Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. SolarWinds, Inc. (1428669) 10-Q published on Nov 09, 2015 at 4:02 pm
Reporting Period: Sep 29, 2015
Parent and Merger Subsidiary have secured committed financing, consisting of, as of October 21, 2015, a combination of equity to be provided by investment funds affiliated with Thoma Bravo and Silver Lake, and debt financing from Goldman Sachs Bank USA, the aggregate proceeds of which will be sufficient for Parent and Merger Subsidiary to pay the aggregate merger consideration and all related fees and expenses. Parent and Merger Subsidiary have committed to use their reasonable best efforts to obtain the debt financing on the terms and conditions described in the debt commitment letter entered into as of October 21, 2015. The transaction is not subject to a financing condition.
The Merger Agreement contains certain termination rights for us and Parent. Upon termination of the Merger Agreement under specified circumstances, we will be required to pay Parent a termination fee. If the Merger Agreement is terminated in connection with us entering into an alternate acquisition agreement with respect to a superior proposal or due to our board changing its recommendation, including the failure to act, in support of the Merger, the termination fee payable by us to Parent will be of $159.0 million. This termination fee will also be payable if: (i) the Merger Agreement is terminated because our stockholders did not vote to adopt the Merger Agreement at the stockholders meeting called to adopt the Merger Agreement, (ii) prior to such vote on the Merger Agreement, an offer or proposal to acquire at least 50% of our stock or assets that was not publicly announced or known at the time the Merger Agreement is signed is publicly announced or becomes known and is not withdrawn, and (iii) within one year of the termination of the Merger Agreement we consummate an acquisition transaction to acquire at least 50% of our stock or assets or enter into an agreement for such a transaction, which we subsequently consummate. In addition, we will be required to reimburse Parent for up to $5.0 million of its expenses associated with the transaction under circumstances in which we would not be obligated to pay Parent a termination fee if the Merger Agreement is terminated either because the Company’s stockholders do not vote to adopt the Merger Agreement, or if we breach our representations, warranties or covenants in a manner that would cause the related closing conditions to not be met. We will also be required to reimburse Parent for up to $5.0 million of expenses associated with the transaction if the Merger Agreement is terminated because we breach our representations, warranties or covenants in a manner that would cause the related closing conditions to not be met and an offer or proposal to acquire at least 15% of our stock or assets is made to the Company or is publicly announced after the date of the Merger Agreement and is not withdrawn, provided that at the time of termination Parent and Merger Subsidiary were not in material breach of their representations, warranties, covenants or agreements under the Merger Agreement.
Upon termination of the Merger Agreement under other specified circumstances, Parent will be required to pay us a termination fee of $318.0 million. The termination fee by Parent will become payable if the Merger Agreement is terminated because Parent fails to consummate the Merger after certain conditions are met, if Parent breaches its representations, warranties or covenants in a manner that would cause the related closing conditions to not be met, or if either party terminates because of the termination date described below, and at the time of such termination, we were otherwise entitled to terminate the Merger Agreement for either of the first two reasons above.
In addition to the foregoing termination rights, and subject to certain limitations, (i) we or Parent may terminate the Merger Agreement if the Merger is not consummated by April 18, 2016 and (ii) we and Parent may mutually agree to terminate the Merger Agreement.
During our routine internal quarterly review of transactions, we discovered that we sold certain perpetual license software products and maintenance services through a third party reseller in January 2015 to Bank Melli Iran, an entity designated by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) as an entity owned or controlled by the Government of Iran and blocked pursuant to Executive Order No. 13382. The transaction was consummated with a third party reseller located in Dubai, United Arab Emirates and we received payment of $29,733 for the sale of the software and maintenance services. At the time of fulfillment, the name and location of the end user was supplied to us as Bank Melli Iran located in Dubai, United Arab Emirates. Upon further diligence in our internal quarterly review, we recognized that the customer was blocked and immediately ceased providing all ongoing maintenance services, including access to receive updated versions of the software and support services. We therefore have no further obligations to Bank Melli Iran and do not intend to continue providing them with software or services in the future. We have voluntarily filed appropriate disclosure with OFAC and the U.S. Department of Commerce, Bureau of Industry and Security.