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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Adams Golf, Inc. (MM) | NASDAQ:ADGF | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 10.78 | 0 | 01:00:00 |
o
|
No fee required.
|
þ
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
(1)
|
Title of each class of securities to which transaction applies: Common Stock, par value $0.001 per share of Adams Golf, Inc. (the “Common Stock”).
|
(2)
|
Aggregate number of securities to which transaction applies: 7,614,146
shares of Common Stock; 250,847 options to purchase Common Stock; and shares of restricted stock with respect to 381,365
shares of Common Stock.
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
|
|
The maximum aggregate value was determined based upon the sum of (A) 7,614,146 shares of Common Stock multiplied by $10.80 per share; (B) options to purchase 250,847 shares of Common Stock with exercise prices less than $10.80 per share multiplied by $9.18 (which is the difference between $10.80 and the weighted average exercise price of $1.62 per share); and (C) shares of restricted stock with respect to 381,365 shares of Common Stock multiplied by $10.80 per share. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying $0.00001146 by the sum of the preceding sentence.
|
(4)
|
Proposed maximum aggregate value of transaction: $88,654,294.26
|
(5)
|
Total fee paid: $1,015.98
|
o
|
Fee paid previously with preliminary materials.
|
o
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
(1)
|
Amount Previously Paid:
|
(2)
|
Form, Schedule or Registration Statement No.:
|
(3)
|
Filing Party:
|
(4)
|
Date Filed:
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Page
|
||||
SUMMARY
|
1
|
|||
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
|
8
|
|||
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
|
12
|
|||
THE PARTIES TO THE MERGER
|
13
|
|||
THE SPECIAL MEETING
|
13
|
|||
Time, Place and Purpose of the Special Meeting
|
13
|
|||
Record Date and Quorum
|
13
|
|||
Vote Required for Approval
|
14
|
|||
Voting Agreements
|
14
|
|||
Proxies and Revocation
|
14
|
|||
Adjournments and Postponements
|
15
|
|||
A
ppraisal Rights of Stockholders
|
15
|
|||
Solicitation of Proxies
|
15
|
|||
Questions and Additional Information
|
15
|
|||
Availability of Documents
|
16
|
|||
THE MERGER
|
17
|
|||
Background of the Merger
|
17
|
|||
Reasons for the Merger; Recommendation of the Board of Directors
|
19
|
|||
Opinion of the Adams Golf Financial Advisor
|
21
|
|||
Projected Financial Information
|
25
|
|||
Financing of the Merger
|
27
|
|||
Interests of Adams Golf Directors and Executive Officers in the Merger
|
27
|
|||
Material Accounting Treatment
|
30
|
|||
Material U.S. Federal Income Tax Consequences of the Merger to Our Stockholders
|
30
|
|||
Regulatory Approvals
|
31
|
|||
Antitrust Approvals
|
31
|
|||
Litigation Relating to the Merger
|
32
|
|||
Delisting and Deregistration of Common Stock
|
32
|
|||
THE MERGER AGREEMENT
|
33
|
|||
The Merger
|
33
|
|||
Closing and
Effective Time
|
33
|
|||
Consideration
to be Received in the Merger
|
33
|
|||
Cancellation of Shares
|
33
|
|||
Treatment of Stock Options and Restricted Stock
|
33
|
|||
Appraisal Rights
|
34
|
|||
Payment for Shares
|
34
|
|||
Representations and Warranties
|
34
|
|||
Covenants and Agreements
|
36
|
|||
Operating Covenants
|
36
|
|||
No Solicitation; Board Recommendation
|
38
|
|||
Reasonable Best Efforts and Certain Pre-Closing Obligations
|
40
|
|||
Access to Information; Confidentiality
|
41
|
|||
Meeting of Our Stockholders
|
41
|
|||
Indemnification and Insurance
|
41
|
|||
Employee Benefit Matters
|
41
|
|||
Additional Agreements
|
42
|
|||
Conditions of the Merger
|
42
|
Termination
|
43
|
|||
Termination Fees
|
43
|
|||
Effect of Termination
|
44
|
|||
Amendment
|
44
|
|||
Extension; Waiver
|
44
|
|||
THE VOTING AGREEMENTS
|
45
|
|||
MARKET PRICE OF COMMON STOCK
|
46
|
|||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
47
|
|||
RIGHTS OF APPRAISAL
|
49
|
|||
SUBMISSION OF STOCKHOLDER PROPOSALS
|
51
|
|||
HOUSEHOLDING OF SPECIAL MEETING MATERIALS
|
51
|
|||
WHERE YOU CAN FIND MORE INFORMATION
|
52
|
|||
Annex A Agreement and Plan of Merger, dated March 18, 2012, by and among Taylor Made Golf Company, Inc., Apple Tree Acquisition Corp. and Adams Golf, Inc.
|
A-1
|
|||
Annex B Form of Voting Agreement
|
B-1
|
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Annex C Form of Gregory Voting Agreement
|
C-1
|
|||
Annex D Opinion of Morgan Stanley & Co. LLC
|
D-1
|
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Annex E Section 262 of the Delaware General Corporation Law
|
E-1
|
·
|
by sending a written notice of revocation to the Secretary of the Company that is actually received prior to the special meeting (note that if such written notice is not delivered to the Company at least one business day prior to the special meeting there is no guaranty that it will be received prior to the start of the special meeting), stating that you revoke your proxy;
|
·
|
by signing a later-dated proxy card and submitting it so that it is received prior to the special meeting in accordance with the instructions included in the proxy card; or
|
·
|
by attending the special meeting and voting your shares in person.
|
·
|
vested stock options (including certain unvested stock options with respect to which vesting will accelerate in connection with the Merger) to acquire our Common Stock that will be cancelled and converted into the right to receive, with respect to each such stock option, an amount of cash equal to the excess, if any, of $10.80 over the applicable exercise price of such stock option for each share of Common Stock subject to such option, without interest and less any withholding taxes;
|
·
|
vested Restricted Stock Shares (including certain Restricted Stock Shares with respect to which vesting will accelerate in connection with the Merger) that will be cancelled and converted into the right to receive an amount in cash, without interest and subject to any withholding taxes, equal to $10.80 for each share of Common Stock in respect of such Restricted Stock Share;
|
·
|
the Merger Agreement provides for indemnification arrangements for each of our current and former directors and executive officers that will continue for six (6) years following the Effective Time, as well as insurance coverage covering such director’s or executive officer’s service to Adams Golf as a director or executive officer;
|
·
|
although no agreements have been entered into as of the date of this proxy statement, Parent may request some of our executive officers to remain after the Merger is completed, and such executive officers may, prior to the closing of the Merger, enter into new arrangements with Parent or its affiliates regarding employment with Parent or the surviving corporation;
|
·
|
although no agreements or plans have been adopted as of the date of this proxy statement, Parent may implement, and the Company has agreed in the Merger Agreement to cooperate with Parent in connection with implementing, retention plans or programs for which our executive officers could be eligible that would be contingent upon the closing of the Merger and become effective immediately upon the Effective Time;
|
·
|
B.H. (Barney) Adams, our Interim Chief Executive Officer, (i) will receive a bonus payment of $100,000 upon the earlier of the hiring of a replacement Chief Executive Officer and the consummation of the sale of the Company and (ii) has an agreement with the Company that provides certain severance payments and benefits in the case of the termination of his employment agreement under certain circumstances on or following a change of control;
|
·
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Pamela High,
our Chief Financial Officer, has an agreement with the Company that provides certain severance payments and benefits in the case of the termination of her employment under certain circumstances on or following a change of control; and
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·
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Russell Fleischer, the sole member of the Strategic Alternatives Negotiation Committee, was paid $25,000 in connection with his services in negotiating the Merger Agreement.
|
·
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adoption of the Merger Agreement by the affirmative vote a majority of the shares of outstanding Common Stock entitled to vote thereon;
|
·
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if required, the waiting period (including any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and all other material filings with or material permits, authorizations, consents and approvals of or expirations of waiting periods imposed by any governmental entity required to consummate the Merger shall have been obtained or filed or shall have occurred;
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·
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accuracy as of March 18, 2012 and as of the closing of the Merger of the representations and warranties made by each of the parties in the Merger Agreement to the extent specified therein;
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·
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performance of or compliance with the pre-closing covenants and agreements by each of the parties to the Merger Agreement to the extent specified therein; and
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·
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absence of certain events, circumstances, changes, occurrences, states of fact or effects prior to the Effective Time that have had or would reasonably be expected, individually or in the aggregate, to have a material adverse effect on the Company.
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·
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a premium of approximately 10% to the closing share price on March 16, 2012;
|
·
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a premium of approximately 38% to the average closing share price for the one-month period ending March 16, 2012;
|
·
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a premium of approximately 76% to the average closing share price for the three-month period ending March 16, 2012;
|
·
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a premium of approximately 71% to the closing share price on the last full trading day prior to Adams Golf's announcement that it was examining strategic alternatives on January 4, 2012; and
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·
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a premium of approximately 107% to the average closing share price for the one-year period ending March 16, 2012.
|
A.
|
The proposed transaction is the acquisition of Adams Golf by Parent pursuant to the Merger Agreement. After the Merger Agreement has been adopted by the stockholders and other closing conditions under the Merger Agreement have been satisfied or waived, at the effective time of the merger (the “
Effective Time
”), Merger Sub, a wholly-owned subsidiary of Parent, will merge with and into Adams Golf. Adams Golf will be the surviving corporation and a wholly-owned subsidiary of Parent following the Effective Time.
|
A.
|
Upon completion of the Merger, you will be entitled to receive $10.80 in cash, without interest and less any applicable withholding taxes, for each share of Adams Golf common stock, par value $0.001 per share (the “
Common Stock
”) that you own immediately prior to completion of the Merger, unless you have properly and validly perfected your statutory rights of appraisal with respect to the Merger. For example, if you own 100 shares of Common Stock, you will receive $1080.00 in cash in exchange for your shares of Common Stock, without interest and less any applicable withholding taxes. After the Merger, you will not own any shares in Adams Golf, the surviving corporation or Parent whether or not you vote in favor of the Merger.
|
A.
|
The special meeting of stockholders of Adams Golf will be held on [
•
], 2012 at 9:00 a.m. local time, at 2801 E. Plano Parkway, Plano, Texas 75074.
|
A.
|
The affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote at the special meeting is required to approve the proposal to adopt the Merger Agreement. Accordingly, failure to vote in person or by proxy or an abstention will have the same effect as a vote against the Merger Agreement.
|
Q.
|
What vote of our stockholders is required to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies?
|
A.
|
Approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies requires the affirmative vote of a majority of the votes cast by the holders of all Common Stock present in person or represented by proxy at the special meeting and entitled to vote on the matter.
|
A.
|
Yes. All of our directors, including our Interim Chief Executive Officer, Barney Adams, and SJ Strategic Investments, LLC, an affiliate of our director, Mr. John M. Gregory (“
SJ Strategic
”), have entered into voting agreements with Parent. The voting agreements provide, among other things, that these Adams Golf stockholders have irrevocably agreed, on the terms and subject to the conditions specified in the voting agreements, to vote all shares of Common Stock owned by such stockholders in favor of the adoption of the Merger Agreement and any other proposal related to the Merger and against competing proposals and any action or agreement that would be expected to materially impair the ability of Adams Golf to complete the Merger. Such stockholders have also granted Parent an irrevocable proxy with respect to such shares of Common Stock. A form of voting agreement entered into by these stockholders is included as Annexes B and C hereto. As of March 16, 2012, the last trading day before announcement of the Merger, these stockholders held an aggregate of
|
|
approximately 2,718,937 shares of Common Stock (representing approximately 34% of the outstanding shares of Common Stock as of March 16, 2012 and as of the record date) plus approximately 75,000
unvested Restricted Stock Shares and shares subject to unexercised options to purchase Common Stock. Pursuant to such voting agreements, if such stockholders acquire beneficial or record ownership of any additional shares of Common Stock, such shares will also be subject to such voting agreements. However, such shares of Common Stock subject to such voting agreements will be reduced, as provided for in such voting agreements, to equal 30% of the outstanding shares of Common Stock if the board of directors makes an Adverse Recommendation Change following an Intervening Event (each, as defined in the Merger Agreement, see “The Merger Agreement—No Solicitation; Board Recommendation” on page 38) in compliance with the Merger Agreement.
|
A.
|
The board of directors of the Company (the “
Board of Directors
” or the “
Board
”) unanimously recommends that you vote
“FOR”
the proposal to adopt the Merger Agreement and
“FOR”
the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the Merger Agreement. You should read “The Merger — Reasons for the Merger; Recommendation of the Board of Directors” beginning on page 19 for a discussion of the factors that the Board of Directors considered in deciding to recommend the adoption of the Merger Agreement.
|
Q.
|
What effects will the proposed Merger have on Adams Golf?
|
A.
|
If the proposed Merger occurs, after the Effective Time, Adams Golf will cease to be a publicly-traded company and will be wholly-owned by Parent. After the Effective Time, you will no longer have any interest in our future earnings or growth and you will no longer be a stockholder of Adams Golf. Following consummation of the Merger, the registration of the Common Stock and our reporting obligations with respect to the Common Stock under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), will be terminated upon application to the Securities and Exchange Commission (the “
SEC
”). In addition, upon completion of the proposed Merger, our Common Stock will no longer be listed on any stock exchange or quotation system, including the NASDAQ Capital Market.
|
Q.
|
What happens if the Merger is not consummated?
|
A.
|
If the proposal to adopt the Merger Agreement is not approved by the stockholders or if the Merger is not completed for any other reason, the Merger will not occur and the Adams Golf stockholders will not receive any payment for their shares. Instead, Adams Golf will remain an independent public company and the Common Stock will continue to be listed and traded on the NASDAQ Capital Market. Under specified circumstances, Adams Golf may be required to pay a fee to Parent in the event the Merger Agreement is terminated as described under the caption “The Merger Agreement — Termination Fees” beginning on page 43. You should also read “The Merger — Reasons for the Merger; Recommendation of the Board of Directors” beginning on page 19 for a discussion of the factors that the Board of Directors considered in deciding to recommend the adoption of the Merger Agreement.
|
Q.
|
What do I need to do now?
|
A.
|
We urge you to read the proxy statement carefully, including the annexes and the other documents referred to or incorporated by reference herein, and to consider how the Merger affects you. If you are a stockholder of record, you can ensure your shares of Common Stock are voted at the special meeting by completing, signing, dating and mailing the enclosed proxy card. Even if you plan to attend the special meeting, we encourage you to return the enclosed proxy card. If you hold your shares in “street” name, you can ensure that your shares are voted at the special meeting by instructing your broker or nominee how to vote, as discussed below.
Do NOT return your stock certificate(s) with your proxy
.
|
Q.
|
How do I cast my vote?
|
A.
|
You may vote:
|
·
|
Via Proxy:
By marking, signing and dating each proxy card you receive and returning it in the enclosed prepaid envelope;
|
·
|
Via Ballot
: By attending the special meeting and casting a ballot in accordance with the instructions provided at the meeting; or
|
·
|
If you hold your shares in “street name,” by following the procedures provided by your broker, bank or other nominee.
|
A.
|
Yes, but only if you instruct your broker, bank or other nominee how to vote. You should follow the procedures provided by your broker, bank or other nominee regarding the voting of your shares. If you do not instruct your broker, bank or other nominee to vote your shares, your shares will not be voted and the effect will be the same as a vote against the proposal to adopt the Merger Agreement, but will not have an effect on the proposal to adjourn the special meeting.
|
Q.
|
How can I change or revoke my vote?
|
A.
|
You have the right to change or revoke your proxy at any time before the vote taken at the special meeting.
|
·
|
by notifying our Secretary, Pamela High, at Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas 75074;
|
·
|
by attending the special meeting and voting in person (your attendance at the special meeting will not, by itself, revoke your proxy; you must vote in person at the special meeting); or
|
·
|
by submitting a later-dated proxy card.
|
Q.
|
What do I do if I receive more than one proxy or set of voting instructions?
|
A.
|
If your shares are registered differently or are in more than one account, you may receive more than one proxy and/or set of voting instructions relating to the special meeting. Each such proxy or set of voting instructions should be completed, signed and/or returned separately as described elsewhere in this proxy statement in order to ensure that all of your shares are voted.
|
A.
|
The record date of the special meeting is [
____________
], 2012, which is prior to the special meeting and the date that the Merger is expected to be completed. If you transfer your shares of Common Stock after the record date but before the special meeting, you will retain your right to vote at the special meeting, but will have transferred the right to receive $10.80 per share in cash to be received by our stockholders in the Merger. In order to receive the merger consideration for your shares of Common Stock, you must hold your shares through completion of the Merger.
|
Q.
|
Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my shares?
|
A.
|
Yes. As a holder of Common Stock, you are entitled to appraisal rights under the Delaware General Corporation Law (the “
DGCL
”) in connection with the Merger if you meet certain conditions. See “Rights of Appraisal” beginning on page 49.
|
Q.
|
When is the Merger expected to be completed?
|
A.
|
We are working toward completing the Merger as quickly as possible, and we anticipate that it will be completed around mid-year 2012. However, the exact timing of the completion of the Merger cannot be predicted. In order to complete the Merger, we must obtain stockholder approval, any required antitrust approvals (as of the date hereof, neither Parent nor we believe any such approvals or filings are required) and the other closing conditions under the Merger Agreement must be satisfied or waived (as permitted by law). See “The Merger Agreement — Closing and Effective Time” and “The Merger Agreement —Covenants and Agreements—Conditions of the Merger” beginning on pages 33 and 42, respectively.
|
A:
|
The expenses of preparing, printing and mailing this proxy statement and the proxies solicited hereby will be borne by us. Additional solicitation may be made by telephone, facsimile or other contact by certain of our directors, officers, employees or agents, none of whom will receive additional compensation for their solicitation efforts. Parent, directly or through one or more affiliates or representatives, may, at its own cost, also make additional solicitation by mail, telephone, facsimile or other contact in connection with the Merger.
|
Q.
|
Will a proxy solicitor be used?
|
A.
|
Yes. Adams Golf has engaged Georgeson Inc. (“
Georgeson
”) to assist in the solicitation of proxies for the special meeting, and Adams Golf estimates it will pay Georgeson
a fee of approximately $9,000. Adams Golf has also agreed to reimburse Georgeson for reasonable administrative and out-of-pocket expenses incurred in connection with the proxy solicitation and indemnify Georgeson against certain losses, costs and expenses.
|
Q.
|
Should I send in my stock certificates now?
|
A.
|
No. After the Merger is completed, a paying agent will send you a letter of transmittal with detailed written instructions for exchanging your shares of Common Stock (whether certificated or uncertificated) for the merger consideration. If your shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee as to how to effectuate the surrender of your “street name” shares in exchange for the merger consideration.
Please do not send your certificates in now
.
|
A.
|
The receipt of cash by you in exchange for your shares of Common Stock pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes, and also generally will be a taxable transaction under applicable state, local and non-U.S. tax laws. If you are a U.S. person (as defined herein), you will recognize, for U.S. federal income tax purposes, gain or loss equal to the difference, if any, between the amount of cash received and your adjusted tax basis in the shares of Common Stock exchanged for cash pursuant to the Merger. Such gain or loss generally will be capital gain or loss. Capital gains recognized by an individual stockholder are eligible for preferential rates of U.S. federal income tax if the shares of Common Stock were held for more than one year. If the shares are held for one year or less, such capital gains recognized by an individual stockholder will be subject to tax at ordinary income tax rates. We recommend that you consult your own tax advisors as to the particular tax consequences to you of the Merger, including the effect of U.S. federal, state and local tax laws or non-U.S. laws. See “The Merger — Material U.S. Federal Income Tax Consequences of the Merger to Our Stockholders” beginning on page 30 for a more detailed description of the U.S. federal income tax consequences of the Merger.
|
Q.
|
Who can help answer my other questions?
|
A.
|
If you have additional questions about the Merger, need assistance in submitting your proxy or voting your shares of Common Stock or need additional copies of the proxy statement or the enclosed proxy card, please (1) mail your request to Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas 75074, Attn: Investor Relations, (2) call our Investor Relations department at (972) 673-9000, or (3) call our proxy solicitor, Georgeson, at either 1.212.440.9800 or toll-free at 1.866.357.4029; banks and brokers, call 1.212.440.9800. If your broker holds your shares, you should call your broker for additional information.
|
·
|
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement that could require us to pay an approximately $3,546,172 termination fee;
|
·
|
the outcome of any legal proceedings that have been or may be instituted against Adams Golf and others relating to the Merger Agreement;
|
·
|
the timing of the completion of the Merger, including any regulatory or other conditions associated therewith;
|
·
|
the inability to complete the Merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions to consummation of the Merger;
|
·
|
the failure of the Merger to close for any other reason;
|
·
|
risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the Merger;
|
·
|
the effect of the announcement of the Merger on our business and customer relationships, operating results and business generally, including our ability to retain key employees;
|
·
|
the ability to recognize the benefits of the Merger;
|
·
|
the amount of the costs, fees, expenses and charges related to the Merger; and
|
·
|
other risks detailed in our current filings with the SEC, including our most recent filings on Forms 8-K, 10-Q and 10-K, including but not limited to, the risks detailed in the sections entitled “Risk Factors.” See “Where You Can Find More Information” beginning on page 52.
|
·
|
by notifying our Secretary, Pamela High, at Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas 75074;
|
·
|
by attending the special meeting and voting in person (your attendance at the special meeting will not, by itself, revoke your proxy; you must vote in person at the special meeting); or
|
·
|
by submitting a later-dated proxy card.
|
·
|
Assessment of Adams Golf’s Business
. Based on its knowledge and discussions with management regarding Adams Golf’s business, financial condition, results of operations, competitive position, business strategy, strategic options and prospects, as well as the risks involved in achieving these prospects, the nature of the Company’s business and the industry in which it competes, and current industry, economic and market conditions, both on a historical and on a prospective basis, Adams Golf’s Board of Directors believed that the Merger presented an opportunity for Adams Golf’s stockholders to realize greater value than the value likely to be realized by Adams Golf’s stockholders in the event Adams Golf remained independent or pursued other alternatives considered in the review process, particularly in light of increased competition from larger companies.
|
·
|
Certainty of Value.
The Board considered the form of consideration to be paid to the stockholders in the Merger and the certainty of the value of the cash consideration compared to the potential risks to the Company of continuing to operate as a going concern. After conducting an extensive review of our results of operations and business prospects, management and the Board determined that continuing to operate independently was not reasonably likely to create greater value for our stockholders for the foreseeable future.
|
·
|
Strategic Alternatives.
The Board considered and discussed with the Company’s management and advisors several potential alternatives to the acquisition by Parent, including the possibility of continuing to operate the Company as an independent entity and combinations with other merger partners, the possibility of issuing additional equity or debt in a public or private offering the possibility of certain asset sales and the desirability and perceived risks of these and other alternatives, as well as the range of potential benefits to the Company’s stockholders of each of these alternatives. The Board’s belief, after a review of potential strategic alternatives and based on, among other things, the Company’s ability to execute its strategic plan, the potential for significant dilution to the stockholders in any equity offering, the uncertain debt and capital markets, the potential inability to fund the Company’s capital expenditures and the increased value offered to stockholders in the Merger was more favorable to the stockholders of the Company than the potential value that might have resulted from other strategic opportunities reasonably available to the Company, including remaining an independent company.
|
·
|
Transaction Financial Terms.
The Board considered the relationship of the merger consideration to the current and historical market prices of the Company’s Common Stock and the fact that the merger consideration was to be paid in cash, which would provide stockholders with the opportunity for liquidity and to receive a premium over the current and recent prices of the Common Stock. The Board reviewed historical market prices, volatility and trading information with respect to the Common Stock, including the fact that the merger consideration represented a premium of 80.3% over the average closing price per share of Common Stock on the NASDAQ Capital Market over the 30 days prior to January 4, 2012 (which was the date we announced that we were examining strategic alternatives), 95.2% over the average closing price per share of Common Stock over the 90 days prior to January 4, 2012, 84.2% over the average closing price per share of Common Stock over the six months prior to January 4, 2012 and 79.0% over the average closing price per share of Common Stock for the one year prior to January 4, 2012.
|
·
|
Process.
The Board considered that the Merger was agreed to only after a lengthy process pursuant to which a total of over 40 potential purchasers were contacted during the first phase of the process, which included the submission of five confidentiality and non-disclosure agreements, one indication of interest, and the submission of one final bid.
|
·
|
Advice and Opinion of Morgan Stanley & Co. LLC.
The Board considered the analysis of Morgan Stanley. In addition, the Board considered the opinion and financial presentation of Morgan Stanley, dated March 18, 2012, to the Board as to the fairness, from a financial point of view and as of the date of the opinion, of the merger consideration to be received in the Merger by holders of shares of Common Stock, as more fully described below in the section entitled “Opinion of the Adams Golf Financial Advisor.”
|
·
|
Terms of the Merger Agreement
. The Board considered the terms of the Merger Agreement, including the ability of Company, under certain circumstances specified in the Merger Agreement and prior to stockholder approval, to furnish information to and engage in discussions or negotiations with a third party that makes an unsolicited bona fide acquisition proposal.
|
·
|
Ability to Withdraw or Change Recommendation
. The Board considered its ability under the Merger Agreement to withdraw or modify its recommendation in favor of the Merger under certain circumstances, including its ability to terminate the Merger Agreement in connection with a Superior Proposal or an Intervening Event (each as defined in the section entitled “The Merger Agreement—No Solicitation; Board Recommendation”), subject to payment of a termination fee of approximately $3,546,172, equal to 4% of the aggregate consideration to be paid to stockholders and optionholders pursuant to the Merger Agreement.
|
·
|
Enforceability
. The Board considered the Company’s right to specifically enforce the Merger Agreement in the event that the Merger is not effectuated due to the Parent’s or Merger Sub’s breach of or failure to perform its obligations under the terms of the Merger Agreement.
|
·
|
Reasonableness of Termination Fee
. The Board considered the termination fee payable by the Company to Parent in the event of certain termination events under the Merger Agreement and the Board of Directors’ determination that the termination fee of 4% of the aggregate consideration payable to stockholders and optionholders pursuant to the Merger Agreement is within the reasonable range of termination fees for transactions of this type.
|
·
|
Availability of Appraisal Rights
. The Board considered the availability of statutory appraisal rights in connection with the Merger to the Company’s stockholders who vote against the Merger and who otherwise comply with all the required procedures under the DGCL, which allows such stockholders to seek appraisal of the fair value of their shares of Common Stock as determined by the Delaware Court of Chancery in connection with the Merger.
|
·
|
Uncertainty of Management Transition
. On February 29, 2012, the Company’s then Chief Executive Officer, Oliver G. Brewer III, resigned from all of his positions as a director and officer of the Company and its subsidiaries and went to work for the Company’s competitor, Callaway Golf Company, on March 5, 2012. Mr. Adams was appointed Interim Chief Executive Officer on February 29, 2012. However, it is unclear that the Company will be able to find a suitable permanent replacement Chief Executive Officer on terms and conditions satisfactory to Adams Golf, and if the Company can find such a replacement, what effect the transition and new Chief Executive Officer will have on the Company’s strategic plans and continued operations.
|
·
|
Impact on the Company’s Stockholders.
The Board considered the fact that, subsequent to the completion of the Merger, the Company would no longer exist as an independent public company and that the nature of the transaction as a cash transaction would prevent the Company’s stockholders from participating in future earnings or growth of the Company and from benefiting from any appreciation in value of the combined company.
|
·
|
Operating Covenants.
The Board considered the potential limitations on the Company’s pursuit of business opportunities due to pre-closing covenants in the Merger Agreement whereby the Company agreed that it will carry on its business in the ordinary course in substantially the same manner as previously conducted and, subject to specified exceptions, will not take a number of actions related to certain assets or the conduct of its business without the prior written consent of Parent.
|
·
|
Taxable Consideration.
The Board considered that the gains, if any, from the contemplated transactions generally would be taxable to the Company’s stockholders for federal income tax purposes.
|
·
|
Effect of Public Announcement.
The Board considered the effect of a public announcement of the Merger Agreement on the Company’s operations, stock price, customers and employees and its ability to attract and retain key management and employees.
|
·
|
Termination Fee.
The Board considered that the Company would have to pay a termination fee of approximately $3,546,172, equal to 4% of the aggregate consideration to be paid to stockholders and optionholders pursuant to the Merger Agreement, if it terminated the Merger Agreement in accordance with its terms in certain circumstances, including in order to enter into a Superior Proposal.
|
·
|
Potential Conflicts of Interest.
The Board was aware of the potential conflicts of interest between the Company, on the one hand, and certain of the Company’s executive officers and directors, on the other hand, as a result of the transactions contemplated by the Merger.
|
·
|
Possible Disruption.
The Board considered the effect of disruption that may be caused by unexpected bidders or the failure to complete the Merger.
|
·
|
Closing Conditions.
The Board considered that the Merger is subject to certain conditions to closing that are beyond the Company’s control.
|
·
|
Sole Remedy.
The Board considered the fact that the Company’s sole and exclusive remedy for any damages it incurs in connection with the Merger Agreement, including any failure by Parent to close the Merger, would be the right to specifically enforce the Merger Agreement and it would not receive any termination fee.
|
·
|
reviewed certain publicly available financial statements and other business and financial information of the Company;
|
·
|
reviewed certain internal financial statements and other financial and operating data concerning the Company;
|
·
|
reviewed certain financial projections prepared by the management of the Company;
|
||
·
|
discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;
|
||
·
|
reviewed the reported prices and trading activity for the Common Stock;
|
||
·
|
compared the financial performance of the Company and the prices and trading activity of the Common Stock with that of certain other publicly traded companies comparable with the Company and their securities;
|
||
·
|
reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
|
||
·
|
participated in discussions and negotiations among representatives of the Company and Parent and their financial and legal advisors;
|
||
·
|
reviewed the Merger Agreement and certain related documents; and
|
||
·
|
performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
|
1 Day
Prior
|
30 Days
Average
|
90 Days
Average
|
6 Month
Average
|
12 Month
Average
|
LTM
High
|
High
Since 2000
|
||||||||||||||||||||||
Share Price
|
$ | 6.31 | $ | 5.99 | $ | 5.53 | $ | 5.86 | $ | 6.03 | $ | 7.88 | $ | 10.20 | ||||||||||||||
Premium Implied by Consideration of $10.80 Per Share
|
71.2 | % | 80.3 | % | 95.2 | % | 84.2 | % | 79.0 | % | 37.1 | % | 5.9 | % |
• September 2008
|
King’s Safetywear Ltd. / Safe Step Group Ltd.
|
|
• June 2007
|
Everlast Worldwide, Inc. / Brands Holdings Ltd.
|
|
• December 2006
|
Igloo Vikski Inc. / Lanctot Ltd.
|
|
• February 2005
|
Malcolm Group PLC / Malcolm of Brookfield (Holdings)
|
|
• April 2004
|
Hockey Co. Holdings Inc. / Reebok International Ltd.
|
|
• November 2003
|
Football USA Inc. / K2 Inc.
|
|
• April 2003
|
Varsity Brands Inc. / Investor Group
|
|
• December 2002
|
Rawlings Sporting Goods Co. / K2 Inc.
|
|
• April 2000
|
PlayCore Inc. / Chartwell Investments II LLC
|
High
|
Low
|
Mean
|
Median
|
|||||||||||||
Premium to Price One Day Prior to Announcement
|
49.6 | % | 8.8 | % | 30.0 | % | 29.4 | % | ||||||||
Premium to 30-Day Average Price
|
63.0 | % | 14.9 | % | 39.0 | % | 40.1 | % |
Fiscal Year Ending 12/31,
|
||||||
2011E
|
2012E
|
2013E
|
2014E
|
2015E
|
2016E
|
|
Adams Income Statement
|
||||||
Total Revenue
|
96.5
|
108.8
|
118.6
|
129.2
|
140.9
|
153.2
|
% growth
|
11.9%
|
12.8%
|
9.0%
|
9.0%
|
9.0%
|
8.8%
|
Cost of Goods Sold
|
(53.7)
|
(60.9)
|
(67.0)
|
(72.9)
|
(79.5)
|
(86.4)
|
% of sales
|
55.7%
|
56.0%
|
56.6%
|
56.4%
|
56.4%
|
56.4%
|
Gross Profit
|
42.8
|
47.9
|
51.5
|
56.3
|
61.4
|
66.8
|
% margin
|
44.3%
|
44.0%
|
43.5%
|
43.6%
|
43.6%
|
43.6%
|
Total Operating Expenses
|
(36.2)
|
(39.3)
|
(43.5)
|
(47.0)
|
(49.6)
|
(52.1)
|
% of sales
|
37.5%
|
36.7%
|
36.7%
|
36.4%
|
35.2%
|
34.0%
|
EBIT
|
6.5
|
8.6
|
8.0
|
9.3
|
11.9
|
14.7
|
% margin
|
7%
|
8%
|
7%
|
7%
|
8%
|
10%
|
Depreciation & Amortization
|
1.4
|
2.1
|
0.7
|
0.8
|
0.9
|
0.9
|
% of sales
|
1.4%
|
1.9%
|
0.6%
|
0.6%
|
0.6%
|
0.6%
|
EBITDA
|
7.9
|
10.6
|
8.8
|
10.1
|
12.7
|
15.6
|
% margin
|
8.2%
|
9.8%
|
7.4%
|
7.8%
|
9.0%
|
10.2%
|
% growth
|
8.6%
|
34.3%
|
(17.4%)
|
14.8%
|
26.1%
|
22.8%
|
Net Income
|
9.2
|
8.3
|
7.7
|
9.0
|
11.5
|
14.3
|
% margin
|
9.5%
|
7.6%
|
6.5%
|
6.9%
|
8.1%
|
9.3%
|
% growth
|
64.1%
|
(9.4%)
|
(6.7%)
|
15.7%
|
28.1%
|
24.2%
|
Adams Cash Flow Statement
|
||||||
Fiscal Year Ending 12/31, | ||||||
2011E
|
2012E
|
2013E
|
2014E
|
2015E
|
2016E
|
|
Cash from Operating
|
||||||
Net Income
|
9.2
|
8.3
|
7.7
|
9.0
|
11.5
|
14.3
|
D&A
|
1.4
|
2.1
|
0.7
|
0.8
|
0.9
|
0.9
|
(Increase) / Decrease in Working Capital
|
(2.4)
|
0.3
|
(3.0)
|
(3.7)
|
(4.1)
|
(4.5)
|
Cash Flow from Operating Activities
|
8.1
|
10.6
|
5.4
|
6.0
|
8.2
|
10.7
|
Cash from Investing
|
||||||
Capital Expenditure
|
(2.0)
|
(0.6)
|
(0.6)
|
(0.7)
|
(0.8)
|
(0.8)
|
Cash Flow from Investing Activities
|
(2.0)
|
(0.6)
|
(0.6)
|
(0.7)
|
(0.8)
|
(0.8)
|
Free Cash Flow
|
6.1
|
10.1
|
4.9
|
5.3
|
7.4
|
9.9
|
Director/Executive Officer
|
|
Number of Shares Owned Including Restricted Stock Shares
|
|
Aggregate Amount Payable for Shares
|
|
B.H. (Barney) Adams
|
456,976
|
4,935,340.80
|
|||
Russell L. Fleischer
|
12,273
|
132,548.40
|
|||
John M. Gregory
|
1,129,196
|
12,195,316.80
|
|||
Joseph R. Gregory
|
1,131,946
|
12,225,016.80
|
|||
Mark R. Mulvoy
|
12,523
|
135,248.40
|
|||
Robert D. Rogers
|
13,523
|
146,048.40
|
|||
Pamela High
|
79,528
|
858,902.40
|
Vested Options
|
Unvested Options
|
||||||||||||||||||
Name
|
Number of
Shares
Underlying
Vested
Options
|
Weighted
Average
Exercise
Price Per
Share
|
Consideration
from Vested
Options
|
Number of
Shares
Underlying
Unvested
Options
|
Weighted
Average
Exercise
Price Per
Share
|
Consideration
from Unvested
Options
|
Total
Consideration
|
||||||||||||
B.H. (Barney) Adams
|
|||||||||||||||||||
Russell L. Fleischer
|
12,500 | $ | 4.72 | $ | 76,000 | $ | 76,000 | ||||||||||||
John M. Gregory
|
|||||||||||||||||||
Joseph R. Gregory
|
|||||||||||||||||||
Mark R. Mulvoy
|
12,500 | $ | 1.24 | $ | 119,500 | $ | 119,500 | ||||||||||||
Robert D. Rogers
|
12,500 | $ | 4.80 | $ | 75,000 | $ | 75,000 | ||||||||||||
Pamela High
|
·
|
Mr. Adams serves under an employment agreement with us that expires on December 31, 2012 (the “
Employment Agreement
”). Effective February 29, 2012, in connection with Mr. Adams’ appointment as our Interim Chief Executive Officer, the Board of Directors agreed to pay Mr. Adams’ an additional salary of $15,000 per month and to pay Mr. Adams a bonus payment of $100,000 upon the earlier of: (i) the appointment of his successor and (ii) the consummation of the sale of the Company. The Employment Agreement also provides Mr. Adams with certain severance payments in the event his employment is terminated by us without “Cause” or by him for “Good Reason”. Among other things, Mr. Adams would have “Good Reason” to terminate his employment if his title, position, reporting requirements, responsibilities or duties were substantially reduced, his base salary were reduced or the successor to the Company following a merger were to fail to assume in writing the Employment Agreement. These severance payments include: (i) payment equal to one year’s base salary in effect immediately prior to such termination and (ii) for a period of one year following such termination, any continuation coverage for which Mr. Adams may be entitled under COBRA.
|
·
|
On February 24, 2011, we entered into that certain Agreement Between Executive and Adams Golf Regarding Termination Due to a Change of Control or Termination Without Cause with Ms. High (the “
Change of Control Agreement
”). The Change of Control Agreement expires on January 31, 2014. If Ms. High’s employment is terminated as part of a change of control of the Company, Ms. High would be entitled to receive any unpaid compensation earned or accrued as of the effective date of her termination and continued payments of base salary and substantially equal medical benefits for the twelve months following such termination. In addition, on October 23, 2009, Ms. High was granted 50,000 Restricted Stock Shares. The Restricted Stock Shares vest in four equal annual installments beginning October 2010. On May 25, 2010, Ms. High was granted 5,000 restricted shares of our common stock. The restricted stock vests in four equal annual installments beginning May 2011. On October 28, 2010, Ms. High was granted 30,000 restricted shares of our common stock. The restricted stock vests in four equal annual installments beginning October 2011. Upon the occurrence of a change of control, all of Ms. High’s unvested shares of restricted stock would vest no later than the calendar day immediately preceding the sale or closing date of the transaction.
|
Name
|
Change
of Control
Payments ($)
|
Benefits
Continuation
|
Total
|
|||||||||
Pamela J. High
|
$ | 160,000 | $ | 7,506 | $ | 183,506 | ||||||
B.H. Barney Adams
|
$ | 220,000 | (1) | $ | 11,783 | $ | 231,783 |
·
|
an individual who is a citizen or resident of the United States;
|
·
|
a corporation created or organized under the laws of the United States or any of its political subdivisions;
|
·
|
a trust that (i) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
|
·
|
an estate the income of which is subject to U.S. federal income tax regardless of its source.
|
·
|
the gain on shares of Common Stock, if any, is effectively connected with the conduct by the non-U.S. person of a trade or business in the United States (and, if certain income tax treaties apply, is attributable to the non-U.S. person’s permanent establishment in the United States), in which event (i) the non-U.S. person will be subject to U.S. federal income tax as described under “— U.S. Persons” above, but such non-U.S. person should provide a Form W-8ECI instead of a Form W-9, and (ii) if the non-U.S. person is a corporation, it also may be subject to branch profits tax on such gain at a 30 percent rate (or such lower rate as may be specified under an applicable income tax treaty); or
|
·
|
the non-U.S. person is an individual who was present in the United States for 183 days or more in the taxable year and certain other conditions are met, in which event the non-U.S. person will be subject to tax at a flat rate of 30 percent (or such lower rate as may be specified under an applicable income tax treaty) on the gain from the exchange of the shares of Common Stock net of applicable U.S. losses from sales or exchanges of other capital assets recognized during the year.
|
·
|
such certificate is properly endorsed or otherwise is in proper form for transfer, including book entry transfer; and
|
·
|
the person requesting such payment establishes to the satisfaction of Merger Sub that any transfer and other taxes required by reason of such payment in a name other than that of the registered holder of such surrendered or transferred share of Common Stock have been paid or are not applicable.
|
·
|
corporate organization, good standing and similar matters;
|
·
|
corporate power and authority to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement;
|
·
|
authorization of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and enforceability of the Merger Agreement;
|
·
|
required governmental filings and consents and absence of violation of applicable laws in connection with the execution, delivery and performance of the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
absence of conflicts with, violation or breach of, defaults under, the organizational documents of the Company and its subsidiaries and certain contracts and permits in connection with the execution, delivery and performance of the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
the capitalization of and capital structure of the Company;
|
·
|
the ownership of all shares of capital stock of the Company by Parent upon consummation of the Merger;
|
·
|
the Company’s ownership of all subsidiaries;
|
·
|
accuracy and sufficiency of SEC filings;
|
·
|
compliance with NASDAQ Capital Market rules and regulations;
|
·
|
preparation of the consolidated financial statements of the Company and its subsidiaries in accordance with United States GAAP on a consistent basis and in compliance with applicable SEC rules and regulations;
|
·
|
indebtedness
;
|
·
|
accounts receivable;
|
·
|
inventory;
|
·
|
absence of certain “off-balance sheet arrangements;”
|
·
|
internal controls over financial reporting;
|
·
|
absence of certain changes or events and the conduct of business in the ordinary course of business since January 1, 2012;
|
·
|
absence of undisclosed material liabilities;
|
·
|
compliance with applicable laws (including anti-bribery and export control laws), court orders and certain regulatory matters;
|
·
|
material contracts;
|
·
|
accuracy of the information in this proxy statement;
|
·
|
legal proceedings;
|
·
|
labor matters;
|
·
|
employee compensation and benefits matters and matters relating to the Employee Retirement Income Securities Act of 1974, as amended;
|
·
|
real property;
|
·
|
intellectual property;
|
·
|
environmental matters and compliance with environmental laws;
|
·
|
tax matters;
|
·
|
receipt of a fairness opinion from Morgan Stanley;
|
·
|
brokers’, finder’s and similar fees payable in connection with the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
the inapplicability of state takeover statutes;
|
·
|
insurance;
|
·
|
related party transactions;
|
·
|
significant customers; and
|
·
|
illegal payments.
|
·
|
corporate organization, good standing and similar matters;
|
·
|
corporate power and authority to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement;
|
·
|
authorization of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and enforceability of the Merger Agreement;
|
·
|
required governmental filings and consents and absence of violation of applicable laws in connection with the execution, delivery and performance of the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
absence of conflicts with, violation or breach of, defaults under, the organizational documents of Parent or Merger Sub and certain contracts and permits in connection with the execution, delivery and performance of the Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
“interested stockholder” (as defined in Section 203 of the DGCL) status and the ownership of shares of Common Stock;
|
·
|
accuracy of information supplied by Parent or Merger Sub for inclusion or incorporation by reference in this proxy statement;
|
·
|
sufficiency of funds to pay the merger consideration;
|
·
|
solvency of Parent and the Surviving Corporation upon consummation of the Merger;
|
·
|
operations of Merger Sub since its formation;
|
·
|
legal proceedings; and
|
·
|
acknowledgment of disclaimer of express or implied representations or warranties of the Company, except as set forth in the Merger Agreement and the Company’s disclosure letter.
|
·
|
changes in industries in which Adams Golf and its subsidiaries operate in general;
|
·
|
general legal, regulatory, political, business, economic, financial or securities market conditions in the United States or elsewhere (including fluctuations, in and of themselves, in the price of the shares of Common Stock);
|
·
|
the announcement of the Merger Agreement, the pendency of the Merger and transactions contemplated by the Merger Agreement, the identity of Parent and the undertaking and performance or observance of the obligations contemplated by the Merger Agreement or necessary to consummate the transactions contemplated by the Merger Agreement, including adverse effects on the results of operations attributable to uncertainties associated with the period between March 18, 2012 and the Closing Date or the consummation of the Merger or any of the transactions contemplated by the Merger Agreement or the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners or employees;
|
·
|
acts of war, insurrection, sabotage or terrorism;
|
·
|
changes in GAAP or the accounting rules or regulations of the SEC, in each case, arising or becoming effective after March 18, 2012;
or
|
·
|
the failure, in and of itself, by Adams Golf to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending on or after March 18, 2012 (it being understood that the causes underlying any such failure may be considered in determining whether a material adverse effect has occurred or would be reasonably expected to occur).
|
·
|
the Company and its subsidiaries will conduct business in all material respects in the ordinary course of business consistent with past practice and, to the extent consistent therewith, each of the Company and its subsidiaries shall use its commercially reasonable efforts to (A) preserve its business organizations intact, (B) maintain its existing relationships with material customers, suppliers, employees, creditors and business partners, to keep available the services of its present officers and employees and to manage its working capital (including the payment of accounts payable and the receipt of accounts receivable), and (C) (i) file all tax returns required to be filed by it and pay all of its debts and taxes when due and (ii) pay or perform its other liabilities when due, in each case, subject to good faith disputes over such debts, taxes or liabilities;
|
·
|
the Company will not amend its Second Amended and Restated Certificate of Incorporation or Amended Bylaws and its subsidiaries will not amend their certificate of incorporation, bylaws or other comparable charter or organizational documents;
|
·
|
neither the Company nor any of its Subsidiaries will (A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock (other than by and among the Company and its subsidiaries); (B) issue, sell, transfer, pledge, dispose of or encumber or agree to issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, puts, collars, commitments or rights of any kind to acquire or sell (or stock appreciation rights with respect to), any shares of capital stock of the Company or any of its subsidiaries (including treasury stock), other than in respect of (1) the shares of the Company's capital stock reserved for issuance on the date of the Merger Agreement pursuant to the exercise of Options outstanding on the date of the Merger Agreement or the vesting of Restricted Stock Shares or (2) grants of Options or Restricted Stock Shares to new hires pursuant to offer letters outstanding as of the date of the Merger Agreement and disclosed to Parent, (C) split, combine or reclassify the Common Stock or any outstanding capital stock of any of the subsidiaries of the Company or (D) redeem, purchase or otherwise acquire, directly or indirectly, any of the Company's capital stock;
|
·
|
except as required by applicable law or under the terms of any of the Company’s benefit plans, the Company will not (A) make any changes in the compensation payable or to become payable to any of its officers, directors, employees, agents, consultants or other persons providing management services (other than increases in wages in the ordinary course of business and consistent with past practice to employees of the Company or its subsidiaries who are not officers, directors or affiliates of the Company), (B) adopt, enter into or amend (including acceleration of vesting) any employment, severance, consulting, termination, deferred compensation or other employee benefit agreement (collectively referred to as, "
Employment Agreements
") including, without limitation, any of the Company’s benefit plans, except that the Company and its subsidiaries may in the ordinary course of business consistent with past practice enter into in any such agreement in connection with the hiring of new employees who are not executive officers or direct reports to an executive officer, (C) make any loans (other than travel and payroll advances to non-officer employees in the ordinary course of business consistent with past practice) to any of its officers, directors, employees, affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to a benefit plan of the Company or otherwise, (D) take (or omit to take) any action which action (or omission to act) would reasonably be expected to result in a "good reason", "constructive termination", or similar event, for purposes of any Employment Agreement;
|
·
|
except as required by applicable law or under the terms of any employee benefit plan of the Company as of the date of the Merger Agreement, the Company will not and will not permit its subsidiaries to (A) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate (other than in the ordinary course consistent with past practice), (B) pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, or (C) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any employee benefit plan of the Company, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any past or present director, officer, employee, agent or consultant;
|
·
|
except in the ordinary course of business consistent with past practice, as required by applicable law or under the terms of any of the Company’s benefit plans, the Company will not (A) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan or agreement to any officer, director, employee or affiliate, other than in the ordinary course of business consistent with past practice, (B) pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, or (C) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any Company benefit plan, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant;
|
·
|
neither the Company nor any of its subsidiaries will, (A) incur or assume any long-term or short-term indebtedness (including without limitation drawing down any amounts under the Company’s credit facility), (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, (C) make any loans, advances or capital contributions to, or investments in, any other person or enter into
|
|
any material commitment or transaction (including, any borrowing, capital expenditure or purchase, sale or lease of assets or real estate); provided, however, that for the purposes of the foregoing, indebtedness shall not include, or be deemed to include, and the foregoing shall not prohibit, or be deemed to prohibit, normal terms of payment with the Company’s customers or revolving credit on the Company’s credit or charge cards in the ordinary course of business consistent with past practices;
|
·
|
neither the Company nor any of its subsidiaries will make or authorize any initial capital expenditure, other than capital expenditures contemplated by the Company's existing capital budget;
|
·
|
neither the Company nor any of its subsidiaries will pay, discharge, waive or satisfy any rights, claims, liabilities or obligations, other than the payment, discharge, waiver, settlement or satisfaction of any such rights, claims, liabilities or obligations, in the ordinary course of business and consistent with past practice, or claims, liabilities or obligations reflected or reserved against in, or contemplated by, the Company’s financial statements (or the notes to the Company’s financial statements);
|
·
|
neither the Company nor any of its subsidiaries will (A) change any of the accounting methods, principles or practices used by it unless required by a change in GAAP or law, (B) settle any material tax claim, assessment, audit or investigation, (C) consent to any material tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment, (D) make, revoke or change any tax election, (E) request a tax ruling, (F) amend any tax return, or (G) file any tax return in a manner that is materially inconsistent with past custom and practice with respect to the Company or any of its subsidiaries unless required by applicable law;
|
·
|
neither the Company nor any of its subsidiaries will (A) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the Merger Agreement) or (B) acquire, transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any material assets, other than in the ordinary course of business and consistent with past practice;
|
·
|
neither the Company nor any of its subsidiaries will acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets (other than in the ordinary course of business consistent with past practices), securities, properties, interests or businesses;
|
·
|
neither the Company nor any of its subsidiaries will sell, lease, license or otherwise transfer any of its material assets, securities, properties, interests or businesses, other than the sale of inventory in the ordinary course of business;
|
·
|
neither the Company nor any of its subsidiaries will amend, supplement, or terminate any material contract or enter into any contract that would constitute a material contract, other than in the ordinary course of business consistent with past practices;
|
·
|
neither the Company nor any of its subsidiaries will initiate or settle any material action; or
|
·
|
neither the Company nor any of its subsidiaries will enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing.
|
·
|
solicit, initiate, facilitate or encourage (including by providing information) the submission of any Acquisition Proposal or any proposal or offer that could reasonably be expected to lead to an Acquisition Proposal;
|
·
|
enter into, engage in or otherwise participate in any discussions or negotiations with, furnish any information relating to the Company or any of its subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its subsidiaries to, or otherwise cooperate in any way with any third party that has made, or that the Company knows is considering making, an Acquisition Proposal;
|
·
|
enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal or that could reasonably be expected to lead to an Acquisition Proposal;
|
·
|
fail to take all action necessary to enforce, or waive, terminate, modify or amend, any confidentiality, standstill or similar agreement to which the Company or any of its subsidiaries is a party or otherwise bound; or
|
·
|
resolve by action of our Board of Directors, to publicly propose or agree to do any of the foregoing.
|
·
|
any amendment to the financial terms or any other material term of any applicable Acquisition Proposal or Superior Proposal will require a new written notice by us and a new four business day period, and no termination of the Merger Agreement by us or adverse recommendation change may be made during any such four business day period;
|
·
|
during the four business day period referenced in the immediately preceding bullet point, we will, and we will cause our financial and legal advisors to, if requested by Parent, negotiate with Parent in good faith to make such changes in the terms and conditions of the Merger Agreement so that, with respect to any adverse recommendation change that is not in response to an Intervening Event, such Acquisition Proposal ceases to constitute a Superior Proposal or, with respect to any adverse recommendation change in response to an Intervening Event, so that the Board no longer concludes that a failure to make such adverse recommendation change could reasonably result in a breach of its fiduciary duties to the stockholders of the Company;
|
·
|
our Board of Directors will take into account any changes to the financial and other terms of the Merger Agreement proposed by Parent in response to any such written notice by us or otherwise; and
|
·
|
the requirements for terminating the Merger Agreement and making the adverse recommendation change are still satisfied at the time the Merger Agreement is terminated or at the time such adverse recommendation change is made.
|
·
|
the preparation and filing of all forms, registrations and notices required to be filed to consummate the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
if required, to file, as promptly as practicable, but in any event no later than twenty (20) business days after the date of the Merger Agreement, notifications under the HSR Act, to respond, as promptly as practicable, to any inquiries received from the Federal Trade Commission and the Antitrust Division of the Department of Justice and to resolve any objections with respect thereto or any other federal, state or foreign laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (provided that neither party shall be required to sell, divest or dispose of its businesses, product lines or assets or otherwise taking or committing to take actions that would limit their freedom of action with respect to its businesses, product lines or assets);
|
·
|
the satisfaction of the other parties’ conditions to consummating the Merger and the other transactions contemplated by the Merger Agreement;
|
·
|
obtaining (and cooperating with each other in obtaining) any consent, authorization, order or approval of, or any exemption by, any third party, including any governmental entity required to be obtained or made in connection with the Merger and the other transactions contemplated by the Merger Agreement; and
|
·
|
the execution and delivery of any additional instruments necessary to consummate the Merger and the other transactions contemplated by the Merger Agreement and to fully carry out the purposes thereof subject to compliance with the Merger Agreement.
|
·
|
the preparation and filing of this proxy statement with the SEC;
|
·
|
determining whether any action by or in respect of, or filing with, any governmental entity is required, or any actions are required to be taken under, or consents, approvals or waivers are required to be obtained from parties to, any material contracts, in connection with the closing of the Merger; and
|
·
|
timely taking any such actions, seeking any such consent, approvals or waivers or making any such filings or furnishing information required in connection with the proxy statement or any other filings.
|
·
|
consultations regarding public announcements;
|
·
|
notification of certain matters; and
|
·
|
compliance of Merger Sub with all of its obligations under or related to the Merger Agreement.
|
·
|
adoption of the Merger Agreement by Adams Golf stockholders;
|
·
|
to the extent applicable, (i) the waiting period (including any extension thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, will have expired or been terminated; and (ii) all other material filings with or permits, authorizations, consents and approvals of or expirations of waiting periods imposed by any governmental entity required to consummate the Merger or the other transactions contemplated by the Merger Agreement will have been obtained or filed or will have occurred (collectively, (i) through (ii) are referred to as the governmental approval condition);
|
·
|
no order or law, entered, enacted, promulgated, enforced or issued by any court of competent jurisdiction, or any other governmental entity, or other legal restraint or prohibition, each of which is referred to as a transaction restraint, shall be in effect preventing the consummation of the Merger or the other transactions contemplated by the Merger Agreement (
provided
,
however
, that each of the parties to the Merger Agreement will have used its reasonable best efforts to prevent the entry of any such transaction restraints and to appeal as promptly as possible any such transaction restraints that may be entered to the extent required by the Merger Agreement); and
|
·
|
no governmental entity will have instituted (or if instituted, will not have withdrawn) any action, suit, proceeding, claim, arbitration or investigation wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent or restrain the consummation of the transactions contemplated by the Merger Agreement, or (ii) cause any of the transactions contemplated by the Merger Agreement to be rescinded following consummation thereof.
|
·
|
accuracy as of the date of the Merger Agreement and as of the closing of the Merger of the representations and warranties made by us to the extent specified in the Merger Agreement;
|
·
|
performance of or compliance with the covenants and agreements contained in the Merger Agreement to be performed or complied with by us prior to or on the Closing Date to the extent specified in the Merger Agreement;
|
·
|
delivery to Parent of a certificate signed by an executive officer certifying to the satisfaction of the two conditions above-mentioned;
|
·
|
absence of the occurrence of any development, change, circumstance or condition prior to the Effective Time that has had or would reasonably be expected to have a material adverse effect on the Company; and
|
·
|
the delivery of a FIRPTA certificate by the Company.
|
·
|
accuracy as of date of the Merger Agreement and as of the closing of the Merger of the representations and warranties made Parent and Merger Sub to the extent specified in the Merger Agreement;
|
·
|
performance of or compliance with the covenants and agreements of each of Parent and Merger Sub contained in the Merger Agreement to be performed or complied with by it prior to or on the Closing Date to the extent specified in the Merger Agreement; and
|
·
|
delivery to us of a certificate signed by an executive officer of each of Parent and Merger Sub certifying to the satisfaction of the two conditions above-mentioned.
|
·
|
the Merger is not consummated on or before September 30, 2012 (the "
Outside Date
"); provided, however, that such termination right shall not be available to any party whose breach of any provision of the Merger Agreement caused the failure of the Merger to be consummated by such time; provided, further, however, that, if, on the Outside Date, either of the conditions to the Closing with respect to antitrust approvals, any order or law preventing the transaction or any governmental order preventing or restraining the consummation of the Merger shall not have been fulfilled but all other conditions to the Closing either have been fulfilled or are then capable of being fulfilled, then the Outside Date shall, without any action on the part of the parties hereto, be extended to December 31, 2012, and such date shall become the Outside Date for purposes of this Agreement, with further extension of the Outside Date available by mutual written consent of Parent and the Company;
|
·
|
a final and non-appealable restraining order, permanent injunction or other order has been issued by a governmental entity or some other legal restraint or prohibition that makes illegal or otherwise prohibits the consummation of the Merger or enjoins the Company or Parent from consummating the Merger or any of the other transactions contemplated by the Merger Agreement; or
|
·
|
our stockholders fail to adopt the Merger Agreement at the special meeting (including any adjournments and postponements thereof); provided, however, if the stockholders would have approved the adoption of the Merger Agreement but for a breach of one of the Voting Agreements, the Company shall not exercise its termination right for 30 business days in order for Parent to attempt to enforce its remedies against any such breaching party under the Voting Agreements and the parties shall reasonably cooperate to adjourn or postpone the special meeting to enable such specific enforcement.
|
·
|
an adverse recommendation change shall have occurred; or
|
·
|
there has been a material breach of the non-solicitation provision by the Company.
|
·
|
before the Effective Time and only prior to the adoption of the Merger Agreement by our stockholders at the special meeting, in order to promptly enter into a definitive agreement with respect to a Superior Proposal subject to our compliance with the non-solicitation provisions of the Merger Agreement and payment of the related termination fee (as set forth below) and provided that we satisfy certain notice and negotiation requirements (as described in –No Solicitation; Board Recommendation above).
|
·
|
by Parent as a result of any adverse recommendation change having occurred or there having been a material breach of the non-solicitation requirements (as described in the section entitled “The Merger Agreement–No Solicitation; Board Recommendation” above); provided, that Parent shall not be entitled to the Termination Fee if it has delivered to the Company notice of termination of the Merger Agreement more than thirty (30) days after Parent's executive officers obtained actual knowledge of the material breach of the non-solicitation requirements;
|
·
|
by Parent or the Company after the (i) Outside Date or the failure of the stockholders to approve the adoption of the Merger Agreement at the special meeting and (ii) an adverse recommendation change has occurred;
|
·
|
by the Company in connection with entering into a binding written definitive agreement concerning a Superior Proposal; or
|
·
|
by the Company after (i) an Acquisition Proposal shall have been made to the Company or directly to the stockholders or shall have been otherwise become publicly known or any person shall have publicly announced an intention to make an Acquisition Proposal, (ii) Outside Date or the failure of the stockholders to approve the adoption of the Merger Agreement at the special meeting and (iii) within twelve (12) months of such termination, the Company shall have entered into a definitive agreement in connection with or consummated any Acquisition Proposal.
|
Common Stock
|
||||||||
High
|
Low
|
|||||||
FISCAL YEAR 2010
|
||||||||
First Quarter (January 1 — March 31)
|
$
|
3.50
|
$
|
2.95
|
||||
Second Quarter (April 1 — June 30)
|
$
|
4.32
|
$
|
3.30
|
||||
Third Quarter (July 1 — September 30)
|
$
|
5.02
|
$
|
3.26
|
||||
Fourth Quarter (October 1 — December 31)
|
$
|
4.90
|
$
|
4.21
|
||||
FISCAL YEAR 2011
|
||||||||
First Quarter (January 1 — March 31)
|
$
|
6.20
|
$
|
4.75
|
||||
Second Quarter (April 1 — June 30)
|
$
|
7.88
|
$
|
4.83
|
||||
Third Quarter (July 1 — September 30)
|
$
|
7.59
|
$
|
4.83
|
||||
Fourth Quarter (October 1 — December 31)
|
$
|
6.46
|
$
|
4.95
|
||||
FISCAL YEAR 2012
|
||||||||
First Quarter (January 1 — March 31 )
|
$
|
10.76
|
$
|
6.31
|
||||
Second Quarter (April 1 — [ ])
|
$
|
10.72
|
$
|
10.78
|
Name of Beneficial Owner
|
Amount and Nature
of Beneficial Ownership(1)
|
Percent
of Class(2)
|
||||||
Certain Persons
|
||||||||
SJ Strategic Investments LLC (3)
|
2,720,792 | 34.0 | % | |||||
Roland E. Casati (4)
|
459,650 | 5.7 | % | |||||
Nantahala Capital Management, LLC(5)
|
579,155 | 7.2 | % | |||||
Taylor Made Golf Company, Inc. (6)
|
2,793,937 | 34.8 | % | |||||
Directors and Named Executive Officers
|
||||||||
B.H. (Barney) Adams (7)
|
456,976 | 5.7 | % | |||||
Oliver G. Brewer III (8)
|
842,400 | 10.5 | % | |||||
Russell L. Fleischer (9)
|
24,773 | * | ||||||
John M. Gregory (10)
|
2,720,792 | 34.0 | % | |||||
Joseph R. Gregory (11)
|
2,720,792 | 34.0 | % | |||||
Mark R. Mulvoy (12)
|
25,023 | * | ||||||
Robert D. Rogers (13)
|
26,023 | * | ||||||
Pamela High
|
79,528 | 1.0 | % | |||||
All Directors and Executive Officers
as a Group
|
3,333,115 | 41.5 | % |
(1)
|
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities for which such person or entity currently has beneficial ownership or has the right to acquire beneficial ownership with 60 days of
[______]
, 2012.
|
(2)
|
Applicable percentage of ownership is based on [7,995,511] voting shares of common stock outstanding on [
●
].
|
(3)
|
Includes (a) 1,119,673 shares owned by Mr. Joseph R. Gregory, the brother of Mr. John Gregory, (b) 12,273 shares owned by Mr. John Gregory, the managing member of SJ Strategics, and (c) 459,650 shares owned by Mr. Roland E. Casati, for which SJ Strategic Investments and Messrs. John Gregory and Joseph Gregory may be deemed to have beneficial ownership as a result of a voting agreement with Mr. Casati. SJ Strategic Investments has disclaimed beneficial ownership of the shares owned by Mr. Joseph R. Gregory and Mr. John Gregory. The address for SJ Strategic Investments LLC is 340 Edgemont Avenue, Suite 200, Bristol, TN 37620. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Taylor Made Golf Company, Inc. (“
Parent
”), that is more fully described in the section entitled “Voting Agreements” above.
|
(4)
|
The address for Mr. Casati is Continental Offices, Ltd., 2700 River Road, Suite 211, Des Plaines, IL 60018. Mr. Casati may be deemed to have beneficial ownership of 2,261,142 shares of Common Stock as a result of a voting agreement with SJ Strategic Investments and Messrs. John Gregory and Joseph Gregory. Mr. Casati has disclaimed beneficial ownership of the shares of Common Stock owned by SJ Strategic Investments, Mr. Joseph R. Gregory and Mr. John Gregory.
|
(5)
|
Nantahala Capital Management, LLC (“
Nantahala
”) is the general partner and/or the investment manager of Nantahala Capital Partners Limited Partnership, Nantahala Capital Partners II Limited Partnership, Nantahala Capital Partners LC Limited Partnership, Blackwell Partners LLC and Silver Creek CS SAV, LLC (collectively, the “
Nantahala Investment Vehicles
”). Nantahala has the power to vote and direct the disposition of the shares of Common Stock owned by the Nantahala Investment Vehicles. The principal purpose of the Nantahala Investment Vehicles is to invest in securities. The principal business of Nantahala is to serve as the general partner and/or the investment manager of the Nantahala Investment Vehicles and other investment vehicles. The principal business address for Nantahala is 100 First Stamford Place, 2nd Floor, Stamford, CT 06902. The number of shares set forth in the table for Nantahala is based solely on Nantahala's Amedment No. 1 to Schedule 13D filed with the SEC on January 10, 2012.
|
(6)
|
Taylor Made Golf Company, Inc., or Parent, may be deemed to have beneficial ownership of 2,793,937 shares of Common Stock (including a total of 75,000 unvested Restricted Stock Shares and unexercised options to purchase shares of Common Stock) by virtue of those certain Voting Agreements between Parent and each of SJ Strategic Investments and Messrs. John M. Gregory, Joseph R. Gregory, B.H. (Barney) Adams, Russell L. Fleischer, Mark R. Mulvoy, and Robert D. Rogers. Such Voting Agreements are more fully described in the section entitled “Voting Agreements” above.
|
(7)
|
Includes 456,976 shares Mr. Adams holds jointly with Jackie Adams, his spouse. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
(8)
|
The address for Mr. Brewer is 2180 Rutherford Rd., Carlsbad, CA 92008. Mr Brewer was the CEO and a Director of the Company until he resigned effective as of February 29, 2012.
|
(9)
|
Includes (a) vested options to purchase 12,500 shares of Common Stock held by Mr. Fleischer and (b) 7,500 unvested Restricted Stock Shares for which Mr. Fleischer does not have the power to dispose. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
(10)
|
Includes (a) 1,116,923 shares owned by SJ Strategic Investments LLC, (b) 1,119,673 shares owned by Mr. Joseph R. Gregory, (c) 7,500 unvested Restricted Stock Shares for which Mr. John Gregory does not have the power to dispose and (d) 459,650 shares owned by Mr. Casati, for which SJ Strategic Investments and Messrs. John Gregory and Joseph Gregory may be deemed to have beneficial ownership as a result of a voting agreement with Mr. Casati. Mr. John Gregory is the managing member of SJ Strategic Investments LLC. Mr. Joseph Gregory is the brother of Mr. John Gregory. Mr. John Gregory has disclaimed beneficial ownership of the shares owned by Mr. Joseph Gregory. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
(11)
|
Includes (a) 1,116,923 shares owned by SJ Strategic Investments LLC, (b) 12,273 shares owned by Mr. John Gregory, (c) 7,500 unvested Restricted Stock Shares for which Mr. Joseph Gregory does not have the power to dispose and (d) 459,650 shares owned by Mr. Casati, for which SJ Strategic Investments and Messrs. John Gregory and Joseph Gregory may be deemed to have beneficial ownership as a result of a voting agreement with Mr. Casati. Mr. Joseph Gregory’s brother, Mr. John Gregory, is the managing member of SJ Strategic Investments LLC. Mr. Joseph Gregory has disclaimed beneficial ownership of the shares owned by SJ Strategic Investments and Mr. John Gregory. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
(12)
|
Includes (a) vested options to purchase 12,500 shares of Common Stock held by Mr. Mulvoy and (b) 7,500 unvested Restricted Stock Shares for which Mr. Mulvoy does not have the power to dispose. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
(13)
|
Includes (a) vested options to purchase 12,500 shares of Common Stock held by Mr. Rogers and (b) 13,523 shares of Common Stock held by a trust (including 7,500 unvested Restricted Stock Shares for which such trust does not have the power to dispose) for which Mr. Rogers has sole voting and dispositive power over the shares held by the trust. Such beneficially owned shares of Common Stock are subject to a Voting Agreement with Parent that is more fully described in the section entitled “Voting Agreements” above.
|
Page | ||
Article I THE MERGER
|
1
|
|
Section 1.1
|
The Merger
|
1
|
Section 1.2
|
Closing
|
1
|
Section 1.3
|
Effective Time
|
2
|
Section 1.4
|
Effect of the Merger
|
2
|
Section 1.5
|
Certificate of Incorporation; Bylaws.
|
2
|
Section 1.6
|
Directors and Officers of the Surviving Corporation
|
2
|
Article II EFFECT OF THE MERGER ON Equity Interests
|
2
|
|
Section 2.1
|
Conversion of Securities
|
2
|
Section 2.2
|
Payment; Surrender of Equity Interest; Stock Transfer Books.
|
3
|
Section 2.3
|
Treatment of Company Stock Plan.
|
5
|
Section 2.4
|
Dissenting Shares.
|
6
|
Section 2.5
|
Subsequent Actions
|
7
|
Section 2.6
|
Adjustments
|
7
|
Section 2.7
|
Lost Certificates
|
7
|
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
8
|
|
Section 3.1
|
Organization.
|
8
|
Section 3.2
|
Authorization; Validity of Agreement; Company Action.
|
8
|
Section 3.3
|
Consents and Approvals; No Violations
|
9
|
Section 3.4
|
Capitalization.
|
9
|
Section 3.5
|
SEC Reports and Financial Statements.
|
11
|
Section 3.6
|
Absence of Certain Changes
|
14
|
Section 3.7
|
No Undisclosed Material Liabilities
|
14
|
Section 3.8
|
Compliance with Laws and Court Orders
|
14
|
Section 3.9
|
Material Contracts.
|
14
|
Section 3.10
|
Information in Proxy Statement
|
16
|
Section 3.11
|
Litigation
|
16
|
Section 3.12
|
Labor Matters
|
16
|
Section 3.13
|
Employee Compensation and Benefit Plans; ERISA.
|
17
|
Section 3.14
|
Properties.
|
18
|
Section 3.15
|
Intellectual Property.
|
19
|
Section 3.16
|
Environmental Laws.
|
20
|
Section 3.17
|
Taxes.
|
21
|
Section 3.18
|
Fairness Opinion
|
23
|
Section 3.19
|
Brokers or Finders
|
23
|
Section 3.20
|
State Takeover Statutes
|
23
|
Section 3.21
|
Insurance
|
23
|
Section 3.22
|
Related Party Transactions
|
24
|
Section 3.23
|
Illegal Payments, etc.
|
24
|
Section 3.24
|
Top Customers and Suppliers.
|
24
|
Section 3.25
|
Rebates and Discounts.
|
24
|
Section 3.26
|
No Other Representations or Warranties
|
25
|
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
25
|
|
Section 4.1
|
Organization; Ownership of Merger Sub
|
25
|
Section 4.2
|
Authorization; Validity of Agreement; Necessary Action
|
25
|
Section 4.3
|
Consents and Approvals; No Violations
|
26
|
Section 4.4
|
Ownership of Common Stock
|
26
|
Section 4.5
|
Information in Proxy Statement
|
26
|
Section 4.6
|
Transaction Funds; Sufficiency of Funds
|
26
|
Section 4.7
|
No Prior Activities
|
27
|
Section 4.8
|
Solvency
|
27
|
Section 4.9
|
Litigation
|
27
|
Section 4.10
|
Disclaimer of Warranties
|
28
|
Article V COVENANTS
|
28
|
|
Section 5.1
|
Interim Operations of the Company
|
28
|
Section 5.2
|
No Solicitation by the Company.
|
31
|
Section 5.3
|
SEC Filing Covenant
|
34
|
Section 5.4
|
Section 16 Matters
|
34
|
Article VI ADDITIONAL AGREEMENTS
|
35
|
|
Section 6.1
|
Preparation of Proxy Statement.
|
35
|
Section 6.2
|
Stockholders Meeting.
|
35
|
Section 6.3
|
Reasonable Best Efforts.
|
36
|
Section 6.4
|
Notification of Certain Matters
|
37
|
Section 6.5
|
Access; Confidentiality
|
38
|
Section 6.6
|
Publicity
|
39
|
Section 6.7
|
Indemnification; Directors' and Officers' Insurance.
|
39
|
Section 6.8
|
Merger Sub Compliance
|
41
|
Section 6.9
|
Employee Matters.
|
41
|
Article VII CONDITIONS
|
42
|
|
Section 7.1
|
Conditions to Each Party's Obligation to Effect the Merger
|
42
|
Section 7.2
|
Conditions to Obligations of Parent and Merger Sub
|
42
|
Section 7.3
|
Conditions to Obligations of the Company
|
43
|
Section 7.4
|
Frustration of Closing Conditions
|
43
|
Article VIII TERMINATION
|
44
|
|
Section 8.1
|
Termination
|
44
|
Section 8.2
|
Effect of Termination.
|
45
|
Article IX MISCELLANEOUS
|
46
|
|
Section 9.1
|
Amendment and Waivers
|
46
|
Section 9.2
|
Non-survival of Representations and Warranties
|
46
|
Section 9.3
|
Expenses
|
46
|
Section 9.4
|
Notices
|
47
|
Section 9.5
|
Counterparts; Execution
|
48
|
Section 9.6
|
Entire Agreement; No Third Party Beneficiaries
|
48
|
Section 9.7
|
Severability
|
48
|
Section 9.8
|
Governing Law
|
48
|
Section 9.9
|
Assignment
|
48
|
Section 9.10
|
Consent to Jurisdiction.
|
49
|
Section 9.11
|
Specific Performance
|
49
|
Article X DEFINITIONS; INTERPRETATION
|
50
|
|
Section 10.1
|
Cross References
|
50
|
Section 10.2
|
Certain Terms Defined
|
52
|
Section 10.3
|
Other Definitional and Interpretative Provisions
|
57
|
Section 10.4
|
Company Disclosure Letter
|
57
|
Exhibit A
|
Certificate of Incorporation of Surviving Corporation
|
Exhibit B
|
Bylaws of Surviving Corporation
|
Defined Term
|
Section
|
Adverse Recommendation Change
|
Section 5.2(a)
|
Agreement
|
Preamble
|
Antitrust Laws
|
Section 6.3(d)
|
CERCLA
|
Section 3.16(a)
|
Certificate
|
Section 2.1(a)
|
Certificate of Merger
|
Section 1.3
|
Closing
|
Section 1.2
|
Closing Date
|
Section 1.2
|
Code
|
Section 3.13(c)
|
Company
|
Preamble
|
Company Board
|
Section 2.3(f)
|
Company Common Stock
|
Section 3.2(a)
|
Company Disclosure Letter
|
Article III
|
Company Intellectual Property
|
Section 3.15(a)
|
Company Permits
|
Section 3.8
|
Company Plan
|
Section 3.13(a)
|
Company Preferred Stock
|
Section 3.4(a)
|
Company Recommendation
|
Section 3.2(c)
|
Company Restricted Share
|
Section 2.3(b)
|
Company Restricted Share Consideration
|
Section 2.3(b)
|
Confidentiality Agreement
|
Section 3.26
|
D&O Premium
|
Section 6.7(b)
|
Dissenting Shares
|
Section 2.4(a)
|
Effective Time
|
Section 1.3
|
Employment Agreements
|
Section 5.1(iv)
|
Excluded Shares
|
Section 2.1(b)
|
Financial Statements
|
Section 3.5(c)
|
GAAP
|
Section 3.4(c)(iv)
|
Governmental Entity
|
Section 3.3
|
Grant Date
|
Section 3.4(c)
|
HSR Act
|
Section 3.3
|
Indemnified Parties
|
Section 6.7(a)
|
Intervening Event
|
Section 5.2(b)(ii)
|
IRS
|
Section 3.13(b)
|
Leased Real Property
|
Section 3.14(a)
|
Material Contract
|
Section 3.9(a)
|
Merger
|
Section 1.1
|
Merger Consideration
|
Section 2.1(a)
|
Merger Sub
|
Preamble
|
Morgan Stanley
|
Section 3.19
|
Notice Period
|
Section 5.2(b)(i)(B)
|
Option Consideration
|
Section 2.3(a)
|
Options
|
Section 2.3(a)
|
Outside Date
|
Section 8.1(b)(i)
|
Parent
|
Preamble
|
Paying Agent
|
Section 2.2(a)
|
Payment Fund
|
Section 2.2(a)
|
Proxy Statement
|
Section 3.10
|
Representatives
|
Section 5.2(a)
|
Restraints
|
Section 7.1(c)
|
Solvent
|
Section 4.8
|
Special Meeting
|
Section 6.2(a)
|
Stockholder Approval
|
Section 3.2(a)
|
Stockholders
|
Recitals
|
Subsequent Notice Period
|
Section 5.2(b)(i)(B)
|
Superior Proposal
|
Section 5.2(c)
|
Surviving Corporation
|
Section 1.1
|
Termination Fee
|
Section 8.2(b)
|
Top Customers
|
Section 3.25
|
Top Suppliers
|
Section 3.25
|
Transaction Funds
|
Section 4.6
|
Transactions
|
Section 3.2(a)
|
Uncertificated Shares
|
Section 2.1(a)
|
Valid Transfer
|
Section 2.2(b)
|
Voting Agreements
|
Recitals
|
ADAMS GOLF, INC.
|
|||
By: | /s/ Byron H. Adams | ||
Name: |
Byron H. Adams
|
||
Title: |
Chairman and Interim CEO
|
||
TAYLOR MADE GOLF COMPANY, INC.
|
|||
By: | /s/ Mark King | ||
Name: |
Mark King
|
||
Title: |
President and CEO
|
||
By: |
/s/ Melissa Claaseen
|
||
Name: |
Melissa Claaseen
|
||
Title: |
CFO
|
||
APPLE TREE ACQUISITION CORP.
|
|||
By: | /s Mark King | ||
Name: |
Mark King
|
||
Title: |
President
|
||
By: |
/s/ Melissa Claaseen
|
||
Name: |
Melissa Claaseen
|
||
Title: |
Treasurer
|
TAYLOR MADE GOLF COMPANY, INC.
|
||
By | ||
Title | ||
Facsimile: |
|
STOCKHOLDER | ||
Signature | ||
Printed Name
|
||
Address: | ||
Facsimile: |
|
Shares Held of Record
|
Options and Other Rights
|
Additional Securities
Beneficially Owned
|
STOCKHOLDER
|
|
Signature
|
|
Number of shares of common stock of
the Company owned of record as of
the date of this proxy:
|
|
TAYLOR MADE GOLF COMPANY, INC.
|
||
By | ||
Title | ||
Facsimile: |
|
STOCKHOLDER | ||
Signature | ||
Printed Name
|
||
Address: | ||
Facsimile: |
|
Shares Held of Record
|
Options and Other Rights
|
Additional Securities
Beneficially Owned
|
STOCKHOLDER
|
|
Signature
|
|
Number of shares of common stock of
the Company owned of record as of
the date of this proxy:
|
|
1)
|
Reviewed certain publicly available financial statements and other business and financial information of the Company;
|
2)
|
Reviewed certain internal financial statements and other financial and operating data concerning the Company;
|
3)
|
Reviewed certain financial projections prepared by the management of the Company;
|
4)
|
Discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;
|
5)
|
Reviewed the reported prices and trading activity for the Company Common Stock;
|
6)
|
Compared the financial performance of the Company and the prices and trading activity of the Company Common Stock with that of certain other publicly-traded companies comparable with the Company and their securities;
|
7)
|
Reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;
|
8)
|
Participated in discussions and negotiations among representatives of the Company and the Buyer and their financial and legal advisors;
|
9)
|
Reviewed the Merger Agreement and certain related documents; and
|
10)
|
Performed such other analyses and considered such other factors as we have deemed appropriate.
|
By:
|
/s/ Benjamin M. Frost | ||
Benjamin M. Frost
Managing Director
|
|
Form of Proxy
ADAMS GOLF, INC. – SPECIAL MEETING
|
||||||||||||||||||
▼ FOLD AND DETACH HERE ▼
|
|||||||||||||||||||
The Board of Directors recommends a vote “FOR” Proposals 1 and 2 and in the discretion of the proxies upon such other matters as may properly come before the meeting or any adjournment thereof.
|
Please mark your votes as indicated in this example
|
x | |||||||||||||||||
Proposal 1. Adoption of the Merger Agreement
|
FOR
|
AGAINST
|
ABSTAIN
|
||||||||||||||||
Approval and adoption of the Agreement and Plan of Merger, dated as of March 18, 2012, by and among Taylor Made Golf Company, Inc., a Delaware corporation (“
Parent
”), Apple Tree Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“
Merger Sub
”), and Adams Golf, Inc. (the “
Company
”), which provides, among other things, for the merger of Merger Sub with and into the Company with the Company surviving the merger, and the conversion of each issued and outstanding share of the Company’s common stock into the right to receive $10.80 in cash, without interest and less any applicable withholding tax.
|
o | o | o | ||||||||||||||||
Proposal 2. Adjournment of the Special Meeting
|
FOR
|
AGAINST
|
ABSTAIN
|
||||||||||||||||
Approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the Agreement and Plan of Merger.
|
o | o | o | ||||||||||||||||
Will Attend Meeting
|
o |
YES
|
|||||||||||||||||
RESTRICTED AREA – SCAN LINE
|
Mark Here for
Address Change
or Comments
SEE REVERSE
|
o | |||||||||||||||||
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
|
|||||||||||||||||||
Signature ________________
|
Signature ________________
|
Date ________________
|
|||||||||||||||||
PRINT AUTHORIZATION
|
(THIS BOXED AREA DOES NOT PRINT)
|
||||||||||||||||||
To commence print on this proxy card please sign, date and fax this card to: 212-269-1116
|
|||||||||||||||||||
SIGNATURE: ________________
|
DATE: ________________
|
TIME: ________________
|
You can now access your ADAMS GOLF, INC. account online.
Access your ADAMS GOLF, INC. account online via Investor ServiceDirect
®
(ISD).
BNY Mellon Shareowner Services, the transfer agent for ADAMS GOLF, INC., now makes it easy and convenient to get current information on your stockholder account.
|
||||||||||||||||||||
·
View account status
·
View certificate history
·
Vie book-entry information
|
·
View payment history for dividends
·
Make address changes
·
Obtain a duplicate 1099 tax form
·
Establish/change PIN
|
|||||||||||||||||||
Visit us on the web at http://www.bnymellon.com/shareowner/equityaccess
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect
®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
|
||||||||||||||||||||
Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statmenet,s tax documents and more. Simply log on to
Investor ServiceDirect
®
at http://www.bnymellon.com/shareowner/equityaccess where step-by-step instructions will prompt you through enrollment.
|
||||||||||||||||||||
|
Important notice regarding the Internet availability of proxy materials for the Stockholder Meeting to be Held on [
•
]
, 2012.
The Proxy Statement is available at: http://bnymellon.mobular.met/bnymellon/adgf
|
|||||||||||||||||||
▼ FOLD AND DETACH HERE ▼
|
||||||||||||||||||||
ADAMS GOLF, INC.
PROXY/VOTING INSTRUCTION CARD
This Proxy is solicited on behalf of the Board of Directors of Adams Golf, Inc.
for the Special Meeting of Stockholders on [
•
]
, 2012
The undersigned, revoking all previous proxies, appoints Byron H. Adams and Pamela J. High, and each of them, with full power of substitution in each, the proxies of the undersigned, to represent the undersigned and vote all shares of Adams Golf, Inc. common stock which the undersigned may be entitled to vote at the Special Meeting of stockholders to be held on [
•
], 2012, and at any adjournment or postponement thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is given, this proxy will be voted FOR proposals 1 and 2.
If you have written in the below space, please mark the comments notification box on the reverse side.
|
||||||||||||||||||||
Address Change/Comments
(Mark the corresponding box on the reverse side)
|
||||||||||||||||||||
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
|
||||||||||||||||||||
RESTRICTED AREA – SCAN LINE
|
||||||||||||||||||||
(Continued and to be marked, dated and signed, on the other side)
|
94911
|
|||||||||||||||||||
RESTRICTED AREA – SIGNATURE LINES
|
||||||||||||||||||||
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