DEFM14A 1 d475722ddefm14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant   ☒                             Filed by a Party other than the Registrant   ☐

Check the appropriate box:

 

   Preliminary Proxy Statement
   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material Pursuant to §240.14a-12

ACTUA CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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(1)   

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LOGO

Actua Corporation

555 East Lancaster Avenue, Suite 640

Radnor, Pennsylvania 19087

November 7, 2017

Dear Actua Corporation Stockholder:

You are cordially invited to attend a special meeting of stockholders (the “Special Meeting”) of Actua Corporation, a Delaware corporation (“Actua”).

Date: December 7, 2017

Time: 10:00 a.m., Eastern Time

Place: The Radnor Hotel

591 East Lancaster Avenue

St. Davids, Pennsylvania 19087

This booklet contains your official notice of the Special Meeting and a proxy statement that includes information about the matters to be acted upon at the Special Meeting. Officers and directors of Actua will be on hand to answer questions and discuss matters that may properly arise.

As previously announced, Actua has entered into two separate definitive agreements to sell its interests in its three majority-owned businesses.

Actua has entered into a Membership Interest Purchase Agreement, dated as of September 23, 2017, by and among Actua, Actua Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Actua (“Actua Holdings”), Arsenal Acquisition Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Actua Holdings (“Arsenal Holdings”), and Velocity Holdco III Inc. (f/k/a Arsenal Buyer Inc.), a Delaware corporation and an affiliate of CVC Growth Fund (“Arsenal Buyer”) (such agreement, the “Velocity/Bolt Sale Agreement”). Pursuant to the Velocity/Bolt Sale Agreement, Arsenal Buyer has agreed to purchase all of Actua’s interests in VelocityEHS Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Velocity”), and BOLT Solutions Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Bolt”), through an acquisition of all of the outstanding membership interests of Arsenal Holdings, which holds all of Actua’s interests in Velocity and Bolt (such transaction, the “Velocity/Bolt Sale”).

Folio Dynamics Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“FolioDynamix”), has also entered into an Agreement and Plan of Merger, dated as of September 25, 2017, by and among FolioDynamix, Envestnet, Inc., a Delaware corporation (“Envestnet”), FCD Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Envestnet (“Merger Sub”), and Actua USA Corporation, a Delaware corporation and a wholly-owned subsidiary of Actua, as the representative of FolioDynamix’s stockholders (“Actua USA”) (such agreement, the “Folio Sale Agreement”). Pursuant to the Folio Sale Agreement, Merger Sub will merge with and into FolioDynamix, with FolioDynamix surviving the merger as a wholly-owned subsidiary of Envestnet (such transaction, the “Folio Sale,” and together with the Velocity/Bolt Sale, the “Transactions”).

Actua’s Board of Directors (the “Board”) is soliciting your approval of the following proposals at the Special Meeting:

Proposal 1: To approve the Transactions contemplated by the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, which together constitute a sale of substantially all of Actua’s assets (in its entirety, the “Sale Proposal”).


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Proposal 2: A non-binding advisory vote to approve the compensation of Actua’s named executive officers based on or that otherwise relates to the Transactions as disclosed in the accompanying proxy statement (the “Transaction-Related Compensation Proposal”).

Proposal 3: To approve an adjournment of the Special Meeting, if necessary, including for the purpose of soliciting additional proxies, if there are not sufficient votes in favor of the approval of the Sale Proposal (the “Adjournment Proposal”).

After careful consideration of a number of factors, which are described in the attached proxy statement, the Board has unanimously determined that the Transactions are advisable, fair to and in the best interests of Actua and its stockholders.

The Board unanimously recommends that you vote (i) “FOR” the Sale Proposal, (ii) “FOR” the Transaction-Related Compensation Proposal and (iii) if necessary, “FOR” the Adjournment Proposal, including for the purpose of soliciting additional proxies.

The attached proxy statement describes in detail each of the proposals for which Actua is soliciting your approval. It also includes a copy of the Velocity/Bolt Sale Agreement as Appendix A and a copy of the Folio Sale Agreement as Appendix B. Actua urges you to read the enclosed materials carefully.

As described in the attached proxy statement, under the Sale Proposal, Actua’s stockholders are being asked to approve both the Velocity/Bolt Sale and the Folio Sale (the Transactions), which together constitute a sale of substantially all of Actua’s assets. In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement, Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

Actua sincerely hopes that you will be able to attend the Special Meeting. However, whether or not you plan to attend, please complete and return the enclosed proxy card in the accompanying envelope or submit a proxy for your shares by telephone or via the Internet. If you attend the Special Meeting, you may, if you wish, revoke any proxy previously given by voting your shares in person.

For those of you who are unable to attend the Special Meeting in person, Actua invites you to listen in through Actua’s website at www.actua.com/investors/events-presentations/.

Actua considers your vote important and encourages you to submit your proxy as soon as possible.

By Order of the Board,

 

LOGO

Suzanne L. Niemeyer

Corporate Secretary

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Transactions, passed upon the merits or fairness of the Transactions or passed upon the adequacy or accuracy of the disclosure in the attached proxy statement. Any representation to the contrary is a criminal offense.

The proxy statement is dated November 7, 2017, and is first being made available to stockholders on or about November 7, 2017.


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LOGO

Actua Corporation

555 East Lancaster Avenue, Suite 640

Radnor, Pennsylvania 19087

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 7, 2017

To the Stockholders of Actua Corporation:

As previously announced, Actua Corporation, a Delaware corporation (“Actua”), has entered into two separate definitive agreements to sell its interests in its three majority-owned businesses.

Actua has entered into a Membership Interest Purchase Agreement, dated as of September 23, 2017, by and among Actua, Actua Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Actua (“Actua Holdings”), Arsenal Acquisition Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Actua Holdings (“Arsenal Holdings”), and Velocity Holdco III Inc. (f/k/a Arsenal Buyer Inc.), a Delaware corporation and an affiliate of CVC Growth Fund (“Arsenal Buyer”) (such agreement, the “Velocity/Bolt Sale Agreement”). Pursuant to the Velocity/Bolt Sale Agreement, Arsenal Buyer has agreed to purchase all of Actua’s interests in VelocityEHS Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Velocity”), and BOLT Solutions Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Bolt”), through an acquisition of all of the outstanding membership interests of Arsenal Holdings, which holds all of Actua’s interests in Velocity and Bolt (such transaction, the “Velocity/Bolt Sale”).

Folio Dynamics Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“FolioDynamix”), has also entered into an Agreement and Plan of Merger, dated as of September 25, 2017, by and among FolioDynamix, Envestnet, Inc., a Delaware corporation (“Envestnet”), FCD Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Envestnet (“Merger Sub”), and Actua USA Corporation, a Delaware corporation and a wholly-owned subsidiary of Actua, as the representative of FolioDynamix’s stockholders (“Actua USA”) (such agreement, the “Folio Sale Agreement”). Pursuant to the Folio Sale Agreement, Merger Sub will merge with and into FolioDynamix, with FolioDynamix surviving the merger as a wholly-owned subsidiary of Envestnet (such transaction, the “Folio Sale,” and together with the Velocity/Bolt Sale, the “Transactions”).

Actua’s Board of Directors (the “Board”) has called a special meeting of Actua’s stockholders, to be held at The Radnor Hotel, 591 East Lancaster Avenue, St. Davids, Pennsylvania 19087, beginning at 10:00 a.m. Eastern Time on December 7, 2017 (the “Special Meeting”), or any adjournment or postponements thereof, for the purpose of considering and taking appropriate action with respect to the following:

Proposal 1: To approve the Transactions contemplated by the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, which together constitute a sale of substantially all of Actua’s assets (in its entirety, the “Sale Proposal”).

Proposal 2: A non-binding advisory vote to approve the compensation of Actua’s named executive officers based on or that otherwise relates to the Transactions as disclosed in the accompanying proxy statement (the “Transaction-Related Compensation Proposal”).

Proposal 3: To approve an adjournment of the Special Meeting, if necessary, including for the purpose of soliciting additional proxies, if there are not sufficient votes in favor of the approval of the Sale Proposal (the “Adjournment Proposal”).


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A copy of the Velocity/Bolt Sale Agreement is attached as Appendix A hereto. A copy of the Folio Sale Agreement is attached as Appendix B hereto.

Only Actua stockholders who owned shares of Actua’s common stock at the close of business on November 2, 2017 can vote at the Special Meeting or any adjournment or postponement that may take place. Each share of Actua’s common stock is entitled to one vote on all matters presented at the Special Meeting and any adjournment or postponement thereof.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF EACH OF THE PROPOSALS LISTED ABOVE.

This Notice of the Special Meeting, proxy statement and accompanying proxy card are being distributed to Actua’s stockholders on or about November 7, 2017.

You may submit a proxy for your shares by telephone or via the Internet (www.proxyvote.com) no later than 11:59 p.m. Eastern Time on December 6, 2017 (as directed on the enclosed proxy card) or by completing, signing and promptly returning the enclosed proxy card by mail. If you choose to submit your proxy card by mail, Actua has enclosed an envelope for your use, which is prepaid if mailed in the United States. If you are attending the Special Meeting and your shares are registered in your name, you may also vote in person at the Special Meeting until voting is closed. If your shares are held through a bank, broker or other nominee, because you are not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you request and obtain a valid proxy in your name from your bank, broker or other nominee.

As described in the attached proxy statement, under the Sale Proposal, Actua’s stockholders are being asked to approve both the Velocity/Bolt Sale and the Folio Sale (the Transactions), which together constitute a sale of substantially all of Actua’s assets. In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement, Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.

All of Actua’s stockholders are cordially invited to attend the Special Meeting. Whether or not you plan to attend the Special Meeting in person, you are requested to complete and return the enclosed proxy card in the accompanying envelope or submit a proxy for your shares by telephone or via the Internet. You may revoke your proxy at any time before the voting at the Special Meeting by sending a properly signed written notice of your revocation to Actua’s Corporate Secretary before the Special Meeting, by submitting another proxy that is properly signed and bearing a later date or by following the specified procedures for submitting a proxy by telephone or electronically and changing your vote. If you attend the Special Meeting, you may, if you wish, revoke any proxy previously given by voting your shares in person. Attendance at the Special Meeting will not itself revoke an earlier submitted proxy.


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LOGO

Actua Corporation

555 East Lancaster Avenue, Suite 640

Radnor, Pennsylvania 19087

PROXY STATEMENT FOR

SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 7, 2017

This proxy statement and related proxy solicitation materials are being first directly made available to the stockholders of Actua Corporation, a Delaware corporation (“Actua”), on or around November 7, 2017 in connection with the solicitation of proxies by Actua’s Board of Directors (the “Board”) for a special meeting of Actua’s stockholders (the “Special Meeting”), for the purposes set forth in the accompanying Notice of Special Meeting. This proxy procedure is necessary to permit all holders of Actua common stock, many of whom are unable to attend the Special Meeting, to vote. The Board encourages you to read this document thoroughly and to take the opportunity to submit a proxy to vote your shares on the matters to be decided at the Special Meeting.

Actua has entered into a Membership Interest Purchase Agreement, dated as of September 23, 2017, by and among Actua, Actua Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Actua (“Actua Holdings”), Arsenal Acquisition Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Actua Holdings (“Arsenal Holdings”), and Velocity Holdco III Inc. (f/k/a Arsenal Buyer Inc.), a Delaware corporation, an affiliate of CVC Growth Fund (“Arsenal Buyer”) (such agreement, the “Velocity/Bolt Sale Agreement”). Pursuant to the Velocity/Bolt Sale Agreement, Arsenal Buyer has agreed to purchase Actua’s interests in VelocityEHS Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Velocity”), and BOLT Solutions Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“Bolt”), through an acquisition of all of the outstanding membership interests of Arsenal Holdings, which holds all of Actua’s interests in Velocity and Bolt (such transaction, the “Velocity/Bolt Sale”).

Folio Dynamics Holdings, Inc., a Delaware corporation and a majority-owned subsidiary of Actua (“FolioDynamix”), has also entered into an Agreement and Plan of Merger, dated as of September 25, 2017, by and among FolioDynamix, Envestnet, Inc., a Delaware corporation (“Envestnet”), FCD Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Envestnet (“Merger Sub”), and Actua USA Corporation, a Delaware corporation and a wholly-owned subsidiary of Actua, as the representative of FolioDynamix’s stockholders (“Actua USA”) (such agreement, the “Folio Sale Agreement”). Pursuant to the Folio Sale Agreement, Merger Sub will merge with and into FolioDynamix, with FolioDynamix surviving the merger as a wholly-owned subsidiary of Envestnet (such transaction, the “Folio Sale,” and together with the Velocity/Bolt Sale, the “Transactions”).

In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”), on or around November 7, 2017, this proxy statement and related proxy materials are being made available on the Internet at www.proxyvote.com. If an Actua stockholder executes and returns the enclosed proxy card or submits a proxy by telephone or via the Internet, the stockholder may nevertheless revoke his, her or its proxy at any time before the voting at the Special Meeting by sending a properly signed written notice of revocation to Actua’s Corporate Secretary before the Special Meeting, by submitting another proxy that is properly signed and bearing a later date or by following the procedures specified for submitting a proxy by telephone or via the Internet prior to 11:59 p.m. Eastern time on December 6, 2017, in accordance with the instructions on the enclosed proxy card. An Actua stockholder who attends the Special Meeting in person may revoke his, her or its proxy at that time by

 

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voting his, her or its shares in person if so desired. Attendance at the Special Meeting will not itself revoke an earlier submitted proxy.

Admission to the Special Meeting will be by admission ticket only. If you are an Actua stockholder of record and plan to attend the Special Meeting, retain the top portion of your proxy card as your admission ticket and bring it and a valid government-issued photo identification with you so that you may gain admission to the meeting. If your shares are held through a bank, broker or other nominee, please contact your nominee and request that the nominee obtain an admission ticket for you or provide you with evidence of your share ownership, which will gain you admission to the Special Meeting. Only Actua stockholders of record are entitled to vote at the Special Meeting. If your shares are held through a bank, broker or other nominee, because you are not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you request and obtain a valid proxy in your name from your bank, broker or other nominee.

Unless revoked or unless contrary instructions are given, each proxy that is properly signed, dated and returned or authorized by telephone or via the Internet in accordance with the instructions on the enclosed proxy card or voting instruction form prior to the start of the Special Meeting will be voted as indicated on the proxy card or voting instruction form or via telephone or the Internet and if no indication is made, each such proxy will be deemed to grant authority to vote FOR each of the following proposals:

Proposal 1: To approve the Transactions contemplated by the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, which together constitute a sale of substantially all of Actua’s assets (in its entirety, the “Sale Proposal”).

Proposal 2: A non-binding advisory vote to approve the compensation of Actua’s named executive officers based on or that otherwise relates to the Transactions as disclosed in the accompanying proxy statement (the “Transaction-Related Compensation Proposal”).

Proposal 3: To approve an adjournment of the Special Meeting, if necessary, including for the purpose of soliciting additional proxies, if there are not sufficient votes in favor of the approval of the Sale Proposal (the “Adjournment Proposal”).

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE SALE PROPOSAL, “FOR” THE TRANSACTION-RELATED COMPENSATION PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.

As described in the attached proxy statement, under the Sale Proposal, Actua’s stockholders are being asked to approve both the Velocity/Bolt Sale and the Folio Sale (the Transactions), which together constitute a sale of substantially all of Actua’s assets. In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement, Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

 

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SUMMARY TERM SHEET

     6  

The Velocity/Bolt Sale

     6  

The Parties to the Velocity/Bolt Sale

     6  

The Velocity/Bolt Sale Agreement

     6  

Effects of the Velocity/Bolt Sale

     6  

Consideration

     7  

Recommendation of the Board

     7  

Conditions to the Closing of the Velocity/Bolt Sale

     7  

Unsolicited Proposals

     7  

Change in Recommendation

     8  

Termination of the Velocity/Bolt Sale Agreement

     8  

Expenses and Termination Fees

     9  

Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale

     10  

Regulatory Approvals

     10  

Vote Required

     10  

The Folio Sale

     10  

The Parties to the Folio Sale

     10  

The Folio Sale Agreement

     11  

Effects of the Folio Sale

     11  

Consideration

     11  

Conditions to the Closing of the Folio Sale

     11  

Exclusivity

     12  

Termination of the Folio Sale Agreement

     12  

Termination Fee

     13  

Certain U.S. Federal Income Tax Consequences of the Folio Sale

     13  

Regulatory Approvals

     13  

Vote Required

     13  

Opinions of Actua’s Financial Advisor Regarding the Transactions

     13  

Anticipated Use of Proceeds from the Transactions

     14  

Effects on Actua if the Transactions are Consummated

     15  

Effects on Actua if the Transactions are Not Consummated

     15  

Certain Accounting Consequences of the Transactions

     15  

The Special Meeting

     15  

QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS AND THE SPECIAL MEETING

     17  

Special Meeting and Voting

     17  

Proposed Transactions

     21  

General

     24  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     25  

RISK FACTORS

     26  

Risks Relating to the Transactions

     26  

Risks Relating to Actua if the Transactions are Consummated

     30  

THE SPECIAL MEETING

     32  

Date, Time and Place

     32  

Purpose

     32  

Record Date, Stockholders Entitled to Vote

     32  

Quorum, Required Votes

     32  

Broker Non-Votes and Abstentions

     32  

Recommendation of the Board

     33  

Solicitation of Proxies and Voting Procedures

     33  

Voting by, and Revocation of, Proxies

     34  

 

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Householding of Proxy Materials

     34  

Other Business

     35  

Questions and Additional Information

     35  

Availability of Documents

     35  

PROPOSAL 1—THE TRANSACTIONS

     36  

BACKGROUND OF THE TRANSACTIONS

     36  

THE VELOCITY/BOLT SALE

     41  

Overview of the Velocity/Bolt Sale

     41  

The Parties to the Velocity/Bolt Sale

     42  

Recommendation of the Board

     42  

Reasons for Recommending the Velocity/Bolt Sale and the Sale Proposal

     42  

Regulatory Approvals

     45  

Appraisal Rights

     45  

Vote Required

     45  

THE VELOCITY/BOLT SALE AGREEMENT

     45  

Explanatory Note Regarding the Velocity/Bolt Sale Agreement

     46  

Effects of the Velocity/Bolt Sale

     46  

Closing

     46  

Consideration

     47  

Representations and Warranties

     47  

Conduct of the Business

     48  

Unsolicited Proposals

     50  

Change in Recommendation

     51  

Stockholder Meeting

     51  

Efforts to Obtain Regulatory Approval

     51  

Financing

     52  

Release

     52  

Conditions to Closing the Velocity/Bolt Sale

     52  

Termination of the Velocity/Bolt Sale Agreement

     53  

Expenses and Termination Fees

     55  

Specific Performance

     55  

Indemnification

     56  

Amendments and Waivers

     56  

Third Party Beneficiaries

     56  

Governing Law

     57  

Secondary Bolt Sale

     57  

THE FOLIO SALE

     57  

Overview of the Folio Sale

     57  

The Parties to the Folio Sale

     58  

Reasons for Recommending the Folio Sale and the Sale Proposal

     58  

Certain U.S. Federal Income Tax Consequences of the Folio Sale

     60  

Regulatory Approvals

     61  

Vote Required

     61  

THE FOLIO SALE AGREEMENT

     61  

Explanatory Note Regarding the Folio Sale Agreement

     61  

Effects of the Folio Sale

     62  

Closing

     62  

Consideration

     62  

Representations and Warranties

     62  

Conduct of the Business

     63  

Exclusivity

     64  

Resignations

     64  

 

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Termination of Certain Agreements

     64  

Efforts to Obtain Regulatory Approval

     65  

Consents of Investment Advisory Clients

     65  

Representation and Warranty Insurance Policy

     65  

Conditions to Closing the Folio Sale

     66  

Specific Performance

     66  

Indemnification

     66  

Termination of the Folio Sale Agreement

     67  

Termination Fees

     68  

Amendments and Waivers

     68  

Third Party Beneficiaries

     68  

Governing Law

     69  

Escrow Agreement

     69  

OPINIONS OF ACTUA’S FINANCIAL ADVISOR REGARDING THE TRANSACTIONS

     69  

Opinions of Actua’s Financial Advisor

  

Velocity/Bolt Fairness Opinion

     69  

FolioDynamix Fairness Opinion

     78  

General

     84  

CERTAIN FINANCIAL PROJECTIONS

     85  

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS

     89  

Impact of the Transactions on Shares and Equity Awards

     89  

Employment Agreements and Other Arrangements with Executive Officers

     92  

Transaction-Related Compensation to Executive Officers

     93  

ANTICIPATED USE OF PROCEEDS FROM THE TRANSACTIONS

     94  

Tax Consequences of the Anticipated Use of Proceeds

     95  

EFFECTS ON ACTUA IF THE TRANSACTIONS ARE CONSUMMATED

     96  

EFFECTS ON ACTUA IF THE TRANSACTIONS ARE NOT CONSUMMATED

     96  

CERTAIN ACCOUNTING CONSEQUENCES OF THE TRANSACTIONS

     97  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

     97  

PROPOSAL 2—ADVISORY VOTE ON TRANSACTION-RELATED COMPENSATION OF NAMED EXECUTIVE OFFICERS

     99  

General

     99  

Vote Required

     99  

Recommendation of the Board

     99  

PROPOSAL 3—ADJOURNMENT OF THE SPECIAL MEETING

     100  

General

     100  

Vote Required

     100  

Recommendation of the Board

     100  

SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2018 ANNUAL MEETING

     101  

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

     102  

APPENDIX A: VELOCITY/BOLT SALE AGREEMENT

     A-1  

APPENDIX B: FOLIO SALE AGREEMENT

     B-1  

APPENDIX C: OPINION OF FINANCIAL ADVISOR—VELOCITY/BOLT SALE

     C-1  

APPENDIX D: OPINION OF FINANCIAL ADVISOR—FOLIO SALE

     D-1  

 

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SUMMARY TERM SHEET

This summary term sheet highlights selected information contained in this proxy statement and may not contain all of the information that is important to you. You are urged to read the entire proxy statement, along with the appendices, carefully.

The Velocity/Bolt Sale

The Parties to the Velocity/Bolt Sale (Page 42)

Actua Corporation

Actua Corporation, a Delaware corporation (f/k/a ICG Group, Inc.), was formed on March 4, 1996 and is headquartered in Radnor, Pennsylvania. Actua is a multi-vertical cloud technology company with offerings that Actua believes create unique and compelling value for its customers and provide transformative efficiency to vertical markets. Actua’s common stock is currently traded on the NASDAQ Global Select Market under the symbol “ACTA.” Actua Corporation’s office is located at 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087.

Actua Holdings, Inc.

Actua Holdings, Inc., a Delaware corporation, is a wholly-owned subsidiary of Actua. Actua Holdings is a holding company that holds equity and debt interests in various businesses. Actua Holdings, Inc.’s office is located at 56 W. Main Street, Plaza 273, Suite 212A, Christiana, Delaware 19702.

Arsenal Acquisition Holdings, LLC

Arsenal Acquisition Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of Actua Holdings, holds all of Actua’s interests in Velocity and Bolt. Following the closing of the Velocity/Bolt Sale, Arsenal Holdings will be a wholly-owned subsidiary of Arsenal Buyer. Arsenal Acquisition Holdings, LLC’s office is located at 56 W. Main Street, Plaza 273, Suite 212A, Christiana, Delaware 19702.

Arsenal Buyer Inc.

Arsenal Buyer Inc., a Delaware corporation and affiliate of CVC Growth Fund, was formed on August 31, 2017 solely for the purpose of consummating the Velocity/Bolt Sale. Arsenal Buyer Inc.’s office, c/o CVC Capital Partners Advisory (U.S.), Inc., is located at 712 Fifth Avenue, 43rd Floor, New York, New York 10019.

The Velocity/Bolt Sale Agreement (Page 45)

Actua, Actua Holdings, Arsenal Holdings and Arsenal Buyer entered into the Velocity/Bolt Sale Agreement on September 23, 2017. A copy of the Velocity/Bolt Sale Agreement is attached to this proxy statement as Appendix A and is incorporated by reference in its entirety into this proxy statement. Actua encourages you to read the Velocity/Bolt Sale Agreement in its entirety.

Effects of the Velocity/Bolt Sale (Page 46)

Pursuant to the Velocity/Bolt Sale Agreement, Actua Holdings has agreed to sell all of the issued and outstanding membership interests of Arsenal Holdings to Arsenal Buyer. Upon the closing of the Velocity/Bolt Sale, Arsenal Holdings will be a wholly-owned subsidiary of Arsenal Buyer, and Arsenal Buyer will therefore indirectly own all of the interests in Velocity and Bolt currently owned indirectly by Actua.

 

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Consideration (Page 47)

The purchase price to be paid by or on behalf of Arsenal Buyer at closing is approximately $328 million. The parties to the Velocity/Bolt Sale Agreement have initiated a process to sell Bolt to another third party separate and apart from the Velocity/Bolt Sale (such sale, a “Secondary Bolt Sale”). If a Secondary Bolt Sale occurs prior to the closing of the Velocity/Bolt Sale, then the purchase price to be paid by or on behalf of Arsenal Buyer at closing will be reduced by an amount equal to (i) $35 million plus (ii) 50% of the net proceeds paid to Actua or its affiliates from such sale in excess of approximately $34.3 million, subject to certain adjustments. If a Secondary Bolt Sale occurs following the closing of the Velocity/Bolt Sale pursuant to a definitive agreement entered into before March 23, 2018 (or before April 22, 2018, so long as, prior to March 23, 2018, (i) Arsenal Buyer has accepted, subject to entering into definitive documentation, a bona fide offer for the purchase of Bolt and (ii) certain transaction-related conditions, including diligence conditions, have been met), Actua Holdings would receive 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments.

Recommendation of the Board (Page 42)

The Board, at a special meeting held on September 23, 2017, after due consideration, unanimously (i) determined that the Velocity/Bolt Sale on the terms and conditions of the Velocity/Bolt Sale Agreement is advisable and in the best interests of Actua and its stockholders, (ii) approved the Velocity/Bolt Sale on the terms and conditions set forth in the Velocity/Bolt Sale Agreement and (iii) recommended that the Velocity/Bolt Sale Agreement and the consummation of the Velocity/Bolt Sale be submitted to Actua’s stockholders at a special meeting of stockholders for authorization and approval. The Board has unanimously approved the Velocity/Bolt Sale on the terms and conditions of the Velocity/Bolt Sale Agreement and unanimously recommends that Actua’s stockholders vote “FOR” the Sale Proposal.

Conditions to the Closing of the Velocity/Bolt Sale (Page 52)

The closing of the Velocity/Bolt Sale is subject to a number of conditions, including (i) approval by the stockholders of Actua in accordance with applicable law, and the certificate of incorporation and bylaws of Actua, (ii) the expiration of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) no governmental authority having issued an order, and no applicable law being in effect, that makes illegal or otherwise prevents the Velocity/Bolt Sale. Arsenal Buyer’s obligation to close is further conditioned on (A) the representations and warranties made by Actua and Actua Holdings being true and correct at closing, subject to certain materiality qualifications, (B) Actua and its subsidiaries having performed in all material respects their obligations under the Velocity/Bolt Sale Agreement, (C) no material adverse effect having occurred, and (D) Actua Holdings and Arsenal Holdings having delivered a required closing certificate to Arsenal Buyer. Actua’s obligation to close is further conditioned on (1) the representations and warranties made by Arsenal Buyer being true and correct at closing, subject to certain materiality qualifications, (2) Arsenal Buyer having performed in all material respects its obligations under the Velocity/Bolt Sale Agreement, and (3) Arsenal Buyer having delivered certain documents to Actua.

Unsolicited Proposals (Page 50)

Actua has agreed not to directly or indirectly (i) initiate, solicit or knowingly encourage or knowingly facilitate the making of an Acquisition Proposal, or any inquiry, proposal or request for information that would reasonably be expected to lead to or result in the making of an Acquisition Proposal, (ii) other than informing third parties of the existence of the provisions governing Actua’s non-solicitation obligations, engage in negotiations or discussions with, or furnish any information concerning Arsenal Holdings or any of its subsidiaries to, any third party who has made, or in response to, an Acquisition Proposal or any inquiry, proposal or request for information that would reasonably be expected to lead to or result in an Acquisition Proposal or (iii) resolve or agree to do any of the foregoing. An “Acquisition Proposal” refers to a transaction involving the acquisition of at least 15% of the assets or equity interests of Arsenal Holdings and its subsidiaries (consisting of

 

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Velocity and Bolt), taken as a whole, or the business of Arsenal Holdings and its subsidiaries, taken as a whole, or any merger or other business combination, sale of shares, sale of assets or other similar transaction of Arsenal Holdings and its subsidiaries, except that a Secondary Bolt Sale as contemplated by the Velocity/Bolt Sale Agreement does not constitute an Acquisition Proposal.

Notwithstanding the non-solicitation obligations described above, prior to obtaining stockholder approval of the Sale Proposal at the Special Meeting, if Actua receives a bona fide written Acquisition Proposal that has not resulted from a breach of the non-solicitation obligations, Actua may engage in negotiations or discussions with, or furnish any information and reasonable access to, such third party if the Board determines in good faith, after consultation with Actua’s outside legal and financial advisors, that such Acquisition Proposal is, or would reasonably be expected to lead to or result in, a Superior Proposal. If the Board determines that such Acquisition Proposal constitutes a Superior Proposal and that failure to approve or recommend such Superior Proposal to the Actua’s stockholders would reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law, Actua may terminate the Velocity/Bolt Sale Agreement and enter into an alternative agreement with respect to such Superior Proposal, provided that Actua must notify Arsenal Buyer of its intent to so terminate the Velocity/Bolt Sale Agreement at least four business days prior to such termination and, if requested by Arsenal Buyer, engage in good faith negotiations with Arsenal Buyer regarding changes to the terms of the Velocity/Bolt Sale Agreement that would render the Acquisition Proposal no longer a Superior Proposal. A “Superior Proposal” is an Acquisition Proposal for at least 50% of the assets or equity interests of Arsenal Holdings and its subsidiaries (consisting of Velocity and Bolt), taken as a whole, that the Board determines in good faith, after consultation with Actua’s outside legal and financial advisors, is on terms more favorable to Actua from a financial point of view than the Velocity/Bolt Sale and is reasonably capable of being consummated on the terms thereof.

In the event that Actua terminates the Velocity/Bolt Sale Agreement to enter into a definitive agreement in respect of a Superior Proposal, Actua must pay the termination fee required to be paid pursuant to the terms of the Velocity/Bolt Sale Agreement substantially concurrently with the termination. See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees.”

Change in Recommendation (Page 51)

If at any time prior to obtaining stockholder approval of the Sale Proposal at the Special Meeting, if a development, event, fact, occurrence or change in circumstances (other than an Acquisition Proposal) occurs or arises that was not known at the time the Velocity/Bolt Sale Agreement was executed (or, if known, the consequences or magnitude of which were not known or understood by the Board as of September 23, 2017), the Board may change its recommendation that Actua’s stockholders approve the Sale Proposal if the Board determines, after consultation with Actua’s outside legal advisors, that the failure to take such action would reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law.

Termination of the Velocity/Bolt Sale Agreement (Page 53)

The Velocity/Bolt Sale Agreement may be terminated as follows:

 

    by mutual written agreement of Actua/Actua Holdings and Arsenal Buyer;

 

    by either party, if:

 

    the closing has not occurred in accordance with the Velocity/Bolt Sale Agreement by March 23, 2018, subject to certain limitations;

 

    any governmental authority has issued a final, non-appealable order prohibiting the Velocity/Bolt Sale, subject to certain limitations;

 

   

any order issued by a governmental authority having jurisdiction over any party thereto, or any applicable law, is in effect that, in each case, makes the consummation of the transactions

 

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contemplated by the Velocity/Bolt Sale Agreement illegal, or otherwise prevents the consummation of the transactions contemplated thereby; or

 

    the Special Meeting has been held and completed and Actua’s stockholders have not approved the Sale Proposal.

 

    by Arsenal Buyer, if:

 

    the Board makes a change in recommendation regarding stockholder approval of the Velocity/Bolt Sale; or

 

    Actua, Actua Holdings or Arsenal Holdings has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform would give rise to the failure of a closing condition and is incapable of being cured or has not been cured within 30 business days after written notice by Arsenal Buyer to Actua or Actua Holdings of such breach or failure to perform.

 

    by Actua/Actua Holdings, if:

 

    at any time prior to receiving stockholder approval of the Sale Proposal, (i) the Board has determined to terminate the Velocity/Bolt Sale Agreement in response to a Superior Proposal, (ii) substantially concurrently with such termination of the Velocity/Bolt Sale Agreement, Actua or Actua Holdings enters into a definitive alternative acquisition agreement with respect to such Superior Proposal, and (iii) substantially concurrently with such termination, Actua Holdings pays to Arsenal Buyer by wire transfer in immediately available funds a termination fee of approximately $8.8 million, as described below;

 

    Arsenal Buyer has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform would give rise to the failure of a closing condition and is incapable of being cured or has not been cured by Arsenal Buyer within 30 business days after written notice has been given by Actua Holdings or Actua to Arsenal Buyer of such breach or failure to perform; or

 

    (i) the conditions to Arsenal Buyer’s obligation to close the Velocity/Bolt Sale have been satisfied, (ii) Actua Holdings and Actua have irrevocably confirmed by written notice to Arsenal Buyer that the conditions to their obligation to close the Velocity/Bolt Sale have been satisfied or waived in writing, and that they are ready, willing and able to consummate the transactions contemplated by the Velocity/Bolt Sale Agreement on the date the closing is required to have occurred pursuant to the Velocity/Bolt Sale Agreement, and (iii) Arsenal Buyer has failed to consummate the transactions within three business days following the later of (A) the date of delivery of such notice of termination and (B)  the date the closing is required to have occurred pursuant to the Velocity/Bolt Sale Agreement.

Expenses and Termination Fees (Page 55)

Actua will be required to pay Arsenal Buyer a termination fee of approximately $8.8 million if, prior to obtaining stockholder approval, the Board has determined to terminate the Velocity/Bolt Sale Agreement to enter into an alternative acquisition agreement in respect of a Superior Proposal, or if Arsenal Buyer terminates the Velocity/Bolt Sale Agreement due to a change in the Board’s recommendation for Actua’s stockholders to approve the Sale Proposal. If the Velocity/Bolt Sale Agreement is terminated due to a failure of Actua’s stockholders to approve the Sale Proposal, Actua is required to reimburse Arsenal Buyer’s and its affiliates’ reasonable out-of-pocket costs and expenses incurred in connection with the Velocity/Bolt Sale Agreement and the transactions contemplated thereby of up to a maximum amount of $3.25 million.

 

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In addition to the foregoing, if the Velocity/Bolt Sale Agreement is terminated (i) by any party thereto due to a failure of the closing thereunder to occur by March 23, 2018 or a failure of Actua’s stockholders to approve the Sale Proposal at the Special Meeting or (ii) by Arsenal Buyer if Actua, Actua Holdings or Arsenal Holdings has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform would give rise to the failure of a closing condition and is incapable of being cured or has not been cured within 30 business days after written notice of such breach or failure to perform, and in either case an Acquisition Proposal had been publicly announced (and not publicly withdrawn) and within 12 months of the date of termination of the Velocity/Bolt Sale Agreement (or any other acquisition transaction is consummated within such 12-month period), Actua or Actua Holdings enters into a definitive agreement with respect to an Acquisition Proposal that is thereafter consummated, then Actua must promptly pay Arsenal Buyer a termination fee of approximately $8.8 million, less any expenses previously reimbursed as described above.

Arsenal Buyer will be required to pay a termination fee of approximately $12.9 million to Actua if Actua terminates the Velocity/Bolt Sale Agreement in the event that (i) the conditions to Arsenal Buyer’s obligation to close have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions), (ii) Actua has certified in writing that the conditions to Actua’s obligation to close have been satisfied, and that Actua is ready, able and willing to close, and (iii) Arsenal Buyer has failed to close within the later of three business days after (A) the date of delivery of such notice and (B) the date the closing is required to occur under the Velocity/Bolt Sale Agreement.

Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale (Page 44)

The transactions contemplated by the Velocity/Bolt Sale Agreement will be taxable to Actua for U.S. federal income tax purposes but will not result in any direct U.S. federal income tax consequences to the stockholders. For a summary of certain U.S. federal income tax consequences of the Velocity/Bolt Sale, see “Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale.

Regulatory Approvals (Page 45)

The Velocity/Bolt Sale Agreement requires no action by or in respect of any governmental authority, other than compliance with any applicable requirements under the HSR Act, the Securities Act, the Exchange Act and any other applicable U.S. state or federal or foreign securities laws or stock exchange rules, including the rules of the NASDAQ Stock Market (“NASDAQ”).

Vote Required (Page 45)

The affirmative vote of a majority of the outstanding shares of Actua’s common stock entitled to vote at the Special Meeting is required to approve the Sale Proposal.

The Folio Sale

The Parties to the Folio Sale (Page 58)

Actua USA Corporation

Actua USA Corporation, a Delaware corporation and wholly-owned subsidiary of Actua, is serving as the representative of the FolioDynamix stockholders under the Folio Sale Agreement. Actua Holdings, Inc., another wholly-owned subsidiary of Actua, is the majority stockholder of FolioDynamix.

Envestnet, Inc.

Envestnet, Inc., a Delaware corporation, was formed on February 11, 2004 and is headquartered in Chicago, Illinois. Envestnet is a leading provider of unified wealth management software and services to financial advisors

 

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and institutions as well as a leading data aggregation and data intelligence platform for financial services companies. Envestnet’s common stock is traded on the New York Stock Exchange under the symbol “ENV.”

FCD Merger Sub, Inc.

FCD Merger Sub, Inc., a Delaware corporation, is a newly-incorporated and wholly-owned subsidiary of Envestnet formed solely for the purpose of consummating the transactions contemplated by the Folio Sale Agreement.

Folio Dynamics Holdings, Inc.

Folio Dynamics Holdings, Inc., a Delaware corporation, is the parent company of Folio Dynamics Inc. (d/b/a FolioDynamix), a leading wealth management services provider that offers its clients sophisticated cloud-based solutions and a suite of advisory tools and services. Folio Dynamics Holdings, Inc. was formed on September 15, 2014, and is headquartered in Secaucus, New Jersey.

The Folio Sale Agreement (Page 61)

Envestnet, Merger Sub, FolioDynamix and Actua USA entered into the Folio Sale Agreement on September 25, 2017. A copy of the Folio Sale Agreement is attached to this proxy statement as Appendix B and is incorporated by reference in its entirety into this proxy statement. Actua encourages you to read the Folio Sale Agreement in its entirety.

Effects of the Folio Sale (Page 62)

Pursuant to the Folio Sale Agreement, Merger Sub will merge with and into FolioDynamix with FolioDynamix surviving the merger as a wholly-owned subsidiary of Envestnet.

Consideration (Page 62)

The base purchase price to be paid by Envestnet at closing is $195 million and is subject to certain adjustments, including a potential downward purchase price adjustment if FolioDynamix fails to obtain consents to the Folio Sale from clients representing at least 95% of the Target Revenue (as defined below) and certain adjustments for working capital, cash, debt and unpaid transaction expenses. Additionally, Actua’s share of the merger consideration could be offset by an amount up to approximately $11.3 million, if and to the extent Actua fails to convey $36 million of net operating loss tax carryforwards (“NOLs”) to Envestnet. Assuming, among other things, receipt of client consents representing at least 95% of the Target Revenue, Actua expects to receive approximately $174 million of net proceeds from the Folio Sale.

Conditions to the Closing of the Folio Sale (Page 66)

The closing of the Folio Sale Agreement is subject to a number of conditions, including (i) the expiration of any waiting period under the HSR Act, (ii) no applicable law being in effect that makes illegal or otherwise prevents the consummation of the Folio Sale Agreement and (iii) FolioDynamix having received consents (whether deemed consents, negative consents or affirmative consents) to the Folio Sale from clients representing 85% of FolioDynamix’s net revenue from a specified prior period (such revenue, the “Target Revenue,” and such condition, the “Consent Condition”). Envestnet’s obligation to close is further conditioned on (A) the representations and warranties made by FolioDynamix and Actua USA being true and correct at closing, subject to certain materiality qualifications, (B) FolioDynamix and Actua USA having performed in all material respects their obligations under the Folio Sale Agreement, (C) no material adverse effect having occurred with respect to FolioDynamix, (D) FolioDynamix having delivered an executed closing certificate to Envestnet, and (E) Envestnet and FolioDynamix having agreed upon the final form of certain revenue recognition deliverables (the “606 Deliverables”) in connection with the adoption of Financial Accounting Standards Board Accounting

 

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Standards Update 2016-08 (Topic 606) (such condition, the “606 Condition”). FolioDynamix’s obligation to close is further conditioned on (1) the representations and warranties of Envestnet and Merger Sub being true and correct at closing, subject to certain materiality qualifications, (2) Envestnet and Merger Sub having performed in all material respects their respective obligations under the Folio Sale Agreement and (3) Envestnet having delivered a required closing certificate. Approval of the Folio Sale by Actua’s stockholders is not a condition to the closing of the Folio Sale.

Exclusivity (Page 64)

Pursuant to the Folio Sale Agreement, FolioDynamix agreed not to directly or indirectly (i) solicit, initiate, or encourage the submission of any proposal or offer from any third party relating to a potential business combination with or acquisition of FolioDynamix or its subsidiaries or any portion of FolioDynamix’s or its subsidiaries’ securities or assets (a “Folio Competing Transaction”), (ii) participate in or continue any activities, discussions or negotiations regarding any Folio Competing Transaction, (iii) provide information regarding FolioDynamix or its subsidiaries to, or (iv) enter into or agree to enter into any contract with, any third party, other than Envestnet, in connection with any potential Folio Competing Transaction. In addition, the Folio Sale Agreement requires FolioDynamix and its subsidiaries to cease any existing activities, discussions or negotiations regarding any Folio Competing Transaction and to promptly notify Envestnet of the receipt of any oral or written communication, proposal, offer or inquiry from any third party regarding a potential Folio Competing Transaction, including the identity of the third party making such communication, proposal, offer or inquiry and the material terms of any such proposal or offer.

Termination of the Folio Sale Agreement (Page 67)

The Folio Sale Agreement may be terminated under a number of circumstances, including as follows:

 

    by mutual written agreement of Envestnet and FolioDynamix; or

 

    by either party if:

 

    the closing of the Folio Sale Agreement has not occurred by March 31, 2018 (such date, as it may be from time to time extended pursuant to the Folio Sale Agreement, including by means of a potential automatic six-month extension, the “Folio End Date”), subject to certain limitations;

 

    there is any applicable law that makes consummation of the transactions contemplated by the Folio Sale Agreement illegal or otherwise prohibited;

 

    any governmental authority has issued a final, non-appealable order, decree or judgment prohibiting the Folio Sale; or

 

    any of the mutual conditions to closing become incapable of fulfillment; or

 

    by Envestnet if:

 

    there has been a misrepresentation or breach of warranty or covenant by FolioDynamix that would result in the failure of certain conditions to closing and FolioDynamix is not capable of curing such misrepresentation or breach prior to the Folio End Date; or

 

    by FolioDynamix if:

 

    there has been a misrepresentation or breach of warranty or covenant by Envestnet that would result in the failure of certain conditions to closing, and Envestnet is not capable of curing such misrepresentation or breach prior to the Folio End Date; or

 

    after January 2, 2018, the sole unsatisfied condition to closing is the 606 Condition, and the closing of the Folio Sale Agreement has not occurred within two business days of FolioDynamix’s having delivered a termination notice to Envestnet.

 

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A termination of the Folio Sale Agreement will be without liability to either Envestnet or FolioDynamix, except (i) to the extent such termination is the result of a willful and material breach, (ii) to the extent such termination results in the payment of a termination fee, as further described in “The Folio Sale Agreement—Termination Fee,” and (iii) in the case of certain provisions of the Folio Sale Agreement which survive its termination, as further described in “The Folio Sale Agreement—Termination of the Folio Sale Agreement.”

Termination Fee (Page 68)

Envestnet will be required to pay FolioDynamix a termination fee of $7 million if FolioDynamix terminates the Folio Sale Agreement after January 2, 2018 and the sole unsatisfied condition to closing is the 606 Condition. See “The Folio Sale Agreement—Termination Fee” for additional information.

Certain U.S. Federal Income Tax Consequences of the Folio Sale (Page 60)

The transactions contemplated by the Folio Sale Agreement will be taxable to Actua for U.S. federal income tax purposes, but will not result in any direct U.S. federal income tax consequences to Actua’s stockholders. For a summary of certain U.S. federal income tax consequences of the Folio Sale, see “Certain U.S. Federal Income Tax Consequences of the Folio Sale.

Regulatory Approvals (Page 61)

The Folio Sale Agreement requires no action by or in respect of any governmental authority, other than the filing of the certificate of merger with the Secretary of State of the State of Delaware, compliance with any applicable U.S. state or federal securities laws, and compliance with any requirements under the HSR Act.

Vote Required (Page 61)

The affirmative vote or written consent of holders of a majority of the outstanding shares of common stock of FolioDynamix is the only vote of the holders of the capital stock of FolioDynamix necessary to adopt and approve the Folio Sale Agreement and the transactions contemplated thereby. This requirement has already been satisfied. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

The Transactions

Opinions of Actua’s Financial Advisor Regarding the Transactions (Page 69)

On September 23, 2017, Actua’s financial advisor, Evercore Group L.L.C. (“Evercore”), delivered the following written opinions to the Board:

 

    Velocity/Bolt Fairness Opinion”: That, as of September 23, 2017 and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the purchase price in the Velocity/Bolt Sale is fair, from a financial point of view, to Actua Holdings; and

 

    FolioDynamix Fairness Opinion”: That, as of September 23, 2017 and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the portion of the merger consideration to be received by Actua in the Folio Sale is fair, from a financial point of view, to Actua.

 

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The full text of the Velocity/Bolt Fairness Opinion and the full text of the FolioDynamix Fairness Opinion, each dated as of September 23, 2017, which set forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering the respective opinions, are attached as Appendix C and Appendix D, respectively, to this proxy statement and are incorporated by reference in their entirety into this proxy statement. You are urged to read Evercore’s opinions carefully and in their entirety. Evercore’s opinions were addressed to, and provided for the information and benefit of, the Board in connection with its evaluation of the Velocity/Bolt Sale and the Folio Sale. The Velocity/Bolt Fairness Opinion and FolioDynamix Fairness Opinion do not constitute a recommendation to the Board or to any other persons in respect of the Transactions, collectively or individually, including as to how any Actua stockholder should vote or act in respect of the Transactions. Evercore’s opinions do not address the relative merits of the Transactions, collectively or individually, as compared to other business or financial strategies that might be available to Actua (including certain of its subsidiaries, as indicated in Evercore’s opinions), nor do they address the underlying business decision of Actua or such subsidiaries to engage in the Transactions.

For further information, see the section entitled “Opinions of Actua’s Financial Advisor Regarding the Transactions,” Appendix C and Appendix D.

Anticipated Use of Proceeds from the Transactions (Page 94)

Assuming the closing of Velocity/Bolt Sale and the Folio Sale, Actua estimates that it will realize net cash proceeds in the range of between approximately $472 million and approximately $502 million, or approximately $14.35 and $15.18 per share (such range of proceeds, the “Proceeds Estimate”). The Proceeds Estimate includes a $30 million range because the Folio Sale is subject to certain potential downward purchase price adjustments totaling approximately $30 million, including an adjustment based on whether FolioDynamix fails to deliver consents (whether deemed consents, negative consents or affirmative consents) to the Folio Sale from clients representing at least 95% of the Target Revenue. If FolioDynamix receives consents from clients representing at least 95% of the Target Revenue, the adjustment amount with respect to such client consents will be $0. However, if FolioDynamix receives consents from clients representing less than 95% of the Target Revenue, the final merger consideration will be adjusted downward by an amount equal to (i) $3 million multiplied by (ii) the difference between 95% and the percentage of the Target Revenue for which FolioDynamix received consents multiplied by (iii) 100. Such adjustment is referred to in this proxy statement as the “Consent Adjustment.” In no event can the Consent Adjustment exceed $30 million.

The Proceeds Estimate takes into account estimated transaction costs associated with both transactions and an estimated negative purchase price adjustment related to working capital, cash and indebtedness associated with the Folio Sale and reflects certain other assumptions. The actual transaction costs and any negative purchase price adjustments could ultimately differ from Actua’s estimates.

Actua intends to distribute substantially all of the net proceeds from the Velocity/Bolt Sale and the Folio Sale, which are expected to be in the range of between approximately $472 million and approximately $502 million (the Proceeds Estimate), to its stockholders as soon as practicable following the closing of both the Velocity/Bolt Sale and the Folio Sale. There can be no assurance, however, of the exact amount of cash proceeds to be distributed to Actua’s stockholders or of the exact timing of any such distributions. Actua has not set a record date for any such distribution, and an Actua stockholder must hold shares of Actua’s common stock as of the applicable record date in order to receive a distribution.

Following the consummation of the Velocity/Bolt Sale and the Folio Sale, Actua intends to wind down its operations and monetize its remaining holdings, which consist largely of minority ownership stakes in private companies, and to distribute its other cash assets. There can be no assurance as to how long this process will take or what the results of this process will yield.

 

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Effects on Actua if the Transactions are Consummated (Page 96)

Contingent upon the successful closing of the Velocity/Bolt Sale and the Folio Sale, and following the distribution to Actua’s stockholders of substantially all of the net proceeds realized from the Transactions, Actua intends to monetize its remaining assets, which consist largely of minority ownership stakes (generally less than 10%) in relatively small private companies, and to discharge its outstanding obligations as it winds down its operations. Actua intends to significantly reduce its operating costs during this wind-down stage.

Actua’s goal is to monetize its remaining holdings over a 12- to 18-month period following the later to occur of the closing of the Velocity/Bolt Sale and the closing of the Folio Sale.

As part of the process of winding down its operations and liquidating its remaining assets, following the distribution of substantially all of the net proceeds from the Velocity/Bolt Sale and the Folio Sale, Actua intends to delist Actua’s common stock with NASDAQ and seek to deregister its common stock with the SEC in connection with the adoption of a plan of liquidation. There can be no assurance as to how long this process would take.

Effects on Actua if the Transactions are Not Consummated (Page 96)

If the Velocity/Bolt Sale and/or the Folio Sale are not completed, Actua will continue operating its businesses in the ordinary course and may explore other strategic alternatives, including the sale of Actua, Arsenal Holdings, Velocity, Bolt and/or FolioDynamix to other parties. However, any alternative transaction may have terms that are less favorable to Actua than the terms of the Transactions, or Actua may be unable to reach agreement for an alternative transaction with a third party.

Certain Accounting Consequences of the Transactions (Page 96)

Actua has determined that each of Velocity, Bolt and FolioDynamix met the criteria for held-for-sale classification and discontinued operations treatment as of September 30, 2017. In its filings with the SEC related to the quarter ended September 30, 2017 and thereafter, for presentation purposes, Actua will reclassify Velocity, Bolt and FolioDynamix as held for sale and discontinued operations for all prior periods presented in order to match the current held-for-sale and discontinued operations classifications. See “Certain Accounting Consequences of the Transactions” for additional information.

The Special Meeting

Date, Time and Place (Page 32)

This proxy statement is being furnished in connection with the solicitation of proxies on behalf of the Board for use at the Special Meeting of Actua stockholders to be held on December 7, 2017, at 10:00 a.m. Eastern Time or at any adjournments or postponements thereof. The Special Meeting will be held at The Radnor Hotel, 591 East Lancaster Avenue, St. Davids, Pennsylvania 19087.

Purpose (Page 32)

The Special Meeting is being held to request that Actua’s stockholders consider and vote upon: (i) the Sale Proposal, (ii) the Transaction-Related Compensation Proposal and (iii) if necessary, the Adjournment Proposal, each as described in this proxy statement.

Record Date and Voting Securities (Page 32)

The Board has specified the close of business on November 2, 2017 as the record date for the purpose of determining the stockholders of Actua who are entitled to receive notice of and to vote at the Special Meeting. Only Actua’s stockholders of record on the close of business on the record date are entitled to notice of and to vote at the Special Meeting.

 

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Quorum; Required Vote (Page 32)

The Special Meeting will be held only if a quorum, consisting of a majority of the outstanding shares of Actua’s common stock entitled to vote, is represented in person or by proxy. The Sale Proposal must be approved by the affirmative vote of a majority of the outstanding shares of Actua’s common stock entitled to vote at the Special Meeting. Each other proposal must be approved by the affirmative vote of a majority of the outstanding shares of Actua’s common stock present in person or by proxy at the Special Meeting.

Voting by, and Revocation of, Proxies (Page 34)

If you submit a proxy via the Internet, by telephone or by returning a signed proxy card by mail, your shares will be voted at the Special Meeting as you indicate. You can revoke your proxy at any time before the voting at the Special Meeting by sending a properly signed written notice of your revocation to Actua’s Corporate Secretary before the Special Meeting, by submitting another proxy that is properly signed and bearing a later date, by following the specified procedures for submitting a proxy by telephone or electronically and changing your vote, or by voting in person at the Special Meeting. Attendance at the Special Meeting will not itself revoke an earlier submitted proxy.

 

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS AND THE SPECIAL MEETING

The following are some of the questions you may have as an Actua stockholder and answers to those questions. These questions and answers highlight only some of the information contained in this proxy statement. You should read carefully this entire document, including all appendices hereto, to fully understand the Transactions and the voting procedures for the Special Meeting.

Special Meeting and Voting

 

Q. When and where is the Special Meeting going to be held?

A. The Special Meeting will be held at 10:00 a.m., Eastern Time on December 7, 2017 at The Radnor Hotel, 591 East Lancaster Avenue, St. Davids, Pennsylvania 19087.

 

Q. What is the purpose of the Special Meeting?

A. At the Special Meeting, stockholders will vote on the matters described in the accompanying Notice of Special Meeting and this proxy statement. The only matters expected to be voted upon at the Special Meeting are (i) the Sale Proposal, (ii) the Transaction-Related Compensation Proposal and (iii) if necessary, the Adjournment Proposal.

 

Q. Which stockholders may vote?

A. The Board has fixed the close of business on November 2, 2017 as the record date for determining the stockholders of Actua who are entitled to receive notice of the Special Meeting, and to vote their shares at the Special Meeting and any adjournment or postponement of the Special Meeting. Only Actua stockholders of record at the close of business on the record date will be entitled to notice of, and to vote at, the Special Meeting and any adjournment or postponement of the Special Meeting. Each share of Actua’s common stock is entitled to one vote. At the close of business on the record date, Actua had issued and outstanding 32,156,605 shares of common stock.

 

Q. What am I being asked to vote on?

A. The Board is asking Actua’s stockholders of record at the close of business on November 2, 2017, the record date for the Special Meeting, to consider and vote upon: (i) the Sale Proposal, (ii) the Transaction-Related Compensation Proposal and (iii) if necessary, the Adjournment Proposal. The Board currently knows of no other business that will be presented for consideration at the Special Meeting. In the event any matters other than those referred to in the accompanying Notice of Special Meeting and this proxy statement should properly come before and be considered at the Special Meeting, it is intended that proxies in the form Actua provides to its stockholders will be voted thereon in accordance with the discretion of the proxy holders.

 

Q. What are the recommendations of the Board for how I should vote my shares?

A. The Board unanimously recommends that you vote (i) “FOR” the Sale Proposal, (ii) “FOR” the Transaction-Related Compensation Proposal and (iii) if necessary, “FOR” the Adjournment Proposal.

 

Q. Why is Actua seeking a stockholder vote on the Adjournment Proposal?

A. Adjourning the Special Meeting to a later date will give Actua additional time to solicit proxies to vote in favor of approval of the Sale Proposal if there are not sufficient votes in favor of the proposal. Consequently, Actua is seeking your approval of the Adjournment Proposal to ensure that, if necessary, Actua will have enough time to solicit the required votes for approval of the Sale Proposal.

 

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Q. Who can attend the Special Meeting?

A. Only Actua stockholders of record as of the close of business on November 2, 2017, the record date for the Special Meeting, or their duly appointed proxies, may attend the Special Meeting. Stockholders will be asked to present a valid government-issued picture identification, such as a driver’s license or passport. If you hold your shares through an account with a bank, broker or other nominee, you must obtain a valid proxy in your name from your bank, broker or other nominee and bring that proxy to the Special Meeting, together with a valid government-issued picture identification and a copy of evidence from your bank, broker or other nominee (including a bank or brokerage statement) reflecting your common stock ownership as of November 2, 2017, the record date for the Special Meeting. Cameras and video recording devices will not be permitted at the Special Meeting. A list of Actua stockholders entitled to vote at the Special Meeting will be available for examination by any stockholder for any purpose germane to the Special Meeting beginning 10 days prior to the Special Meeting during ordinary business hours at 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087, Actua’s principal place of business, and ending on the day prior to the Special Meeting.

 

Q. Do I need an admission ticket to attend the Special Meeting?

A. Admission to the Special Meeting will be by admission ticket only. If you are an Actua stockholder of record and plan to attend the Special Meeting, retain the top portion of your proxy card as your admission ticket and bring it and a valid government-issued picture identification with you so that you may gain admission to the meeting. If your shares are held through a bank, broker or other nominee, please contact your nominee and request that the nominee obtain an admission ticket for you or provide you with evidence of your share ownership, which will gain you admission to the Special Meeting. Actua stockholders who do not obtain admission tickets in advance of the Special Meeting may obtain them on the date of the Special Meeting at the registration desk upon verifying their stock ownership as of the record date. All persons attending the Special Meeting must present a valid government-issued picture identification along with their admission ticket or proof of beneficial ownership in order to gain admission to the Special Meeting. Admission to the Special Meeting will be expedited if admission tickets are obtained in advance. Admission tickets may be issued to others at Actua’s discretion.

 

Q. How many votes must be present at the Special Meeting to constitute a quorum?

A. Stockholders holding a majority of the issued and outstanding shares of Actua’s common stock entitled to vote as of the record date, November 2, 2017, must be present, in person or by proxy, to constitute a quorum at the Special Meeting. As of the record date, there were 32,156,605 shares of Actua’s common stock issued and outstanding. Shares represented by abstentions on any proposal to be acted upon by Actua’s stockholders at the Special Meeting will be treated as present at the Special Meeting for purposes of determining whether a quorum is present.

 

Q. How many votes can be cast by all stockholders?

A. 32,156,605 votes may be cast at the Special Meeting. Each Actua stockholder is entitled to cast one vote for each share of common stock held by such stockholder as of the record date. There is no cumulative voting and the holders of Actua’s common stock vote together as a single class.

 

Q. What vote is needed for each of the proposals to be adopted?

A. The approval of the Sale Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote at the Special Meeting. The approval of the Transaction-Related Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy at the Special Meeting, if a quorum is present. A vote for or against the Sale Proposal does not count as a vote for or against the Transaction-Related Compensation Proposal, and vice versa. In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement,

 

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Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

 

Q. What is a broker non-vote?

A. Generally, a broker non-vote occurs when shares held by a bank, broker or other nominee for a beneficial owner are not voted with respect to a particular proposal because (i) the nominee has not received voting instructions from the beneficial owner and (ii) the nominee lacks discretionary voting power to vote such shares. Under applicable stock exchange rules, banks, brokers and other nominees who hold shares of Actua’s common stock for beneficial owners have the discretion to vote on routine matters when they have not received voting instructions from those beneficial owners at least ten days prior to the applicable meeting. On a non-routine matter, banks, brokers and other nominees do not have the discretion to direct the voting of the beneficial owners’ shares (as they do on a routine matter), and, if the beneficial owner has not provided voting instructions with respect to that matter, there will be a “broker non-vote” on the matter. Broker non-votes will be counted for purposes of calculating whether a quorum is present at the Special Meeting but will not be counted for purposes of determining the number of votes present in person or represented by proxy and entitled to vote with respect to a particular proposal. Accordingly, a broker non-vote will not negatively impact Actua’s ability to obtain a quorum and will not otherwise directly affect the outcome of the vote on the Transaction-Related Compensation Proposal or the Adjournment Proposal (each of which is a non-routine matter that requires the approval of a majority of the shares present in person or represented by proxy and entitled to vote at the Special Meeting) but will have the effect of a vote against the Sale Proposal (a non-routine matter that requires a majority of shares entitled to vote at the Special Meeting). Actua urges you to provide instructions to your bank, broker or other nominee so that your votes may be counted for each proposal to be voted upon. You should provide voting instructions for your shares by following the instructions provided on the voting instruction form that you receive from your bank, broker or other nominee.

 

Q. How can I vote?

A. You can vote in person or by valid proxy submitted by telephone, via the Internet or by mail. If you are unable to attend the Special Meeting, Actua urges you to submit a proxy by doing one of the following:

 

    Submit a proxy by telephone: You can submit a proxy for your shares by calling the toll-free number indicated on your proxy card using a touch-tone telephone 24 hours a day. Easy to follow voice prompts enable you to submit a proxy for your shares and confirm that your voting instructions have been properly recorded. If your shares are held through a bank, broker or other nominee, please check your voting instruction form or contact your bank, broker or other nominee to determine whether you will be able to submit a proxy by telephone.

 

    Submit a proxy via the Internet: You can also submit a proxy via the Internet by following the instructions on your proxy card. The website address for Internet proxy submission is indicated on your proxy card. Internet proxy submission is also available 24 hours a day. If your shares are held through a bank, broker or other nominee, please check your voting instruction form or contact your bank, broker or other nominee to determine whether you will be able to submit a proxy via the Internet.

 

    Submit a proxy by Mail: If you choose to submit a proxy by mail, complete, sign, date and return your proxy card in the postage-paid envelope provided. Please promptly mail your proxy card to ensure that it is received on or before December 6, 2017.

 

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The deadline for submitting a proxy by telephone or electronically via the Internet is 11:59 p.m. Eastern Time on December 6, 2017.

 

Q. Can I change my vote?

A. Yes. A proxy may be revoked at any time prior to the voting at the Special Meeting by submitting a later-dated proxy (including a proxy authorization submitted by telephone or electronically via the Internet prior to the deadline for submitting a proxy by telephone or via the Internet), by sending a properly signed written notice of such revocation to Actua’s Corporate Secretary in advance of the Special Meeting or by attending the Special Meeting and voting in person. If your shares are held through a bank, broker or other nominee, you may change your voting instructions by submitting a later-dated voting instruction form to your bank, broker or other nominee or fiduciary, or if you obtained a legal proxy from your bank, broker or other nominee or fiduciary giving you the right to vote your shares, by attending the Special Meeting and voting in person.

Q. What if I vote for some but not all of the proposals?

A. Shares of Actua’s common stock represented by proxies received by Actua (whether received through the return of the enclosed proxy card or received by telephone or via the Internet) where the stockholder has provided voting instructions with respect to the proposals described in this proxy statement will be voted in accordance with the voting instructions so made. If your proxy card is properly executed and returned but does not contain voting instructions as to one or more of the proposals to be voted upon at the Special Meeting, or if you give your proxy by telephone or via the Internet without indicating how you want to vote on each of the proposals to be voted upon at the Special Meeting, your shares will be voted:

 

    “FOR” the Sale Proposal;

 

    “FOR” the Transaction-Related Compensation Proposal; and

 

    “FOR” the Adjournment Proposal, if necessary, including for the purpose of soliciting additional proxies, if there are not sufficient votes in favor of the approval of the Sale Proposal.

If your shares are held through a bank, broker or other nominee, and you do not properly instruct your bank, broker or other nominee how to vote your shares, your bank, broker or other nominee will not have discretion to direct the voting of your shares at the Special Meeting and the votes represented by your shares will constitute broker non-votes. Under applicable stock exchange rules, banks, brokers and other nominees who hold shares of Actua’s common stock for beneficial owners have the discretion to vote on routine matters when they have not received voting instructions from those beneficial owners at least ten days prior to the applicable meeting. On a non-routine matter, banks, brokers and other nominees do not have the discretion to direct the voting of the beneficial owners’ shares (as they do on a routine matter), and, if the beneficial owner has not provided voting instructions with respect to that matter, there will be a “broker non-vote” on the matter. Broker non-votes will not be counted for purposes of calculating whether a quorum is present at the Special Meeting, will have the effect of a vote against the Sale Proposal and will not be counted for purposes of determining the number of votes present in person or represented by proxy with respect to the Transaction-Related Compensation Proposal or the Adjournment Proposal. Actua urges you to provide instructions to your bank, broker or other nominee so that your votes may be counted for each proposal to be voted upon. You should provide voting instructions for your shares by following the instructions provided on the voting instruction form that you receive from your bank, broker or other nominee.

 

Q. Who will pay for the cost of this proxy solicitation?

A. Actua will pay the cost of soliciting proxies on behalf of the Board. Actua’s directors, officers and employees may solicit proxies on Actua’s behalf in person or by telephone, facsimile or electronically via the Internet, as described above. Actua has engaged Broadridge Financial Solutions, Inc. (“Broadridge”) to assist Actua in the

 

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distribution of proxies. Actua has engaged Innisfree M&A Incorporated (“Innisfree”), to assist in the solicitation of proxies. Actua will also reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in sending Actua’s proxy materials to beneficial owners of Actua’s common stock as of the record date.

 

Q. Who will count and certify the vote?

A. Representatives of Broadridge will count the votes and certify the voting results. The voting results are expected to be published in a Current Report on Form 8-K filed with the SEC within four business days following the conclusion of the Special Meeting.

 

Q. How can I access the proxy materials electronically?

A. Copies of the Notice of Special Meeting, proxy statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as other materials filed by Actua with the SEC, are available without charge to stockholders on Actua’s corporate website at www.actua.com or upon written request to Actua Corporation, Attention: Investor Relations, 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087. You can elect to receive future annual reports, proxy statements and other proxy materials electronically by marking the appropriate box on your proxy card or voting instruction form or by following the instructions provided if you submit a proxy by telephone or via the Internet.

Proposed Transactions

 

Q. What are the proposed Transactions?

A. The proposed Transactions are comprised of the sale of Actua’s interests in its three majority-owned businesses, Velocity, Bolt and FolioDynamix, which collectively represent substantially all of the assets of Actua. Actua’s interests in Velocity and Bolt will be sold to Arsenal Buyer on the terms and conditions set forth in the Velocity/Bolt Sale Agreement, and Actua’s interests in FolioDynamix will be sold to Envestnet on the terms and conditions set forth in the Folio Sale Agreement.

 

Q. What are the total proceeds that Actua estimates it will receive from the Transactions?

A. Actua estimates that it will realize cash proceeds in the range of between approximately $472 million and approximately $502 million from the Transactions, assuming the closing of each of the Velocity/Bolt Sale and the Folio Sale. Actua expects to pay U.S. federal income taxes in connection with the Transactions but does not expect the amount to be material.

Under the Velocity/Bolt Sale Agreement, the aggregate purchase price is approximately $328 million in cash, based on a total enterprise value of $354 million. A portion of the gross proceeds from the Velocity/Bolt Sale will be used to pay Actua’s expenses associated with such transaction. If a Secondary Bolt Sale occurs prior to the closing of the Velocity/Bolt Sale, then the purchase price to be paid by or on behalf of Arsenal Buyer at closing will be reduced by an amount equal to (i) $35 million plus (ii) 50% of the net proceeds paid to Actua or one of its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments. If a Secondary Bolt Sale occurs following the closing of the Velocity/Bolt Sale pursuant to a definitive agreement entered into before March 23, 2018 (or before April 22, 2018, so long as, prior to March 23, 2018, (i) Arsenal Buyer has accepted, subject to entering into definitive documentation, a bona fide offer for the purchase of Bolt and (ii) certain transaction-related conditions, including diligence conditions, have been met), Actua Holdings would receive 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments.

Under the Folio Sale Agreement, the aggregate merger consideration is $195 million in cash, subject to certain adjustments, including the potential downward Consent Adjustment, and adjustments for working capital, cash,

 

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debt and unpaid transaction expenses. Assuming, among other things, receipt of client consents representing at least 95% of the Target Revenue, Actua expects to receive approximately $174 million of net proceeds from the Folio Sale, and of these proceeds, $975,000 will be held in escrow to satisfy potential indemnification claims, $100,000 will be held in escrow to satisfy potential working capital adjustments and $500,000 will be held as a stockholder representative’s expense fund.

 

Q. If the Transactions are consummated, how does Actua intend to use the proceeds from the Transactions?

A. As described above, Actua estimates that it will realize cash proceeds in the range of between approximately $472 million and approximately $502 million from the Transactions, assuming the closing of both the Velocity/Bolt Sale and the Folio Sale. Actua intends to take the necessary actions to distribute substantially all of the net proceeds from the Transactions to its stockholders. The timing and amount of cash to be distributed to Actua’s stockholders will depend on the timing of the closings and the amount of net proceeds realized from the Transactions. Actua intends to distribute substantially all of the net proceeds as soon as practicable following the closing of both the Velocity/Bolt Sale and the Folio Sale. There can be no assurance, however, of the exact amount of cash proceeds to be distributed to Actua’s stockholders or of the exact timing of any such distributions. Actua has not set a record date for any such distribution, and an Actua stockholder must hold shares of Actua’s common stock as of the applicable record date in order to receive a distribution.

 

Q. What will happen if stockholders do not approve the Transactions?

A. In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement, Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets. If the Velocity/Bolt Sale Agreement is terminated following a failure of Actua’s stockholders to approve the Transactions, Actua would be obligated to pay Arsenal Buyer an amount equal to the reasonable out-of-pocket costs and expenses it incurred in connection with the Velocity/Bolt Sale Agreement and the transactions contemplated thereby, up to a maximum of $3.25 million. If there was an Acquisition Proposal that had been publicly announced prior to such a termination and within 12 months after such a termination Actua enters into a definitive agreement with respect to an Acquisition Proposal and the transactions contemplated thereby are later consummated, Actua would be obligated to pay Arsenal Buyer a termination fee of approximately $8.8 million under the terms of the Velocity/Bolt Sale Agreement, less any expenses of Arsenal Buyer previously reimbursed. See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees.”

The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale, and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

 

Q. What is the Transaction-Related Compensation Proposal?

A. The Transaction-Related Compensation Proposal is a non-binding advisory vote to approve the payment of certain compensation to Actua’s executive officers that is based on or otherwise relates to the Transactions. For further information regarding these compensation arrangements, see “Interests of Certain Persons in the Transactions.”

 

Q. What will happen if the Transaction-Related Compensation Proposal is approved by Actua’s stockholders?

A. The non-binding advisory vote on executive compensation payable to Actua’s executive officers in connection with the Transactions is a vote separate and apart from the Sale Proposal. Accordingly, approval of this proposal

 

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is not a condition to consummating either the Velocity/Bolt Sale or the Folio Sale, and, as an advisory vote, the result will not be binding on the Board or on the Compensation Committee of the Board.

 

Q. What if Actua receives another offer for the membership interests of Arsenal Holdings?

A. Under the Velocity/Bolt Sale Agreement, Actua has agreed that, subject to certain exceptions, it will not, and will cause its subsidiaries and representatives not to, directly or indirectly, (i) initiate, solicit or knowingly facilitate the making of an Acquisition Proposal or any inquiry, proposal or request for information that would reasonably be expected to lead to, or result in, an Acquisition Proposal, (ii) subject to certain exceptions, engage in negotiations or discussions with, or furnish any information concerning Arsenal Holdings or any of its subsidiaries to, any third party who has made, or in response to, an Acquisition Proposal or any inquiry, proposal or request for information that would reasonably be expected to lead to, or result in, an Acquisition Proposal, or (iii) resolve or agree to take any such actions.

However, prior to obtaining stockholder approval for the Sale Proposal, if Actua receives an unsolicited written Acquisition Proposal that has not resulted from a breach of Actua’s non-solicitation obligations, then Actua may engage in negotiations or discussions with, or furnish any information and reasonable access to, such third party if the Board determines in good faith, after consultation with its outside legal and financial advisors is, or would reasonably be expected to lead to or result in, a Superior Proposal. After compliance with the notice and negotiation provisions of the Velocity/Bolt Sale Agreement, the Board may withdraw, modify or qualify its recommendation that the stockholders approve the Sale Proposal and terminate the Velocity/Bolt Sale Agreement in order to enter into a definitive agreement with respect to such Superior Proposal, in each case subject to the payment of a termination fee. See “The Velocity/Bolt Sale Agreement—Unsolicited Proposals.”

 

Q. What if Actua receives another offer for FolioDynamix or its assets?

A. Under the Folio Sale Agreement, Actua has agreed that it will not, and will cause its affiliates and their respective directors, officers, employees, representatives and advisors not to, (i) solicit, initiate or encourage the submission of any proposal or offer from any other person relating to a Folio Competing Transaction, (ii) participate in or continue any activities, discussions or negotiations regarding a Folio Competing Transaction, or (iii) provide information regarding FolioDynamix or any of its subsidiaries to, or enter into or agree to enter into any contract with any person other than Envestnet, in connection with a possible Folio Competing Transaction. Therefore, unlike under the Velocity/Bolt Sale Agreement, if an unsolicited proposal to purchase FolioDynamix emerges, Actua will not be able to negotiate with that bidder without violating its obligations under the Folio Sale Agreement.

 

Q. Will Actua continue operations if the Velocity/Bolt Sale and Folio Sale are completed?

A. Yes, for a period of time. Following the consummation of the Velocity/Bolt Sale and the Folio Sale, Actua intends to wind down its operations and monetize its remaining holdings, which consist largely of minority ownership stakes in private companies, and to distribute its other cash assets, such as, among other things, any deferred consideration under the Folio Sale Agreement. There can be no assurance as to how long this process will take or what the results of this process will yield. Actua intends to significantly reduce its operating costs during this wind-down stage and return net proceeds from the sale of its remaining holdings and its other cash assets to its stockholders, less amounts reasonably expected to be needed to fund Actua’s operations and satisfy its liabilities.

 

Q. What will happen if the Velocity/Bolt Sale and/or the Folio Sale are not completed?

A. If the Velocity/Bolt Sale and/or the Folio Sale are not completed, Actua may explore other strategic alternatives, including the sale of Actua, Arsenal Holdings, Velocity, Bolt and/or FolioDynamix to other parties. However, any alternative transaction may have terms that are less favorable to Actua than the terms of the Transactions, or Actua may be unable to reach agreement for an alternative transaction with a third party.

 

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Q. Will I have dissenting stockholders’ appraisal rights with respect to the Transactions?

A. No. You are not entitled to dissenting stockholders’ appraisal rights under Delaware law in connection with the Transactions.

 

Q. Are there any risks related to the proposed Transactions?

A. Yes, there are certain risks related to the proposed Transactions. Actua encourages you to carefully read the section entitled “Risk Factors” beginning on page 26.

 

Q. Will I owe any federal income taxes as a result of the Velocity/Bolt Sale or the Folio Sale?

A. Neither the Velocity/Bolt Sale nor the Folio Sale will result in any direct U.S. federal income tax consequences to Actua’s stockholders. You are urged to read the discussions in the sections entitled “Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale” and “Certain U.S. Federal Income Tax Consequences of the Folio Sale” for a summary of certain material U.S. federal income tax consequences to Actua of the Transactions, and to consult your tax advisor as to the U.S. federal income tax consequences of the Transactions, as well as the effects of state, local and foreign tax laws, to you upon the closing of the Transactions or the anticipated distribution of the net proceeds thereof to Actua’s stockholders.

General

 

Q. Who can help answer my questions?

A. If you have any additional questions about the Special Meeting, the Transactions, the Sale Proposal, the Transaction-Related Compensation Proposal or the Adjournment Proposal, how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, you should contact Actua, Innisfree (Actua’s proxy solicitor) or Broadridge:

 

    Actua Corporation, 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087; or by phone at (610) 727-6900.

 

    Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022; or by phone at (212) 750-5833.

 

    Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717; or by phone at (888) 554-9413.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this proxy statement that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, risks associated with Actua’s ability to compete successfully in highly-competitive, rapidly-developing markets, the valuation of public and private cloud-based businesses by analysts, investors and other market participants, Actua’s ability to deploy capital effectively and on acceptable terms, the effect of economic conditions generally, capital spending by Actua’s customers, Actua’s ability to retain existing customer relationships and revenue streams and secure new ones, developments in the markets in which Actua operates and Actua’s ability to respond to those changes in a timely and effective manner, the availability, performance and security of Actua’s cloud-based technology, particularly in light of increased cybersecurity risks and concerns, Actua’s ability to retain key personnel, Actua’s ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions, share repurchases or other strategic transactions (including in connection with the execution and consummation thereof), Actua’s ability to have continued access to capital and to manage capital resources effectively, Actua’s ability to satisfy the closing conditions for the transactions described above and other risks and uncertainties detailed in Actua’s filings with the SEC. These and other factors may cause actual results to differ materially from those projected.

Other factors that could cause Actua’s actual results to differ materially from those projected in forward-looking statements include, but are not limited to, factors discussed elsewhere in this proxy statement and include, among other things:

 

    the occurrence of any event, change or circumstance that could give rise to the termination of the Velocity/Bolt Sale Agreement or the Folio Sale Agreement;

 

    the outcome of any legal proceedings that have been or may be initiated against any of the other parties to the Velocity/Bolt Sale Agreement or the Folio Sale Agreement;

 

    the inability to complete the Velocity/Bolt Sale due to the failure to obtain stockholder approval or the inability to complete the Velocity/Bolt Sale and/or the Folio Sale due to the failure to satisfy other conditions to closing the Velocity/Bolt Sale or the Folio Sale, including, with respect to the Folio Sale, the Consent Condition and the 606 Condition;

 

    the failure of the Velocity/Bolt Sale or the Folio Sale to close for any other reason;

 

    risks that the Velocity/Bolt Sale or the Folio Sale may disrupt current plans and operations and the potential difficulties in employee retention generally;

 

    the amount of the costs, fees and expenses related to the Transactions;

 

    the failure of Arsenal Buyer or Envestnet to be ready, willing and able to consummate the transactions contemplated by the Velocity/Bolt Sale Agreement or the Folio Sale Agreement, respectively; and

 

    risks that Actua’s residual non-cash assets following the consummation of the Transactions lose value or are unable to be monetized on favorable terms or at a favorable price to Actua.

In light of those risks, uncertainties and assumptions, the forward-looking events discussed in this proxy statement might not occur. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue” or the negative of such terms or other similar expressions. All forward-looking statements attributable to Actua or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements included in this proxy statement. Actua undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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RISK FACTORS

You should carefully consider each of the following risks and all of the other information contained or incorporated by reference in this proxy statement, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements” on page 25 and the appendices hereto, before deciding how to vote your shares of Actua common stock at the Special Meeting.

The risks described below are the risks that Actua currently believes are the material risks of which Actua’s stockholders should be aware. Nonetheless, additional risks that are not presently known to Actua, or that Actua currently believes are not material, may also prove to be important.

Risks Relating to the Transactions

Either or both of the Transactions may not be completed if certain required conditions, many of which are outside of Actua’s and its businesses’ control, are not satisfied.

Completion of each of the Transactions is subject to various closing conditions, including, but not limited to the absence of legal orders prohibiting the consummation of such transaction, the termination or expiration of applicable waiting periods under the HSR Act, the absence of conditions or circumstances constituting a material adverse effect with respect to Actua’s businesses, the accuracy of the representations and warranties of the parties to the Velocity/Bolt Sale Agreement or the Folio Sale Agreement, as applicable, the parties’ performance and compliance with the agreements and covenants contained in the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, as applicable, and, in the case of the Folio Sale Agreement, the Consent Condition and the 606 Condition. The Velocity/Bolt Sale is also conditioned upon approval by the stockholders of Actua.

Despite Actua’s and its businesses’ best efforts, Actua and/or its businesses may not be able to satisfy or timely obtain the various closing conditions, and such failure or delay in completing either of the Transactions may cause uncertainty or other negative consequences that may materially and adversely affect Actua’s performance, financial condition, results of operations, stock price and the perceived value of the Transactions.

Actua or one of its subsidiaries may waive one or more of the closing conditions without re-soliciting stockholder approval.

Actua may determine to waive or cause one of its subsidiaries to waive, in whole or in part, one or more of the conditions to Actua’s or its subsidiaries’ obligations to consummate either of the Transactions. Actua expects to evaluate the materiality of any waiver and its effect on Actua’s stockholders in light of the facts and circumstances at the time to determine whether any amendment of this proxy statement or any re-solicitation of proxies is required in light of such waiver. Any determination whether to waive any condition to either of the Transactions or as to re-soliciting stockholder approval or amending this proxy statement as a result of a waiver will be made by Actua or one of its subsidiaries, at the time of such waiver and based on the facts and circumstances as they exist at that time.

Each of the Velocity/Bolt Sale Agreement and the Folio Sale Agreement may be terminated in accordance with its respective terms, and the Transactions may not be completed. Failure to complete either of the Transactions could adversely affect Actua’s business.

If either the Velocity/Bolt Sale Agreement or the Folio Sale Agreement is terminated in accordance with its respective terms and the Velocity/Bolt Sale or the Folio Sale is not completed, or if either of the Transactions is not completed for any other reason, including, but not limited to, if the conditions to closing of either of the Transactions are not satisfied, Actua will be subject to several risks, including that (i) the price of Actua’s common stock may decline if either of the Transactions is not completed, to the extent Actua’s current stock price reflects a market assumption that the Transactions will occur, (ii) Actua will remain liable for significant

 

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transaction costs that would be payable even if the Transactions are not completed, (iii) a failed transaction may result in negative publicity and a negative impression of Actua in the investment community, (iv) Actua’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Transactions, and (v) any disruptions to Actua’s business resulting from the announcement and pendency of either of the Transactions, including any adverse changes in Actua’s and/or its businesses’ relationships with employees, vendors and customers, could continue or accelerate in the event of a failed transaction. For these and other reasons, failure to consummate either of the Transactions could adversely impact Actua’s business, financial condition, results of operations, and stock price.

In addition, if the Velocity/Bolt Sale Agreement is terminated by Actua or Actua Holdings to enter into an alternative acquisition agreement in respect of a Superior Proposal or by Arsenal Buyer due to a change in the Board’s recommendation that Actua’s stockholders approve the Sale Proposal, Actua may be required to pay a termination fee of approximately $8.8 million to Arsenal Buyer. If the Velocity/Bolt Sale Agreement is terminated because Actua’s stockholders fail to approve the Sale Proposal, Actua may be required to reimburse Arsenal Buyer’s and its affiliates’ reasonable out-of-pocket costs and expenses incurred in connection with the Velocity/Bolt Sale Agreement and the transactions contemplated thereby of up to a maximum amount of $3.25 million. See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees” for more information.

If the Folio Sale Agreement is terminated, and the Folio Sale is not completed, FolioDynamix may be at a competitive disadvantage with respect to its competitors, which could adversely affect Actua and FolioDynamix.

The industry that FolioDynamix operates in is highly competitive. Even though FolioDynamix is operating in a “business as usual” manner during the period between signing the Folio Sale Agreement and the closing of the Folio Sale, due to the inherit uncertainty of FolioDynamix’s long-term status as an independent business, potential new clients may be more likely to contract with competitors rather than FolioDynamix. Existing clients may also be more vulnerable to switching to other firms during this time. If for any reason the Folio Sale Agreement is terminated, and the Folio Sale is not completed, FolioDynamix may be at a competitive disadvantage with respect to its competitors generally as FolioDynamix seeks to reestablish its ability to attract and maintain clients, and with respect to Envestnet in particular because Envestnet would possess detailed information about FolioDynamix, its business and its operations.

Actua has incurred and will continue to incur substantial transaction-related costs in connection with each of the Transactions.

Actua has incurred, and expects to continue to incur, a number of non-recurring transaction-related costs in initiating and completing the Transactions. These fees and costs have been, and will continue to be, substantial. Non-recurring transaction costs include, but are not limited to, fees for multiple transactions paid to Actua’s financial, legal and accounting advisors, filing fees and printing costs. These costs may be higher than expected (particularly given the 606 Condition and the requirement that Actua deliver standalone audited financial statements for FolioDynamix).

Actua’s businesses will be subject to certain contractual restrictions while the Transactions are pending.

The Velocity/Bolt Sale Agreement and the Folio Sale Agreement each contain certain customary covenants that restrict Actua’s businesses from paying dividends, making capital expenditures in excess of certain thresholds, making certain acquisitions and divestitures, entering into certain contracts (including with respect to customers), incurring certain indebtedness, and taking other specified actions until the earlier of the completion of the respective transaction or the termination of the Velocity/Bolt Sale Agreement or the Folio Sale Agreement, as applicable, without the consent of Arsenal Buyer or Envestnet, as applicable. These restrictions may prevent Actua’s businesses from pursuing attractive business opportunities that may arise while the Transactions are pending. Adverse effects arising from the pendency of the Transactions could be exacerbated by any delays in

 

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consummation of either of the Transactions or the termination of the Velocity/Bolt Sale Agreement or the Folio Sale Agreement, as applicable. See “The Velocity/Bolt Sale Agreement—Conduct of the Business” and “The Folio Sale Agreement—Conduct of the Business” for more information.

The Velocity/Bolt Sale Agreement and the Folio Sale Agreement contain certain customary provisions that may discourage other companies from trying to enter into a strategic transaction with Actua for greater consideration.

The Velocity/Bolt Sale Agreement and the Folio Sale Agreement contain certain customary provisions that may discourage a third party from submitting a business combination proposal to Actua during the pendency of the Transactions that could result in greater value to Actua’s stockholders. The Velocity/Bolt Sale Agreement includes a general prohibition on Actua (subject to certain exceptions) from soliciting any competing proposals or engaging in discussions with any third party in respect of a competing proposal or request for information that could result in an acquisition proposal, subject to limited exceptions. The Velocity/Bolt Sale Agreement prohibits the Board from (i) withdrawing its recommendation that Actua’s stockholders vote for the approval of the Velocity/Bolt Sale, (ii) taking any action to exempt any person from any applicable state law takeover statute, (iii) approving, adopting or recommending a competing proposal or publicly proposing to do any of the foregoing, and (iv) allowing Actua or any of Actua’s subsidiaries to execute or enter into certain binding agreements with any third party in respect of a competing proposal, subject to certain exceptions. Notwithstanding the non-solicitation obligations described above, prior to obtaining stockholder approval of the Sale Proposal at the Special Meeting, if Actua receives a bona fide written Acquisition Proposal that has not resulted from a breach of the non-solicitation obligations, then Actua may engage in negotiations or discussions with, or furnish any information and reasonable access to, such third party if the Board determines in good faith, after consultation with Actua’s outside legal and financial advisors, that such Acquisition Proposal is, or would reasonably be expected to lead to or result in, a Superior Proposal.

In addition, if the Velocity/Bolt Sale Agreement is terminated by Actua to enter into an alternative acquisition agreement in respect of a Superior Proposal or by Arsenal Buyer due to a change in the Board’s recommendation for Actua’s to approve the Sale Proposal, Actua may be required to pay a termination fee of approximately $8.8 million to Arsenal Buyer. If the Velocity/Bolt Sale Agreement is terminated because Actua’s stockholders fail to approve the Sale Proposal, Actua may be required to reimburse Arsenal Buyer’s and its affiliates’ reasonable out-of-pocket costs and expenses incurred in connection with the Velocity/Bolt Sale Agreement and the transactions contemplated thereby of up to a maximum amount of $3.25 million. See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees” for more information.

The Folio Sale Agreement includes a general prohibition on FolioDynamix or any of FolioDynamix’s subsidiaries from (A) soliciting, initiating or encouraging the submission of any proposal or offer from any person relating to a competing transaction, (B) participating in or continuing any discussions or negotiations regarding a Folio Competing Transaction, (C) providing certain information about FolioDynamix or any of FolioDynamix’s subsidiaries, or (D) entering into or agreeing to enter into any contract with any third party in connection with a competing transaction. If an unsolicited proposal to purchase FolioDynamix emerges, FolioDynamix will not be able to negotiate with that bidder without violating its obligations under the Folio Sale Agreement. See “The Velocity/Bolt Sale Agreement—Unsolicited Proposals,” “Velocity/Bolt Sale Agreement—Change in Recommendation” and “The Folio Sale Agreement—Exclusivity” for additional information.

Certain of Actua’s officers and directors have interests in the Transactions that may be different from the interests of Actua’s stockholders generally.

Certain of Actua’s officers and directors may have interests in the Transactions that are different from or in addition to those of Actua’s stockholders generally. These interests may include change in control severance payments for certain officers, treatment of other equity awards for officers and directors and the indemnification of former directors and officers. Actua’s stockholders should be aware of these interests when they consider the

 

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recommendations of the Board that they vote “FOR” the approval of the Sale Proposal and “FOR” the approval of the Transaction-Related Compensation Proposal. The Board was aware of these interests when it unanimously determined that the Velocity/Bolt Sale Agreement and Folio Sale Agreement, and the respective transactions contemplated thereby, were fair to, and in the best interests of Actua’s stockholders and unanimously recommended that Actua’s stockholders approve the Sale Proposal. For additional information on these interests of Actua’s executive officers and directors, see “Interests of Certain Persons in the Transactions.”

The amount of capital distributed to stockholders as a result of the Transactions may be less than Actua’s expectations. Furthermore, there can be no assurance about the method, timing or amounts of any such distributions.

Actua intends to distribute substantially all of the net proceeds from the Velocity/Bolt Sale and the Folio Sale, which are expected to be in the range of between approximately $472 million and approximately $502 million, to its stockholders as soon as practicable following the closing of both the Velocity/Bolt Sale and the Folio Sale. There can be no assurance, however, of the exact amount of cash proceeds to be distributed to Actua’s stockholders or of the exact timing of any such distributions. The amount of capital available for distribution and the method and timing of such distributions will depend on several factors, including but not limited to:

 

    the consummation of the Transactions, including the receipt of required approvals, the time required to obtain approvals, and the total proceeds realized;

 

    the value realized from the Transactions, including the successful execution of related agreements and underlying transactions, and the timing of the related transactions;

 

    the outcomes of contingencies, including Actua’s legal and regulatory matters, indemnification obligations, and other contingencies (both relating to the Transactions and otherwise) and, in the case of the Folio Sale, the receipt of third party consents and the working capital adjustment;

 

    the value at which Actua believes it will be able to monetize its residual non-cash assets following the consummation of the Transactions; and

 

    working capital and contingent cash requirements of Actua’s remaining business.

In addition, the method, timing and amount of any returns of capital will be at the discretion of the Board and will depend on market and business conditions and Actua’s overall capital structure and liquidity position. Actua expects to make an initial distribution soon after the closing of the Transactions, but Actua has not set a record date for any such distribution, and an Actua stockholder must hold shares of Actua’s common stock as of the applicable record date in order to receive a distribution. See “Anticipated Use of Proceeds from the Transactions.”

The opinions of Actua’s financial advisor will not be updated to reflect changes in circumstances between signing of the Velocity/Bolt Sale Agreement or the Folio Sale Agreement and the closing of the Velocity/Bolt Sale or the Folio Sale, respectively.

Actua has not obtained updated opinions from Actua’s financial advisor as of the date of this proxy statement, and Actua does not currently anticipate asking Actua’s financial advisor to update its opinions regarding the Velocity/Bolt Sale or the Folio Sale. Changes in the operations and prospects of Actua and its subsidiaries, general market and economic conditions and other factors beyond Actua’s control, and on which Actua’s financial advisor’s opinions were based, may significantly alter the value of Velocity or Bolt by the time the Velocity/Bolt Sale is completed or FolioDynamix at the time the Folio Sale is completed. The opinions of Actua’s financial advisor do not speak as of the time the Velocity/Bolt Sale or the Folio Sale will be completed or as of any date other than the date of such opinions. As such, unless Actua requests its financial advisor to update its opinions (which Actua does not currently anticipate doing), the opinions will not address the fairness

 

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of the consideration from a financial point of view at the time of the Special Meeting or at the time the Velocity/Bolt Sale or the Folio Sale is completed. The Board’s recommendation that Actua’s stockholders vote “FOR” the Sale Proposal, however, is made as of the date of this proxy statement. For a description of the opinions that Actua received from Actua’s financial advisor, see “Opinions of Actua’s Financial Advisor Regarding the Transactions.”

While either the Velocity/Bolt Sale or the Folio Sale is pending, there may be uncertainty about the future of Actua and its individual businesses, which could have a material adverse effect on the business, financial condition and results of operations of Actua and its individual businesses.

While either the Velocity/Bolt Sale or the Folio Sale is pending, there may be uncertainty about the future of Actua and its businesses that introduces additional risks to Actua and its businesses. The risks related to the pendency of the Transactions include:

 

    the diversion of management and employee attention from Actua’s and its individual businesses’ day-to-day business;

 

    the potential disruption to customers, business partners and service providers;

 

    the loss of employees who may depart due to concerns regarding uncertainty relating to their jobs following the closing of the Velocity/Bolt Sale and/or the Folio Sale; and

 

    the potential inability to respond effectively to competitive pressures, industry developments and future opportunities.

The occurrence of any of these events individually or in combination could have a material adverse effect on Actua’s and/or its individual businesses’ business, financial condition and results of operations. Additionally, Actua has incurred substantial transaction costs and experienced substantial diversion of management resources in connection with the Velocity/Bolt Sale and the Folio Sale, and Actua will continue to do so until the final closing or termination of the Transactions.

If either or both of the proposed Transactions are not completed, Actua may explore other potential transactions, but any such alternatives may be less favorable to Actua.

If either of the proposed Transactions are not completed, Actua may explore other strategic alternatives, including a sale of Actua’s controlling majority equity in Actua’s businesses to another party or parties. An alternative transaction may have terms that are less favorable to Actua than the terms of the proposed Transactions, or Actua may be unable to reach agreement with any third party on an alternative transaction that Actua would consider to be reasonable.

Risks Relating to Actua if the Transactions are Consummated

Following the consummation of the Transactions, Actua intends to begin to wind down its operations and monetize its remaining holdings.

Following the consummation of the Transactions, Actua intends to begin to wind down its operations and monetize its remaining holdings, which consist largely of minority ownership stakes in private companies, and to distribute its other cash assets. Actua intends to significantly reduce its operating costs during this wind-down stage. Actua’s goal is to monetize its remaining holdings over a 12- to 18-month period following the closing of the Transactions.

However, Actua may not be able to sell Actua’s minority holdings during the identified time frame, for amounts projected or otherwise on desirable terms, if at all, and there can be no assurance as to how long this process will take or what the results of this process will yield. There can be no assurance as to whether Actua will

 

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realize the value of escrowed proceeds, holdbacks or other contingent consideration associated with the Folio Sale and the sale of its other assets during that period. Additionally, there can be no assurance that Actua will be able to satisfy its liabilities during that period. Further, the method, timing and amount of any distributions will be at the discretion of the Board and will depend on market and business conditions and Actua’s overall capital structure and liquidity position. See “Effects on Actua if the Transactions are Consummated” for additional information.

Following the Transactions, the continuing costs and burdens associated with being a public company will constitute a much larger percentage of Actua’s expenses.

If the Transactions are completed, in the immediate term, Actua will remain a public company and will continue to be subject to the listing standards of NASDAQ and SEC rules and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002. While all public companies face the costs and burdens associated with being public companies, the costs and burden of being a public company will be a significant portion of Actua’s expenses if the Transactions are completed.

As part of the process of winding down Actua’s operations and liquidating its remaining assets following the closing of the Transactions and the distribution of substantially all the net proceeds from the Velocity/Bolt Sale and the Folio Sale, Actua intends to delist Actua’s common stock with NASDAQ and seek to deregister its common stock with the SEC in connection with the adoption of a plan of liquidation. There can be no assurance, however, as to the timing of such actions, or whether such actions will be completed at all, and Actua will continue to face the costs and burdens of being a public company until such time as its common stock is delisted with NASDAQ and deregistered with the SEC.

 

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THE SPECIAL MEETING

Date, Time and Place

This proxy statement is being furnished in connection with the solicitation of proxies on behalf of the Board for use at the Special Meeting of Actua stockholders to be held on December 7, 2017, at 10:00 a.m. Eastern Time or at any adjournments or postponements thereof. The Special Meeting will be held at The Radnor Hotel, 591 East Lancaster Avenue, St. Davids, Pennsylvania 19087. If you need directions to the location of the Special Meeting in order to attend the Special Meeting and vote in person, please contact Actua’s Corporate Secretary, Suzanne L. Niemeyer, at (610) 727-6874.

Purpose

The Special Meeting is being held to request that Actua stockholders consider and vote upon: (i) the Sale Proposal, (ii) the Transaction-Related Compensation Proposal and (iii) if necessary, the Adjournment Proposal, each as described in this proxy statement. Copies of the Velocity/Bolt Sale Agreement and the Folio Sale Agreement are attached to this proxy statement at Appendix A and Appendix B, respectively, and are incorporated by reference in their entirety into this proxy statement.

Actua does not expect a vote to be taken on any other matters at the Special Meeting. If, however, any other matters properly come before the Special Meeting, proxy holders will vote thereon in accordance with their discretion.

Record Date, Stockholders Entitled to Vote

The Board has specified the close of business on November 2, 2017 as the record date for the purpose of determining the stockholders of Actua who are entitled to receive notice of, and to vote at, the Special Meeting. Only Actua’s stockholders of record on the close of business on the record date are entitled to notice of, and to vote at, the Special Meeting. As of the record date, there were 32,156,605 shares of Actua’s common stock issued and outstanding and entitled to notice of, and to vote at, the Special Meeting. Each share of Actua’s common stock entitles its holder to one vote on all matters properly coming before the Special Meeting.

Quorum, Required Votes

The Special Meeting will be held only if a quorum, consisting of a majority of the outstanding shares of Actua’s common stock entitled to vote, is represented in person or by proxy. At the close of business on November 2, 2017, the record date for the Special Meeting, 32,156,605 shares of common stock were outstanding and eligible to vote at the Special Meeting, meaning that 16,078,303 shares of common stock must be represented at the Special Meeting in person or by proxy in order to have a quorum.

The Sale Proposal must be approved by the affirmative vote of a majority of the outstanding shares of Actua’s common stock entitled to vote at the Special Meeting.

The Transaction-Related Compensation Proposal must be approved by the affirmative vote of a majority of the shares of Actua’s common stock present in person or by proxy at the Special Meeting.

The Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of Actua’s common stock present in person or represented by proxy at the Special Meeting, regardless of whether a quorum is present.

Broker Non-Votes and Abstentions

For each of the Sale Proposal and the Transaction-Related Compensation Proposal, you may vote FOR, AGAINST or ABSTAIN. Abstentions will have the effect of a vote against each of the proposals and will count for the purpose of determining whether a quorum is present at the Special Meeting.

 

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Under applicable stock exchange rules, banks, brokers and other nominees who hold shares of Actua’s common stock for beneficial owners have the discretion to vote on routine matters when they have not received voting instructions from those beneficial owners at least ten days prior to the applicable meeting. On a non-routine matter, banks, brokers and other nominees do not have the discretion to direct the voting of the beneficial owners’ shares (as they do on a routine matter), and, if the beneficial owner has not provided voting instructions with respect to that matter, there will be a “broker non-vote” on the matter. Broker non-votes will be counted for purposes of calculating whether a quorum is present at the Special Meeting but will not be counted for purposes of determining the number of votes present in person or represented by proxy and entitled to vote with respect to a particular proposal. Accordingly, a broker non-vote will not negatively impact Actua’s ability to obtain a quorum and will not otherwise directly affect the outcome of the vote on the Transaction-Related Compensation Proposal or the Adjournment Proposal (each of which is a non-routine matter that requires the approval of a majority of the shares present in person or represented by proxy and entitled to vote at the Special Meeting) but will have the effect of a vote against the Sale Proposal (a non-routine matter that requires a majority of shares entitled to vote at the Special Meeting).

Recommendation of the Board

The Board has unanimously approved and adopted the Velocity/Bolt Sale Agreement and the Folio Sale Agreement and determined that the Transactions and the other agreements and transactions contemplated by the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, respectively, are advisable and in Actua’s and its stockholders’ best interests. The Board unanimously recommends that Actua’s stockholders approve the Transactions, which together constitute a sale of substantially all of Actua’s assets, by voting “FOR” the approval of the Sale Proposal. However, the Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement. For a description of the factors considered by the Board in making its determinations with respect to the Velocity/Bolt Sale and the Folio Sale, see the sections in this proxy statement entitled “The Velocity/Bolt Sale—Recommendation of the Board,” “The Velocity/Bolt Sale—Reasons for Recommending the Velocity/Bolt Sale and the Sale Proposal and The Folio Sale—Reasons for Recommending the Folio Sale and the Sale Proposal.” The Board also unanimously recommends that Actua’s stockholders approve the Transaction-Related Compensation Proposal and, if necessary, the Adjournment Proposal by voting “FOR” the approval of such proposals.

THE BOARD UNANIMOUSLY RECOMMENDS THAT ACTUA’S STOCKHOLDERS VOTE “FOR” THE SALE PROPOSAL, “FOR” THE TRANSACTION-RELATED COMPENSATION PROPOSAL, AND, IF NECESSARY, “FOR” THE ADJOURNMENT PROPOSAL.

Solicitation of Proxies and Voting Procedures

Your shares may be voted at the Special Meeting only if you are present or represented by proxy. Whether or not you plan to attend the Special Meeting, you are encouraged to submit a proxy to ensure that your shares will be represented. If you hold shares in your own name as of the close of business on November 2, 2017, the record date for the Special Meeting, you have three ways to submit your proxy prior to the Special Meeting:

 

    Via the Internet: Actua encourages you to submit your proxy over the Internet at www.proxyvote.com;

 

    Via telephone: You may submit your proxy by calling 1-800-690-6903; or

 

    Via mail: If you elected to receive your proxy materials by mail, you may submit a proxy by completing, signing and returning the proxy card that was sent to you.

If you are submitting a proxy over the Internet or by telephone, you will need to use the control number provided with your proxy materials. Proxies submitted via the Internet or by telephone must be received by 11:59

 

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p.m., ET, on December 6, 2017. If you hold your shares through an account with a bank or a broker, please follow the directions provided to you by your bank, broker or other nominee; your ability to submit a proxy via the Internet or by telephone depends on the voting procedures of your bank, broker or other nominee.

If you want to vote in person at the Special Meeting, you must retain the top portion of your proxy card as your admission ticket and bring a valid government-issued picture identification with you to the Special Meeting. If you hold your shares through an account with a bank, broker or other nominee, you must obtain a valid proxy in your name from your bank, broker or other nominee and bring that proxy as your admission ticket to the Special Meeting, together with a valid government-issued picture identification and evidence from your bank, broker or other nominee (including a bank or brokerage statement) reflecting your common stock ownership as of November 2, 2017, the record date for the Special Meeting.

This proxy solicitation is being made and paid for by Actua on behalf of Actua’s Board. The cost of soliciting proxies, including expenses in connection with preparing and mailing of this proxy statement, will be borne by Actua. Actua has retained Broadridge to assist in the distribution of proxies for a nominal fee, reimbursement of reasonable out-of-pocket expenses and indemnification against certain losses, costs and expenses. Actua has retained Innisfree to assist in soliciting the proxy votes. In addition to the use of mail, proxies may be solicited by directors, officers and regular employees of Actua, without additional compensation. Proxies may be solicited by mail, in person, by telephone, over the Internet or by other electronic means. Actua will also request brokers and other fiduciaries to forward proxy solicitation material to the beneficial owners of shares of Actua’s common stock that the brokers and fiduciaries hold of record, and Actua will reimburse such brokers and other fiduciaries for their reasonable out-of-pocket expenses incurred in connection therewith.

Voting by, and Revocation of, Proxies

If you submit a proxy via the Internet, by telephone or by returning a signed proxy card by mail, your shares will be voted at the Special Meeting as you indicate. If you sign your proxy card without indicating your vote, your shares will be voted “FOR” the Sale Proposal, “FOR” the Transaction-Related Compensation Proposal, and, if necessary, “FOR” the Adjournment Proposal. If you hold your shares through an account with a bank or a broker, you will receive instructions from your bank, broker or other nominee that you must follow in order to have your shares voted. If you fail to correctly follow the instructions from your bank, broker or other nominee, your shares may not be voted. See “Broker Non-Votes and Abstentions” for additional information.

You can revoke your proxy at any time before the voting at the Special Meeting by sending a properly signed written notice of your revocation to Actua’s Corporate Secretary before the Special Meeting, by submitting another proxy that is properly signed and bearing a later date, by following the specified procedures for submitting a proxy electronically and changing your vote, or by voting in person at the Special Meeting. Attendance at the Special Meeting will not itself revoke an earlier submitted proxy. You should direct any written notices of revocation and related correspondence to Actua Corporation, Attention: Corporate Secretary, 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087.

Householding of Proxy Materials

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy materials. This means that only one copy of the notice and proxy statement may have been sent to multiple stockholders in your household. Actua will promptly deliver a separate copy of those materials to you if you request one by writing, calling or e-mailing Actua’s Investor Relations group at Actua Corporation, 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087 (telephone—610-727-6900; e-mail—ir@actua.com). If you want to receive separate copies of those materials in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact Actua at the above address and phone number.

 

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Other Business

Actua does not expect that any matter other than the Sale Proposal, the Transaction-Related Compensation Proposal and, if necessary, the Adjournment Proposal will be brought before the Special Meeting. If, however, any other matter properly comes before the Special Meeting, proxy holders will vote thereon in accordance with their discretion.

Questions and Additional Information

If you have questions about the Velocity/Bolt Sale, the Folio Sale, the advisory (nonbinding) vote on executive compensation payable in connection with the Transactions or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call Actua’s Corporate Secretary, Suzanne L. Niemeyer, at (610) 727-6874 or Innisfree toll-free at (212) 750-5833.

Availability of Documents

Any documents referenced in this proxy statement will be made available for inspection and copying at Actua’s principal executive offices at 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087, during Actua’s regular business hours by any interested holder of Actua’s common stock.

 

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PROPOSAL 1—THE TRANSACTIONS

At the Special Meeting, Actua’s stockholders will be asked to consider and vote upon a proposal to approve the Transactions, which together constitute a sale of substantially all of Actua’s assets.

For a summary of and detailed information regarding the Sale Proposal, see the information about the Transactions set forth in the sections of this proxy statement captioned “The Velocity/Bolt Sale” beginning on page 41 of this proxy statement, “The Velocity/Bolt Sale Agreement” beginning on page 45 of this proxy statement, “The Folio Sale” beginning on page 57 of this proxy statement, and “The Folio Sale Agreement” beginning on page 61 of this proxy statement. A copy of the Velocity/Bolt Sale Agreement is attached to this proxy statement as Appendix A. A copy of the Folio Sale Agreement is attached to this proxy statement as Appendix B. You are urged to read the Velocity/Bolt Sale Agreement and the Folio Sale Agreement carefully and in their entirety.

BACKGROUND OF THE TRANSACTIONS

As part of Actua’s ongoing evaluation of its businesses and prospects in light of its corporate objectives and its constant mandate of delivering stockholder value, the Board and Actua’s senior management have, from time to time, considered potential strategic alternatives to continuing to own and operate Actua’s businesses (or certain of its businesses) in the ordinary course. More specifically, in 2016, Actua explored potential ways in which to unlock value for its stockholders, given market conditions whereby valuation multiples reflected in the sales of private, cloud-based companies (such as Actua’s four consolidated businesses) generally exceeded by a meaningful margin those reflected in the market stock price of Actua and similarly situated public cloud-based companies.

On September 20, 2016, following inbound interest from potential acquirers and an extensive auction process, Actua entered into an agreement to sell one of its four consolidated businesses, GovDelivery Holdings, Inc., to affiliates of Vista Equity Partners for $153 million in cash, subject to customary adjustments, which resulted in approximately $133 million in cash proceeds to Actua (such transaction, the “GovDelivery Sale”). The Board and Actua’s senior management believed that the market reacted quite favorably to the announcement of the GovDelivery Sale, as the closing market price per share of Actua’s common stock increased from $10.27 on September 23, 2016, the last trading day prior to Actua’s public announcement of the GovDelivery Sale, to $12.95 on September 30, 2016 (an approximately 26% increase). The GovDelivery Sale was consummated on October 18, 2016.

In early September 2016, when it seemed increasingly likely that the GovDelivery Sale would occur, Actua’s senior management and the Board, together with the assistance of Evercore as an outside financial advisor, began evaluating the potential uses of the proceeds of the pending GovDelivery Sale and other strategic issues.

On October 19, 2016, following the consummation of the GovDelivery Sale, representatives of Evercore presented to Actua management and the Board a review of market conditions/data and Actua’s potential strategic alternatives and potential uses of capital. At the same meeting, following Evercore’s presentation, the Board approved Actua’s launch of a “Dutch auction” tender offer to repurchase up to $80 million of its common stock following Actua’s announcement of its third quarter earnings (such transaction, the “Dutch Tender Offer”). Actua launched the Dutch Tender Offer in November 2016 and consummated the repurchase of approximately $64.2 million of shares under the Dutch Tender Offer in December 2016. The Board and Actua’s senior management believed that, as with the GovDelivery Sale, the market reacted favorably to the Dutch Tender Offer, since the closing market price per share of Actua’s common stock increased from $11.60 on November 2, 2016, the last trading day prior to Actua’s public announcement of its intent to launch the Dutch Tender Offer, to $14.80 on December 9, 2016, the day following Actua’s announcement of the preliminary results of the Dutch Tender Offer (an approximately 28% increase).

 

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During late 2016 and early 2017, based on the results of the GovDelivery Sale and the Dutch Tender Offer, which the Board and Actua management believed demonstrated an unlocking of stockholder value that was not, under current market conditions, being captured in Actua’s public stock price, Actua management and the Board continued to discuss, including with input from Evercore, Actua’s various strategic options, which included, among other things, continuing to own and build Actua’s existing businesses, selling one or more of its businesses, and selling Actua in its entirety.

At a meeting of the Board on January 27, 2017, Actua management presented to the Board regarding, and the Board discussed, Actua’s 2017 strategic planning process and a number of potential strategic alternatives, including management’s analysis regarding the strengths, weaknesses, opportunities and risks attendant to both Actua’s continuing to own and build Actua’s existing businesses (on the one hand) and Actua’s selling some combination or all of those businesses (on the other hand), taking into account, among other things, operating risks, transaction risks, likelihood of stockholder support, macro-dynamics and the long-term sustainability of Actua’s business model, given, among other things, the increasing costs and regulatory burden associated with Actua being a public company. The Board then met in a special session with Evercore and certain members of Actua’s management in attendance, during which the attendees discussed Actua’s potential strategic alternatives. Following the discussion, while it had not made a decision with respect to any of these potential strategic alternatives, the Board requested that management continue to review, including with input from Evercore, the possible pursuit of a sale of Actua or one or more of its businesses and to present to the Board a recommendation at the following Board meeting. Management continued considering other strategic alternatives during that time, including the possibility of continuing to own Actua’s existing businesses, and it was uncertain which alternatives, if any, Actua would pursue.

At the following meeting of the Board on March 10, 2017, Evercore reviewed with the Board certain preliminary financial analyses of Actua, based on projections provided to it by Actua’s management, and an overview of private and public market conditions, along with Actua’s current status (including stock price), and risks and opportunities relative to those conditions, and discussed potential acquirers of Actua as a whole. Evercore also reviewed with the Board certain preliminary financial analyses of each of Actua’s businesses including, for each business:

 

    financial projections provided to Evercore by management;

 

    industry and market position analysis;

 

    potential acquirers of the business; and

 

    aspects of the business that might be attractive to/problematic for potential acquirers.

Evercore also discussed with the Board the fact that inbound interest in Velocity had been expressed by various private equity firms, including CVC Capital Partners on behalf of CVC Growth Fund, to members of both Actua’s and Velocity’s management. Evercore once again presented the Board with a number of potential strategic alternatives, including the exploration of a sale of Actua as a whole, along with the simultaneous gauging of outside interest relative to the sale of one or more of Actua’s businesses. Following discussions regarding, among other things, the Board’s desires to maximize stockholder value and to reduce (to the extent possible) execution risk, the Board authorized management, with the assistance of Actua’s advisors, to prepare marketing materials, execute confidentiality agreements and take such other necessary or advisable steps to obtain initial indications of interest from financial sponsors that focus on software or cloud-based businesses and would be likely to have an interest in acquiring Actua, while simultaneously conducting an individual, highly targeted outreach to potential strategic acquirers of FolioDynamix. At this time, however, it was still uncertain which strategic alternatives, if any, Actua would ultimately pursue.

In March 2017, in accordance with the Board’s instructions, Evercore contacted 29 financial sponsors seeking interest in a sale of all of the equity of Actua. Of the 29 financial sponsors contacted, 21 entered into confidentiality agreements with Actua in order to proceed with due diligence. From March 31, 2017 to April 14,

 

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2017, Actua management presentations were conducted with 19 potential bidders. On April 7, 2017, at the direction of management, Evercore provided interested parties with a process letter which, among other matters, requested that interested parties submit, on or prior to April 18, 2017, preliminary, non-binding indications of interest to purchase all of the equity of Actua.

Several parties submitted preliminary, non-binding bids to acquire Actua on April 18, 2017, notably:

 

    CVC Capital Partners Advisory (U.S.), Inc.’s (“CVC”) preliminary non-binding bid on behalf of CVC Growth Fund, which was submitted on April 18, 2017 and revised on April 19, 2017, reflected a value of between $16.80 and $17.50 per share of Actua’s stock.

 

    Four other parties submitted preliminary bids to acquire Actua’s stock for purchase prices ranging from $15.50 to $17.75 per share.

 

    One party submitted a preliminary bid to acquire Actua for $300 million, conditioned on a simultaneous spinoff of Bolt, FolioDynamix and Actua’s minority holdings.

All of the preliminary proposals indicated that the parties submitting them still had substantial due diligence to complete.

The Board met on April 21, 2017 to discuss the preliminary bids. Evercore reviewed with the Board each bid proposal, as well as the strategic review process, including the level of engagement of each interested party and, based on discussions then to date, its views as to the likelihood of each party being able to ultimately acquire Actua in its entirety and the substantial uncertainty that still existed with respect to a sale of Actua. At the conclusion of the meeting, the Board instructed Evercore to contact each of the parties that had submitted preliminary bids, inviting the four bidders that had submitted the highest bids, including CVC, to the second round of the process and informing the other bidders that Actua would not proceed further with them in light of the financial inadequacy of their proposals. As instructed by the Board, Evercore sent a letter dated April 24, 2017, to the four highest bidders, including CVC, encouraging each of them to conduct further due diligence and to attend management presentations from Velocity, Bolt and FolioDynamix before submitting a final bid for Actua. One of the parties decided not to proceed in the process shortly after having been admitted into the second round. On July 3, 2017, following extensive diligence and management presentations, the remaining three bidders were provided, at the instruction of Actua’s management, with a final process letter, which called for each party to submit a firm offer to acquire Actua, along with a mark-up of the draft definitive acquisition agreement that had been provided, no later than July 24, 2017. One of the three remaining bidders withdrew from the process in mid-July without submitting a firm offer to acquire Actua, after participating in management presentations.

Concurrent with the ongoing Actua sale process, in mid-April 2017, Evercore contacted, at the direction of the Board, six potential strategic buyers of FolioDynamix and engaged in discussions with two additional potential strategic buyers that had expressed inbound interest in potentially acquiring FolioDynamix during this time period. Each of the eight parties executed a confidentiality agreement and received access to a confidential information memorandum. Five of those parties engaged in one or more meetings and/or telephonic discussions with management of Actua and/or FolioDynamix between April and July 2017, and four received access to an electronic data room. Evercore received two formal letters of intent, dated May 10, 2017 and June 12, 2017 from Envestnet for the acquisition of FolioDynamix at prices ranging from $160 million to $200 million and $180 million to $200 million, respectively. In process letters dated June 20, 2017 and July 2, 2017, each sent at the instruction of Actua’s management, two final bidders, including Envestnet, received instructions to submit a definitive offer to acquire FolioDynamix, along with a markup of the draft definitive acquisition agreement that had been provided, no later than July 24, 2017.

The two remaining bidders for Actua, including CVC, submitted non-binding final offers on July 24, 2017 and July 25, 2017. CVC submitted a final non-binding bid for CVC Growth Fund to acquire Actua at

 

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an estimated price per share of $16.66; CVC’s proposed purchase price was based on a number of assumptions, including, among other things:

 

    the sale of FolioDynamix to a third party prior to the consummation of the Actua/CVC Growth Fund transaction at an enterprise valuation of at least $200 million, with net cash proceeds to Actua of at least $191.5 million and no continuing liability to Actua with respect to FolioDynamix;

 

    the sale of Bolt to a third party with whom CVC was working at an enterprise valuation of $35 million; and

 

    a full release to Actua of the remaining $10 million escrow from the GovDelivery Sale (the “GovDelivery Escrow”).

CVC included with its bid a full markup of the draft acquisition agreement and noted that its offer for CVC Growth Fund to purchase Actua was not contingent on the completion of any due diligence, but that the third party that was identified as the potential acquirer of Bolt would need three weeks to complete confirmatory due diligence on Bolt. CVC also requested that Actua enter into an agreement providing for exclusive negotiations with CVC. The other remaining bidder for Actua submitted a bid to acquire Actua at an estimated price per share lower than CVC’s proposal, and its bid also assumed a sale of FolioDynamix to a third party with net cash proceeds to Actua of at least $200 million. The other party indicated that its bid was conditioned upon completion of confirmatory due diligence and did not submit comments on the draft definitive acquisition agreement with its bid.

On July 24, 2017, Envestnet submitted a bid to acquire FolioDynamix based on an enterprise valuation of $190 million, subject to customary adjustments for working capital, cash and indebtedness (and a potential upward price adjustment dependent on certain cost savings being uncovered during confirmatory due diligence), along with a closing condition relating to client consents. Envestnet also provided a markup of the draft definitive acquisition agreement with its bid.

The Board met on July 26, 2017 to discuss the most recent bids submitted by CVC and the other bidder for the sale of Actua, as well as the bid from Envestnet to acquire FolioDynamix. Evercore reviewed each proposal with the Board. The Board discussed the relative merits and considerations of each bid, and, as a result of those discussions, it instructed Evercore to seek “best and final” prices and terms.

Following Evercore’s request for CVC’s “best and final” offer, as instructed by the Board, on July 28, 2017, CVC submitted a revised non-binding bid in which it maintained its estimated per share price of $16.66 (based again on the assumptions regarding FolioDynamix and the GovDelivery Escrow set forth above) but provided that CVC Growth Fund would acquire Bolt directly through its purchase of Actua stock rather than assuming that a third party partner would purchase Bolt, thereby eliminating the need for any confirmatory diligence relative to the CVC bid and lessening overall execution risk. Thereafter, at the direction of Actua’s management, Evercore relayed to CVC that the Board might consider granting CVC’s previous request for exclusivity if CVC meaningfully increased its bid. CVC submitted a revised non-binding bid on July 30, 2017 (and a clarifying bid on August 1, 2017) for CVC Growth Fund to acquire Actua at an estimated per share price of $17.00 (based again on the assumptions regarding FolioDynamix and the GovDelivery Escrow set forth above, which were increasingly unlikely to occur). In addition to the price increase, the revised bids together provided that Actua and CVC Growth Fund would jointly pursue a sale of Bolt to a third party following the execution of a definitive Actua purchase agreement and that each of Actua and CVC Growth Fund would, subject to certain adjustments, receive 50% of any net proceeds paid to Actua or one of its affiliates (or, after the closing of the Velocity/Bolt Sale, to CVC Growth Fund or its affiliates) from a sale of Bolt in excess of the amount payable to Actua or its affiliates assuming an enterprise value for Bolt of $35 million, if that sale of Bolt occurs pursuant to a definitive agreement that is signed within six months (or, subject to certain conditions being met, seven months) following the execution of the definitive Actua/CVC Growth Fund purchase agreement.

 

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On the basis of CVC’s revised non-binding bid of August 1, 2017, following approval by the Board, Actua entered into an exclusivity agreement with CVC on August 1, 2017 providing for 45 days of exclusivity. Between July 24, 2017 and August 28, 2017, Actua, CVC and their respective advisors negotiated and exchanged drafts of the definitive purchase agreement and negotiated other key agreements, including a contingent value rights agreement that addressed future value that was contemplated by CVC’s bid to be retained by Actua’s stockholders following the consummation of CVC Growth Fund’s acquisition of Actua, including under the GovDelivery Escrow, any escrow, holdback or other contingent proceeds from Actua’s sale of FolioDynamix and any potential Bolt sale proceeds to which Actua would be entitled under the agreement, as described above.

The Board met on August 31, 2017 to, among other things, review the terms and open issues for both the potential Actua/CVC Growth Fund and FolioDynamix/Envestnet transactions and discuss the timing and process relating to both transactions. Based on a number of factors highlighted by management and Evercore, including the significant amount of residual rights and obligations of Actua following the closing of the FolioDynamix/Envestnet transaction as it was then contemplated, as well as the potential disparity in the timing of the signing and closing of the Actua/CVC Growth Fund and FolioDynamix/Envestnet transactions, the Board authorized management and Actua’s advisors to pursue an alternative structure in the Actua/CVC Growth Fund transaction whereby, in lieu of a sale of Actua to CVC Growth Fund through a merger, CVC Growth Fund would acquire all of Actua’s interests in Velocity and Bolt through the acquisition of a wholly-owned subsidiary of Actua, thus allowing for:

 

    the negotiation of an Actua/CVC Growth Fund transaction that would not be contingent upon the consummation of the FolioDynamix/Envestnet transaction, allowing the two transactions to be negotiated independently and, if necessary, announced and closed at separate times;

 

    the negotiation of a FolioDynamix/Envestnet transaction that would not be required to be free of any indemnities and/or other continuing liabilities; and

 

    a more orderly wind-down of Actua, along with a greater opportunity to maximize stockholder value in connection with the sale of Actua’s minority holdings.

Accordingly, on August 31, 2017, in accordance with the Board’s instructions, Evercore orally proposed to CVC an alternative structure whereby CVC Growth Fund would acquire all of Actua’s interests in Velocity and Bolt through the acquisition of a wholly-owned subsidiary of Actua at an enterprise value of $360 million. On September 5, 2017, CVC submitted an oral non-binding counteroffer under which CVC Growth Fund would acquire Velocity and Bolt through the alternative structure for a purchase price based on an enterprise value of $354 million. On September 8, 2017, Actua and its advisors delivered a draft Velocity/Bolt Sale Agreement to CVC and its advisors reflecting the revised transaction structure for the Velocity/Bolt Sale, including an indemnity by Actua for any losses or liabilities incurred by Arsenal Buyer and its affiliates as a result of Actua’s ongoing business operations unrelated to Velocity or Bolt. On September 12, 2017, CVC reaffirmed its $354 million enterprise value in a non-binding bid and delivered a further revised draft of the Velocity/Bolt Sale Agreement to Actua and its advisors. Between September 12, 2017 and September 22, 2017, Actua, CVC and their respective advisors negotiated and exchanged further drafts of the Velocity/Bolt Sale Agreement.

Between July 31, 2017 and September 25, 2017, Actua, Envestnet and their respective advisors negotiated and exchanged drafts of the Folio Sale Agreement, which negotiations resulted in an increase in the enterprise value in the Folio Sale to $195 million, subject to the Consent Adjustment.

The Board met on September 15, 2017 and September 21, 2017 to receive updates from Evercore and management regarding the Velocity/Bolt Sale process and the Folio Sale process (including at the September 15, 2017 meeting, Evercore’s preliminary financial analysis of the proposed Transactions), as well as updates from Evercore on certain open deal points and updates from Actua’s legal counsel on the terms and open issues in both the Velocity/Bolt Sale Agreement and the Folio Sale Agreement. During the meeting on September 15, 2017, Dechert LLP, as legal counsel to Actua and its subsidiaries (“Dechert”), presented to the Board regarding the Board’s fiduciary duties under Delaware law in the context of the Velocity/Bolt Sale and the Folio Sale.

 

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The Board met again on September 23, 2017, together with management, Evercore and Dechert. Dechert again discussed the Board’s fiduciary duties and also reviewed with the Board the terms of the proposed Velocity/Bolt Sale Agreement and Folio Sale Agreement, including the closing conditions for the transactions contemplated thereby (and the risks related thereto), the purchase price adjustments and indemnification obligations thereunder, the right of the Board (if any) to consider alternative transactions or change its recommendation to the stockholders for intervening events, the potential timing implications of the transactions contemplated thereby, and various other matters. Also at the meeting, Evercore reviewed its financial analyses of the Transactions and rendered its oral opinions, later confirmed by delivery of written opinions dated September 23, 2017, that, as of that date and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in the written opinions, the purchase price in the Velocity/Bolt Sale is fair, from a financial point of view, to Actua Holdings and the portion of the merger consideration to be received by Actua in the Folio Sale is fair, from a financial point of view, to Actua. Following discussions, the Board unanimously determined that each of the Velocity/Bolt Sale and the Folio Sale was advisable and in the best interests of Actua and its stockholders and approved the execution of the Velocity/Bolt Sale Agreement and the Folio Sale Agreement.

The Velocity/Bolt Sale Agreement was executed on September 23, 2017, and the Folio Sale Agreement was executed on September 25, 2017. After the close of market on September 25, 2017, Actua announced its entry into the Velocity/Bolt Sale Agreement and the Folio Sale Agreement, along with other related matters.

Past Contacts, Transactions or Negotiations

Other than as described under “Background of the Transactions” above, neither Actua nor any of its subsidiaries has had any negotiations, transactions or material contacts during the past two years with either CVC or Envestnet, and other than as described under “Background of the Transactions” above or set forth in the Velocity/Bolt Sale Agreement and the Folio Sale Agreement (and the other agreements contemplated thereby), there are no present or proposed material agreements, arrangements, understandings or relationships between Actua’s executive officers, directors or affiliates, on the one hand, and any of CVC, Envestnet or their respective executive officers or directors, on the other hand.

THE VELOCITY/BOLT SALE

The following, together with the discussion appearing above under the section captioned “Background of the Transactions,” is a summary of the material terms of the Velocity/Bolt Sale and the Velocity/Bolt Sale Agreement.

Overview of the Velocity/Bolt Sale

On September 23, 2017, Actua, Actua Holdings, Arsenal Holdings and Arsenal Buyer entered into the Velocity/Bolt Sale Agreement. Under the Velocity/Bolt Sale Agreement, Arsenal Buyer has agreed to purchase Actua’s interest in each of Velocity and Bolt through an acquisition of all of the outstanding membership interests of Arsenal Holdings, which holds all of Actua’s interests in Velocity and Bolt. The aggregate purchase price is approximately $328 million, based on a total enterprise value of $354 million for Velocity and Bolt. A portion of the proceeds to Actua from the Velocity/Bolt Sale will be used to pay Actua’s transaction costs. If a Secondary Bolt Sale occurs prior to the closing of the Velocity/Bolt Sale, then the purchase price to be paid by or on behalf of Arsenal Buyer at closing will be reduced by an amount equal to (i) $35 million plus (ii) 50% of the net proceeds paid to Actua or one of its affiliates from such the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments. If a Secondary Bolt Sale occurs following the closing pursuant to a definitive agreement entered into before March 23, 2018 (or before April 22, 2018, so long as, prior to March 23, 2018, (i) Arsenal Buyer has accepted, subject to entering into definitive documentation, a bona fide offer to purchase Bolt and (ii) certain transaction-related conditions, including diligence conditions, have been met),

 

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Actua Holdings would receive 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments.

The Velocity/Bolt Sale, which is subject to approval by the stockholders of Actua and a number of customary closing conditions, including the expiration or termination of the applicable waiting period under the HSR Act, is expected to be consummated in the fourth quarter of 2017. Actua expects to pay U.S. federal income taxes in connection with the Transactions but does not expect the amount to be material.

The Parties to the Velocity/Bolt Sale

Actua Corporation

Actua Corporation, a Delaware corporation (f/k/a ICG Group, Inc.), was formed on March 4, 1996 and is headquartered in Radnor, Pennsylvania. Actua is a multi-vertical cloud technology company with offerings that it believes create unique and compelling value for its customers and provide transformative efficiency to vertical markets. Actua’s common stock is currently traded on the NASDAQ Global Select Market under the symbol “ACTA.” Actua Corporation’s office is located at 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania, 19087.

Actua Holdings, Inc.

Actua Holdings, Inc., a Delaware corporation, is a wholly-owned subsidiary of Actua. Actua Holdings is a holding company for various businesses in which Actua is invested. Actua Holdings, Inc.’s office is located at 56 W. Main Street, Plaza 273, Suite 212A, Christiana, Delaware 19702.

Arsenal Acquisition Holdings, LLC

Arsenal Acquisition Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of Actua Holdings, holds all of Actua’s interests in Velocity and Bolt. Following the closing of the Velocity/Bolt Sale, Arsenal Holdings will be a wholly-owned subsidiary of Arsenal Buyer. Arsenal Acquisition Holdings, LLC’s office is located at 56 W. Main Street, Plaza 273, Suite 212A, Christiana, Delaware 19702.

Arsenal Buyer Inc.

Arsenal Buyer Inc., a Delaware corporation and affiliate of CVC Growth Fund, was formed on August 31, 2017 solely for the purpose of consummating the Velocity/Bolt Sale. Arsenal Buyer Inc.’s office is located at 712 Fifth Avenue, 43rd Floor, New York, New York 10019.

Recommendation of the Board

The Board, at a special meeting held on September 23, 2017, after due consideration, unanimously (i) determined that the Velocity/Bolt Sale on the terms and conditions of the Velocity/Bolt Sale Agreement is advisable and in the best interests of Actua and its stockholders, (ii) approved the Velocity/Bolt Sale on the terms and conditions of the Velocity/Bolt Sale Agreement and (iii) recommended that the Velocity/Bolt Sale Agreement and the consummation of the Velocity/Bolt Sale be submitted to Actua’s stockholders at a special meeting of stockholders for authorization and approval. The Board has unanimously approved the Velocity/Bolt Sale on the terms and conditions of the Velocity/Bolt Sale Agreement and unanimously recommends that Actua’s stockholders vote “FOR” the Sale Proposal.

Reasons for Recommending the Velocity/Bolt Sale and the Sale Proposal

The Board unanimously determined that the Velocity/Bolt Sale is advisable and in the best interests of Actua’s stockholders and approved and declared advisable the execution, delivery and performance of the

 

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Velocity/Bolt Sale Agreement and the consummation of the transactions contemplated thereby, including the Velocity/Bolt Sale. The Board recommends that the stockholders vote FOR the approval of the Sale Proposal. See Reasons for Recommending the Folio Sale and the Sale Proposal.

In evaluating the Velocity/Bolt Sale and the Velocity/Bolt Sale Agreement, the Board discussed the proposed transaction with Actua’s management and legal and financial advisors and considered a variety of factors, including, but not limited to, the following factors, which the Board viewed as generally supporting its decision to approve and enter into the Velocity/Bolt Sale Agreement and its recommendation that the stockholders vote “FOR” the Sale Proposal:

 

    the Board’s knowledge of the business, financial condition, strategy and prospects of Actua and its subsidiaries, considered as a whole and individually, including the risks and uncertainties inherent in Actua’s businesses;

 

    the Board’s evaluation, with the assistance of management and legal and financial advisors, of potential strategic alternatives for Actua and its businesses, which included continuing to operate and grow its businesses, selling Actua in its entirety and selling one or more of Actua’s businesses;

 

    the Board’s knowledge of Velocity’s and Bolt’s competitive positions within their respective markets;

 

    Actua’s difficulty in growing its businesses through mergers and acquisitions due to competition for acquisition targets as valuation multiples for private cloud-based companies have generally exceeded the valuation multiples at which Actua’s common stock trades;

 

    the discount applied to Actua’s common stock due to Actua’s size and its ownership of various companies in differing stages of growth and maturity;

 

    the lack of liquidity in Actua’s common stock and the lack of foreseeable catalysts for significant stock price appreciation;

 

    the Board’s desire to unlock value and provide liquidity for Actua’s stockholders, many of whom have indicated that they would welcome a return of capital to stockholders through cash distributions;

 

    the transaction presenting attractive combined revenue valuation multiples for Velocity and Bolt relative to the revenue valuation multiples at which Actua stock has traded;

 

    the fact that the consideration in the Velocity/Bolt Sale consists solely of cash, allowing Actua to distribute cash to its stockholders;

 

    the increasing burdens and costs associated with Actua and its subsidiaries complying with public company regulatory requirements, including requirements under the Sarbanes-Oxley Act of 2002;

 

    the view that Velocity and Bolt may be more suitable for private ownership due to their relative sizes and the nature of their businesses;

 

    the fact that Velocity had experienced a good deal of inbound interest from potential acquirers, which made a sale of Velocity likely to occur;

 

    concern that if Velocity and/or Folio were sold, Bolt’s size, the nature of its business and its historical operating performance would make it difficult for it to operate as a standalone public company;

 

    potential future cash needs of Bolt that Actua and Bolt’s other stockholders are reluctant or unwilling to provide; and

 

    long sales cycles at Bolt making it difficult for Bolt to reach an inflection point in its growth and to predict future results.

In reaching its determination and recommendation, the Board also considered the following potentially negative factors:

 

   

the fact that after the Velocity/Bolt Sale is consummated, Velocity and Bolt would no longer be subsidiaries of Actua, and Actua’s stockholders would no longer have the opportunity to participate in

 

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any future earnings or growth of Velocity or Bolt, or to benefit from any potential future appreciation in the value of Actua’s stock as a result of Actua’s majority stake in Velocity and Bolt;

 

    the restrictions imposed in the Velocity/Bolt Sale Agreement on Actua’s ability to solicit competing acquisition proposals from third parties;

 

    the fact that if Actua terminates the Velocity/Bolt Sale Agreement to enter into an alternative acquisition agreement, or if Arsenal Buyer terminates the Velocity/Bolt Sale Agreement because the Board changes in its recommendation that Actua’s stockholders approve the Sale Proposal, Actua may be required to pay a termination fee to Arsenal Buyer;

 

    the restrictions imposed on the conduct of the Velocity and Bolt businesses prior to the consummation of the Velocity/Bolt Sale;

 

    the risk that the conditions to closing the Velocity/Bolt Sale under the Velocity/Bolt Sale Agreement may not be satisfied and the Velocity/Bolt Sale therefore may not be consummated, which could result in a further diversion of management and employee attention, employee attrition and potentially negative effects on the business and customer relationships of Actua, Velocity and Bolt and the trading price of Actua’s stock; and

 

    the fact that Actua has historically had success in creating stockholder value by investing in businesses and could continue to drive value by pursuing other strategies in lieu of the Velocity/Bolt Sale.

The foregoing discussion of the factors considered by the Board is intended to be a summary of the principal factors considered by the Board and is not intended to be exhaustive. After considering these factors, the Board concluded that the positive factors relating to the Velocity/Bolt Sale substantially outweighed the potential negative factors. The Board unanimously reached the conclusion to approve the Velocity/Bolt Sale in light of the various factors described above and other factors that the members of the Board believed were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the Velocity/Bolt Sale and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision, and it did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Rather, the Board made its recommendation based on the totality of information it received and the investigation it conducted. In considering the factors discussed above, individual directors may have given different weight to different factors.

Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale

The following discussion is a summary of certain material U.S. federal income tax consequences of the Velocity/Bolt Sale. This discussion is a summary for Actua’s common stockholders and is intended for general information only. This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Department of the Treasury regulations promulgated thereunder, judicial opinions, and published positions of the Internal Revenue Service (the “IRS”), all as in effect as of the date of this document. Such authorities are subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements in this proxy statement. No rulings have been requested or received from the IRS as to the tax consequences of the Velocity/Bolt Sale and there is no intent to seek any such ruling. Accordingly, no assurance can be given that the IRS will not challenge the tax treatment of tax consequences of the Velocity/Bolt Sale discussed below or, if it does challenge the tax treatment, that it will not be successful. This discussion does not address any U.S. federal tax considerations other than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerations, alternative minimum tax considerations or any tax reporting requirements.

Tax Consequences of the Velocity/Bolt Sale to Actua’s Stockholders

The Velocity/Bolt Sale will not result in any direct U.S. federal income tax consequences to Actua’s stockholders. Each stockholder is urged to consult his or her own tax advisor as to the U.S. federal income tax

 

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consequences of the Velocity/Bolt Sale to such stockholder, as well as the effects of state, local and foreign tax laws, to such stockholder upon the closing of the Transactions or the anticipated distribution of the net proceeds thereof to such stockholder.

Tax Consequences of the Velocity/Bolt Sale to Actua

The transactions contemplated by the Velocity/Bolt Sale Agreement will be taxable to Actua for U.S. federal income tax purposes, but Actua does not expect to pay a material amount of U.S. federal income tax as a result of the Transactions. The amount of gain or loss Actua recognizes with respect to the Velocity/Bolt Sale will be measured by the difference between the cash and any other amount realized by Actua and Actua’s tax basis in the shares of Velocity and the shares of Bolt. It is expected that for U.S. federal income tax purposes, Actua will recognize gain on the sale of Velocity and loss on the sale of Bolt. It is anticipated that certain tax attributes of Actua and its affiliates will be available to offset a portion of any such income, gain, and taxes otherwise resulting from the Velocity/Bolt Sale for U.S. federal income tax purposes. The determination of whether and to what extent such tax attributes will be available is highly complex and is based in part upon facts that will not be known until after the completion of the Velocity/Bolt Sale, including the existence and amount of available losses, deductions, credits, and other tax attributes arising in the taxable year in which the Velocity/Bolt Sale occurs (and in prior taxable years).

Regulatory Approvals

The Velocity/Bolt Sale Agreement requires no action by or in respect of any governmental authority, other than compliance with any applicable requirements under the HSR Act, the Securities Act, the Exchange Act and any other applicable U.S. state or federal or foreign securities laws or stock exchange rules, including the rules of NASDAQ.

Appraisal Rights

Holders of Actua’s common stock are not entitled to appraisal rights in connection with the Transactions. The Delaware General Corporation Law does not provide appraisal rights or other similar rights to stockholders of a corporation in connection with a sale of subsidiaries, even if such sale represents a sale of substantially all of the assets of the corporation.

Vote Required

The affirmative vote of a majority of the outstanding shares of Actua’s common stock entitled to vote at the Special Meeting is required to approve the Sale Proposal. Abstentions will not be counted as votes cast or shares voting on the Sale Proposal, but will count for the purpose of determining whether a quorum is present at the Special Meeting. If you abstain, it will have the same effect as a vote “AGAINST” the Sale Proposal. Broker non-votes, if any, will be counted for purposes of calculating whether a quorum is present at the Special Meeting and will have the same effect as a vote “AGAINST” the Sale Proposal. See “Broker Non-Votes and Abstentions” on page 32 for additional information.

In addition to the satisfaction of the other conditions to closing set forth in the Velocity/Bolt Sale Agreement, Actua cannot complete the Velocity/Bolt Sale unless its stockholders approve the Sale Proposal, since the Velocity/Bolt Sale alone would constitute a sale of substantially all of Actua’s assets.

THE VELOCITY/BOLT SALE AGREEMENT

The discussion in this proxy statement of the terms and conditions of the Velocity/Bolt Sale Agreement is subject to and is qualified in its entirety by reference to the Velocity/Bolt Sale Agreement, a copy of which is attached as Appendix A to this proxy statement and is incorporated by reference herein.

 

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Explanatory Note Regarding the Velocity/Bolt Sale Agreement

The following is a summary of the material provisions of the Velocity/Bolt Sale Agreement. This summary does not purport to be complete and may not contain all of the information about the Velocity/Bolt Sale Agreement that may be important to you. The rights and obligations of the parties to the Velocity/Bolt Sale Agreement are governed by the express terms and conditions of the Velocity/Bolt Sale Agreement and not by this summary or any other information contained in this proxy statement. You are urged to read the Velocity/Bolt Sale Agreement carefully and in its entirety, as well as this proxy statement, before making any voting decisions. This summary is qualified in its entirety by reference to the Velocity/Bolt Sale Agreement, a copy of which is attached as Appendix A to this proxy statement and is incorporated by reference herein.

In reviewing the Velocity/Bolt Sale Agreement and this summary, please remember that they have been included to provide you with information regarding the terms of the Velocity/Bolt Sale Agreement and are not intended to provide any other factual information about Actua, Arsenal Buyer or any of their respective subsidiaries. The Velocity/Bolt Sale Agreement contains representations and warranties and covenants by each of the parties thereto, which are summarized below. These representations and warranties have been made solely for the benefit of the other parties to the Velocity/Bolt Sale Agreement and:

 

    were negotiated with the principal purpose of allocating risk between the parties if those statements prove to be inaccurate, rather than establishing matters of fact;

 

    may have been qualified by certain confidential disclosures that were made to the other party in connection with the negotiation of the Velocity/Bolt Sale Agreement, which disclosures are not reflected in the Velocity/Bolt Sale Agreement or this proxy statement; and

 

    may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors.

Moreover, the representations, warranties and covenants made in the Velocity/Bolt Sale Agreement were made only as of specified dates. Information concerning the subject matter of the representations and warranties in the Velocity/Bolt Sale Agreement and described below may have changed since September 23, 2017 and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement. Accordingly, the representations and warranties and other provisions of the Velocity/Bolt Sale Agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. See “Where You Can Find More Information; Incorporation by Reference” beginning on page 102.

Effects of the Velocity/Bolt Sale

Pursuant to the Velocity/Bolt Sale Agreement, Actua has agreed to sell all of the issued and outstanding membership interests of Arsenal Holdings to Arsenal Buyer. Upon the closing of the Velocity/Bolt Sale, Arsenal Holdings will be a wholly-owned subsidiary of Arsenal Buyer and Arsenal Buyer will indirectly own all of the interests in Velocity and Bolt currently owned indirectly by Actua, except that Actua will retain certain rights to a portion of the proceeds from a Secondary Bolt Sale by Arsenal Buyer or its affiliates if a definitive agreement is entered into prior to March 23, 2018 (or, subject to certain conditions, April 22, 2018) pursuant to the terms and conditions set forth in the Velocity/Bolt Sale Agreement.

Closing

The closing will take place at 9:00 a.m., Eastern Time, on the third business day following the day on which the last of the conditions to closing in the Velocity/Bolt Sale Agreement is satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver (to the extent permitted under the Velocity/Bolt Sale Agreement) of such conditions), unless the Velocity/Bolt Sale Agreement has been terminated pursuant to its terms or unless another time and/or date is agreed to in writing by the parties to the Velocity/Bolt Sale Agreement.

 

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Consideration

The purchase price to be paid by or on behalf of Arsenal Buyer at closing is approximately $328 million, which is based on an aggregate enterprise value of $354 million for Velocity and Bolt.

If a Secondary Bolt Sale occurs prior to the closing of the Velocity/Bolt Sale, then the purchase price to be paid by or on behalf of Arsenal Buyer at closing will be reduced by an amount equal to (i) $35 million plus (ii) 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments. If a Secondary Bolt Sale occurs following the closing pursuant to a definitive agreement entered into before March 23, 2018 (or before April 22, 2018, so long as, prior to March 23, 2018, (i) Arsenal Buyer has accepted, subject to entering into definitive documentation, a bona fide offer to purchase Bolt and (ii) certain transaction-related conditions, including diligence conditions, have been met), Actua Holdings would receive 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments. If, following the closing of the Velocity/Bolt Sale, Arsenal Buyer terminates the process relating to the Secondary Bolt Sale and then later completes a Secondary Bolt Sale pursuant to a definitive agreement entered into prior to March 23, 2018, Actua Holdings would receive the same portion of the net proceeds from the Secondary Bolt Sale as described in the previous sentence. See “The Velocity/Bolt Sale Agreement—Bolt Sale.”

Representations and Warranties

The Velocity/Bolt Sale Agreement contains representations and warranties made by Actua, Actua Holdings and Arsenal Holdings to Arsenal Buyer, and by Arsenal Buyer to Actua Holdings. Certain of the representations and warranties in the Velocity/Bolt Sale Agreement are subject to materiality or material adverse effect qualifications (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct is material or would reasonably be expected to have a material adverse effect). In addition, certain of the representations and warranties in the Velocity/Bolt Sale Agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue or incorrect as a result of matters of which certain officers of the party making the representation did not have actual knowledge.

The Velocity/Bolt Sale Agreement provides that, with respect to Arsenal Holdings and its subsidiaries, “Material Adverse Effect” means any circumstance, event, change, development, occurrence or effect (each, an “Effect”) that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, financial condition, assets or results of operations of Arsenal Holdings and its subsidiaries, taken as a whole. However, no Effect shall constitute or contribute to a Material Adverse Effect to the extent that such Effect arises out of, or results directly or indirectly from, and none of the following will be taken into account in determining whether a Material Adverse Effect has occurred or is continuing or would reasonably be expected to occur:

 

    general economic, business or regulatory conditions in the United States or elsewhere in the world;

 

    credit, debt, financial or capital markets, interest or exchange rates or commodity prices, in each case, in the United States or elsewhere in the world;

 

    conditions generally affecting the industry in which Arsenal Holdings and its subsidiaries operate;

 

    any national or international political conditions, any military conflict, declared or undeclared war, armed hostilities, acts of foreign or domestic terrorism or civil disobedience;

 

    any hurricane, flood, tornado, earthquake or other natural disaster or pandemic;

 

    changes or proposed changes in any applicable law or generally accepted accounting principles (or the interpretation thereof);

 

    any failure by Arsenal Holdings or any of its subsidiaries to meet any internal or external projections, estimates, expectations, earnings predictions or forecasts for any period, or to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations for any period (but excluding the underlying causes of such failure);

 

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    changes in the trading volume or trading price of Actua common stock or Actua’s credit rating (but excluding the underlying causes of such changes);

 

    subject to certain exceptions, the public announcement or pendency of the Velocity/Bolt Sale Agreement or the anticipated consummation of the transactions contemplated thereby (including the identity of Arsenal Buyer as the acquirer or any disclosure by Arsenal Buyer regarding its or its affiliates’ plans with respect to the conduct of the business following closing), including the impact thereof on relationships, contractual or otherwise, with officers, employees, customers, suppliers, distributors, vendors, licensors, licensees, lenders or governmental authorities or governmental officials;

 

    any action required to be taken by Actua Holdings or any of its subsidiaries pursuant to the Velocity/Bolt Sale Agreement; and

 

    subject to certain exceptions, any stockholder litigation.

Note, however, that in the case of the first five bullet points in the above list, any Effect may be taken into account in determining whether a Material Adverse Effect has occurred or is continuing or would reasonably be expected to occur to the extent such Effect has had or would reasonably be expected to have a disproportionate effect on Arsenal Holdings and its subsidiaries as compared to other participants in the industries in which they operate.

Conduct of the Business

Arsenal Holdings has agreed to certain covenants in the Velocity/Bolt Sale Agreement restricting the conduct of its business between September 23, 2017 and the closing of Velocity/Bolt Sale. In general, Arsenal Holdings has agreed to, and Actua and Actua Holdings have agreed to cause Arsenal Holdings and its subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course consistent with past practice, and to the extent consistent therewith, use its commercially reasonable efforts to preserve substantially intact its business organization and preserve satisfactory relationships with governmental authorities, employees, customers and suppliers having significant business dealings with them.

In addition to these agreements regarding conduct of business generally, Arsenal Holdings has agreed not to, and Actua and Actua Holdings have agreed to cause Arsenal Holdings and its subsidiaries not to, do any of the following:

 

    (i) declare, set aside, or pay any dividends on, or make any other distributions with respect to, any of its capital stock or other equity interests, other than dividends or distributions by a direct or indirect subsidiary to Arsenal Holdings or another of its subsidiaries, (ii) split, combine or reclassify any of its capital stock or other equity interests or issue or authorize the issuance of any other securities in substitution for shares of its capital stock or its other equity interests or (iii) purchase, redeem or otherwise acquire (A) any shares of its capital stock or its other equity interests or other voting securities or (B) any options, warrants, calls or rights to acquire, or any securities convertible into or exchangeable for, any such shares or other equity interests or voting securities;

 

    issue, deliver, sell, grant, pledge or otherwise encumber or subject to any lien any shares of its capital stock or its other equity interests or other voting securities or any options or other equity awards of Arsenal Holdings or its subsidiaries, warrants, calls or rights to acquire any such shares or other equity interests or other voting securities (other than the issuance of shares of capital stock of Velocity or Bolt pursuant to the exercise of equity awards of Velocity or Bolt issued and outstanding as of September 23, 2017);

 

    amend its organizational documents or the organizational documents of any of its subsidiaries;

 

    merge or consolidate with, or purchase an equity interest in, or acquire all or substantially all of the assets of, any person or any division or business thereof;

 

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    sell, lease, license or otherwise dispose of its real or personal properties or assets, subject to certain exceptions;

 

    (i) incur any indebtedness on its own behalf or on behalf of any of its subsidiaries or guarantee indebtedness of another person, subject to certain exceptions, or (ii) make any loans or capital contributions to, or investments in, any person, subject to certain exceptions;

 

    make any capital expenditures, other than in an aggregate amount not to exceed $100,000;

 

    enter into any contract that would constitute a material contract if in existence on September 23, 2017, or modify or amend in any material respect or terminate, or waive any material right or claim under, any material contract to which Arsenal Holdings or any of its subsidiaries is a party, in each case other than in the ordinary course of business consistent with past practice;

 

    (i) grant or agree to grant any increase in base salary, bonus opportunity or other compensation to any current or former executive officer, employee or director of Arsenal Holdings or any of its subsidiaries, except (A) as required under the terms of existing contracts (1) that were made available to Arsenal Buyer and (2) in effect as of September 23, 2017 or (B) in the ordinary course of business, increases in compensation to non-officer employees, (ii) adopt or terminate any employee plan or (iii) establish, enter into, modify, amend or terminate any employee plan or arrangement that would be an employee plan if in existence as of September 23, 2017, subject to certain exceptions;

 

    hire or terminate (other than for cause) the employment of any officer of Arsenal Holdings or its subsidiaries or promote any person to such position;

 

    enter into, modify, amend, or terminate any collective bargaining or other agreement with any labor union, works council, or similar labor organization;

 

    make any material change in accounting methods, principles or practices, subject to certain exceptions;

 

    make, revoke or change any income tax election or other material tax election; change any annual tax accounting period; adopt or make any change to any of its methods of accounting for tax purposes; file any amended income tax return or other material tax return; enter into any ruling request or closing agreement; settle or compromise any income tax claim or other material tax claim or assessment; prepare any income tax return or other material tax return in a manner that is inconsistent with past practice; consent to any extension or waiver of the limitations period applicable to any income tax claim or other material tax claim or assessment; or fail to timely make payments of income taxes or other material taxes when due, subject to certain exceptions;

 

    enter into any new material line of business outside of the business as conducted on September 23, 2017;

 

    waive, release, assign, settle or compromise any proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the out of pocket payment of monetary damages that do not exceed $300,000 in the aggregate for all such claims or proceedings, or commence any material claim, litigation, investigation or proceeding (other than certain stockholder litigation);

 

    adopt a plan or agreement of complete or partial liquidation or dissolution of Arsenal Holdings or any of its subsidiaries (other than a sale of Bolt, if applicable, in accordance with the terms of the Velocity/Bolt Sale Agreement and a definitive agreement for a sale of Bolt);

 

    fail to maintain, or allow to lapse, be dedicated to the public, be made “open source,” or be abandoned, any proprietary software or any material intellectual property rights; or

 

    authorize any of, or commit or agree to take any of, the foregoing actions.

 

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Unsolicited Proposals

Under the Velocity/Bolt Sale Agreement, Actua has agreed that, subject to certain exceptions described below, it and its subsidiaries will not, and will use reasonable best efforts to cause their respective representatives not to, directly or indirectly:

 

    initiate, solicit or knowingly encourage or knowingly facilitate the making of any Acquisition Proposal or any inquiry, proposal or request for information that would reasonably be expected to lead to, or result in, an Acquisition Proposal;

 

    other than informing third parties of the existence of the provisions governing Actua’s non-solicitation obligations, engage in negotiations or discussions with, or furnish any information concerning Arsenal Holdings or any of its subsidiaries to, any third party who has made, or in response to, an Acquisition Proposal or any inquiry, proposal or request for information that would reasonably be expected to lead to, or result in, an Acquisition Proposal; or

 

    resolve or agree to take any actions described above.

An “Acquisition Proposal” is any offer or proposal (other than an offer or proposal made or submitted by or on behalf of Arsenal Buyer) related to any transaction or series of related transactions involving (i) the acquisition of at least 15% of the assets of, equity interests in or business of Arsenal Holdings and its subsidiaries, taken as a whole, (ii) any merger, reorganization, recapitalization, consolidation or other business combination, sale of shares of capital stock or other equity interests, sale of assets, tender offer, exchange offer or other similar transaction of Arsenal Holdings and its subsidiaries or (iii) any combination of the foregoing. A Secondary Bolt Sale as contemplated by the Velocity/Bolt Sale Agreement does not constitute an Acquisition Proposal.

Notwithstanding the non-solicitation obligations described above, prior to obtaining stockholder approval of the Sale Proposal at the Special Meeting, if Actua receives a bona fide written Acquisition Proposal that has not resulted from a breach of the non-solicitation obligations described above, Actua may engage in negotiations or discussions with, or furnish any information and reasonable access to, such third party making such Acquisition Proposal or potential financing sources if the Board determines in good faith, after consultation with its outside legal and financial advisors, that such Acquisition Proposal is, or would reasonably be expected to lead to or result in, a Superior Proposal. If the Board determines that such Acquisition Proposal constitutes a Superior Proposal and that failure to approve or recommend such Superior Proposal to Actua’s stockholders would reasonably be expected to be inconsistent with the Board’s fiduciary duties under applicable law, Actua may terminate the Velocity/Bolt Sale Agreement and enter into an alternative acquisition agreement in respect of such Superior Proposal, provided that Actua must first notify Arsenal Buyer of its intent to so terminate the Velocity/Bolt Sale Agreement at least four business days prior to such termination and, if requested by Arsenal Buyer, Actua must engage in good faith negotiations with Arsenal Buyer regarding changes to the terms of the Velocity/Bolt Sale Agreement that would render the Acquisition Proposal no longer a Superior Proposal. If there is any amendment to the material terms of such Superior Proposal, Actua must provide notice to Arsenal Buyer and provide Arsenal Buyer with at least three business days’ notice prior to such termination.

A “Superior Proposal” is an Acquisition Proposal made by a third party involving the acquisition of at least 50% of the assets of, equity interests in or business (as determined by reference to consolidated revenues) of Arsenal Holdings and its subsidiaries, taken as a whole, that did not result from a breach of the non-solicitation obligations described above, that the Board determines in good faith, after consultation with Actua’s financial advisor and outside legal counsel, and considering such factors as the Board deems to be appropriate (including the conditionality and the timing and likelihood of consummation of such proposal), (i) is on terms that are more favorable to Actua, from a financial point of view, than the transactions contemplated by the Velocity/Bolt Sale Agreement and (ii) is reasonably capable of being consummated on the terms thereof.

In the event that Actua terminates the Velocity/Bolt Sale Agreement to enter into a definitive agreement in respect of a Superior Proposal, Actua must pay the termination fee required to be paid pursuant to the terms of

 

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the Velocity/Bolt Sale Agreement substantially concurrently with the termination. See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees.”

Change in Recommendation

If there is any development, event, fact, occurrence or change of circumstances (other than an Acquisition Proposal) that occurs or arises prior to stockholder approval of the Sale Proposal and was not known (or if known, the consequences or magnitude of which were not known or understood by the Board at the time the Velocity/Bolt Sale Agreement was executed), the Board may change its recommendation that the stockholders approve the Sale Proposal if the Board determines, after consultation with its outside legal advisor, that the failure to take such action would reasonably be expected to be inconsistent with the Board’s fiduciary duties, provided that at least four business days’ prior notice is provided to Arsenal Buyer advising Arsenal Buyer that Actua intends to take such action and specifying, in reasonable detail, the reasons for such action.

Stockholders Meeting

Actua has agreed to take, in accordance with applicable law and its certificate of incorporation and bylaws and the rules of NASDAQ, all action necessary to convene and hold a stockholders meeting as promptly as reasonably practicable for the purpose of obtaining stockholder approval of the Sale Proposal, subject to Actua’s rights under the Velocity/Bolt Sale Agreement with respect to a competing proposal, provided that Actua may postpone or adjourn the stockholders meeting with the consent of Arsenal Buyer to solicit additional proxies if Actua does not receive proxies representing a sufficient number of shares of common stock to approve the Sale Proposal, or to allow reasonable time for supplemental or amended disclosure which Actua has determined in good faith is reasonably necessary under applicable law to be disseminated and reviewed by Actua’s stockholders.

Efforts to Obtain Regulatory Approval

Subject to the terms and conditions in the Velocity/Bolt Sale Agreement, each of the parties has agreed to use its reasonable best efforts to take, or cause to be taken, the actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, the things necessary, proper or advisable under applicable laws and regulations or otherwise to consummate the transactions contemplated thereby, including using reasonable best efforts to (i) obtain the necessary actions or non-actions, waivers, consents, clearances, approvals, and expirations or terminations of waiting periods from governmental authorities and make the necessary registrations and filings and take the steps as may be necessary to obtain an approval, clearance or waiver from, or to avoid an action or proceeding by, any governmental authority, including, without limitation, in connection with any regulatory law, and (ii) obtain all necessary consents, approvals or waivers from, and deliver notices to, third parties.

Arsenal Buyer will not be required to propose, negotiate, commit to or effect, by agreement, consent decree, hold separate order, trust or otherwise, (i) the sale, divestiture or disposition of such assets, businesses, services products or product lines of Arsenal Buyer or Arsenal Holdings (or any of their respective subsidiaries or affiliates), or behavioral limitations, conduct restrictions or commitments with respect to any such assets, businesses, services, products or product lines of Arsenal Buyer or Arsenal Holdings (or any of their respective subsidiaries or affiliates), (ii) the creation or termination of relationships, ventures, contractual rights or obligations of Arsenal Holdings or Arsenal Buyer or their respective subsidiaries or affiliates and (iii) any other actions that would limit the freedom of action of Arsenal Buyer, Arsenal Holdings or any of their respective subsidiaries or affiliates with respect to, or its ability to retain, one or more of its or its subsidiaries (including Arsenal Holdings’) or its affiliates’ assets, businesses, services, products or product lines, or, in the event that any litigation is instituted which could have the effect of preventing the consummation of the transactions contemplated by the Velocity/Bolt Sale Agreement, defend any such litigation.

 

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The applicable HSR Act filings with respect to the Velocity/Bolt Sale Agreement were made by the parties on October 6, 2017, and early termination of the waiting period under the HSR Act was granted on November  3, 2017.

Financing

Arsenal Buyer will fund the purchase price under the Velocity/Bolt Sale Agreement from debt and equity financing and in connection therewith Arsenal Buyer delivered a debt commitment letter and equity commitment letter to Actua in respect of those financing commitments. Arsenal Buyer must use its reasonable best efforts to arrange and obtain debt financing on the terms and conditions of the debt commitment letter or, if such financing is unavailable, to arrange for alternative debt financing. Upon the request of Arsenal Holdings, Arsenal Buyer has agreed to use its reasonable best efforts to keep Actua Holdings reasonably informed about the status of and issues relating to the debt financing, and Actua and Actua Holdings have agreed to cause Arsenal Holdings to, and Arsenal Holdings has agreed to and to cause its subsidiaries and their respective directors, officers, employees, consultants and advisors to, use reasonable best efforts to cooperate with Arsenal Buyer’s efforts to obtain that financing.

Release

Effective upon the closing of the Velocity/Bolt Sale, Actua and Actua Holdings, each on behalf of itself and its subsidiaries (other than Arsenal Holdings and its subsidiaries), have agreed to waive, release and discharge Arsenal Holdings and its subsidiaries and certain other released parties from any and all liabilities, other than any obligation, covenant or agreement of Arsenal Buyer under the Velocity/Bolt Sale Agreement or any other document entered into or executed in connection therewith or any liability for fraud by Arsenal Buyer.

Conditions to Closing the Velocity/Bolt Sale

The obligation of each of Actua, Actua Holdings and Arsenal Buyer to effect the transactions contemplated by the Velocity/Bolt Sale Agreement is subject to the satisfaction or waiver (to the extent permitted by applicable law) of each of the following conditions:

 

    the stockholders of Actua have approved the transaction in accordance with applicable law, and the certificate of incorporation and bylaws of Actua;

 

    the waiting period under the HSR Act relating to the Velocity/Bolt Sale has expired or been terminated; and

 

    no order issued by a government authority or any applicable law is in effect that would make the Velocity/Bolt Sale illegal or otherwise prevent the consummation of the transaction.

The obligation of Arsenal Buyer to effect the transactions contemplated by the Velocity/Bolt Sale Agreement is subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:

 

    the representations and warranties made by Actua, Actua Holdings and Arsenal Holdings are true and correct as of September 23, 2017 and as of the closing or as of a certain specified date, subject to certain materiality thresholds;

 

    each of Actua, Actua Holdings and Arsenal Holdings has performed in all material respects any obligation or complied in all material respects with any agreement or covenant to be performed or complied with under the Velocity/Bolt Sale Agreement at any time prior to the closing;

 

   

since September 23, 2017, there has not been any Effect that has or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or any Effect that, individually or in combination with any other Effect, does or would reasonably be expected to prevent, materially delay, interfere with, impair or hinder Actua Holdings or Arsenal Holdings from performing any of its

 

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obligations under the Velocity/Bolt Sale Agreement or from consummating the transactions contemplated thereby; and

 

    each of Actua, Actua Holdings and Arsenal Holdings has provided certain deliverables.

The obligation of Actua and Actua Holdings to effect the transactions contemplated by the Velocity/Bolt Sale Agreement is subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:

 

    the representations and warranties made by Arsenal Buyer are true and correct as of September 23, 2017 and as of the closing or as of a certain specified date, subject to certain materiality thresholds;

 

    Arsenal Buyer has performed in all material respects any obligation or complied in all material respects with any agreement or covenant to be performed or complied with under the Velocity/Bolt Sale Agreement at any time prior to the closing; and

 

    Arsenal Buyer has provided certain deliverables.

Termination of the Velocity/Bolt Sale Agreement

The Velocity/Bolt Sale Agreement may be terminated and the transactions contemplated thereby may be abandoned at any time prior to the closing, whether before or after receipt of the approval of the stockholders, under the following circumstances:

 

    by mutual written agreement of Actua/Actua Holdings and Arsenal Buyer; or

 

    by either Actua Holdings, Actua or Arsenal Buyer, if:

 

    the closing has not occurred in accordance with the Velocity/Bolt Sale Agreement on or before March 23, 2018, provided that the right to terminate the Velocity/Bolt Sale Agreement under this provision is not available to any party whose material breach (including, with respect to Actua Holdings or Actua, material breach by Actua, Actua Holdings or Arsenal Holdings) of any of its obligations under the Velocity/Bolt Sale Agreement has been the primary cause of, or resulted in, the failure of the closing to be consummated by that date;

 

    any governmental authority of competent jurisdiction has issued a final, non-appealable order permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Velocity/Bolt Sale Agreement, provided that the right to terminate the Velocity/Bolt Sale Agreement under this provision is not available to any party whose material breach (including, with respect to Actua Holdings or Actua, material breach by Actua, Actua Holdings or Arsenal Holdings) of any of its obligations under the Velocity/Bolt Sale Agreement has been the primary cause of, or resulted in, that order;

 

    any order issued by a governmental authority having jurisdiction over any party hereto, or any applicable law, is in effect that, in each case, makes the consummation of the transactions contemplated by the Velocity/Bolt Sale Agreement illegal, or otherwise prevents the consummation of the transactions contemplated thereby; or

 

    the Special Meeting has been held and completed (after giving effect to any adjournment or postponement thereof) and Actua’s stockholders have not approved the Sale Proposal at such Special Meeting; or

 

    by Arsenal Buyer, if:

 

   

the Board has made a change in recommendation regarding stockholder approval of the Velocity/Bolt Sale (it being understood and agreed that any notice to Arsenal Buyer in accordance with the terms of the Velocity/Bolt Sale Agreement of the Board’s intentions to make such a change in recommendation prior to effecting such change in recommendation will not result in Arsenal

 

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Buyer having any termination rights pursuant to this provision), provided that Arsenal Buyer’s right to terminate the Velocity/Bolt Sale Agreement pursuant to this provision with respect to a change in recommendation expires at 5:00 p.m., New York City time, on the tenth calendar day following the change in recommendation; or

 

    Actua, Actua Holdings or Arsenal Holdings has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform (i) would give rise to the failure of certain conditions set forth in the Velocity/Bolt Sale Agreement and (ii) is incapable of being cured or has not been cured by Actua, Actua Holdings or Arsenal Holdings, as applicable, within 30 business days after written notice has been given by Arsenal Buyer to Actua Holdings or Actua of such breach or failure to perform, provided that Arsenal Buyer may not terminate the Velocity/Bolt Sale Agreement pursuant to this provision if, at the time such termination would otherwise take effect in accordance with the foregoing, Arsenal Buyer is in material breach of any provision of the Velocity/Bolt Sale Agreement; or

 

    by Actua/Actua Holdings, if:

 

    at any time prior to receiving stockholder approval of the Sale Proposal, (i) the Board has determined to terminate the Velocity/Bolt Sale Agreement in response to a Superior Proposal, (ii) substantially concurrently with such termination of the Velocity/Bolt Sale Agreement, Actua or Actua Holdings has entered into a definitive alternative acquisition agreement with respect to such Superior Proposal and (iii) substantially concurrently with such termination, Actua Holdings has paid to Arsenal Buyer by wire transfer in immediately available funds the termination fee required to be paid pursuant to the terms of the Velocity/Bolt Sale Agreement, as described below;

 

    Arsenal Buyer has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform (i) would give rise to the failure of certain conditions set forth in the Velocity/Bolt Sale Agreement and (ii) is incapable of being cured or has not been cured by Arsenal Buyer within 30 business days after written notice has been given by Actua Holdings or Actua to Arsenal Buyer of such breach or failure to perform, provided that neither Actua Holdings nor Actua may terminate in the Velocity/Bolt Sale Agreement pursuant to this provision if, at the time such termination would otherwise take effect in accordance with the foregoing, Actua, Actua Holdings or Arsenal Holdings is in material breach of any provision of the Velocity/Bolt Sale Agreement; or

 

    if (i) the conditions to Arsenal Buyer’s obligation to close the Velocity/Bolt Sale have been satisfied (other than those conditions that by their nature are to be satisfied at the closing of the Velocity/Bolt Sale Agreement, but subject to the satisfaction or waiver (to the extent permitted under the Velocity/Bolt Sale Agreement) of such conditions) or waived, (ii) Actua Holdings and Actua have irrevocably confirmed by written notice to Arsenal Buyer that all of the conditions to their obligation to close the Velocity/Bolt Sale have been satisfied or waived in writing (other than those conditions that by their nature are to be satisfied at the closing of the Velocity/Bolt Sale Agreement), and Actua and Actua Holdings have certified in writing that they are ready, willing and able to consummate the transactions contemplated by the Velocity/Bolt Sale Agreement on the date the closing is required to have occurred pursuant to the Velocity/Bolt Sale Agreement, and (iii) Arsenal Buyer fails to consummate the transactions within three business days following the later of (A) the date of delivery of such notice of termination and (B) the date the closing is required to have occurred pursuant to the Velocity/Bolt Sale Agreement.

The party desiring to terminate the Velocity/Bolt Sale Agreement, with limited exceptions, shall give notice of such termination to each other party to the Velocity/Bolt Sale Agreement and specify the applicable provision or provisions thereof pursuant to which such termination is effected.

 

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See “The Velocity/Bolt Sale Agreement—Expenses and Termination Fees” for certain consequences of terminating the Velocity/Bolt Sale Agreement.

Expenses and Termination Fees

If the Velocity/Bolt Sale Agreement is terminated prior to obtaining stockholder approval of the Sale Proposal by Actua Holdings or Actua in order to enter into an alternative acquisition agreement in respect of a Superior Proposal, or by Arsenal Buyer due to a change in the Board’s recommendation for stockholders to approve the Sale Proposal, Actua Holdings must pay Arsenal Buyer a fee of approximately $8.8 million substantially concurrently with such termination. If the Velocity/Bolt Sale Agreement is terminated due to a failure of the stockholders to approve the Sale Proposal, Actua must reimburse Arsenal Buyer’s and its affiliates’ reasonable out-of-pocket costs and expenses in connection with the transaction up to a maximum amount of $3.25 million.

If the Velocity/Bolt Sale Agreement is terminated (i) by any party thereto due to a failure of the closing thereunder to occur by March 23, 2018 or a failure of Actua’s stockholders to approve the Sale Proposal at the Special Meeting or (ii) by Arsenal Buyer if Actua, Actua Holdings or Arsenal Holdings has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Velocity/Bolt Sale Agreement, which breach or failure to perform would give rise to the failure of a closing condition and is incapable of being cured or has not been cured within 30 business days after written notice of such breach or failure to perform, and in either case an Acquisition Proposal had been publicly announced (and not publicly withdrawn) and within 12 months of the date of termination of the Velocity/Bolt Sale Agreement, Actua or Actua Holdings enters into a definitive agreement with respect to an Acquisition Proposal that is thereafter consummated (or any other acquisition transaction is consummated within such 12-month period), then Actua must promptly pay Arsenal Buyer a termination fee of approximately $8.8 million, less any expenses previously reimbursed as described above.

If the Velocity/Bolt Sale Agreement is terminated by Actua Holdings or Actua in the event that (i) the conditions to Arsenal Buyer’s obligation to close the Velocity/Bolt Sale have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions), (ii) Actua Holdings and Actua have confirmed in writing that the conditions to their obligations to close have been satisfied, and have certified in writing that they are ready, able and willing to close the Velocity/Bolt Sale, and (iii) Arsenal Buyer has failed to close within the later of three business days after (A) the date of delivery of such written notice and certificate and (B) the date the closing is required to occur under the Velocity/Bolt Sale Agreement, then except in a circumstance where Arsenal Holdings is seeking specific performance, Arsenal Buyer must promptly, but in no event later than five business days after the date of such termination, pay or cause to be paid to Actua Holdings in immediately available funds an amount equal to approximately $12.9 million. Arsenal Buyer has delivered a limited guarantee to Actua Holdings guaranteeing payment of such termination fee, as well as payment of certain costs and expenses incurred by Actua up to a maximum of $2 million.

If either Actua or Arsenal Buyer, as applicable, has failed to pay the applicable termination fee to the other party when due, such party must pay the other party all reasonable costs and expenses (including reasonable fees and expenses of counsel) in connection with the collection and enforcement of the applicable termination fee and any interest on such unpaid amount accruing from the due date at an interest rate per annum equal to 2% in excess of the prime commercial leading rate quoted by The Wall Street Journal.

Except as otherwise described above, all costs and expenses of the parties to the Velocity/Bolt Sale Agreement are required to be paid by the party incurring such cost or expense.

Specific Performance

The parties are entitled to an injunction to prevent breaches of the Velocity/Bolt Sale Agreement and to specifically enforce the terms and provisions of the Velocity/Bolt Sale Agreement. Actua Holdings is also

 

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entitled to specifically enforce the closing of the Velocity/Bolt Sale in the event that (i) all of the conditions to Arsenal Buyer’s obligation to close the Velocity/Bolt Sale have been satisfied (other than those conditions that by their nature are to be satisfied at the closing), (ii) Arsenal Buyer has failed to complete the closing by the date required under the terms of the Velocity/Bolt Sale Agreement, (iii) Arsenal Buyer’s debt financing for the transaction has been funded or will be funded if Arsenal Buyer’s equity financing is funded at closing and (iv) Actua and Actua Holdings have irrevocably confirmed in writing that if specific performance is granted and Arsenal Buyer’s debt and equity financing are funded, then the closing of the Velocity/Bolt Sale will occur.

Indemnification

The Velocity/Bolt Sale Agreement requires Actua Holdings and Actua to jointly and severally indemnify, defend and hold harmless Arsenal Holdings, Arsenal Buyer, their respective affiliates, and their respective officers, directors, managers, partners, employees, equityholders, representatives, successors and assigns from and against any and all claims, losses, liabilities, damages, deficiencies, interest and penalties, costs and expenses, including in connection with or resulting from the defense, settlement and/or compromise of a claim, demand or assessment, and including the reasonable costs, expenses and fees of attorneys, accountants, expert witnesses and investigators incurred by any of them arising out of, in connection with or relating to the following matters:

 

    activities of Actua or any of its affiliates, other than Velocity and Bolt, before, on or after September 23, 2017, including with respect to its minority investments and any other businesses owned or conducted by Actua or its affiliates or any predecessor persons;

 

    actions taken with respect to an internal restructuring prior to signing the Velocity/Bolt Sale Agreement;

 

    certain stockholder litigation;

 

    claims by stockholders of Bolt in connection with the Velocity/Bolt Sale or a Secondary Bolt Sale that occurs within 18 months after the closing of the Velocity/Bolt Sale; and

 

    certain transaction expenses incurred by Arsenal Holdings or Velocity in excess of approximately $7.7 million.

Actua Holdings and Actua also agree to jointly and severally indemnify, defend and hold harmless Arsenal Buyer and its affiliates from and against any losses arising from or relating to any taxes of Actua or its affiliates (other than Arsenal Holdings and its subsidiaries), including taxes arising as a result of Velocity or Bolt being part of or owned by, or ceasing to be part of or owned by, an affiliated group on or prior to the closing of the Velocity/Bolt Sale.

Amendments and Waivers

Any provision of the Velocity/Bolt Sale Agreement may be amended or waived at any time before or after the requisite approvals by the parties, but only if such amendment or waiver is in writing and signed, in the case of an amendment, by each party to the Velocity/Bolt Sale Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, provided, that without the further approval of Actua’s stockholders, no such amendment or waiver shall be made or given that requires the approval of Actua’s stockholders under applicable law unless such required further approval is obtained.

Third Party Beneficiaries

Nothing in the Velocity/Bolt Sale Agreement, expressed or implied, is intended to confer on any person other than the parties thereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of the Velocity/Bolt Sale Agreement, except with limited exceptions for matters including, but not limited to, indemnification and director and officer insurance coverage.

 

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Governing Law

The Velocity/Bolt Sale Agreement is governed and construed in accordance with the laws of the State of Delaware, except that claims and actions that may be based upon, arise out of, or relate to, the debt financing or involve the financing sources shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the law of any jurisdiction other than the State of New York.

Secondary Bolt Sale

The parties to the Velocity/Bolt Sale Agreement have initiated a process relating to the Secondary Bolt Sale.

If a Secondary Bolt Sale occurs prior to the closing of the Velocity/Bolt Sale, then the purchase price to be paid by or on behalf of Arsenal Buyer at closing will be reduced by an amount equal to (i) $35 million plus (ii) 50% of the net proceeds paid to Actua or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments to reflect costs, fees and expenses incurred in connection with the Secondary Bolt Sale. If a Secondary Bolt Sale occurs following the closing pursuant to a definitive agreement entered into before March 23, 2018 (or before April 22, 2018, so long as, prior to March 23, 2018, (i) Arsenal Buyer has accepted, subject to entering into definitive documentation, a bona fide offer to purchase Bolt and (ii) certain transaction-related conditions, including diligence conditions, have been met), Actua Holdings would receive 50% of the net proceeds paid to Arsenal Buyer or its affiliates from the Secondary Bolt Sale in excess of approximately $34.3 million, subject to certain adjustments for certain expenses and costs incurred by Arsenal Buyer and its affiliates relating to Arsenal Buyer’s ownership of Bolt and costs, fees and expenses incurred in connection with the process relating to the Secondary Bolt Sale.

Subject to certain agreements among the parties, Actua has agreed with Arsenal Buyer to work together diligently and in good faith to complete a Secondary Bolt Sale in a transaction that would result in greater than $34.3 million in net proceeds within the timeline described above and to focus on effecting such a transaction that has no residual liabilities or deferred consideration. Actua has agreed to certain standards regarding communication between the parties participating in the Secondary Bolt Sale process as well as a reasonable opportunity upon reasonable notice for each of the parties to participate in calls with Actua’s financial advisors in connection therewith. Each party has also agreed to keep the other reasonably informed of any material developments and events. If the process for the Secondary Bolt Sale results in a single bona fide offer to purchase Bolt at a price that will result in net proceeds in excess of approximately $34.3 million after deducting for certain expenses and costs incurred by Arsenal Buyer and its affiliates relating to Arsenal Buyer’s ownership of Bolt and costs, fees and expenses incurred in connection with the process relating to the Secondary Bolt Sale, the parties must accept the offer. If there are two or more bona fide offers for the purchase of Bolt in a Secondary Bolt Sale, the parties will mutually agree on which offer to accept, provided, that if Arsenal Buyer and Actua disagree on which offer to accept, Arsenal Buyer in its discretion has the right to decide which offer to accept.

There can be no assurance that Actua or Arsenal Buyer or any of their affiliates will be able to negotiate, enter into a definitive agreement or consummate a separate sale of Bolt for net proceeds in excess of $34.3 million.

THE FOLIO SALE

The following, together with the discussion appearing above under the section captioned “Background of the Transactions,” is a summary of the material terms of the Folio Sale and the Folio Sale Agreement.

Overview of the Folio Sale

On September 25, 2017, FolioDynamix, Envestnet, Merger Sub and Actua USA entered into the Folio Sale Agreement. Under the Folio Sale Agreement, Envestnet has agreed to acquire FolioDynamix through the merger

 

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of Merger Sub, a wholly-owned subsidiary of Envestnet, with and into FolioDynamix. The purchase price is $195 million in cash, subject to certain adjustments, including a potential downward purchase price adjustment associated with the Consent Adjustment and certain adjustments for working capital, cash, debt and unpaid transaction expenses. Additionally, Actua’s share of the merger consideration could be offset by an amount up to approximately $11.3 million to the extent Actua fails to convey $11.3 million of NOLs that would otherwise transfer to Envestnet in the Folio Sale. Assuming, among other things, receipt of client consents representing at least 95% of the Target Revenue, Actua expects to receive approximately $174 million of net proceeds from the Folio Sale. A small portion of the proceeds will be held in escrow to satisfy potential indemnification claims and for expenses of the stockholders’ representative. The Folio Sale is subject to a number of closing conditions, including the expiration or termination of the applicable waiting period under the HSR Act, the Consent Condition and the 606 Condition, but it is not contingent on the approval of Actua’s stockholders. The Folio Sale is expected to close in the first quarter of 2018.

The Parties to the Folio Sale

Actua USA Corporation

Actua USA Corporation, a Delaware corporation and wholly-owned subsidiary of Actua, is serving as the representative of the FolioDynamix stockholders under the Folio Sale Agreement. Actua Holdings, Inc., another wholly-owned subsidiary of Actua, is the majority stockholder of FolioDynamix.

Envestnet, Inc.

Envestnet, Inc., a Delaware corporation, was formed on February 11, 2004 and is headquartered in Chicago, Illinois. Envestnet is a leading provider of unified wealth management software and services to financial advisors and institutions as well as a leading data aggregation and data intelligence platform for financial services companies. Envestnet’s common stock is traded on the New York Stock Exchange under the symbol “ENV.”

FCD Merger Sub, Inc.

FCD Merger Sub, Inc., a Delaware corporation, is a newly-incorporated and wholly-owned subsidiary of Envestnet formed solely for the purpose of consummating the transactions contemplated by the Folio Sale Agreement.

Folio Dynamics Holdings, Inc.

Folio Dynamics Holdings, Inc., a Delaware corporation, is the parent company of Folio Dynamics Inc. (d/b/a FolioDynamix), a leading wealth management services provider that offers its clients sophisticated cloud-based solutions and a suite of advisory tools and services. Folio Dynamics Holdings, Inc. was formed on September 15, 2014, and is headquartered in Secaucus, New Jersey.

Reasons for Recommending the Folio Sale and the Sale Proposal

The Board unanimously determined that the Folio Sale is advisable and in the best interests of Actua’s stockholders and approved and declared advisable the execution, delivery and performance of the Folio Sale Agreement and the consummation of the transactions contemplated thereby, including the Folio Sale. The Board recommends that the stockholders vote “FOR” the approval of the Sale Proposal. See “Reasons for Recommending the Velocity/Bolt Sale and the Sale Proposal.”

 

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In evaluating the Folio Sale Agreement and the transactions contemplated thereby, the Board discussed the proposed transactions with Actua’s management and legal and financial advisors and considered a variety of factors, including, but not limited to, the following factors, which the Board viewed as generally supporting its decision to approve and enter into the Folio Sale Agreement and its recommendation that the stockholders vote “FOR” the Sale Proposal:

 

    the Board’s knowledge of the business, financial condition, strategy and prospects of FolioDynamix, including the risks and uncertainties inherent in FolioDynamix’s business;

 

    the Board’s evaluation, with the assistance of management and legal and financial advisors, of potential strategic alternatives for FolioDynamix, which included continuing to operate and grow FolioDynamix, selling FolioDynamix to a strategic acquirer and selling FolioDynamix together with one or more of Actua’s other businesses;

 

    the Board’s knowledge of FolioDynamix’s competitive position, including the impact of consolidation within the industry;

 

    Actua’s difficulty in growing FolioDynamix through mergers and acquisitions due to competition for acquisition targets as valuation multiples for private cloud-based companies have generally exceeded the valuation multiples at which Actua’s common stock trades;

 

    the discount applied to Actua’s common stock due to Actua’s size and its ownership of various companies in differing stages of growth and maturity;

 

    the lack of liquidity in Actua’s common stock and the lack of foreseeable catalysts for significant stock price appreciation;

 

    the Board’s desire to unlock value and provide liquidity for Actua’s stockholders, many of whom have indicated that they would welcome a return of capital to stockholders through cash distributions;

 

    the transaction presenting attractive valuation multiples for FolioDynamix relative to the valuation multiples at which Actua stock has traded;

 

    the fact that the consideration in the Folio Sale consists solely of cash, allowing Actua to distribute cash to its stockholders;

 

    the sale of FolioDynamix to a strategic acquirer resulting in significant synergies that enhanced the value of the Folio Sale;

 

    the increasing burdens and costs associated with Actua and FolioDynamix complying with public company regulatory requirements, including requirements under the Sarbanes-Oxley Act of 2002;

 

    concern that if Velocity and/or Bolt were sold, FolioDynamix’s size and the nature of its business would make it difficult for it to operate as a standalone public company; and

 

    unpredictable sales and asset on-boarding cycles for large customers at FolioDynamix, making it difficult for FolioDynamix to predict future results.

In reaching its determination and recommendation, the Board also considered the following potentially negative factors:

 

    the fact that after the Folio Sale is consummated, FolioDynamix would no longer be a subsidiary of Actua, and Actua’s stockholders would no longer have the opportunity to participate in any future earnings or growth of FolioDynamix, or to benefit from any potential future appreciation in the value of Actua’s stock as a result of Actua’s majority stake in FolioDynamix;

 

    the restrictions imposed in the Folio Sale Agreement on Actua’s ability to solicit competing acquisition proposals from third parties;

 

    the restrictions imposed on the conduct of FolioDynamix’s business prior to the consummation of the Folio Sale;

 

   

the risk that the conditions to closing the Folio Sale under the Folio Sale Agreement may not be satisfied and the Folio Sale therefore may not be consummated, which could result in a further

 

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diversion of management and employee attention, employee attrition and potentially negative effects on the business and customer relationships of Actua and FolioDynamix and the trading price of Actua’s stock; and

 

    the fact that Actua has historically had success in creating stockholder value by investing in businesses and could continue to drive value by pursuing other strategies in lieu of the Folio Sale.

The foregoing discussion of the factors considered by the Board is intended to be a summary of the principal factors considered by the Board and is not intended to be exhaustive. After considering these factors, the Board concluded that the positive factors relating to the Folio Sale substantially outweighed the potential negative factors. The Board unanimously reached the conclusion to approve the Folio Sale in light of the various factors described above and other factors that the members of the Board believed were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the Folio Sale and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision, and it did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Rather, the Board made its recommendation based on the totality of information it received and the investigation it conducted. In considering the factors discussed above, individual directors may have given different weight to different factors.

Certain U.S. Federal Income Tax Consequences of the Folio Sale

The following discussion relates to certain material U.S. federal income tax consequences of the Folio Sale. This discussion is a summary for Actua’s common stockholders and is intended for general information only. This discussion is based on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicial opinions, and published positions of the IRS, all as in effect as of the date of this document. Such authorities are subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements in this proxy statement. No rulings have been requested or received from the IRS as to the tax consequences of the Folio Sale and there is no intent to seek any such ruling. Accordingly, no assurance can be given that the IRS will not challenge the tax treatment of tax consequences of the Folio Sale discussed below or, if it does challenge the tax treatment, that it will not be successful. This discussion does not address any U.S. federal tax considerations other than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerations, alternative minimum tax considerations or any tax reporting requirements.

Tax Consequences of the Folio Sale to Actua’s Stockholders

The Folio Sale will not result in any direct U.S. federal income tax consequences to Actua’s stockholders. Each stockholder is urged to consult his or her own tax advisor as to the U.S. federal income tax consequences of the Folio Sale to such stockholder, as well as the effects of state, local and foreign tax laws, to such stockholder upon the closing of the Transactions or the anticipated distribution of the net proceeds thereof to such stockholder.

Tax Consequences of the Folio Sale to Actua

The transactions contemplated by the Folio Sale Agreement will be taxable to Actua for U.S. federal income tax purposes. The amount of gain or loss Actua recognizes with respect to the Folio Sale will be measured by the difference between the cash and any other amount realized by Actua and Actua’s tax basis in the shares of FolioDynamix. It is expected that Actua will recognize a loss for U.S. federal income tax purposes as a result of the Folio Sale. If Actua were to recognize gain for U.S. federal income tax purposes as a result of the Folio Sale, then certain tax attributes of Actua and its affiliates would be available to offset a portion of any such income, gain, and taxes otherwise resulting from the Folio Sale for U.S. federal income tax purposes. The determination of whether and to what extent such tax attributes would be available is highly complex and is based in part upon

 

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facts that will not be known until after the completion of the Folio Sale, including the existence and amount of available losses, deductions, credits, and other tax attributes arising in the taxable year in which the Folio Sale occurs (and in prior taxable years).

Regulatory Approvals

The Folio Sale Agreement requires no action by or in respect of any governmental authority, other than the filing of the certificate of merger with the Secretary of State of the State of Delaware, compliance with any applicable U.S. state or federal securities laws, and compliance with any requirements under the HSR Act.

Vote Required

The affirmative vote or written consent of holders of a majority of the outstanding shares of common stock of FolioDynamix is the only vote of the holders of the capital stock of FolioDynamix necessary to adopt and approve the Folio Sale Agreement and the transactions contemplated thereby. This requirement has already been satisfied. The Folio Sale alone, without the sale of any of Actua’s other businesses, would not constitute a sale of substantially all of Actua’s assets and therefore would not require approval by Actua’s stockholders. Because consummation of the Folio Sale alone would not require Actua stockholder approval, approval of the Sale Proposal is not a condition to the closing of the Folio Sale, and, even if the Sale Proposal is not approved, Actua intends to complete the Folio Sale, subject to the satisfaction or waiver of the conditions to closing set forth in the Folio Sale Agreement.

THE FOLIO SALE AGREEMENT

The discussion in this proxy statement of the terms and conditions of the Folio Sale Agreement is subject to and is qualified in its entirety by reference to the Folio Sale Agreement, a copy of which is attached as Appendix B to this proxy statement and is incorporated by reference herein.

Explanatory Note Regarding the Folio Sale Agreement

The following is a summary of the material provisions of the Folio Sale Agreement. This summary does not purport to be complete and may not contain all of the information about the Folio Sale Agreement that may be important to you. The rights and obligations of the parties to the Folio Sale Agreement are governed by the express terms and conditions of the Folio Sale Agreement and not by this summary or any other information contained in this proxy statement. You are urged to read the Folio Sale Agreement carefully and in its entirety, as well as this proxy statement. This summary is qualified in its entirety by reference to the Folio Sale Agreement, a copy of which is attached as Appendix B to this proxy statement and is incorporated by reference herein.

In reviewing the Folio Sale Agreement and this summary, please remember that they have been included to provide you with information regarding the terms of the Folio Sale Agreement and are not intended to provide any other factual information about Actua, FolioDynamix or any of their respective subsidiaries. The Folio Sale Agreement contains representations and warranties and covenants made by each of the parties thereto, which are summarized below. These representations and warranties have been made solely for the benefit of the other parties to the Folio Sale Agreement and:

 

    were negotiated with the principal purpose of allocating risk between the parties if those statements prove to be inaccurate, rather than establishing matters of fact;

 

    may have been qualified by certain confidential disclosures that were made to the other party in connection with the negotiation of the Folio Sale Agreement, which disclosures are not reflected in the Folio Sale Agreement; and

 

    may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors.

 

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Moreover, the representations, warranties and covenants made in the Folio Sale Agreement were made only as of specified dates. Information concerning the subject matter of the representations and warranties in the Folio Sale Agreement and described below may have changed since the date of the Folio Sale Agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement. Accordingly, the representations and warranties and other provisions of the Folio Sale Agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. See “Where You Can Find More Information; Incorporation by Reference” beginning on page 102.

Effects of the Folio Sale

Pursuant to the Folio Sale Agreement, Merger Sub will merge with and into FolioDynamix, surviving the merger as a wholly-owned subsidiary of Envestnet.

Closing

The closing will take place at 10:00 a.m., Eastern Time, on a date to be determined by the parties to the Folio Sale Agreement, which shall be no later than the second business day after the conditions to closing set forth in the Folio Sale Agreement have be satisfied or waived (other than those conditions that by their nature are to be satisfied at closing, but subject to the satisfaction or waiver (to the extent permitted under the Folio Sale Agreement) of such conditions); provided that the closing shall not occur after January 2, 2018, unless agreed by Envestnet and FolioDynamix.

Consideration

The merger consideration to be paid by Envestnet is as follows:

 

    $195 million, plus

 

    the value, as of the closing of the Folio Sale, of all cash, cash equivalents and marketable securities of FolioDynamix on a consolidated basis, minus

 

    the sum of FolioDynamix’s indebtedness and unpaid transaction expenses as of the closing of the Folio Sale, plus

 

    FolioDynamix’s working capital amount as of the closing of the Folio Sale (whether a positive or a negative amount, but only if such amount is greater than $100,000 or less than $(100,000)), and minus

 

    the Consent Adjustment, if any, in an amount not to exceed $30 million.

Because the Consent Adjustment is dependent in part on consents to the Folio Sale received from FolioDynamix’s clients (some of which are not required to be received at or prior to the closing of the Folio Sale), Actua may not know the final amount of the merger consideration prior to or at the time of the closing of the Folio Sale.

Representations and Warranties

The Folio Sale Agreement contains representations and warranties made by Envestnet and FolioDynamix to each other. Certain of the representations and warranties are subject to materiality and material adverse effect qualifications (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct is material or would reasonably be expected to have a material adverse effect).

The Folio Sale Agreement provides that “Material Adverse Effect” means any changes, facts, circumstances, conditions, effects, developments or events that, individually or in the aggregate, have had or

 

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would be reasonably expected to have a materially adverse effect on the business, assets, financial condition or results of operations of FolioDynamix or its subsidiaries, taken as a whole, except any such effects arising out of or in connection with:

 

    the announcement or pendency of the Folio Sale or the anticipated consummation of the transactions contemplated thereby or the identity of the parties thereto or any of their respective affiliates;

 

    changes or conditions generally affecting any industry in which FolioDynamix or its subsidiaries operate;

 

    changes in economic, financial or political conditions generally;

 

    changes in political or social conditions generally, including acts of war, sabotage or terrorism;

 

    seasonal or cyclical fluctuations affecting FolioDynamix or any of its subsidiaries consistent with past fluctuation;

 

    changes in accounting requirements or principles under GAAP;

 

    any failure by FolioDynamix or any of its subsidiaries to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or any other financial or operating metrics for any period (but excluding the underlying causes of such failure);

 

    changes in applicable law;

 

    actions taken by Envestnet or its affiliates or at the request thereof; or

 

    earthquakes, floods, hurricanes or other natural disasters.

Note, however, that the foregoing (other than the announcement or anticipated consummation of the Folio Sale) may be taken into account in determining whether a Material Adverse Effect has occurred to the extent that such event, change, fact, circumstance, effect, or development adversely affects FolioDynamix or any of its subsidiaries in a disproportionate manner relative to other participants in any industry in which FolioDynamix or any of its subsidiaries operate.

Conduct of the Business

FolioDynamix has agreed to certain covenants in the Folio Sale Agreement restricting the conduct of its business between September 25, 2017 and the closing of the Folio Sale. In general, FolioDynamix and its subsidiaries have agreed to conduct their respective businesses in the ordinary course of business consistent with past practice and to use their commercially reasonable efforts to preserve intact their present business organization and maintain relationships with their customers, lenders, suppliers and others having material business relationships with them.

In addition to these agreements regarding the conduct of business generally, FolioDynamix has agreed not to, and to cause its subsidiaries not to, do any of the following without Envestnet’s consent:

 

    amend their respective certificates of incorporation, bylaws or similar organizational documents;

 

    (i) split, combine or reclassify any shares of capital stock, (ii) declare, set aside or pay any dividend or other distribution in respect of capital stock (other than dividends paid by any subsidiary to FolioDynamix or another wholly-owned subsidiary), or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase or otherwise acquire any company securities or subsidiary securities;

 

    commit to make any capital expenditures following the closing or any obligations, liabilities or commitments in respect thereof exceeding $250,000 for any individual project or $500,000 in the aggregate;

 

    merge or consolidate with any third party or acquire, directly or indirectly, any assets, securities, properties, interests or businesses other than the acquisition of assets or inventory in the ordinary course of business;

 

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    cancel, compromise, waive or settle, or offer or propose to cancel, compromise, waive or settle, any material proceeding or claim against FolioDynamix or its subsidiaries, any stockholder litigation or stockholder dispute against FolioDynamix or any of its officers or directors, or any proceeding that relates to the transactions contemplated by the Folio Sale Agreement;

 

    materially amend, modify or terminate any material contract or employee plan, subject to certain exceptions;

 

    hire or otherwise enter into any employment or independent contractor or individual consulting agreement or arrangement with any individual providing for base salary or base fees, on an annualized basis, in excess of $200,000 or terminate any employee, independent contractor or individual consultant whose base salary or base fees exceeds, on an annualized basis, $200,000, or enter into any collective bargaining agreement with any labor organization; or

 

    cancel, reduce or fail to maintain insurance coverage currently applicable to FolioDynamix or its subsidiaries, except for renewals or replacements of insurance coverage with substantially similar terms as the existing coverage.

Exclusivity

Under the Folio Sale Agreement, FolioDynamix has agreed that it will not, and will cause its affiliates and its and their respective directors, officers, managers, employees, agents, representatives and advisors not to, among other things:

 

    solicit, initiate, or encourage the submission of any proposal or offer from any third party relating to a potential Folio Competing Transaction;

 

    participate in or continue any activities, discussions or negotiations regarding any Folio Competing Transaction;

 

    provide information regarding FolioDynamix or its subsidiaries to any third party; or

 

    enter into or agree to enter into any contract with any third party, other than Envestnet, in connection with any potential Folio Competing Transaction.

In addition, the Folio Sale Agreement requires FolioDynamix and its subsidiaries to cease any existing activities, discussions or negotiations regarding any Folio Competing Transaction and to promptly notify Envestnet of the receipt of any oral or written communication, proposal, offer or inquiry from any third party regarding a potential Folio Competing Transaction, including the identity of the third party making such communication, proposal, offer or inquiry.

Resignations

Under the Folio Sale Agreement, FolioDynamix has agreed to deliver to Envestnet the resignations of all officers and directors of FolioDynamix and its subsidiaries (solely in their capacities as such), in each case, as requested by Envestnet, with such resignations to be effective as of the closing of the Folio Sale Agreement.

Termination of Certain Agreements

Under the Folio Sale Agreement, FolioDynamix has agreed to take, or to cause its affiliates to take, such actions required to cause certain agreements, commitments, obligations, accounts, arrangements or understandings between FolioDynamix and/or any of its subsidiaries and any related party to be terminated, canceled, paid or settled without payment or further liability on the part of FolioDynamix or its subsidiaries, in each case effective immediately prior to the closing, and to settle, effective as of, or prior to, the closing, all intercompany accounts such that there are no intercompany obligations, interest, fees, payables or receivables between FolioDynamix or any of its subsidiaries, on the one hand, and Actua or any of its other affiliates, on the other hand.

 

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Efforts to Obtain Regulatory Approval

Subject to the terms and conditions of the Folio Sale Agreement, each of the parties has agreed (i) to use its reasonable best efforts to submit any required filings under the HSR Act no later than 10 business days after the signing of the agreement and (ii) to take, and cause its affiliates to take, all actions reasonably necessary to avoid or eliminate any impediment under any applicable law so as to enable the consummation of the transactions contemplated thereby, including the Folio Sale, to occur as soon as reasonably practicable (and in any event no later than the Folio End Date), except that the parties will not be obligated to sell or divest businesses, product lines or assets, terminate existing relationships or contracts, or otherwise take or commit to take actions that would limit their or their affiliates freedom of action with respect to the ability to retain one or more businesses, product lines or assets.

The applicable HSR Act filings with respect to the Folio Sale Agreement were made by the parties on October 10, 2017 and October 11, 2017. Envestnet has notified the U.S. Department of Justice and the Federal Trade Commission that it is withdrawing its HSR filing, effective on November 13, 2017, and plans to refile immediately thereafter to restart the applicable 30-day waiting period and allow the Department of Justice additional time to review Actua’s and Envestnet’s HSR filings.

Consents of Investment Advisory Clients

In accordance with the terms and conditions of the Folio Sale Agreement and the requirements under applicable law, FolioDynamix has agreed to send consent notices to each of its customers that is an investment advisory client for purposes of the U.S. Investment Advisers Act of 1940 and to use commercially reasonable efforts to obtain consent to the Folio Sale from each such customer. Some of the contracts with FolioDynamix’s investment advisory clients require affirmative written consent, while others, in accordance with applicable law, deem that consent has been given unless the customer terminates the contract within a specified period of time after receiving the consent notice (“negative consent”).

The closing of the Folio Sale is conditioned on satisfaction of the Consent Condition, which requires FolioDynamix to obtain consent from both investment advisory and other clients representing at least 85% of Target Revenue. In addition, if the Consent Condition has been satisfied but FolioDynamix has not obtained consent from clients representing at least 95% of Target Revenue, the purchase price will be adjusted downward pursuant to the Consent Adjustment. For purposes of the Consent Condition and the Consent Adjustment, consent (i) for investment advisory clients is deemed to have been given when any affirmative consent required under the client contract or negative consent required under applicable law, as applicable, has been given, and (ii) for other clients (A) is deemed to have been given when any affirmative consent (or waiver or expiration of a termination right) required under the client contract has been given/occurred or (B) is deemed to have already been given where (1) the underlying client contract does not require affirmative consent or (2) Envestnet has agreed that affirmative consent need not be obtained. One of FolioDynamix’s clients has 60 days following the consummation of the Folio Sale to provide or withhold a required waiver of a termination right (or allow such right to expire) for purposes of the Consent Adjustment.

Representation and Warranty Insurance Policy

Under the Folio Sale Agreement, Envestnet agreed to use its reasonable best efforts to obtain, and cause to be bound, as promptly as practicable, a representation and warranty insurance policy from AIG with a policy limit of no less than $30 million and a retention amount no greater than approximately $2 million, that excludes any and all rights of subrogation against Actua and against the FolioDynamix stockholders, except with respect to fraud. Envestnet obtained and caused to be bound the representation and warranty insurance policy from AIG effective as of October 2, 2017.

Envestnet is not permitted to waive, amend, or permit the waiver or amendment of the policy in a manner adverse to Actua or the FolioDynamix stockholders without the prior written consent of Actua. In addition, to the extent Envestnet is unable to recover damages under the representation and warranty insurance policy, the FolioDynamix stockholders are required to indemnify Envestnet.

 

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Conditions to Closing the Folio Sale

The obligation of each of Envestnet, Merger Sub and FolioDynamix to consummate the Folio Sale and the other transactions contemplated by the Folio Sale Agreement is subject to the satisfaction of various conditions, including, among other things:

 

    the applicable waiting period under the HSR Act has expired or terminated;

 

    no provision of applicable law and no judgment, injunction, order or decree has prevented, enjoined or made illegal the consummation of the Folio Sale;

 

    each of Envestnet, FolioDynamix, Actua and Merger Sub has performed or complied with its respective covenants obligations, and agreements under the Folio Sale Agreement, subject to certain exceptions;

 

    each of Envestnet and FolioDynamix has exchanged certain specified deliverables;

 

    Envestnet and FolioDynamix have agreed upon the final form of the 606 Deliverables to be delivered to Envestnet/satisfied the 606 Condition, provided that this condition will be automatically deemed satisfied if (i) Envestnet is in material breach of (A) its obligation to review and provide reasonable, good faith comments on FolioDynamix’s drafts of the 606 Deliverables on the timeline specified in the Folio Sale Agreement or (B) its obligation to use its reasonable best efforts to cause the 606 Deliverables to be substantially completed on the timeline specified in the Folio Sale Agreement, and (ii) FolioDynamix is not in breach of its related obligations (Once FolioDynamix believes the 606 Deliverables are in final form, it may so indicate by delivering written notice to Envestnet that each of the 606 Deliverables is final and, but for Envestnet’s agreement, the 606 Condition is satisfied (such notice, the “606 Notice”). Envestnet has five business days after delivery of the 606 Notice to dispute the 606 Notice by stating in reasonable detail its basis for the dispute. If Envestnet does not timely deliver a dispute notice, then the 606 Condition will be deemed automatically satisfied. If Envestnet does timely dispute the 606 Notice, Envestnet and FolioDynamix must use their reasonable best efforts and work in good faith for a period of at least five business days to finalize the 606 Deliverables and satisfy the 606 Condition.);

 

    the Consent Condition;

 

    the escrow agreement and payment agent agreement shall have been executed and delivered and remain in full force and effect; and

 

    since the date of the Folio Sale Agreement, there shall have been no material adverse effect that remains uncured as of the closing.

Approval of the Folio Sale by Actua’s stockholders is not a condition to the closing of the Folio Sale Agreement.

Specific Performance

The parties are entitled to an injunction to prevent breaches of the Folio Sale Agreement and to specifically enforce the terms and provisions of the Folio Sale Agreement.

Indemnification

The Folio Sale Agreement requires the FolioDynamix stockholders to, severally and not jointly and in accordance with their respective percentage ownership interest in FolioDynamix, indemnify Envestnet, its affiliates, and their respective officers, directors, managers, partners, employees, agents, successors and assigns for any and all damages, losses, liabilities, fines, claims, demands, judgments, awards, assessments, penalties, costs and expenses (including reasonable attorneys’ fees and out-of-pocket expenses in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the parties) and related interest and penalties suffered or incurred by any such parties and arising out of, among other things:

 

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    any breach by FolioDynamix of its fundamental representations;

 

    any misrepresentation or breach of any non-fundamental representation or warranty by FolioDynamix to the extent the aggregate amount of damages suffered or incurred in connection therewith exceeds $975,000;

 

    any indebtedness and unpaid transaction expenses not taken into account in calculating the final merger consideration under the Folio Sale Agreement;

 

    any litigation brought by current or former FolioDynamix stockholders arising out of the Folio Sale Agreement or the transactions contemplated thereby;

 

    any sales or use taxes or other similar taxes that apply with respect to transactions between FolioDynamix and its subsidiaries and their respective customers (reduced by any reimbursement or recovery realized in connection therewith);

 

    any damages that Envestnet would reasonably have been expected to cover under the representation and warranty insurance policy from AIG had it been bound as of September 25, 2017; and

 

    any claims for damages related to certain threatened litigation between FolioDynamix and one of its clients.

In addition, to the extent the NOLs conveyed to Envestnet in the transaction are less than $36 million, Actua is obligated to pay Envestnet an amount equal to (i) $0.3105 multiplied by (ii) the difference between $36 million and the amount of the NOLs conveyed to Envestnet. This indemnification obligation, together with an adjustment to Actua’s share of the merger consideration at closing, is subject to a cap equal to approximately $11.3 million.

In certain circumstances, the Envestnet indemnified parties are required to seek recovery from the representation and warranty insurance policy prior to seeking recovery from FolioDynamix’s stockholders. Certain indemnification obligations of the FolioDynamix stockholders are capped at the amount of funds held back in escrow.

In addition, subject to the terms and conditions of the Folio Sale Agreement, until the sixth anniversary of the closing, each of Envestnet and the surviving corporation shall, jointly and severally, indemnify each present and former director and officer of FolioDynamix and each of its subsidiaries against any and all damages suffered or incurred thereby in connection with any liabilities or proceedings arising out of matters existing or occurring prior to the effective time of the Folio Sale, and shall advance reasonable expenses (including attorneys’ fees) in connection therewith. Under the Folio Sale Agreement, FolioDynamix has also agreed to purchase a prepaid “tail” directors’ and officers’ liability insurance policy covering all persons currently covered by FolioDynamix’s director and officer liability insurance policy for a period of not less than six years from the effective time of the Folio Sale.

Termination of the Folio Sale Agreement

The Folio Sale Agreement may be terminated at any time prior to the closing under the following circumstances:

 

    by mutual written agreement of Envestnet and FolioDynamix; or

 

    by either Envestnet or FolioDynamix, if:

 

    the closing has not been consummated by the Folio End Date, subject to a one-time extension of that deadline by six months if the sole unsatisfied condition to closing is regulatory approval under the HSR Act, and provided that the terminating party’s failure to perform any of its obligations under the Folio Sale Agreement is not the cause of the failure of the closing to occur prior to such date;

 

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    the Folio Sale has been declared or would be illegal or otherwise prohibited;

 

    certain conditions to closing under the Folio Sale Agreement have become incapable of fulfillment by the Folio End Date, provided that the terminating party’s failure to perform any of its obligations under the Folio Sale Agreement is not the cause of the inability of those condition(s) to be fulfilled prior to such date; or

 

    an event of misrepresentation or breach of warranty or covenant by the other party is incapable of being cured prior to the Folio End Date; or

 

    by FolioDynamix, if:

 

    after January 2, 2018, the sole unsatisfied condition to closing (other than conditions that by their nature are to be satisfied at closing) is the 606 Condition and the closing of the Folio Sale Agreement has not occurred within two business days of FolioDynamix’s having delivered a termination notice to Envestnet. The 606 Condition shall be automatically deemed satisfied if (i) Envestnet is in material breach of (A) its obligation to review and provide reasonable, good faith comments on FolioDynamix’s drafts of the 606 Deliverables on the timeline specified in the Folio Sale Agreement or (B) its obligation to use its reasonable best efforts to cause the 606 Deliverables to be substantially completed on the timeline specified in the Folio Sale Agreement, and (ii) FolioDynamix is not in breach of its related obligations. Once FolioDynamix believes the 606 Deliverables are in final form, it may so indicate by delivering the 606 Notice to Envestnet. Envestnet has five business days after delivery of the 606 Notice to dispute the 606 Notice by stating in reasonable detail its basis for the dispute. If Envestnet does not timely deliver a dispute notice, then the 606 Condition will be deemed automatically satisfied. If Envestnet does timely dispute the 606 Notice, Envestnet and FolioDynamix shall use their reasonable best efforts and work in good faith for a period of at least five business days to finalize the 606 Deliverables and satisfy the 606 Condition. Once FolioDynamix believes the 606 Deliverables are in final form, it may so indicate by delivering the 606 Notice to Envestnet. Envestnet has five business days after delivery of the 606 Notice to dispute the 606 Notice by stating in reasonable detail its basis for the dispute. If Envestnet does not timely deliver a dispute notice, then the 606 Condition will be deemed automatically satisfied. If Envestnet does timely dispute the 606 Notice, Envestnet and FolioDynamix shall use their reasonable best efforts and work in good faith for a period of at least five business days to finalize the 606 Deliverables and satisfy the 606 Condition.

Termination Fee

Under the Folio Sale Agreement, FolioDynamix may terminate the Folio Sale Agreement at any time after January 2, 2018 if the closing does not occur within two business days of Envestnet’s receipt of the 606 Notice. If the Folio Sale Agreement is terminated by FolioDynamix pursuant to the foregoing and FolioDynamix is not in breach of certain of its own obligations under the Folio Sale Agreement, Envestnet shall pay FolioDynamix a termination fee of $7 million.

Amendments and Waivers

Any provision of the Folio Sale Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to the Folio Sale Agreement or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege under the Folio Sale Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Third Party Beneficiaries

No provision of the Folio Sale Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities upon any person other than the parties thereto and their respective successors and assigns, subject to limited exceptions for matters including, but not limited to, indemnification.

 

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Governing Law

The Folio Sale Agreement is governed by and construed in accordance with the law of the State of Delaware, without regard to Delaware conflicts of law rules.

Escrow Agreement

Under the Folio Sale Agreement, Actua USA and Envestnet are required to enter into an escrow agreement with JPMorgan Chase Bank, N.A. in a customary form.

OPINIONS OF ACTUA’S FINANCIAL ADVISOR REGARDING THE TRANSACTIONS

In connection with each of the Velocity/Bolt Sale and the Folio Sale, Actua engaged Evercore to act as its financial advisor. On September 23, 2017, Evercore rendered its oral opinions, which were subsequently confirmed in writing, to the Board that, as of September 23, 2017 and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its respective written opinions, (i) the purchase price in the Velocity/Bolt Sale is fair, from a financial point of view, to Actua Holdings, and (ii) the portion of the merger consideration to be received by Actua in the Folio Sale is fair, from a financial point of view, to Actua.

The full text of the written Velocity/Bolt Fairness Opinion and the FolioDynamix Fairness Opinion, each dated as of September 23, 2017, which set forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Evercore in rendering its respective opinions, are attached as Appendix C and Appendix D, respectively, to this proxy statement and are incorporated by reference in their entirety into this proxy statement. You are urged to read the Velocity/Bolt Fairness Opinion and the FolioDynamix Fairness Opinion carefully and in their entirety. The Velocity/Bolt Fairness Opinion and FolioDynamix Fairness Opinion do not constitute a recommendation to the Board or to any other persons in respect of the Transactions, collectively or individually, including as to how any Actua stockholder should vote or act in respect of the Transactions. Evercore’s opinions do not address the relative merits of the Transactions, collectively or individually, as compared to other business or financial strategies that might be available to Actua (including certain of its subsidiaries, as indicated in Evercore’s opinions), nor do they address the underlying business decision of Actua or such subsidiaries to engage in the Transactions.

Set forth below is a summary of the material financial analyses reviewed by Evercore with the Board on September 23, 2017 in connection with rendering the Velocity/Bolt Fairness Opinion and the FolioDynamix Fairness Opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before September 21, 2017, and is not necessarily indicative of current market conditions.

The following summary of Evercore’s material financial analyses includes information presented in tabular format. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

Velocity/Bolt Fairness Opinion

On September 23, 2017, Evercore rendered its oral opinion, which was subsequently confirmed in writing, to the Board that, as of September 23, 2017, and based upon and subject to the factors, procedures, assumptions,

 

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qualifications and limitations set forth in its written opinion, the purchase price in the Velocity/Bolt Sale is fair, from a financial point of view, to Actua Holdings.

In connection with rendering the Velocity/Bolt Fairness Opinion, Evercore, among other things:

 

    reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to Arsenal Holdings prepared and furnished to Evercore by management of Actua;

 

    reviewed certain non-public projected financial data relating to Arsenal Holdings prepared and furnished to Evercore by management of Actua;

 

    reviewed certain non-public historical and projected operating data relating to Arsenal Holdings prepared and furnished to Evercore by management of Actua;

 

    discussed the past and current operations, financial projections and current financial condition of Arsenal Holdings with management of Arsenal Holdings (which, as used in the following summary of the Velocity/Bolt Fairness Opinion, includes the respective management of Velocity and Bolt) and Actua (including their views on the risks and uncertainties of achieving such projections);

 

    prepared a discounted cash flow analysis utilizing the financial projections provided by management of Actua (the projections relating to Velocity furnished to Evercore by management of Actua and approved for Evercore’s use by the Board are referred to as the “Velocity Projections” and the projections relating to Bolt furnished to Evercore by management of Actua and approved for Evercore’s use by the Board are referred to as the “Bolt Projections,” and such projections are set forth in “Certain Financial Projections”);

 

    compared the financial performance of Arsenal Holdings with those of certain other publicly traded companies that Evercore deemed relevant;

 

    compared the financial performance of Arsenal Holdings and the valuation multiples relating to the Velocity/Bolt Sale with those of certain other transactions that Evercore deemed relevant;

 

    reviewed a substantially final draft of the Velocity/Bolt Sale Agreement, dated September 23, 2017; and

 

    performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumes no liability therefor. Evercore assumed that the Velocity Projections and the Bolt Projections were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of Actua as to the future financial performance of Arsenal Holdings. Evercore expresses no view as to any projected financial data relating to Arsenal Holdings or the assumptions on which they are based. At the direction of the Board, for purposes of its opinion, Evercore took into consideration the views of the Board on the risks and uncertainties of achieving such projections. Evercore relied, at the direction of the Board, without independent verification, upon the assessments of the management of Arsenal Holdings and Actua as to financials of Arsenal Holdings.

For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the final executed Velocity/Bolt Sale Agreement did not differ from the draft agreement reviewed by Evercore, that the representations and warranties of each party contained in the Velocity/Bolt Sale Agreement are true and correct, that each party will perform all of the covenants and agreements required to be performed by it under the Velocity/Bolt Sale Agreement, that all conditions to the consummation of the Velocity/Bolt Sale will be satisfied

 

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without material waiver or modification thereof, and that the Velocity/Bolt Sale will be consummated in accordance with the terms set forth in the Velocity/Bolt Sale Agreement. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Velocity/Bolt Sale will be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on Arsenal Holdings, Actua or the consummation of the Velocity/Bolt Sale or materially reduce the benefits to Actua Holdings or Actua of the Velocity/Bolt Sale.

Evercore also assumed, with the consent and at the direction of the Board, for purposes of its opinion that (i) when determined in accordance with the Velocity/Bolt Sale Agreement, (A) the adjustment set forth in Section 2.04 of the Velocity/Bolt Sale Agreement will not result in any reduction to the “Base Purchase Price” and (B) the amount of the “Bolt Payment Amount” and of the “Deferred Bolt Proceeds” will be $0, resulting in the purchase price being equal to $328 million, (ii) none of the “Indemnified Parties” will incur any “Losses” for which it is entitled to indemnification under the Velocity/Bolt Sale Agreement (including, for avoidance of doubt, any “Losses” in respect of “Taxes” for which indemnification is provided under Section 7.20 of the Velocity/Bolt Sale Agreement), (iii) the amount of all “Liabilities” released pursuant to Section 7.17 of the Velocity/Bolt Sale Agreement will be $0, and (iv) the Velocity/Bolt Sale will not result in any material adverse tax consequences to Actua Holdings or Actua (as each of the preceding terms in quotation marks is defined in the Velocity/Bolt Sale Agreement). Evercore’s opinion does not express any view as to the actual, assumed or proposed adjustment to the Base Purchase Price set forth in Section 2.04 of the Velocity/Bolt Sale Agreement, Bolt Payment Amount, Deferred Bolt Proceeds or any other adjustment to the purchase price set forth in the Velocity/Bolt Sale Agreement. In addition, Evercore noted that the purchase price to be paid to Actua Holdings pursuant to the Velocity/Bolt Sale Agreement will not be reduced for certain transaction expenses to be paid by Arsenal Holdings (including for legal, financial and other professional advisors’ fees and transaction-related bonuses), and Evercore understood that Arsenal Buyer and Actua Holdings took estimates of such Arsenal Holdings transaction expenses into consideration when negotiating the terms of the Velocity/Bolt Sale Agreement. Evercore did not take such estimated or actual Arsenal Holdings transaction expenses into consideration for purposes of its analysis and opinion, other than to the extent reflected in the final terms of the Velocity/Bolt Sale Agreement.

Evercore neither made nor assumed any responsibility for making any independent valuation or appraisal of the assets or liabilities of Arsenal Holdings, Actua Holdings or Actua, nor was Evercore furnished with any such appraisals, nor did Evercore evaluate the solvency or fair value of Arsenal Holdings, Actua Holdings or Actua under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion is necessarily based upon information made available to Evercore as of September 23, 2017 and financial, economic, market and other conditions as they existed and as could be evaluated on such date. It is understood that subsequent developments may affect Evercore’s opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and expresses no opinion with respect to, any matter other than the fairness to Actua Holdings, from a financial point of view, of the purchase price. Evercore does not express any view on, and its opinion does not address, the fairness of the Velocity/Bolt Sale to, or any consideration received in connection therewith by, the holders of any other securities, creditors or other constituencies of Arsenal Holdings, Actua Holdings or Actua, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Arsenal Holdings, Actua Holdings or Actua, or any class of such persons, whether relative to the purchase price or otherwise. Evercore assumed that any modification to the structure of the Velocity/Bolt Sale will not vary in any respect material to its analysis. Evercore’s opinion does not address the relative merits of the Velocity/Bolt Sale as compared to other business or financial strategies that might be available to Arsenal Holdings, Actua Holdings or Actua, nor does it address the underlying business decision of Actua Holdings or Actua to engage in the Velocity/Bolt Sale. In arriving at its opinion, Evercore was not authorized to solicit, and did not solicit, interest from any third party with respect to the acquisition of any or all of Actua’s outstanding common stock or any business combination or other extraordinary transaction involving Actua. Evercore’s opinion does not constitute a recommendation to the Board

 

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or to any other persons in respect of the Velocity/Bolt Sale, including as to how any Actua stockholder should vote or act in respect of the Velocity/Bolt Sale. Evercore expresses no opinion as to the price at which shares of Actua’s outstanding common stock will trade at any time. Evercore is not a legal, regulatory, accounting or tax expert and has assumed the accuracy and completeness of assessments by Arsenal Holdings, Actua Holdings, Actua and their respective advisors with respect to legal, regulatory, accounting and tax matters.

Summary of Evercore’s Financial Analysis for Velocity/Bolt Fairness Opinion

In performing its analysis of Arsenal Holdings, Evercore conducted various financial analyses on a sum-of-the-parts basis by analyzing each of Velocity and Bolt on a standalone basis and then, reflecting on Arsenal Holdings’ ownership interests in each of Velocity and Bolt, combining the results of these analyses to assess the fairness of the purchase price for Arsenal Holdings to Actua Holdings.

Selected Public Company Trading Analysis

In performing a public company trading multiples analysis of Arsenal Holdings on a sum-of-the-parts basis, Evercore reviewed and compared certain financial information of each of Velocity and Bolt to corresponding financial multiples and ratios for the selected public companies listed in the table below, divided into two groups: (i) vertical software as a service (“SaaS”), horizontal SaaS, business information / risk management, and diversified information public companies Evercore deemed most relevant to consider in relation to Velocity (“Velocity Selected Public Companies”), and (ii) insurance software and online distribution public companies Evercore deemed most relevant to consider in relation to Bolt (“Bolt Selected Public Companies”), in each case based on Evercore’s professional judgment and experience, because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of Velocity and Bolt, respectively.

Velocity Selected Public Companies:

 

  Vertical SaaS

 

  Horizontal SaaS

 

  Business Information /
  Risk Management

 

  Diversified Information

•    Bazaarvoice, Inc.

•    Brightcove Inc.

•    Castlight Health, Inc.

•    Instructure, Inc.

•    Model N, Inc.

 

•    Amber Road, Inc.

•    Apptio, Inc.

•    CommerceHub, Inc.

•    Marin Software, Inc.

•    SPS Commerce, Inc.

•    Workiva, Inc.

 

•    Aon plc

•    CoreLogic, Inc.

•    Dun & Bradstreet Corp.

•    Equifax Inc.

•    Experian PLC

•    Fair Isaac Corp.

•    Moody’s Corp.

•    Nielsen Holdings Plc

•    Verisk Analytics Inc.

 

•    IHS Markit Ltd.

•    Pearson PLC

•    RELX PLC

•    S&P Global, Inc.

•    Thomson Reuters Corp.

•    Wolters Kluwer NV

Bolt Selected Public Companies:

 

Insurance Software

 

Online Distribution

         

 

•    Crawford & Co.

•    Majesco

•    Sapiens

•    Symbility

 

•    eHealth

•    iSelect

•    QuinStreet

     

Evercore reviewed, among other things and to the extent publicly available:

 

    total enterprise value (“TEV”) of each Velocity Selected Public Company as a multiple of trailing twelve-month (“LTM”) revenue as of the quarter ended June 30, 2017, estimated revenue for calendar years 2017 and 2018, LTM earnings before interest, taxes, depreciation and amortization (“EBITDA”) as of the quarter ended June 30, 2017, and estimated EBITDA for calendar years 2017 and 2018;

 

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    market equity value (“MEV”) of each Velocity Selected Public Company as a multiple of LTM cash flow from operations less capital expenditures (“CFFO-Capex”) for the quarter ended June 30, 2017 and estimated CFFO-Capex for calendar years 2017 and 2018; and

 

    TEV of each Bolt Selected Public Company as a multiple of LTM revenue as of the quarter ended June 30, 2017 and estimated revenue for calendar years 2017 and 2018.

TEV was calculated for purposes of this analysis as MEV of each selected company on September 21, 2017, plus debt and preferred stock, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recent publicly available balance sheet of such company and, in the case of minority interest, where applicable). MEV was calculated for purposes of this analysis as the price per share of each selected company on September 21, 2017, multiplied by the estimated fully diluted number of such company’s outstanding equity securities on such date based on the treasury stock method. The financial data of the Velocity Selected Public Companies and Bolt Selected Public Companies used by Evercore for this analysis was based on publicly available historical income and cash flow statements and research analysts’ estimates, and the financial data of Velocity and Bolt used by Evercore for this analysis was based on the historical financial information, Velocity Projections and Bolt Projections provided to Evercore by management of Actua and Arsenal Holdings. Evercore did not review TEV as a multiple of EBITDA or MEV as a multiple of CFFO-Capex for the Bolt Selected Public Companies because, in each case, the corresponding Bolt metric is negative. Evercore noted that the overall low to high, mean and median TEV/revenue multiples observed for the Velocity Selected Public Companies and the Bolt Selected Public Companies, and the overall low to high, mean and median TEV/EBITDA and MEV/CFFO-Capex multiples observed for the Velocity Selected Public Companies, were as follows:

Velocity Selected Public Companies:

 

     TEV / Revenue     TEV / EBITDA     MEV / CFFO-Capex  
     LTM     2017E     2018E     LTM     2017E     2018E     LTM     2017E     2018E  

Vertical SaaS

                  

Low

     1.51     1.48     1.40     19.6     17.9     13.7     *       39.0     23.4

High

     8.13       7.07       5.43       19.6       17.9       37.0       *       39.0       23.4  

Mean

     3.95       3.55       2.93       19.6       17.9       25.3       *       39.0       23.4  

Median

     3.64       3.34       2.92       19.6       17.9       25.3       *       39.0       23.4  

Horizontal SaaS

                  

Low

     0.50     2.75     2.45     26.7     24.5     21.0     30.8     36.4     33.5

High

     10.53       9.78       8.52       28.0       25.8       21.0       30.8       36.4       48.7  

Mean

     4.40       4.85       4.24       27.4       25.2       21.0       30.8       36.4       41.1  

Median

     3.98       3.77       3.28       27.4       25.2       21.0       30.8       36.4       41.1  

Business Information /

Risk Management

                  

Low

     2.83     2.92     2.82     11.1     10.8     10.2     11.6     14.2     13.1

High

     7.89       7.65       7.19       19.4       17.7       16.1       32.5       29.0       24.9  

Mean

     5.01       4.62       4.36       14.0       13.4       12.4       18.8       20.7       18.0  

Median

     4.88       4.08       3.88       12.4       11.5       10.9       13.6       20.0       15.7  

Diversified Information

                  

Low

     0.95     0.95     0.98     5.6     6.5     6.4     13.2     13.5     13.1

High

     7.41       7.30       6.95       19.0       17.4       16.1       38.2       26.8       23.8  

Mean

     4.58       4.44       4.27       13.2       12.8       12.2       23.4       21.3       18.0  

Median

     4.47       4.30       4.14       13.8       13.2       12.6       22.3       21.7       17.0  

 

* Data not available or multiple is greater than 50.0x and therefore not meaningful in Evercore’s professional judgment.

 

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Bolt Selected Public Companies:

 

     TEV / Revenue  
     LTM      2017E      2018E  

Insurance Software

        

Low

     0.72      0.74      0.72

High

     2.86        2.60        2.31  

Mean

     1.99        1.83        1.65  

Median

     2.18        2.00        1.78  

Online Distribution

        

Low

     1.08      1.03        0.95

High

     2.27        2.43        2.17  

Mean

     1.63        1.64        1.48  

Median

     1.54        1.46        1.31  

Evercore then applied a reference range of:

 

    TEV/LTM revenue multiples of 4.5x to 5.5x, TEV/2017E revenue multiples of 4.0x to 5.0x, TEV/2018E revenue multiples of 3.5x to 4.5x, TEV/LTM EBITDA multiples of 13.0x to 16.0x, TEV/2017E EBITDA multiples of 12.0x to 15.0x and TEV/2018E EBITDA multiples of 10.5x to 13.0x, in each case for Velocity and each derived by Evercore based on its review of the Velocity Selected Public Companies listed above, and its experience and professional judgment, to Velocity’s LTM revenue based on bookings for the year (“non-GAAP revenue”) as of the quarter ended September 30, 2017, estimated 2017 non-GAAP revenue, estimated 2018 non-GAAP revenue, LTM EBITDA based on bookings for the year and excluding stock-based compensation and one-time non-recurring items (“Adjusted EBITDA” for purposes of the Velocity/Bolt Fairness Opinion) as of the quarter ended September 30, 2017, estimated 2017 Adjusted EBITDA and estimated 2018 Adjusted EBITDA, respectively;

 

    MEV/LTM CFFO-Capex multiples of 21.0x to 25.0x, MEV/2017E CFFO-Capex multiples of 20.0x to 24.0x and MEV/2018E CFFO-Capex multiples of 15.0x to 19.0x, in each case for Velocity and each derived by Evercore based on its review of the Velocity Selected Public Companies listed above, and its experience and professional judgment, to Velocity’s LTM CFFO-Capex as of the quarter ended September 30, 2017, estimated 2017 CFFO-Capex and estimated 2018 CFFO-Capex, respectively; and

 

    TEV/LTM revenue multiples of 0.70x to 1.70x, TEV/2017E revenue multiples of 0.65x to 1.65x and TEV/2018E revenue multiples of 0.60x to 1.60x, in each case for Bolt and each derived by Evercore based on its review of the Bolt Selected Public Companies listed above, and its experience and professional judgment, to Bolt’s LTM revenue as of the quarter ended September 30, 2017, estimated 2017 revenue and estimated 2018 revenue, respectively.

 

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This analysis resulted in implied enterprise values for Velocity and Bolt, which when added together and reflecting Arsenal Holdings’ ownership interest in each of Velocity and Bolt, indicated implied equity value reference ranges for Arsenal Holdings on a sum-of-the parts basis as set forth in the tables below.

 

Analysis

   Velocity Metric
(mm)
   Multiple Range    Velocity Enterprise
Value Range (mm)

TEV / LTM non-GAAP revenue

   $61.0    4.5x to 5.5x    $274 to $335

TEV / 2017E non-GAAP revenue

   $64.9    4.0x to 5.0x    $260 to $324

TEV / 2018E non-GAAP revenue

   $77.2    3.5x to 4.5x    $270 to $347

TEV / LTM Adjusted EBITDA

   $16.7    13.0x to 16.0x    $218 to $268

TEV / 2017E Adjusted EBITDA

   $21.2    12.0x to 15.0x    $254 to $318

TEV / 2018E Adjusted EBITDA

   $28.6    10.5x to 13.0x    $300 to $372

MEV / LTM CFFO-Capex

   $13.2    21.0x to 25.0x    $245 to $298

MEV / 2017E CFFO-Capex

   $13.3    20.0x to 24.0x    $234 to $287

MEV / 2018E CFFO-Capex

   $20.8    15.0x to 19.0x    $279 to $362

 

Analysis

   Bolt Metric
(mm)
   Multiple Range    Bolt Enterprise
Value Range (mm)

TEV / LTM revenue

   $31.4    0.70x to 1.70x    $22 to $53

TEV / 2017E revenue

   $32.2    0.65x to 1.65x    $21 to $53

TEV / 2018E revenue

   $33.2    0.60x to 1.60x    $20 to $53

 

     Arsenal Holdings’
Ownership Interest In
   Arsenal Holdings
Equity Value Range
(mm)

Analysis

   Velocity (mm)    Bolt (mm)   

TEV / LTM non-GAAP revenue/revenue

   $262 to $314    $22 to $52    $283 to $366

TEV / 2017E non-GAAP revenue/revenue

   $249 to $304    $21 to $52    $270 to $356

TEV / 2018E non-GAAP revenue/revenue

   $258 to $324    $20 to $52    $278 to $376

TEV / LTM Adjusted EBITDA

   $213 to $256    N/A    $213 to $256

TEV / 2017E Adjusted EBITDA

   $244 to $298    N/A    $244 to $298

TEV / 2018E Adjusted EBITDA

   $284 to $345    N/A    $284 to $345

MEV / LTM CFFO-Capex

   $236 to $282    N/A    $236 to $282

MEV / 2017E CFFO-Capex

   $227 to $272    N/A    $227 to $272

MEV / 2018E CFFO-Capex

   $266 to $337    N/A    $266 to $337

Evercore compared the results of this analysis to the assumed purchase price for Arsenal Holdings under the Velocity/Bolt Sale Agreement of $328 million, noting that the purchase price was within or above each of the implied valuation ranges.

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of Velocity and Bolt, which calculates the present value of a company’s future after-tax free unlevered cash flow based on assumptions with respect to such cash flow and assumed discount rates, in order to derive an implied equity value reference range for Arsenal Holdings on a sum-of-the-parts basis as of September 30, 2017 based on each of the Velocity Projections and the Bolt Projections. Evercore calculated the after-tax unlevered free cash flow (which Evercore calculated for purposes of its analysis as EBITDA, less stock-based compensation, applicable taxes, capital expenditures, and adjusted for changes in working capital (in Velocity’s case, excluding deferred revenue and including any changes in deferred tax assets/liabilities), in each case, based on guidance from management of Actua and Arsenal Holdings) that Velocity and Bolt were forecasted to generate in calendar years 2017 (fourth quarter only) through 2021 and calculated terminal values for each of Velocity and Bolt by applying a range of perpetuity growth rates of 2.5% to 5.0% (based on Evercore’s professional judgment given the nature of Velocity and Bolt and their

 

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respective businesses and the industries in which they operate) to Velocity and Bolt’s respective calendar year 2021 forecasted after-tax unlevered free cash flow. Evercore then discounted to present value as of September 30, 2017 the after-tax unlevered free cash flow and terminal values of Velocity and Bolt using discount rates ranging from 12.0% to 14.0% for Velocity, based on an estimate of Velocity’s weighted average cost of capital, and 20.0% to 24.0% for Bolt, based on an estimate of Bolt’s weighted average cost of capital. For purposes of its analysis, Evercore utilized an implied income tax rate of 35% for the forecasted after-tax unlevered free cash flow and separately calculated a net present value as of September 30, 2017 of Velocity’s NOLs of $50.9 million (based on information provided by management of Actua and Arsenal Holdings) using a discount rate of 13.0% (the midpoint of the 12.0% to 14.0% range) and of Bolt’s NOLs of $91.8 million (based on information provided by management of Actua and Arsenal Holdings) using a discount rate of 22.0% (the midpoint of the 20.0% to 24.0% range). Using this analysis, Evercore derived a range of implied standalone enterprise valuations for Velocity of $273.1 million to $420.2 million and for Bolt of $50.5 million to $70.0 million, which reflected a range of $261 million to $386 million for Arsenal Holdings’ ownership interests in Velocity and a range of $49 million to $67 million for Arsenal Holdings’ ownership interests in Bolt, resulting in a range of implied equity valuations for Arsenal Holdings on a sum-of-the-parts basis of $310 million to $453 million.

Evercore compared the results of this analysis to the assumed purchase price for Arsenal Holdings under the Velocity/Bolt Sale Agreement of $328 million, noting that the purchase price was within the implied valuation range.

Precedent Transactions Analysis

In performing a precedent transactions analysis of Arsenal Holdings on a sum-of-the-parts basis, Evercore reviewed publicly available information related to certain precedent acquisition transactions, set forth in the table below, divided into two groups: (i) transactions involving vertical SaaS, horizontal SaaS, business information/risk management and diversified information target companies from March 2010 to July 2017 Evercore deemed most relevant to consider in relation to Velocity (“Velocity Precedent Transactions”) and (ii) transactions involving insurance technology target companies from March 2008 to February 2017 Evercore deemed most relevant to consider in relation to Bolt (“Bolt Precedent Transactions”).

Velocity Precedent Transactions:

 

Date

  

Acquiror

  

Target

July 2017

   Sage    Intacct

June 2017

   Enel Group    EnerNOC

May 2017

   Moody’s    Bureau Van Dijk

May 2017

   Vista Equity Partners    Xcatly

Jan. 2017

   Cisco    AppDynamics

Dec. 2016

   Gemalto    3M Identity Management Business

Dec. 2016

   Synchronoss    IntraLinks

Nov. 2016

   Symantec    LifeLock

Nov. 2016

   GE    ServiceMax

Oct. 2016

   LDiscovery    Kroll Ontrack

Sept. 2016

   Baring    SAI Global

Sept. 2016

   Google    Apigee

July 2016

   DTI    Epiq Systems

July 2016

   Oracle    NetSuite

June 2016

   Salesforce    Demandware

May 2016

   Wolters Kluwer    Enablon

May 2016

   Oracle    Opower

May 2016

   Vista Equity Partners    Marketo

 

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Date

  

Acquiror

  

Target

May 2016

   Accel-KKR    SciQuest

Apr. 2016

   Oracle    Textura

Apr. 2016

   Vista Equity Partners    Cvent

Apr. 2016

   EQT    Sitecore

Feb. 2016

   Insight    Diligent Corp

Feb. 2016

   Resmed    Brightree

Jan. 2016

   Genstar    Sphera

Dec. 2015

   Transunion    Trustev

Nov. 2015

   Endurance International    Constant Contact

Oct. 2015

   Roper    Aderant

Sept. 2015

   SS&C    Primatics Financial LLC

Sept. 2015

   Vista Equity Partners    Solera

Aug. 2015

   JMI    Intelex

Aug. 2015

   Envestnet    Yodlee

June 2015

   Vista Equity Partners    Powerschool (Pearson)

June 2015

   Cox Automotive    Dealertrack

July 2014

   ACI Worldwide Corp.    Retail Decisions

Mar. 2014

   Vestar Capital    ISS

Mar. 2014

   Thoma Bravo    TravelClick

Jan. 2014

   VMware    Airwatch

Aug. 2012

   Verisk Information    Argus

May 2012

   GTCR    CAMP Systems

Feb. 2012

   Advent & Goldman Sachs    TransUnion

Sept. 2011

   RELX    Accuity

Dec. 2010

   Verisk Analytics    3E Company

Mar. 2010

   MSCI    RiskMetrics

Bolt Precedent Transactions:

 

Date

  

Acquiror

  

Target

Feb. 2017

   Sapiens    StoneRiver

Dec. 2016

   Guidewire    ISCS

Nov. 2015

   All Web Leads    InsuranceQuotes

Mar. 2015

   LDC    SSP

Dec. 2014

   Esure Group    Gocompare.com

May 2014

   Solera    Pittsburgh Glass Works Insurance & Services Division

Feb. 2011

   Craneware PLC    ClaimTrust, Inc.

Mar. 2008

   Mastek Limited    Systems Task Group International

 

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For transactions where sufficient public information was available, Evercore calculated and compared the TEV of the target company in the relevant transaction as a multiple of the target company’s LTM revenue (in the case of both the Velocity Precedent Transactions and Bolt Precedent Transactions) and LTM EBITDA (in the case of the Velocity Precedent Transactions). Evercore did not review LTM EBITDA multiples for the Bolt Precedent Transactions because the corresponding Bolt metric is negative. Evercore noted that the overall low to high, mean and median TEV/LTM Revenue multiples observed for the Velocity Precedent Transactions and the Bolt Precedent Transactions, and the overall low to high, mean and median TEV/LTM EBITDA multiples observed for the Velocity Precedent Transactions, were as follows:

 

     TEV/LTM  
     Revenue      EBITDA  

Velocity Precedent Transactions:

     

Low

     0.77      5.3

High

     17.94        47.2  

Mean

     5.65        19.8  

Median

     5.00        17.5  

Bolt Precedent Transactions:

     

Low

     1.28      N/A  

High

     4.76        N/A  

Mean

     2.51        N/A  

Median

     2.00        N/A  

Based on this analysis and its experience and professional judgment, Evercore then applied a reference range of TEV/LTM revenue multiples of 4.0x to 5.0x to Velocity’s LTM non-GAAP revenue, a reference range of TEV/LTM revenue multiples of 1.50x to 2.50x to Bolt’s LTM revenue and a reference range of LTM/EBITDA multiples of 14.0x to 18.0x to Velocity’s LTM Adjusted EBITDA, in each case as of the quarter ended September 30, 2017. This analysis resulted in implied enterprise values for Velocity and Bolt, which when added together and reflecting Arsenal Holdings’ ownership interest in each of Velocity and Bolt, indicated implied equity value reference ranges for Arsenal Holdings on a sum-of-the parts basis as set forth in the tables below.

 

Analysis

   Velocity Metric
(mm)
   Multiple Range    Velocity Enterprise
Value Range (mm)

TEV / LTM non-GAAP revenue

   $61.0    4.0x to 5.0x    $244 to $305

TEV / LTM Adjusted EBITDA

   $16.7    14.0x to 18.0x    $234 to $301

 

Analysis

   Bolt Metric
(mm)
   Multiple Range    Bolt Enterprise
Value Range (mm)

TEV / LTM revenue

   $31.4    1.50x to 2.50x    $47 to $79

 

     Arsenal Holdings’
Ownership Interest In
   Arsenal Holdings
Equity Value Range
(mm)

Analysis

   Velocity (mm)    Bolt (mm)   

TEV / LTM non-GAAP revenue/revenue

   $236 to $288    $46 to $75    $282 to $363

TEV / LTM Adjusted EBITDA

   $227 to $285    N/A    $227 to $285

Evercore compared the results of this analysis to the assumed purchase price for Arsenal Holdings under the Velocity/Bolt Sale Agreement of $328  million, noting that the purchase price was within or above each of the implied valuation ranges.

FolioDynamix Fairness Opinion

On September 23, 2017, Evercore rendered its oral opinion, which was subsequently confirmed in writing, to the Board that, as of September 23, 2017 and based upon and subject to the factors, procedures, assumptions,

 

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qualifications and limitations set forth in its written opinion, the portion of the merger consideration to be received by Actua in the Folio Sale is fair, from a financial point of view, to Actua.

In connection with rendering the FolioDynamix Fairness Opinion, Evercore, among other things:

 

    reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to FolioDynamix, as prepared and furnished to Evercore by management of Actua and FolioDynamix;

 

    reviewed certain non-public projected financial and operating data relating to FolioDynamix, as prepared and furnished to Evercore by management of Actua and FolioDynamix;

 

    discussed the past and current operations, financial projections and current financial condition of FolioDynamix with management of Actua and FolioDynamix (including their views on the risks and uncertainties of achieving such projections);

 

    prepared a discounted cash flow analysis utilizing the financial projections provided by management of Actua and FolioDynamix (the financial projections relating to FolioDynamix provided to Evercore by management of Actua and approved for Evercore’s use by the Board are referred to as the “FolioDynamix Projections” and are set forth in “Certain Financial Projections”);

 

    compared the financial performance of FolioDynamix with those of certain other publicly traded companies that Evercore deemed relevant;

 

    compared the financial performance of FolioDynamix and the valuation multiples relating to the FolioDynamix transaction with those of certain other transactions that Evercore deemed relevant;

 

    reviewed a substantially final draft of the Folio Sale Agreement, dated September 22, 2017; and

 

    performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumes no liability therefor. Evercore assumed that the FolioDynamix Projections were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of Actua and FolioDynamix as to the future financial performance of FolioDynamix. Evercore expresses no view as to any projected financial data relating to FolioDynamix or the assumptions on which they are based. At the direction of the Board, for purposes of its opinion, Evercore took into consideration the views of the Board on the risks and uncertainties of achieving such projections. Evercore relied, at the direction of the Board, without independent verification, upon the assessments of the management of Actua and FolioDynamix as to financials of FolioDynamix.

For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the final executed Folio Sale Agreement will not differ from the draft agreement reviewed by Evercore, that the representations and warranties of each party contained in the Folio Sale Agreement are true and correct, that each party will perform all of the covenants and agreements required to be performed by it under the Folio Sale Agreement, that all conditions to the consummation of the Folio Sale will be satisfied without material waiver or modification thereof and that the Folio Sale will be consummated in accordance with the terms set forth in the Folio Sale Agreement. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Folio Sale will be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on FolioDynamix or the consummation of the Folio Sale or materially reduce the benefits to Actua.

Evercore also assumed, with the consent and at the direction of the Board, for purposes of its opinion that (i) when determined in accordance with the Folio Sale Agreement, (A) the “Final Merger Consideration” will be

 

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equal to or greater than the “Closing Merger Consideration” and (B) the amount of the adjustments to the “Final Merger Consideration” and “Closing Merger Consideration” will be $0, resulting in the merger consideration being equal to $189.4 million (after giving effect to assumptions regarding FolioDynamix’s debt and cash at the closing of the Folio Sale and the resulting adjustments thereafter pursuant to the Folio Sale Agreement), and (ii) none of the “Parent Indemnified Parties” will incur any “Damages” for which it is entitled to indemnification under the Folio Sale Agreement (as each of the preceding terms in quotation marks is defined in the Folio Sale Agreement). Evercore’s opinion does not express any view as to the actual, assumed or proposed adjustments to the merger consideration set forth in the Folio Sale Agreement. In addition, Evercore noted that the aggregate merger consideration to be paid to FolioDynamix’s stockholders pursuant to the Folio Sale Agreement may be further reduced by certain transaction expenses to be paid by FolioDynamix (including for legal, financial and other professional advisors’ fees and transaction-related bonuses), and Evercore did not take such Folio Sale expenses into consideration for purposes of its analysis and opinion.

Evercore neither made nor assumed any responsibility for making any independent valuation or appraisal of the assets or liabilities of FolioDynamix, nor was Evercore furnished with any such appraisals, nor did Evercore evaluate the solvency or fair value of FolioDynamix under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion is necessarily based upon information made available to Evercore as of September 23, 2017 and financial, economic, market and other conditions as they existed and as could be evaluated on such date. It is understood that subsequent developments may affect Evercore’s opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and expresses no opinion with respect to, any matter other than the fairness to Actua, from a financial point of view, of the portion of the merger consideration to be received by Actua. Evercore does not express any view on, and its opinion does not address, the fairness of the Folio Sale to, or any consideration received in connection therewith by, the holders of any other securities, creditors or other constituencies of FolioDynamix or Actua, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of FolioDynamix or Actua, or any class of such persons, whether relative to the merger consideration or otherwise. Evercore assumed that any modification to the structure of the Folio Sale will not vary in any respect material to its analysis. Evercore’s opinion does not address the relative merits of the Folio Sale as compared to other business or financial strategies that might be available to FolioDynamix and/or Actua, nor does it address the underlying business decision of Actua to engage in the Folio Sale. Evercore’s opinion does not constitute a recommendation to the Board or to any other persons in respect of the Folio Sale. Evercore is not a legal, regulatory, accounting or tax expert and has assumed the accuracy and completeness of assessments by FolioDynamix, Actua and their respective advisors with respect to legal, regulatory, accounting and tax matters.

Summary of Evercore’s Financial Analysis for FolioDynamix Fairness Opinion

Selected Public Company Trading Analysis

In performing a public company trading multiples analysis of FolioDynamix, Evercore reviewed and compared certain financial information of FolioDynamix to corresponding financial multiples and ratios for the selected financial technology (“FinTech”), vertical SaaS and horizontal SaaS public companies listed in the table below (“FolioDynamix Selected Public Companies”), based on Evercore’s professional judgment and experience, because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of FolioDynamix.

 

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FolioDynamix Selected Public Companies:

 

FinTech

  

Vertical SaaS

  

Horizontal SaaS

•    Envestnet

  

•    Bazaarvoice

  

•    Amber Road

•    Financial Engines

  

•    Brightcove

  

•    Apptio

•    Fiserv

  

•    Castlight Health

  

•    CommerceHub

•    Morningstar

  

•    Instructure

  

•    Marin Software

•    SEI Investments

  

•    Model N

  

•    SPS Commerce

•    SS&C Technologies

     

•    Workiva

Evercore reviewed, among other things and to the extent publicly available, TEV of the vertical SaaS and horizontal SaaS FolioDynamix Selected Public Companies as a multiple of estimated revenue for calendar years 2017 and 2018 and TEV of the FinTech FolioDynamix Selected Public Companies as a multiple of estimated EBITDA for calendar years 2017 and 2018. Revenue multiples were utilized for the vertical SaaS and horizontal SaaS FolioDynamix Selected Public Companies because the majority of SaaS public companies had negative EBITDA and SaaS companies generally trade in the public markets on revenue multiples. EBITDA multiples were utilized for the FinTech FolioDynamix Selected Public Companies because they are generally at a more mature stage and FinTech companies generally trade in the public markets on EBITDA multiples. TEV was calculated for purposes of this analysis as the price per share of each selected company on September 21, 2017, multiplied by the estimated fully diluted number of such company’s outstanding equity securities on such date based on the treasury stock method, plus debt and preferred stock, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recent publicly available balance sheet of such company and, in the case of minority interest, where applicable). The financial data of the FolioDynamix Selected Public Companies used by Evercore for this analysis was based on IBES estimates, and the financial data of FolioDynamix used by Evercore in this analysis was based on the FolioDynamix Projections provided to Evercore by management of Actua and FolioDynamix. Evercore noted that the overall low to high, mean and median TEV/revenue multiples observed for the vertical SaaS and horizontal SaaS FolioDynamix Selected Public Companies, and the overall low to high, mean and median TEV/EBITDA multiples observed for the FinTech FolioDynamix Selected Public Companies, were as follows:

 

     TEV / Revenue  

FolioDynamix Selected Public Company

   2017E      2018E  

Vertical SaaS Companies

     

Low

     1.5x        1.4x  

High

     7.1        5.4  

Mean

     3.5        2.9  

Median

     3.3        2.9  

Horizontal SaaS Companies

     

Low

     2.8x        2.5x  

High

     9.8        8.5  

Mean

     4.9        4.2  

Median

     3.8        3.3  

 

     TEV / EBITDA

FolioDynamix Selected Public Company

   2017E    2018E

FinTech Companies

     

Low

   12.3x    10.6x

High

   20.4    16.4

Mean

   15.9    13.8

Median

   14.9    13.9

 

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Evercore then applied a reference range of TEV/2017E revenue multiples of 2.0x to 4.0x, TEV/2018E revenue multiples of 1.5x to 3.5x, TEV/2017E EBITDA multiples of 12.5x to 20.0x and TEV/2018E EBITDA multiples of 11.0x to 16.0x, each derived by Evercore based on its review of the FolioDynamix Selected Public Companies listed above, and its experience and professional judgment, to FolioDynamix’s estimated 2017 gross revenue less manager fees passed through to third party investment managers (“net revenue”), estimated 2018 net revenue, estimated 2017 EBITDA and EBITDA adjusted for approximately $2.2 million of one-time expenses (“Adjusted EBITDA” for purposes of the FolioDynamix Fairness Opinion), and estimated 2018 EBITDA, respectively. This analysis resulted in implied enterprise values for FolioDynamix as set forth in the table below.

 

Analysis

   FolioDynamix
Metric (mm)
     Multiple Range    FolioDynamix
Enterprise Value
Range (mm)

TEV / 2017E net revenue

   $ 44.8      2.0x to 4.0x    $90 to $179

TEV / 2018E net revenue

   $ 60.5      1.5x to 3.5x    $91 to $212

TEV / 2017E EBITDA

   $ 3.4      12.5x to 20.0x    $43 to $68

TEV / 2017E Adjusted EBITDA

   $ 5.6      12.5x to 20.0x    $70 to $113

TEV / 2018E EBITDA

   $ 11.2      11.0x to 16.0x    $123 to $179

Evercore compared the results of this analysis to the assumed aggregate merger consideration to be paid to all FolioDynamix stockholders under the Folio Sale Agreement of $189.4 million, noting that the merger consideration was within or above each of the implied valuation ranges.

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of FolioDynamix, which calculates the present value of a company’s future after-tax unlevered free cash flow based on assumptions with respect to such cash flow and assumed discount rates, in order to derive an implied enterprise value reference range for FolioDynamix as of September 30, 2017 based on the FolioDynamix Projections. Evercore calculated the after-tax unlevered free cash flow (which Evercore calculated for purposes of its analysis as EBITDA, less stock-based compensation, applicable taxes, capital expenditures, and adjusted for changes in working capital, in each case, based on guidance from management of Actua and FolioDynamix) that FolioDynamix was forecasted to generate in calendar years 2017 (fourth quarter only) through 2021 and calculated a terminal value for FolioDynamix by applying a range of perpetuity growth rates of 2.0% to 5.0% (based on Evercore’s professional judgment given the nature of FolioDynamix and its business and the industries in which it operates) to FolioDynamix’s calendar year 2021 forecasted after-tax unlevered free cash flow. Evercore then discounted to present value as of September 30, 2017 the after-tax unlevered free cash flow and terminal value of FolioDynamix using discount rates ranging from 13.5% to 15.5%, based on an estimate of FolioDynamix’s weighted average cost of capital. For purposes of its analysis, Evercore utilized an implied income tax rate of 35% for the forecasted after-tax unlevered free cash flow and separately calculated a net present value as of September 30, 2017 of FolioDynamix’s NOLs of $36 million (based on information provided by management of Actua and FolioDynamix) using a discount rate of 14.5% (the midpoint of the 13.5% to 15.5% range). Using this analysis, Evercore derived a range of implied enterprise valuations for FolioDynamix of $156 million to $239 million.

Evercore compared the results of this analysis to the assumed aggregate merger consideration to be paid to all FolioDynamix stockholders under the Folio Sale Agreement of $189.4 million, noting that the merger consideration was within the implied valuation range.

Precedent Transactions Analysis

Evercore reviewed publicly available information related to certain precedent acquisition transactions, set forth in the table below, involving financial services target companies from August 2011 to November 2016 Evercore deemed most relevant to consider in relation to FolioDynamix (“FolioDynamix Precedent Transactions”).

 

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FolioDynamix Precedent Transactions:

 

Date

  

Acquiror

  

Target

Nov. 2016

   Broadridge    M&O Systems, Inc.

Apr. 2016

   Huatai Securities    AssetMark Holdings

Nov. 2015

   Financial Engines    The Mutual Fund Store

Oct. 2015

   Hellman & Friedman    Edelman Financial (Lee Equity Partners)

Feb. 2015

   TA Associates    NorthStar Financial Services Group

Feb. 2015

   Fidelity Investments    eMoney Advisor

Feb. 2015

   SS&C    Advent

Sept. 2014

   Actua Corp.    FolioDynamix Inc.

June 2014

   Envestnet    Placemark

Jan. 2014

   RCS Capital    Cetera Financial

Apr. 2013

   Envestnet    Prudential Wealth Management Solutions

Feb. 2012

   SS&C    Thomson Reuters PORTIA Business

Feb. 2012

   Envestnet    Tamarac Inc

Feb. 2012

   Envestnet    Prima Capital Holdings

Aug. 2011

   Envestnet    FundQuest Incorporated

For transactions where sufficient public information was available, Evercore calculated and compared the TEV of the target company in the relevant transaction as a multiple of the target company’s LTM revenue and LTM EBITDA. Evercore noted that the overall low to high, mean and median TEV/LTM Revenue and TEV/LTM EBITDA multiples observed for the FolioDynamix Precedent Transactions were as follows:

 

     TEV/LTM  
     Revenue     EBITDA  

FolioDynamix Precedent Transactions:

    

Low

     0.5     9.5

High

     8.0 (1)      29.1  

Mean

     3.6 (2)      16.1  

Median

     4.0 (2)      12.0  

 

(1) 2014 Actua/FolioDynamix transaction, based on net revenue
(2) Excludes 2014 Actua/FolioDynamix transaction

Based on this analysis and its experience and professional judgment, Evercore then applied a reference range of TEV/LTM revenue multiples of 2.5x to 5.5x to FolioDynamix’s LTM net revenue as of the quarter ended June 30, 2017 and a reference range of TEV/LTM EBITDA of 10.0x to 30.0x to FolioDynamix’s LTM EBITDA and LTM Adjusted EBITDA, in each case as of the quarter ended June 30, 2017. The implied enterprise value reference ranges for FolioDynamix are set forth in the table below.

 

Analysis

   FolioDynamix
Metric (mm)
     Multiple Range    FolioDynamix
Enterprise Value
Range (mm)

TEV / LTM net revenue

   $ 38.1      2.5x to 5.5x    $95 to $210

TEV / LTM EBITDA

   $ 3.5      10.0x to 30.0x    $35 to $106

TEV / LTM Adjusted EBITDA

   $ 4.4      10.0x to 30.0x    $44 to $133

Evercore compared the results of this analysis to the assumed aggregate merger consideration to be paid to all FolioDynamix stockholders under the Folio Sale Agreement of $189.4 million, noting that the merger consideration was within or above each of the implied valuation ranges.

 

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General

The foregoing summary of Evercore’s material financial analyses does not purport to be a complete description of the analyses or data presented by Evercore. In connection with the review of the Velocity/Bolt Sale and Folio Sale by the Board, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinions. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s Velocity/Bolt Fairness Opinion and FolioDynamix Fairness Opinion, as applicable. In arriving at each of its fairness determinations, Evercore considered the results of all the analyses applicable to such opinion and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of such opinion. Rather, Evercore made its determinations as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses applicable to each such opinion. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above should not be taken to be the view of Evercore with respect to the actual values of either Arsenal Holdings (or its ownership interest in either Velocity or Bolt) or FolioDynamix, as applicable. No company or transaction used in the above analyses as a comparison is directly comparable to Arsenal Holdings, Velocity, Bolt or FolioDynamix or to the Transactions. Further, Evercore’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Actua, Actua Holdings, Arsenal Holdings, Velocity, Bolt, FolioDynamix or their respective advisors.

Evercore prepared these analyses for the purpose of providing an opinion to the Board as to the fairness, from a financial point of view, of (i) the purchase price to Actua Holdings in the Velocity/Bolt Sale and (ii) the portion of the merger consideration to be received by Actua in the Folio Sale. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the respective businesses or securities of Actua, Arsenal Holdings, Velocity, Bolt or FolioDynamix actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.

The purchase price in the Velocity/Bolt Sale Agreement and the merger consideration in the Folio Sale Agreement were each determined through arm’s length negotiations between the Board, on the one hand, and Arsenal Buyer and Envestnet, respectively, on the other hand. Evercore provided advice to the Board during these negotiations. Evercore did not, however, recommend any specific purchase price or merger consideration to Actua or its Board or recommend that any specific purchase price or merger consideration constituted the only appropriate consideration for the Velocity/Bolt Sale or Folio Sale, respectively.

Pursuant to the terms of Evercore’s engagement letter with Actua dated September 11, 2017, a fee of $1 million was payable to Evercore upon the delivery of the Velocity/Bolt Fairness Opinion, and a success fee estimated to be approximately $8.5 million will be payable to Evercore upon the consummation of the Velocity/Bolt Sale and against which such $1 million opinion fee will be credited. Pursuant to the terms of Evercore’s engagement letter with Actua dated May 3, 2017, as amended and restated as of July 26, 2017, a fee of $2 million was payable to Evercore upon the delivery of the FolioDynamix Fairness Opinion, and a success fee estimated to be approximately $5.8 million (assuming no purchase price adjustment relative to the Consent Adjustment) will be payable to Evercore upon the consummation of the Folio Sale and against which such $2 million opinion fee will be credited. Under both engagement letters, Actua has also agreed to reimburse Evercore for its reasonable

 

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and documented out-of-pocket expenses (including legal fees, expenses and disbursements) and to indemnify Evercore for certain potential liabilities arising out of its engagement. In addition to Evercore’s engagement by Actua in connection with the Transactions, during the two years prior to September 23, 2017, Evercore and its affiliates provided financial advisory services to Actua and its affiliates, for which Evercore and its affiliates received fees in an amount equal to approximately $1.1 million in the aggregate. Subsequent to rendering its opinions on September 23, 2017, Evercore also was engaged by Bolt to provide financial advisory services in connection with the Secondary Bolt Sale, for which services Evercore may become entitled to receive fees in the future but has not received any compensation as of the date of this proxy statement.

During the two years prior to September 23, 2017, Evercore and its affiliates provided financial advisory services to CVC Capital Partners Advisory (U.S.), Inc., an entity that advises certain investment funds, including those affiliated with Arsenal Buyer, and its affiliates and portfolio companies, for which Evercore and its affiliates have received, and in the future may become entitled to receive, fees. As of the date of this proxy statement, Evercore and its affiliates have received fees in an amount equal to approximately $800,000 in the aggregate in connection with such services. During the two years prior to September 23, 2017, neither Evercore nor its affiliates have had any material relationship with Actua, CVC or their respective affiliates other than as described above or any material relationship with Envestnet, the Parent or their respective affiliates. Evercore may provide financial or other services to Actua, CVC, Envestnet and their respective affiliates (including without limitation to Bolt, as described above) in the future, and in connection with any such services Evercore may receive compensation.

In the ordinary course of business, Evercore or its affiliates may actively trade the securities, or related derivative securities, or financial instruments of Actua, CVC, Envestnet and their respective affiliates, for its own account and for the accounts of its customers, and, accordingly, may at any time hold a long or short position in such securities or instruments.

The issuance of both the Velocity/Bolt Fairness Opinion and the FolioDynamix Fairness Opinion was approved by an opinion committee of Evercore.

The Board engaged Evercore to act as a financial advisor in connection with the Transactions based on its qualifications, experience and reputation, as well as familiarity with the business of Actua. Evercore is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.

CERTAIN FINANCIAL PROJECTIONS

Other than annual financial guidance provided to investors, Actua does not, as a matter of course, publicly disclose internal projections as to its or its individual businesses’ future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates. Actua is including the Velocity Projections, the Bolt Projections and the FolioDynamix Projections (collectively, the “Projections”) in this proxy statement to provide its stockholders with access to certain non-public unaudited projected financial information about each of Velocity, Bolt and FolioDynamix that was made available to the Board in connection with its consideration of the Transactions and to Evercore for its use and reliance in connection with its financial analyses and fairness opinions, and is not being included in this proxy statement to induce any stockholder to vote in favor of the Sale Proposal or any other proposal to be voted on at the Special Meeting. The Projections were generated solely for internal use and not developed with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or GAAP. The Projections are forward-looking statements. All of the Projections summarized in this section were prepared by Actua management.

 

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No independent registered public accounting firm provided any assistance in preparing the Projections. Accordingly, no independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the Projections or expressed any opinion or given any other form of assurance with respect thereto, and they assume no responsibility for the information contained in the Projections.

By including the Projections in this proxy statement, neither Actua nor any of its representatives has made or makes any representation to any person regarding the information included in the Projections or the ultimate performance of Actua, Velocity, Bolt, FolioDynamix or any of their affiliates compared to the information contained in the Projections. Actua has made no representation to Arsenal Buyer or Envestnet, in the Velocity/Bolt Sale Agreement or the Folio Sale Agreement, respectively, or otherwise concerning the Projections.

The assumptions and estimates underlying the Projections, all of which are difficult to predict and many of which are beyond the control of Actua, Velocity, Bolt and FolioDynamix, may not be realized. There can be no assurance that the underlying assumptions will prove to be accurate or that the forecasted results will be realized, and actual results likely will differ, and may differ materially, from those reflected in the Projections, whether or not the Transactions are completed. Neither Actua nor any of its affiliates assumes any responsibility to its stockholders for the accuracy of this information.

In particular, the Projections, while presented with numerical specificity necessarily, were based on numerous variables and assumptions that are inherently uncertain. Because the Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. Important factors that may affect actual results and results in the Projections not being achieved include, but are not limited to, the effect of global economic conditions, fluctuations in foreign currency exchange rates, the cost and effect of changes in tax and other legislation and other risk factors described in Actua’s SEC filings, including Actua’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and described under the section above entitled “Special Note Regarding Forward-Looking Statements.” The Projections also reflect assumptions as to certain business decisions that are subject to change. The information set forth in the Projections is not fact and should not be relied upon as being necessarily indicative of future results.

The Projections were developed on a standalone basis without giving effect to the closing of the Transactions, and therefore the Projections do not give effect to the Transactions or any changes to each of Velocity, Bolt and FolioDynamix’s operations or strategies that may be implemented after the consummation of the Transactions, including cost synergies realized as a result of the Transactions, or to any costs incurred in connection with the Transactions. Furthermore, the Projections do not take into account the effect of any failure of the Transactions to be completed and should not be viewed as accurate or continuing in that context.

The Projection summarized in this section were prepared prior to the execution of the Velocity/Bolt Sale Agreement and the Folio Sale Agreement and have not been updated to reflect any changes after the date they were prepared. Actua undertakes no obligation, except as required by law, to update or otherwise revise the Projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error or to not be appropriate, or to reflect changes in general economic or industry conditions.

In light of the foregoing factors and the uncertainties inherent in the Projections, readers of this proxy statement are cautioned not to place undue, if any, reliance on the Projections.

 

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Velocity Projections

Below is a summary of the Velocity Projections:

 

     Fiscal Year Ending December 31,  
     2017     2018     2019     2020     2021  

($ in millions)

   (Estimated)  

Non-GAAP Revenue(1)

   $ 64.9     $ 77.2     $ 93.8     $ 112.9     $ 135.6  

Non-GAAP Gross Profit

   $ 52.2     $ 63.3     $ 77.6     $ 94.1     $ 113.7  

Operating Expenses

   ($ 31.0   ($ 34.7   ($ 40.6   ($ 47.1   ($ 54.9

Adjusted EBITDA(2)

   $ 21.2     $ 28.6     $ 37.0     $ 47.0     $ 58.9  

Cash Flow From Operations

   $ 14.3     $ 12.9     $ 28.0     $ 35.5     $ 43.2  

 

(1) Velocity presents its revenue based on bookings for the relevant year rather than GAAP revenue.
(2) EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA (with earnings derived from revenue based on bookings for the relevant year rather than GAAP revenue) plus one-time costs.

 

     Quarter Ending
December 31,
     Fiscal Year Ending December 31,  
     2017      2018      2019      2020      2021  

($ in millions)

   (Estimated)  

Adjusted EBITDA

   $ 8.2      $ 28.6      $ 37.0      $ 47.0      $ 58.9  

EBIT(1)

   $ 7.3      $ 24.6      $ 32.4      $ 41.6      $ 52.4  

EBIAT(2)

   $ 4.8      $ 16.0      $ 21.1      $ 27.0      $ 34.1  

Unlevered Free Cash Flow(3)

   $ 3.2      $ 15.9      $ 20.7      $ 27.0      $ 33.7  

 

(1) EBIT is Adjusted EBITDA less depreciation and amortization and stock-based compensation.
(2) EBIAT is EBIT less taxes assuming an implied income tax rate of 35%. Certain projections for Velocity provided to bidders, including CVC, which in other respects were consistent with the Velocity Projections, utilized implied tax rates giving effect to expected utilization of any tax benefits rather than an assumed income tax rate of 35%. These projections did not specifically calculate Unlevered Free Cash Flow; however, utilizing implied tax rates giving effect to expected utilization of tax benefits would result in Unlevered Free Cash Flow figures as follows for the quarter ending December 31, 2017 and the fiscal years ending December 31, 2018 through 2021: $4.2, $19.3, $24.7, $31.3 and $38.6.
(3) Unlevered free cash flow is EBIAT plus depreciation and amortization, less changes in net working capital excluding deferred revenue and less capital expenditures.

Bolt Projections

Below is a summary of the Bolt Projections:

 

     Fiscal Year Ending December 31,  
     2017     2018     2019     2020     2021  
($ in millions)    (Estimated)  

Revenue

   $ 32.2     $ 33.2     $ 45.7     $ 61.2     $ 75.3  

Gross Profit

   $ 25.6     $ 26.4     $ 38.1     $ 53.0     $ 66.4  

Operating Expenses

   ($ 30.1   ($ 32.0   ($ 36.2   ($ 42.4   ($ 49.2

Operating Income

   ($ 4.4   ($ 5.6   $ 1.9     $ 10.5     $ 17.2  

Adjusted EBITDA(1)

   ($ 2.6   ($ 3.9   $ 3.6     $ 12.2     $ 18.9  

Cash Flow From Operations

   ($ 2.3   $ 0.2     $ 4.7     $ 12.8     $ 18.7  

 

(1) EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA plus one-time costs.

 

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     Quarter Ending
December 31,
    Fiscal Year Ending December 31,  
     2017     2018     2019      2020      2021  
($ in millions)    (Estimated)  

Adjusted EBITDA

   ($ 0.9   ($ 3.9   $ 3.6      $ 12.2      $ 18.9  

EBIT(1)

   ($ 1.4   ($ 5.7   $ 1.8      $ 10.4      $ 17.1  

EBIAT(2)

   ($ 0.9   ($ 3.7   $ 1.2      $ 6.8      $ 11.1  

Unlevered Free Cash Flow(3)

   $ 1.2     $ 2.2     $ 4.2      $ 9.2      $ 12.8  

 

(1) EBIT is EBITDA less depreciation and amortization and less stock-based compensation.
(2) EBIAT is EBIT less taxes.
(3) Unlevered free cash flow is EBIAT plus depreciation and amortization, less change in net working capital excluding deferred revenue and less capital expenditures. For this purpose, capital expenditures are assumed to be equal to depreciation and amortization.

The following projections for Bolt, which reflected the view of Bolt’s management, were provided to potential bidders for Actua, including CVC (the “Initial Bolt Projections”):

 

     Fiscal Year Ending December 31,  
     2017     2018     2019      2020      2021  

($ in millions)

   (Estimated)  

Revenue

   $ 33.1     $ 40.7     $ 58.0      $ 79.2      $ 102.0  

Gross Profit

   $ 26.4     $ 33.0     $ 49.6      $ 69.8      $ 91.6  

Operating Income

   ($ 4.5   ($ 1.9   $ 7.8      $ 18.8      $ 30.2  

EBITDA(1)

   $ (2.7   $ (0.2   $ 9.4      $ 20.4      $ 31.8  

 

(1) EBITDA is earnings before interest, taxes, depreciation and amortization.

In light of Bolt’s historical operating performance, Actua management determined that it should provide the Board and Evercore with Bolt projections that reflect a more conservative growth rate for the business than the Initial Bolt Projections. Accordingly, Actua made the Bolt Projections available to the Board in connection with its consideration of the Velocity/Bolt Sale and to Evercore for its use and reliance in connection with its financial analysis and the Velocity/Bolt Fairness Opinion.

FolioDynamix Projections

Below is a summary of the FolioDynamix Projections:

 

     Fiscal Year Ending December 31,  
     2017     2018      2019      2020      2021  

($ in millions)

   (Estimated)  

Gross Revenue

   $ 70.6     $ 91.5      $ 114.2      $ 141.2      $ 172.5  

Gross Profit

   $ 31.8     $ 44.8      $ 59.7      $ 78.2      $ 99.3  

Operating Income (Loss)

   $ 1.6     $ 9.2      $ 16.8      $ 30.2      $ 43.8  

Net Income

   ($ 0.5   $ 7.1      $ 14.8      $ 19.4      $ 28.7  

Net Revenue(1)

   $ 44.8     $ 60.5      $ 78.1      $ 99.7      $ 124.9  

EBITDA(2)

     3.4       11.2        18.8        32.2        45.9  

Adjusted EBITDA(3)

     5.6       11.2        18.8        32.2        45.9  

 

(1) Net revenue is defined as gross revenue less manager fees passed through to third party investment managers.
(2) EBITDA is earnings before interest, taxes, depreciation and amortization.
(3) Adjusted EBITDA is EBITDA plus one-time costs.

 

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     Quarter Ending
December 31,
     Fiscal Year Ending December 31,  
     2017      2018      2019      2020      2021  

($ millions)

   (Estimated)  

Net Revenue

   $ 13.1      $ 60.5      $ 78.1      $ 99.7      $ 124.9  

EBITDA

   $ 1.9      $ 11.2      $ 18.8      $ 32.2      $ 45.9  

EBIT(1)

   $ 1.1      $ 7.7      $ 15.2      $ 28.6      $ 42.2  

EBIAT(2)

   $ 0.7      $ 5.0      $ 9.9      $ 18.6      $ 27.4  

Unlevered Free Cash Flow(3)

   $ 1.5      $ 3.7      $ 8.2      $ 16.5      $ 24.8  

 

(1) EBIT is EBITDA less depreciation and amortization and less stock-based compensation.
(2) EBIAT is EBIT less taxes.
(3) Unlevered free cash flow is EBIAT plus depreciation and amortization, less change in net working capital excluding deferred revenue and less capital expenditures. For this purpose, capital expenditures are assumed to be equal to depreciation and amortization.

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS

Certain of Actua’s executive officers and directors may have financial interests in the Transactions that may be different from, or in addition to, the interests of Actua’s stockholders generally. The Board was aware of those potentially differing interests and considered them, among other matters, in evaluating the Velocity/Bolt Sale Agreement and the Folio Sale Agreement and in reaching its decision to approve such agreements and the transactions contemplated thereby, as more fully discussed in “Background of the Transactions,” “The Velocity/Bolt Sale—Reasons for Recommending the Velocity/Bolt Sale and the Sale Proposal” and “The Folio Sale—Reasons for Recommending the Folio Sale and the Sale Proposal.”

For further information with respect to the arrangements between Actua and its named executive officers, see “Transaction-Related Compensation to Executive Officers.”

Impact of the Transactions on Shares and Equity Awards

Shares

Actua’s executive officers and directors who own shares of common stock will be entitled to receive, on the same terms and conditions as Actua’s other stockholders, the same dividends, distributions and other benefits that Actua’s stockholders would receive when Actua distributes substantially all of the net proceeds received from the consummation of the Transactions to Actua’s stockholders.

Company Restricted Stock

On February 28, 2014, under the terms of Actua’s Seventh Amended and Restated 2005 Omnibus Equity Compensation Plan, as amended from time to time (the “Plan”), the Board granted 750,000 shares of restricted stock to each of Walter W. Buckley, III and Douglas Alexander and 200,000 shares of restricted stock to R. Kirk Morgan (the “2014 Long-Term Grants”), with:

 

    50% of the shares in each grant subject to time-based vesting (in equal annual installments over a four-year period); and

 

    50% of the shares in each grant subject to market-based vesting.

As of September 30, 2017, 93,750 restricted shares subject to time-based vesting and 375,000 shares subject to market-based vesting remained unvested for each of Messrs. Buckley and Alexander, and 25,000 restricted shares subject to time-based vesting and 100,000 shares subject to market-based vesting remained unvested for

 

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Mr. Morgan. Vesting of the 2014 Long-Term Grants will accelerate upon the executive’s termination of employment without “cause” or for “good reason,” in either case, following a “change of control” that occurs before February 28, 2018. For purposes of the foregoing, the terms “cause,” “good reason” and “change of control” have the meanings set forth in the Plan, the applicable award agreement and the executives’ employment agreements (as applicable).

On March 10, 2017, Actua granted 56,859 shares of restricted stock to each of Messrs. Buckley and Alexander and 21,661 shares of restricted stock to Mr. Morgan, in each case, as part of Actua’s 2017 performance bonus plan (the “2017 Performance Awards”). The 2017 Performance Awards were made under the Plan. The 2017 Performance Awards become vested based on the achievement of certain performance goals, and with respect to Messrs. Buckley and Alexander, will vest in full if their employment is terminated without “cause” or for “good reason,” in either case, following a “change of control.” Upon any termination of employment prior to a change of control other than for cause, each executive is entitled to pro-rata vesting (based on actual performance). For purposes of the foregoing, the terms “cause,” “good reason” and “change of control” have the meanings set forth in the executives’ employment agreements and award agreements, as applicable.

The Velocity/Bolt Sale will constitute a change of control for purposes of the 2014 Long-Term Grants and for purposes of the 2017 Performance Awards granted to Messrs. Buckley, Alexander and Morgan. In connection with its efforts to ensure that a program of Actua employee incentive arrangements is in place in order to maximize stockholder value in connection with the Transactions, the Board has recognized that Actua’s executives responsible for structuring, negotiating and consummating the Transactions would be incented in large part through the vesting of unvested shares under the 2014 Long-Term Grants and the 2017 Performance Awards. Given the structure of the Transactions, which will require certain of Actua’s executives to remain at Actua in order to assist in the wind-down of Actua’s operations, Actua’s residual regulatory compliance efforts and/or the liquidation of Actua’s remaining assets following the change of control for varying periods before their employment is ultimately terminated (and thus not receive the intended vesting acceleration or distributions on their restricted stock), the Board has determined that any unvested shares under the 2014 Long-Term Grants and the 2017 Performance Awards will vest upon the consummation of the change of control in connection with the Transactions (that is, the consummation of the Velocity/Bolt Sale), subject to the executive’s continued employment with Actua through the change of control. The Board believes that those actions are necessary to fully realize the incentives it has put in place in connection with the Transactions and will foster alignment between Actua’s stockholders and the executives who will seek to maximize stockholder value as they wind down Actua’s operations and dispose of its remaining assets.

Stock Options and Stock Appreciation Rights

As of September 30, 2017, Mr. Morgan holds stock appreciation rights (“SARs”) covering 37,500 shares of Actua’s common stock; those SARs are fully vested. As of the date of this proxy statement, David Adelman, Richard Haverstick and Peter Miller each hold SARs covering 25,000 shares of Actua’s common stock, with all of the SARs held by Messrs. Adelman and Miller being vested, and 6,250 of the SARs held by Mr. Haverstick being vested. The vesting of Mr. Haverstick’s 18,750 unvested SARs will be accelerated in full upon the change of control (that is, the consummation of the Velocity/Bolt Sale), subject to his continued service on the Board through the time of the change of control.

Deferred Stock Units

As of September 30, 2017, all of the non-employee directors (other than Mr. Haverstick) held deferred stock units granted under the Plan (“DSUs”). All of the DSUs held by non-employee directors are vested, except for 5,625 DSUs held by each of Michael Hagan, Mr. Miller and Philip Ringo. Pursuant to their terms, all of these unvested DSUs will become immediately vested in full, and each DSU will be settled for one share of Actua’s common stock, upon the change of control (that is, the consummation of the Velocity/Bolt Sale). The number of DSUs held by each non-employee director as of September 30, 2017 is set forth in the table below.

 

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Carried Interest

Actua’s executive officers have not and will not receive any compensation under Actua’s carried interest program in connection with the Transactions, as Actua’s interest in Bolt is no longer held by the limited partnership that had been set up under the program.

Executive Officer and Director Equity Holdings

The table below sets forth, with respect to each executive officer and director of Actua, as applicable, as of September 30, 2017:

 

    the number of shares of Actua’s common stock beneficially held by the individual without restriction (that is, excluding 2014 Long-Term Grants, 2017 Performance Awards and Director Restricted Stock), and the value of that common stock as of September 30, 2017 (which equals the number of shares of Actua’s common stock multiplied by the latest closing price of Actua’s common stock as of that date);

 

    the number of shares of Actua’s common stock underlying SARs and stock options held by the individual (all of which is vested, except for 18,750 SARs held by Mr. Haverstick), and the value of those SARs and stock options as of September 30, 2017 (which, for each award of SARs or stock options, equals the number of shares of Actua’s common stock underlying the award, multiplied by the difference, if any, between the latest closing price of Actua’s common stock as of that date and the exercise price or base price of the award);

 

    the number of shares of restricted stock under 2014 Long-Term Grants and 2017 Performance Awards held by the individual, and the value of that restricted stock as of September 30, 2017 (which equals the number of shares of restricted stock multiplied by the latest closing price of Actua’s common stock as of that date);

 

    the number of shares of restricted stock that is Director Restricted Stock held by the individual, and the value of that restricted stock as of September 30, 2017 (which equals the number of shares of restricted stock multiplied by the latest closing price of Actua’s common stock as of that date); and

 

    the number of DSUs held by the individual (all of which is vested, except for 5,625 DSUs held by each of Messrs. Hagan, Miller and Ringo), and the value of those DSUs as of September 30, 2017 (which equals the number of DSUs multiplied by the latest closing price of Actua’s common stock as of that date).

Note, the value of the equity interests set forth on this table does not separately include the value of any dividends expected to be paid in connection with the Transactions (since any such value should be reflected in the latest closing price of Actua’s common stock prior to September 30, 2017).

 

Name

  Shares of
Common
Stock (#)
    Value of
Common
Stock ($)
    Shares of
Common
Stock
Underlying
SARs and
Stock
Options (#)
    Value of
SARs and
Stock
Options
($)
    Shares Under
2014 Long-
Term Grants
and 2017
Performance
Awards (#)
    Value of
2014 Long-
Term Grants
and 2017
Performance
Awards ($)
    Shares of
Director
Restricted
Stock (#)
    Value of
Director
Restricted
Stock ($)
    Shares of
Common
Stock
Underlying
DSUs (#)
    Value of
Common
Stock
Underlying
DSUs ($)
 

Walter W. Buckley, III

    787,472     $ 12,048,322       —         —         525,609     $ 8,041,818       —         —         —         —    

Douglas Alexander

    801,379     $ 12,261,099       —         —         525,609     $ 8,041,818       —         —         —         —    

R. Kirk Morgan

    30,448     $ 465,550       37,500     $ 118,125       146,661     $ 2,243,913       —         —         —         —    

David J. Adelman

    71,472     $ 1,093,522       25,000     $ 78,750       —         —         12,793     $ 195,733       26,211     $ 401,283  

David J. Berkman

    63,333     $ 968,995       —         —         —         —         11,969     $ 183,126       103,784     $ 1,587,795  

Thomas A. Decker

    55,465     $ 848,615       —         —         —         —         10,715     $ 163,940       67,760     $ 1,026,728  

David K. Downes

    54,939     $ 840,567       —         —         —         —         12,507     $ 191,357       67,598     $ 1,034,249  

Michael J. Hagan

    15,742     $ 249,853       —         —         —         —         5,269     $ 80,616       79,176     $ 1,211,393  

H. Richard Haverstick, Jr.

    23,149     $ 354,180       25,000     $ 157,000       —         —         12,769     $ 195,366       —         —    

Peter K. Miller

    26,673     $ 408,097       25,000     $ 163,500       —         —         4,910     $ 75,123       55,996     $ 856,739  

Philip J. Ringo

    31,085     $ 475,601       —         —         —         —         5,878     $ 89,933       131,849     $ 2,017,290  

 

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Employment Agreements and Other Arrangements with Executive Officers

Messrs. Buckley and Alexander. Actua is party to an employment agreement with each of Messrs. Buckley and Alexander.

If either Mr. Buckley’s or Mr. Alexander’s employment is terminated by Actua without cause during the six-month period before, or the 24-month period following, a change of control, or if either executive resigns for good reason during the 24-month period following a change of control, he would, under his employment agreement, be entitled to:

 

    payment, within 60 days of his termination date, of a lump sum equal to two times the sum of his annual base salary plus target bonus ($2,475,000);

 

    payment, at the same time of payment of bonuses to Actua’s other executives, of a prorated bonus for the year in which his termination occurs;

 

    automatic vesting of all unvested stock options, SARs and restricted stock granted to him under Actua’s equity compensation plans;

 

    continuation of his medical benefits until the earlier to occur of (i) two years after his termination and (ii) his eligibility for benefits under another employer’s or his spouse’s employer’s plan (estimated to be $44,183 for each of Messrs. Buckley and Alexander); and

 

    outplacement assistance of up to $40,000.

The first 18 months of the medical benefits, if payable, would be paid on a monthly basis, and the last six months of the medical payments, if payable, would be paid in a lump sum within 30 days following the end of the 18-month period following the executive’s termination. The benefits outlined above for Messrs. Buckley and Alexander are expressly contingent upon the relevant executive executing and not revoking or breaching a general release, as well as the executive’s continued adherence to the non-competition, non-solicitation, confidentiality and invention assignment covenants contained in his employment agreement.

The terms “cause,” “good reason” and “change of control” are defined in the applicable executive’s employment agreement. The consummation of the Velocity/Bolt Sale will constitute a “change of control” under Messrs. Buckley’s and Alexander’s employment agreements.

For a quantification of the severance benefits potentially payable to Messrs. Buckley and Alexander in connection with the Transactions, see “Transaction-Related Compensation to Executive Officers.”

Mr. Morgan. Actua is party to an employment agreement with Mr. Morgan.

If Mr. Morgan’s employment is terminated by Actua without cause (as defined in Mr. Morgan’s employment agreement) on or prior to December 31, 2020, he would, under his employment agreement, be entitled to the following benefits:

 

    payment, following his termination, of a lump sum amount equal to 12 months of his base salary plus target bonus at the rate existing at termination of his employment ($600,000);

 

    payment, at the same time as other employees, of a prorated bonus for service through his termination date based on individual performance and company performance for that period as determined by the Board;

 

    continuation of medical and dental insurance until the earlier to occur of (i) 12 months after termination of his employment and (ii) his eligibility for benefits under another employer’s or his spouse’s employer’s plan (estimated to be $22,092);

 

    provision of executive outplacement services until the earlier to occur of (i) 12 months after termination of his employment and (ii) his employment with a subsequent employer (estimated to be $40,000); and

 

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    the exercise period of his vested option and SAR awards will be extended, subject to the limitations of applicable tax law, to the earlier to occur of (i) 24 months after termination of his employment, (ii) 12 months after the price of Actua’s common stock is maintained at a minimum closing price of $30 per share for 20 consecutive trading days, subject to adjustment for stock splits and similar events and (iii) the original expiration date of the award.

The benefits outlined above are expressly contingent upon Mr. Morgan executing and not rescinding or breaching a general release and restrictive covenant agreement in a form acceptable to Actua.

Transaction-Related Compensation to Executive Officers

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation that could become payable to each of Actua’s executive officers and that is based on or otherwise relates to the Transactions; this compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules.

The amounts set forth in the “Golden Parachute Compensation” table below are estimates of the amounts that would be payable, assuming, solely for purposes of this table the consummation of the change of control in connection with the Transactions (that is, the consummation of the Velocity/Bolt Sale) occurs prior to February 28, 2018 and that the executive’s employment is terminated on such date. Certain other assumptions are included in the footnotes below. Accordingly, the amounts received by Messrs. Buckley, Alexander and Morgan in connection with the Transactions may materially differ from the amounts set forth below. Some of the amounts set forth in the table below would be payable by virtue of the consummation of the Velocity/Bolt Sale and/or the waiver of any applicable requirement that the executive’s employment be terminated (“single-trigger” payments), while other amounts would be payable only if a qualifying termination of employment occurs following the consummation of the Velocity/Bolt Sale (“double-trigger” payments).

Golden Parachute Compensation

 

Name

  Cash
($)(1)
    Equity
($)(2)
    Pension /
NQDC
($)
    Perquisites /
Benefits
($)(3)
    Tax
Reimbursement ($)
    Other
($)
    Total
($)(4)
 

Walter W. Buckley, III

  $ 2,475,000     $ 8,036,562       —       $ 84,183       —         —       $ 10,595,745  

Douglas Alexander

  $ 2,475,000     $ 8,036,562       —       $ 84,183       —         —       $ 10,595,745  

R. Kirk Morgan

    —       $ 2,242,447       —         —         —         —       $ 2,242,447  

 

(1) Represents for Messrs. Buckley and Alexander the lump sum payment of two times the sum of his annual base salary plus target bonus (as described in “Interests of Certain Persons in the Transactions—Employment Agreements and Other Arrangements with Executive Officers” above), which is owed in the event that the executive’s employment is terminated by Actua without cause during the six-month period before, through the 24-month period following, a change of control or if the executive resigns for good reason during the 24-month period following a change of control. The payment of Messrs. Buckley’s and Alexander’s prorated bonuses will be accomplished through the vesting of their respective 2017 Performance Awards, as reflected in the “Equity” column of this table and accompanying footnote (2). All of the severance payments described in this footnote (1) are double-trigger arrangements. Mr. Morgan is not entitled to receive any cash change of control severance benefits, but his severance benefits in the event of a termination without cause are described above in “Interests of Certain Persons in the Transactions—Employment Agreements and Other Arrangements with Executive Officers.”
(2)

Represents the accelerated vesting of the 2014 Long-Term Grants and 2017 Performance Awards held by Messrs. Buckley, Alexander and Morgan. Upon the consummation of the Velocity/Bolt Sale, (A) a total of 468,750 shares under the 2014 Long Term Grants and a total of 56,859 shares under the 2017 Performance Awards will become vested for each of Messrs. Buckley and Alexander, and (B) a total of 125,000 shares

 

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  under the 2014 Long-Term Grants and a total of 21,661 shares under the 2017 Performance Awards will become vested for Mr. Morgan. The value of the shares becoming vested was calculated as the number of shares so vesting multiplied by $15.29 (the average closing market price of Actua’s common stock over the first five business days following the first public announcement of the Transactions). The vesting acceleration arrangements described in this footnote (2) are single-trigger arrangements.
(3) Represents for each of Messrs. Buckley and Alexander the continuation of medical benefits and the maximum potential amount of outplacement assistance (as described above in “Interests of Certain Persons in the Transactions—Employment Agreements and Other Arrangements with Executive Officers”) to be provided if his employment is terminated by Actua without cause during the six-month period before, through the 24-month period following, a change of control or if he resigns for good reason during the 24-month period following a change of control. The amounts relating to the continuation of medical benefits assume that the cost of providing the continuing benefits will remain the same as it is in 2017. All of the severance arrangements described in this footnote (3) are double-trigger arrangements. Mr. Morgan is not entitled to receive any change of control severance benefits, but his severance benefits in the event of a termination without cause are described above in “Interests of Certain Persons in the Transactions—Employment Agreements and Other Arrangements with Executive Officers.”
(4) The total single trigger arrangements for Messrs. Buckley, Alexander and Morgan set forth in this table are $8,036,562, $8,036,562 and $2,242,447, respectively, and the total double trigger payments for Messrs. Buckley, Alexander and Morgan described on this table are $2,559,183, $2,559,183 and $0, respectively.

ANTICIPATED USE OF PROCEEDS FROM THE TRANSACTIONS

Assuming the closing of the Velocity/Bolt Sale and the Folio Sale, Actua estimates that it will realize net cash proceeds in the range of between approximately $472 million and approximately $502 million, or approximately $14.35 and $15.18 per share (such range of proceeds, the “Proceeds Estimate”). The Proceeds Estimate includes a $30 million range because the Folio Sale is subject to certain potential downward purchase price adjustments totaling approximately $30 million, including in connection with the Consent Adjustment. The Proceeds Estimate takes into account estimated transaction costs associated with both the Velocity/Bolt Sale and the Folio Sale and an estimated negative purchase price adjustment related to working capital, cash and indebtedness associated with the Folio Sale; the actual transaction costs and any negative purchase price adjustments could ultimately differ from Actua’s estimates. Escrowed proceeds of approximately $1.1 million and a shareholder representative’s expense fund of $0.5 million are also excluded from the Proceeds Estimate, as those proceeds may never be realized due to indemnification claims and/or purchase price adjustments. The Proceeds Estimate does not include the potential additional proceeds from a Secondary Bolt Sale, as described above, since there can be no assurance that any such proceeds will be realized. Actua expects to pay U.S. federal income taxes in connection with the Transactions but does not expect the amount to be material.

Actua intends to distribute substantially all of the net proceeds from the Velocity/Bolt Sale and the Folio Sale, which are expected to be in the range of between approximately $472 million and approximately $502 million (that is, the Proceeds Estimate), to its stockholders as soon as practicable following the closing of both the Velocity/Bolt Sale and the Folio Sale. There can be no assurance, however, of the exact amount of cash proceeds to be distributed to Actua’s stockholders or of the exact timing of any such distributions. Actua has not set a record date for any such distribution, and an Actua stockholder must hold shares of Actua’s common stock as of the applicable record date in order to receive a distribution.

Following the consummation of the Velocity/Bolt Sale and the Folio Sale, Actua intends to wind down its operations and monetize its remaining holdings, which consist largely of minority ownership stakes (generally less than 10%) in private companies, including (i) Anthem Ventures Fund, L.P., Anthem Annex Fund, L.P. and Stage2 Capital Ventures Associates, L.P. (each of which invests in technology companies), (ii) InstaMed Holdings, Inc. (a cloud-based healthcare payments network), (iii) Parchment Inc. (a provider of cloud-based

 

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technology for education credentials), (iv) Savana, Inc. (a provider of financial process automation technology) and (v) Relay Holdings, LLC (a provider of personalized mobile customer solutions) (collectively, the “Minority Holdings”), over a 12- to 18-month period following the consummation of the Velocity/Bolt Sale and the Folio Sale, and to distribute its other cash assets, such as any deferred consideration under the Folio Sale Agreement, any residual portions of the GovDelivery Escrow and any residual value in QC Holdings, Inc., which sold substantially all of its assets to Allconnect, Inc. in 2013. There can be no assurance as to how long this process will take or what the results of this process will yield. Actua intends to significantly reduce its operating costs during this wind-down stage and return net proceeds from the sale of its remaining holdings and its other cash assets to its stockholders, less amounts reasonably expected to be needed to fund Actua’s operations and satisfy its liabilities. Actua is working with its advisors to determine the method or combination of methods by which it may distribute those proceeds and assets, which could consist of multiple cash distributions over time to Actua stockholders who hold stock as of the various record dates associated with such distributions and/or on or about the date on which a certificate of dissolution is filed for Actua.

Tax Consequences of the Anticipated Use of Proceeds

The following discussion is a summary of the material U.S. federal income tax consequences of a non-liquidating distribution of the proceeds from the Transactions to Actua’s stockholders. For a summary of certain material U.S. federal income tax consequences of the Transactions, see “Certain U.S. Federal Income Tax Consequences of the Velocity/Bolt Sale” and “Certain U.S. Federal Income Tax Consequences of the Folio Sale.”

Taxation of Distributions

As discussed above, Actua intends to distribute substantially all of the net proceeds from the Transactions to its stockholders. If Actua makes a non-liquidating dividend distribution of cash or property, such distribution will be taxable as a dividend for U.S. federal income tax purposes to the extent paid out of Actua’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions in excess of current or accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of a stockholder’s basis in Actua’s shares of common stock and thereafter as either long-term or short-term capital gain, depending on the stockholder’s holding period for such shares of common stock. The timing and amount of cash to be distributed to our stockholders will depend on a number of factors, discussed in further detail above.

Foreign Stockholders

For purposes of this discussion, a “foreign stockholder” is a stockholder that, for U.S. federal income tax purposes, is not a U.S. person. The term “U.S. person” means:

 

    an individual citizen or resident of the United States;

 

    a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any State thereof or the District of Columbia;

 

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

    a trust, if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

Foreign stockholders generally will be subject to withholding of U.S. federal income tax at a rate of 30% of the gross amount of Actua’s distributions treated as dividends or such lower rate as may be specified by an applicable income tax treaty. In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, a foreign stockholder will be required to provide a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or appropriate substitute or successor form) certifying its entitlement to

 

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benefits under the tax treaty. A foreign stockholder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for refund with the IRS.

The U.S. federal withholding tax does not apply to dividends that are “U.S. trade or business income” (as described below) of a foreign stockholder who provides a properly executed IRS Form W-8ECI (or appropriate substitute or successor form), certifying that the dividends are subject to tax as income effectively connected with the foreign stockholder’s conduct of a trade or business in the United States. Dividend income received by a foreign stockholder will be considered to be “U.S. trade or business income” if such dividend income is (1) effectively connected with the conduct by a foreign stockholder of a trade or business within the United States; and (2) in the case of a foreign stockholder that is eligible for the benefits of an income tax treaty with the United States, attributable to a “permanent establishment” or “fixed base” maintained by the foreign stockholder in the United States. U.S. trade or business income is not subject to U.S. federal withholding tax (provided the foreign stockholder complies with applicable certification and disclosure requirements); instead, U.S. trade or business income is subject to U.S. federal income tax on a net income basis at regular U.S. federal income tax rates generally in the same manner as if the recipient were a U.S. person. Any U.S. trade or business income received by a foreign stockholder that is treated as a corporation also may be subject to a “branch profits tax” at a 30% rate, or such lower rate as provided under an applicable income tax treaty.

Each foreign stockholder is urged to consult his or her own tax advisor as to the U.S. federal income tax consequences of any distributions from Actua.

EFFECTS ON ACTUA IF THE TRANSACTIONS ARE CONSUMMATED

Contingent upon the successful closing of the Velocity/Bolt Sale and the Folio Sale, and following the distribution to Actua’s stockholders of substantially all of the net proceeds realized from the Transactions, Actua intends to monetize the Minority Holdings and discharge its outstanding obligations as it winds down its operations. Actua intends to significantly reduce its operating costs during this wind-down stage.

Actua’s goal is to monetize the Minority Holdings over a 12- to 18-month period following the consummation of both the Velocity/Bolt Sale and the Folio Sale. Actua may not realize the value of escrowed proceeds, holdbacks or other contingent consideration associated with the Folio Sale and the sale of its other assets during that period, however. Additionally, there can be no assurance that Actua will be able to satisfy all of its liabilities during that period.

As part of the process of winding down its operations and liquidating its remaining assets, following the distribution of substantially all of the net proceeds from the Velocity/Bolt Sale and the Folio Sale, Actua intends to delist Actua’s common stock with NASDAQ and seek to deregister its common stock with the SEC in connection with the adoption of a plan of liquidation. Actua believes those measures may be necessary and appropriate, given the minimal amount of assets and resources that it expects to have available at the time of the wind-down.

EFFECTS ON ACTUA IF THE TRANSACTIONS ARE NOT CONSUMMATED

If the Velocity/Bolt Sale and/or the Folio Sale are not completed, Actua will continue operating its businesses in the ordinary course and may explore other strategic alternatives, including the sale of Actua, Arsenal Holdings, Velocity, Bolt and/or FolioDynamix to other parties. However, any alternative transaction may have terms that are less favorable to Actua than the terms of the Transactions, or Actua may be unable to reach agreement for an alternative transaction with a third party.

 

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CERTAIN ACCOUNTING CONSEQUENCES OF THE TRANSACTIONS

In connection with the execution of the Velocity/Bolt Sale Agreement on September 23, 2017, the execution of the Folio Sale Agreement on September 25, 2017 and Actua’s review of relevant accounting factors, Actua determined that each of Velocity, Bolt and FolioDynamix met the criteria for held-for-sale classification and discontinued operations treatment as of September 30, 2017. Accordingly, the aggregate results of each of those companies will be presented as one line item entitled “Loss from discontinued operations, net of tax” on Actua’s consolidated statements of operations beginning in the quarter ended September 30, 2017. Additionally, the aggregate assets and liabilities of Velocity, Bolt and FolioDynamix will be presented in the line items entitled “Assets of discontinued operations” and “Liabilities of discontinued operations” on Actua’s consolidated balance sheets beginning on September 30, 2017. In its filings with the SEC related to the quarter ended September 30, 2017 and thereafter, for presentation purposes, Actua will reclassify Velocity, Bolt and FolioDynamix as held for sale and discontinued operations for all prior periods presented in order to match the current held-for-sale and discontinued operations classifications.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

The following table contains information relating to shares of Actua Common Stock beneficially owned by:

 

    each person or group that is known to Actua to be the beneficial owner of more than 5% of its outstanding Common Stock;

 

    each Actua director and executive officer; and

 

    all Actua directors and executive officers as a group.

Unless otherwise specified, (i) the information in the following table is as of September 30, 2017, and (ii) the address of each person listed below is c/o Actua Corporation, Attention: Corporate Secretary, 555 East Lancaster Avenue, Suite 640, Radnor, Pennsylvania 19087.

 

Name of 5% Beneficial Owner,

Director or Executive Officer

   Options,
Warrants and
SARs Exercisable
Within 60 Days
     DSUs(1)      Number of Shares
Beneficially
Owned,
Including Options,
Warrants and
SARs

Exercisable
Within  60 Days
and DSUs
     Percent of
Voting Shares
Outstanding(2)
 

David J. Adelman

     25,000        26,211        135,476        *

Doug Alexander

     0        0        1,326,988        4.1

David J. Berkman

     0        103,784        179,086        *

Walter W. Buckley, III(3)

     0        0        1,313,081        4.1

Thomas A. Decker

     0        67,760        133,940        *

David K. Downes

     0        67,598        135,044        *

Michael J. Hagan

     0        79,176        100,187        *

H. Richard Haverstick

     6,250        0        42,168        *

Peter K. Miller

     25,000        55,996        112,579        *

R. Kirk Morgan

     37,500        0        214,609        *

Philip J. Ringo

     0        131,849        168,812        *

All directors and executive officers as a group (11 individuals)

     93,750        532,374        3,861,970        12.0

BlackRock, Inc.(4)(5)

     0        0        2,615,055        8.1

Capital World Investors(4)(6)

     0        0        2,602,000        8.1

Dimensional Fund Advisors LP(4)(7)

     0        0        2,390,957        7.4

FMR LLC(4)(8)

     0        0        5,921,628        18.4

The Vanguard Group, Inc.(4)(9)

     0        0        2,742,065        8.5

 

* Represents less than 1% of the outstanding shares of common stock of Actua.
(1)

Includes shares of common stock underlying DSUs issued under Actua’s Non-Management Director Compensation Plan in connection with the director’s service on the Board and its committees. Since directors do not have any voting or dispositive power with respect to

 

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  the shares of common stock underlying the DSUs they hold, the DSUs are not included in the “Percent of Voting Shares Outstanding” figures in the table.
(2) Percentages are based on 32,156,605 shares of Actua common stock outstanding and eligible to vote as of September 30, 2017.
(3) Includes 25,000 shares of common stock held by two trusts for the benefit of members of Mr. Buckley’s immediate family (with each trust holding 12,500 shares of common stock), as to which Mr. Buckley disclaims beneficial ownership.
(4) Ownership information is as of December 31, 2016, based on a Schedule 13G (or an amendment thereto) filed with the SEC.
(5) Includes shares held by the following subsidiaries of BlackRock, Inc. (“BlackRock”): BlackRock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management (Australia) Limited and BlackRock Investment Management, LLC. BlackRock’s address is 55 East 52nd Street, New York, NY 10055.
(6) Includes shares held by various investment companies under the Investment Company Act of 1940, as amended (the “Investment Act”), for which Capital World Investors/Capital Research and Management Company (“CW”) serves as investment advisor (including shares held by SMALLCAP World Fund, Inc., which, according to the Schedule 13G filed by CW on February 13, 2017, represent more than 5% of the outstanding shares of Actua’s common stock). The address of CW is 333 South Hope Street, Los Angeles, CA 90071.
(7) Includes shares held by (a) four separate investment companies under the Investment Act for which Dimensional Fund Advisors LP (“Dimensional”) provides investment advice and (b) certain other commingled funds, group trusts and separate accounts for which Dimensional serves as investment manager or sub-advisor. Dimensional disclaims beneficial ownership of all such shares. Dimensional’s address is Palisades West, Building One, 6300 Bee Cave Road, Austin, TX 78746.
(8) Includes shares held by various investment companies registered under the Investment Act for which Fidelity Management & Research Company (“Fidelity Management”) serves as investment advisor. The address of each of FMR LLC and Fidelity Management is 245 Summer Street, Boston, MA 02210.
(9) Includes shares held by a number of (a) collective trust accounts for which Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc. (“Vanguard”), serves as investment manager and (b) Australian investment offerings for which Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, serves as investment manager. Vanguard’s address is 100 Vanguard Boulevard, Malvern, PA 19355.

 

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PROPOSAL 2—ADVISORY VOTE ON TRANSACTION-RELATED COMPENSATION OF NAMED EXECUTIVE OFFICERS

General

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, Actua is providing its stockholders with a separate advisory (non-binding) vote to approve certain compensation that may be paid or become payable to Actua’s named executive officers in connection with the Transactions, as described in this proxy statement in the sections entitled “Interests of Certain Persons in the Transactions.”

The Board unanimously recommends that the stockholders of Actua approve the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to the named executive officers of Actua Corporation in connection with the Transactions, as disclosed in the table in the sections of the proxy statement titled “Interests of Certain Persons in the Transactions,” including the associated narrative discussion, and the agreements and plans pursuant to which such compensation may be paid or become payable, are hereby APPROVED.”

The vote on the Transaction-Related Compensation Proposal is a vote separate and apart from the vote on the Sale Proposal. Accordingly, you may vote to approve the Sale Proposal and vote not to approve the Transaction-Related Compensation Proposal and vice versa. Because the vote on the Transaction-Related Compensation Proposal is advisory only, it will not be binding on the Board or Actua. Accordingly, if the Transactions are consummated, the compensation related to the Transactions will be payable, subject only to the conditions applicable thereto under the applicable compensation agreements and arrangements, regardless of the outcome of the non-binding, advisory vote of Actua’s stockholders. Although the Transaction-Related Compensation Proposal is only advisory in nature and is not binding on the Board or Actua, Actua intends to review the voting results with the Board and the Compensation Committee of the Board.

Required Vote

The above resolution approving the compensation of Actua’s named executive officers pursuant to the completion of the Transactions on a non-binding advisory basis requires the affirmative vote of a majority of the outstanding shares of Actua’s common stock present in person or by proxy at the Special Meeting, provided that a quorum is present. Abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present at the Special Meeting. Abstentions will have the same effect as a vote against the Transaction-Related Compensation Proposal. Broker non-votes will not affect the vote on the Transaction-Related Compensation Proposal.

Recommendation of the Board

The Board unanimously recommends that the stockholders of Actua vote “FOR” the Transaction-Related Compensation Proposal.

 

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PROPOSAL 3—ADJOURNMENT OF THE SPECIAL MEETING

General

If, at the Special Meeting, the number of shares of Actua’s common stock, present or represented by proxy and voting in favor of the approval of the sale of substantially all of Actua’s assets pursuant to the Sale Proposal is insufficient to approve such proposal, under Actua’s charter and Delaware law, Actua intends to move to adjourn the Special Meeting in order to enable the Board to solicit additional proxies in respect of the approval of the sale of substantially all of Actua’s assets. In that event, Actua will ask Actua’s stockholders to vote only upon the Adjournment Proposal, and not upon any of the other proposals to be acted on at the Special Meeting.

In the Adjournment Proposal, Actua is asking you to authorize the holder of any proxy solicited by the Board to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the Special Meeting to another time and place for the purpose of soliciting additional proxies. If the stockholders of Actua approve the Adjournment Proposal, Actua could adjourn the Special Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders of Actua that have previously voted.

Required Vote

The affirmative vote of a majority of the outstanding shares of Actua’s common stock present in person or by proxy at the Special Meeting is required to approve the Adjournment Proposal. This means that, of the shares present in person or by proxy at the Special Meeting, a majority must vote in favor of the Adjournment Proposal in order for the Adjournment Proposal to be approved. Abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present at the Special Meeting. Abstentions will have the same effect as a vote against the Adjournment Proposal. Broker non-votes will not affect the vote on the Adjournment Proposal.

Recommendation of the Board

The Board believes that if the number of shares of Actua’s common stock present or represented by proxy at the Special Meeting and voting in favor of the approval of the sale of substantially all the assets of Actua pursuant to the Sale Proposal is insufficient to approve such proposal, it is in the best interests of Actua’s stockholders to enable Actua to continue to seek to obtain a sufficient number of additional votes to bring about the approval of the Sale Proposal.

The Board unanimously recommends that you vote “FOR” the Adjournment Proposal.

 

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SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2018 ANNUAL MEETING

Under the rules of the SEC set forth in Rule 14a-8 of the Exchange Act relating to stockholder proposals (the “Stockholder Proposal Rules”), some stockholder proposals may be eligible for inclusion in Actua’s 2018 proxy statement. The Stockholder Proposal Rules set forth the criteria that must be met for a stockholder proposal to be included in a proxy statement. Under the Stockholder Proposal Rules, any stockholder wishing to have a proposal included in Actua’s proxy statement for the 2018 annual meeting must submit the proposal so that Actua’s Corporate Secretary receives it no later than January 2, 2018. However, in the event that Actua’s 2018 annual meeting is held prior to May 17, 2018 or later than July 16, 2018, Actua will disclose the new deadline by which stockholder proposals must be received under Part II, Item 5 of its earliest practicable Quarterly Report on Form 10-Q or, if impracticable, by another means reasonably calculated to inform stockholders.

The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at the 2018 annual meeting without inclusion of that proposal in Actua’s proxy materials, and written notice of the proposal is not received by Actua’s Corporate Secretary by March 18, 2018 (the date that is 45 days before the one year anniversary on which Actua first sent its proxy materials for the 2017 annual meeting), or if Actua meets other requirements of the applicable SEC rules, the proxies solicited by the Board for use at the 2018 annual meeting will confer discretionary authority to vote on the proposal should it be raised at the 2018 annual meeting.

Additional information regarding Actua’s procedures is located in the Company’s proxy statement on Schedule 14A for the 2017 annual meeting filed on April 28, 2017. See “Where You Can Find More Information” on page 102.

 

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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

Actua files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any of this information at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding issuers, including Actua, who file electronically with the SEC. The reports and other information filed by Actua with the SEC is also available at Actua’s website. The address of Actua’s website is: http://www.actua.com. The information contained on those websites is specifically not incorporated by reference into this proxy statement.

In addition, the SEC allows Actua to “incorporate by reference” certain information into this proxy statement, which means that Actua can disclose important information to its stockholders by referring its stockholders to other documents that Actua filed separately with the SEC. Actua stockholders should consider the incorporated information as if Actua reproduced it in this proxy statement, except for any information directly superseded by information contained in this proxy statement.

This proxy statement incorporates by reference the documents listed below that Actua has previously filed with the SEC (other than information furnished pursuant to Item 2.02 and Item 7.01 of a Current Report on Form 8-K). These documents contain important information about Actua, its financial condition or other matters.

 

    Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 31, 2017.

 

    Quarterly Report on Form 10-Q for the three (3) months ended March 31, 2017, filed with the SEC on May 8, 2017.

 

    Quarterly Report on Form 10-Q for the six (6) months ended June 30, 2017, filed with the SEC on August 9, 2017.

 

    Current Reports on Form 8-K filed with the SEC on June 20, 2017 and September 25, 2017.

In addition, Actua incorporates by reference any future filing it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K) after the date of this proxy statement and prior to the date of the Special Meeting. Such documents are considered to be a part of this proxy statement, effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered correct.

 

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APPENDIX A

VELOCITY/BOLT SALE AGREEMENT

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and among

ACTUA CORPORATION,

ACTUA HOLDINGS, INC.

ARSENAL BUYER INC., and

ARSENAL ACQUISITION HOLDINGS, LLC

SEPTEMBER 23, 2017

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS

     A-6  

Section 1.01.

 

Definitions

     A-6  

Section 1.02.

 

Other Definitional and Interpretative Provisions

     A-16  

ARTICLE 2 THE CLOSING

     A-16  

Section 2.01.

 

The Closing

     A-16  

Section 2.02.

 

Sale and Purchase of Company Interests

     A-16  

Section 2.03.

 

Purchase Price

     A-17  

Section 2.04.

 

Closing Purchase Price Adjustment

     A-17  

Section 2.05.

 

Withholding Rights

     A-17  

Section 2.06.

 

Further Assurances

     A-18  

Section 2.07.

 

FIRPTA Certificate

     A-18  

ARTICLE 3 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

     A-18  

Section 3.01.

 

Corporate Existence and Power

     A-18  

Section 3.02.

 

Organizational Documents

     A-18  

Section 3.03.

 

Corporate Authorization

     A-18  

Section 3.04.

 

Governmental Authorization

     A-19  

Section 3.05.

 

Non-Contravention

     A-19  

Section 3.06.

 

Capitalization

     A-19  

Section 3.07.

 

Subsidiaries

     A-20  

Section 3.08.

 

Financial Statements

     A-20  

Section 3.09.

 

Absence of Certain Changes

     A-21  

Section 3.10.

 

No Undisclosed Liabilities

     A-21  

Section 3.11.

 

Litigation

     A-21  

Section 3.12.

 

Compliance with Applicable Law

     A-21  

Section 3.13.

 

Material Contracts

     A-22  

Section 3.14.

 

Taxes

     A-23  

Section 3.15.

 

Employee Benefit Plans

     A-25  

Section 3.16.

 

Labor and Employment Matters

     A-26  

Section 3.17.

 

Environmental Matters

     A-26  

Section 3.18.

 

Intellectual Property

     A-27  

Section 3.19.

 

Real Property; Property

     A-29  

Section 3.20.

 

Related Party Transactions

     A-29  

Section 3.21.

 

Insurance

     A-29  

ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING SELLER

     A-30  

Section 4.01.

 

Corporate Existence and Power

     A-30  

Section 4.02.

 

Corporate Authorization; Enforceability

     A-30  

Section 4.03.

 

Governmental Authorization

     A-30  

Section 4.04.

 

Non-Contravention

     A-30  

Section 4.05.

 

Title to Company Interests

     A-31  

Section 4.06.

 

Litigation

     A-31  

Section 4.07.

 

Compliance with Applicable Law

     A-31  

Section 4.08.

 

Brokers’ Fees

     A-31  

ARTICLE 5 REPRESENTATIONS AND WARRANTIES REGARDING PARENT

     A-31  

Section 5.01.

 

Corporate Existence and Power

     A-31  

Section 5.02.

 

Corporate Authorization

     A-31  

Section 5.03.

 

Governmental Authorization

     A-32  

Section 5.04.

 

Non-Contravention

     A-32  

 

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         Page  

Section 5.06.

 

Disclosure Documents

     A-33  

Section 5.07.

 

SEC Filings and the Sarbanes-Oxley Act

     A-33  

Section 5.08.

 

Litigation

     A-33  

Section 5.09.

 

Compliance with Applicable Law

     A-33  

Section 5.10.

 

Brokers’ Fees

     A-33  

Section 5.11.

 

Vote Required

     A-34  

Section 5.12.

 

Takeover Laws

     A-34  

Section 5.13.

 

Opinion of Financial Advisor

     A-34  

Section 5.14.

 

No Other Representations or Warranties

     A-34  

ARTICLE 6 REPRESENTATIONS AND WARRANTIES REGARDING BUYER

     A-34  

Section 6.01.

 

Corporate Existence and Power

     A-34  

Section 6.02.

 

Authorization; Enforceability

     A-34  

Section 6.03.

 

Governmental Authorization

     A-35  

Section 6.04.

 

Non-Contravention

     A-35  

Section 6.05.

 

No Vote of Buyer Stockholders; Required Approval

     A-35  

Section 6.06.

 

Disclosure Documents

     A-35  

Section 6.07.

 

Litigation

     A-35  

Section 6.08.

 

Ownership

     A-35  

Section 6.09.

 

Buyer Material Adverse Effect

     A-36  

Section 6.10.

 

Availability of Funds

     A-36  

Section 6.11.

 

Solvency

     A-37  

Section 6.12.

 

Brokers’ Fees

     A-37  

Section 6.13.

 

No Other Representations or Warranties

     A-37  

ARTICLE 7 COVENANTS

     A-38  

Section 7.01.

 

Conduct of the Company

     A-38  

Section 7.02.

 

Unsolicited Proposals

     A-40  

Section 7.03.

 

Proxy Statement; Stockholders Meeting

     A-42  

Section 7.04.

 

Access to Information; Confidentiality

     A-44  

Section 7.05.

 

Notice of Certain Events

     A-45  

Section 7.06.

 

Employee Benefit Plan Matters

     A-46  

Section 7.07.

 

State Takeover Laws

     A-47  

Section 7.08.

 

Obligations of Buyer

     A-47  

Section 7.09.

 

Director and Officer Liability

     A-47  

Section 7.10.

 

Efforts

     A-49  

Section 7.11.

 

Stockholder Litigation

     A-50  

Section 7.12.

 

Public Announcements

     A-50  

Section 7.13.

 

Debt Financing

     A-51  

Section 7.14.

 

Matters Prior to a Bolt Sale

     A-53  

Section 7.15.

 

Matters Following a Bolt Sale

     A-54  

Section 7.16.

 

Director Resignations

     A-56  

Section 7.17.

 

Release

     A-56  

Section 7.18.

 

Mail; Payments; Misallocated Assets

     A-56  

Section 7.19.

 

Matters Relating to Parent and its Affiliates

     A-57  

Section 7.20.

 

Tax Matters

     A-57  

ARTICLE 8 CONDITIONS TO THE CLOSING

     A-59  

Section 8.01.

 

Conditions to the Obligations of Each Party

     A-59  

Section 8.02.

 

Conditions to the Obligations of Buyer

     A-60  

Section 8.03.

 

Conditions to the Obligations of Seller and Parent

     A-60  

Section 8.04.

 

Frustration of Closing Conditions

     A-61  

 

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         Page  

ARTICLE 9 TERMINATION

     A-61  

Section 9.01.

 

Termination

     A-61  

Section 9.02.

 

Effect of Termination

     A-62  

Section 9.03.

 

Financing Sources

     A-62  

ARTICLE 10 INDEMNIFICATION

     A-63  

Section 10.01.

 

Indemnification by Seller and Parent

     A-63  

Section 10.02.

 

Procedure with Respect to Direct Claims

     A-63  

Section 10.03.

 

Procedure with Respect to Third-Party Actions

     A-64  

Section 10.04.

 

Tax Matters

     A-65  

ARTICLE 11 MISCELLANEOUS

     A-65  

Section 11.01.

 

Notices

     A-65  

Section 11.02.

 

Survival of Representations, Warranties and Covenants

     A-67  

Section 11.03.

 

Amendments and Waivers.