You are here: Agreements > Agreement and Plan of Merger > AGREEMENT AND PLAN OF MERGER

SITE SEARCH
AGREEMENTS / CONTRACTS
(optional)
(optional)
Try our advanced search >>
CLAUSES Search Contract Clauses >>
Browse Contract Clause Library>>

Agreement And Plan Of Merger

Agreement and Plan of Merger

Legal Documents
You are currently viewing:

 This Agreement and Plan of Merger involves

RITCHIE BROS AUCTIONEERS INC | Fortis Advisors LLC | IRONPLANET HOLDINGS, INC | RITCHIE BROS AUCTIONEERS INCORPORATED | TOPAZ MERGERSUB, INC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
 

Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware     Date: 8/31/2016
Industry: Business Services     Law Firm: Skadden Arps;Orrick Herrington     Sector: Services

join now
50 of the Top 250 law firms use our Products every day

 

Exhibit 2.1

 

EXECUTION VERSION

 

 

 

AGREEMENT AND PLAN OF MERGER

 

BY AND AMONG

 

RITCHIE BROS. AUCTIONEERS INCORPORATED

 

TOPAZ MERGERSUB, INC.

 

IRONPLANET HOLDINGS, INC.

 

AND

 

FORTIS ADVISORS LLC, AS THE REPRESENTATIVE OF THE INDEMNIFYING SECURITYHOLDERS

 

OF IRONPLANET HOLDINGS, INC.

 

Dated as of August 29, 2016

 

 

 

 

 

 

Table of Contents

 

 

Page

 

 

Article I DEFINITIONS

2

1.01

Definitions

2

1.02

Other Definitional Provisions

21

 

 

 

Article II THE MERGER

22

2.01

The Merger

22

2.02

Conversion of Capital Stock

23

2.03

Exchange of Certificates; Lost Certificates; Paying Agent

24

2.04

Options

24

2.05

Warrants

27

2.06

Dissenting Holders

27

2.07

Certificate of Incorporation

28

2.08

Bylaws

28

2.09

Directors and Officers

28

2.10

Withholding

28

 

 

 

Article III THE CLOSING; MERGER CONSIDERATION ADJUSTMENT

29

3.01

The Closing

29

3.02

The Closing Transactions

29

3.03

Closing Proceeds Adjustment

30

 

 

 

Article IV CONDITIONS TO CLOSING

33

4.01

Conditions to the Parent’s and the Merger Sub’s Obligations

33

4.02

Conditions to the Company’s Obligations

35

4.03

Conditions to All Parties’ Obligations

35

 

 

 

Article V REPRESENTATIONS AND WARRANTIES OF THE COMPANY

36

5.01

Organization and Corporate Power

36

5.02

Subsidiaries

37

5.03

Authorization; No Conflict

37

5.04

Capital Stock

38

5.05

Financial Statements

40

5.06

Absence of Undisclosed Liabilities

41

5.07

Absence of Certain Changes or Events

41

5.08

Title to Properties

42

5.09

Tax Matters

42

5.10

Material Contracts

45

5.11

Intellectual Property

46

5.12

Litigation

48

5.13

Product and Service Warranties

48

5.14

Governmental Consents

49

5.15

Employee Benefit Plans

49

5.16

Insurance

51

 

 -i-

 

 

Table of Contents

 

 

 

Page

 

 

 

5.17

Environmental Matters

51

5.18

Affiliated Transactions

52

5.19

Brokerage

52

5.20

Permits; Compliance With Laws

52

5.21

Trade Control Laws and Sanctions; FCPA Compliance

52

5.22

Anti-Takeover Statute Not Applicable

54

5.23

Employees

54

5.24

Customers

55

5.25

Bank Accounts

55

 

 

 

Article VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

56

6.01

Organization and Corporate Power

56

6.02

Authorization

56

6.03

No Violation

56

6.04

Governmental Consents

56

6.05

Brokerage

57

6.06

Litigation

57

6.07

Merger Sub

57

6.08

Solvency

57

6.09

Sufficient Funds

57

 

 

 

Article VII COVENANTS OF THE COMPANY

59

7.01

Conduct of the Business

59

7.02

Information Statement

62

7.03

Access to Books and Records

63

7.04

Regulatory Filings

63

7.05

Notice to Warrant Holders

63

7.06

Section 280G

64

7.07

No Shop

64

7.08

Financial Information and Cooperation

65

7.09

Securityholder Schedule

67

7.10

Contract Notice

67

 

 

 

Article VIII COVENANTS OF PARENT

68

8.01

Director and Officer Liability and Indemnification

68

8.02

Regulatory Filings

69

8.03

Payments to Optionholders and Other Individuals

69

8.04

Form S-8

69

8.05

Employee Matters

69

8.06

Financing

70

 

 

 

Article IX TERMINATION

73

9.01

Termination

73

9.02

Notice of Termination; Effect of Termination

74

 

 -ii-

 

 

Table of Contents

 

 

 

Page

 

 

 

Article X ADDITIONAL AGREEMENTS AND COVENANTS

75

10.01

Further Assurances

75

10.02

Regulatory Filings; Efforts

75

10.03

Government Permits

77

10.04

CFIUS Approval

77

10.05

ITAR Notices

77

 

 

 

Article XI INDEMNIFICATION

78

11.01

Indemnification of the Parent Indemnified Parties

78

11.02

Exclusive Remedy

79

11.03

Termination of Indemnification

79

11.04

Procedures Relating to Indemnification

79

11.05

Survival

81

11.06

Manner of and Limitations on Payment

82

11.07

Losses Net of Insurance Proceeds

82

11.08

Tax Treatment of Indemnity Payments

82

11.09

Approval of Escrow

82

11.10

Financing Sources

83

 

 

 

Article XII MISCELLANEOUS

83

12.01

Press Releases and Communications

83

12.02

Expenses

83

12.03

Notices

84

12.04

Assignment

85

12.05

Severability

86

12.06

Construction

86

12.07

Amendment and Waiver

86

12.08

Complete Agreement

87

12.09

Third-Party Beneficiaries

87

12.10

Release

88

12.11

Counterparts

89

12.12

Governing Law; Jurisdiction

89

12.13

Representative

90

12.14

Sources of Recovery

93

12.15

Specific Performance

94

12.16

Relationship of the Parties

94

12.17

Protected Communications and Associated Rights

95

 

 -iii-

 

 

EXHIBITS

 

Exhibit A

-

Form of Stockholder Written Consent

Exhibit B

-

Form of Certificate of Merger

Exhibit C

-

Form of Escrow Agreement

Exhibit D

-

Form of Optionholder Letter of Transmittal

Exhibit E

-

Form of Stockholder Letter of Transmittal

Exhibit F

-

Form of Company Closing Certificate

Exhibit G

-

Form of Parent Closing Certificate

Exhibit H

-

Form of Securityholder Schedule

Exhibit I

-

Working Capital, IP Cash & Indebtedness Schedule

Exhibit J

-

Form of FIRPTA Certificate

Exhibit K

-

Form of Warrant Holder Consent Agreement

 

 

 

SCHEDULES

 

Schedule 1.01(a)

 

Company knowledge persons

Schedule 1.01(b)

 

Parent knowledge persons

 

 -iv-

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of August 29, 2016, is made by and among IRONPLANET HOLDINGS, INC., a Delaware corporation (the “ Company ”), RITCHIE BROS. AUCTIONEERS INCORPORATED, a company organized under the laws of Canada (the “ Parent ”), TOPAZ MERGERSUB, INC., a Delaware corporation and wholly-owned Subsidiary of the Parent (the “ Merger Sub ”), and Fortis Advisors LLC, a Delaware limited liability company (the “ Representative ”), as representative for the Indemnifying Securityholders. Capitalized terms used and not otherwise defined herein have the meanings set forth in Article I .

 

WHEREAS, the Parent desires to acquire one hundred percent (100%) of the issued and outstanding capital stock of the Company in a reverse subsidiary merger transaction on the terms and subject to the conditions set forth herein;

 

WHEREAS, the respective boards of directors of the Parent, the Merger Sub and the Company have authorized, adopted and approved this Agreement and determined that this Agreement and the Merger are desirable and in the best interests of their respective corporations and stockholders; and

 

WHEREAS, the respective boards of directors of the Merger Sub and the Company have recommended the adoption of this Agreement by their respective stockholders in accordance with the General Corporation Law of the State of Delaware (“ DGCL ”).

 

WHEREAS, prior to the execution and delivery of this Agreement, the Company has delivered to Parent and Merger Sub written consents of certain Stockholders, in the form attached hereto as Exhibit A (the “ Stockholder Written Consent ”), representing approximately 55% of the issued and outstanding Voting Preferred Stock and 45% of the issued and outstanding Voting Stock of the Company, in favor of this Agreement and each of the transactions contemplated hereby, including the Merger;

 

WHEREAS, as an inducement to Parent and Merger Sub to enter into this Agreement, concurrently with the execution of this Agreement, Caterpillar Inc. (“ Caterpillar ”) has executed an agreement with Parent, pursuant to which Caterpillar and Parent have agreed, contingent upon the consummation of the transactions contemplated by this Agreement, to certain commercial arrangements with respect to Caterpillar, Parent and the acquired entities of the Company in accordance with the terms of such agreement (the “ Commercial Arrangements ”);

 

WHEREAS, as an inducement to Parent and Merger Sub to enter into this Agreement, concurrently with the execution of this Agreement, certain employees of the Company have executed employment agreements (including confidentiality, non-solicitation and non-competition provisions) with Parent or one of its Affiliates, the effectiveness of which are contingent upon the consummation of the transactions contemplated by this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

 

 

 

Article I

DEFINITIONS

 

1.01         Definitions . For purposes hereof, the following terms when used herein shall have the respective meanings set forth below:

 

2014 Reorganization Agreement ” is defined in Section 5.09(j)(i) .

 

280G Arrangements ” is defined in Section 7.06 .

 

280G Calculation Date ” is defined in Section 7.06 .

 

280G Calculations ” is defined in Section 7.06 .

 

60-Day Notice Condition ” is defined in Section 4.01(n) .

 

AAS ” is defined in Section 5.05 .

 

Acquisition Proposal ” with respect to the Company, shall mean any offer, inquiry, indication of interest or proposal relating to any transaction or series of related transactions involving: (a) the sale, license, lease, transfer, disposition or acquisition of all or a substantial portion of (excluding sales of inventory and licensing of the Company’s products or services in the ordinary course of business consistent with past practice) the business or assets of the Company or any of its Subsidiaries; (b) the issuance, disposition or acquisition of (i) any capital stock or other equity security of the Company (other than (A) Company Stock issued upon the exercise of Options, (B) Options issued in accordance with the terms of this Agreement, (C) Company Common Stock issued upon conversion of any shares of Company Preferred Stock outstanding as of the date hereof or (D) Company Common Stock or Company Preferred Stock, as the case may be, issued upon exercise of Warrants outstanding as of the date hereof), (ii) any option, call, warrant or right (whether or not immediately exercisable) to acquire any capital stock or other equity security of the Company (other than Options issued in accordance with the terms of this Agreement), or (iii) any security, instrument or obligation that is or may become convertible into or exchangeable for any capital stock or other equity security of the Company (other than Options issued in accordance with the terms of this Agreement); (c) any merger, consolidation, share exchange, business combination, reorganization, recapitalization or similar transaction involving the Company or any of its Subsidiaries; (d) any liquidation, dissolution, recapitalization or other significant corporate reorganization of the Company or any of its Subsidiaries; or (e) any combination of the foregoing; provided , however , that the transactions between Parent, Merger Sub and the Company contemplated by this Agreement shall not be deemed an Acquisition Proposal.

 

Advisory Group ” is defined in Section 12.13(b) .

 

Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

 

 

2

 

 

 

Agreement ” is defined above in the Preamble.

 

Alternative Committed Financing ” is defined in Section 8.06(d) .

 

Associated Rights ” is defined in Section 12.17 .

 

Business Day ” means any day other than a Saturday, Sunday, or a day on which all banking institutions of New York, New York are authorized or obligated by Law or executive Order to close.

 

Cap ” is defined in Section 11.01 .

 

Capital Lease Obligation ” means, without duplication of any item that would otherwise be included in the term Indebtedness, any obligation (including accrued interest) of the Company or its Subsidiaries under a lease agreement that would be capitalized pursuant to GAAP. Notwithstanding the foregoing, Capital Lease Obligations shall not include any breakage costs, prepayment penalties or fees or other similar amounts payable in connection with any capitalized leases; provided , that Capital Lease Obligations shall include breakage costs, prepayment penalties or fees or other similar amounts in connection with a capitalized lease but only to the extent that the capital lease requires prepayment penalties or fees or other similar amounts in connection with the consummation of the transactions contemplated by this Agreement.

 

Caterpillar ” is defined above in the recitals.

 

CAT Incentive Shares ” means shares of Company Stock, if any, issuable pursuant to the 2014 Reorganization Agreement as a result of the transactions contemplated by this Agreement.

 

Certificate of Merger ” means the certificate of merger in the form of Exhibit B .

 

Certificates ” means certificates which, immediately prior to the Closing, (i) represented shares of Company Stock or (ii) formerly represented shares of IronPlanet, Inc., a wholly-owned Subsidiary of the Company, which remain unexchanged for certificates representing shares of Company Stock.

 

CFIUS ” means the Committee on Foreign Investment in the United States and each member agency thereof, acting in such capacity.

 

CFIUS Approval ” means (i) CFIUS has issued a written notice that it has concluded a review or investigation of the notification voluntarily provided pursuant to the DPA, with respect to the transactions contemplated by this Agreement, and has terminated all action under the DPA or (ii) if CFIUS has sent a report to the President of the United States requesting the President’s decision and (x) the President has announced a decision not to take any action to suspend or prohibit the transactions contemplated by this Agreement or (y) having received a report from CFIUS requesting the President’s decision, the President has not taken any action after 15 days from the date the President received such report from CFIUS.

 

 

3

 

 

 

Claim ” means any claim, demand, cause of action, investigation, inquiry, suit, action, charge or legal, administrative, arbitrative or other proceeding.

 

Closing ” is defined in Section 3.01 .

 

Closing Date ” is defined in Section 3.01 .

 

Closing Proceeds ” means (i) the Enterprise Value, minus (ii) the amount of Indebtedness outstanding as of the Closing Reference Time, plus (iii) the amount of IP Cash as of the Closing Reference Time, minus (iv) the amount (if any) by which Closing Working Capital is less than Target Working Capital, plus (v) the amount (if any) by which Closing Working Capital is greater than Target Working Capital, plus (vi) the aggregate exercise price of all Vested Options, plus (vii) the aggregate exercise price of all Warrants, minus (viii) the Company Portion of Unvested Option Value, minus (ix) the Representative Holdback Amount, minus (x) all Transaction Expenses, minus (xi) the Indemnification Escrow Amount, minus (xii) any “success fees” or bonuses, or “single trigger” severance payments payable to employees of the Company or any of its Subsidiaries arising solely from or otherwise triggered solely by the Closing of the transactions contemplated hereby as a result of termination (on or prior to the Closing) of such employees by the Company or payable to employees of the Company or any of its Subsidiaries who have delivered notice (on or prior to the Closing) of an intention to terminate their employment pursuant to “Good Reason” under the applicable employee’s employment agreement (excluding any bonuses payable to any employee based on the performance of such employee or the performance of the Company or any of its Subsidiaries, other than, in any such case, performance in connection with the transactions contemplated hereby) (including, in the case of this clause (xii), the employer portion of any social security or Medicare Tax attributable to such payments); provided, that, this clause (xii) shall not include severance payments to employees in connection with termination of an employee’s employment resulting from Parent’s notice to an employee that (A) the employee will not continue in employment with Parent and its Affiliates following the Closing, (B) the employee will continue in employment with Parent and its Affiliates solely for a defined temporary transitional period following the Closing or (C) would otherwise constitute “Good Reason” under the applicable employee’s employment agreement, minus (xiii) the employer portion of any social security or Medicare Tax resulting from the consideration payable in respect of Vested Options pursuant to this Agreement. For the avoidance of doubt, no items included in the definitions of IP Cash, Indebtedness, Transaction Expenses or Working Capital shall be double counted for purposes of calculating the Closing Proceeds hereunder.

 

Closing Reference Stock Price ” means the volume-weighted average trading price of Parent Common Stock on the New York Stock Exchange for the five (5) trading days ending on (and inclusive of) the trading day that is the third full trading day prior to (and not inclusive of) the Closing Date.

 

Closing Reference Time ” means 12:01 a.m. prevailing Eastern Time on the Closing Date.

 

Closing Statement ” is defined in Section 3.03(b) .

 

 

4

 

 

 

Closing Working Capital ” means Working Capital as of the Closing Reference Time.

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Commercial Arrangements ” is defined in the Recitals

 

Committed Financing ” is defined in Section 6.09(a) .

 

Committed Financing Sources ” means the Persons that have committed to provide, are arrangers, initial purchasers, underwriters, agents, lenders or other entities under or with respect to, or otherwise entered into agreements in connection with, the Debt Commitment Letter, including any Alternative Committed Financing in connection with the Merger if obtained as contemplated by  Section 8.06(d) , and any joinder agreements or credit agreements entered into pursuant thereto or relating thereto, together with their Affiliates, officers, directors, employees, controlling persons and representatives involved in the Financing and their successors and assigns.

 

Company ” is defined above in the Preamble.

 

Company Common Stock ” means the common stock, par value $0.00001 per share, of the Company.

 

Company Documents ” is defined in Section 5.03(a) .

 

Company Governance Documents ” is defined in Section 5.01 .

 

Company Group ” is defined in Section 12.17 .

 

Company Intellectual Property ” is defined in Section 5.11(a) .

 

Company Portion of Unvested Option Value ” means an amount equal to (i) the Unvested Option Value, minus (ii) the lesser of (A) an amount equal to (1) the Unvested Option Value, multiplied by (2) 0.5, or (B) $8,500,000.

 

Company Preferred Stock ” means the Voting Preferred Stock and Non-Voting Preferred Stock.

 

Company Representatives ” is defined in Section 7.08(a) .

 

Company Securityholders ” means, the holders of all of the issued and outstanding Company Stock, together with the holders of all other issued and outstanding equity interests of the Company, including securities convertible into, or exercisable or exchangeable for, securities of the Company, including Options and Warrants.

 

Company Stock ” means the Company Common Stock and Company Preferred Stock.

 

 

5

 

 

 

Compliant ” means, with respect to the Financing Information and without giving effect to any supplements or updates thereto other than supplements and updates delivered by the Company prior to the commencement of the Marketing Period, that (i) such Financing Information does not contain any untrue statement of a material fact or omit to state any material fact necessary, in each case with respect to the Company or its Subsidiaries, in order to make such Financing Information, in the light of the circumstances under which the statements contained in the Financing Information are made, not misleading, and (ii) if the Financing includes an offering of debt securities of Parent or any of its Subsidiaries, the financial statements and other financial information included in such Financing Information are, and remain throughout the Marketing Period, sufficient and sufficiently current to permit (A) a registration statement on Form S-3 of Parent for financing consisting of debt securities to finance, in part, the payments contemplated by this Agreement in connection with the Merger, that includes such financial statements and financial information to be declared effective by the SEC on or before the last day of the Marketing Period (it being understood that if the offering of debt securities will be conducted as a private placement and not as a registered offering then such financial statements and other financial information shall not be required to include financial statements required by Rules 3-09, 3-10 or 3-16 of Regulation S-X under the Securities Act (provided that customary data as to the total assets, revenue, EBITDA and adjusted EBITDA or comparable metrics (including such data as reasonably necessary to present such metrics on a pro forma basis giving effect to the transactions contemplated by this Agreement) of non-guarantor subsidiaries and of any unrestricted subsidiaries shall be provided), Compensation Discussion and Analysis or other information required by Item 402 of Regulation S-K under the Securities Act and the executive compensation and related person disclosure rules related to SEC Release Nos. 33-8732A, 34-54302A and IC-2744A and other information not customarily provided in an offering memorandum for a Rule 144A offering), and (B) the Financing Sources to receive customary comfort letters from the independent auditors of the Company, AAS and Kruse on the financial statements and financial information included in the Financing Information and contained in the offering memorandum, prospectus or prospectus supplement for such offering of debt securities, including customary negative assurance comfort with respect to the period following the end of the latest fiscal year or fiscal quarter of the Company for which historical financial statements of the Company are included in the Financing Information and prior to the comfort letter cut-off date and customary pro forma financial statement comfort, and the independent auditors of the Company, AAS and Kruse have delivered drafts of such comfort letters in customary form and indicated that, upon completion of customary procedures, they are prepared to deliver the executed comfort letters in such customary form upon any pricing and closing of such offering of debt securities during the Marketing Period. If the Company in good faith reasonably believes that it has delivered the Financing Information to Parent that is Compliant, the Company may deliver to Parent a written notice to that effect (stating when the Company believes it completed any such delivery), in which case the Company shall be deemed to have delivered the Financing Information that is Compliant as of the date of delivery of such notice unless Parent in good faith reasonably believes that the Company has not completed delivery of such Financing Information and, within three (3) Business Days after its receipt of such notice from the Company, Parent delivers a written notice to the Company to that effect (stating with specificity which Financing Information the Company has not delivered or which is not Compliant).

 

 

6

 

 

 

Confidentiality Agreement ” means that certain Mutual Confidentiality Agreement, dated July 6, 2015, by and between Parent and the Company.

 

Consenting Securityholder ” is defined in Section 12.10(a) .

 

Continuing Employees ” is defined in Section 8.05 .

 

Contract ” means any legally binding contract, agreement, indenture, note, instrument, license, franchise, lease, arrangement, commitment, understanding or other right or obligation (whether written or oral) to which a Person is a party or by which a Person is bound or affected or to which any of its properties or assets is subject.

 

Controls ” is defined in Section 5.05 .

 

Covered Employees ” is defined in Section 5.23(a) .

 

D&O Indemnitees ” is defined in Section 8.01(a) .

 

D&O Tail Policies ” is defined in Section 8.01(b) .

 

DDTC ” is the Directorate of Defense Trade Controls of the U.S. Department of State.

 

Debt Commitment Letter ” is defined in Section 6.09(a) .

 

Debt Fee Letters ” is defined in Section 6.09(a) .

 

Deductible ” is defined in Section 11.01 .

 

DGCL ” is defined in the recitals.

 

Disclosure Schedules ” is defined in Article V .

 

Dissenting Shares ” is defined in Section 2.06(a) .

 

DOJ ” means the United States Department of Justice.

 

DPA ” means Section 721 of the Defense Production Act of 1950, as amended, and all rules and regulations thereunder, including as codified at 31 C.F.R. Part 800 et seq.

 

EBITDA ” means earnings before interest, taxes, depreciation and amortization.

 

Effective Time ” is defined in Section 2.01(b) .

 

End Date ” is defined in Section 9.01(d) .

 

Enterprise Value ” means seven hundred fifty million dollars ($750,000,000).

 

 

7

 

 

 

Environmental Claim ” means any administrative, regulatory or judicial action, suit, order, claim, demand, directive, Lien, investigation, proceeding, notice or request by or from any Governmental Body or any other person seeking information or alleging liability relating to or arising out of any Environmental Law or Environmental Permit, including a Release of, or human exposure to, any Hazardous Material.

  

Environmental Laws ” means all Laws as enacted and in effect on or prior to the Closing Date concerning pollution, the environment or the protection of human health from environmental hazards, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials, substances or wastes.

 

Environmental Permit ” means any permit, license, exemption, registration, emissions allocation or credit, Order, franchise, authorization, consent or approval required under any applicable Environmental Law for the Company or its Subsidiaries to conduct its respective businesses.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate ” means each entity that is treated as a single employer with the Company or any of its Subsidiaries for purposes of Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code.

 

Escrow Agent ” means SunTrust Bank or its successor, in its capacity as such pursuant to the Escrow Agreement.

 

Escrow Agreement ” means an escrow agreement in the form of Exhibit C .

 

Estimated Closing Proceeds ” is defined in Section 3.03(a) .

 

Exercisable Shares ” is defined in Section 2.04(a)(ii) .

 

FCPA ” is defined in Section 5.21(e) .

 

Final Securityholder Schedule ” is defined in Section 5.04(e) .

 

Financial Statements ” is defined in Section 5.05 .

 

Financing ” is defined in Section 8.06(a) .

 

Financing Agreement ” is defined in Section 8.06(a)(i) .

 

 

8

 

 

 

Financing Information ” means (a) audited consolidated balance sheets of the Company as of the end of the two (2) most recently completed fiscal years ended at least sixty (60) days prior to the Closing Date and the consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ deficit and cash flows of the Company for the three (3) most recently completed fiscal years ended at least sixty (60) days prior to the Closing Date, (b) unaudited consolidated balance sheets and related consolidated statements of operations, comprehensive loss and cash flows of the Company for each subsequent fiscal quarter ended at least forty (40) days prior to the Closing Date (but not including the fourth fiscal quarter of any fiscal year) and unaudited corresponding financial statements for the same fiscal quarters in the preceding fiscal year (which have, in each case, been reviewed in accordance with SAS 100), (c) all other financial statements, financial data and other financial or operating information regarding the Company and its Subsidiaries (i) in the event that the Financing includes a registered public offering of debt securities by Parent on Form S-3, that are required by the Securities Act (including Regulations S-K and S-X thereunder and other accounting rules and regulations of the SEC) for inclusion in such registration statement, prospectus or prospectus supplement with respect to such debt securities of Parent, (ii) that are customarily included in offering documents and syndication materials used to syndicate credit facilities of the type to be included in the Financing and (iii) in the event that the Financing includes a Rule 144A private placement of debt securities by Parent or any of its Subsidiaries, that are customarily included in offering documents used in private placements of securities under Rule 144A of the Securities Act (it being understood that none of such information need include financial statements required by Rules 3-09, 3-10 or 3-16 of Regulation S-X under the Securities Act (provided that customary data as to the total assets, revenue, EBITDA and adjusted EBITDA or comparable metrics (including such data as reasonably necessary to present such metrics on a pro forma basis giving effect to the transactions contemplated by this Agreement) of non-guarantor subsidiaries and of any unrestricted subsidiaries shall be provided), Compensation Discussion and Analysis or other information required by Item 402 of Regulation S-K under the Securities Act and the executive compensation and related person disclosure rules related to SEC Release Nos. 33-8732A, 34-54302A and IC-2744A and other information not customarily provided in an offering memorandum for a Rule 144A offering, and (d) the financial information of the Company and its Subsidiaries necessary for Parent to prepare any pro forma financial statements for the historical periods required by SEC Regulation S-X to the extent reasonably requested by the Financing Sources.

 

Financing Sources ” means the Committed Financing Sources and any Persons that have committed to provide, are arrangers, initial purchasers, underwriters, agents lenders or other entities under or with respect to, or otherwise entered into agreements in connection with any Financing other than the Committed Financing or Alternative Committed Financing, together with their Affiliates, officers, directors, employees, controlling persons and representatives involved in the Financing and their successors and assigns.

 

Foreign Plan ” is defined in Section 5.15(k) .

 

Foreign Public Official ” means any (i) officer, employee or representative acting in the capacity as such of any foreign Governmental Body; (ii) officer, employee or representative acting in the capacity as such of any commercial enterprise or entity that is owned or controlled by a foreign Governmental Body; (iii) officer, employee or representative acting in the capacity as such of any public international organization, such as the African Union, the International Monetary Fund, the United Nations or the World Bank; (iv) Person acting in an official capacity for any foreign Governmental Body, enterprise or organization identified above; and (v) foreign political party, foreign political party official or candidate for foreign political office.

 

 

9

 

 

 

FTC ” means the United States Federal Trade Commission.

 

Fundamental Representations ” means the representations and warranties set forth in Section 5.04 , Section 5.05 and Section 5.06 .

 

GAAP ” means United States generally accepted accounting principles.

 

Governmental Body ” means any (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (ii) federal, state, provincial, local, municipal, foreign, or other government, or (iii) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal).

 

Hazardous Materials ” means material, substance, chemical, or waste (or combination thereof) that (i) is listed, defined, designated, regulated or classified as hazardous, toxic, radioactive, dangerous, a pollutant, a contaminant, petroleum, oil, or words of similar meaning or effect under any Environmental Law; or (ii) can form the basis of any liability under any Environmental Law.

 

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

Indebtedness ” means, without duplication, as of a given time, (i) the amount of all indebtedness for borrowed money of the Company and its Subsidiaries (including any unpaid principal, premium, accrued and unpaid interest, related expenses, prepayment penalties, commitment and other fees and reimbursements), (ii) liabilities of the Company and its Subsidiaries evidenced by bonds, debentures, notes, or other similar instruments or debt securities, (iii) liabilities of the Company and its Subsidiaries to pay the deferred purchase price of property or services other than trade payables incurred in the ordinary course of business and deferred rent, (iv) all liabilities of the Company and its Subsidiaries arising out of interest rate and currency swap arrangements and any other arrangements designed to provide protection against fluctuations in interest or currency rates, (v) the amount of Capital Lease Obligations; (vi) any deferred purchase price liabilities related to past acquisitions of the Company and any of its Subsidiaries, (vii) all indebtedness in the nature of guarantees of the obligations of other Persons described in the immediately preceding clauses (i) through (vi), (viii) liabilities related to deposits or advance payments from buyers, and (ix) current liabilities net of refundable prepayments of the Company or any of its Subsidiaries in respect of income Taxes; provided , that “Indebtedness” shall not include any such liabilities or obligations between the Company and any of its wholly-owned Subsidiaries or between any wholly-owned Subsidiary of the Company and another wholly-owned Subsidiary of the Company.

 

Indemnification Escrow Account ” is defined in Section 3.02(e) .

 

 

10

 

 

 

Indemnification Escrow Amount ” means an amount equal to thirty million dollars ($30,000,000).

 

Indemnification Escrow Funds ” means the amount of cash held from time to time by the Escrow Agent in the Indemnification Escrow Account pursuant to the Escrow Agreement.

 

Indemnifying Securityholders ” is defined in Section 11.04(a) .

 

Indemnity Allocation Percentage ” means, as to any Indemnifying Securityholder that has received any portion of the Merger Consideration, a fraction, (i) the numerator of which is the number of shares of Company Stock (for the avoidance of doubt, including the CAT Incentive Shares and all other shares of Company Stock issuable as a result of, on or at the Effective Time, if any), plus the number of shares of Company Stock issuable upon exercise of Vested Options, plus the number of shares of Company Stock issuable in respect of Warrants, in each case held by such Indemnifying Securityholder immediately prior to the Effective Time, and (ii) the denominator of which is the total number of shares of Company Stock (for the avoidance of doubt, including the CAT Incentive Shares and all other shares of Company Stock issuable as a result of, on or at the Effective Time, if any), plus the total number of shares of Company Stock issuable upon exercise of Vested Options, plus the number of shares of Company Stock issuable in respect of Warrants, in each case held by all Indemnifying Securityholders immediately prior to the Effective Time.

 

Independent Firm ” is defined in Section 3.03(d) .

 

Information Statement ” is defined in Section 7.02(b) .

 

Initial Securityholder Schedule ” is defined in Section 5.04(e) .

 

Insurance Policies ” is defined in Section 5.16 .

 

Intellectual Property ” shall mean all intellectual property and industrial property rights and rights in confidential information of every kind and description throughout the world, including all U.S. and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof, (ii) trademarks, service marks, names, corporate names, trade names, domain names, logos, slogans, trade dress, design rights, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (iii) copyrights and copyrightable subject matter, (iii) rights in computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, technology supporting the foregoing, and all documentation, including user manuals and training materials, related to any of the foregoing, (iv) trade secrets and all other confidential information, ideas, know-how, inventions, proprietary processes, formulae, models, and methodologies, (v) rights of publicity, privacy, and rights to personal information, (vi) moral rights and rights of attribution and integrity, (vii) social media addresses and accounts and usernames, account names and identifiers (whether textual, graphic, pictorial or otherwise), and sub-domain names and personal URL’s used or acquired in connection with a third-party website; (viii) all rights in the foregoing and in other similar intangible assets and (ix) all applications and registrations, and any renewals, extensions and reversions, for the foregoing.

 

 

11

 

 

 

Investors’ Rights Agreement ” means that certain Investors’ Rights Agreement dated April 1, 2015, by and among the Company and each Person whose name appears on the signature pages thereto or who otherwise thereafter became a party to such agreement.

 

IP Cash ” means, as of a given time, an amount equal to (i) the aggregate amount of all cash and cash equivalents of the Company or any of its Subsidiaries, determined in accordance with GAAP, including all restricted cash segregated for seller proceeds to the extent such amounts are included in Seller Cash, and excluding (A) Seller Cash, (B) cash segregated for letters of credit relating to customer Contracts (other than short-term letters of credit) and (C) any other amounts that are contractually or otherwise restricted and not freely available to the Company for its use (it being agreed, however, that to the extent such an amount is included in Indebtedness (including any liabilities related to deposits or advance payments from buyers included in Indebtedness), the amount shall not be excluded from IP Cash pursuant to this clause (C), notwithstanding such restriction), plus (ii) to the extent not already reflected in cash and cash equivalents, all un-cleared deposits of the Company and its Subsidiaries outstanding less (iii) to the extent not already reflected in cash and cash equivalents all un-cleared checks or withdrawals of the Company and the Subsidiaries outstanding.

 

IRS ” means the United States Internal Revenue Service or any successor agency.

 

ITAR ” means the International Traffic in Arms Regulations.

 

ITAR 60-Day Notice ” means notification required under Section 122.4(b) of the ITAR for any intended sale or transfer to a foreign Person of ownership or control of any entity registered under the ITAR with respect to the Merger and the other transactions contemplated hereby.

 

knowledge ” means, (i) with respect to the Company, the actual knowledge of the persons listed on Schedule 1.01(a), provided that if any employee that is a direct report of any such person would reasonably be expected to have knowledge of the particular matter subject to the applicable knowledge or similar qualification, such person shall make a reasonable inquiry of such direct report with respect to such matter and (ii) with respect to Parent, the actual knowledge of the persons listed on Schedule 1.01(b), provided that if any employee that is a direct report of any such person would reasonably be expected to have knowledge of the particular matter subject to the applicable knowledge or similar qualification, such person shall make a reasonable inquiry of such direct report with respect to such matter.

 

Kruse ” is defined in Section 5.05 .

 

Latest Balance Sheet ” is defined in Section 5.05 .

 

Law ” means any law (including common law), rule, regulation, judgment, Order, decree, or other pronouncement having the effect of law of any Governmental Body.

 

 

12

 

 

 

Liens ” means any liens, statutory liens, pledges, mortgages, security interests, charges, easements, rights of way, covenants, claims, restrictions, rights, options, conditional sale or other title retention agreements or encumbrances of any kind or nature.

 

Losses ” is defined in Section 11.01 .

 

made available ” means with respect to documents and other diligence materials made available to Parent, those documents to the extent of which copies were made available in the electronic data room established for the purposes of the Merger, but excludes any documents uploaded to such electronic data room prior to the date of this Agreement.

 

Marketing Period ” means a period of at least fifteen (15) consecutive Business Days commencing after the later of (x) Parent’s receipt of the Financing Information that is Compliant and (y) the satisfaction or waiver (to the extent permitted hereunder or by applicable Law) of the conditions set forth in Article IV (other than those conditions that by their nature are to be satisfied at the Closing, provided that nothing has occurred and no condition or state of facts exists that would cause any of such conditions to fail to be satisfied assuming the Closing were to be scheduled at any time during such fifteen (15) consecutive Business Day period); provided, that: (1) (A) such fifteen (15) consecutive Business Day period shall exclude November 24, 2016 and November 25, 2016 and (B) if such fifteen (15) consecutive Business Day period has not ended prior to December 17, 2016, then such period shall not commence until on or after January 5, 2017; (2) the Marketing Period shall end on any earlier date that is the date on which the Financing is consummated; (3) the Marketing Period shall not be deemed to have commenced if (A) after the date of this Agreement and prior to the completion of the Marketing Period, the accounting firms that audited the audited financial statements included in the Financing Information shall have withdrawn its audit opinion with respect to such audited financial statements, in which case the Marketing Period shall not be deemed to commence unless and until a new unqualified audit opinion is issued with respect to such financial statements by such accounting firm or another independent accounting firm reasonably acceptable to Parent, (B) the Financing Information would not be Compliant at any time during such fifteen (15) consecutive Business Day period, in which case a new fifteen (15) consecutive Business Day period shall commence upon the Parent receiving updated Financing Information that would be Compliant and provided that the requirement in clause (y) above would be satisfied on the first day, throughout and on the last day of such new fifteen (15) consecutive Business Day period (for the avoidance of doubt, it being understood that if at any time during the Marketing Period the Financing Information provided at the initiation of the Marketing Period ceases to be Compliant, then the Marketing Period shall be deemed not to have commenced until such Financing Information is Compliant) or (C) the Company has stated their intent to, or determines to, restate any financial statements included in the Financing Information or any such restatement is under consideration, or otherwise states or determines that any financial statements included in the Financing Information can no longer be relied upon, and in each such case, the Marketing Period shall not commence unless and until either such restatement has been completed and the applicable Financing Information has been amended and updated or, for a restatement under consideration, if the Company has determined that such a restatement is not required, or for a non-reliance that the applicable Financing Information has been amended and updated such that it can then be relied upon.

 

 

13

 

 

 

Material Adverse Change ” means any change, effect or circumstance (a) that is, or would reasonably be expected to be, materially adverse to the financial condition, business or results of operations of the Company and its Subsidiaries, taken as a whole, but shall exclude any effect resulting or arising from: (i) any change in any Law or GAAP (or authoritative interpretations of GAAP); (ii) any change in interest rates or general economic conditions (including currency fluctuations, changes in the price of gas, oil or other natural resources and any adverse development regarding the European Union, its member states (including member states leaving the European Union) and the Eurozone (including one or more member states leaving or forced to leave the Eurozone)); (iii) any change that is generally applicable to the industries in which the Company or any of its Subsidiaries operates; (iv) the entry into this Agreement or the announcement or consummation of the transactions contemplated by this Agreement and the other agreements referenced herein (including as to the identity of the parties hereto); (v) any action taken with the express prior consent of the Parent (including those actions taken which are expressly required or expressly permitted by this Agreement); (vi) any national or international political event or occurrence, including acts of war or terrorism, pandemics or natural disasters (including any escalation or general worsening of any of the foregoing) in the United States or any other country or region of the world, (vii) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions ( provided  that the underlying causes of any such failure or decline may be considered in determining whether a Material Adverse Change has occurred to the extent not otherwise excluded by another exception herein) and (viii)  changes in the financial, credit, banking or securities markets in the United States or any other country or region in the world (including any disruption thereof and any decline in the price of any security or any market index); provided , that, in the case of the foregoing clauses (i) , (ii) , (iii) , (vi) and (viii) , if such effect disproportionately and negatively affects the Company and its Subsidiaries as compared to other Persons or businesses that operate in the industry in which the Company and its Subsidiaries operate, then the disproportionate aspect of such effect may be taken into account in determining whether a Material Adverse Change has occurred or will occur.

 

Material Adverse Impact ” is defined in Section 10.02(c) .

 

Material Contract ” is defined in Section 5.10 .

 

Material Customer ” is defined in Section 5.24 .

 

Merger ” is defined in Section 2.01(a) .

 

Merger Consideration ” means, together, the Stockholders’ Merger Consideration, the Optionholders’ Merger Consideration and the Warrant Holders’ Merger Consideration.

 

Merger Sub ” is defined above in the Preamble.

 

New Debt Commitment Letter ” is defined in Section 8.06(d) .

 

Non-Voting Preferred Stock ” means the Company’s Series A-1 Preferred Stock.

 

Objection Notice ” is defined in Section 3.03(d) .

 

 

14

 

 

 

OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

Option Exchange Ratio ” is defined in Section 2.04(b) .

 

Optionholder ” means a holder of an Option.

 

Optionholder Letter of Transmittal ” means a letter of transmittal in the form of Exhibit D .

 

Optionholders’ Merger Consideration ” means, collectively, the Vested Optionholders’ Merger Consideration and the Unvested Optionholders’ Merger Consideration.

 

Options ” means all options to acquire shares of Company Stock which are outstanding as of immediately prior to the Effective Time (whether or not exercisable).

 

Order ” shall mean, with respect to any Person, any order, writ, rule, injunction, award, judgment, decree, stipulation, verdict or ruling issued, made, rendered, enacted, adopted, promulgated or applied by a Governmental Body that is binding upon or applicable to such Person or its property.

 

Other Antitrust Regulations ” mean all antitrust or competition Laws of any Governmental Body.

 

Parent ” is defined above in the Preamble.

 

Parent Adjustment Amount ” is defined in Section 3.03(g)(i) .

 

Parent Common Stock ” means the common shares, no par value, of Parent.

 

Parent Documents ” is defined in Section 6.01 .

 

Parent Indemnified Parties ” is defined in Section 11.01 .

 

Parent Parties Group ” is defined in Section 12.17 .

 

Parent Plans ” is defined in Section 8.05 .

 

Paying Agent ” is defined in Section 2.03 .

 

Pension Plans ” is defined in Section 5.15(a).

 

Permit ” means any approvals, authorizations, consents, licenses, permits, registrations or certificates of a Governmental Body.

 

 

15

 

 

 

Permitted Liens ” means (i) Liens securing liabilities which are reflected or reserved against in the Latest Balance Sheet to the extent so reflected or reserved; (ii) Liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and for which adequate reserves with respect thereto are maintained on the Company’s books in accordance with GAAP; (iii) statutory, landlord’s, mechanic’s, materialmen’s, and similar Liens arising or incurred in the ordinary course of business for amounts which are not yet due and payable or which are being contested in good faith by appropriate proceedings if reserves with respect thereto are maintained on the Company’s books in accordance with GAAP; (iv) Liens set forth on the Permitted Liens Section of the Disclosure Schedule; (v) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Body which are not violated by the current use or occupancy of such real property or the operation of the business or any violation of which is not material; (vi) easements, rights, covenants, conditions and restrictions of record and; (vii) non-exclusive licenses entered into in the ordinary course of business.

 

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Governmental Body.

 

Plans ” is defined in Section 5.15(a) .

 

Protected Communications ” is defined in Section 12.17 .

 

Purchase Price Adjustments ” is defined in Section 3.03(g)(ii) .

 

Purchase Price Adjustments Collar ” shall mean an amount equal to fifty thousand dollars ($50,000).

 

Release ” means any release, spill, emission, leaking, pumping, emitting, depositing, discharging, injecting, escaping, leaching, dispersing, dumping, pouring, disposing or migrating into, onto or through the environment (including ambient air, surface water, ground water, land surface or subsurface strata) or within any building, structure, facility or fixture.

 

Representative ” is defined above in the Preamble.

 

Representative Group ” is defined in Section 12.13(b) .

 

Representative Holdback Amount ” means an amount equal to five million dollars ($5,000,000).

 

Restrictive Covenant ” means any non-compete, non-solicit, non-interference, non-disparagement or confidentiality obligation.

 

Retained Per Share Portion ” means a fraction, the numerator of which is one (1), and the denominator of which is the sum of (i) the total number of shares of Company Stock issued and outstanding immediately prior to the Effective Time (for the avoidance of doubt, (A) excluding Company Stock held by the Company as treasury stock or held by the Merger Sub, and (B) including the CAT Incentive Shares and all other shares of Company Stock issuable as a result of, on or at the Effective Time), plus (ii) the number of shares of Company Stock issuable upon exercise of all Vested Options, plus (iii) the number of shares of Company Stock issuable upon exercise of all Warrants outstanding immediately prior to the Effective Time.

 

 

16

 

 

 

Sanctioned Person ” means any Person that is the target of Sanctions by virtue of being any of the following or a different condition having the same implications (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State, the United Nations Security Council, the European Union, or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Territory, or (c) any Person 50% or more owned or controlled by any such Person or Persons.

 

Sanctioned Territory ” means, at any time, a country or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria).

 

Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by relevant Governmental Bodies, including, but not limited to those administered by the U.S. government through OFAC or the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty’s Treasury of the United Kingdom.

 

SEC ” means the United States Securities and Exchange Commission.

 

Section 280G Payments ” is defined in Section 7.06 .

 

Securities Act ” means the Securities Act of 1933, as amended.

 

Seller Adjustment Amount ” is defined in Section 3.03(g)(ii) .

 

Seller Cash ” means, as of a given time cash proceeds from products sold at auction and collected from buyers by the Company and/or its Subsidiaries, which are temporarily held by the Company and/or its Subsidiaries and payable to the seller in the auction transaction, net of transaction fees due to the Company and/or its Subsidiaries, whether or not the cash is classified on the consolidated balance sheet as cash or restricted cash.

 

Seller Related Party ” means the Company and the Indemnifying Securityholders and each of their respective Affiliates and their and their respective Affiliates’ stockholders, partners, members, officers, directors, employees, controlling persons, agents and representatives.

 

Series A Preferred Stock ” means the Series A Preferred Stock, par value $0.00001 per share, of the Company.

 

Series A-1 Preferred Stock ” means the Series A-1 Preferred Stock, par value $0.00001 per share, of the Company.

 

Series B Preferred Stock ” means the Series B Preferred Stock, par value $0.00001 per share, of the Company.

 

Series C Preferred Stock ” means the Series C Preferred Stock, par value $0.00001 per share, of the Company.

 

 

17

 

 

 

Series D Preferred Stock ” means the Series D Preferred Stock, par value $0.00001 per share, of the Company.

 

Series E Preferred Stock ” means the Series E Preferred Stock, par value $0.00001 per share, of the Company.

 

Software ” means computer programs (whether in source code, object code or other form) and all documentation, including user manuals and training manuals, related to any of the foregoing.

 

Solvent ” means that, as of any date of determination and with respect to any Person: (i) the sum of the debt (including contingent liabilities) of such Person and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value of the present assets of such Person and its Subsidiaries, taken as a whole; (ii) the capital of such Person and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of such Person and its Subsidiaries, taken as a whole; and (iii) such Person and its Subsidiaries, taken as a whole, do not have de bts, including current obligations, beyond their ability to pay such debts as they mature in the ordinary course of business.

 

Stockholder ” means each holder of a Certificate representing Company Stock.

 

Stockholder Approval ” is defined in Section 5.03(b) .

 

Stockholder Letter of Transmittal ” means a letter of transmittal in the form of Exhibit E .

 

Stockholder Written Consent ” is defined above in the recitals.

 

Stockholders’ Closing Consideration ” is defined in Section 2.02(a).

 

Stockholders’ Merger Consideration ” is defined in Section 2.02(a).

 

Subsidiary ” means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one (1) or more of the other Subsidiaries of such Person or a combination thereof, or any partnership, association or other business entity which a majority of the partnership or other similar ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one (1) or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association or other business entity or is or controls the managing director or general partner of such partnership, association or other business entity.

 

Subsidiary Governance Documents ” is defined in Section 5.02 .

 

Surviving Corporation ” is defined in Section 2.01(a) .

 

 

18

 

 

 

Target Working Capital ” means ten million dollars ($10,000,000).

 

Tax ” means all income, capital gains, gross income, gross receipts, sales, use, ad valorem, franchise, capital, profits, license, withholding, employment, social security, payroll taxes, severance, transfer, conveyance, documentary, stamp, property, inventory, value added, alternative, environmental, customs duties, minimum tax, estimated and any other tax, fee, charge, levy, excise, duty or assessment, to the extent the foregoing are in the nature of a tax, together with any interest and penalties, and other additional amounts, relating thereto that may be imposed by any Governmental Body.

 

Tax Returns ” means any return, claims for refund, report, information return or other document (including schedules or any related or supporting information) filed or required to be filed with any Governmental Body in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

 

Tax Warranty Period ” is defined in Section 5.09(a) .

 

Third-Party Claim ” is defined in Section 11.04(a) .

 

Trade Control Laws ” means those Laws regulating the export, reexport, transfer, disclosure or provision of commodities, Software, technology, defense articles or defense services, or imposing trade control sanctions or restrictions on countries, individuals or entities including, without limitation: the Export Administration Act of 1979 (Public Law 96-72, as amended); the Export Administration Regulations (15 C.F.R. Parts 730-774); the International Emergency Economic Powers Act (Public Law 95-223); the Trading with the Enemy Act (50 U.S.C. App. §§ 1-44); the Arms Export Control Act (Public Law 90-629); ITAR (22 C.F.R. Parts 120-130); export and import Laws and regulations administered by the Bureau of Alcohol, Tobacco, Firearms and Explosives (27 C.F.R. Chapter II); the Foreign Trade Regulations (15 C.F.R. Part 30); regulations, orders and restrictions administered by OFAC (31 C.F.R. Part 500 et seq.); U.S. and non-U.S. customs Laws; and any other export controls, customs, and economic sanctions Laws administered by a U.S. Governmental Body, or by any foreign Governmental Body to the extent applicable and to the extent compliance with such Laws is not prohibited or penalized by applicable U.S. Law.

 

Transaction Expenses ” means, without duplication, to the extent not paid prior to the Closing Reference Time, the amount of (i) all fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, accountants, brokers or other representatives and consultants; appraisal fees, costs and expenses; and travel, lodging, entertainment and associated expenses) incurred by the Company prior to Closing in connection with this Agreement and in connection with other acquisitions (but, with respect to such other acquisitions, to the extent incurred prior to the date hereof) or financings including the Company’s initial public offering, (ii) all fees payable by the Company or any of its Subsidiaries to any Company Securityholder or any Affiliate of any such Person in connection with this Agreement or the transactions contemplated hereby, or otherwise and (iii) one hundred percent (100%) of the premium for the D&O Tail Policies as set forth in Section 8.01 . The foregoing notwithstanding, expenses and costs as to which the Company is entitled to reimbursement under Section 7.08 shall not constitute Transaction Expenses.

 

 

19

 

 

 

Transfer Taxes ” means any and all transfer Taxes of the Company or any of its Subsidiaries (excluding Taxes measured in whole or in part by net income), including sales, use, excise, value-added, gross receipts, registration, real estate, stamp, documentary, notarial, filing, recording, permit, license, authorization, transfer, conveyance and similar transfer Taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges.

 

Treasury Regulations ” means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified.

 

Uncertificated Stock ” is defined in Section 2.03 .

 

Unvested Option ” is defined in Section 2.04(b) .

 

Unvested Option Value ” means an amount equal to (i) (A) the number of shares of Company Common Stock that were subject to Unvested Options outstanding immediately prior to the Effective Time and entitled at the Effective Time to receive Unvested Optionholders’ Merger Consideration pursuant to Section 2.04(b) hereof multiplied by (B) the sum of (1) the Retained Per Share Portion of the Estimated Closing Proceeds, plus (2) the Retained Per Share Portion of the Indemnification Escrow Amount, plus (3) the Retained Per Share Portion of the Representative Holdback Amount, minus (ii) the aggregate exercise price of all Unvested Options outstanding immediately prior to the Effective Time, where, for purposes of this calculation, the value of the Retained Per Share Portion of the Estimated Closing Proceeds equals an amount such that the Estimated Closing Proceeds, after giving effect to the deduction of the Company Portion of Unvested Option Value in accordance with the terms hereof, is the product of the Retained Per Share Portion of Estimated Closing Proceeds multiplied by the denominator used in the definition of “the Retained Per Share Portion.”

 

Unvested Optionholders’ Merger Consideration ” is defined in Section 2.04(b) .

 

Vested Option ” is defined in Section 2.04(a)(ii) .

 

Vested Optionholder ” means each holder of a Vested Option.

 

Vested Optionholders’ Closing Consideration ” is defined in Section 2.04(a)(ii) .

 

Vested Optionholders’ Merger Consideration ” is defined in Section 2.04(a)(ii) .

 

Voting Preferred Stock ” means the Company’s Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.

 

Voting Stock ” means the Voting Preferred Stock and the Company Common Stock.

 

Waived Benefits ” is defined in Section 7.06 .

 

 

20

 

 

 

WARN ” means the Worker Adjustment and Retraining Notification Act or any similar state or local Law, each as amended.

 

Warrant Closing Payment ” means a cash amount equal to the product of (i) the number of shares of Company Stock for which a Warrant is exercisable and (ii) the excess of the Retained Per Share Portion of the Estimated Closing Proceeds over the per share exercise price of such Warrant.

 

Warrant Holder ” means a holder of a Warrant.

 

Warrant Holder Consent Agreement ” is defined in Section 2.05 .

 

Warrant Holders’ Merger Consideration ” is defined in Section 2.05 .

 

Warrants ” shall mean all warrants to purchase shares of the Company’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, as set forth in the Initial Securityholder Schedule, and updated in the Final Securityholder Schedule.

 

Welfare Plans ” is defined in Section 5.15(a) .

 

Working Capital ” means (A) the Company’s consolidated total current assets (as defined by and determined in accordance with GAAP, consistent with the Company’s past practices), excluding IP Cash, deferred initial public offering costs, the current portion of deferred financing costs and any current and deferred income Tax assets, but including the VAT receivable from Italy (presently included in long term assets), less (B) the Company’s consolidated total current liabilities (as defined by and determined in accordance with GAAP, consistent with the Company’s past practices), excluding current liabilities relating to Indebtedness (net of the current portion of any deferred financing costs), and any current or deferred income Tax liabilities, but including (i) liabilities related to refunds payable to buyers on collapsed sales and (ii) liabilities in respect of customer obligations to pay sales Taxes which the Company or any of its Subsidiaries is obligated to remit to the extent such sales Taxes amounts are uncollected from customers. A reference calculation of Working Capital, IP Cash and Indebtedness at June 30, 2016 is attached as Exhibit I .

 

1.02         Other Definitional Provisions .

 

(a)           Accounting Terms . Accounting terms which are not otherwise defined in this Agreement have the meanings given to them under GAAP. To the extent that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition of such term set forth in this Agreement will control.

 

(b)          “ Hereof,” etc . The terms “hereof,” “herein” and “hereunder” and terms of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement.

 

(c)           Successor Laws . Any reference to any particular Code section or any other Law will be interpreted to include any revision of or successor to that section regardless of how it is numbered or classified.

 

 

21

 

 

 

(d)          “ Including,” etc . The term “including” has the inclusive meaning frequently identified with the phrase “but not limited to” or “without limitation”.

 

(e)           Singular and Plural Forms . Unless the context otherwise clearly indicates, each defined term used in this Agreement shall have a comparable meaning when used in its plural or in its singular form.

 

(f)           Internal References . References herein to a specific section, subsection, clause, recital, schedule or exhibit shall refer, respectively, to sections, subsections, clauses, recitals, schedules or exhibits of this Agreement, unless otherwise specified.

 

(g)           Gender . References herein to any gender shall include each other gender.

 

(h)           Heirs, Executors, etc . References herein to any Person shall include such Person’s heirs, executors, personal representatives, administrators, successors and assigns; provided , however , that nothing contained in this Section 1.02(h) is intended to authorize any assignment or transfer not otherwise permitted by this Agreement.

 

(i)           Capacity . References herein to a Person in a particular capacity or capacities shall exclude such Person in any other capacity.

 

(j)           Time Period . With respect to the determination of any period of time, the word “from” or “since” means “from and including” or “since and including,” as applicable, and the words “to” and “until” each means “to and including”.

 

(k)           Contract . References herein to any contract mean such contract as amended, supplemented or modified (including any waiver thereto).

 

(l)           Calendar Days . References to any period of days shall be deemed to be the relevant number of calendar days, unless otherwise specified.

 

(m)           Business Day . If the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is a day that is not a Business Day, then the time for the giving of such notice or the performance of such action shall be extended to the next succeeding Business Day.

 

(n)          “ Dollar,” etc. The terms “dollars” or “$” mean dollars in the lawful currency of the United States of America and all payments made pursuant to this agreement shall be in United States dollars.

 

Article II

THE MERGER

 

2.01         The Merger .

 

(a)          At the Effective Time, the Merger Sub shall merge with and into the Company in accordance with the DGCL (the “ Merger ”), whereupon the separate existence of the Merger Sub shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”) and a wholly-owned Subsidiary of Parent.

 

 

22

 

 

 

(b)          The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as is mutually agreed to by Parent and the Company and specified in the Certificate of Merger (the “ Effective Time ”).

 

(c)          From and after the Effective Time, the Surviving Corporation shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of each of the Company and the Merger Sub, all as provided under the DGCL.

 

2.02         Conversion of Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

 

(a)          Each share of Company Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) shall be converted into the right to receive in cash only the sum of the following: (i) the Retained Per Share Portion of the Estimated Closing Proceeds, payable to the holder thereof in accordance with the procedures set forth in Section 2.03 , (ii)  the Retained Per Share Portion of any Indemnification Escrow Funds distributed to the Representative or to the Paying Agent at the Representative’s direction (on behalf of the Indemnifying Securityholders) pursuant to the terms of the Escrow Agreement, but subject to Section 12.13, (iii) the Retained Per Share Portion of any Purchase Price Adjustment distributed to the Paying Agent (on behalf of the Indemnifying Securityholders) pursuant to Section 3.03 , but subject to Section 12.13, and (iv) the Retained Per Share Portion of any portion of the Representative Holdback Amount released by, or caused to be released by, the Representative (on behalf of the Indemnifying Securityholders) pursuant to Section 12.13(a) . The aggregate consideration to which holders of Company Stock become entitled pursuant to this Section 2.02(a) is referred to herein as the “ Stockholders’ Merger Consideration ” and the portion of the Merger Consideration payable solely with respect to clause (i) of this Section 2.02(a) is referred to herein as the “ Stockholders’ Closing Consideration ”.

 

(b)          Each share of Company Stock held immediately prior to the Effective Time by the Company as treasury stock, by any Subsidiary of the Company or by the Merger Sub shall be canceled, and no payment shall be made with respect thereto.

 

(c)          Each share of the Merger Sub’s common stock issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

 

 

23

 

 

 

2.03         Exchange of Certificates; Lost Certificates; Paying Agent . Prior to the Closing Date, Parent shall appoint a paying agent (the “ Paying Agent ”) for the purpose of effecting the exchange of cash for Certificates which are converted into the right to receive payment pursuant to Section 2.02 . Prior to the Effective Time, the Paying Agent (or if agreed by the Company, the Company) will send to the holders of Company Stock, the Stockholder Letter of Transmittal. At or after the Effective Time, each Stockholder shall surrender to the Paying Agent Certificates, duly endorsed in blank or accompanied by duly executed stock powers, together with a duly executed Stockholder Letter of Transmittal, representing (i) the number of shares of Company Stock held by such holder or (ii) the number of shares of Company Stock represented by the Certificates held by such holder which formerly represented shares of stock of IronPlanet, Inc.. On the Closing Date or, with respect to any Certificates that have not been surrendered to the Paying Agent on the Closing Date, within two (2) Business Day after surrender of such Certificates, the Paying Agent shall pay each Stockholder who has surrendered his, her or its Certificates, duly endorsed in blank or accompanied by duly executed stock powers, together with a duly executed Stockholder Letter of Transmittal, the amount of cash to which he, she or it is entitled under Section 2.02 . Surrendered Certificates shall forthwith be canceled. Until so surrendered and exchanged, each such Certificate shall represent solely the right to receive the Stockholders’ Merger Consideration into which the shares it theretofore represented shall have been converted pursuant to Section 2.02 , and neither the Paying Agent nor the Surviving Corporation shall be required to pay the holder thereof the amount of cash to which he, she or it would otherwise have been entitled. Notwithstanding the foregoing, if any shares of Company Stock are held by a Stockholder in book entry form (“ Uncertificated Stock ”), the surrender of physical Certificates by the Stockholder shall not be required by the Paying Agent in order to receive the consideration to which he, she or it is entitled under Section 2.02 . At Closing, the Uncertificated Stock will automatically be converted into the right to payment pursuant to Section 2.02 and shall forthwith be canceled. Notwithstanding the foregoing, if any Certificate shall have been lost, stolen or destroyed, then, upon the making of an affidavit of such fact by the Person claiming such certificate to be lost, stolen or destroyed and the providing of an indemnity by such Person, in form and substance reasonably satisfactory to the Paying Agent and the Representative, against any Claim that may be made against it with respect to such Certificate, the Paying Agent shall issue, in exchange for such lost, stolen or destroyed Certificate, the Stockholders’ Merger Consideration to be paid in respect of the share(s) of Company Stock represented by such Certificate, in the amounts, at the times, and in the manner contemplated by this Article II . Notwithstanding anything to the contrary, the Paying Agent shall not be liable to any Stockholder for Stockholders’ Merger Consideration delivered to a Governmental Body if such delivery is required pursuant to any applicable abandoned property, escheat or similar Law.

 

2.04         Options . Prior to the Effective Time, the Company shall take all necessary and appropriate actions to authorize and effect the treatment of Options set forth in this Section 2.04 .

 

(a)           Vested Options .

 

(i)          The Company shall impose a blackout period in connection with the exercise of Options that is effective beginning not later than the fifth (5th) Business Day prior to the Closing Date.

 

 

24

 

 

 

(ii)         As of the Effective Time, each then-outstanding Option or portion thereof that is vested and exercisable at that time (each, a “ Vested Option ”) shall, subject to paragraphs (iii) and (iv) below, be cancelled and converted into the right to receive (A) an amount in cash equal to the product of (1) the excess of the Retained Per Share Portion of the Estimated Closing Proceeds over the applicable exercise price per share of such Vested Option, multiplied by (2) the number of shares of Company Stock such holder could have purchased if such holder had exercised such Option in full (and paid the applicable exercise price in respect thereof) immediately prior to such time (the “ Exercisable Shares ”), which amount shall be payable to the holder thereof at, or as soon as practicable following, the Closing; (B) an amount in cash equal to the product of (1) the Retained Per Share Portion of the Indemnification Escrow Funds distributed to the Paying Agent (on behalf of the Indemnifying Securityholders) pursuant to the Escrow Agreement, but subject to Section 12.13 , multiplied by (2) the number of Exercisable Shares of such Vested Optionholder; (C) an amount in cash equal to the product of (1) the Retained Per Share Portion of any Purchase Price Adjustments distributed to the Paying Agent (on behalf of the Indemnifying Securityholders) pursuant to Section 3.03 , but subject to Section 12.13 , multiplied by (2) the number of Exercisable Shares of such Vested Optionholder; and (D) an amount in cash equal to the product of (1) the Retained Per Share Portion of any portion of the Representative Holdback Amount released by, or caused to be released by, the Representative (on behalf of the Indemnifying Securityholders) pursuant to Section 12.13(a) , multiplied by (2) the number of Exercisable Shares of such Vested Optionholder. The aggregate consideration to which holders of Vested Options become entitled pursuant to this Section 2.04(a)(ii) is collectively referred to herein as the “ Vested Optionholders’ Merger Consideration ” and the portion of the Vested Optionholders’ Merger Consideration payable solely with respect to clause (A) of this Section 2.04(a)(ii) is referred to herein as the “ Vested Optionholders’ Closing Consideration .” For the purposes of reporting compensation income and calculating the applicable income and employment tax withholding with respect to the payments made pursuant to this Section 2.04(a)(ii) , the applicable information reporting and the timing and amounts subject to income and employment tax withholding shall be based upon the amounts actually payable to the applicable holders of the Vested Options.

 

(iii)        As promptly as reasonably practicable after the Effective Time, but in no event later than the date that is ten (10) Business Days following the Effective Time, Parent shall or shall cause the Surviving Corporation to distribute to each holder of a Vested Option as of the Effective Time (A) an Optionholder Letter of Transmittal that includes a completed option table for the Vested Options held by such holder and (B) instructions for use in effecting the surrender of all rights in and to the Company Common Stock subject to each Vested Option held by the holder thereof in exchange for payment of the applicable portion of the Vested Optionholders’ Merger Consideration, which payment is conditioned upon the execution and delivery of such letter of transmittal by the Vested Optionholder thereof in accordance with the instructions therein. After the Effective Time, as soon as reasonably practicable after receipt by Parent or the Surviving Corporation of such duly executed Optionholder Letter of Transmittal and in exchange therefor, the Surviving Corporation shall or shall direct its payroll agent to, in accordance with its customary payroll practices, in exchange for such duly executed and delivered Optionholder Letter of Transmittal, pay amounts due with respect to each such Vested Option so surrendered, but without interest; provided that, such payment shall not be made prior to seven (7) days after the Effective Time or later than the date that is ten (10) Business Days following the receipt of such executed Optionholder Letter of Transmittal.

 

 

25

 

 

 

(iv)        Prior to the Effective Time, the Company shall take all necessary and appropriate actions so that, from and after the Effective Time, each holder of a Vested Option as to which the Retained Per Share Portion of the Estimated Closing Proceeds does not exceed the applicable exercise price per share of such Vested Option shall be entitled to receive no consideration in respect of the cancellation thereof or otherwise.

 

(b)           Unvested Options . At the Effective Time, each Option outstanding immediately prior to the Effective Time which is not a Vested Option (each, an “ Unvested Option ”) will, (i) with respect to Unvested Options outstanding on the date hereof, on the same terms and conditions (including vesting and vesting acceleration provisions) as are applicable to such Unvested Option immediately prior to the Effective Time and (ii) with respect to Unvested Options granted after the date hereof, on the same terms and conditions (including vesting and vesting acceleration provisions) as are applicable to such Unvested Options immediately prior to the Effective Time, automatically be converted into an option to acquire, the number of shares of Parent Common Stock determined by multiplying the number of shares of Company Stock subject to the Unvested Option immediately prior to the Effective Time by a fraction, the numerator of which shall equal the sum of the Retained Per Share Portion of the Estimated Closing Proceeds, plus the Retained Per Share Portion of the Indemnification Escrow Funds, plus the Retained Per Share Portion of any portion of the Representative Holdback Amount, and the denominator of which shall be the Closing Reference Stock Price (the “ Option Exchange Ratio ”) (with the result rounded down to the nearest whole share), at an exercise price per share of Parent Common Stock equal to the per share exercise price for the shares of Company Stock otherwise purchasable pursuant to such Unvested Option divided by the Option Exchange Ratio, rounded up to the nearest whole cent (such Options, the “ Unvested Optionholders’ Merger Consideration ”). The assumption described in this Section 2.04(b) shall be effected in a manner consistent with the requirements of Section 424 of the Code, as applicable, and Section 409A of the Code.

 

(c)          The Surviving Corporation shall act as paying agent in effecting the payment of the Vested Optionholders’ Closing Consideration through the Surviving Corporation’s payroll system in accordance with the last sentence of Section 2.04(a)(iii) . The Surviving Corporation (or any other Person that has any withholding obligation with respect to any payment made pursuant to this Section 2.04 ) shall be entitled to deduct and withhold from any payments to be made pursuant to this Section 2.04 any Taxes required to be deducted and withheld with respect to the making of such payments under the Code or any other applicable provision of Law and shall make payments pursuant to this Section 2.04 to Vested Optionholders in compliance with Section 409A of the Code. To the extent that amounts are so withheld, such withheld amounts shall be timely paid over to the applicable Tax authority in accordance with applicable law and such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Optionholder on behalf of whom such deduction and withholding was made.

 

 

26

 

 

 

2.05         Warrants . Copies of all agreements and instruments related to the Warrants, as in effect as of the date hereof, have been made available or provided to Parent. As a result of the execution and delivery of an agreement between each holder of Warrants and the Company in the form of Exhibit K hereto (each, a “ Warrant Holder Consent Agreement ”), each of the Warrants shall, at the Effective Time, be terminated in exchange for payment of (a) the Warrant Closing Payment applicable to such Warrant, plus (b) the Retained Per Share Portion of any Indemnification Escrow Funds distributed to the Paying Agent (on behalf of the Indemnifying Securityholders) pursuant to the terms of the Escrow Agreement, but subject to Section 12.13, (c) the Retained Per Share Portion of any Purchase Price Adjustment distributed to the Paying Agent (on behalf of the Indemnifying Securityholders) pursuant to Section 3.03 , but subject to Section 12.13, and (d) the Retained Per Share Portion of any portion of the Representative Holdback Amount released by, or caused to be released by, the Representative (on behalf of the Indemnifying Securityholders) pursuant to Section 12.13(a) . The aggregate consideration to which holders of Company Stock become entitled pursuant to this Section 2.05 is referred to herein as the “ Warrant Holders’ Merger Consideration .”

 

2.06         Dissenting Holders .

 

(a)          Notwithstanding anything in this Agreement to the contrary, any shares of Company Stock issued and outstanding immediately prior to the Effective Time eligible under the DGCL to exercise appraisal or dissenters’ rights and held by a holder who has not voted in favor of, or provided written consent to, the Agreement and the Merger and who has exercised and perfected appraisal or dissenters’ rights for such shares in accordance with Section 262 of the DGCL and has not effectively withdrawn or lost such appraisal or dissenters’ rights (collectively, the “ Dissenting Shares ”) shall not be converted into or represent the right to receive the consideration for Company Stock set forth in Section 2.02 , and the holder or holders of such shares shall be entitled only to such rights as may be granted to such holder or holders in Section 262 of the DGCL.

 

(b)          Notwithstanding the provisions of Section 2.06(a) , if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal and dissenters’ rights under Section 262 of the DGCL, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive, upon surrender of the certificate representing such shares in accordance with Section 2.03 , the consideration for such shares set forth in Section 2.02 , without interest, subject to the applicable portion of the Indemnification Escrow Amount and the Representative Holdback Amount with respect to such shares.

 

(c)          The Company shall (i) comply with the requirements of Section 262 of the DGCL, (ii) give Parent prompt notice of any written demand received by the Company pursuant to Section 262 of the DGCL, and of withdrawals of such demands, and provide copies of any documents or instruments served pursuant to the DGCL and received by the Company and (iii) give Parent the opportunity to participate in all negotiations and proceedings with respect to any such demands. Prior to the Effective Time, the Company shall not make any payment or settlement offer with respect to any such demand unless Parent shall have consented in writing to such payment or settlement offer (such consent not to be unreasonably withheld, delayed or conditioned).

 

 

27

 

 

 

(d)          Any amount paid by Parent, the Company or the Surviving Corporation to any Person with respect to Dissenting Shares in excess of the amount that would otherwise be payable pursuant to Section 2.02 for each such Dissenting Share (such amount, unless determined in a final, non-appealable judgment of a court, being subject to the written approval of the Representative, which approval shall not be unreasonably withheld, conditioned or delayed), and all interest, costs, expenses and fees incurred by the Company, Parent or the Surviving Corporation in connection with the exercise of all rights under Section 262 of the DGCL, shall be entitled to indemnification as Losses as set forth in Article XI hereof as an inaccuracy in Section 5.04 .

 

2.07         Certificate of Incorporation . As of the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated pursuant to the terms set forth in the Certificate of Merger (which shall include provisions related to indemnification, exculpation and advancement of expenses identical to those set forth in the certificate of incorporation of the Company as in effect immediately prior to the Effective Time), and as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable Law.

 

2.08         Bylaws . The bylaws of the Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving Corporation (except that the title thereof shall read “Bylaws of IronPlanet Holdings, Inc.” and the provisions related to indemnification, exculpation and advancement of expenses shall be identical to those set forth in the bylaws of the Company as in effect immediately prior to the Effective Time) and, as so amended and restated, shall be the bylaws of the Surviving Corporation until amended in accordance with applicable Law.

 

2.09         Directors and Officers . From and after the Effective Time, until successors are duly elected or appointed in accordance with applicable Law (or their earlier resignation or removal), the directors and officers of the Merger Sub at the Effective Time shall be the directors and officers, as applicable, of the Surviving Corporation.

 

2.10         Withholding . Each of the Company, Parent, Merger Sub and the Surviving Corporation (and any other Person that has any withholding obligation with respect to any payment made pursuant to this Agreement) and the Representative and the Paying Agent shall be entitled to deduct and withhold from the Merger Consideration and any amounts otherwise payable pursuant to this Agreement to any Person such amounts as the Company, Parent, Merger Sub and the Surviving Corporation or such other Person is required to deduct and withhold with respect to the making of such payment under the Code or any other applicable provision of Law. To the extent that amounts are so withheld, such withheld amounts shall be timely paid over to the applicable Tax authority in accordance with applicable Law and shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

 

28

 

 

 

Article III

THE CLOSING; MERGER CONSIDERATION ADJUSTMENT

 

3.01         The Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place (a) at 9:00 a.m. prevailing Eastern Time on the second Business Day following full satisfaction or due waiver of all of the closing conditions set forth in Article IV (other than those to be satisfied at the Closing); provided that, notwithstanding the satisfaction or waiver of the conditions set forth in Article IV , in no event shall the Closing occur prior to the third (3rd) Business Day immediately following the final day of the Marketing Period (or such date during the Marketing Period specified by Parent on at least three (3) Business Days written notice to the Company) or (b) on such other date and time as is mutually agreed to in writing by the parties. The date and time of the Closing are referred to herein as the “ Closing Date ”. The Closing will take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP or such place as is mutually agreed to in writing by the parties.

 

3.02         The Closing Transactions . Subject to the terms and conditions set forth in this Agreement, the parties hereto shall consummate the following transactions on the Closing Date:

 

(a)          the Company and the Merger Sub shall cause a duly executed copy of the Certificate of Merger to be filed with the Secretary of State of the State of Delaware and make all other filings or recordings required by the DGCL in connection with the Merger;

 

(b)          Parent shall deliver or cause to be delivered to the Paying Agent an aggregate amount of cash equal to (A) the Stockholders’ Closing Consideration and (B) the aggregate Warrant Closing Payments, in each case for distribution by the Paying Agent to each Stockholder and Warrant Holder, of the amounts issuable and payable in accordance with clause (i) of Section 2.02(a) and clause (a) of Section 2.05 , in the case of such cash by wire transfer of immediately available funds to the account(s) designated by the Paying Agent;

 

(c)          Parent shall deliver or cause to be delivered to the Company an aggregate amount equal to the Vested Optionholders’ Closing Consideration (for distribution by the Company to each Vested Optionholder of such holder’s Retained Per Share Portion of the Estimated Closing Proceeds as determined in accordance with Section 2.04 ), by wire transfer of immediately available funds to the account(s) designated by the Company;

 

(d)          Parent shall repay, or cause to be repaid, on behalf of the Company, all amounts necessary to discharge fully the then-outstanding balance of all Indebtedness identified in Section 4.01(f) of the Disclosure Schedule by wire transfer of immediately available funds to the account(s) designated by the holders of such Indebtedness;

 

(e)          Parent shall deliver the Indemnification Escrow Amount to the Escrow Agent for deposit into an escrow account (the “ Indemnification Escrow Account ”) established pursuant to the terms of the Escrow Agreement;

 

(f)          Parent shall deliver the Representative Holdback Amount by wire transfer of immediately available funds to the account(s) designated by the Representative;

 

 

29

 

 

 

(g)          Parent shall pay, on behalf of the Company, all Transaction Expenses to each Person who is owed a portion thereof; and

 

(h)          the Parent, the Merger Sub, the Company and the Representative (on behalf of the Indemnifying Securityholders) shall make such other deliveries as are required by Article IV .

 

3.03         Closing Proceeds Adjustment .

 

(a)          At least three (3) Business Days prior to the Closing Date, the Company shall prepare and deliver to the Parent the Company’s good-faith estimate as of the Closing Reference Time of the Closing Proceeds (the “ Estimated Closing Proceeds ”), including each of the components thereof, together with a reasonably detailed computation of, and reasonable supporting materials for, such estimates, in each case based on the Company’s books and records and other information then available. The Company shall consider in good faith any reasonable comments to the Estimated Closing Proceeds provided by the Parent.

 

(b)          No later than ninety (90) days after the Closing Date, the Parent shall prepare and deliver to the Representative a statement (the “ Closing Statement ”) setting forth the Parent’s calculation of the Closing Proceeds, including each of the components thereof, together with a reasonably detailed computation of, and reasonable supporting materials for, the amounts set forth thereon.

 

(c)          The Estimated Closing Proceeds and the Closing Statement shall be prepared in accordance with GAAP consistent with the Company’s past practice and Exhibit I .

 

(d)          Following delivery of the Closing Statement and until the final determination of the Closing Proceeds, Parent and its Subsidiaries (including the Surviving Corporation) shall (i) permit the Representative and its representatives to have reasonable access (by electronic means to the extent reasonably available without material additional cost or burden to Parent), during normal business hours and upon reasonable notice, to the books and records of the Surviving Corporation and to review the working papers of the Parent relating to the Closing Statement and (ii) provide the Representative and its representatives reasonable access, during normal business hours and upon reasonable notice, to Parent’s and its Subsidiaries’ (including the Surviving Corporation’s) employees and advisors (including making their chief financial officer(s) and accountants available to respond to reasonable written or oral inquiries of the Representative or its representatives), provided in each case that such access does not unreasonably disrupt the normal operations of the Company. If the Representative disagrees with any part of Parent’s calculation of the Closing Proceeds as set forth on the Closing Statement, the Representative shall, within sixty (60) days after the Representative’s receipt of the Closing Statement, notify Parent in writing of such disagreement by setting forth the Representative’s calculation of the Closing Proceeds, including each of the components thereof, and describing in reasonable detail the basis for such disagreement (an “ Objection Notice ”). The Closing Statement shall be final, binding and non-appealable by the parties hereto (a) on the sixtieth (60 th ) day after delivery of the Closing Statement to the Representative unless Parent receives from the Representative prior to such sixtieth (60 th ) day an Objection Notice, or (b) such earlier date as the Representative notifies Parent in writing that it does not dispute the Closing Statement. If an Objection Notice is delivered to Parent, then Parent and the Representative shall negotiate in good faith to resolve their disagreements with respect to the computation of the Closing Proceeds. In the event that Parent and the Representative are unable to resolve all such disagreements within thirty (30) days after Parent’s receipt of such Objection Notice, Parent and the Representative shall submit such remaining disagreements to Deloitte LLP, or if Deloitte LLP is unwilling or unable to serve, another nationally-recognized accounting firm as is acceptable to the Parent and the Representative (the “ Independent Firm ”).

 

 

30

 

 

 

(e)          The Independent Firm shall make a final and binding determination with respect to the computation of the Closing Proceeds, including each of the components thereof to the extent any such amounts are in dispute, in accordance with Exhibit I and the accounting principles set forth in this Agreement. The Parent and the Representative shall cooperate with the Independent Firm during the term of its engagement and shall use reasonable best efforts to cause the Independent Firm to resolve all remaining disagreements with respect to the computation of the Closing Proceeds, including each of the components thereof, as soon as practicable. Parent and the Representative will each furnish to the Independent Firm such work papers and other documents and information relating to the disputed items and amounts and answer questions, as the Independent Firm may reasonably request. Neither Parent nor the Representative shall have any ex parte communications or meetings with the Independent Firm regarding such dispute without the prior consent of the other. The Independent Firm shall consider only those items and amounts in the Parent’s and the Representative’s respective calculations of the Closing Proceeds, including each of the components thereof, that are identified as being items and amounts to which the Parent and the Representative have been unable to agree. In resolving any disputed item, the Independent Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Independent Firm’s determination of the Closing Proceeds, including each of the components thereof, shall be based solely on written materials submitted by the Parent and the Representative ( i.e. , not on independent review) and on the definitions included herein. All such written materials submitted shall be delivered to each party at the same time delivered to the Independent Firm. The determination of the Independent Firm shall be conclusive and binding upon the parties hereto and shall not be subject to appeal or further review.

 

(f)          The costs and expenses of the Independent Firm in determining the Closing Proceeds, including each of the components thereof, shall be borne by the Parent, on the one hand, and the Representative (on behalf of the Indemnifying Securityholders), on the other hand, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party. For example, if the Parent claims the Closing Proceeds are one thousand dollars ($1,000) less than the amount determined by the Representative, and the Representative contests only five hundred dollars ($500) of the amount claimed by the Parent, and if the Independent Firm ultimately resolves the dispute by awarding the Parent three hundred dollars ($300) of the five hundred dollars ($500) contested, then the costs and expenses of the Independent Firm will be allocated sixty percent (60%) ( i.e. , 300 ÷ 500) to the Representative (on behalf of the Indemnifying Securityholders) and forty percent (40%) ( i.e. , 200 ÷ 500) to the Parent. Prior to the Independent Firm’s determination of Closing Proceeds, (i) the Parent, on the one hand, and the Representative (on behalf of the Indemnifying Securityholders), on the other hand, shall each pay fifty percent (50%) of any retainer paid to the Independent Firm and (ii) during the engagement of the Independent Firm, the Independent Firm will bill fifty percent (50%) of the total charges to each of the Parent, on the one hand, and the Representative (on behalf of the Indemnifying Securityholders), on the other hand. In connection with the Independent Firm’s determination of Closing Proceeds, the Independent Firm shall also determine, pursuant to the terms of the first and second sentences of this Section 3.03(f) , and taking into account all fees and expenses already paid by each of the Parent, on the one hand, and the Representative (on behalf of the Indemnifying Securityholders), on the other hand, as of the date of such determination, the allocation of its fees and expenses between the Parent and the Representative (on behalf of the Indemnifying Securityholders), which such determination shall be conclusive and binding upon the parties hereto.

 

 

31

 

 

 

(g)          Within five (5) Business Days after the final determination of the Closing Proceeds, including each of the components thereof, pursuant to this Section 3.03 :

 

(i)          if the Closing Proceeds as finally determined pursuant to this Section 3.03 are less than the Estimated Closing Proceeds by more than the Purchase Price Adjustments Collar (the amount of such deficiency, the “ Parent Adjustment Amount ”), then the Representative (on behalf of the Indemnifying Securityholders) shall pay to the Parent an amount equal to such deficiency first from the Representative Holdback Amount, and if the Parent Adjustment Amount exceeds the Representative Holdback Amount, then the Representative shall pay to the Parent the remainder of the Parent Adjustment Amount from the Indemnification Escrow Account after exhausting the Representative Holdback Amount; and

 

(ii)         if the Closing Proceeds as finally determined pursuant to this Section 3.03 are greater than the Estimated Closing Proceeds by more than the Purchase Price Adjustments Collar (the amount of such excess, the “ Seller Adjustment Amount ”), then the Parent shall, or shall cause the Surviving Corporation or one or more of its Subsidiaries to, pay to the Paying Agent (on behalf of the Indemnifying Securityholders) an amount equal to such excess.

 

All payments to be made pursuant to this Section 3.03(g) (the “ Purchase Price Adjustments ”) shall not include interest on the Parent Adjustment Amount or the Seller Adjustment Amount, as applicable. All Purchase Price Adjustments shall (x) be treated by all parties for Tax purposes as adjustments to the Merger Consideration to the maximum extent permitted by Law and (y) be made by wire transfer of immediately available funds to the account(s) designated by the Parent or the Representative, as applicable. The payments described in this Section 3.03(g) shall be the sole and exclusive remedy of the Parent and the Representative (on behalf of the Indemnifying Securityholders) for any and all Claims arising under this Agreement with respect to this Section 3.03 .

 

 

32

 

 

 

Article IV

CONDITIONS TO CLOSING

 

4.01         Conditions to the Parent’s and the Merger Sub’s Obligations . The obligations of the Parent and the Merger Sub to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions immediately prior to the Effective Time:

 

(a)          the representations and warranties set forth in Article V (other than the representations and warranties set forth in Section 5.01 , Section 5.02 , Section 5.03(a) , Section 5.03(b) and Section 5.04 of this Agreement) shall be true and correct as of the date of this Agreement and as of the Closing Date (without giving effect to any materiality or similar qualification limiting the scope of such representation or warranty and, with respect to the representations and warranties set forth in Section 5.09 , without giving effect to any limitation as to time or the Tax Warranty Period limiting the scope of such representation or warranty), except (i) to the extent that the failure of such representations and warranties to be true and correct does not constitute a Material Adverse Change, (ii) for changes expressly provided in this Agreement, and (iii) for those representations and warranties which expressly relate to an earlier date (in which case such representations and warranties shall have been true and correct as of such earlier date except to the extent that the failure of such representations and warranties to have been true and correct as of such earlier date (without giving effect to any materiality or similar qualification limiting the scope of such representation or warranty), together with any breach of the representations and warranties pursuant to clause (i) above, did not constitute a Material Adverse Change);

 

(b)          the representations and warranties set forth in Section 5.01 , Section 5.02 , Section 5.03(a) and Section 5.03(b) shall be true and correct in all respects and the representations and warranties set forth in Section 5.04 shall be true and correct in all respects other than de minimis inaccuracies, in each case as of the date of this Agreement and as of the Closing Date, except (i) for changes expressly provided in this Agreement and (ii) for those representations and warranties which expressly relate to an earlier date (in which case such representations and warranties shall have been true and correct in all respects as of such earlier date);

 

(c)          the Company and the Representative shall have performed in all material respects all of the covenants and agreements required to be performed and complied with by them under this Agreement at or prior to the Closing;

 

(d)          the Company shall have delivered to the Parent a certificate executed on behalf of the Company by an officer of the Company in the form of Exhibit F , dated as of the Closing Date, certifying that the conditions specified in Sections   4.01(a) , 4.01(b) and 4.01(c) have been satisfied; and

 

(e)          the Escrow Agreement shall have been executed by the Escrow Agent and the Representative and shall have been delivered to the Parent;

 

 

33

 

 

 

(f)          the Company shall have delivered to the Parent customary payoff letters (in form and substance reasonably satisfactory to the Financing Sources) from the holders of Indebtedness identified in Section 4.01(f) of the Disclosure Schedule evidencing the amount necessary to repay or satisfy and discharge any Indebtedness outstanding thereunder and shall have made customary arrangements for such holders of such Indebtedness to deliver all related Lien (except Permitted Liens) releases (in form and substance reasonably satisfactory to the Financing Sources) to the Parent as soon as practicable, but in any event prior to the Closing; provided that the Parent agrees that no such releases shall be effective prior to the consummation of the Closing;

 

(g)          The Company shall have delivered to Parent duly executed copies of all third party consents, approvals, assignments, notices, waivers, authorizations or other certificates set forth on Section 4.01(g) of the Disclosure Schedule;

 

(h)          Parent shall have received evidence reasonably satisfactory to Parent that either (a) the requisite equityholder approval under Section 280G(b)(5)(B) of the Code was obtained with respect to any Section 280G Payments in accordance with Section 7.06 , or (b) the requisite equityholder approval under Section 280G(b)(5)(B) of the Code with respect to such Section 280G Payments was not obtained, and as a consequence, such Section 280G Payments will not be made, retained, or provided, pursuant to the written agreements with respect to Waived Benefits entered into by the affected individuals, which written agreements have been provided to Parent;

 

(i)          Parent shall have received a properly executed certificate from the Company pursuant to Treasury Regulation Section 1.1445-2(c)(3) (including a form of notice to the IRS along with written authorization for Parent to deliver such notice form to the IRS on behalf of the Company upon the Closing), and such certificate and form of notice shall be in the form of Exhibit J ;

 

(j)          Parent shall have received a Warrant Holder Consent Agreement duly executed and delivered by each holder of Warrants, each such agreement to be in full force and effect as of the Effective Time;

 

(k)          the Contracts set forth on Section 4.01(k) of the Disclosure Schedule shall be in full force and effect and, to the knowledge of the Company, the Company shall not have received notice from the other party thereto of an intent to terminate its relationship with the Company or an unwillingness to perform in accordance with such Contract.

 

(l)          there shall not have occurred a Material Adverse Change since the date of this Agreement;

 

(m)          the parties shall have obtained CFIUS Approval;

 

(n)          absent termination of all Company registrations and withdrawal of all applications for registration under the ITAR, the DDTC shall have concluded its review and the DDTC shall not have taken action to block or prevent the consummation of the Merger or any of the other transactions contemplated by this Agreement and no requirements or conditions to mitigate any ITAR concerns shall have been imposed, other than requirements or conditions that have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Parent or the Surviving Corporation (the “ 60-Day Notice Condition ”);

 

 

34

 

 

 

(o)          the applicable time periods for the perfection of appraisal rights under Section 262(d)(2) of the DGCL shall have lapsed and, as of the Closing Date, the total number of Dissenting Shares shall not exceed 5% of the issued and outstanding shares of Company Stock; and

 

(p)          evidence, reasonably satisfactory to Parent, that the Company has complied in all respects with the requirements under Section 228 of the DGCL that the Company has delivered to each holder of Company Stock the Information Statement.

 

4.02         Conditions to the Company’s Obligations . The obligation of the Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions immediately prior to the Effective Time:

 

(a)          the representations and warranties set forth in Article VI shall have been true and correct in all material respects as of the date of this Agreement and as of the Closing Date;

 

(b)          Parent and Merger Sub shall have performed in all material respects all the covenants and obligations required to be performed by them under this Agreement at or prior to the Closing;

 

(c)          the Parent shall have delivered to the Company a certificate signed by an officer of the Parent in the form of Exhibit G , dated as of the Closing Date, certifying that the conditions specified in Sections 4.02(a) , and 4.02(b) have been satisfied; and

 

(d)          the Escrow Agreement shall each have been executed by the Escrow Agent and the Parent and shall have been delivered to the Company and the Representative (on behalf of the Indemnifying Securityholders).

 

4.03         Conditions to All Parties’ Obligations . The obligation of each of the Company, the Representative (on behalf of the Indemnifying Securityholders), Parent and Merger Sub to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of immediately prior to the Effective Time:

 

(a)          the Merger shall have received the Stockholder Approval;

 

(b)          the applicable waiting periods under the HSR Act shall have expired or been terminated, and all other material governmental filings, consents, authorizations and approvals that are required for the consummation of the transactions contemplated hereby set forth on Section 4.03(b) of the Disclosure Schedule shall have been made and obtained;

 

(c)          no Law shall have been enacted or promulgated by any Governmental Body which prohibits consummation of the Merger, and no Governmental Body shall have issued any Order (whether temporary, preliminary or permanent) which prohibits consummation of the Merger; and

 

 

35

 

 

 

(d)          this Agreement shall not have been terminated in accordance with Section 9.01 .

 

Article V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Parent that the statements in this Article V are true and correct as of the date of this Agreement and as of the Closing Date, except as set forth in the schedules supplied by the Company to Parent and Merger Sub, dated as of the date hereof (the “ Disclosure Schedule ”), with specific reference to the Sections or subsections hereof, as applicable, to which such exception relates (except to the extent that it is reasonably apparent on the face of such disclosure that it also qualifies or applies to other Sections or subsections thereof), the Company represents and warrants to Parent and Merger Sub as follows.

 

5.01         Organization and Corporate Power . The Company is a corporation duly organized, validly existing and in good standing under the DGCL. The Company has all requisite corporate power and authority and all authorizations, licenses and permits necessary to own, lease and operate its properties and assets and to carry on its businesses as now being conducted, except for authorizations, licenses and permits which, individually or in the aggregate, are not material to the Company and its Subsidiaries, taken as a whole. The Company is duly qualified to do business and is in good standing (or its equivalent, if applicable) in every jurisdiction in which the ownership, leasing and use of its properties and assets, or the conduct of business as now conducted, requires it to qualify, except where the failure to be so qualified and in good standing would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. The Company has made available to the Parent prior to the date hereof a true and complete copy of the certificate of incorporation of the Company, the bylaws of the Company and the Investors’ Rights Agreement, each as amended to date (together, the “ Company Governance Documents ”), and each such instrument is in full force and effect. The Company is not in violation of the provisions of the Company Governance Documents. The Company has made available to Parent complete and accurate copies of the minutes (or, in the case of minutes that have not yet been finalized, drafts thereof) of, and resolutions approved and adopted at, all meetings of the stockholders of the Company and each of its Subsidiaries, the boards of directors of the Company and each of its Subsidiaries and the committees of each of such boards of directors, in each case held since January 1, 2013 and prior to the date hereof.

 

 

36

 

 

 

5.02         Subsidiaries . Except as set forth in Section 5.02 of the Disclosure Schedule, the Company does not directly or indirectly own any equity interest in, or any interest convertible into or exchangeable or exercisable for any equity interest in, any corporation, partnership, limited liability company, joint venture or other Person. Except for the Company’s interests in such Subsidiaries or as otherwise set forth in Section 5.02 of the Disclosure Schedule, the Company owns, directly or indirectly, of record and beneficially, all capital stock and other equity interests in each of its Subsidiaries, free and clear of all Liens (other than pledges to lenders in respect of Indebtedness to be repaid at Closing and Permitted Liens, if applicable), and all such capital stock and other equity interests are validly issued, fully paid and non-assessable (to the extent such concept is applicable to such equity interests). There are no outstanding options, warrants, rights, commitments, preemptive rights or agreements of any kind to which the Company or any of its respective Subsidiaries is a party or by which any of them is bound which would obligate any of them to issue, deliver, purchase or sell any additional shares of capital stock, units, membership, or other equity or profit interests of any kind in any of the Subsidiaries of the Company. Each of the Company’s Subsidiaries is duly formed or organized, validly existing and in good standing (or its equivalent, if applicable) under the applicable Laws of its jurisdiction of formation or organization, and each of the Company’s Subsidiaries has all requisite power and authority to own and operate its properties and to carry on its businesses as now conducted, except where the failure to be in good standing would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Each of the Company’s Subsidiaries is qualified to do business in every jurisdiction in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. The Company has made available to the Parent prior to the date hereof a true and complete copy of the certificate of incorporation and bylaws of each of its Subsidiaries (or such other organizational or governing documents as may be applicable), each as amended to date (together, the “ Subsidiary Governance Documents ”), and each such instrument is in full force and effect. None of the Company’s Subsidiaries is in violation of the provisions of its respective Subsidiary Governance Documents.

 

5.03         Authorization; No Conflict.

 

(a)          The Company has all necessary corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate expressly required by this Agreement to be executed by the Company in connection with the transactions contemplated by this Agreement (the “ Company Documents ”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject in the case of the Merger, to the Stockholder Approval. The execution, delivery and performance of this Agreement and each of the Company Documents by the Company and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by all requisite corporate action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement (other than, with respect to the Merger, the Stockholder Approval). This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly authorized, executed and delivered by the Company, and assuming that this Agreement and each of the Company Documents is a valid and binding obligation of the other parties hereto and thereto, this Agreement constitutes, and each of the Company Documents when so executed and delivered will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors’ rights or to general principles of equity.

 

 

37

 

 

 

(b)          The affirmative votes of (i) the holders of a majority of the outstanding shares of Company Common Stock and the holders of a majority of the outstanding shares of the Voting Preferred Stock (voting as a single voting class on an as-converted to common stock basis) and (ii) the holders of at least two-thirds (2/3rds) of the Voting Preferred Stock (voting as a single voting class on an as-converted to common stock basis) are the only votes of the holders of Company Stock required to approve this Agreement by the Company stockholders (the “ Stockholder Approval ”).

 

(c)          Except for the Stockholder Approval, the requirements of the HSR Act, the requirements of the Other Antitrust Regulations, the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, obtaining the CFIUS Approval, submitting an ITAR 60-Day Notice if the Company is registered under the ITAR, or as set forth on Section 5.03(c) of the Disclosure Schedule, the execution, delivery and performance of this Agreement and each of the Company Documents by the Company and the consummation of the transactions contemplated hereby and thereby, or compliance by the Company or its Subsidiaries with any of the provisions hereof or thereof, do not and will not conflict with, result in any material breach of, require any notice under, constitute a material default under (with or without notice or lapse of time or both), result in a material violation of, result in the creation of any Lien (other than a Permitted Lien, if applicable) upon any material properties or assets of the Company or any of its Subsidiaries under, give rise to any right of termination, cancellation or acceleration of any material obligation or to loss of a material benefit under, or give rise to any obligation of the Company or any of its Subsidiaries to make any material payment under, any provision of (i) the Company Governance Documents and the Subsidiary Governance Documents, (ii) any Material Contract, (iii) any outstanding Order applicable to the Company or any of its Subsidiaries or any of the material properties or assets of the Company or any of its Subsidiaries, or (iv) any applicable Law to which the Company or any of its Subsidiaries is subject, except as, in the case of clauses (ii) through (iv) above, any matters that, individually or in the aggregate, would not (A) reasonably be expected to have a Material Adverse Change or (B) prevent or materially delay the consummation of the transactions contemplated hereby.

 

5.04         Capital Stock .

 

(a)          The authorized capital stock of the Company consists solely of (i) 138,729,379 shares of Company Common Stock, 17,882,543 shares of which are issued and outstanding as of the date of this Agreement; (ii) 86,270,621 shares of Company Preferred Stock, of which (A) 16,746,220 shares have been designated Series A Preferred Stock, all of which are issued and outstanding as of the date of this Agreement; (B) 5,004,988 shares of which have been designated Series A-1 Preferred Stock, 5,000,900 shares of which are issued and outstanding as of the date of this Agreement; (C) 12,395,329 shares of which have been designated Series B Preferred Stock, all of which are issued and outstanding as of the date of this Agreement; (D) 1,533,333 shares of which have been designated Series C Preferred Stock, 900,000 shares of which are issued and outstanding as of the date of this Agreement; (E) 10,590,751 shares of which have been designated Series D Preferred Stock, 9,434,929 shares of which are issued and outstanding as of the date of this Agreement and (F) 40,000,000 shares of which have been designated Series E Preferred Stock, 22,431,398 shares of which are issued and outstanding as of the date of this Agreement. Each share of Company Preferred Stock is convertible on a one-share for one-share basis into Company Common Stock.

 

 

38

 

 

 

(b)          As of the date of this Agreement, there were outstanding Options to purchase an aggregate of 15,935,214 shares of Company Common Stock (of which Options to purchase an aggregate of 8,171,929 shares of Company Common Stock were exercisable).

 

(c)          As of the date of this Agreement, there were outstanding Warrants to purchase (a) 21,887 shares of Series A Preferred Stock, (b) 133,333 shares of Series C Preferred Stock, and (c) 1,155,822 shares of Series D Preferred Stock. Copies of all agreements and instruments related to the Warrants, as in effect as of the date hereof, have been made available or provided to Parent.

 

(d)          All of the issued and outstanding shares of Company Stock have been, and all of the shares of Company Stock that may be issued pursuant to any Option, Warrants or upon conversion of any share of Company Preferred Stock will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Section 5.04(d) of the Disclosure Schedule and for Options and Warrants listed on the Final Securityholder Schedule, no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase, acquire (including, rights of first refusal, anti-dilution or pre-emptive rights) or register under the Securities Act any shares of capital stock of the Company is authorized or outstanding. Except as set forth in Section 5.04(d) of the Disclosure Schedule, no Option is entitled to any acceleration as a result of or in connection with the consummation of the Merger. From and after the Effective Time, no holder of any Option or Warrant will have the right to any consideration with respect thereto, except as set forth in this Agreement. The Company does not have any obligation to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidence of indebtedness or assets of the Company. The Company does not have any obligation to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the Company. Other than the shares of Company Stock outstanding as of the date hereof and other than Company Stock issued upon the exercise of Options or Warrants, there are no other outstanding securities of the Company entitled, and no separate contractual rights entitling any holders thereof, to vote on any matters put to a vote of the stockholders of the Company. Other than with respect to appraisal rights for Dissenting Shares, no Stockholder or any other Person is entitled to any different or additional amount of consideration in respect of shares of Company Stock, Options or warrants in connection with the Merger except as expressly provided for in this Agreement. No shares of Company Stock are subject to employment-related forfeiture restrictions. All of the issued and outstanding shares of Company Stock have been offered, issued and sold by the Company in compliance in all respects with all applicable securities Laws. All of the outstanding shares of Company Stock are owned of record by the holders and in the respective amounts as are set forth in the Initial Securityholder Schedule, and as updated in the Final Securityholder Schedule.

 

 

39

 

 

 

(e)          The information set forth as of the date hereof in Section 5.04(e) of the Disclosure Schedule (the “Initial Securityholder Schedule ”) in the form of Exhibit H hereto, and as updated prior to the Effective Time and delivered to Parent two (2) Business Days prior to the Closing Date (the “ Final Securityholder Schedule ”), including the portion of the Merger Consideration to be delivered to each Company Securityholder, is a good faith estimate as of the date hereof and, as updated and delivered to Parent pursuant to this Section 5.04(e) , will be true, complete and correct as of the Effective Time (except the addresses, phone numbers, e-mail addresses and other administrative related information which will be true, complete and correct in all material respects), and the calculations performed to compute such information are, and will be, accurate and in accordance in all material respects with the terms of this Agreement and the Company Governance Documents and all other agreements and instruments among the Company and the Company Securityholders. The payment of the Merger Consideration in the forms and in the manner provided by this Agreement and in accordance with the Final Securityholder Schedule does not and will not conflict with the terms of the Company Governance Documents, any other agreement or instrument among the Company and any Company Securityholders, any other rights.

 

(f)          Except as set forth on Section 5.04(f) of the Disclosure Schedule, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock or other equity interests of the Company or any of its Subsidiaries.

 

(g)          No capital stock or other equity interest of the Company is owned by any of its Subsidiaries.

 

5.05         Financial Statements . Attached hereto as Section 5.05(i) of the Disclosure Schedule are the following financial statements (collectively, the “ Financial Statements ”): (a) the Company’s unaudited consolidated balance sheet as of June 30, 2016 (the “ Latest Balance Sheet ”) and the related statement of operations, comprehensive loss and cash flows for the six (6) month period then ended and the Company’s unaudited statement of operations, comprehensive loss and cash flows for the six (6) months ended June 30, 2015, including the notes thereto, (b) the Company’s audited consolidated balance sheet as of December 31, 2015 and December 31, 2014 and the Company’s audited consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ deficit and cash flows for the fiscal years ended December 31, 2015, 2014 and 2013 including the notes thereto; (c) Associated Auction Services, LLC’s audited balance sheet as of December 31, 2014 and March 31, 2015 and audited statements of operations, members’ equity and cash flows for the three months ended March 31, 2015 and the year ended December 31, 2014, including the notes thereto, and (d) Kruse Energy & Equipment Auctioneers, LLC’s audited balance sheet as of October 31, 2014 and the audited statements of income, changes in members’ capital and cash flows for the ten month period ended October 31, 2014, including the notes thereto. The Financial Statements have been based upon the information contained in the books and records of the Company, its Subsidiaries, Associated Auction Services, LLC (“ AAS ”) and Kruse Energy & Equipment Auctioneers, LLC (“ Kruse ”), as applicable, have been prepared in conformity in all material respects with GAAP consistently applied throughout the periods presented without modification, in any material respect, of the accounting principles used in the preparation thereof throughout the periods presented, subject in the case of the unaudited financial statements to (i) the absence of complete footnote disclosures and other presentation items required by GAAP to be included in audited financial statements, (ii) changes resulting from normal year-end adjustments in a manner consistent with past practice, provided that such changes are not material, individually or in the aggregate, and (iii) such other exceptions to GAAP as are set forth on Section 5.05(ii) of the Disclosure Schedule, and present fairly in all material respects in accordance with GAAP the financial condition and results of operations of the Company and its Subsidiaries, AAS and Kruse, as applicable, as of the times and for the periods referred to therein. The Company has in place systems and processes (including the maintenance of proper books and records) that are customary for a company at the same stage of development as the Company designed to (i) provide reasonable assurances regarding the reliability of the Financial Statements identified in provisos (a) and (b) above and any financial statements contained in the Financing Information and (ii) in a timely manner accumulate and communicate to the Company’s principal executive officer and principal financial officer the type of information that would be required to be disclosed in the Financial Statements identified in provisos (a) and (b) above (such systems and processes are herein referred to as the “ Controls ”). Except as set forth on Section 5.05(iii) of the Disclosure Schedule, none of the Company nor any of its Subsidiaries, nor, to the Company’s knowledge, their employees or any independent auditor has identified or been made aware of any complaint, allegation, deficiency, assertion or claim, whether written or oral, regarding the Controls or the Financial Statements. To the Company’s knowledge, there have been no instances or allegations of fraud, whether or not material, that occurred during any period covered by the Financial Statements that involve the Company’s management or other current and former employees, consultants or directors of the Company or any of its Subsidiaries who have a role in the preparation of the Financial Statements or the Controls utilized by the Company or any of its Subsidiaries. The Company and the Company Subsidiaries have in place a revenue recognition policy that is compliant in all material respects with GAAP.

 

 

40

 

 

 

5.06         Absence of Undisclosed Liabilities . Neither the Company nor any of its Subsidiaries has any liability or obligation (absolute, accrued, contingent, or otherwise) required by GAAP to be shown or reserved against in a balance sheet or disclosed in the related footnotes or any other liability or obligation, except such liabilities or obligations (i) as are specifically reflected on, and fully reserved against in, the Latest Balance Sheet, (ii) that are liabilities incurred after the date of the Latest Balance Sheet in the ordinary course of business consistent with past practice, (iii) that have arisen in connection with the authorization, preparation, negotiation, execution or performance of this Agreement or the consummation of the transactions contemplated hereby, (iv) that are not material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, (iv) that are reflected in the calculation of Working Capital delivered to Parent at Closing, (v) to the extent covered by third parties pursuant to indemnification, insurance, contribution or similar contracts, (vi) that are Transaction Expenses or (vii) that are the subject of any other representation or warranty contained in this Article V and are disclosed in the Disclosure Schedule pursuant to such other representation or warranty. The Company has not declared, set aside, made or paid out any dividend or other distribution (whether in cash, stock, or property or any combination thereof) in respect of any securities of the Company or any of its Subsidiaries since January 1, 2016.

 

5.07         Absence of Certain Changes or Events . Since January 1, 2016 through the date of this Agreement, (i) there has not been a Material Adverse Change and (ii) the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice in all material respects.

 

 

41

 

 

 

5.08         Title to Properties .

 

(a)           Section 5.08 of the Disclosure Schedule identifies all real property owned, leased or used by the Company and its Subsidiaries. The Company and its Subsidiaries have good and marketable title to, or valid leasehold interests in, all of their respective material properties, real and personal, tangible and intangible, free and clear of all Liens, except Permitted Liens and Liens as set forth in Section 5.08 of the Disclosure Schedule. All material leases pursuant to which the Company or any of its Subsidiaries lease from others real or personal property are in good standing, valid, effective, binding and enforceable in accordance with their respective terms obligation of the Company and its Subsidiaries, as the case may be, and to the knowledge of the Company, of the other parties thereto, subject to, in each case, bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors’ rights or to general principles of equity. Since January 1, 2016, there is not or there has not occurred, under any of such material leases, any material default or event of default (or event which with notice or lapse of time, or both, would constitute a material default and in respect of which the Company or any of its Subsidiaries have not taken adequate steps to prevent such a default from occurring). Neither the Company nor its Subsidiaries have subleased, licensed or otherwise granted any Person the right to use or occupy any portion of any material leased real property to which it is a party. All of the tangible property, plant and equipment of the Company and its Subsidiaries has been maintained in reasonable operating condition and repair, ordinary wear and tear excepted, and is in all material respects sufficient to permit the Company and its Subsidiaries to conduct their operations in the ordinary course of business in a manner consistent with their past practices.

 

5.09         Tax Matters .

 

(a)          All income Tax Returns and other material Tax Returns required to be filed by the Company or any of its Subsidiaries on or after January 1, 2013 (the “ Tax Warranty Period ”) have been timely filed (taking into account applicable extensions validly obtained). All such Tax Returns were prepared in accordance with applicable Law in all material respects and are true, correct and complete in all material respects. All material Taxes due and payable by the Company or any of its Subsidiaries (whether or not shown as due on such Tax Returns) with respect to the Tax Warranty Period have been timely paid to the appropriate Governmental Body, except as set forth on Section 5.09(a) of the Disclosure Schedule.

 

(b)          All Taxes that the Company or any of its Subsidiaries was or is required to withhold or collect with respect to the Tax Warranty Period have been withheld and collected in all material respects and have been timely paid over in the appropriate amounts to the proper Governmental Body in compliance in all material respects with all Tax withholding provisions of applicable federal, state, local and non-U.S. Laws.

 

(c)          There are no Liens for Taxes on any assets of the Company or any of its Subsidiaries except for Taxes not yet due and payable.

 

(d)          No examination, audit, Claim, assessment, deficiency, proceeding or proposed adjustment in respect of Taxes of the Company or any of its Subsidiaries is pending, for which the Company or any of its Subsidiaries received written notice thereof. No Claim has been made with respect to the Tax Warranty Period in writing to the Company or any of its Subsidiaries by a Governmental Body in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns stating that the Company or any of its Subsidiaries is or may be subject to any Taxes assessed by such jurisdiction.

 

 

42

 

 

 

(e)          Neither the Company nor any of its Subsidiaries has executed or filed with any Governmental Body any agreement currently in effect that waives or extends the period of assessment, reassessment or collection of any Taxes nor has the Company or any of its Subsidiaries agreed to a Tax assessment or deficiency that has not been paid or otherwise satisfied. No power of attorney has been granted by or with respect to the Company or any of its Subsidiaries with regard to any matters relating to Taxes that is currently in effect.

 

(f)          With respect to the Tax Warranty Period, neither the Company nor any of its Subsidiaries is a party to, is bound by or has any obligation under any agreement relating to the sharing, allocation or payment of, or indemnity for, any Taxes (other than agreements the principal subject matter of which is not Taxes). With respect to the Tax Warranty Period, neither the Company nor any of its Subsidiaries has been a member of an affiliated, combined, consolidated or unitary group for purposes of filing any Tax Return (other than a group the common parent of which was the Company or any of its Subsidiaries) nor does the Company or any of its Subsidiaries have any liability for any Taxes of any other Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or non-U.S. Law, or as a transferee or successor, by contract or otherwise (other than agreements the principal subject matter of which is not Taxes).

 

(g)           Section 5.09(g) of the Disclosure Schedule sets forth the respective entity classifications, and the applicable dates for such classifications, of the Company and each of its Subsidiaries for U.S. federal and state income Tax purposes.

 

(h)          Neither the Company nor any of its Subsidiaries is required to make any adjustment in any material respect (nor has any Governmental Body proposed in writing to the Company or any of its Subsidiaries any such adjustment) pursuant to Section 481 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) for any taxable period ending after the Closing Date as a result of a change in accounting method made prior to the Closing. Neither the Company nor any of its Subsidiaries is required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) executed prior to the Closing, (ii) intercompany transaction or excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) with respect to a transaction consummated prior to the Closing, (iii) installment sale or open transaction disposition made prior to the Closing, (iv) prepaid amount received prior to the Closing, except as set forth on Section 5.09(h) of the Disclosure Schedule or (v) election under Section 108(i) of the Code made prior to the Closing. Neither the Company nor any of its Subsidiaries has any requests (or is the subject of any requests) for rulings with respect to Taxes pending with any Governmental Body.

 

 

43

 

 

 

(i)          With respect to the Tax Warranty Period, neither the Company nor any of its Subsidiaries is, or has been, a party to any “listed transaction,” as defined in Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).

 

(j)          

 

(i)          The Company intends to report, on its U.S. federal income Tax Return for the Company’s taxable year ended December 31, 2015: (A) in respect of Company Stock earned during the calendar year 2015 by each Person pursuant to Section 2.5 of the Agreement and Plan of Reorganization, dated as of December 18, 2014, among IronPlanet Holdings, Inc., IronPlanet, Inc., Associated Auction Services, LLC, Carbon Acquisition Corp., CAS Merger Sub, LLC, KPCB Holdings, Inc., as IronPlanet Representative and CAS Representative, LLC, as CAS Representative (the “ 2014 Reorganization Agreement ”), either a reduction of gross income or a deduction (i.e. as an ordinary and necessary business expense) in an amount equal to the fair value (as reflected in the applicable valuation report received by the Company) of such Company Stock; and (B) in respect of Company Stock provided to each Person during the calendar year 2015 pursuant to Section 2.5 of the Investors’ Rights Agreement, a deduction (i.e. as an ordinary and necessary business expense) in an amount equal to the excess of the fair value (as reflected in the applicable valuation report received by the Company) of such Company Stock over the amount paid by such Person for such Company Stock.

 

(ii)         The Company timely and properly delivered to each U.S. Person described in clause (i)(B) above, an IRS Form 1099-MISC reporting, as income for U.S. federal income Tax purposes, an amount equal to the excess of the fair value (as reflected in the applicable valuation report received by the Company) of all Company Stock described in clause (i)(B) above that was provided to such Person over the amount paid by such Person for such Company Stock.

 

(iii)        It was the intent of the Company that the shares of Company Common Stock that could be issued pursuant to Section 2.5 of the 2014 Reorganization Agreement and the shares of Company Series E Preferred Stock that could be purchased pursuant to section 2.5(a) of the Investors’ Rights Agreement was to provide an incentive to generate additional sales for the Company and its Subsidiaries.

 

(k)          The Company and its Subsidiaries have established in all material respects adequate accruals and reserves, in accordance with GAAP, on the Latest Balance Sheet for all Taxes payable by the Company and its Subsidiaries for all taxable periods and portions thereof through the date of the Latest Balance Sheet.

 

(l)          Neither the Company nor any of its Subsidiaries is, or has been, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the five- (5-) year period ending on the Closing Date.

 

 

44

 

 

 

(m)          The Company and each of its Subsidiaries has made available to Parent true and complete copies of all income Tax Returns of the Company and its Subsidiaries filed during the Tax Warranty Period.

 

(n)          Notwithstanding any other representation or warranty in this Article V , the representations and warranties in Section 5.07 , Section 5.15 and this Section 5.09 constitute the sole and exclusive representations and warranties of the Company with respect to Taxes of, or with respect to, the Company or any of its Subsidiaries.

 

5.10         Material Contracts . All of the following Contracts (other than any Contract with any customer of the Company) to which the Company or any of its Subsidiaries is a party or by which any of them or their respective assets or properties are bound as of the date hereof are listed in Section 5.10 of the Disclosure Schedule by reference to the applicable subsection below:

 

(a)          Any Contract of the type identified in Item 601(b)(10


continue to document