Parent fully informed, on a current basis, of the status and material
terms of any such Takeover Proposal, indication or request, including any material amendments or proposed amendments as to price,
proposed financing, and other material terms thereof. The Company shall provide Parent with at least 48 hours’ prior notice
of any meeting of the Company Board (or such lesser notice as is provided to the members of the Company Board) at which the Company
Board is reasonably expected to consider any Takeover Proposal. The Company shall promptly provide Parent with a list of any non-public
information concerning the Company’s and any of its Subsidiary’s business, present or future performance, financial
condition, or results of operations, provided to any third party, and, to the extent such information has not been previously provided
to Parent, copies of such information. For the avoidance of doubt, this Section 5.04(e) shall not apply to a Takeover
Proposal that relates to any Excluded Party (for so long as such Person or group is an Excluded Party).
(f) Company
Adverse Recommendation Change or Company Acquisition Agreement. Except as expressly permitted by this Section 5.04,
the Company Board shall not effect a Company Adverse Recommendation Change or enter into (or permit any Subsidiary to enter into)
a Company Acquisition Agreement. Notwithstanding the foregoing, at any time prior to the receipt of the Requisite Company Vote,
the Company Board may effect a Company Adverse Recommendation Change or enter into (or permit any Subsidiary to enter into) a Company
Acquisition Agreement, if: (i) the Company promptly notifies Parent, in writing, at least five Business Days (the “Superior
Proposal Notice Period”) before making a Company Adverse Recommendation Change or entering into (or causing a Subsidiary
to enter into) a Company Acquisition Agreement, of its intention to take such action with respect to a Superior Proposal, which
notice shall state expressly that the Company has received a Takeover Proposal that the Company Board intends to declare a Superior
Proposal and that the Company Board intends to effect a Company Adverse Recommendation Change and/or the Company intends to enter
into a Company Acquisition Agreement; (ii) the Company specifies the identity of the party making the Superior Proposal and the
material terms and conditions thereof in such notice and includes an unredacted copy of the Takeover Proposal and attaches to such
notice the most current version of any proposed agreement (which version shall be updated on a prompt basis) for such Superior
Proposal and any related documents, including financing documents, to the extent provided by the relevant party in connection with
the Superior Proposal; (iii) the Company and its Representatives, during the Superior Proposal Notice Period, negotiate with Parent
in good faith to make such adjustments in the terms and conditions of this Agreement so that such Takeover Proposal ceases to constitute
a Superior Proposal, if Parent, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after
commencement of the Superior Proposal Notice Period, there is any material revision to the terms of a Superior Proposal, including,
any revision in price or financing, the Superior Proposal Notice Period shall be extended, if applicable, to ensure that at least
five Business Days remains in the Superior Proposal Notice Period subsequent to the time the Company notifies Parent of any such
material revision (it being understood that there may be multiple extensions)); and (iv) the Company Board determines in good faith,
after consulting with outside legal counsel and its Company Financial Advisor, that such Takeover Proposal continues to constitute
a Superior Proposal after taking into account any adjustments made by Parent during the Superior Proposal Notice Period in the
terms and conditions of this Agreement.
Section 5.05 Stockholders
Meeting; Preparation of Proxy Materials; Approval by Sole Stockholder of Merger Sub.
(a) Company
Stockholders Meeting. The Company shall take all action necessary to duly call, give notice of, convene, and hold the Company
Stockholders Meeting as soon as reasonably practicable after the date of this Agreement, and, in connection therewith, the Company
shall mail the Company Proxy Statement to the holders of Company Common Stock in advance of such meeting. Except to the extent
that the Company Board shall have effected a Company Adverse Recommendation Change as permitted by Section 5.04 hereof,
the Company Proxy Statement shall include the Company Board Recommendation. Subject to Section 5.04 hereof, the Company
shall use reasonable best efforts to: (i) solicit from the holders of Company Common Stock proxies in favor of the
adoption of
this Agreement and approval of the Merger; and (ii) take all other actions necessary or advisable to secure the vote or consent
of the holders of Company Common Stock required by applicable Law to obtain such approval. Except for the election of directors,
approval of the Company’s executive compensation and ratification of the selection of the Company’s independent accountant,
the Company shall not submit any other proposals for approval at the Company Stockholders Meeting without the prior written consent
of Parent. The Company shall keep Parent and Merger Sub updated with respect to proxy solicitation results as requested Parent
or Merger Sub. Once the Company Stockholders Meeting has been called and noticed, the Company shall not postpone or adjourn the
Company Stockholders Meeting without the consent of Parent (other than: (A) in order to obtain a quorum of its stockholders;
or (B) to allow reasonable additional time after the filing and mailing of any supplemental or amended disclosures to the
Company Proxy Statement for compliance with applicable legal requirements). If the Company Board makes a Company Adverse Recommendation
Change, it will not alter the obligation of the Company to submit the adoption of this Agreement and the approval of the Merger
to the holders of Company Common Stock at the Company Stockholders Meeting to consider and vote upon, unless this Agreement shall
have been terminated in accordance with its terms prior to the Company Stockholders Meeting.
(b) Preparation
of Company Proxy Statement. In connection with the Company Stockholders Meeting, as soon as reasonably practicable following
the date of this Agreement the Company shall prepare and file the Company Proxy Statement with the SEC. Parent, Merger Sub, and
the Company will cooperate and consult with each other in the preparation of the Company Proxy Statement. Without limiting the
generality of the foregoing, each of Parent and Merger Sub will furnish the Company the information relating to it required by
the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Company Proxy Statement. The Company
shall not file the Company Proxy Statement, or any amendment or supplement thereto, without providing Parent a reasonable opportunity
to review and comment thereon (which comments shall be reasonably considered by the Company). The Company shall use its reasonable
best efforts to cause the Company Proxy Statement at the date that it (and any amendment or supplement thereto) is first published,
sent, or given to the stockholders of the Company and at the time of the Company Stockholders Meeting, to comply as to form in
all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. The Company
shall use its reasonable best efforts to resolve, and each party agrees to consult and cooperate with the other party in resolving,
all SEC comments with respect to the Company Proxy Statement as promptly as practicable after receipt thereof and to cause the
Company Proxy Statement in definitive form to be cleared by the SEC and mailed to the Company’s stockholders as promptly
as reasonably practicable following filing with the SEC. The Company agrees to consult with Parent prior to responding to SEC comments
with respect to the preliminary Company Proxy Statement. Each of Parent, Merger Sub, and the Company agree to correct any information
provided by it for use in the Company Proxy Statement which shall have become false or misleading in any material respect, and
the Company shall promptly prepare and mail to its stockholders an amendment or supplement setting forth such correction. The Company
shall as soon as reasonably practicable: (i) notify Parent of the receipt of any comments from the SEC with respect to the
Company Proxy Statement and any request by the SEC for any amendment to the Company Proxy Statement or for additional information;
and (ii) provide Parent with copies of all written correspondence between the Company and its Representatives, on the one
hand, and the SEC, on the other hand, with respect to the Company Proxy Statement.
(c) Approval
by Sole Stockholder of Merger Sub. Immediately following the execution and delivery of this Agreement, Parent, as sole stockholder
of Merger Sub, shall adopt this Agreement and approve the Merger, in accordance with the DGCL.
Section 5.06 Notices
of Certain Events; Stockholder Litigation; No Effect on Disclosure Letter.
(a) Notice
of Certain Events. The Company shall notify Parent and Merger Sub, and Parent and Merger Sub shall notify the Company, promptly
of: (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement; and (iii) any event, change, or effect between
the date of this Agreement and the Effective Time which causes or is reasonably likely to cause the failure of the conditions set
forth in Section 6.02(a), Section 6.02(b), or Section 6.02(c) of this Agreement (in the case
of the Company and its Subsidiaries) or Section 6.03(a) or Section 6.03(b) of this Agreement (in the case
of Parent and Merger Sub), to be satisfied.
(b) Stockholder
Litigation. The Company shall promptly advise Parent in writing after becoming aware of any Legal Action commenced, or to the
Company’s Knowledge threatened, after the date hereof against the Company or any of its directors by any stockholder of the
Company (on their own behalf or on behalf of the Company) relating to this Agreement or the transactions contemplated hereby (including
the Merger) and shall keep Parent reasonably informed regarding any such Legal Action. The Company shall give Parent the opportunity
to consult with the Company regarding the defense or settlement of any such stockholder litigation and shall consider Parent’s
views with respect to such stockholder litigation and shall not settle any such stockholder litigation without the prior written
consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed).
(c) No
Effect on Disclosure Letter. In no event shall: (i) the delivery of any notice by a party pursuant to this Section 5.06
limit or otherwise affect the respective rights, obligations, representations, warranties, covenants, or agreements of the parties
or the conditions to the obligations of the parties under this Agreement; or (ii) disclosure by the Company or Parent be deemed
to amend or supplement the Company Disclosure Letter or constitute an exception to any representation or warranty.
Section 5.07 Employees;
Benefit Plans.
(a) Comparable
Salary and Benefits. During the period commencing at the Effective Time and ending December 31, 2021 (or if earlier, the date
of the employee’s termination of employment with Parent and its Subsidiaries), and to the extent consistent with the terms
of the governing plan documents, Parent shall cause the Surviving Corporation and each of its Subsidiaries, as applicable, to provide
the Company Continuing Employees with (i) the same annual base salary or wage level, and the same annual target bonus opportunities
(excluding equity-based compensation) as provided by the Company and its Subsidiaries as of immediately prior to the Effective
Time, and (ii) employee benefits (excluding any retiree health or defined benefit retirement benefits) that are, in the aggregate,
no less favorable than the employee benefits (excluding any retiree health or defined benefit retirement benefits) provided by
the Company and its Subsidiaries on the date of this Agreement.
(b) Crediting
Service. With respect to any Parent Benefit Plans in which any Company Continuing Employees will participate effective as of
the Effective Time, and subject to the terms of the governing plan documents, Parent shall, or shall cause the Surviving Corporation
to, credit all service of the Company Continuing Employees with the Company or any of its Subsidiaries, as the case may be, as
if such service were with Parent, for purposes of eligibility to participate (but not for purposes of benefit accrual, except for
vacation, if applicable), for full or partial years of service in any Parent Benefit Plan in which such Company Continuing Employees
may be eligible to participate after the Effective Time; provided, that such service shall not be credited to the extent
that: (i) such crediting would result in a duplication of benefits; or (ii) such service was not credited under the corresponding
Company Employee Plan. For purposes of determining satisfaction of any co-payments, annual deductible limitation and out-of-pocket
maximum that may apply under a Parent Benefit Plan, Parent shall, or shall cause the Surviving Corporation to, use reasonable best
efforts to cause each Parent Benefit Plan to ensure that each Company Continuing Employee will be credited for covered expenses
paid by the Company Continuing Employee under the corresponding Company Employee Plan during the then current annual period of
coverage.
(c) Termination
and/or Amendment of Benefit Plans. Effective no later than the day immediately preceding the Closing Date, the Company shall
terminate or amend any Company Employee Plans (other than any Company Employee Plan that is a tax-qualified defined benefit retirement
plan subject to the funding requirements of Title IV of ERISA, except for amendments with respect to covered participants, eligible
employees and participating employers) maintained by the Company or its Subsidiaries that Parent has requested to be terminated
or amended by providing a written notice to the Company at least 15 days prior to the Closing Date; provided, that such
Company Employee Plans can be terminated and/or amended in accordance with their terms and applicable Law without any adverse consequences
with respect to any Company ERISA Affiliate. No later than the day immediately preceding the Closing Date, the Company shall provide
Parent with evidence that such Company Employee Plans have been terminated and/or amended in a manner requested by and acceptable
to Parent.
(d) Employees
Not Third-Party Beneficiaries. This Section 5.07 shall be binding upon and inure solely to the benefit of each
of the parties to this Agreement, and nothing in this Section 5.07, express or implied, shall confer upon any Company
Employee, any beneficiary, or any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 5.07.
Nothing contained herein, express or implied: (i) shall be construed to establish, amend, or modify any benefit plan, program,
agreement, or arrangement; (ii) shall alter
or limit the
ability of the Surviving Corporation, Parent, or any of their respective Affiliates to amend, modify, or terminate any benefit
plan, program, agreement, or arrangement at any time assumed, established, sponsored, or maintained by any of them; or (iii) shall
prevent the Surviving Corporation, Parent, or any of their respective Affiliates from terminating the employment of any Company
Continuing Employee following the Effective Time. The parties hereto acknowledge and agree that the terms set forth in this Section 5.07
shall not create any right in any Company Employee or any other Person to any continued employment with the Surviving Corporation,
Parent, or any of their respective Subsidiaries or compensation or benefits of any nature or kind whatsoever, or otherwise alter
any existing at-will employment relationship between any Company Employee and the Surviving Corporation.
(e) Prior
Written Consent. With respect to matters described in this Section 5.07, the Company will not send any written
notices or other written communication materials to Company Employees without the prior written consent of Parent.
Section 5.08 Directors’
and Officers’ Indemnification and Insurance.
(a) Indemnification.
Parent and Merger Sub agree that all rights to indemnification, advancement of expenses, and exculpation by the Company now existing
in favor of each Indemnified Party as provided in the Charter Documents of the Company, in each case as in effect on the date of
this Agreement, or pursuant to any other Contracts in effect on the date hereof and disclosed in Section 5.08(a) of
the Company Disclosure Letter, shall be assumed by the Surviving Corporation in the Merger, without further action, at the Effective
Time and shall survive the Merger and shall remain in full force and effect in accordance with their terms. For a period of six
years from the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain in
effect rights to exculpation, indemnification, and advancement of expenses equivalent to the provisions of the Charter Documents
of the Company as in effect immediately prior to the Effective Time with respect to acts or omissions by any Indemnified Party
occurring prior to the Effective Time, and shall not amend, repeal, or otherwise modify any such provisions in any manner that
would adversely affect the rights thereunder of any Indemnified Party; provided that all rights to indemnification in respect
of any claim made for indemnification within such period shall continue until the disposition of such action or resolution of such
claim.
(b) Insurance.
Prior to the Effective Time the Company shall, or if the Company is unable to, Parent shall cause the Surviving Corporation as
of the Effective Time to, obtain and fully pay the premium for the non-cancellable extension of the directors’ and officers’
liability coverage of the Company’s existing directors’ and officers’ insurance policies and the Company’s
existing fiduciary liability insurance policies (collectively, “D&O Insurance”), in each case for a claims
reporting or discovery period of at least six years from and after the Effective Time with respect to any claim related to any
period of time at or prior to the Effective Time); provided that the Company shall give Parent a reasonable opportunity
to participate in the selection of such tail policy and the Company shall give reasonable and good faith consideration to any comments
made by Parent with respect thereto. If the Company or the Surviving Corporation for any reason fails to obtain such “tail”
insurance policies as of the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, continue to maintain in effect, for a period of at least six years from and after the Effective Time, the D&O Insurance
in place as of the date hereof with the Company’s current insurance carrier or with an insurance carrier with the same or
better credit rating as the Company’s current insurance carrier with respect to D&O Insurance with terms, conditions,
retentions and limits of liability that are no less favorable than the coverage provided under the Company’s existing policies
as of the date hereof, or the Surviving Corporation shall purchase from the Company’s current insurance carrier or from an
insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to D&O
Insurance comparable D&O Insurance for such six-year period; provided that in no event shall Parent or the Surviving
Corporation be required to expend for such policies pursuant to this sentence an annual premium amount in excess of $250,000 (the
“Maximum Premium”). If such insurance coverage cannot be obtained at an annual premium equal to or less than
the Maximum Premium, the Surviving Corporation will obtain, and Parent will cause the Surviving Corporation to obtain, the greatest
coverage available for a cost not exceeding an annual premium equal to the Maximum Premium.
(c) Survival.
The obligations of Parent, Merger Sub, and the Surviving Corporation under this Section 5.08 shall survive the consummation
of the Merger and shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party to whom this
Section 5.08 applies without the consent of such affected
Indemnified
Party (it being expressly agreed that the Indemnified Parties to whom this Section 5.08 applies shall be third-party
beneficiaries of this Section 5.08, each of whom may enforce the provisions of this Section 5.08).
(d) Assumptions
by Successors and Assigns; No Release or Waiver. In the event Parent, the Surviving Corporation or any of their respective
successors or assigns: (i) consolidates with or merges into any other Person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger; or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume all of the obligations set forth in this Section 5.08. The
agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any Indemnified Party
is entitled, whether pursuant to Law, Contract, or otherwise. Nothing in this Agreement is intended to, shall be construed to,
or shall release, waive, or impair any rights to directors’ and officers’ insurance claims under any policy that is
or has been in existence with respect to the Company or its officers, directors, and employees, it being understood and agreed
that the indemnification provided for in this Section 5.08 is not prior to, or in substitution for, any such claims
under any such policies.
Section 5.09 Reasonable
Best Efforts.
(a) Governmental
and Other Third-Party Approvals; Notification. Upon the terms and subject to the conditions set forth in this Agreement (including
those contained in this Section 5.09), each of the parties hereto shall, and shall cause its Subsidiaries to, use its
reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper, or advisable to consummate and make effective, and to satisfy all
conditions to, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including: (i) the
obtaining of all necessary Permits, waivers, and actions or nonactions from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the taking of all steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entities; (ii) the obtaining of all necessary
consents or waivers from third parties; and (iii) the execution and delivery of any additional instruments necessary to consummate
the Merger and to fully carry out the purposes of this Agreement. The Company and Parent shall, subject to applicable Law, promptly:
(A) cooperate and coordinate with the other in the taking of the actions contemplated by clauses (i), (ii), and (iii) immediately
above; and (B) supply the other with any information that may be reasonably required in order to effectuate the taking of
such actions. Each party hereto shall promptly inform the other party or parties hereto, as the case may be, of any communication
from any Governmental Entity regarding any of the transactions contemplated by this Agreement. If the Company, on the one hand,
or Parent or Merger Sub, on the other hand, receives a request for additional information or documentary material, or request for
a telephone call or meeting, from any Governmental Entity with respect to the transactions contemplated by this Agreement, then
it shall use reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with
the other party, an appropriate response in compliance with such request, and, if permitted by applicable Law and by any applicable
Governmental Entity, provide the other party’s counsel with advance notice and the opportunity to attend and participate
in any meeting with any Governmental Entity in respect of any filing made thereto in connection with the transactions contemplated
by this Agreement. Neither Company, on the one hand, nor Parent or Merger Sub, on the other hand, will independently participate
in any meeting with any Governmental Entity in respect of any inquiry or findings with respect to the transactions contemplated
by this Agreement without giving the other prior notice of the meeting and the opportunity to attend, participate, or both, in
each case unless prohibited by the Governmental Entity.
(b) Governmental
Antitrust Authorities. Without limiting the generality of the undertakings pursuant to Section 5.09(a) hereof,
the parties hereto shall: (i) provide or cause to be provided as promptly as reasonably practicable to any Governmental Antitrust
Authority any information and documents requested by any Governmental Antitrust Authority as necessary, proper, or advisable to
permit consummation of the transactions contemplated by this Agreement and thereafter to respond as promptly as practicable to
any request for additional information or documentary material that may be made under any applicable Antitrust Laws; and (ii) subject
to the terms set forth in Section 5.09(c) hereof, use their reasonable best efforts to take such actions as are necessary
or advisable to obtain prompt approval of the consummation of the transactions contemplated by this Agreement by any Governmental
Entity or expiration of applicable waiting periods.
(c) Actions
or Proceedings. In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted)
by a Governmental Entity or private party challenging the Merger or any other transaction contemplated by this Agreement, or any
other agreement contemplated hereby, the Company, Parent and Merger Sub shall cooperate in all respects and shall use their respective
reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned
any Order, whether temporary, preliminary, or permanent, that is in effect and that prohibits, prevents, or restricts consummation
of the transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, none of Parent,
Merger Sub, or any of their respective Affiliates shall be required to defend, contest, or resist any action or proceeding, whether
judicial or administrative, or to take any action to have vacated, lifted, reversed, or overturned any Order, in connection with
the transactions contemplated by this Agreement.
(d) No
Divestitures; Other Limitations. Notwithstanding anything to the contrary set forth in this Agreement, none of Parent, Merger
Sub, or any of their respective Subsidiaries shall be required to, and the Company may not, without the prior written consent of
Parent, consent to, or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation,
understanding, agreement, or Order to: (i) sell, license, assign, transfer, divest, hold separate, or otherwise dispose of
any assets, business, or any portion of the business of the Company, the Surviving Corporation, Parent, Merger Sub, or any of their
respective Subsidiaries; (ii) conduct, restrict, operate, invest, or otherwise change the assets, business, or portion of
business of the Company, the Surviving Corporation, Parent, Merger Sub, or any of their respective Subsidiaries in any manner;
or (iii) impose any restriction, requirement, or limitation on the operation of the business or portion of the business of
the Company, the Surviving Corporation, Parent, Merger Sub, or any of their respective Subsidiaries; provided, that if requested
by Parent, the Company will become subject to, consent to, or offer or agree to, or otherwise take any action with respect to,
any such requirement, condition, limitation, understanding, agreement, or Order so long as such requirement, condition, limitation,
understanding, agreement, or Order is only binding on the Company in the event the Closing occurs.
Section 5.10 Public
Announcements. The initial press release with respect to this Agreement and the transactions contemplated hereby shall
be a release mutually agreed to by the Company and Parent. Thereafter, each of the Company, Parent, and Merger Sub agrees that
no public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior
written consent of the Company and Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), except as
may be required by applicable Law or the rules or regulations of any applicable United States securities exchange or other Governmental
Entity to which the relevant party is subject or submits, 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. Notwithstanding the foregoing, the restrictions set forth in this Section 5.10 shall not apply to
any release or announcement made or proposed to be made in connection with and related to a Company Adverse Recommendation Change
or in compliance with Section 5.04.
Section 5.11 Anti-Takeover
Statutes. If any “control share acquisition,” “fair price,” “moratorium,” or other
anti-takeover Law becomes or is deemed to be applicable to the Company, the Merger, or any other transaction contemplated by this
Agreement, then each of the Company and the Company Board shall grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise
act to render such anti-takeover Law inapplicable to the foregoing.
Section 5.12 Section 16
Matters. Prior to the Effective Time, the Company shall take all such steps as may be required to cause to be exempt
under Rule 16b-3 promulgated under the Exchange Act any dispositions of shares of Company Common Stock (including derivative securities
with respect to such shares) that are treated as dispositions under such rule and result from the transactions contemplated by
this Agreement by each director or officer of the Company who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company immediately prior to the Effective Time.
Section 5.13 Stock
Exchange Delisting; Deregistration. To the extent requested by Parent, prior to the Effective Time, the Company shall
cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done
all things, reasonably necessary, proper or advisable on its part under applicable Laws and the rules and policies of Nasdaq to
enable the delisting by the Surviving Corporation of the shares of Company Common Stock from Nasdaq and the deregistration of the
shares of Company Common Stock under the Exchange Act as promptly as practicable after the Effective Time, and in any event no
more than ten days after the Effective Time.
Section 5.14 PPP
Loan. The Company and its Subsidiaries shall use reasonable best efforts to cause the amounts borrowed under the PPP
Loan to be forgiven under Applicable PPP Laws (including taking all necessary or appropriate steps to obtain lender approval and
to resolve any requests or concerns raised by Governmental Entities in connection with any audit regarding the forgiveness application
submitted by the Company and its Subsidiaries in respect of the PPP Loan), and shall keep Parent reasonably informed on a current
basis with respect thereto. Prior to the Closing, the Company and its Subsidiaries shall provide Parent and Merger Sub with all
information reasonably requested by Parent in connection with seeking forgiveness under the PPP Loans, including employee records,
corporate governance documents related to the PPP Loans and all receipts, account records and invoices applicable to the PPP Loans.
Prior to the Effective Time, to the extent required by the SBA Procedural Notice and Applicable PPP Laws or any similar guidance,
the Company shall establish an interest-bearing escrow account controlled by the PPP Lender with the funds contributed to equal
the outstanding balance of the PPP Loans at such time. Notwithstanding anything else herein to the contrary, Parent and Merger
Sub shall cooperate with the Company and its Subsidiaries to the extent reasonably requested by the Company and its Subsidiaries
to secure (i) all approvals of the Merger required or requested by the PPP Lender, any applicable Governmental Entity, and any
Applicable PPP Laws, and (ii) forgiveness of the PPP Loan.
Section 5.15 Obligations
of Merger Sub. Parent will take all action necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this Agreement.
Section 5.16 Treatment
of Certain Company Indebtedness.
(a) If
requested by Parent, the Company shall, and shall cause its Subsidiaries, as applicable, to deliver all notices and take all other
reasonable actions required to facilitate (i) the termination of commitments under the Credit Agreement, (ii) the repayment in
full (or in the case of letters of credit, cash collateralization, to the extent Parent shall not have entered into an alternative
arrangement with the issuing bank) of all obligations then outstanding thereunder and (iii) the release of all liens and guarantees
in connection therewith, in each case, on the Closing Date in connection with such repayment (such termination, repayment and release,
the “Credit Agreement Termination”); provided, that (A) in no event shall this Section 5.16 require
the Company or any of its Subsidiaries to cause such Credit Agreement Termination unless the Closing shall have occurred and (B)
Parent shall provide, or cause to be provided, all funds required to effect all such repayments and cash collateralization of letters
of credit.
(b) On
the Business Day prior to the anticipated Closing Date, the Company shall deliver or cause to be delivered to Parent a copy of
a payoff letter (each, a “Payoff Letter”) with respect to the Credit Agreement and/or any other indebtedness
of the Company or any of its Subsidiaries to a financial or comparable institution ( “Bank Debt”), in form
and substance reasonably acceptable to Parent, each of which Payoff Letters shall (i) indicate the total amount required to be
paid to fully satisfy all principal, interest, prepayment premiums, penalties, breakage costs and any other monetary obligations
then due and payable under the Credit Agreement or agreement(s) governing such other Bank Debt, as applicable, as of the anticipated
Closing Date (such amount payable with respect to the Payoff Letter and Credit Agreement or agreement(s) governing such other
Bank Debt, as applicable, the “Payoff Amount”), (ii) state that upon receipt of the Payoff Amount under each
such Payoff Letter, the Credit Agreement and all related loan documents, or the agreement(s) governing such other Bank Debt, as
applicable, shall be terminated (but excluding any contingent obligations, including indemnification obligations, that in any
such case are not then due and payable and that by their terms are to survive the termination of the Credit Agreement and the
related loan documents or the agreement(s) governing such other Bank Debt, as applicable), and (iii) provide that all Liens and
all guarantees in connection therewith relating to the assets and properties of the Company or any of its Subsidiaries securing
such obligations shall be, released and terminated upon the payment of each Payoff Amount on the Closing Date (subject to delivery
of funds as arranged by Parent and the filing of appropriate UCC 3 termination statements and other termination filings and excluding
any cash collateral provided with respect to letters of credit).
Section 5.17 Financing
Cooperation.
(a) The
Company shall, and shall cause its Subsidiaries to (and shall use its reasonable best efforts to cause its and their respective
Representatives to), use its and their respective reasonable best efforts to provide all cooperation as may be reasonably requested
by Parent in arranging, obtaining and syndicating any third party indebtedness for borrowed money to be raised by Parent or its
Subsidiaries for the purpose of financing the aggregate Merger Consideration and any other amounts required to be paid in connection
with the consummation of the transactions contemplated hereby and all related fees and expenses of Parent and Merger Sub (any such debt financing,
the “Financing”). Without limiting the generality of the foregoing, the Company shall, and shall cause its Subsidiaries
to (and shall use its reasonable best efforts to cause its and their respective Representatives to), use
its and their
respective reasonable best efforts to (i) upon reasonable advance notice and during normal business hours, make senior management,
external auditors and advisors of the Company and its Subsidiaries available to participate in a reasonable number of meetings,
presentations, road shows, drafting sessions and due diligence sessions with proposed lenders, lead arrangers and/or other agents
or lenders for the Financing, and in sessions with rating agencies, (ii) provide reasonable assistance with the preparation
of customary materials (to the extent relating to the Company or its Subsidiaries) for lender presentations, rating agency presentations,
confidential information memoranda and similar documents customary or reasonably required in connection with the Financing, including
the marketing and syndication thereof, in each case as may be reasonably requested by Parent, (iii) on an ongoing basis,
and in any event prior to the Effective Time, furnish Parent and its Financing Sources with such customary financial statements,
schedules or other financial data or information reasonably requested by Parent regarding the Company and its Subsidiaries, (iv) promptly
furnish Parent and its Financing Sources with such other financial, due diligence and other information relating to the Company
and its Subsidiaries as reasonably requested by the Parent or its Financing Sources from time to time or which is customary and
reasonably necessary for the completion of the Financing, (v) use reasonable best efforts to cause the Company’s independent
accountants to provide reasonable assistance to Parent consistent with their customary practice, (vi) furnish to such Financing
Sources at least five Business Days prior to Closing all information regarding the Company and its Subsidiaries that is required
in connection with, and in accordance with the terms of, the Financing by regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested by any
Financing Source in writing at least 10 Business Days prior to Closing and (vii) provide customary authorization letters
authorizing the distribution of information to prospective lenders, subject to customary terms and conditions, and containing
a customary representation to the Financing Sources which are arranging or providing the portion of the Financing constituting
syndicated credit facilities that such information does not contain a material misstatement or omission and containing a customary
representation to such Financing Sources that the public side versions of such documents, if any, do not include material non-public
information about the Company and its Subsidiaries or its or their securities.
(b) Parent
shall promptly, upon written request by the Company, reimburse (or cause to be reimbursed) the Company and its Subsidiaries for
all reasonable and documented out-of-pocket costs and expenses (but, for the sake of clarity, excluding the costs of the Company’s
preparation of its annual and quarterly financial statements) incurred by the Company or any of its Subsidiaries or their respective
Representatives in connection with the Financing, including the cooperation of the Company and its Subsidiaries and Representatives
contemplated by Section 5.17(a), and shall indemnify and hold harmless the Company, its Subsidiaries and their respective
Representatives from and against any and all losses, damages, claims, interest, awards, judgments, penalties, costs or expenses
suffered or incurred by any of them in connection with the arrangement of the Financing and any information used in connection
therewith, except with respect to (i) any information provided in writing by the Company or any of its Subsidiaries to Parent
or any Financing Source for use in connection with the Financing or (ii) any fraud or willful breach by any such persons,
as determined by a final, non-appealable judgment by a court of competent jurisdiction.
Section 5.18 Further
Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments, or assurances
and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect, or confirm
of record or otherwise in the Surviving Corporation any and all right, title, and interest in, to and under any of the rights,
properties, or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
Article VI.
CONDITIONS
Section 6.01 Conditions
to Each Party’s Obligation to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger is subject to the satisfaction or waiver (where permissible
pursuant to applicable Law) on or prior to the Closing Date of each of the following conditions:
(a) Company
Stockholder Approval. This Agreement will have been duly adopted by the Requisite Company Vote.
(b) Regulatory
Approvals. All required filings have been made and all required approvals obtained (or waiting periods expired or terminated)
under any applicable Antitrust Laws.
(c) No
Injunctions, Restraints, or Illegality. No Governmental Entity having jurisdiction over any party hereto shall have enacted,
issued, promulgated, enforced, or entered any Laws or Orders, whether temporary, preliminary, or permanent, that make illegal,
enjoin, or otherwise prohibit consummation of the Merger or the other transactions contemplated by this Agreement, and to the
Knowledge of Parent or the Company there shall be no ongoing investigation by the U.S. Federal Trade Commission, the Department
of Justice, or any other Governmental Entity seeking information related to, or otherwise seeking to prohibit, the transactions
contemplated by this Agreement under any applicable Laws relating to antitrust, competition or trade regulation matters.
Section 6.02
Conditions to Obligations of
Parent and Merger Sub. The obligations of Parent and Merger
Sub to effect the Merger are also subject to the satisfaction or waiver (where permissible pursuant to applicable Law) by Parent
and Merger Sub on or prior to the Closing Date of the following conditions:
(a) Representations
and Warranties. (i) The representations and warranties of the Company (other than in Section 3.01(a), Section 3.02,
Section 3.03(a), Section 3.03(b), Section 3.03(d), Section 3.03(e), Section 3.10
and Section 3.22) set forth in Article III of this Agreement shall be true and correct in all respects
(except with respect to Section 3.05(a), without giving effect to any limitation indicated by the words “Company
Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,”
or “materially”) when made and as of immediately prior to the Effective Time, as if made at and as of such time (except
those representations and warranties that address matters only as of a particular date, which shall be true and correct in all
respects as of that date), except where the failure of such representations and warranties to be so true and correct would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and; (ii) the representations
and warranties contained in Section 3.01(a), Section 3.02, Section 3.03(a), Section 3.03(b),
Section 3.03(d), Section 3.03(e), Section 3.10 and Section 3.22 shall be true and correct
in all respects when made and as of immediately prior to the Effective Time, as if made at and as of such time (except those representations
and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date).
(b) Performance
of Covenants. The Company shall have performed in all material respects all obligations, and complied in all material respects
with the agreements and covenants, in this Agreement required to be performed by or complied with by it at or prior to the Closing.
(c) Company
Material Adverse Effect. Since the date of this Agreement, there shall not have been any Company Material Adverse Effect or
any event, change, or effect that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(d) Officers
Certificate. Parent will have received a certificate, signed by the chief executive officer or chief financial officer of
the Company, certifying as to the matters set forth in Section 6.02(a), Section 6.02(b), Section 6.02(c)
and Section 6.02(f) hereof.
(e) Indebtedness
at Closing. Immediately prior to the Closing, the Company’s aggregate indebtedness under the Credit Agreement including
any outstanding letters of credit and other Bank Debt, excluding $5,800,000 as that portion of the PPP Loan expected to be forgiven
and borrowings incurred to pay Taxes (collectively, the “Company Debt”), shall not exceed $18,247,000, as evidenced
by, among other things, the Payoff Letters delivered by Company to Parent pursuant to Section 5.16.
(f) Net
Book Value. Immediately prior to the Closing, the difference of “A” less “B” being at least $80,829,000,
where “A” equals the sum of (i) the Net Tangible Book Value of Company’s electrical division, plus (ii) the
Net Tangible Book Value of Target’s PFI, LLC subsidiary (the “Subsidiary NBV”), and where “B”
equals the Company Debt; provided that for purposes of this calculation the Subsidiary NBV will be capped at $19,380,000
regardless of the actual Subsidiary NBV.
(g) Cain
Circle. The Company shall have (i) disposed of the Cain Circle Property, either pursuant to the Asset Purchase Agreement dated
as of January 13, 2021 between HWC Wire & Cable Company and Southern Rigging Companies, LLC or on terms and conditions reasonably
satisfactory to Parent, and (ii) purchased and paid for a premises pollution liability policy on the Cain Circle Property having
terms and conditions reasonably satisfactory to Parent.
Section 6.03
Conditions to Obligation of
the Company. The obligation of the Company to effect the Merger
is also subject to the satisfaction or waiver by the Company on or prior to the Effective Time of the following conditions:
(a) Representations
and Warranties. The representations and warranties of Parent and Merger Sub set forth in Article IV of this Agreement
shall be true and correct in all respects (without giving effect to any limitation indicated by the words “material adverse
effect,” “in all material respects,” “in any material respect,” “material,” or “materially”)
when made and as of immediately prior to the Effective Time, as if made at and as of such time (except those representations and
warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date),
except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Parent’s and Merger Sub’s ability to consummate
the transactions contemplated by this Agreement.
(b) Performance
of Covenants. Parent and Merger Sub shall have performed in all material respects all obligations, and complied in all material
respects with the agreements and covenants, in this Agreement required to be performed by or complied with by them at or prior
to the Closing.
(c) Officers
Certificate. The Company will have received a certificate, signed by an officer of Parent, certifying as to the matters set
forth in Section 6.03(a) and Section 6.03(b).
Article VII.
TERMINATION, AMENDMENT, AND WAIVER
Section 7.01
Termination by Mutual Consent.
This Agreement may be terminated at any time prior to the Effective Time (whether before or after the receipt of the Requisite
Company Vote) by the mutual written consent of Parent, Merger Sub, and the Company.
Section 7.02
Termination by Either Parent
or the Company. This Agreement may be terminated by either
Parent or the Company at any time prior to the Effective Time (whether before or after the receipt of the Requisite Company Vote):
(a) if
the Merger has not been consummated on or before the End Date; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.02(a) shall not be available to any party whose breach of any representation, warranty,
covenant, or agreement set forth in this Agreement has been the cause of, or resulted in, the failure of the Merger to be consummated
on or before the End Date;
(b) if
any Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any Law or Order
making illegal, permanently enjoining, or otherwise permanently prohibiting the consummation of the Merger or the other transactions
contemplated by this Agreement, and such Law or Order shall have become final and nonappealable; provided, however, that
the right to terminate this Agreement pursuant to this Section 7.02(b) shall not be available to any party whose breach
of any representation, warranty, covenant, or agreement set forth in this Agreement has been the cause of, or resulted in, the
issuance, promulgation, enforcement, or entry of any such Law or Order; or
(c) if
this Agreement has been submitted to the stockholders of the Company for adoption at a duly convened Company Stockholders Meeting
and the Requisite Company Vote shall not have been obtained at such
meeting
(unless such Company Stockholders Meeting has been adjourned or postponed, in which case at the final adjournment or postponement
thereof).
Section 7.03
Termination by Parent.
This Agreement may be terminated by Parent at any time prior to the Effective Time:
(a) If:
(i) a Company Adverse Recommendation Change shall have occurred; or (ii) the Company shall have breached or failed to
perform in any material respect any of its covenants and agreements set forth in Section 5.04 or Section 5.05(a);
or
(b) if
there shall have been a breach of any representation, warranty, covenant, or agreement on the part of the Company set forth in
this Agreement such that the conditions to the Closing of the Merger set forth in Section 6.02(a) or Section 6.02(b),
as applicable, would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided
that Parent shall have given the Company at least 20 days’ written notice prior to such termination stating Parent’s
intention to terminate this Agreement pursuant to this Section 7.03(b); provided further, that Parent shall
not have the right to terminate this Agreement pursuant to this Section 7.03(b) if Parent or Merger Sub is then in
material breach of any representation, warranty, covenant, or obligation hereunder, which breach has not been cured.
Section 7.04 Termination
by the Company. This Agreement may be terminated by the Company
at any time prior to the Effective Time:
(a) if
prior to the receipt of the Requisite Company Vote at the Company Stockholders Meeting, the Company Board authorizes the Company,
to the extent permitted by and subject to full compliance with the applicable terms and conditions of this Agreement, including
Section 5.04 hereof, to enter into a Company Acquisition Agreement (other than an Acceptable Confidentiality Agreement)
in respect of a Superior Proposal; provided, that the Company shall have paid any amounts due pursuant to Section 7.06(b)
hereof in accordance with the terms, and at the times, specified therein; and provided further, that in the event of
such termination, the Company substantially concurrently enters into such Company Acquisition Agreement; or
(b) if
there shall have been a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set
forth in this Agreement such that the conditions to the Closing of the Merger set forth in Section 6.03(a) or Section 6.03(b)
as applicable, would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided,
that the Company shall have given Parent at least 20 days’ written notice prior to such termination stating the Company’s
intention to terminate this Agreement pursuant to this Section 7.04(b); provided further, that the Company
shall not have the right to terminate this Agreement pursuant to this Section 7.04(b) if the Company is then in material
breach of any representation, warranty, covenant, or obligation hereunder, which breach has not been cured.
Section 7.05
Notice of Termination; Effect
of Termination. The party desiring to terminate this Agreement
pursuant to this Article VII (other than pursuant to Section 7.01) shall deliver written notice of such
termination to each other party hereto specifying with particularity the reason for such termination, and any such
termination in accordance with this Section 7.05 shall be effective immediately upon delivery of such written notice
to the other party. If this Agreement is terminated pursuant to this Article VII, it will become void and of no further
force and effect, with no liability on the part of any party to this Agreement (or any stockholder, director, officer, employee,
agent, or Representative of such party) to any other party hereto, except: (a) with respect to Section 5.03(c),
this Section 7.05, Section 7.06, and Article VIII (and any related definitions contained in
any such Sections or Article), which shall remain in full force and effect; and (b) with respect to any liabilities
or damages incurred or suffered by a party, to the extent such liabilities or damages were the result of fraud or the willful
breach by another party of any of its representations, warranties, covenants, or other agreements set forth in this Agreement.
Section 7.06
Fees Following Termination.
(a) If
this Agreement is terminated by Parent pursuant to Section 7.03(a), then the Company shall pay to Parent (by wire
transfer of immediately available funds), within two (2) Business Days after such termination, a fee in an amount equal to
the Termination Fee.
(b) If
this Agreement is terminated by the Company pursuant to Section 7.04(a), then the Company shall pay to Parent (by
wire transfer of immediately available funds), at or prior to such termination, the Termination Fee.
(c) If
this Agreement is terminated: (i) by Parent pursuant to Section 7.03(b), provided, that the Requisite
Company Vote shall not have been obtained at the Company Stockholders Meeting (including any adjournment or postponement thereof);
or (ii) by the Company or Parent pursuant to (A) Section 7.02(a) hereof and provided, that the Requisite
Company Vote shall not have been obtained at the Company Stockholders Meeting (including any adjournment or postponement thereof),
or (B) Section 7.02(c) hereof, and, in any such case:
(1)
prior to such termination (in the case of termination pursuant to Section 7.02(a) or Section 7.03(b))
or the Company Stockholders Meeting (in the case of termination pursuant to Section 7.02(c)), a Takeover Proposal
shall (x) in the case of a termination pursuant to Section 7.02(a) or Section 7.02(c) have been publicly
disclosed and not withdrawn, or (y) in the case of a termination pursuant to Section 7.03(b) have been publicly
disclosed or otherwise made or communicated to the Company or the Company Board and not withdrawn; and
(2) within
12 months following the date of such termination of this Agreement the Company shall have entered into a preliminary agreement
(such as a term sheet or letter of intent) or a definitive agreement with respect to any Takeover Proposal, or any Takeover Proposal
shall have been consummated (in each case whether or not such Takeover Proposal is the same as the original Takeover Proposal
made, communicated, or publicly disclosed);
then
in any such event the Company shall pay to Parent (by wire transfer of immediately available funds), immediately prior to and
as a condition to consummating such transaction, the Termination Fee (it being understood for all purposes of this Section 7.06(c),
all references in the definition of Takeover Proposal to 15% shall be deemed to be references to “more than 25%” instead).
For
purposes of this Section 7.06(c), if a Person (other than Parent) makes a Takeover Proposal that has been publicly disclosed
and subsequently withdrawn prior to such termination or the Company Stockholder Meeting, as applicable, and, within 18 months
following the date of the termination of this Agreement, such Person or any of its controlled Affiliates makes a Takeover Proposal
that is publicly disclosed, such initial Takeover Proposal shall be deemed to have been “not withdrawn” for purposes
of clauses (x) and (y) of this Section 7.06(c).
(d) The
Company acknowledges and hereby agrees that the provisions of this Section 7.06 are an integral part of the transactions
contemplated by this Agreement (including the Merger), and that, without such provisions, Parent and Merger Sub would not have
entered into this Agreement. If the Company shall fail to pay in a timely manner the amounts due pursuant to this Section 7.06,
and, in order to obtain such payment, Parent makes a claim against the Company that results in a judgment against the Company,
the Company shall pay to Parent the reasonable costs and expenses of Parent (including its reasonable attorneys’ fees and
expenses) incurred or accrued in connection with such suit, together with interest on the amounts set forth in this Section 7.06
at the prime rate as published in The Wall Street Journal in effect on the date such payment was required to be made
through the date such payment was actually received, or a lesser rate that is the maximum permitted by applicable Law. The
parties acknowledge and agree that: (i) the right to receive the Termination Fee and/or any expense reimbursement under this
Agreement shall not limit or otherwise affect Parent’s or Merger Sub’s right to specific performance as provided in
Section 8.12; and (ii) in no event shall the Company be obligated to pay the Termination Fee on more than one
occasion.
(e) Except
as expressly set forth in this Section 7.06, all Expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such Expenses.
Section 7.07 Amendment.
At any time prior to the Effective Time, this Agreement may be amended or supplemented in any and all respects, whether before
or after receipt of the Requisite Company Vote, by written agreement signed by each of the parties hereto; provided, however,
that following the receipt of the Requisite Company Vote, there shall be no amendment or supplement to the provisions of this
Agreement which by Law would require further approval by the holders of Company Common Stock without such approval.
Section 7.08 Extension;
Waiver. At any time prior to the Effective Time, Parent or Merger Sub, on the one hand, or the Company, on the other
hand, may: (a) extend the time for the performance of any of the obligations of the other party(ies); (b) waive any
inaccuracies in the representations and warranties of the other party(ies) contained in this Agreement or in any document delivered
under this Agreement; or (c) unless prohibited by applicable Law, waive compliance with any of the covenants, agreements,
or conditions contained in this Agreement. Any agreement on the part of a party to any extension or waiver will be valid only
if set forth in an instrument in writing signed by such party. The failure of any party to assert any of its rights under this
Agreement or otherwise will not constitute a waiver of such rights.
Article VIII.
MISCELLANEOUS
Section 8.01 Interpretation;
Construction.
(a) The
table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall
not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section,
Exhibit, Article, or Schedule, such reference shall be to a Section of, Exhibit to, Article of, or Schedule of this
Agreement unless otherwise indicated. Unless the context otherwise requires, references herein: (i) to an agreement, instrument,
or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time
to the extent permitted by the provisions thereof; and (ii) to a statute means such statute as amended from time to time
and includes any successor legislation thereto and any regulations promulgated thereunder. Whenever the words “include,”
“includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation,” and the word “or” is not exclusive. The word “extent” in the phrase
“to the extent” means the degree to which a subject or other thing extends, and does not simply mean “if.”
A reference in this Agreement to $ or dollars is to U.S. dollars. The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. The words “hereof,” “herein,” “hereby,” “hereto,”
and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. References to “this Agreement” shall include the Company Disclosure
Letter. The words “made available to Parent,” “provided to Parent” and words of similar import refer to
information either posted to the electronic data room hosted by Ansarada and maintained by the Company for purposes of the transactions
contemplated by this Agreement or available on EDGAR no later than 4:00 p.m. Central Time, on March 23, 2021.
(b) The
parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(c) The
mere inclusion of an item in the Company Disclosure Letter as an exception to a representation or warranty in Article III
shall not be deemed an admission by the Company that such item represents a material exception or fact, event or circumstance
or that such item is reasonably likely to result in a Company Material Adverse Effect. Any disclosures made in a section
of the Company Disclosure Letter shall be deemed to be made with respect to the correspondingly numbered section of Article III
and other sections of Article III to the extent it is reasonably apparent on its face (notwithstanding the absence
of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections.
(d) No
summary of this Agreement or any Exhibit attached hereto or Section of the Company Disclosure Letter delivered herewith prepared
by or on behalf of any party shall affect the meaning or interpretation of this Agreement or any such Exhibit or Section of the
Company Disclosure Letter.
Section 8.02 Survival.
None of the representations and warranties contained in this Agreement or in any instrument delivered under this Agreement will
survive the Effective Time. This Section 8.02 does not limit any covenant or agreement of the parties contained in
this Agreement which, by its terms, contemplates performance after the Effective Time. The Confidentiality Agreement will survive
termination of this Agreement in accordance with its terms.
Section 8.03 Governing
Law. This Agreement, and all Legal Actions (whether based
on contract, tort, or statute) arising out of, relating to, or in connection with this Agreement or the actions of any of the
parties hereto in the negotiation, administration,
performance,
or enforcement hereof, shall be governed by and construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of Laws of any jurisdiction other than those of the State of Delaware.
Section 8.04
Submission to Jurisdiction.
Each of the parties hereto irrevocably agrees that any Legal Action with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by any other party hereto or its successors or assigns shall be brought and determined exclusively in
the Court of Chancery in the State of Delaware, or in the event (but only in the event) that such court does not have subject
matter jurisdiction over such Legal Action, in the U.S. District Court for the District of Delaware. Each of the parties hereto
agrees that sending of process or other papers in connection with any such Legal Action in the manner provided in Section 8.06
or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the
parties hereto hereby irrevocably submits with regard to any such Legal Action for itself and in respect of its property, generally
and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any Legal Action relating
to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid
courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim,
or otherwise, in any Legal Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition
and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder: (a) any claim
that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve
process in accordance with this Section 8.04; (b) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise); and (c) to the fullest
extent permitted by the applicable Law, any claim that (i) the suit, action, or proceeding in such court is brought in an
inconvenient forum, (ii) the venue of such suit, action, or proceeding is improper, or (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.
Section 8.05
Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (B) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 8.05.
Section 8.06
Notices.
All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be
deemed to have been given upon the earlier of actual receipt or (a) when delivered by hand (providing proof of delivery);
(b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on
the date sent by email if sent during normal business hours of the recipient, and on the next Business Day if sent after
normal business hours of the recipient. Such communications must be sent to the respective parties at the following addresses
(or to such other Persons or at such other address for a party as shall be specified in a written notice given in accordance with
this Section 8.06):
|
If
to Parent or Merger Sub, to:
|
|
Dot
Holdings Co.
|
|
|
|
17050
Baxter Road
|
|
|
|
St.
Louis, MO 63005
|
|
|
|
Attention: John
Tracy
|
|
|
|
Email: JTracy@DotFoods.com
|
|
|
|
Lewis
Rice LLC
|
|
with
a copy (which will not constitute notice to Parent or Merger Sub) to:
|
|
600
Washington Ave., Suite 2500
|
|
|
|
St.
Louis, MO 63101
|
|
|
|
Attention: John
C. Bodnar
|
|
|
|
Email: jbodnar@lewisrice.com
|
|
If
to the Company, to:
|
|
Houston
Wire & Cable Company
|
|
|
|
10201
North Loop East
|
|
|
|
Houston,
TX 77029
|
|
|
|
Attention:
James L. Pokluda III,
|
|
|
|
President
& CEO
|
|
|
|
Email:
jpokluda@houwire.com
|
|
with
a copy (which will not constitute notice to the Company) to:
|
|
Schiff
Hardin LLP
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233
S. Wacker Drive, Suite 7100
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Chicago,
IL 60606
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Attention:
Robert J. Minkus
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Email:
rminkus@schiffhardin.com
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Section 8.07
Entire Agreement.
This Agreement (including the Exhibits to this Agreement), the Company Disclosure Letter and the Confidentiality Agreement constitute
the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all other prior agreements
and understandings, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement.
In the event of any inconsistency between the statements in the body of this Agreement, the Confidentiality Agreement, and the
Company Disclosure Letter (other than an exception expressly set forth as such in the Company Disclosure Letter), the statements
in the body of this Agreement will control.
Section 8.08
No Third-Party Beneficiaries.
Except as provided in Section 5.08 hereof (which shall be to the benefit of the Persons referred to in such section),
this Agreement is for the sole benefit of the parties hereto and their permitted assigns and respective successors and nothing
herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit,
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 8.09
Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality,
or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such
term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or
unenforceable, 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 a mutually acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
Section 8.10 Assignment.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither Parent or Merger Sub, on the one hand, nor the Company on the other hand, may assign its rights or
obligations hereunder without the prior written consent of the other party (Parent in the case of Parent and Merger Sub), which
consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that prior to the Effective Time,
Merger Sub may, without the prior written consent of the Company, assign all or any portion of its rights under this Agreement
to Parent or to one or more of Parent’s direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning
party of any of its obligations hereunder.
Section 8.11 Remedies.
Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be
cumulative with, and not exclusive of, any other remedy contained in this Agreement, at Law, or in equity. The exercise by a party
to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.
Section 8.12 Specific
Performance.
(a) The
parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with
the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches
of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in
the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at Law or in equity.
For the avoidance of doubt, notwithstanding anything else in this Agreement, in no event shall specific performance of Parent’s
or Merger Sub’s obligation to consummate the Merger survive any termination of this Agreement.
(b) Each
party further agrees that: (i) no such party will oppose the granting of an injunction or specific performance as provided
herein on the basis that the other party has an adequate remedy at law or that an award of specific performance is not an appropriate
remedy for any reason at law or equity; (ii) no such party will oppose the specific performance of the terms and provisions
of this Agreement; and (iii) no other party or any other Person shall be required to obtain, furnish, or post any bond or
similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.12,
and each party irrevocably waives any right it may have to require the obtaining, furnishing, or posting of any such bond or similar
instrument.
Section 8.13 Counterparts;
Effectiveness; Electronic Transmission of Signatures. This
Agreement may be executed in any number of counterparts, all of which will be one and the same agreement. This Agreement will
become effective when each party to this Agreement will have received counterparts signed by all of the other parties. Receipt
of a party’s executed signature page to this Agreement by e-mail or other electronic transmission with permission to release
such signature page shall constitute effective execution and delivery to this Agreement by such party.
Section 8.14 Definitions.
For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters:
“Acceptable
Confidentiality Agreement” means a confidentiality agreement that contains confidentiality provisions that are no less
favorable to the Company than those contained in the Confidentiality Agreement.
“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such first Person. For the purposes of this definition, “control” (including, the terms “controlling,”
“controlled by,” and “under common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the
ownership of voting securities, by Contract, or otherwise.
“Affordable
Care Act” means the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education
Reconciliation Act (HCERA).
“Antitrust
Laws” means Laws that are designed or intended to prohibit, restrict, or regulate actions having the purpose or effect
of monopolization or restraint of trade or significant impediments or lessening of competition or creation or strengthening of
a dominant position through merger or acquisition.
“Applicable
PPP Laws” means all applicable requirements under the CARES Act and all applicable requirements under the Small Business
Act, including the legal requirements thereunder applicable to the PPP Loan.
“Business
Day” means any day, other than Saturday, Sunday, or any day on which banking institutions located in St. Louis, Missouri
are authorized or required by Law or other governmental action to close.
“Cain
Circle Property” means the adjoining parcels of real estate located at 12611 Cain Circle and 1645 Federal Road, Houston,
Texas 77015.
“CARES
Act” means the Coronavirus Aid, Relief, and Economic Security Act.
“Charter
Documents” means the certificate of incorporation (including any certificate of designations), by-laws, or like organizational
documents, collectively, each as amended to date.
“Closing”
means the closing of the Merger.
“Closing
Date” means the actual date of the Closing.
“COBRA”
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Section 4980B of the Code
and Section 601 et. seq. of ERISA.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company
Acquisition Agreement” means any agreement in principle, letter of intent, term sheet, acquisition agreement, merger
agreement, option agreement, joint venture agreement, partnership agreement, or other Contract relating to any Takeover Proposal.
“Company
Adverse Recommendation Change” means the Company Board: (i) failing to make, or withdrawing, amending, modifying,
or materially qualifying, in a manner adverse to Parent, the Company Board Recommendation; (ii) failing to include the Company
Board Recommendation in the Company Proxy Statement that is mailed to the Company’s stockholders; (iii) recommending
a Takeover Proposal; (iv) failing to recommend against acceptance of any tender offer or exchange offer for the shares of
Company Common Stock within ten Business Days after the commencement of such offer; (v) failing to reaffirm (publicly, if
so requested by Parent) the Company Board Recommendation within ten Business Days after the date any Takeover Proposal (or material
modification thereto) is first publicly disclosed by the Company or the Person making such Takeover Proposal; (vi) making
any public statement inconsistent with the Company Board Recommendation; or (vii) resolving or agreeing to take any of the
foregoing actions.
“Company
Balance Sheet” means the audited balance sheet of the Company dated as of December 31, 2020 contained in the Company
SEC Documents filed prior to the date hereof.
“Company
Board” means the Board of Directors of the Company.
“Company
Common Stock” means the common stock, par value $.001 per share, of the Company.
“Company
Continuing Employees” means the employees of the Company and its Subsidiaries who remain employed immediately after
the Effective Time.
“Company
Disclosure Letter” means the disclosure letter, dated as of the date of this Agreement and delivered by the Company
to Parent concurrently with the execution of this Agreement.
“Company
DSU” means a stock unit issued under the Directors Deferred Compensation Plan.
“Company
Employee” means any current or former employee of the Company or any of its Subsidiaries.
“Company
Employee Plan” means any plan, program, policy, agreement, collective bargaining agreement, or other arrangement providing
for compensation, severance, deferred compensation, performance awards, stock or stock-based awards, fringe, retirement, death,
disability, medical, or wellness benefits, or other employee benefits or remuneration of any kind, including each employment,
termination, severance, retention, change in control, or consulting or independent contractor plan, program, arrangement, or agreement,
in each case whether written or unwritten or otherwise, funded or unfunded, insured or self-insured, including each “employee
benefit plan,” within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, which is or has been sponsored,
maintained, contributed to, or required to be contributed to, by the Company or any of its Subsidiaries for the benefit of
any Company Employee, or with respect to which the Company or any Company ERISA Affiliate has or would reasonably be expected
to have any Liability.
“Company
Equity Award” means a Company Stock Option, a Company Restricted Share, a Company RSU or a Company PSU granted under
one of the Company Stock Plans or a Company DSU issued under the Directors Deferred Compensation Plan, as the case may be.
“Company
ERISA Affiliate” means all employers, trades, or businesses (whether or not incorporated) that would be treated together
with the Company or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code.
“Company
Financial Advisors” means William Blair & Company and Johnson Rice & Company.
“Company
IP” means all Intellectual Property, other than the Company-Owned IP, used in or necessary for the conduct of the business
of the Company and its Subsidiaries as currently conducted and as proposed to be conducted.
“Company
IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants
not to sue, waivers, releases, permissions, and other Contracts, whether written or oral, relating to Intellectual Property and
to which the Company or any of its Subsidiaries is a party, beneficiary, or otherwise bound.
“Company
IT Systems” means all software, software-as-a-service, computer hardware (whether general or special purpose), servers,
networks, infrastructure-as-a-service, platforms, platform-as-a-service, peripherals, telecommunications capabilities (including
all voice, data and video networks and equipment) and similar or related items of automated, computerized, or other information
technology networks and systems (including telecommunications networks and systems for voice, data, and video) owned, leased,
licensed, or used (including through cloud-based or other third-party service providers) by the Company or any of its Subsidiaries.
“Company
Material Adverse Effect” means any event, occurrence, fact, condition, or change that is, or would reasonably be expected
to become, individually or in the aggregate, materially adverse to: (a) the business, results of operations, financial condition,
or assets of the Company and its Subsidiaries, taken as a whole; or (b) the ability of the Company to consummate the transactions
contemplated hereby on a timely basis; provided, however, that, for the purposes of clause (a), a Company Material Adverse Effect
shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to, or resulting from:
(i) changes generally affecting the economy, financial or securities markets, or political conditions; (ii) the announcement
or pendency of the transactions contemplated by this Agreement (it being understood and agreed that this clause shall not apply
with respect to any representation or warranty that is intended to address the consequences of the announcement or the pendency
of this Agreement); (iii) any changes in applicable Law or GAAP or other applicable accounting standards; (iv) acts
of war or terrorism or the escalation thereof; (v) natural disasters, pandemics and acts of God; (vi) general conditions
in the industry in which the Company and its Subsidiaries operate; (vii) any failure, in and of itself, by the Company to
meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial
or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such
failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected
to become, a Company Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another
clause of this proviso); (viii) any change, in and of itself, in the market price or trading volume of the Company’s
securities (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute,
or be taken into account in determining whether there has been or would reasonably be expected to become, a Company Material Adverse
Effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); or (ix) actions
taken as required or specifically permitted by the Agreement or actions or omissions taken with Parent’s consent; provided
further, however, that any event, change, and effect referred to in clauses (i), (iii), (iv), (v), or (vi) immediately above
shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected
to occur to the extent that such event, change, or effect has a disproportionate effect on the Company and its Subsidiaries, taken
as a whole, compared to other participants in the industries in which the Company and its Subsidiaries conduct their businesses.
“Company-Owned
IP” means all Intellectual Property owned by the Company or any of its Subsidiaries.
“Company
Preferred Stock” means the shares of preferred stock, par value $0.001 per share, of the Company.
“Company
Proxy Statement” means, collectively, the letter to the stockholders, notice of meeting, proxy statement, and forms
of proxy, to be filed with the SEC in connection with the Merger.
“Company
PSU” means a Company performance stock unit.
“Company
Restricted Share” means a share of Company Common Stock subject to vesting, repurchase, or other lapse of restrictions.
“Company
RSU” means a Company restricted stock unit.
“Company
SEC Documents” means the registration statements, prospectuses, reports, schedules, forms, statements, and other documents
(including exhibits and schedules thereto and all other information incorporated by reference) required to be filed or furnished
by the Company with the SEC since January 1, 2018.
“Company
Stock Option” means an option to acquire shares of Company Common Stock.
“Company
Stock Plans” means the following plans: (i) the Houston Wire & Cable Company 2017 Stock Plan, as amended, and
(ii) the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015, as amended.
“Company
Stockholders Meeting” means the meeting of the stockholders of the Company to be held to consider the adoption of this
Agreement.
“Confidentiality
Agreement” means the Confidentiality Agreement dated as of October 14, 2020 between the Company and Dot Family
Holdings, LLC.
“Contracts”
means any contracts, agreements, licenses, notes, bonds, mortgages, indentures, leases, or other binding instruments or binding
commitments, whether written or oral.
“Credit
Agreement” means the Fourth Amended and Restated Loan and Security Agreement, dated as of October 1, 2015, as amended,
among HWC Wire & Cable Company, as borrower, the Company, as Guarantor, certain financial institutions, as lenders, and Bank
of America, N.A., as agent..
“DGCL”
means the Delaware General Corporation Law.
“Directors
Deferred Compensation Plan” means the Houston Wire & Cable Company Nonemployee Directors’ Deferred Compensation
Plan effective December 11, 2017.
“EDGAR”
means the Electronic Data Gathering, Analysis, and Retrieval database of the SEC.
“Effective
Time” means the effective time of the Merger.
“End
Date” means September 30, 2021.
“Environmental
Laws” means any applicable Law, and any Order or binding agreement with any Governmental Entity: (a) relating to
pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety,
or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the
presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental
Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization
Act of 1986, 42 U.S.C. §§ 9601 et. seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et. seq.;
the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et.
seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et. seq.; the Clean Air Act of 1966, as amended by
the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et. seq.; and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. §§ 651 et. seq.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Excluded
Party” shall mean any Person, group of Persons or group of Persons that includes any Person or group of Persons, from
whom the Company or any of its Representatives has received prior to the No-Shop Period Start Date a written Takeover Proposal
that the Company Board determines in good faith (such determination to be made no later than one (1) Business Day after the No-Shop
Period Start Date), after consultation with outside counsel and its financial advisors, is or would reasonably be expected to
result in a Superior Proposal; provided that any such Person or group of Persons shall cease to be an Excluded Party
when the ultimate equityholder(s) of such Person and the other Persons who were members of such group, if any, as of the No Shop
Period Start Date, cease to provide (directly or indirectly) in the aggregate at least 25% of the equity financing (measured by
value) of such Person or group at any time following the No-Shop Period Start Date.
“Expenses”
means, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses
of counsel, accountants, financial advisors, and investment bankers of such Person and its Affiliates), incurred by such Person
or on its behalf in connection with or related to the authorization, preparation, negotiation, execution, and performance
of this Agreement and any transactions related thereto, any litigation with respect thereto, the preparation, printing, filing,
and mailing of the Company Proxy Statement, the filing of any required notices under the Antitrust Laws, or in connection with
other regulatory approvals, and all other matters related to the Merger and the other transactions contemplated by this Agreement.
“Financing
Sources” means any entity (other than Parent or any of its Affiliates) that has committed to provide or arrange or act
as an administrative or facility agent in respect of all or any part of the Financing in connection with the Merger or other transactions
contemplated by this Agreement, including the parties to any joinder agreements or credit agreements entered pursuant thereto
or relating thereto, together with their respective Affiliates, and their respective Affiliates’ Representatives, members,
managers, general or limited partners or their respective Affiliates, successors and assigns.
“GAAP”
means United States generally accepted accounting principles.
“Governmental
Antitrust Authority” means any Governmental Entity with jurisdiction over the Antitrust Laws.
“Governmental
Entity” means any supranational, national, state, municipal, local, or foreign government, any instrumentality, subdivision,
court, administrative agency or commission, or other governmental authority, or any quasi-governmental or private body exercising
any regulatory or other governmental or quasi-governmental authority.
“Hazardous
Substance” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid,
liquid, mineral, or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, or
words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products,
radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation,
per- and polyfluoroalkyl substances and polychlorinated biphenyls.
“HIPAA”
means the Health Insurance Portability and Accountability Act of 1996, as amended.
“Indemnified
Party” means each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective
Time an officer or director of the Company or any of its Subsidiaries.
“Intellectual
Property” means any and all of the following arising pursuant to the Laws of any jurisdiction throughout the world:
(a) trademarks, service marks, trade names, and similar indicia of source or origin, all registrations and applications for
registration thereof, and the goodwill connected with the use of and symbolized by the foregoing; (b) copyrights and all
registrations and applications for registration thereof; (c) all inventions (whether or not the subject of a patent or patent
application), invention disclosures and improvements, trade secrets and know-how; (d) patents, patent applications, and/or
statutory invention registrations, including any counterparts, reissues, divisions/divisionals, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, ; (e) internet domain name registrations; and (f) other intellectual
property and related proprietary rights.
“IRS”
means the United States Internal Revenue Service.
“Knowledge”
means: (a) with respect to the Company and its Subsidiaries, the actual knowledge of each of the individuals listed in Section 8.14A
of the Company’s Disclosure Letter, in each case after due inquiry of those employees who would reasonably be expected
to have actual knowledge of the matter in question; and (b) with respect to Parent and its Subsidiaries, the actual knowledge
of each of the individuals listed in Section 8.14 of Parent’s Disclosure Letter, after due inquiry.
“Laws”
means any federal, state, local, municipal, foreign, multi-national or other laws, common law, statutes, constitutions, ordinances,
rules, regulations, codes, Orders, or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered,
or applied by any Governmental Entity.
“Lease”
means all leases, subleases, licenses, concessions, and other agreements (written or oral) under which the Company or any of its
Subsidiaries holds any Leased Real Estate, including the right to all security deposits and other amounts and instruments deposited
by or on behalf of the Company or any of its Subsidiaries thereunder.
“Leased
Real Estate” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures,
improvements, fixtures, or other interest in real property held by the Company or any of its Subsidiaries.
“Legal
Action” means any legal, administrative, arbitral, or other proceedings, suits, actions, investigations, examinations,
claims, audits, hearings, charges, complaints, indictments, or litigations.
“Liability”
means any liability, indebtedness, or obligation of any kind (whether accrued, absolute, contingent, matured, unmatured, determined,
determinable, or otherwise, and whether or not required to be recorded or reflected on a balance sheet under GAAP).
“Liens”
means, with respect to any property or asset, all pledges, liens, mortgages, charges, encumbrances, hypothecations, easements,
rights of way, options, rights of first refusal, rights of first offer, and security interests of any kind or nature whatsoever.
“Nasdaq”
means the Nasdaq Global Market.
“Net
Tangible Book Value” means total assets, excluding intangibles (other than software development costs), less total liabilities,
and excluding intercompany items, Tax accruals and debt, calculated on a basis consistent with the exhibit set forth in Section
8.14B of the Company Disclosure Letter.
“No-Shop
Period Start Date” means April 24, 2021.
“Off-the-Shelf
Solutions” means commercially available software, software-as-a-service or other IT products or services that are non-exclusively
licensed by the Company other than by a written agreement executed by the licensee, including by shrink wrap, click through or
similar licenses.
“Order”
means any order, writ, assessment, decision, injunction, decree, ruling, or judgment of a Governmental Entity or arbitrator, whether
temporary, preliminary, or permanent.
“Owned
Real Estate” means all land, together with all buildings, structures, fixtures, and improvements located thereon and
all easements, rights of way, and appurtenances relating thereto, owned by the Company or any of its Subsidiaries.
“Parent
Benefit Plans” means any “employee benefit plan” as defined in Section 3(3) of ERISA maintained by
Parent or any of its Subsidiaries, excluding any retiree health plans or programs maintained by Parent or any of its Subsidiaries,
any defined benefit retirement plans or programs maintained by Parent or any of its Subsidiaries, and any equity compensation
arrangements maintained by Parent or any of its Subsidiaries.
“Parent’s
Disclosure Letter” means the disclosure letter, dated as of the date of this Agreement and delivered by Parent to the
Company concurrently with the execution of this Agreement.
“Payroll
Tax Executive Order” means the Presidential Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing
COVID-19 Disaster, as issued on August 8, 2020, and including any administrative or other guidance published with respect thereto
by any Governmental Entity (including IRS Notice 2020-65).
“PBGC”
means the Pension Benefit Guaranty Corporation.
“Permits”
means permits, licenses, registrations, variances, clearances, consents, commissions, franchises, exemptions, authorizations,
and approvals from Governmental Entities.
“Permitted
Liens” means: (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the
amount or validity of which is being contested in good faith (provided appropriate reserves required pursuant to GAAP have been
made in respect thereof); (b) mechanics’, carriers’, workers’, repairers’, and similar statutory
Liens arising or incurred in the ordinary course of business for amounts which are not delinquent or which are being contested
by appropriate proceedings (provided appropriate reserves required pursuant to GAAP have been made in respect thereof); (c) covenants,
conditions, restrictions, easements, public rights of way and other similar non-monetary matters of record affecting title to
such Person’s owned or leased real property, which do not, individually or in the aggregate, materially impair the occupancy
or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses;
and (d) Liens arising under workers’ compensation, unemployment insurance, social security, retirement, and similar
legislation.
“Person”
means any individual, corporation, limited or general partnership, limited liability company, limited liability partnership, trust,
association, joint venture, Governmental Entity, or other entity or group (which term will include a “group” as such
term is defined in Section 13(d)(3) of the Exchange Act).
“PPP
Lender” means Bank of America, N.A.
“PPP
Loan” means that certain promissory note dated May 4, 2020 in the original principal amount of $6.2 million by and between
HWC Wire & Cable Company and the PPP Lender.
“Privacy
Agreement” means any Contracts (or portions thereof) to which the Company and/or one or more of its Subsidiaries is
a party involving the processing of personal information.
“Real
Estate” means the Owned Real Estate and the Leased Real Estate.
“Representatives”
means, with respect to any Person, its directors, officers, employees, investment bankers, attorneys, accountants, consultants,
or other agents or advisors.
“Requisite
Company Vote” means the affirmative vote or consent of the holders of a majority of the outstanding shares of Company
Common Stock.
“Sarbanes-Oxley
Act” means the Sarbanes-Oxley Act of 2002 (including the rules and regulations promulgated thereunder.
“SBA
Procedural Notice” means Procedural Notice 5000-20057, “Paycheck Protection Program Loans and Changes of Ownership,”
effective October 2, 2020, promulgated by the Small Business Administration.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Subsidiary”
of a Person means a corporation, partnership, limited liability company, or other business entity of which a majority of the shares
of voting securities is at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly,
through one or more intermediaries, or both, by such Person.
“Superior
Proposal” means a bona fide written Takeover Proposal (except that, for purposes of this definition, each reference
in the definition of “Takeover Proposal” to “15%” shall be “50.1%”) that the Company
Board determines in good faith (after consultation with outside legal counsel and the Company Financial Advisor) is more favorable
from a financial point of view to the holders of Company Common Stock than the transactions contemplated by this Agreement, taking
into account: (a) all financial considerations; (b) the identity of the third party making such Takeover Proposal; (c) the
anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments)
and prospects for completion of such Takeover Proposal; (d) the other terms and conditions of such Takeover Proposal and
the implications thereof on the Company, including relevant legal, regulatory, and other aspects of such Takeover Proposal deemed
relevant by the Company Board (including any conditions relating to financing, stockholder approval, regulatory approvals, or
other events or circumstances beyond the control of the party invoking the condition); and (e) any revisions to the terms
of this Agreement and the Merger proposed by Parent during the Superior Proposal Notice Period set forth in Section 5.04(f).
“Takeover
Proposal” means an inquiry, proposal, or offer from, or indication of interest in making a proposal or offer by, any
Person or group (other than Parent and its Subsidiaries, including Merger Sub), relating to any transaction or series of
related transactions (other than the transactions contemplated by this Agreement), involving any: (a) direct or indirect
acquisition of assets of the Company or its Subsidiaries (including any voting equity interests of Subsidiaries, but excluding
sales of assets in the ordinary course of business) equal to 15% or more of the fair market value of the Company’s and its
Subsidiaries’ consolidated assets or to which 15% or more of the Company’s and its Subsidiaries’ net revenues
or net income on a consolidated basis are attributable; (b) direct or indirect acquisition of 15% or more of the voting equity
interests of the Company or any of its Subsidiaries whose business constitutes 15% or more of the consolidated net revenues, net
income, or assets of the Company and its Subsidiaries, taken as a whole; (c) tender offer or exchange offer that if consummated
would result in any Person or group (as defined in Section 13(d) of the Exchange Act) beneficially owning (within the
meaning of Section 13(d) of the Exchange Act) 15% or more of the voting power of the Company; (d) merger, consolidation,
other business combination, or similar transaction involving the Company or any of its Subsidiaries, pursuant to which such Person
or group (as defined in Section 13(d) of the Exchange Act) would own 15% or more of the consolidated net revenues, net
income, or assets of the Company,
and its Subsidiaries, taken as a whole; (e) liquidation, dissolution (or the adoption of
a plan of liquidation or dissolution), or recapitalization or other significant corporate reorganization of the Company or one
or more of its Subsidiaries which, individually or in the aggregate, generate or constitute 15% or more of the consolidated net
revenues, net income, or assets of the Company and its Subsidiaries, taken as a whole; or (f) any combination of the foregoing.
“Taxes”
means all federal, state, local, foreign, and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise,
registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest, additions, or penalties
with respect thereto and any interest in respect of such additions or penalties.
“Tax
Returns” means any return, declaration, report, claim for refund, information return or statement, or other document
relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Termination
Fee” means $4,000,000.00.
“Treasury
Regulations” means the Treasury regulations promulgated under the Code.
“Voting
Agreement” means that certain Voting Agreement by and among each of the directors and officers of the Company and their
respective Affiliates dated as of the date hereof the form of which is attached hereto as Exhibit B.
“Voting
Debt” means any bonds, debentures, notes, or other indebtedness issued by the Company or any of its Subsidiaries: (i) having
the right to vote on any matters on which stockholders or equityholders of the Company or any of its Subsidiaries may vote (or
which is convertible into, or exchangeable for, securities having such right); or (ii) the value of which is directly based
upon or derived from the capital stock, voting securities, or other ownership interests of the Company or any of its Subsidiaries.
“WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988.
[signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
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|
COMPANY
|
|
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Houston
Wire & Cable Company
|
|
|
By:
|
/s/
G. Gary Yetman
|
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Name:
|
G.
Gary Yetman
|
|
Title:
|
Executive
Chairman
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|
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PARENT
|
|
|
Omni
Cable, LLC
|
|
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By:
|
/s/
Greg Lampert
|
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Name:
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Greg
Lampert
|
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Title:
|
President
and Chief Executive Officer
|
|
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MERGER SUB
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OCDFH Acquisition Sub Inc,
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|
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By:
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/s/
John M. Tracy
|
|
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Name:
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John
M. Tracy
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|
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Title:
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Chief
Executive Officer
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[Signature
Page to Merger Agreement]
EXHIBIT A
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION OF
HOUSTON WIRE & CABLE COMPANY
1. The
name of the corporation is Houston Wire & Cable Company (the “Corporation”).
2. The
address of the registered office of the Corporation in the State of Delaware is 251 Little Falls Drive, Wilmington, Delaware 19808.
The name of the registered agent of the Corporation at such address is Corporation Service Company.
3. The
nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).
4. The
total number of shares of stock which the Corporation is authorized to issue is [●]. All shares shall be Common Stock, having
a par value of $0.001 per share.
5. Unless
and except to the extent that the by-laws of the Corporation (the “By-Laws”) shall so require, the election
of directors of the Corporation need not be by written ballot.
6. To
the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its
stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of, or repeal
of this Paragraph 6 shall apply to or have any effect on the liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions of such director occurring prior to such amendment.
7. The
Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to
be made a party or is otherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative
(a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative,
is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture,
trust, enterprise, or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding
sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses
not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof)
commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized
in the specific case by the board of directors of the Corporation. Any amendment, repeal, or modification of this Paragraph 7
shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
8. In
furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt,
amend, or repeal the By-Laws or adopt new By-Laws without any action on the part of the stockholders; provided that any By-law
adopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered, or repealed by the stockholders.
9. The
Corporation shall have the right, subject to any express provisions or restrictions contained in the Certificate of Incorporation
of the Corporation (the “Certificate of Incorporation”) or the By-Laws, from time to time, to amend, alter,
or repeal any provision of the Certificate of Incorporation in any manner now or hereafter provided by law, and all rights and
powers of any kind conferred upon a director or stockholder of the Corporation by the Certificate of Incorporation or any amendment
thereof are conferred subject to such right.
10. Unless
the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall,
to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on
behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee,
or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising
pursuant to any provision of the DGCL, the Certificate of Incorporation, or the By-Laws or (iv) any action asserting a claim governed
by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable
parties named as defendants therein.
EXHIBIT B
Voting
Agreement
This
Voting Agreement (this “Agreement”), dated as of March 24, 2021, is made and entered into by and between the
undersigned stockholder (“Stockholder”) of Houston Wire & Cable Company, a Delaware corporation (the “Company”),
and Omni Cable, LLC, a Pennsylvania limited liability company (“Parent”). Parent and Stockholder are each sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
A. Concurrently
with the execution of this Agreement, the Company, Parent, and OCDFH Acquisition Sub Inc., a Delaware corporation and wholly-owned
subsidiary of Parent (“Merger Sub”), have entered into an Agreement and Plan of Merger (as the same may be
amended from time to time, the “Merger Agreement”), providing for, among other things, the merger (the “Merger”)
of Merger Sub and the Company pursuant to the terms and conditions of the Merger Agreement.
B. In
order to induce Parent to enter into the Merger Agreement, Stockholder is willing to make certain representations, warranties,
covenants, and agreements as set forth in this Agreement with respect to the shares of common stock, par value $.001 per share,
of the Company (“Company Common Stock”) Beneficially Owned by Stockholder and set forth below Stockholder’s
signature on the signature page hereto (the “Original Shares” and, together with any additional shares of Company
Common Stock pursuant to Section 7 hereof, the “Shares”); and
C. As
a condition to its willingness to enter into the Merger Agreement, Parent has required that Stockholder, and Stockholder has agreed
to, execute and deliver this Agreement.
AGREEMENT
In
consideration of the foregoing and of the representations, warranties, covenants, and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:
1. Definitions.
For purposes of this Agreement, capitalized terms used and
not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. When used in this
Agreement, the following terms in all of their tenses, cases, and correlative forms shall have the meanings assigned to them in
this Section 1.
(a) “Beneficially
Own” or “Beneficial Ownership” has the meaning assigned to such term in Rule 13d-3 under the
Exchange Act, and a Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of
such rule (in each case, irrespective of whether or not such rule is actually applicable in such circumstance). For the avoidance
of doubt, “Beneficially Own” and “Beneficial Ownership” shall also include record ownership of securities.
(b) “Beneficial
Owner” shall mean the Person who Beneficially Owns the referenced securities.
2. Representations
of Stockholder.
Stockholder
represents and warrants to Parent that:
(a) Ownership
of Shares. Stockholder: (i) is the Beneficial Owner of all of the Original Shares free and clear of any proxy, voting
restriction, adverse claim, or other Liens, other than those created by this Agreement or under applicable federal or state securities
Laws; and (ii) has the sole voting power over all of the Original Shares. Except pursuant to this Agreement, there are no
options, warrants, or other rights, agreements, arrangements, or commitments of any character to which Stockholder is a party
relating to the pledge, disposition, or voting of any of the Original Shares and there are no voting trusts or voting agreements
with respect to the Original Shares.
(b) Disclosure
of All Shares Owned. Stockholder does not Beneficially Own any shares of Company Common Stock other than: (i) the Original
Shares; and (ii) any options, warrants, or other rights to acquire any
additional
shares of Company Common Stock or any security exercisable for or convertible into shares of Company Common Stock, set forth on
the signature page of this Agreement (collectively, “Options”).
(c) Power
and Authority; Binding Agreement. Stockholder has full [corporate] power and authority [and legal capacity] to enter into,
execute, and deliver this Agreement and to perform fully Stockholder’s obligations hereunder. This Agreement has been duly
and validly executed and delivered by Stockholder and constitutes the legal, valid, and binding obligation of Stockholder, enforceable
against Stockholder in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting creditors’ rights generally.
(d) No
Conflict. The execution and delivery of this Agreement by Stockholder does not, and the consummation of the transactions contemplated
hereby and the compliance with the provisions hereof will not, conflict with or violate any Law applicable to Stockholder or result
in any breach of or violation of, or constitute a default (or an event that with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment, acceleration, or cancellation of, or result in the creation
of any Lien on any of the Shares pursuant to, any agreement or other instrument or obligation [including organizational documents]
binding upon Stockholder or any of the Shares.
(e) No
Consents. No consent, approval, Order, or authorization of, or registration, declaration, or filing with, any Governmental
Entity or any other Person on the part of Stockholder is required in connection with the valid execution and delivery of this
Agreement. [No consent of Stockholder’s spouse is necessary under any “community property” or other laws in
order for Stockholder to enter into and perform its obligations under this Agreement.]
(f) No
Litigation. There is no action, suit, investigation, or proceeding (whether judicial, arbitral, administrative, or other)
(each an “Action”) pending against, or, to the knowledge of Stockholder, threatened against or affecting, Stockholder
that could reasonably be expected to materially impair or materially adversely affect the ability of Stockholder to perform Stockholder’s
obligations hereunder or to consummate the transactions contemplated by this Agreement on a timely basis.
3. Representations
and Warranties of Parent.
Parent
has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to fully perform
Parent’s obligations hereunder. This Agreement has been duly and validly executed and delivered by Parent and constitutes
the legal, valid, and binding obligation of Parent, enforceable against Parent in accordance with its terms except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally.
4. Agreement
to Vote Shares.
Stockholder
irrevocably and unconditionally agrees during the term of this Agreement, at any annual or special meeting of the Company called
with respect to the following matters, and at every adjournment or postponement thereof, and on every action or approval
by written consent or consents of the Company stockholders with respect to any of the following matters, to vote or cause the
holder of record to vote the Shares: (i) in favor of (1) the Merger Agreement and the Merger and the other transactions
contemplated by the Merger Agreement, and (2) any proposal to adjourn or postpone such meeting of stockholders of the Company
to a later date if there are not sufficient votes to approve the Merger; and (ii) against (1) any Takeover Proposal,
Company Acquisition Agreement, or any of the transactions contemplated thereby, (2) any action, proposal, transaction, or
agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty, or any other obligation
or agreement of the Company under the Merger Agreement or of Stockholder under this Agreement, and (3) any action, proposal,
transaction, or agreement that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or
inhibit the timely consummation of the Merger or the fulfillment of Parent’s, the Company’s, or Merger Sub’s
conditions under the Merger Agreement or change in any manner the voting rights of any class of shares of the Company (including
any amendments to the Company Charter Documents).
5. No
Voting Trusts or Other Arrangement.
Stockholder
agrees that during the term of this Agreement Stockholder will not, and will not permit any entity under Stockholder’s control
to, deposit any of the Shares in a voting trust or subject any of the Shares to any arrangement with respect to the voting of
the Shares other than agreements entered into with Parent.
6. Transfer
and Encumbrance.
Stockholder
agrees that during the term of this Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer, exchange,
assign, pledge, convey any legal or Beneficial Ownership interest in or otherwise dispose of (by merger (including by conversion
into securities or other consideration), by tendering into any tender or exchange offer, [by testamentary disposition,] by operation
of Law] or otherwise), or encumber (“Transfer”) any of the Shares or enter into any contract, option, or other
agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder’s voting or economic interest
therein. Any attempted Transfer of Shares or any interest therein in violation of this Section 6 shall be null and
void. This Section 6 shall not prohibit a Transfer of the Shares by Stockholder [to any member of Stockholder’s
immediate family, or to a trust for the benefit of Stockholder or any member of Stockholder’s immediate family, or upon
the death of Stockholder]/[to an [Affiliate] of Stockholder]; provided, that a Transfer referred to in this sentence shall be
permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and
substance to Parent, to be bound by all of the terms of this Agreement.
7. Additional
Shares.
Stockholder
agrees that all shares of Company Common Stock that Stockholder purchases, acquires the right to vote, or otherwise acquires Beneficial
Ownership of, after the execution of this Agreement and prior to the Expiration Time shall be subject to the terms and conditions
of this Agreement and shall constitute Shares for all purposes of this Agreement. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization, reclassification, combination, exchange of shares, or the like of the capital stock
of the Company affecting the Shares, the terms of this Agreement shall apply to the resulting securities and such resulting securities
shall be deemed to be “Shares” for all purposes of this Agreement.
8. Waiver
of Appraisal and Dissenters’ Rights and Certain Other Actions.
(a) Waiver
of Appraisal and Dissenters’ Rights. To the extent permitted by Law, Stockholder hereby irrevocably and unconditionally
waives, and agrees not to assert or perfect, any rights of appraisal or rights to dissent in connection with the Merger that Stockholder
may have by virtue of ownership of the Shares.
(b) Waiver
of Certain Other Actions. Stockholder hereby agrees not to commence or participate in, and to take all actions necessary to
opt out of any class in any class action with respect to, any Action, derivative or otherwise, against the Parent, the Company,
or any of their respective Subsidiaries or successors: (a) challenging the validity of, or seeking to enjoin or delay the
operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking to enjoin or delay the Closing);
or (b) to the fullest extent permitted under Law, alleging a breach of any duty of the Board of Directors of the Company,
Parent or Merger Sub in connection with the Merger Agreement, this Agreement, or the transactions contemplated thereby or hereby.
9. Termination.
This
Agreement shall terminate upon the earliest to occur of (the “Expiration Time”): (a) the Effective
Time; (b) the date on which the Merger Agreement is terminated in accordance with its terms; and (c) the
termination of this Agreement by mutual written consent of the Parties. Nothing in this Section 9 shall relieve
or otherwise limit the liability of any Party for any intentional breach of this Agreement prior to such
termination.
10. No
Solicitation.
Subject
to Section 11, Stockholder shall not and shall use its reasonable best efforts to cause its Affiliates and Representatives
not to: (a) directly or indirectly solicit, seek, initiate, knowingly encourage, or knowingly facilitate any inquiries regarding,
or the making of, any submission or announcement of a proposal or offer that constitutes, or could reasonably be expected to lead
to, any Takeover Proposal; (b) directly or indirectly engage in, continue, or otherwise participate in any discussions or
negotiations regarding, or furnish or afford access to any other Person any information in connection with or for the purpose
of encouraging or facilitating, any proposal or offer that constitutes, or could reasonably be expected to lead to, any Takeover
Proposal; (c) enter into any agreement, agreement in principle, letter of intent, memorandum of understanding, or similar
arrangement with respect to a Takeover Proposal; (d) solicit proxies with respect to a Takeover Proposal (other than the
Merger and the Merger Agreement) or otherwise encourage or assist any Person in taking or planning any action that could reasonably
be expected to compete with, restrain, or otherwise serve to interfere with or inhibit the timely consummation of the Merger in
accordance with the terms of the Merger Agreement; or (e) initiate a stockholders’ vote or action by written consent
of the Company’s stockholders with respect to a Takeover Proposal.
11. No
Agreement as Director or Officer.
Stockholder
makes no agreement or understanding in this Agreement in Stockholder’s capacity as a director or officer of the Company
or any of its Subsidiaries (if Stockholder holds such office), and nothing in this Agreement: (a) will limit or affect any
actions or omissions taken by Stockholder in stockholder’s capacity as such a director or officer, including in exercising
rights under the Merger Agreement, and no such actions or omissions shall be deemed a breach of this Agreement; or (b) will
be construed to prohibit, limit, or restrict Stockholder from exercising Stockholder’s fiduciary duties as an officer or
director to the Company or its stockholders.
12. Further
Assurances.
Stockholder
agrees, from time to time, and without additional consideration, to execute and deliver such additional proxies, documents, and
other instruments and to take all such further action as Parent may reasonably request to consummate and make effective the transactions
contemplated by this Agreement.
13. Stop
Transfer Instructions.
At
all times commencing with the execution and delivery of this Agreement and continuing until the Expiration Time, in furtherance
of this Agreement, Stockholder hereby authorizes the Company or its counsel to notify the Company’s transfer agent that
there is a stop transfer order with respect to all of the Shares (and that this Agreement places limits on the voting and transfer
of the Shares), subject to the provisions hereof and provided that any such stop transfer order and notice will immediately be
withdrawn and terminated by the Company following the Expiration Time.
14. Specific
Performance.
Each
Party hereto acknowledges that it will be impossible to measure in money the damage to the other Party if a Party hereto fails
to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event
of any such failure, the other Party will not have an adequate remedy at Law or damages. Accordingly, each Party hereto agrees
that injunctive relief or other equitable remedy, in addition to remedies at Law or damages, is the appropriate remedy for any
such failure and will not oppose the seeking of such relief on the basis that the other Party has an adequate remedy at Law. Each
Party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection
with the other Party’s seeking or obtaining such equitable relief.
15. Entire
Agreement.
This
Agreement supersedes all prior agreements, written or oral, between the Parties hereto with respect to the subject matter hereof
and contains the entire agreement between the Parties with respect to the subject matter hereof. This Agreement may not be amended
or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the
Parties hereto. No waiver of any provisions hereof by either Party shall be deemed a waiver of any other provisions hereof by
such Party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such Party.
16. Notices.
All
notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed
to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by email of a PDF document
(with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent
after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses
(or at such other address for a Party as shall be specified in a notice given in accordance with this Section 16):
If
to Parent:
Dot
Holdings Co.
17050
Baxter Road
St.
Louis, MO 63005
Attention:
John Tracy
Email:
JTracy@DotFoods.com
Copy
to:
Lewis
Rice LLC
600
Washington Ave., Suite 2500
Attention:
John C. Bodnar
Email:
jbodnar@lewisrice.com
If
to Stockholder, to the address or email address set forth for Stockholder on the signature page hereof.
Copy
to:
Schiff
Hardin LLP
233
S. Wacker Drive, Suite 7100
Chicago,
IL 60606
Attention:
Robert J. Minkus
Email:
rminkus@schiffhardin.com
17. Miscellaneous.
(a) Governing
Law. This Agreement, and all Legal Actions (whether based on contract, tort, or statute) arising out of or relating to this
Agreement or the actions of any of the Parties in the negotiation, administration, performance, or enforcement hereof, shall be
governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application
of Laws of any jurisdiction other than those of the State of Delaware.
(b) Submission
to Jurisdiction. Each of the Parties hereto irrevocably agrees that any Legal Action with respect to this Agreement and the
rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and
the rights and obligations arising hereunder brought by the other Party hereto or its successors or assigns shall be brought and
determined exclusively in the Court of Chancery in the State of Delaware, or in the event (but only in the event) that such court
does not have subject matter jurisdiction over such Legal Action, in the U.S. District Court for the District of Delaware. Each
of the Parties hereto agrees that mailing of process or other papers in connection with any such Legal Action in the manner provided
in Section 16 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service
thereof. Each of the Parties hereto hereby irrevocably submits with regard to any such Legal Action for itself and in respect
of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not
bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal
other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, counterclaim, or otherwise, in any Legal Action with respect to this
Agreement
and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement
and the rights and obligations arising hereunder: (i) any claim that it is not personally subject to the jurisdiction of
the above named courts for any reason other than the failure to serve process in accordance with this Section 17(b);
(ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment, or otherwise); and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the
suit, action, or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action, or proceeding
is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(c) Waiver
of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF
A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY;
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 17(c).
(d) Expenses.
All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense, whether
or not the Merger is consummated.
(e) Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality,
or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such
term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or
unenforceable, 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated
as originally contemplated to the greatest extent possible.
(f) Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together
shall constitute one and the same instrument.
(g) Section
Headings. All section headings herein are for convenience of reference only and are not part of this Agreement, and no construction
or reference shall be derived therefrom.
(h) Assignment.
Neither Party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent
of the other Party hereto, except that Parent may assign, in its sole discretion, all or any of its rights, interests and obligations
hereunder to any of its Affiliates. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the Parties and their respective permitted successors and assigns. Any assignment contrary to the provisions
of this Section 17(h) shall be null and void.
(i) No
Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other
than the Parties and their respective successors and permitted assigns any legal or equitable right, benefit, or remedy of any
nature under or by reason of this Agreement.
[signature
page follows]
IN
WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the date first written above.
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Number of Shares of Company Common Stock Beneficially Owned as of the date of this Agreement: __________
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Number of Options
Beneficially Owned as of the date of this Agreement: ___________________________
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ANNEX B
March 24, 2021
The Board of Directors
Houston Wire & Cable Company
10201 North Loop E
Houston, TX 77029
Members of the Board of Directors:
You have asked Johnson Rice & Company
L.L.C. (“we,” “our” or “us”) to advise you with respect to the fairness, from a financial point
of view, to the stockholders of Houston Wire & Cable Company (“HWCC”) of the Consideration (as defined below) to
be received by such stockholders pursuant to a proposed Agreement and Plan of Merger (the “Merger Agreement”), among
Omni Cable, LLC (“Parent”), OCDFH Acquisition Sub, Inc. a direct wholly-owned subsidiary of Parent (“Merger Sub”),
and HWCC.
Pursuant to the Merger Agreement, Merger
Sub will be merged with and into HWCC (the “Transaction”) and the shares of HWCC Common Stock (as defined below), other
than Dissenting Shares (as defined in the Merger Agreement), treasury shares and shares of HWCC Common Stock owned by HWCC, Parent
and their respective subsidiaries, will be converted into the right to receive $5.30 per share in cash (the “Consideration”).
In arriving at our opinion, we have, among other things:
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reviewed and analyzed the draft Merger
Agreement dated as of March 21, 2021 and the draft final version dated as of March 24, 2021;
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reviewed and analyzed the financial statements and other publicly
available information concerning HWCC, including HWCC’s Draft Annual Report on Form 10-K for the period ended December 31,2020
(10-K information for the most recent year was preliminary as HWCC has not yet filed the document); Annual Reports on Form 10-K
for each of the years in the three-year period ended December 31,2019; HWCC’s Quarterly Reports on Form 10-Q for each of
the quarters in the three-year period ended September 30, 2020; and HWCC’s Current Reports on Form 8-K filed over the preceding
two years; reviewed and analyzed certain other internal information, primarily financial in nature, which was provided to us by
HWCC, relating to HWCC, including internal financial forecasts prepared by management of HWCC;
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reviewed and analyzed certain publicly
available information concerning the trading of, and the trading market for, the shares of common stock, par value $0.01 per share,
of HWCC (the “HWCC Common Stock”);
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reviewed and analyzed certain publicly
available information with respect to certain other companies that we believed to be comparable to HWCC and the trading markets
for certain of such companies’ securities;
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reviewed and analyzed certain publicly
available information concerning the estimates of the future operating and financial performance of HWCC and the comparable companies
prepared by industry experts unaffiliated with HWCC;
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reviewed and analyzed certain publicly
available information concerning the nature and terms of certain other transactions considered relevant to our analysis;
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met with certain officers and employees
of HWCC to discuss the foregoing and other matters that we believed relevant to our analysis; and
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considered such other information, financial
studies, analyses and investigations, and financial, economic and market criteria that we deemed relevant.
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In addition, we have also met with certain officers and employees
of HWCC to discuss the foregoing, as well as other matters believed relevant to our analysis and have considered such other information,
financial studies, analyses and investigations, and financial, economic and market criteria
which we deemed relevant. In connection with our review, we have not independently verified (nor have we assumed responsibility
or liability for independently verifying) any of the foregoing information and have relied on it being complete and accurate in
all material respects. With respect to the financial forecasts for HWCC, HWCC’s management has advised us, and we have assumed,
that such forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of HWCC’s
management as to the future financial performance of HWCC. We have assumed that the final/execution versions of the Merger Agreement
and the related Transaction documents will be substantially the same as the drafts of such documents that we have reviewed and
that the Transaction will be consummated in accordance with the terms set forth in the Merger Agreement without any waiver, amendment
or delay of any terms or conditions. We have also assumed that the representations and warranties made by HWCC and Parent in the
Merger Agreement and the related Transaction documents are and will be true and correct in all respects material to our analysis.
We have assumed that in connection with the receipt of all necessary governmental, regulatory or other approvals and consents required
for the Merger Agreement, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse
effect on the receipt of the Consideration by the stockholders of HWCC. We are not legal, tax or regulatory advisors and have relied
upon, without independent verification, the assessment of HWCC and its legal, tax and regulatory advisors with respect to such
matters. We have not performed any tax analysis, nor have we been furnished with any such analysis. We have not conducted or been
provided with any valuation or appraisal of any assets or liabilities, nor have we evaluated the solvency of HWCC or Parent under
any state or federal laws relating to bankruptcy, insolvency or similar matters.
In conducting our analysis and arriving
at our opinion as expressed herein, we have considered such financial and other factors as we deemed appropriate under the circumstances
including, among others, the following: (i) the historical and current financial position and results of operations of HWCC; (ii)
the business prospects of HWCC; (iii) the historical and current market for HWCC Common Stock and for the equity securities of
certain other companies believed to be comparable to HWCC; and (iv) the nature and terms of certain other acquisition transactions
that we believe to be relevant, including premiums paid, if any, in such other acquisition transactions. We have also taken into
account our assessment of general economic, market and financial conditions and our experience in connection with similar transactions
and securities’ valuation generally. Our opinion necessarily is based upon conditions as they exist and can be evaluated
on, and only on the information made available at, the date hereof. Events occurring after the date hereof may affect this opinion
and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this opinion.
We are an internationally recognized investment
banking firm that specializes in the energy industry. We are continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, initial public offerings, secondary distributions
of listed and unlisted securities and private placements.
We have not acted as a financial advisor
to HWCC in connection with the Transaction and will not receive a fee for our services. We will receive a fee for rendering this
opinion. We will also be reimbursed for expenses incurred. HWCC has agreed to indemnify us for certain liabilities that may arise
out of our engagement. In the past, we have provided investment banking and financial advisory services to HWCC for which we received
compensation. Specifically, Johnson Rice was engaged by HWCC in 2020 for advisory services in connection with the disposition of
its Southern Wire and Southwest Wire Rope businesses. The disposition transaction for Southern Wire was consummated in December
2020, and the disposition transaction for Southwest Wire Rope was consummated in March 2021. Additionally, Johnson Rice was engaged
by HWCC in 2020 for advisory services in connection with the disposition of its Vertex business and was paid a work fee of $100,000
in December 2020. In March 2021, Johnson Rice and HWCC mutually agreed to terminate the advisory engagement related to the Vertex
business. We have never provided investment banking or financial advisory services to Parent. We may in the future provide financial
advice and services to HWCC, Parent and their respective affiliates for which we would expect to receive compensation.
In the ordinary course of our business,
we actively trade debt and equity securities for our own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in securities of HWCC and Parent.
It is understood that this opinion is for
the information of HWCC’s Board of Directors (in its capacity as such) in connection with and for the purposes of its evaluation
of the Transaction. Our opinion does not address HWCC’s underlying business decision to pursue the Transaction or the relative
merits of the Transaction as compared to any alternative business
strategies or transactions that might exist for HWCC. Our opinion
does not constitute a recommendation as to how any holder of shares of HWCC Common Stock should vote on the Transaction or any
matter related thereto. In addition, you have not asked us to address, and this opinion does not address, the
fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of HWCC,
other than the holders of shares of HWCC Common Stock (other than with respect to Dissenting Shares, treasury shares and shares
of HWCC Common Stock owned by HWCC, Parent and their respective subsidiaries). We express no opinion as to the price at which shares
of HWCC Common Stock will trade at any time. Furthermore, we do not express any view or opinion as to the fairness, financial or
otherwise, of the amount or nature of any compensation payable or to be received by any of HWCC’s officers, directors or
employees, or any class of such persons, in connection with the Transaction relative to the Consideration to be received by holders
of shares of HWCC Common Stock. This opinion has been authorized by the Fairness Committee of Johnson Rice & Company L.L.C.
Except as otherwise expressly provided in our engagement letter with HWCC, our opinion may not be used or referred to by HWCC,
or quoted or disclosed to any person in any manner, without our prior written consent.
Subject to the foregoing,
including the various assumptions and limitations set forth herein, it is our opinion that, as of the date hereof, the Consideration
to be received by the holders of shares of HWCC Common Stock as set forth in the Merger Agreement is fair, from a financial point
of view, to such holders (other than with respect to Dissenting Shares, treasury shares and shares of HWCC Common Stock owned by
HWCC, Parent and their respective subsidiaries).
Very truly yours,
Johnson Rice & Company L.L.C.
ANNEX C
Section 262 of the Delaware General
Corporation Law
§ 262.
Appraisal rights
(a) Any stockholder of a corporation of
this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect
to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto
in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value
of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock”
and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt”
mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available
for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant
to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, §
256, § 257, § 258, § 263 or § 264 of this title:
(1) Provided, however, that
no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository
receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of
stockholders to act upon the agreement of merger or consolidation (or, in the case of a merger pursuant to § 251(h), as of
immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii)
held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock
of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of
the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph
(b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of
a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant
to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation
surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other
corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional
shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any combination of the shares
of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the
stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned
by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) [Repealed.]
(c) Any corporation may provide in its
certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series
of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation
is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section,
shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected
as follows:
(1) If a proposed merger or
consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders,
the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date
for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect
to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are
available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section
and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder
electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the
vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares; provided that a demand
may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly
designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy
or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation,
the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation
has become effective; or
(2) If the merger or consolidation
was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation
before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall
notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series
of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent
corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger
approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h)
of this title and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder’s shares; provided that a demand may be delivered to the corporation by electronic transmission
if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will
be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby
to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the
merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation
shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant
to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title
and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled
to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit
of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective
date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections
(a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing
a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s
demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date
of the merger or consolidation, any stockholder who has complied with
the requirements of subsections (a)
and (d) of this section hereof, upon request given in writing (or by electronic transmission directed to an information
processing system (if any) expressly designated for that purpose in the notice of appraisal), shall be entitled to
receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to §
251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined in § 251(h)(6)d. of this
title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to
in § 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such
stockholder’s request for such a statement is received by the surviving or resulting corporation or within 10 days
after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever
is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or
request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition
by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days
after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value
of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving
or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered
by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to
the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published
in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the
Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately
before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal
rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of
such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds
1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the
merger or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253
or § 267 of this title.
(h) After the Court determines the stockholders
entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including
any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the
shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together
with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall
take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except
as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall
be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established
from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time
before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an
amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any,
between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless
paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in
the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination
of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to
the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment
of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith,
and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock.
The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be
determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder,
the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of
the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall
be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends
or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s
demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has
not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for
appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger
or consolidation, as set forth in subsection (e) of this section.
(l) The shares of the surviving or resulting
corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation
shall have the status of authorized and unissued shares of the surviving or resulting corporation.