UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
JetPay Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
477177109
(CUSIP Number)
Charles E. Glew
Steven M. Michienzi
Flexpoint Fund II, L.P.
Flexpoint Ford, LLC
676 N. Michigan Ave., Suite 3300
Chicago, Illinois 60611
(312) 327-4525
Copy to:
James S. Rowe
Mark A. Fennell, P.C.
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
(312) 862-2000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
October 19, 2018
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* | The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. 477177109 |
SCHEDULE 13D | Page 2 of 8 |
1 | NAMES OF REPORTING PERSON:
Flexpoint Fund II, L.P.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY):
26-2377163 | |||||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (1) (a) ☒ (b) ☐
| |||||
3 | SEC USE ONLY:
| |||||
4 | SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO | |||||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): ☐
| |||||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7 | SOLE VOTING POWER:
0 | ||||
8 | SHARED VOTING POWER:
11,959,920 shares of Common Stock (as defined below) issuable upon conversion of
99,666 | |||||
9 | SOLE DISPOSITIVE POWER:
0 | |||||
10 | SHARED DISPOSITIVE POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ☐
| |||||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
43.5% (3)(4) | |||||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
PN |
(1) | Box (a) is checked with respect to the relationship of the Reporting Persons and Sundara Investment Partners, LLC, a Delaware limited liability company (Sundara), as described in Item 4 and footnote (4) below. |
(2) | The Series A Preferred Stock is convertible into Common Stock. The calculation of shares of Common Stock is based on the number of shares of Series A Preferred Stock issued (99,666), multiplied by $300 (the purchase price per share of the Series A Preferred Stock) and divided by the applicable conversion price of $2.50, which is subject to adjustment in certain circumstances. |
(3) | The calculation of the foregoing percentage is based on an aggregate of 27,484,690 shares of Common Stock outstanding, consisting of 15,524,770 shares of Common Stock outstanding as of October 18, 2018, plus an additional 11,959,920 shares of Common Stock issuable upon conversion of the Series A Preferred Stock beneficially owned by the Reporting Persons. |
(4) | As a result of the entry by the Investor (as defined below) into the Amended and Restated Securities Purchase Agreement described in Item 4, the Reporting Persons may be deemed to be the beneficial owners of the shares of Series A Preferred Stock owned by Sundara and the shares of Common Stock into which such shares of Series A Preferred Stock owned by Sundara may be converted; however, the Reporting Persons disclaim beneficial ownership of all securities owned by Sundara. Based on information provided to the Reporting Persons, Sundara beneficially owns 33,667 shares of Series A Preferred Stock, which are convertible into 4,040,040 shares of Common Stock. |
CUSIP No. 477177109 |
SCHEDULE 13D | Page 3 of 8 |
1 | NAMES OF REPORTING PERSON:
Flexpoint Management II, L.P.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY):
26-2370850 | |||||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (1) (a) ☒ (b) ☐
| |||||
3 | SEC USE ONLY:
| |||||
4 | SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO | |||||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): ☐
| |||||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7 | SOLE VOTING POWER:
0 | ||||
8 | SHARED VOTING POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. (2) | |||||
9 | SOLE DISPOSITIVE POWER:
0 | |||||
10 | SHARED DISPOSITIVE POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ☐
| |||||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
43.5% (3)(4) | |||||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
PN |
(1) | Box (a) is checked with respect to the relationship of the Reporting Persons and Sundara, as described in Item 4 and footnote (4) below. |
(2) | The Series A Preferred Stock is convertible into Common Stock. The calculation of shares of Common Stock is based on the number of shares of Series A Preferred Stock issued (99,666), multiplied by $300 (the purchase price per share of the Series A Preferred Stock) and divided by the applicable conversion price of $2.50, which is subject to adjustment in certain circumstances. |
(3) | The calculation of the foregoing percentage is based on an aggregate of 27,484,690 shares of Common Stock outstanding, consisting of 15,524,770 shares of Common Stock outstanding as of October 18, 2018, plus an additional 11,959,920 shares of Common Stock issuable upon conversion of the Series A Preferred Stock beneficially owned by the Reporting Persons. |
(4) | As a result of the entry by the Investor (as defined below) into the Amended and Restated Securities Purchase Agreement described in Item 4, the Reporting Persons may be deemed to be the beneficial owners of the shares of Series A Preferred Stock owned by Sundara and the shares of Common Stock into which such shares of Series A Preferred Stock owned by Sundara may be converted; however, the Reporting Persons disclaim beneficial ownership of all securities owned by Sundara. Based on information provided to the Reporting Persons, Sundara beneficially owns 33,667 shares of Series A Preferred Stock, which are convertible into 4,040,040 shares of Common Stock. |
CUSIP No. 477177109 |
SCHEDULE 13D | Page 4 of 8 |
1 | NAMES OF REPORTING PERSON:
Flexpoint Ultimate Management II, LLC
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY):
26-2360949 | |||||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (1) (a) ☒ (b) ☐
| |||||
3 | SEC USE ONLY:
| |||||
4 | SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO | |||||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): ☐
| |||||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7 | SOLE VOTING POWER:
0 | ||||
8 | SHARED VOTING POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. (2) | |||||
9 | SOLE DISPOSITIVE POWER:
0 | |||||
10 | SHARED DISPOSITIVE POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ☐
| |||||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
43.5% (3)(4) | |||||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
OO (Limited Liability Company) |
(1) | Box (a) is checked with respect to the relationship of the Reporting Persons and Sundara, as described in Item 4 and footnote (4) below. |
(2) | The Series A Preferred Stock is convertible into Common Stock. The calculation of shares of Common Stock is based on the number of shares of Series A Preferred Stock issued (99,666), multiplied by $300 (the purchase price per share of the Series A Preferred Stock) and divided by the applicable conversion price of $2.50, which is subject to adjustment in certain circumstances. |
(3) | The calculation of the foregoing percentage is based on an aggregate of 27,484,690 shares of Common Stock outstanding, consisting of 15,524,770 shares of Common Stock outstanding as of October 18, 2018, plus an additional 11,959,920 shares of Common Stock issuable upon conversion of the Series A Preferred Stock beneficially owned by the Reporting Persons. |
(4) | As a result of the entry by the Investor (as defined below) into the Amended and Restated Securities Purchase Agreement described in Item 4, the Reporting Persons may be deemed to be the beneficial owners of the shares of Series A Preferred Stock owned by Sundara and the shares of Common Stock into which such shares of Series A Preferred Stock owned by Sundara may be converted; however, the Reporting Persons disclaim beneficial ownership of all securities owned by Sundara. Based on information provided to the Reporting Persons, Sundara beneficially owns 33,667 shares of Series A Preferred Stock, which are convertible into 4,040,040 shares of Common Stock. |
CUSIP No. 477177109 |
SCHEDULE 13D | Page 5 of 8 |
1 | NAMES OF REPORTING PERSON:
Donald J. Edwards
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY):
- | |||||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS): (1) (a) ☒ (b) ☐
| |||||
3 | SEC USE ONLY:
| |||||
4 | SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO | |||||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): ☐
| |||||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7 | SOLE VOTING POWER:
0 | ||||
8 | SHARED VOTING POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. (2) | |||||
9 | SOLE DISPOSITIVE POWER:
0 | |||||
10 | SHARED DISPOSITIVE POWER:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,959,920 shares of Common Stock issuable upon conversion of 99,666 shares of Series A Preferred Stock. | |||||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): ☐
| |||||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
43.5% (3)(4) | |||||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
IN |
(1) | Box (a) is checked with respect to the relationship of the Reporting Persons and Sundara, as described in Item 4 and footnote (4) below. |
(2) | The Series A Preferred Stock is convertible into Common Stock. The calculation of shares of Common Stock is based on the number of shares of Series A Preferred Stock issued (99,666), multiplied by $300 (the purchase price per share of the Series A Preferred Stock) and divided by the applicable conversion price of $2.50, which is subject to adjustment in certain circumstances. |
(3) | The calculation of the foregoing percentage is based on an aggregate of 27,484,690 shares of Common Stock outstanding, consisting of 15,524,770 shares of Common Stock outstanding as of October 18, 2018, plus an additional 11,959,920 shares of Common Stock issuable upon conversion of the Series A Preferred Stock beneficially owned by the Reporting Persons. |
(4) | As a result of the entry by the Investor (as defined below) into the Amended and Restated Securities Purchase Agreement described in Item 4, the Reporting Persons may be deemed to be the beneficial owners of the shares of Series A Preferred Stock owned by Sundara and the shares of Common Stock into which such shares of Series A Preferred Stock owned by Sundara may be converted; however, the Reporting Persons disclaim beneficial ownership of all securities owned by Sundara. Based on information provided to the Reporting Persons, Sundara beneficially owns 33,667 shares of Series A Preferred Stock, which are convertible into 4,040,040 shares of Common Stock. |
This Amendment No. 3 (this Amendment) amends and supplements the Statement on Schedule 13D filed with the Securities and Exchange Commission (the Commission) on October 21, 2013, as amended by Amendment No. 1 filed with the Commission on October 24, 2016 and as further amended by Amendment No. 2 filed with the Commission on March 29, 2017 (the Schedule 13D) by Flexpoint Fund II, L.P. (the Investor), Flexpoint Management II, L.P. (Flexpoint Management), Flexpoint Ultimate Management II, LLC (Flexpoint Ultimate) and Donald J. Edwards (Edwards). The Schedule 13D relates to shares of common stock, par value $0.001 (Common Stock) of JetPay Corporation, a Delaware corporation (Issuer), issuable upon conversion of shares of series A preferred stock, par value $0.001 per share (Series A Preferred Stock). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Schedule 13D. Except as otherwise provided herein, all Items of the Schedule 13D remain unchanged.
Item 4. | Purpose of Transaction. |
Item 4 is hereby amended to add the following disclosure at the end such item:
On October 19, 2018, the Issuer entered into an Agreement and Plan of Merger (the Merger Agreement) with NCR Corporation (Parent) and Orwell Acquisition Corporation, a wholly-owned subsidiary of Parent (Merger Sub), providing for the acquisition of the Company by Parent in an all cash transaction, pursuant to a tender offer (the Offer), followed by a subsequent back-end merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly-owned subsidiary of Parent.
In connection with the execution of the Merger Agreement, the Reporting Persons entered into the tender and support agreement described in Item 6 hereof. The information set forth or incorporated in Item 6 hereof is incorporated herein by reference.
Item 5. | Interest in Securities of the Issuer. |
Item 5 is hereby amended and restated in its entirety to read as follows:
(a), (b)
The information contained on the cover pages to this Schedule 13D and the information set forth or incorporated in Items 2, 3, 4 and 6 hereof are incorporated herein by reference.
As of October 19, 2018, the Investor is the record owner of 99,666 shares of Series A Preferred Stock, which are convertible at the current conversion price of $2.50 into approximately 11,959,920 shares of Common Stock, representing approximately 43.5% of the outstanding Common Stock, based on 15,524,770 shares of Common Stock outstanding as of October 18, 2018, plus an additional 11,959,920 shares of Common Stock issuable upon conversion of the Series A Preferred Stock. The conversion price of the Series A Preferred Stock was adjusted upward to $2.50 (from $2.36) on July 11, 2018 as a result of a settlement between the Issuer and Valley National Bank. Due to their relationship with the Investor, Flexpoint Management, Flexpoint Ultimate, and Edwards may be deemed to have shared voting power with respect to the Series A Preferred Stock beneficially owned by the Investor, and as a result, Flexpoint Management, Flexpoint Ultimate, and Edwards may be deemed to have shared beneficial ownership of such shares of Series A Preferred Stock.
Under the definition of beneficial ownership as set forth in Rule 13d-3 under the Exchange Act, as a result of the entry into the A&R Purchase Agreement, the Reporting Persons may be deemed to be members of a group with Sundara and, as a result, to beneficially own the 33,667 shares of Series A Preferred Stock acquired by Sundara pursuant to the A&R Purchase Agreement and the Underlying Shares into which they may be converted. As described in Item 4 above and for the reasons stated therein, the Reporting Persons disclaim beneficial ownership of all such securities.
Although the Reporting Persons disclaim beneficial ownership of the 33,667 shares owned by Sundara, if such shares were aggregated with the 99,666 shares of Series A Preferred Stock beneficially owned by the Reporting Persons, the Reporting Persons would be deemed to beneficially own 133,333 shares of Series A Preferred Stock, convertible into 15,999,960 shares of Common Stock, constituting approximately 50.8% of the outstanding shares of Common Stock.
Except as set forth above, neither any Reporting Person nor, to the best of the Reporting Persons knowledge, Sundara, owns any shares of Common Stock.
Neither the filing of this Statement nor any of its contents shall be deemed to constitute an admission that any Reporting Person is the beneficial owner of the Series A Preferred Stock or the Common Stock referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed.
(c)
Except as set forth in this Item 5, none of the Reporting Persons has engaged in any transaction during the past 60 days involving shares of Common Stock or Series A Preferred Stock.
(d), (e)
Not applicable.
Item 6. | Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer |
Item 6 is hereby amended to add the following disclosure at the end of such Item:
Tender and Support Agreement
On October 19, 2018, the Investor entered into a Tender and Support Agreement (the Support Agreement), by and among the Investor, Parent, Merger Sub and the Company, pursuant to which the Investor agreed to tender all of the shares of Series A Preferred Stock held by the Investor in the Offer and to take certain other actions in furtherance of the Merger. The Support Agreement will terminate upon the earliest to occur of: (i) the termination of the Merger Agreement; (ii) the effectiveness of the Merger; (iii) the acquisition by Parent or Merger Sub of all of the securities to be tendered by the Investor pursuant to the Support Agreement; (iv) a Change in Recommendation (as such term is defined in the Merger Agreement) by the board of directors of the Issuer; or (v) the failure of Parent or Merger Sub to accept for payment the securities tendered by Investor by 5:30 p.m. (Philadelphia, Pennsylvania time) on the first business day following the expiration of the Offer.
Item 7. | Materials to be Filed as Exhibits |
Item 7 is amended by adding the following:
Exhibit No. |
Description | |
8. | Tender and Support Agreement, dated as of October 19, 2018, by and among Flexpoint Fund II, L.P., NCR Corporation, Orwell Acquisition Corporation and JetPay Corporation. |
Signatures
After reasonable inquiry and to the best knowledge and belief of the undersigned, such person certifies that the information set forth in this Amendment with respect to such person is true, complete and correct.
FLEXPOINT FUND II, L.P. | ||||||
By: | Flexpoint Management II, L.P. | |||||
Its: | General Partner | |||||
By: | Flexpoint Ultimate Management II, LLC | |||||
Its: | General Partner | |||||
Dated: October 23, 2018 | By: | /s/ Donald J. Edwards | ||||
Name: | Donald J. Edwards | |||||
Its: | Manager | |||||
FLEXPOINT MANAGEMENT II, L.P. | ||||||
By: | Flexpoint Ultimate Management II, LLC | |||||
Its: | General Partner | |||||
Dated: October 23, 2018 | By: | /s/ Donald J. Edwards | ||||
Name: | Donald J. Edwards | |||||
Its: | Manager | |||||
FLEXPOINT ULTIMATE MANAGEMENT II, LLC | ||||||
Dated: October 23, 2018 | By: | /s/ Donald J. Edwards | ||||
Name: | Donald J. Edwards | |||||
Its: | Manager | |||||
Dated: October 23, 2018 | /s/ Donald J. Edwards | |||||
Donald J. Edwards |
Exhibit 8
EXECUTION VERSION
TENDER AND SUPPORT AGREEMENT
This TENDER AND SUPPORT AGREEMENT (this Agreement) is made and entered into as of October 19, 2018 by and among NCR Corporation, a Maryland corporation (Parent), Orwell Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (Merger Sub), and the undersigned stockholder (the Stockholder) of JetPay Corporation, a Delaware corporation (the Company) and, solely for purposes of Section 3(c) and Section 12(a) of this Agreement, the Company.
RECITALS
WHEREAS, Parent, Merger Sub and the Company have entered into an Agreement and Plan of Merger of even date herewith (the Merger Agreement), which provides for, among other things, (A) the commencement by Merger Sub of a tender offer (the Offer) to purchase (i) any and all any and all of the shares of common stock, par value $0.001 per share, of the Company (the Company Common Stock) issued and outstanding (each, a Share) at a price per Share of $5.05 (such amount, or any other amount per Share paid pursuant to the Offer in accordance with this Agreement, the Company Share Offer Price), net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement (the Company Share Offer); (ii) any and all of the shares of Series A Preferred Stock issued and outstanding (each, a Series A Preferred Share) at a price per Series A Preferred Share equal to the greater of (A) the Series A Liquidation Value of such Series A Preferred Share and (B) the amount of proceeds that the holder of such Series A Preferred Share would receive if such Series A Preferred Share was converted into Shares pursuant to the Series A Certificate of Designation and such holder received the Company Share Offer Price for each Share issued upon such conversion (the greater of the foregoing clauses (A) and (B), or any other amount per Series A Preferred Share paid pursuant to the Offer in accordance with this Agreement, the Series A Offer Price), net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement (the Series A Offer); (iii) any and all shares of Series A-1 Preferred Stock issued and outstanding (each, a Series A-1 Preferred Share) at a price per Series A-1 Preferred Share equal to the greater of (A) the Series A-1 Liquidation Value of such Series A-1 Preferred Share and (B) the amount of proceeds that the holder of such Series A-1 Preferred Share would receive if such Series A-1 Preferred Share was converted into Shares pursuant to the Series A-1 Certificate of Designation and such holder received the Company Share Offer Price for each Share issued upon such conversion (the greater of the foregoing clauses (A) and (B), or any other amount per Series A-1 Preferred Share paid pursuant to the Offer in accordance with this Agreement, the Series A-1 Offer Price), net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement (the Series A-1 Offer); and (iv) any and all shares of Series A-2 Preferred Stock issued and outstanding (each, a Series A-2 Preferred Share and, together with the Series A Preferred Shares and the Series A-1 Preferred Shares, the Preferred Shares) at a price per Series A-2 Preferred Share equal to the greater of (A) the Series A-2 Liquidation Value of such Series A-2 Preferred Share and (B) the amount of proceeds that the holder of such Series A-2 Preferred Share would receive if such Series A-2 Preferred Share was converted into Shares pursuant to the Series A-2 Certificate of Designation and such holder received the Company Share Offer Price for each Share issued upon such conversion (the greater of the foregoing clauses (A) and (B), or any other amount per Series A-2 Preferred Share paid pursuant to the Offer in accordance with this Agreement, the Series A-2 Offer Price and, together with the Company
Share Offer Price, the Series A Offer Price and the Series A-1 Offer Price, the Offer Prices), net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement (the Series A-2 Offer and, together with Company Share Offer, the Series A Offer and the Series A-1 Offer, the Offer); and (B) following the acceptance for payment of the Shares and the Preferred Shares pursuant to the Offer, upon the terms and subject to the conditions set forth in the Merger Agreement, the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the Merger), pursuant to which each Share, Series A Preferred Share, Series A-1 Preferred Share or Series A-2 Preferred Share that is not (a) tendered and accepted pursuant to the Offer or (b) a Dissenting Share will thereupon be cancelled and converted into the right to receive cash in an amount equal to the Merger Consideration, the Series A Offer Price, the Series A-1 Offer Price or the Series A-2 Offer Price, as applicable;
WHEREAS, the Stockholder is the record and/or beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act)), of such number of shares of the Company as is indicated on Schedule I of this Agreement; and
WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent and Merger Sub have required the Stockholder, and in order to induce Parent and Merger Sub to enter into the Merger Agreement, the Stockholder (solely in the Stockholders capacity as such) has agreed, to enter into this Agreement and tender all of the Subject Shares as described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:
1. Certain Definitions. All capitalized terms that are used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:
(a) | Encumbrance shall mean any lien, hypothecation, adverse claim, charge, security interest, pledge or option, proxy, right of first refusal, preemptive right, voting trust or any other similar right. |
(b) | Expiration Date shall mean the earliest to occur of such date and time as (i) the Merger Agreement shall have been terminated for any reason; (ii) the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement; (iii) the acquisition by Parent or Merger Sub of all the Subject Shares of the Stockholder, whether pursuant to the Offer, the Merger or otherwise; (iv) is agreed to in writing by Parent and the Stockholder; (v) if the Stockholder is a trust whose trustee is not a director or officer of the Company, the determination by such trustee of the Stockholder following a material development, event, fact, occurrence or material change in circumstances that first occurs or first arises after the date hereof that was not known or reasonably foreseeable by the trustee of the Stockholder, after consultation with its outside legal counsel, that the failure to terminate this Agreement would violate the trustees fiduciary duties under |
2
applicable Law; (vi) the Company Board of Directors shall have made a Change in Recommendation; or (vii) if the Offer (including any extensions thereof permitted under the terms of the Merger Agreement and not in contravention of the terms of this Agreement) shall have expired without acceptance for payment of the Subject Shares pursuant to the Offer occurring on or before 5:30 p.m. (Philadelphia, Pennsylvania time) on the first business day following such expiration of the Offer (which, for the avoidance of doubt, shall include any extensions thereof permitted under the terms of the Merger Agreement and not in contravention of the terms of this Agreement). |
(c) | Permitted Encumbrance shall mean (i) any Encumbrance arising (A) hereunder (in connection therewith any restrictions on transfer or any other Encumbrance that has been waived by appropriate consent), (B) under the Companys Organizational Documents or any Contracts with the Company listed in the Company SEC Documents or the Company Disclosure Schedules or (C) under securities laws; (ii) any right, agreement, understanding or arrangement which represents a financial interest in cash received upon sale of the Subject Shares and not an Encumbrance upon the Subject Shares prior to such sale; and (iii) any withdrawal rights under contract, deed or Applicable Law applicable to any trust that is also a stockholder of the Company as of the date hereof. |
(d) | Subject Shares shall mean, other than nontransferable restricted shares of Company Common Stock, (i) all Shares, Series A Preferred Shares, Series A-1 Preferred Shares or Series A-2 Preferred Shares beneficially owned by the Stockholder as of the date hereof; and (ii) all additional Shares, Series A Preferred Shares, Series A-1 Preferred Shares or Series A-2 Preferred Shares of which the Stockholder acquires beneficial ownership during the period from the date of this Agreement through the Expiration Date (including by way of stock dividend or distribution, split-up, recapitalization, combination, exchange of shares or issued upon the exercise of any options, the settlement of any restricted stock or other conversion of any convertible securities). |
(e) | Transfer A Person shall be deemed to have effected a Transfer of a Subject Share if such person, directly or indirectly, (i) sells, pledges, creates an Encumbrance with respect to (other than Permitted Encumbrances), assigns, exchanges, grants an option with respect to, transfers, gifts, disposes of or enters into any derivative arrangement with respect to such Subject Share or any interest therein; or (ii) enters into an agreement or commitment providing for the sale, pledge, creation of an Encumbrance (other than Permitted Encumbrances), assignment, exchange, transfer, gift, disposition of or any derivative arrangement with respect to, or grant of an option with respect to, such Subject Share or any interest therein. |
2. Transfer of Subject Shares.
(a) | Transfer Restrictions. Except as expressly contemplated by this Agreement or the Merger Agreement, the Stockholder shall not cause or voluntarily consent to any |
3
Transfer of any of the Subject Shares to be effected. Notwithstanding the foregoing, (x) direct or indirect transfers of equity or other interests in the Stockholder by its equityholders is not prohibited by this Section 2(a) and (y) the Stockholder may make Transfers of Subject Shares (A) as Parent may agree in writing and (B) pursuant to the Offer. |
(b) | Transfer of Voting Rights. The Stockholder shall not (i) deposit any Subject Shares in a voting trust or grant any proxy or power of attorney or enter into any voting agreement or similar agreement with respect to any of the Subject Shares or (ii) take (or knowingly refrain from taking) any other action that would in any way restrict, limit or interfere with the performance of the Stockholders obligations hereunder. Any action taken in violation of the foregoing sentence shall be null and void ab initio and such Stockholder agrees that any such prohibited action may and should be enjoined. |
(c) | Exceptions. Nothing in this Section 2 shall prohibit a Transfer of Subject Shares by Stockholder: (i) if Stockholder is an individual, pursuant to applicable laws of descent and distribution; (ii) if Stockholder is a partnership, limited partnership, corporation, limited liability company or trust, to one or more partners, shareholders or members of Stockholder or to an affiliated entity under common control with Stockholder or to any trustee or beneficiary of the trust; or (iii) if Stockholder is a trust, to distribute shares to its beneficiaries pursuant to the withdrawal rights of beneficiaries; provided, however, that a Transfer referred to in Section 2(c)(i) or (ii) hereof shall be permitted only if the transferee agrees in writing, reasonably satisfactory in form and substance to Parent, to be bound by the terms of this Agreement. |
(d) | Involuntary Transfer. If any involuntary Transfer of any of the Subject Shares shall occur (including, but not limited to, a sale by the Stockholders trustee in any bankruptcy, or a sale to a purchaser at any creditors or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement. |
3. Agreement to Tender; Consent to Transaction.
(a) | Tender of Shares. The Stockholder shall tender, pursuant to and in accordance with the terms of the Offer, the Subject Shares. No later than ten (10) Business Days after commencement of the Offer, the Stockholder shall (a) deliver to the depositary designated in the Offer all documents or instruments required to be delivered in order to tender the Subject Shares pursuant to the terms of the Offer, and/or (b) instruct its broker or such other person who is the holder of record of any Subject Shares to tender such shares for exchange in the Offer pursuant to the terms and conditions of the Offer. Prior to the Expiration Date, the Stockholder shall not tender the Subject Shares into any exchange or tender offer commenced by a third party other than Parent or Merger Sub. Notwithstanding anything to the contrary |
4
herein, the Stockholder may withdraw such Subject Shares from the Offer at any time following the termination of this Agreement. For the avoidance of doubt, (x) the Stockholder shall not be required, for purposes of this Agreement, to exercise any unexercised Company equity award held by the Stockholder and (y) the Stockholder shall not have any obligation under this Section 3 to tender (or caused to be tendered) any Subject Shares into the Offer to the extent such tender could cause the Stockholder to incur liability under Section 16(b) of the Exchange Act. |
(b) | Return of Shares. If the Offer is terminated or withdrawn by Merger Sub or the Merger Agreement is terminated prior to the purchase of Subject Shares in the Offer, Parent and Merger Sub shall promptly return, and shall cause any depository or paying agent, acting on behalf of Parent and Merger Sub, to promptly return all tendered Subject Shares to the Stockholder. |
(c) | Consent to Transaction. The Stockholder hereby consents to the Companys entry into the Merger Agreement for purposes of Section 11 of the Series A Certificate of Designation and Section 6.4 of the Amended and Restated Securities Purchase Agreement, dated as of October 18, 2016, by and among the Company, the Stockholder and Sundara Investment Partners, LLC (as amended, the SPA). Solely for the benefit of the other parties to the SPA (which shall be intended third party beneficiaries of this sentence), the Stockholder agrees that Sections 6.14(b) - (e) of the SPA shall not apply to, and hereby waives its rights (including rights to receive notice) under such provisions with respect to, the transactions contemplated by the Merger Agreement (including the Offer). Solely for the benefit of the Stockholder (and not Parent or Merger Sub), the Company shall not agree to or give any modification, consent, waiver or amendment to or under any provision of the Merger Agreement that would be adverse to the Stockholder (including if such modification, consent, waiver or amendment that would reduce the amount, change the form or otherwise adversely affect the consideration payable to the Stockholder pursuant to the Offer or the Merger Agreement) without the prior written consent of the Series A Preferred Majority Holders (as defined in the Series A Certificate of Designation). |
4. Directors and Officers. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall (or shall require the Stockholder to attempt to) limit or restrict the Stockholder in his or her capacity as a director or officer of the Company or any designee of, or Person affiliated with, the Stockholder who is a director or officer of the Company from acting in such capacity or voting in such persons sole discretion on any matter (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholders capacity as a stockholder of the Company and that any director or officer of the Company who signs this Agreement on behalf of the Stockholder is signing only as an individual and not in any other capacity). No action (or inaction) taken by the Stockholder or any designee of, or Person affiliated with, the Stockholder who is a director or officer of the Company in their capacity as a director or officer of the Company shall be deemed to constitute a breach of this Agreement.
5. Trustees. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall (or shall require the Stockholder to attempt to) limit or restrict any trustee
5
of the Stockholder in his or her capacity as a director or officer of the Company from acting in such capacity or voting in such persons sole discretion on any matter (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholders capacity as a stockholder of the Company and that any trustee who signs this Agreement on behalf of the Stockholder is signing only in his or her capacity as a trustee and not as an individual or in any other capacity). No action (or inaction) taken by any trustee in their capacity as a director or officer of the Company shall be deemed to constitute a breach of this Agreement.
6. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Subject Shares. All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Stockholder, and neither Parent nor Merger Sub shall have the authority by virtue of this Agreement or the transactions to be consummated pursuant hereto to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Stockholder in the voting of any of the Subject Shares to the extent such Subject Shares are entitled to be voted, except as otherwise provided herein.
7. Representations and Warranties of the Stockholder. The Stockholder represents and warrants to Parent and Merger Sub as follows:
(a) | Power; Binding Agreement. The Stockholder has full power and authority, and, if Stockholder is an individual, the legal capacity, to execute and deliver this Agreement, to perform the Stockholders obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder and the consummation by the Stockholder of the transactions contemplated hereby have been duly and validly authorized by the Stockholder and no other actions or proceedings on the part of the Stockholder are necessary to authorize the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder or the consummation by the Stockholder of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Stockholder, and, assuming this Agreement constitutes a valid and binding obligation of Parent and Merger Sub, constitutes a valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance and other equitable remedies. |
(b) | No Conflicts. Except for filings under the Exchange Act and filings under the HSR Act, no filing with, and no permit, authorization, consent, or approval of, any Governmental Authority is necessary for the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder and the consummation by the Stockholder of the transactions contemplated hereby. None of the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder or the consummation by the Stockholder of the transactions contemplated hereby will (i) |
6
conflict with or result in any breach of any organizational documents applicable to the Stockholder; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, commitment, arrangement, understanding or other agreement to which the Stockholder is a party or by which the Stockholder or any of the Stockholders properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, judgment, order, statute, rule, or regulation applicable to the Stockholder or any of the Stockholders properties or assets, except, in the case of each of the foregoing clauses (i) - (iii), as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation by the Stockholder of the transactions contemplated hereby. |
(c) | Ownership of Shares. The Stockholder (i) is the sole record and/or beneficial owner of the Shares, Series A Preferred Shares, Series A-1 Preferred Shares and/or Series A-2 Preferred Shares indicated on the signature page of this Agreement, all of which are free and clear of any Encumbrances (other than Permitted Encumbrances); (ii) is the sole owner of options that are exercisable for the number of Shares indicated on the signature page of this Agreement, all of which options and Shares issuable upon the exercise of such options are free and clear of any Encumbrances (other than Permitted Encumbrances); and (iii) is not the beneficial owner or otherwise a holder of any securities of the Company other than those described in the preceding clauses (i)(ii). |
(d) | Voting and Disposition Power. The Stockholder has full voting power with respect to the Subject Shares and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Subject Shares. None of the Shares, Series A Preferred Shares, Series A-1 Preferred Shares and/or Series A-2 Preferred Shares indicated on the signature page of this Agreement are subject to any stockholders agreement, proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Shares except as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation by the Stockholder of the transactions contemplated hereby. |
(e) | Reliance. The Stockholder has been represented by or had the opportunity to be represented by, independent counsel of its own choosing, and that it has had the full right and opportunity to consult with its attorney, that to the extent, if any, that it desired, it availed itself of this right and opportunity, that it or its authorized officers (as the case may be) have carefully read and fully understand this Agreement, the Offer and the exhibits thereto and the Merger Agreement in its entirety and have had it fully explained to them by its counsel, that it is fully aware of the contents thereof and its meaning, intent and legal effect, and that it or its authorized officer (as the case may be) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence. The Stockholder |
7
understands and acknowledges that the Company, Parent and Merger Sub are entering into the Merger Agreement in reliance upon the Stockholders execution, delivery and performance of this Agreement. |
(f) | Absence of Litigation. With respect to the Stockholder, as of the date hereof, there is no action, suit, claim, proceeding, charge, arbitration or investigation pending against, or, to the actual knowledge of the Stockholder, threatened in writing against the Stockholder or any of the Stockholders properties or assets (including the Subject Shares) before or by any Governmental Authority that could reasonably be expected to prevent or materially delay or impair the consummation by the Stockholder of the transactions contemplated by this Agreement or otherwise materially impair the Stockholders ability to perform its obligations hereunder. |
(g) | Brokers. No broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage, finders, financial advisors or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder. |
8. Representations and Warranties of Parent and Merger Sub. Parent and Merger Sub represent and warrant to the Stockholder as follows:
(a) | Organization and Qualification. Each of Parent and Merger Sub is a duly organized and validly existing in good standing under the Applicable Laws of the jurisdiction of its organization or formation. All of the issued and outstanding capital stock of Merger Sub is owned directly or indirectly by Parent. |
(b) | Power; Binding Agreement. Each of Parent and Merger Sub has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Parent and Merger Sub of this Agreement, the performance by each of Parent and Merger Sub of its obligations hereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by each of Parent and Merger Sub and no other actions or proceedings on the part of Parent or Merger Sub are necessary to authorize the execution and delivery by Parent or Merger Sub, the performance by either Parent or Merger Sub of its obligations hereunder or the consummation by Parent or Merger Sub of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Merger Sub, and, assuming this Agreement constitutes a valid and binding obligation of the Stockholder, constitutes a valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance and other equitable remedies. |
(c) | No Conflicts. Except for filings under the Exchange Act and filings under the HSR Act, no filing with, and no permit, authorization, consent, or approval of, any |
8
Governmental Authority is necessary for the execution and delivery by Parent or Merger Sub of this Agreement, the performance by each of Parent or Merger Sub of its obligations hereunder and the consummation by Parent or Merger Sub of the transactions contemplated hereby. None of the execution and delivery by Parent or Merger Sub of this Agreement, the performance by each of Parent or Merger Sub of its obligations hereunder or the consummation by Parent or Merger Sub of the transactions contemplated hereby will (i) conflict with or result in any breach of any organizational documents applicable to Parent or Merger Sub; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, commitment, arrangement, understanding or other agreement to which Parent or Merger Sub is a party or by which Parent or Merger Sub or any of Parents or Merger Subs properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, judgment, order, statute, rule, or regulation applicable to Parent or Merger Sub or any of Parents or Merger Subs properties or assets, except as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby. |
9. Disclosure. The Stockholder shall permit the Company, Parent and Merger Sub to publish and disclose (in all documents and schedules filed with the SEC, and any press release or other disclosure document that the Company, Parent or Merger Sub determines to be necessary or desirable in connection with the Offer, the Merger and any transactions related thereto) the Stockholders identity and ownership of Subject Shares and the nature of the commitments, arrangements and understandings under this Agreement. Parent and Merger Sub shall permit the Stockholder to publish and disclose in all disclosure documents required by Law (including any Schedule 13D/A filing), the nature of the commitments, arrangements and understandings under this Agreement.
10. Further Assurances. Subject to the terms and conditions of this Agreement, each party shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to fulfill such partys obligations under this Agreement.
11. Termination. This Agreement shall terminate and shall have no further force or effect as of the Expiration Date; provided that this Section 11 and Section 12 (other than Section 12(e)) shall survive such termination and remain in full force and effect. Notwithstanding the foregoing, solely in the event of a termination of this Agreement pursuant to clause (i) of the definition of Expiration Date, nothing set forth in this Section 11 shall relieve any party hereto from liability for any Intentional and Knowing Breach of this Agreement that is material prior to such termination.
12. Miscellaneous Provisions.
(a) | Amendment or Supplement. This Agreement (other than Section 3(c) and the following sentence) may be amended or supplemented in any and all respects by written agreement signed by Parent and the Stockholder. Section 3(c) and this |
9
sentence may be amended or supplemented in any and all respects by written agreement signed by the Company and the Stockholder; provided, however, that any amendments to this sentence adversely affecting Parent or Merger Sub shall require the written consent of Parent. |
(b) | Extension of Time, Waiver, etc. Any party may, subject to Applicable Law, solely as to itself: (i) waive any inaccuracies in the representations and warranties of any other party hereto; (ii) extend the time for the performance of any of the obligations or acts of any other party hereto; or (iii) waive compliance by any other party with any of the agreements contained in this Agreement or, except as otherwise provided in this Agreement, waive any of such partys conditions set forth in this Agreement. Notwithstanding the foregoing, no failure or delay by the Stockholder, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver of rights, nor shall any single or partial exercise of such rights preclude any other or further exercise of such rights or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. |
(c) | Entire Agreement; No Third Party Beneficiary. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter of this Agreement. Except for the rights of the other parties to the SPA in Section 3(c) and the Company set forth in Section 9, this Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns or to otherwise create any third-party beneficiary hereto. This Agreement shall not be effective unless and until (i) the Company Board has voted to approve the Merger Agreement, (ii) the Merger Agreement is executed by all the parties thereto, and (iii) this Agreement is executed by all the parties hereto. |
(d) | Applicable Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. All actions and proceedings arising out of or relating to this Agreement or the negotiation, validity or performance of this Agreement, shall be heard and determined in the Court of Chancery of the State of Delaware, and the parties irrevocably submit to the jurisdiction of such court (and, in the case of appeals, the appropriate appellate court therefrom), in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. The parties agree that service of any court paper may be made in any manner as may be provided under the applicable Laws or court rules governing service of process in such court. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit |
10
on the judgment or in any other manner provided by applicable Law. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT. |
(e) | Specific Enforcement. The parties hereto agree that irreparable damage would occur for which monetary damages would not be an adequate remedy in the event that any of the provisions of this Agreement are not performed in accordance with the terms hereof or are otherwise breached, and that the party seeking to enforce this Agreement against such nonperforming party under this Agreement shall be entitled to specific performance and the issuance of injunctive and other equitable relief. The parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief, this being in addition to any other remedy to which they are entitled at law or in equity. |
(f) | Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of Law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void, except that Merger Sub may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to any one or more direct or indirect wholly owned Subsidiaries of Parent without the consent of the Stockholder, but no such assignment shall relieve Merger Sub of any of its obligations under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. |
(g) | Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) four (4) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid; (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service; or (iii) on the date of confirmation of receipt (or the first (1st) Business Day following such receipt if the date of such receipt is not a Business Day) of transmission by electronic mail or facsimile, in each case to the intended recipient as set forth below (or to such other address, electronic mail address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto): |
if to Parent or Merger Sub:
NCR Corporation
864 Spring Street
Atlanta, Georgia 30308
Attention: General Counsel
Email: Law.Notices@ncr.com
11
with a copy to (which copy shall not constitute notice):
Benesch, Friedlander, Coplan & Aronoff LLP
200 Public Square
Suite 2300
Cleveland, OH 44114
Attention: Sean T. Peppard
Email: speppard@beneschlaw.com
if to the Stockholder:
Flexpoint Fund II, L.P.
c/o Flexpoint Ford, LLC
676 N. Michigan Ave., Suite 3300
Chicago, Illinois 60611
Attention: Steven M. Michienzi
Fax: (312) 327-4525
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
300 North LaSalle St.
Chicago, IL 60654
Fax: (312) 862-2200
Attention: Sanford E. Perl, P.C. and Mark A. Fennell, P.C.
if to the Company:
JetPay Corporation
7450 Tilghman Street
Suite 170
Allentown, Pennsylvania 18106
with a copy (which shall not constitute notice to):
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, Pennsylvania 19104
Attention: James A. Lebovitz, Esq.
Ian A. Hartman, Esq.
Facsimile No.: 215 698 3599
215 994 2222
Email: james.lebovitz@dechert.com
ian.hartman@dechert.com
12
(h) | Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision. |
(i) | Construction. |
a. | For purposes of this Agreement, whenever the context requires: (A) the singular number shall include the plural, and vice versa; (B) the masculine gender shall include the feminine and neuter genders; (C) the feminine gender shall include the masculine and neuter genders; and (D) the neuter gender shall include the masculine and feminine genders. |
b. | The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement. |
c. | As used in this Agreement, the words include and including, and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words without limitation. |
(j) | Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. |
(k) | Counterparts; Signatures. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile transmission, by electronic mail in portable document format (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, each of which shall be deemed an original. |
13
(l) | No Recourse. Parent and Merger Sub agree that the Stockholder (in his capacity as a stockholder of the Company) will not be liable for claims, losses, damages, liabilities or other obligations resulting from the Companys breach of the Merger Agreement. |
(m) | Expenses. Without duplication of the Companys obligations under Section 12.1 of the SPA, Parent shall pay the out-of-pocket costs and expenses incurred by the Stockholder (including the reasonable fees, charges and disbursements of counsel for the Stockholder) related to the transactions contemplated by the Merger Agreement (including related to any filings under the HSR Act) and/or this Agreement and/or the preparation, negotiation, execution and delivery of this Agreement and the transactions contemplated hereby and any amendments or waivers hereto, in an amount not to exceed $100,000. For the avoidance of doubt, Parents payment of expenses of the Stockholder under this Section 12(m) shall constitute full satisfaction of the Companys obligations to the Stockholder under Section 12.1 of the SPA with respect to expense reimbursement in connection with the Merger Agreement, this Agreement and the transactions contemplated hereby and thereby. Except as otherwise specifically provided herein, each party shall bear its own expenses in connection with this Agreement. |
(n) | Indemnification. |
(i) Parent (the Indemnifying Party) covenants and agrees, on the terms and subject to the limitations set forth in this Agreement, to indemnify and hold harmless Stockholder and Stockholders representatives (each, an Indemnified Party), from and against any and all Losses incurred in connection with, arising out of or resulting from any claims, demands, actions, proceedings or investigations (collectively, Actions) relating solely to the transactions contemplated by the Merger Agreement or this Agreement (including any Actions brought by any of the stockholders, directors, officers or employees of any of Parent or Company relating thereto). For purposes of this Section 12(n), Losses means any direct loss, liability, cost, damage or expense (including, without duplication, reasonable fees and expenses of counsel, accountants, consultants and other experts) related to an Action for which an Indemnified Party is entitled to indemnification pursuant to this Agreement.
(ii) Notwithstanding anything herein to the contrary, the Indemnifying Party will not be obligated to provide indemnity hereunder to any Indemnified Party with respect to any Losses which (x) result from such Indemnified Partys willful misconduct or gross negligence, (y) result primarily from any breach of any representation and warranty of such Indemnified Party contained in this Agreement or any breach of any covenant or agreement made or to be performed by such Indemnified Party under this Agreement or (z) constitute consequential, indirect, incidental, special, exemplary, punitive or enhanced damages or lost profits.
(iii) The Indemnifying Party will indemnify the Indemnified Parties pursuant to this Section 12(n) regardless of whether such Losses are incurred prior to or after
14
the Closing (provided, however, that such indemnification shall only be available in the instance of Losses relating to, incurred in connection with, arising out of or resulting from any Actions relating to the transactions contemplated by the Merger Agreement or this Agreement). The indemnification provided pursuant to this Section 12(n) is in addition to, and not in derogation of, and shall not supersede or modify, any other rights an Indemnified Party may have under applicable law, the certificate of incorporation or bylaws of the Company, or pursuant to any contract, agreement or arrangement; provided, however, that Losses will not be duplicated.
(iv) The Indemnifying Party shall have the right, in its sole discretion, to defend against, negotiate, settle, or otherwise deal with any third party Action that is or may be subject to indemnification hereunder (each an Indemnifiable Claim) (provided that the Indemnifying Party delivers a written confirmation to the Indemnified Party that the indemnification provisions of Section 12(n) are applicable to such Indemnifiable Claim and that the Indemnifying Party will indemnify such Indemnified Party in respect of such Indemnifiable Claim to the extent required by this Section 12(n)) and the Indemnified Party may participate, at his, her or its own expense, in the defense of such Indemnifiable Claim. If the Indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any such Indemnifiable Claim, the Indemnified Party may defend against, negotiate, settle, or otherwise deal with such Indemnifiable Claim, at the Indemnifying Partys expense. Without the prior written consent of each of the Indemnified Parties who are named in the Action subject to the Indemnifiable Claim (which consent shall not be unreasonably withheld, delayed or conditioned), the Indemnifying Party will not settle or compromise or consent to the entry of judgment with respect to any Indemnifiable Claim (or part thereof) unless such settlement, compromise or consent (x) includes an unconditional release of such Indemnified Parties, (y) does not include any admission of wrongdoing on the part of such Indemnified Parties and (z) does not require such Indemnified Parties to pay any amount or suffer any loss and does not enjoin or restrict in any way the future actions or conduct of such Indemnified Parties.
[Remainder of Page Intentionally Left Blank]
15
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed to be effective as of the date first above written.
NCR CORPORATION | ||
By: | /s/ Andre Fernandez | |
Name: | Andre Fernandez | |
Title: | Chief Financial Officer | |
ORWELL ACQUISITION CORPORATION | ||
By: | /s/ Edward Gallagher | |
Name: | Edward Gallagher | |
Title: | President | |
FLEXPOINT FUND II, L.P. | ||
By: | Flexpoint Management II, L.P. | |
Its: | General Partner | |
By: | Flexpoint Ultimate Management II, LLC | |
Its: | General Partner | |
By: | /s/ Donald J. Edwards | |
Name: | Donald J. Edwards | |
Its: | Manager |
16
Solely for purposes of Section 3(c) and Section 12(a):
JETPAY CORPORATION | ||
By: | /s/ Diane (Vogt) Faro | |
Name: | Diane (Vogt) Faro | |
Title: | Chief Executive Officer |
SCHEDULE I
NAME AND ADDRESS |
COMPANY COMMON STOCK |
SERIES A PREFERRED SHARES |
SERIES A-1 PREFERRED SHARES |
SERIES A-2 PREFERRED SHARES |
COMPANY OPTIONS | |||||||||||||
Flexpoint Fund II, L.P. |
99,666 | |||||||||||||||||
TOTAL |
99,666 |