Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_____________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): March 15, 2010
The
Orchard Enterprises, Inc.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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000-51761
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20-3365526
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer Identification No.)
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23
East 4th
Street
3rd
Floor
New
York, New York
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10003
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(Registrant's
telephone number, including area code): (212)
201-9280
N/A
(Former
name or former address if changed since last report.)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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þ
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry Into a Material Definitive Agreement.
On March
16, 2010, The Orchard Enterprises, Inc. (the “Company”) announced that it had
entered into an Agreement and Plan of Merger dated as of March 15, 2010 (the
“Merger Agreement”) with Dimensional Associates, LLC (“Dimensional”) and Orchard
Merger Sub, Inc., a wholly owned subsidiary of Dimensional (“Merger Sub”),
pursuant to which Merger Sub will merge with and into the Company, with the
Company as the surviving corporation (the “Merger”).
Dimensional
currently owns approximately 42% of the Company’s outstanding common stock and
99% of the Company’s outstanding Series A Preferred Stock, representing an
aggregate of approximately 53% of the Company’s voting
securities. The Board of Directors of the Company approved the Merger
Agreement and the Merger and the other transactions contemplated by the Merger
Agreement based on the recommendations of a special committee of independent and
disinterested directors (the “Special Committee”).
In the
Merger, each outstanding share of the Company’s common stock, par value $0.01
per share, other than (i) outstanding shares of common stock held by
Dimensional, its affiliates or Merger Sub, or (ii) with respect to which
dissenters rights are properly exercised, will be converted and exchanged into
the right to receive:
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·
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a
contingent right to receive a share of additional consideration
(“Additional Consideration”).
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The
Additional Consideration will be paid, if, on or prior to the six-month
anniversary of the consummation of the Merger, Dimensional, the Company or any
of their affiliates enters into a commitment (the “Resale Transaction”) to sell
at least 80% of the outstanding voting securities of the Company or at least 80%
of the assets of the Company. The Additional Consideration will be an
amount equal to 15% of the difference between the enterprise value of the
Company in the Resale Transaction and the enterprise value of the Company
immediately prior to the consummation of the Merger as calculated in
accordance with the terms of the Merger Agreement.
If the
Additional Consideration is to be paid, Dimensional will pay such amount to the
paying agent, for the benefit of, and distribution to, the Company’s pre-Merger
stockholders and, if applicable, the Company’s pre-Merger option and stock
appreciation rights holders.
Pursuant
to the terms of the Merger Agreement, at the effective time of the Merger, the
officers and directors of Merger Sub at the effective time of the Merger will
become the officers and directors of the surviving corporation, until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law. Also, at the effective time of the Merger, the
Amended and Restated Certificate of Incorporation of the surviving corporation
as then in effect will be amended and restated as provided in the Merger
Agreement until amended in accordance with applicable
law.
Consummation
of the Merger, which is currently anticipated to occur in the third quarter of
the Company’s fiscal year 2010, is subject to certain customary closing
conditions, including, among others, (i) the approval and adoption of the Merger
and the Merger Agreement by holders of a majority of the Company’s common stock
not owned by Dimensional, its affiliates or Merger Sub (the “Minority
Stockholders”) at a meeting of the Company’s stockholders to be called to vote
on the matter and (ii) the approval of an amendment to the Company’s certificate
of incorporation by holders of a majority of the Company’s voting securities.
There can be no assurances that the Merger will be approved or
consummated.
The
Merger Agreement, which is included as Exhibit 2.1 to this current report
on Form 8-K and incorporated herein by reference, contains customary
representations and warranties and covenants for these types of agreements,
including, among other things, covenants regarding the conduct of the Company’s
business prior to the effective time of the Merger.
The
Merger Agreement contains a 30-day “go-shop” provision pursuant to which the
Company has the right to solicit and engage in discussions and negotiations with
respect to an Acquisition Proposal (as defined in the Merger Agreement) through
April 14, 2010. The Special Committee has retained Craig-Hallum
Capital Group LLC to coordinate its solicitation activities during the go-shop
period. After April 14, 2010, the Company is subject to a “no-shop” restriction
on its ability to solicit third-party proposals or provide information or engage
in discussions with third parties.
However,
if the Company at any time receives an Acquisition Proposal from a third party
that the Special Committee determines constitutes, or is reasonably likely
to lead to, a Superior Proposal (as defined in the Merger Agreement), the
Special Committee may engage in discussions and negotiations with such third
party so long as certain notice and other procedural requirements are
satisfied.
The
Company’s Board of Directors (consistent with the recommendation of the Special
Committee) may withdraw or change its recommendation to the Company’s
stockholders with respect to the Merger if the Board of Directors of the Company
has received a Superior Proposal and/or determines that to do otherwise would
reasonably be expected to be inconsistent with its fiduciary duties. In
addition, subject to certain requirements, the Company may terminate the Merger
Agreement and enter into an agreement with a third party who makes a Superior
Proposal.
If the
Merger Agreement is terminated under specified circumstances, including the
failure of the Company’s Minority Stockholders to approve and adopt the Merger
Agreement, the Company may be required to reimburse Dimensional’s actual
out-of-pocket expenses in connection with the proposed Merger up to
$350,000.
The
foregoing summary of the Merger Agreement does not purport to be complete and is
subject to, and qualified in its entirety by, the full text of the Merger
Agreement attached as Exhibit 2.1 hereto and incorporated herein by
reference. The Merger Agreement has been included to provide the
Company’s stockholders and investors with information regarding its
terms. It is not intended to provide any factual information about
the parties.
The
representations, warranties and covenants of the Company set forth in the Merger
Agreement (1) were made solely for purposes of the Merger Agreement and solely
for the benefit of the contracting parties, (2) may be subject to limitations
agreed upon by the contracting parties, including being qualified by
confidential disclosures made to Dimensional and Merger Sub in connection with
the Merger Agreement, (3) will not survive consummation of the Merger,
(4) are qualified in certain circumstances by a materiality standard which
may differ from what may be viewed as material by investors, (5) were made
only as of the date of the Merger Agreement or such other date as is specified
in the Merger Agreement, and (6) may have been included in the Merger
Agreement for the purpose of allocating risk between the parties rather than
establishing matters as facts. The Company’s stockholders and
investors are not third party beneficiaries under the Merger Agreement, and
should not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of facts or
conditions of the Company. Moreover, information concerning the subject matter
of the representation and warranties may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in the
Company’s public disclosure.
The
Company intends to file with the U.S. Securities and Exchange Commission (the
“SEC”) a preliminary proxy statement in connection with the proposed Merger and
to mail a definitive proxy statement and other relevant documents to the
Company’s stockholders. Stockholders of the Company and other
interested persons are advised to read, when available, the Company’s
preliminary proxy statement, and amendments thereto, and definitive proxy
statement in connection with the Company’s solicitation of proxies for the
stockholders meeting to be held to approve the Merger and the Merger Agreement
because these proxy statements will contain important information about the
Company, Dimensional and the proposed Merger. The definitive proxy
statement will be mailed to stockholders as of a record date to be established
for voting on the Merger and the Merger Agreement. Stockholders will
also be able to obtain a copy of the preliminary and definitive proxy
statements, without charge, once available, at the SEC’s internet site at
http://www.sec.gov or by directing a request to: Attention: Secretary, The
Orchard Enterprises, Inc., 23 East 4th Street, 3rd Floor, New York, New York
10003.
The
Company and its directors and executive officers may be deemed participants in
the solicitation of proxies from the Company’s stockholders. A list
of the names of those directors and the executive officers and descriptions of
their interests in the Company is contained in the Company’s proxy statement
dated April 29, 2009, and the Company’s Form 8-K dated February 22, 2010, which
are filed with the SEC, and will also be contained in the Company’s proxy
statement when it becomes available. The Company’s stockholders may
obtain additional information about the interests of its directors and executive
officers in the Merger by reading the Company’s proxy statement when it becomes
available.
Item 8.01 Other
Events.
The
Company issued a press release dated March 16, 2010 announcing entry into the
Merger Agreement. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and
Exhibits.
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Exhibit
Number
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Description
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2.1
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Agreement
and Plan of Merger among The Orchard Enterprises, Inc., Dimensional
Associates, LLC and Orchard Merger Sub, Inc., dated as of March 15,
2010
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99.1
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Press
Release dated March 16, 2010
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Signature
Pursuant
to the requirements of the Securities and Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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The Orchard Enterprises,
Inc. |
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Date:
March 16, 2010
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By:
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/s/
Bradley Navin |
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Name:
Bradley Navin |
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Title: Chief
Executive Officer |
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Exhibit
Index
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Exhibit
Number
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Description
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2.1
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Agreement
and Plan of Merger among The Orchard Enterprises, Inc., Dimensional
Associates, LLC and Orchard Merger Sub, Inc., dated as of March 15,
2010
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99.1
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Press
Release dated March 16, 2010
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