|
Filed
by the Registrant x
|
|
Filed
by a Party other than the Registrant ¨
|
|
Check
the appropriate box:
|
¨
|
Preliminary
Proxy Statement
|
¨
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to Sec.240.14a-11(c) or
Sec.240.14a-12
|
|
Payment
of Filing Fee (Check the appropriate
box):
|
¨
|
No
fee required.
|
¨
|
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:
|
||
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
||
|
(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):
|
||
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
||
|
(5)
|
Total
fee paid:
|
||
|
¨
|
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:
|
1.
|
To
consider and vote on a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of October 20, 2008, among SpaceDev, Inc., a
Delaware corporation, Sierra Nevada Corporation, a Nevada corporation and
SDV Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Sierra Nevada Corporation, as it may be amended from time to
time;
|
2.
|
To
elect a Board of Directors for the
Company;
|
3.
|
To
consider and vote on a proposal to ratify the appointment of PKF,
Certified Public Accountants, A Professional Corporation, as the Company's
registered independent public accounting firm for the fiscal year ending
December 31, 2008;
|
PROPOSAL
1
|
3
|
THE
MERGER AGREEMENT - SELECTED INFORMATION
|
3
|
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND THE MERGER
PROPOSAL
|
11
|
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
|
16
|
THE
MERGER AGREEMENT – MATERIAL ASPECTS
|
18
|
General
Description of the Merger
|
18
|
Background
of the Merger
|
18
|
Other
Relevant Discussions
|
26
|
Reasons
for the Merger
|
27
|
Recommendation
of the Company's Board of Directors
|
30
|
Opinion
of Cowen and Company, LLC
|
31
|
Certain
Effects of the Merger
|
37
|
Financing
by SNC of Merger and Related Transactions
|
38
|
Interests
of the Company's Directors and Executive Officers in the
Merger
|
38
|
Material
U.S. Federal Income Tax Consequences
|
40
|
Information
Reporting and Backup Withholding
|
41
|
Regulatory
and Other Governmental Approvals
|
42
|
Certain
Financial Forecasts
|
42
|
THE
MERGER AGREEMENT – SUMMARY OF TERMS
|
43
|
Structure
of the Merger
|
43
|
Effective
Date
|
43
|
Merger
Consideration
|
43
|
Procedure
for Receiving Merger Consideration
|
44
|
Treatment
of Options to Acquire Company Shares and Other Equity-Based
Awards
|
45
|
Directors
and Officers
|
45
|
Representations
and Warranties
|
45
|
Conduct
of Business Covenant
|
48
|
Solicitation
of Other Offers
|
51
|
Acquisition
Proposals
|
52
|
Termination
of the Merger Agreement
|
53
|
Termination
Fee
|
54
|
Financing;
Our Cooperation
|
54
|
Employee
Matters
|
55
|
Commercially
Reasonable Best Efforts
|
55
|
Indemnification
and Insurance
|
55
|
Other
Covenants
|
56
|
Conditions
to Completion of the Merger
|
56
|
Amendment
|
57
|
Appraisal
Rights
|
58
|
Litigation
Regarding the Merger Agreement
|
61
|
Market
Prices of the Company Common Stock
|
61
|
PROPOSAL
2
|
63
|
ELECTION
OF DIRECTORS
|
63
|
PROPOSAL
3
|
74
|
RATIFICATION
OF SELECTION OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING
FIRM
|
74
|
ANNEX
A - AGREEMENT AND PLAN OF MERGER
|
A
|
ANNEX
B - OPINION OF COWEN AND COMPANY, LLC
|
B-1
|
ANNEX
C - SECTION
262 OF THE DELAWARE GENERAL CORPORATION LAW
|
C-1
|
PROPOSAL
1
|
·
|
As
required by the merger agreement, cash-out of all Company stock options,
including those held by our directors and executive
officers. This cashout will pay optionholders $0.10 for each
option share or, if higher, the amount by which the option is in-the-money
at the merger price. This payment will be made even for options which as
of the effective time of the merger had not yet satisfied their stated
time-of-service or performance vesting requirements, and even for options
which would be out-of-the-money at the merger price. Based on holdings as
of October 20, 2008, this cashout would result in an estimated aggregate
cash payment to our directors and executive officers of approximately
$642,450 including $290,000 to Mr. Sirangelo and $308,800 to Mr.
Slansky.
|
·
|
Existing
employment agreements with our executive officers Mr. Sirangelo and Mr.
Slansky that include provisions for severance benefits in the event of
resignation for “good reason” in connection with or following the
merger. Mr. Sirangelo’s agreement’s definition of good reason
would include, after the merger, the failure of SNC to make him its chief
executive officer. Mr. Slansky’s agreement’s definition of good
reason would include, after the merger, the failure of the surviving
corporation to offer to continue his employment, position, and benefits
for one year. The estimated cost of severance benefits for the
named executive officers in the event that, immediately following the
merger, each executive officer's employment is terminated by SNC, is
$330,000 for Mr. Sirangelo and $240,000 for Mr. Slansky or in the event
that, immediately following the merger, each executive officer's
employment is terminated by him for “good reason” is $165,000 for Mr.
Sirangelo and $120,000 for Mr.
Slansky.
|
·
|
Continued
indemnification and insurance coverage for our current and former
directors and executive officers for six years following the closing under
the merger agreement.
|
·
|
the
receipt of the required stockholder vote in favor of the approval and
adoption of the merger agreement;
|
·
|
the
absence of any order, injunction, decree or other legal restraint issued
by any governmental entity or other law, rule or legal restraint
preventing, restraining or rendering illegal the consummation of the
merger or any of the transactions contemplated by the merger
agreement;
|
·
|
the
absence of any proceeding by a governmental entity seeking to enjoin,
restrain or otherwise prohibit the merger or any of the transactions
contemplated by the merger
agreement;
|
·
|
the
correctness in all material respects of the representations and warranties
of the Company (without giving effect to any materiality qualifier on any
representation or warranty) as of the date of the merger agreement and as
of the effective time of the merger (except to the extent any such
representation or warranty is expressly made as of an earlier date, in
which case the truth and correctness of such representation or warranty on
and as of such earlier date);
|
·
|
the
performance in all material respects by the Company of all obligations
required to be performed by it under the merger agreement at or before the
effective time of the merger;
|
·
|
the
delivery to SNC by the Company of a certificate signed on behalf of the
Company by our Chief Executive Officer and Chief Financial Officer
certifying as to certain matters;
|
·
|
the
correctness in all material respects of each representation or warranty of
SNC and Merger Sub (without giving effect to any materiality qualifier on
any representation or warranty) as of the date of the merger agreement and
as of the effective time of the merger (except to the extent any such
representation or warranty is expressly made as of an earlier date, in
which case the truth and correctness in all material respects of such
representation or warranty on and as of such earlier
date);
|
·
|
the
performance in all material respects by SNC and Merger Sub of all
obligations required to be performed by them under the merger agreement at
or before the effective time of the
merger;
|
·
|
the
absence of any event or circumstance that has or would reasonably be
expected to prevent or delay the merger or result in a material adverse
effect on the Company’s business, condition, assets, or results of
operations;
|
·
|
the
receipt of certain identified third-party
consents;
|
·
|
the
ineligibility of at least 95% of the Company common stock to pursue
appraisal rights under Delaware
law;
|
·
|
all
shares of Series C Preferred Stock shall have been converted into Company
common stock or shall have been acquired by SNC or redeemed or repurchased
by the Company, and all shares of Series D-1 Preferred Stock shall have
been acquired by SNC or redeemed or repurchased by the Company;
and
|
·
|
rights
to acquire shares of capital stock in the surviving corporation pursuant
to any Company warrant, Company stock option, the Company’s 1999 Employee
Stock Purchase Plan or any other right or instrument following the
effective time of the merger shall (i) represent the collective right to
purchase not more than an aggregate of 500,000 shares of the Company’s
capital stock, and (ii) be held by not more than 20 distinct holders, of
which (A) none can have been officers or directors of the Company at any
time during the period after September 1, 2008, and (B) no more than 10
can hold such rights to purchase in excess of an aggregate of 10,000
shares of the Company’s capital
stock.
|
·
|
by
the mutual written consent of the Company and
SNC;
|
·
|
by
either SNC or the Company, if any order, decree or ruling permanently
restraining or otherwise prohibiting the consummation of the merger has
become final and non-appealable;
|
·
|
by
either the Company or SNC, if the merger has not been consummated on or
before the "outside date," which is defined in the merger agreement as
December 31, 2008;
|
·
|
by
either the Company or SNC, if the Annual Meeting is convened and a vote is
taken and the required stockholder vote in favor of approving and adopting
the merger agreement is not obtained at the Annual Meeting (or at any
adjournment or postponement of the Annual
Meeting);
|
·
|
by
SNC, if:
|
·
|
by
the Company, if:
|
·
|
after
an acquisition proposal for 10% of the assets of, equity interest in, or
businesses of, the Company has been commenced or made to the Company or
its stockholders or otherwise become publicly known or announced the
merger agreement is terminated by SNC or the Company because the required
stockholder vote was not obtained at the Annual Meeting or the merger
agreement is terminated by SNC because the Company has breached its
representations and warranties or covenants under certain circumstances
and, in each case, within 12 months after the merger agreement was
terminated, the Company consummates any acquisition proposal including the
transfer of 50% or more of its assets or equity interests (which need not
be the same acquisition proposal as the acquisition proposal first
mentioned in this paragraph);
|
·
|
the
merger agreement is terminated by SNC because
of:
|
·
|
the
failure by our Board of Directors or any committee thereof to reject
within 10 business days after the receipt thereof or shall have approved
or publicly recommended any acquisition proposal;
|
·
|
our
entry into any (A) letter of intent, memorandum of understanding or
agreement in principle with respect to an acquisition proposal or (B) any
alternative acquisition agreement;
|
·
|
the
commencement of a tender or exchange offer relating to our securities, and
our failure to send to our security holders, within 10 business days after
such tender or exchange offer is first published, sent or given, a
statement disclosing that our Board of Directors recommends rejection of
such tender or exchange offer;
|
·
|
certain
breaches by us of our non-solicitation obligations;
or
|
·
|
a
change in our Board's recommendation with respect to the merger or the
Board of Directors' failure to affirm its recommendation with respect to
the merger; or
|
·
|
the
merger agreement is terminated by the Company to enter into an agreement
with respect to a superior
proposal.
|
·
|
filing
a notice of revocation, that is dated a later date than your proxy, with
the Company's Secretary;
|
·
|
submitting
a duly executed proxy card bearing a later
date;
|
·
|
submitting
a new proxy at a later time, but not later than 11:59 p.m. Pacific
Time on December 14, 2008, or the day before the meeting date, if the
Annual Meeting is adjourned or postponed;
or
|
·
|
voting
in person at an Annual Meeting (simply attending the Annual Meeting will
not constitute revocation of a
proxy).
|
·
|
general
global and local economic and political
conditions;
|
·
|
government
spending levels and priorities with respect to space products,
particularly under a new Presidential
administration;
|
·
|
competitive
conditions, including entries into lines of business of the Company by new
or existing competitors, who may possess resources equal to or greater
than those of the Company, or the effect of Company competitors being
acquired by larger and stronger
organizations;
|
·
|
the
impact of product performance or failure on other products and business
lines of the Company;
|
·
|
effects
of war or terrorism;
|
·
|
the
financial well-being and commercial success of key customers, development
partners and suppliers;
|
·
|
the
performance by third parties upon whom the Company relies for the
provision of goods or services;
|
·
|
changes
in the situation of SNC or SNC’s bank lenders which might result in
unavailability of SNC's debt financing in support of the
merger;
|
·
|
the
occurrence of any event, change or other circumstances that could give
rise to the termination of the merger
agreement;
|
·
|
the
failure of the merger to close for any other
reason;
|
·
|
the
effects on the Company’s business of the announcement of the merger
agreement and the pendency of the merger, including as to the Company's
ability to retain employees and as to relationships with current and
potential future customers;
|
·
|
the effects on the Company’s
business of the merger agreement’s requirement that, until the closing of
the merger, the Company generally not engage in any material activity
without SNC’s consent;
|
·
|
the
risk of litigation in connection with the proposed
merger;
|
·
|
risks
related to management’s attention having been diverted from ongoing
business operations, and continuing to be so diverted, as a result of
needing to attend to matters related to the merger;
and
|
·
|
such
other factors as are described in greater detail in the Company's filings
with the SEC, including, without limitation, the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2007, filed March
28, 2008 and the Company's Quarterly Report on Form 10-Q for the quarterly
periods ended March 31, 2008, filed May 12, 2008, June 30, 2008, filed
August 14, 2008, and September 30, 2008, filed November 13, 2008, the
Executive Employment agreements entered into on December 20, 2005 and
filed on Form 8-K with the SEC December 24, 2005 and the Executive
Employment amendments entered into on April 21, 2008 and filed on Form 8-K
with the SEC April 23, 2008.
|
·
|
On
December 10, 2007, at the suggestion of a business partner involved
in the ORBCOMM matter, Mr. Sirangelo, CEO of SpaceDev, emailed Mr. Fatih
Ozmen, CEO of Sierra Nevada, to initiate general discussions regarding
ways in which Sierra Nevada and SpaceDev might work together on an ORBCOMM
solicitation and other similar
activities.
|
·
|
On
January 7, 2008, Mr. Ozmen and Mr. Sirangelo had a meeting in Denver to
have a general discussion concerning their mutual companies and the
ORBCOMM solicitation.
|
·
|
On
January 18, 2008, the SpaceDev Board of Directors met in a special
strategic planning meeting. The Board met with members of
SpaceDev’s senior management to discuss SpaceDev’s position in the
emerging space market and the perceived direction of and trends in that
market, the perceived threats and challenges associated with SpaceDev’s
position in the market and the potential opportunities to grow and expand
such position. These discussions involved a general review of the various
long-range strategic alternatives available to SpaceDev, including
exploring opportunities for business combinations. The board of
directors instructed SpaceDev’s senior management to explore potential
strategic alternatives for SpaceDev. The Board supported and encouraged
management to explore the hiring of an external financial advisory firm
with significant aerospace credentials to support future discussions that
might be held.
|
·
|
On
January 25, 2008, Mr. Sirangelo met with Mr. Ozmen at the Sierra Nevada
headquarters in Sparks, Nevada (near Reno). During the meeting
Sierra Nevada presented a general corporate overview and there was a
continued general discussion concerning how a working relationship
regarding aerospace programs might be
created.
|
·
|
On
February 5, 2008, Messrs. Sirangelo and Ozmen conducted a teleconference
during which it was decided that as a next step, Sierra Nevada would send
a representative to conduct a visit with SpaceDev at SpaceDev’s Colorado
facility.
|
·
|
On
February 13, 2008, Sierra Nevada’s representative and Mr. Sirangelo met at
SpaceDev’s Colorado facility. During this visit they discussed
how Sierra Nevada and SpaceDev might work together and traded mutual
corporate presentations.
|
·
|
On
February 22, 2008, Messrs. Sirangelo and Ozmen met at Sierra Nevada’s
corporate headquarters in Sparks, Nevada. Mr. Sirangelo
presented a corporate overview to Mr. Ozmen and spoke in further detail
concerning SpaceDev’s manufacturing abilities, the products that they may
have relevant to the ORBCOMM solicitation and the products that SpaceDev
had relevant to the small satellite and propulsion
businesses. Mr. Ozmen discussed Sierra Nevada’s various product
areas, the recent acquisition of MicroSat Systems and Sierra Nevada’s
general plans in space activities, along with its history of
expansion.
|
·
|
On
March 13, 2008, Sierra Nevada’s representative and Mr. Sirangelo met in
Washington, DC at the Sierra Nevada office. The primary
discussions centered around the future of small satellites, the ORBCOMM
solicitation, the relationship between OHB Technology AG and SpaceDev and
the variety of methods and opportunities for SpaceDev and Sierra Nevada to
work together. Sierra Nevada’s representative indicated that
Mr. Ozmen might want to discuss a potential strategic relationship between
the companies and indicated that he would be contacting Mr.
Sirangelo.
|
·
|
On
March 19, 2008, Mr. Ozmen, Mr. Sirangelo and Ms. Eren Ozmen, the CFO of
Sierra Nevada, met at the Sierra Nevada headquarters in
Sparks. During this meeting, the parties continued discussions
regarding how SpaceDev might be involved with the manufacture of small
satellites for Sierra Nevada and how SpaceDev might provide antennas and
deployable structures to Sierra Nevada. Mr. Sirangelo and Mr.
Ozmen also discussed how SpaceDev and Sierra Nevada might work together
within the consolidating and competitive environment of the emerging space
industry. Mr. Ozmen inquired whether SpaceDev might also be interested in
a more significant relationship. Mr. Sirangelo indicated that
it would be a discussion that he would need to have with the SpaceDev
Board but that it might be worthwhile to continue to try to outline what
form a potential transaction might take. Mr. Ozmen asked for
information on SpaceDev and Mr. Sirangelo indicated he would put together
a more detailed package of SpaceDev’s public information and forward a
mutual non-disclosure
agreement.
|
·
|
On
March 26, 2008, Messrs. Ozmen and Sirangelo held a conference call during
which Mr. Ozmen indicated that he and his team were examining potential
strategic alternatives for consideration by SpaceDev. Mr. Ozmen
also indicated that he was planning to be in the San Diego area and wanted
to come by to visit SpaceDev.
|
·
|
On
March 27, 2008, the SpaceDev Board met for its regularly scheduled
quarterly Board meeting. During this meeting, the Board engaged
in an extensive discussion of the various strategic alternatives for
SpaceDev. The Board discussed the alternatives that SpaceDev
might pursue in order to thrive in the current space and business
environment. It reviewed the ongoing consolidation within the
small satellite marketplace and the recent acquisitions of all the primary
competitive small satellite companies by larger companies, and considered
the business risks which this posed for the Company. The Board
discussed the possibility of various types of directions and
transactions. As part of this it reviewed the initial
discussions that had been held by management with Sierra
Nevada.
|
·
|
Also
on March 27, 2008, Mr. Ozmen met in SpaceDev’s office in Poway, California
(near San Diego) with Mr. Sirangelo, where Mr. Sirangelo indicated that
the Board would be open to entertaining a strategic relationship proposal
from Sierra Nevada. Mr. Sirangelo also indicated that he would
like to simultaneously pursue a path for the companies to potentially
enter into a contractual relationship around providing manufacturing and
systems to Sierra Nevada for the ORBCOMM program, regardless of whether a
strategic relationship was consummated. Mr. Ozmen agreed and
indicated that both alternatives may, at this point, be of interest to
Sierra Nevada.
|
·
|
On
April 3, 2008, Messrs. Sirangelo and Slansky had a meeting with Cowen to
discuss strategic alternatives, industry outlook and the various
discussions with potential partners that were known to
SpaceDev.
|
·
|
On
April 4, 2008, Mr. Ozmen, Ms. Ozmen and Mr. Sirangelo met at Sierra
Nevada’s Sparks headquarters to continue the dual discussions around a
potential strategic and/or contracting relationship and to further
discussions regarding the potential manufacturing
relationship. The principals of Sierra Nevada indicated that
they might be interested in making a proposal to acquire the outstanding
equity of SpaceDev. The parties discussed the considerations in
this action, SpaceDev’s position and requirements as a public company and
Sierra Nevada’s past successful history in merging and consolidating
companies.
|
·
|
On
April 10, 2008, Messrs. Ozmen and Sirangelo had a telephone conference to
discuss what information Sierra Nevada might be interested in examining
and the internal steps that it was going through to evaluate
SpaceDev. They agreed to have a status check sometime the
following week to see if this preliminary evaluation was
completed.
|
·
|
On
April 18, 2008, Mr. Ozmen called Mr. Sirangelo and indicated that he was
going to provide a non-binding letter stating Sierra Nevada’s general
interest sometime the following week following the signing of a mutual
Non-Disclosure Agreement.
|
·
|
On
April 20, 2008, Mr. Sirangelo provided Mr. Ozmen with an expanded
Non-Disclosure Agreement for Sierra Nevada’s
signature.
|
·
|
On
April 21, 2008, Sierra Nevada delivered the executed Non-Disclosure
Agreement to Mr. Sirangelo. Mr. Ozmen, by e-mail, then
delivered a letter to Mr. Sirangelo explaining the value of a
potential business combination between Sierra Nevada and SpaceDev and how
the transaction could be completed, including by way of a stock-for-cash
transaction. It outlined, in non-binding terms, the general parameters of
a potential transaction, including a gross acquisition price of $40
million. The parties discussed that this was before any
diligence and before consideration of preferred stock retirement
requirements and certain
deductions.
|
·
|
On
April 27, 2008, Mr. Sirangelo in an e-mail to Mr. Ozmen indicated that he
was planning to discuss the offer internally and would respond back in due
time. He also inquired into Mr. Ozmen’s availability to join a
future informational SpaceDev board meeting to introduce himself and
Sierra Nevada to the Board and its advisors. On April 28, 2008,
Mr. Ozmen indicated that he would be willing to join the SpaceDev Board
meeting telephone conference
call.
|
·
|
On
May 1, 2008, Mr. Ozmen provided a full Sierra Nevada corporate
presentation to Mr. Sirangelo for distribution to SpaceDev’s Board members
and advisors.
|
·
|
On
May 1, 2008 and May 2, 2008, SpaceDev’s management met with Cowen to
further their diligence, discussions and to conduct more in-depth meetings
with SpaceDev management.
|
·
|
On
May 2, 2008, SpaceDev held an informational teleconference of the Board of
Directors to provide background material to the Board in preparation for
the formal Board meeting to be held May 8, 2008 and to provide an update
on strategic alternatives available to SpaceDev. The Board
discussed each alternative at length, including the alternative of taking
no action. Management provided an interim update on the
activities of Cowen, which had included contacting several targeted
aerospace companies to determine if there was strategic interest in
SpaceDev. During the meeting, Mr. Ozmen was invited to join the
SpaceDev Board conference call and provided a detailed overview of Sierra
Nevada, its interest in SpaceDev and of the details of the letter it
provided to Mr. Sirangelo on April 21, 2008. The Board members
had the opportunity to ask Mr. Ozmen questions and to be introduced to and
better understand Sierra Nevada. After Mr. Ozmen departed the
call, the Board continued the discussions and recommended that Mr.
Sirangelo continue to hold discussions and explain the benefits of
SpaceDev to Sierra Nevada, and to continue to work with Cowen to find
and/or develop transactions which would be more
favorable.
|
·
|
On
May 6, 2008, Messrs. Sirangelo and Ozmen had a telephone conference to
discuss the Sierra Nevada letter, the presentation made to the Board and
various aspects of SpaceDev’s financial and company
assets. This included the SpaceDev’s tax loss
carry-forwards and state tax credits. Mr. Sirangelo asked if
Sierra Nevada might be interested in making a significant equity
investment in SpaceDev, as opposed to a 100% acquisition. Mr.
Ozmen responded that Sierra Nevada had no equity partners in any of its
businesses, and therefore had no interest in a non-100%
acquisition. The parties also had a thorough discussion
regarding Mr. Sirangelo’s assertion that the gross proposed price, for a
complete buyout, would not be strong enough to be considered favorably by
SpaceDev’s Board and stockholders given that certain deductions and
payments would need to occur. Mr. Sirangelo further outlined
what he believed the potential synergies between the companies might be,
including but not limited to: SpaceDev’s high quality employee
base, its research efforts and other assets and how all these could be of
significant long-term value to Sierra Nevada. The parties then
proceeded to discuss and negotiate around these
items.
|
·
|
On
May 7, 2008, Mr. Ozmen and Ms. Ozmen contacted Messrs. Sirangelo and
Slansky to discuss, in detail, various aspects of SpaceDev’s financials
and to further negotiate the acquisition proposal from Sierra
Nevada.
|
·
|
On
May 7, 2008, Mr. Sirangelo, in a phone call and in an e-mail, provided
Sierra Nevada under the NDA, details around SpaceDev’s new nanosatellite
program. Mr. Ozmen and Ms. Ozmen contacted Mr. Sirangelo to
further negotiate the transaction and to inform Mr. Sirangelo that SNC had
in fact won the ORBCOMM contract. Mr. Ozmen indicated that
absent an equity purchase transaction with SpaceDev, SNC would likely
build up its own space capacity in order to perform satellite bus
manufacturing on the ORBCOMM
contract.
|
·
|
On
May 8, 2008, Mr. Ozmen sent an updated, nonbinding general letter of
interest, expressing Sierra Nevada’s interest in pursuing a transaction
with SpaceDev and increasing the proposed gross acquisition price to $44
million. The parties discussed that this was before any
diligence and before consideration of preferred stock retirement
requirements and certain
deductions.
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·
|
On
May 8, 2008, SpaceDev held its regularly scheduled Board of Directors
meeting. In addition to normal business, the Board held a
thorough discussion of various strategic alternatives available to
SpaceDev. Cowen presented a financial analysis of SpaceDev, the
emerging space market and SpaceDev’s current position in the
market. This discussion included a preliminary financial
analysis, an overview of strategic alternatives (including the alternative
of taking no action), a review of these alternatives (including contacts
which Cowen had made) and Cowen’s preliminary conclusions with respect to
the alternatives. This review was based upon Cowen’s
observations, industry knowledge and aerospace and defense
experience. The Board then began a review and discussion of
Sierra Nevada and its general letter of
interest. After a detailed and thorough discussion, the Board
unanimously authorized management to enter into formal negotiations with
Sierra Nevada toward a definitive agreement with pricing along the lines
of the submitted May 8 general letter of interest while continuing to
explore viable alternatives and that management be authorized and directed
to take any and all prudent actions to implement the intent of the
Board.
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·
|
On
May 9, 2008, in a telephone conversation with Mr. Ozmen, Mr. Sirangelo
indicated the result of the Board Meeting and it was decided to move
forward to start the legal and financial due diligence and to begin the
discussions of the legal documentation needed for the transaction and of
the determination of what the net purchase price would
be.
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·
|
On
May 10, 2008, Mr. Sirangelo in an e-mail, sent the Company’s draft Form
10-Q and financial press release (under NDA) to Sierra Nevada and provided
an overview of the information, as well as the link to the SEC website for
review of publicly available
information.
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·
|
On
May 17, 2008, Ms. Ozmen and other SNC personnel visited with Messrs.
Sirangelo and Slansky in SpaceDev’s Colorado facility. In
addition to a tour of the facility and corporate presentations, the main
purpose of the meeting was to hold preliminary discussions around the
expected financial, legal and administrative due diligence, schedules and
information requests.
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·
|
On
May 19, 2008, the Company established an extensive “data room” containing
documents responsive to Sierra Nevada’s due diligence requests and SNC
created an FTP site on May 20,
2008.
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·
|
On
May 19, 2008 and May 20, 2008, Mr. Ozmen, Ms. Ozmen and Mr. Sirangelo held
conversations regarding the process to complete all mutual diligence and
the steps required to obtain alignment on the major
issues. Also, Mr. Sirangelo provided SpaceDev’s recent press
releases to SNC and discussed these
announcements.
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·
|
On
May 20, 2008, a first draft of a definitive merger agreement was provided
by SpaceDev’s legal counsel to SNC and its legal
counsel.
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·
|
On
May 21, 2008 through May 26, 2008, Messrs. Sirangelo and Ozmen
communicated numerous times about developing a contractual relationship
for antenna sub-systems around SNC’s ORBCOMM project. Mr. Ozmen
asked for formal information on SpaceDev’s products. Messrs. Sirangelo and
Ozmen discussed SpaceDev’s antenna products and how they might be used as
part of SNC’s client proposals. On May 26, 2008, Messrs.
Sirangelo and Ozmen had an in person meeting in Washington, D.C. to
further discuss the ORBCOMM program related work and if there was any
other way for the two companies to
collaborate.
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·
|
On
June 6, 2008 through June 9, 2008, Mr. Slansky communicated with various
SNC representatives to discuss and answer questions regarding preliminary
financial information provided by
SpaceDev.
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·
|
On
June 6, 2008, the SpaceDev Board of Directors met in a special meeting
attended also by outside counsel and Cowen. Management
proceeded to update the Board on the status of discussions and
negotiations with Sierra Nevada, including some of the key financial and
business issues that had arisen. Mr. Sirangelo stated that the
“data room” had been established and an initial draft of a definitive
merger agreement had been exchanged, identifying legal, structural and
financial issues to negotiate and that discussions were
on-going. Management reiterated that many business or legal
issues had not been negotiated and that there were likely to be several
issues to be resolved with Sierra Nevada. The Board discussed
issues relating to the acquisition of a public company by a closely held
private company, which were becoming obstacles to a potential
transaction. The Board directed management to continue to
negotiate the transaction. Mr. Sirangelo also cautioned the
Board that the transaction may not happen. The Board also
reviewed the search for alternative business and strategic relationships
and combinations and encouraged management to continue this
effort.
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·
|
On
June 12, 2008 and June 13, 2008, Messrs. Sirangelo and Ozmen communicated
several times regarding the due diligence information provided by
SpaceDev. Sierra Nevada’s preliminary feedback regarding the
data was discussed, as well as the negotiation
schedule.
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·
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On
June 17, 2008 and June 19, 2008, Messrs. Sirangelo, Slansky, Ozmen and
their legal and financial representatives had a series of teleconferences
and discussions to review due diligence. In addition, they
began negotiations on the draft of the merger agreement. In
view of the required preferred stock repayment and the payment of fairness
opinion fees for the transaction, the parties agreed on a deduction of
$1.5 million from the gross purchase. The parties agreed that
additional future discussions would be needed to settle the remaining
deductions. The parties also collectively decided on a schedule for legal
matters, reviewed SpaceDev’s tax credits, current ownership structure,
option and warrants structure and other
matters.
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·
|
On
July 1, 2008 and July 2, 2008, Messrs. Sirangelo and Ozmen and their
various representatives had extensive discussions regarding the financial
and corporate information provided by SpaceDev and also planned for site
visits by Sierra Nevada representatives to the SpaceDev facilities in
Colorado and Poway for operational reviews and
analysis.
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·
|
On
July 7, 2008, Sierra Nevada representatives met with senior members of
SpaceDev’s operations team to discuss questions relating to equipment,
facilities, program management and informational systems in
Colorado.
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·
|
On
July 8, 2008, Messrs. Sirangelo and Slansky met with Mr. and Ms. Ozmen in
Sparks, Nevada to continue to negotiate the merger
agreements. The parties were not able to conclude their
negotiations by the end of the session. Messrs. Sirangelo and
Ozmen agreed that since the Ozmen’s would be unavailable for most the
month of July and early August due to an extended pre-planned vacation,
the parties should attempt to renew discussions the following
month.
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·
|
On
July 11, 2008, a special meeting of SpaceDev’s Board of Directors was
held. Also in attendance was SpaceDev’s corporate
counsel. Management then provided the Board with an
update on the potential Sierra Nevada transaction. It was noted
that SpaceDev had provided all the due diligence information that had been
requested to date and had developed a draft definitive merger
agreement. Management further explained that there were still
several deal issues, which could make or break the deal. Mr.
Sirangelo believed that the Sierra Nevada principals wanted to conclude
the transaction and stated that they remained interested in
SpaceDev. This was the first public company that Sierra Nevada
had attempted to acquire. In typical public company
acquisitions, there is no holdback or indemnification to help ameliorate
issues which the buyer identifies post-closing. This was a
challenge for Sierra Nevada. Also, the way certain of
SpaceDev’s options and warrants were drafted and structured, did not allow
for a certainty that they would terminate upon a merger, and SpaceDev
could not be certain that it could procure termination agreements with
100% of the holders. Sierra Nevada considered this to be troubling The
Board also reviewed the search for alternative business and strategic
relationships and combinations and encouraged management to continue this
effort.
|
·
|
On
August 8, 2008, Mr. Ozmen sent an e-mail indicating that while Sierra
Nevada was still committed to working a transaction with SpaceDev, there
was still concern about certain stockholder issues and there was not a
clear path to resolve the issue. He suggested a further
teleconference to occur when he returned to the United States later in
August.
|
·
|
On
August 10, 2008 and August 11, 2008, Messrs. Sirangelo and Ozmen spoke on
brief teleconferences during which they reviewed the status of the
transaction, the status of due diligence, the major issues still to be
resolved and the activities that would be necessary to complete any
transaction. There was no major progress made on outstanding
issues. The parties did agree to meet in
person.
|
·
|
On
August 12, 2008, Messrs. Sirangelo and Slansky met with Mr. and Ms.
Ozmen. Also in attendance in person and by phone were each
company’s legal advisors. The parties attempted to review
again the variety of issues surrounding a potential
transaction. Each company’s attorney indicated that some
progress had been made on a definitive agreement but not on the major
issues, particularly SNC’s need to ensure retirement of all SpaceDev
derivative securities and the consequences if they were
not. The parties again went through all elements of SpaceDev’s
ownership and several follow-up due diligence requests were
made. The meeting adjourned without any resolution of the
matters at hand.
|
·
|
On
August 26, 2008 and August 27, 2008, the parties attempted to resolve the
outstanding issue of warrants and options. Sierra
Nevada presented the additional stipulation of creating cashout
offers to option holders and warrant holders to prevent derivative
securities from surviving the merger and to achieve other corporate
objectives.
|
·
|
On
September 3, 2008 and September 4, 2008, Messrs. Sirangelo and Ozmen held
discussions to attempt to negotiate the remaining outstanding issues
related to stock ownership, options and warrants. After
considerable dialogue, they came to a mutual resolution which involved the
Company seeking agreements to retire all options and warrants before the
closing, with failure to achieve retirements at the 100% level to result
in a purchase price reduction but not necessarily a failure to satisfy a
closing condition. They both undertook to speak to their
respective attorneys about their understandings and to have these final
changes reflected in a revised draft merger
agreement.
|
·
|
During
the week of September 5, 2008, SpaceDev Directors considered the proposed
merger agreement draft and other supporting documents. Mr.
Sirangelo held in-person or teleconference meetings with each of the
SpaceDev Board members to answer any questions, discuss the transaction,
and highlight the new changes made to the draft merger
agreement.
|
·
|
On
September 12, 2008, the SpaceDev Board of Directors met in an extended
special meeting and discussed all aspects of the potential Sierra Nevada
transaction. This included the agreements, the nature of the
transactions, the resolutions that had enabled the final issues to be
resolved, the status of SpaceDev and other strategic discussions SpaceDev
had had. The Board also received an extensive briefing from
Cowen, including a financial analysis of the transaction and the
industry. Cowen also discussed and presented its opinion that,
as of that date and based upon and subject to the various considerations
and assumptions set forth therein, the merger consideration to be received
by holders of shares of the Company common stock pursuant to the draft
merger agreement dated September 5, 2008 was fair, from a financial point
of view, to such holders. The Cowen opinion was reviewed, discussed and
accepted by the Board. At the end of this meeting, the Board
unanimously passed a resolution approving the merger
agreement.
|
·
|
On
September 11, 2008 and September 12, 2008, Messrs. Sirangelo and Ozmen and
Ms. Ozmen communicated about the SpaceDev Board meeting and the next steps
in the transaction process toward an actual signing of a merger agreement,
including several additional “pre-signing conditions” that SNC
required.
|
·
|
On
September 16, 2008, the SpaceDev executive team made a trip to Sierra
Nevada’s headquarters to begin familiarization
discussions.
|
·
|
On
September 21, 2008, Mr. Sirangelo and Mr. Ozmen traded emails regarding
the contents of the draft disclosure schedule related to the
representations and warranties SpaceDev was making in the merger
agreement. Mr. Ozmen also indicated that SNC had not completed
its due diligence and that such investigation needed to be completed
before the signing of an
agreement.
|
·
|
On
September 22, 2008, Mr. Sirangelo provided Mr. and Ms. Ozmen further
information requested during the September 21
communications.
|
·
|
On
September 25, 2008, Mr. Ozmen indicated that SNC was updating its internal
valuation and assumptions based upon the most recent due diligence and
external market conditions (i.e., the worldwide financial and credit
markets downturn) and expressed that they would need to update their
assessment of the initial valuation proposition. Mr. Ozmen
asked for additional financial due diligence regarding programs and
backlogs.
|
·
|
On
September 26, 2008, Mr. Sirangelo provided to Mr. Ozmen and Ms. Ozmen by
email copies of data to assist in their assessment of their initial
valuation.
|
·
|
On
September 29, SpaceDev provided Mr. and Ms. Ozmen additional due diligence
information and requested a meeting to discuss the process. The
two companies’ financial teams also had an extensive meeting with the
Company’s tax accountants to review and discuss previous tax returns and
tax credits.
|
·
|
On
September 30, 2008, Mr. Ozmen and Mr. Sirangelo spoke regarding the due
diligence provided and also discussed several major
programs. Also, Mr. Sirangelo and Ms. Ozmen also communicated
about setting up a follow-up meeting and agreed to meet in person the next
day. Ms. Ozmen provided a detailed explanation of their
analysis, requested additional financial due diligence and set an agenda
for the next meeting.
|
·
|
On
October 1, 2008, Mr. Sirangelo and Mr. Slansky met in person with Ms.
Ozmen at the SNC headquarters in Sparks. The parties had an
extensive discussion regarding the information provided by the Company in
response to Sierra Nevada’s additional due diligence requests, the
complete overall SNC assessment of the Company’s current and future
expected financial position and the potential value of the integrated
companies. The parties also discussed at length the external
market and global financial crisis and environment. Ms. Ozmen
indicated that because of their assessment of all of the above, SNC would
not be able to maintain its previous valuation model and indicated that
they would be providing a revised offer position to the
Company. Ms. Ozmen also asked for additional financial
due diligence to finish their analysis. Also later on this
date, Mr. Slansky responded to the diligence request from Ms.
Ozmen.
|
·
|
On
October 2, 2008, Mr. Ozmen and Mr. Sirangelo communicated about the
previous day’s session and discussed SNC developing position and set up a
future discussion.
|
·
|
On
October 3, 2008, the SpaceDev Board of Directors held an informational
meeting to discuss the status of the SNC transaction and to review in
detail the issues which had been raised by
SNC.
|
·
|
On
October 4, 2008, Mr. Sirangelo and Mr. Ozmen spoke by telephone to discuss
the transaction and SNC’s revised valuation range. Mr. Ozmen
proposed a 15% price reduction and asked that the Company consider it
seriously. Mr. Sirangelo presented the Company’s point of view
regarding the recent SNC assessment and financial market
conditions. The parties were not in alignment and Mr. Sirangelo
indicated that he would provide to SNC additional financial
data.
|
·
|
On
October 5, 2008, Mr. Sirangelo provided in an email the financial due
diligence referenced in the October 4 discussions and counter-offered that
the merger price should be reduced by 5% to address the new market and
financial conditions.
|
·
|
On
October 6, 2008, Mr. Ozmen, by email, requested due
diligence. Later that day, Mr. Sirangelo
provided updated due diligence information. Later
that day, Ms. Ozmen requested additional financial due diligence data and
sent an email with further explanation of SNC’s financial evaluation of
the Company, SNC’s banking situation and the general concerns that SNC
had. Later that day, Mr. Sirangelo provided SNC with the
requested data in the requested financial
template.
|
·
|
On
October 7, 2008, Mr. Ozmen, in an email, provided feedback on the data
provided the previous day and asked a series of additional questions
regarding the data. He expressed that SNC would be seeking a
greater reduction in the valuation than the Company had counter-offered,
explained SNC’s analysis and requested a discussion to see if a compromise
could be obtained.
|
·
|
On
October 8, 2008, Mr. Sirangelo and Ms. Ozmen had an extensive discussion
regarding the financial terms of the transaction. After considerable
dialogue and compromise, they agreed upon a valuation which was
approximately between the two starting positions, and the two parties
discussed the process and information needed to get to a
signing.
|
·
|
On
October 9, 2008, Mr. Sirangelo sent an email to Mr. and Ms. Ozmen with his
understanding of the previous day’s discussion. Later this day,
Ms. Ozmen responded confirming agreement on the merger consideration and
requesting two additional changes to the merger agreement (introducing the
appraisal rights closing condition and the employee bonus plan pre-closing
covenant).
|
·
|
On
October 10, 2008, Mr. Sirangelo informed Mr. and Ms. Ozmen of the death of
SpaceDev founder James W.
Benson.
|
·
|
On
October 10, 2008, the SpaceDev Board met and discussed SNC’s requested
changes from the merger agreement version which the Board had approved on
September 12. The Board agreed to hold a formal meeting to
approve or disapprove the transaction upon the completion of diligence by
SNC, the final drafting of the merger agreement and any update to the
fairness opinion draft as being undertaken by Cowen. Cowen made a
preliminary observation that it appeared that the evaluations of
comparable companies and transactions had declined in the current
financial market’s turmoil, proportionately more than SNC’s proposed
acquisition price had
declined.
|
·
|
Between
October 11 and 17, 2008, the SpaceDev team lead by Mr. Slansky and SNC
financial and legal teams had multiple conversations and correspondence
needed to conduct the activities necessary to finish the merger agreement
and supporting documents that would support its signing and public
announcement. During this time, SpaceDev provided a
considerable amount of additional due diligence materials as requested and
SNC provided SpaceDev with an updated financing letter confirming the
availability of funds post the US banking and financial markets
problems.
|
·
|
On
October 17, Mr. Slansky, Mr. Sirangelo and the Company’s and SNC’s lawyers
conducted a final review meeting during which it was mutually agreed that
all major pre-signing conditions from both sides had been met and the
signing of the merger agreement would occur on October 20 pending final
approvals from SpaceDev’s and SNC’s boards and that between this meeting
and the morning of October 20, all remaining document changes would be
completed.
|
·
|
On
October 20, 2008, the SpaceDev Board met in a formal session, along with
outside counsel and Cowen, during which they discussed all aspects of the
Sierra Nevada transaction. This included the updated merger
agreement, the nature of the transactions, the compromises that had
enabled the final issues to be resolved and the status of
SpaceDev. Management noted that none of the potential
alternative business combinations had matured. The Board also
received an extensive updated briefing from Cowen, including a detailed
review of their financial analysis of the transaction and the
industry. Cowen also presented its opinion that, as of that
date and based upon and subject to the various considerations and
assumptions set forth therein, the merger consideration to be received by
holders of shares of the Company common stock pursuant to the merger
agreement was fair, from a financial point of view, to such holders. The
Cowen opinion was reviewed, discussed and then accepted by the Board.
Outside counsel reviewed with the Board their fiduciary duties under
Delaware law. At the end of this session, the Board unanimously approved
the merger agreement, determined it to be advisable and fair, and directed
that it be presented for stockholders’ consideration at the Annual
Meeting.
|
·
|
On
October 20, 2008, SNC’s and Merger Sub’s Boards of Directors approved the
merger agreement.
|
·
|
On
October 20, 2008, SpaceDev, Sierra Nevada and Merger Sub executed and
delivered the merger
agreement.
|
·
|
the
fact that the merger price represents a substantial premium over the
Company’s recent stock price on the OTCBB; the $0.68 to $0.72 per share
price range envisioned by the Board represented a premium of approximately
52% to 61% over the volume weighted average closing sale price of the
Company common stock for the 30 trading days before October 20, 2008, the
date the merger agreement was approved and signed. (At the
time of the Board meeting, it was understood that the low end of the price
range would be $0.68 per share based on a possible merger agreement
"closing adjustment" of up to $2 million if not all stock options and
warrants were terminated or surrendered at the time of the
merger . Subsequently, we arranged for enough terminations and
surrenders to reduce the maximum possible closing adjustment amount to
$250,000. Therefore, even when one now takes into account the
estimated costs to defend the merger-related lawsuits which were filed
against the Company after October 20, we believe the low end of the
projected range for the per-common-share merger consideration can now be
considered to be $0.70 per share.);
|
·
|
the
difficulty of the path to achieving a higher stock price and market
capitalization, due to the thin, illiquid market for the Company’s stock,
the likelihood that selling pressure for major stockholders would put
considerable ongoing downward pressure on the stock price over the
foreseeable future, and inability of major good news (such as the
announcement of the Company’s contract with Scaled Composites for
SpaceShipTwo work) to cause a significant or sustained stock price
increase;
|
·
|
the
fact that the merger consideration is all cash, so that the transaction
allows the Company's stockholders to realize fair value, in cash, for
their investment, provides such stockholders certainty of value for their
shares and removes the stockholders' exposure to the risks inherent in
continuing to operate as a publicly traded
company;
|
·
|
the
belief of the Board of Directors that the merger likely would be completed
by SNC if approved by the Company's stockholders based on, among other
things, the absence of a financing condition and Sierra Nevada’s long
history of closing transactions;
|
·
|
the
fact that the terms of the merger agreement provide for a 45 day "window
shop" period from October 20, 2008 through December 4, 2008, during which
the Company may receive and respond to alternative acquisition proposals
subject to the terms of the merger
agreement;
|
·
|
the
results of the numerous market tests conducted by the Company and the
belief of the Board of Directors that, in exploring a merger of the
Company, it was preferable to negotiate on a confidential basis directly
with a finite number of strategic companies rather than to conduct a
public "auction" of the Company before signing a definitive transaction
agreement because the uncertainties such a process would create
in the minds of the Company’s current and prospective customers and
employees would be highly detrimental to the Company’s
business;
|
·
|
the financial analyses and
information reviewed with the Board of Directors by the Company's
financial advisor, Cowen, in connection with the proposed merger (see
"Background of the Merger" beginning on page 18 and "Opinion of Cowen and
Company, LLC" beginning on page 31);
|
·
|
the opinion dated October 20,
2008, of Cowen delivered to the Board of Directors to the effect that, as
of that date and based upon and subject to the various considerations and
assumptions set forth therein, the merger consideration to be received by
holders of shares of the Company common stock pursuant to the merger
agreement was fair, from a financial point of view, to such
holders. The full text of the Cowen opinion dated October 20,
2008, which sets forth the assumptions made, matters considered and
limitations on the scope of review undertaken by Cowen in rendering its
opinion, is attached to this proxy statement as Annex B. The
Company and its Board of Directors encourage stockholders to read the
Cowen opinion carefully and in its entirety, as well as the section below
entitled "Opinion of Cowen and Company, LLC " beginning on page
31;
|
·
|
the
right of the Company to terminate the merger agreement in order to accept
a superior proposal, subject to paying a termination fee of $1.5 million,
which represented only about 4% of the acquisition
amount;
|
·
|
the
understanding of the Board of Directors, after consultation with its
advisors, that the size of the termination fee payable in order for the
Company to accept a superior proposal, in the event that the merger
agreement is terminated under certain circumstances, is reasonable and
customary in light of the benefits of the merger, commercial practice and
transactions of this size and
nature;
|
·
|
the
fact that completion of the merger is subject to approval by our
stockholders and the right of our Board of Directors, under certain
circumstances specified in the merger agreement, to change its
recommendation that our stockholders vote in favor of the approval and
adoption of the merger agreement, subject to SNC's right to terminate the
merger agreement and receive a termination
fee;
|
·
|
the
business risk inherent in continuing the Company’s operations on a
standalone basis, including the anticipating continuing difficulty in
obtaining significant traction with customers for high-dollar,
mission-critical projects in light of the Company’s relatively small size,
the diseconomies of scale related to the Company’s relatively small size
and its public-company status, and the uncertain future for the funding of
government space programs in light of overall budget deficits, the 2008
global financial crisis, the continued need, for the foreseeable future,
for defense budget allocations to favor the needs of the ongoing
war;
|
·
|
the
uncertain outlook for US government funding of space projects in light of
the upcoming change in government, the fact that space was not a featured
part of either Presidential candidate’s platform, and recent announcements
by the US government of the delaying or cancellations of several major
space programs;
|
·
|
the
difficulty of obtaining a desirable larger scale (i.e., doubling or
tripling in size) either by growing operations organically or by finding a
suitable acquisition target;
|
·
|
the
potential alternative stockholder value that could be expected to be
generated from the various strategic alternatives available to the
Company, including the alternative of remaining
independent;
|
·
|
the
belief of the Board of Directors that the sale of the Company at this
transaction price was more favorable to stockholders than the other
strategic alternatives available to the Company and its
stockholders;
|
·
|
the
commitment made by SNC to recognize continuing employees’ service time
with the Company; and
|
·
|
the other terms and conditions of
the merger agreement as reviewed by our Board of Directors (see "THE
MERGER AGREEMENT-MATERIAL ASPECTS" beginning on page 18) and the fact that they were the
product of extensive arm's-length negotiations between the
parties.
|
·
|
the
fact that the terms of the merger agreement provide for a "window shop"
period from October 20, 2008 through December 4, 2008, during which the
Company may receive unsolicited alternative acquisition
proposals;
|
·
|
the
fact that the Company is permitted under certain circumstances to
terminate the merger agreement in order to accept a superior proposal,
subject to payment of a termination
fee.
|
·
|
the
fact that completion of the merger is subject to approval by our
stockholders and the right of our Board of Directors, under certain
circumstances specified in the merger agreement, to change its
recommendation that our stockholders vote in favor of the approval and
adoption of the merger agreement, subject to SNC's right to terminate the
merger agreement and receive a termination fee;
and
|
·
|
the
fact that none of our directors or officers is affiliated with
SNC.
|
·
|
the
fact that the Company's stockholders will lose the opportunity to
participate in any future earnings or growth of the Company and will not
benefit from any future appreciation in value of the
Company;
|
·
|
the
fact that the price being paid for each Company share in the merger is
below the historical price levels of the Company common stock, and below
the 52-week high stock price;
|
·
|
the
fact that the merger agreement was entered into without a public
auction;
|
·
|
the
risks and costs to the Company if the merger does not close, including the
diversion of management and employee attention, potential employee
attrition and the potential effect on business and customer
relationships;
|
·
|
the
risk that the merger might not be completed in a timely
manner;
|
·
|
the
customary restrictions on the conduct of the Company's business before the
completion of the merger, which among other things require the Company to
conduct its business in all material respects only in the ordinary course,
subject to specific limitations, which may delay or prevent the Company
from undertaking business opportunities that may arise pending completion
of the merger;
|
·
|
the
fact that the merger agreement does not contain a “go shop” provision;
and
|
·
|
the
possibility that the $1.5 million termination fee payable by the Company
under specified circumstances and the right of SNC to match the terms of
any competing proposal may discourage a competing proposal to acquire the
Company from emerging.
|
·
|
has
determined that the merger agreement and the merger, upon the terms and
conditions set forth in the merger agreement, are advisable and fair to,
and in the best interests of, the Company and its
stockholders;
|
·
|
has
approved and adopted the merger agreement;
and;
|
·
|
recommends
that the Company's stockholders vote "FOR" the approval and adoption of
the merger agreement.
|
|
•
|
a
draft of the merger agreement dated October 10, 2008, which was the most
recent draft made available to
Cowen;
|
|
•
|
certain
publicly available financial and other information for SpaceDev and
certain other relevant financial and operating data furnished to Cowen by
the management of SpaceDev;
|
|
•
|
certain
internal financial analyses, financial forecasts, reports and other
information concerning SpaceDev, referred to as the Company Forecasts,
prepared by the management of
SpaceDev;
|
|
•
|
discussions
Cowen had with certain members of the management of SpaceDev concerning
the historical and current business operations, financial condition and
prospects of SpaceDev and such other matters Cowen deemed
relevant;
|
|
•
|
the
reported price and trading histories of the shares of SpaceDev Common
Stock as compared to the reported price and trading histories of certain
publicly traded companies Cowen deemed
relevant;
|
|
•
|
certain
financial terms of the merger as compared to the financial terms of
certain selected business combinations Cowen deemed
relevant;
|
|
•
|
based
on the Company Forecasts, the cash flows generated by SpaceDev on a
stand-alone basis to determine the present value of the discounted cash
flows; and
|
|
•
|
such
other information, financial studies, analyses and investigations and such
other factors that Cowen deemed relevant for the purposes of its
opinion.
|
One
Week
|
Four
Weeks
|
||||||
Premiums
Paid to Stock Price:
|
Median
|
Mean
|
Median
|
Mean
|
|||
Industry
Transactions
|
26.1%
|
43.8%
|
26.5%
|
47.9%
|
|||
Implied
SpaceDev Stock Price:
|
|||||||
One
week spot price ($0.40)
|
$0.50
|
$0.58
|
-
|
-
|
|||
Four
week spot price ($0.51)
|
-
|
-
|
$0.65
|
$0.75
|
Target
|
Acquirer
|
Saab
Space AB
|
RUAG
Holding AG
|
Radyne
Corporation
|
Comtech
Telecommunications Corp.
|
CSA
Engineering Inc.
|
Moog
Inc.
|
Surrey
Satellite Technology Limited
|
EADS
Astrium
|
Gilat
Satellite Networks Ltd.
|
Investor
Group
|
MacDonald,
Dettwiler and Associates Ltd. – Information Systems and Geospatial
Services operations
|
Alliant
Techsystems Inc.
|
Alliance
Spacesystems, LLC
|
MacDonald,
Dettwiler and Associates Ltd.
|
AeroAstro,
Inc.
|
Radyne
Corporation
|
Andrew
Corporation
|
CommScope,
Inc.
|
Lyman
Bros., Inc, – GlobalSat division
|
Globecomm
Systems Inc.
|
Swales
Aerospace
|
Alliant
Techsystems Inc.
|
Cobham
plc – Precision Antennas Ltd. subsidiary
|
Andrew
Corporation
|
The
Boeing Company – Rocketdyne Propulsion and Power business
|
United
Technologies Corporation
|
Space
Imaging LLC
|
GeoEye,
Inc. (f/k/a ORBIMAGE Holdings Inc.)
|
PSI
Group
|
Alliant
Techsystems Inc.
|
CMC
Electronics Inc. – Cincinnati Electronics
|
L-3
Communications Holdings, Inc.
|
Eastman
Kodak Company – Remote Sensing Systems business
|
ITT
Industries, Inc.
|
Mission
Research Corporation
|
Alliant
Techsystems Inc.
|
Sequa
Corporation – Atlantic Research Corporation subsidiary
|
GenCorp
Inc. (Aerojet-General Corporation
subsidiary)
|
General
Dynamics Corporation – Ordnance and Tactical Systems, Space Propulsion and
Fire Support business
|
GenCorp
Inc. (Aerojet-General Corporation
subsidiary)
|
TRW
Inc.
|
Northrop
Grumman Corporation
|
Earth
Satellite Corporation
|
MacDonald,
Dettwiler and Associates Ltd.
|
GenCorp
Inc. (Aerojet-General Corporation subsidiary) – Electronics and
Information Systems business
|
Northrop
Grumman Corporation
|
Alcoa
Inc. – Thiokol Propulsion business
|
Alliant
Techsystems Inc.
|
Precedent
Transactions
|
SpaceDev
|
|||||
Median
Total
|
Mean Total
|
Median
<$150 mm
|
Mean <$150
mm
|
Multiple
implied by merger consideration
|
Multiple
implied by adjusted merger consideration
|
|
Enterprise
value as a multiple of:
|
||||||
LTM
revenue
|
1.2x
|
1.3x
|
1.0x
|
1.1x
|
0.9x
|
0.8x
|
LTM
EBITDA
|
10.1x
|
10.9x
|
8.4x
|
8.4x
|
18.5x
|
17.3x
|
Precedent
Transactions
|
|||||
Median
Total
|
Mean Total
|
Median
<$150 mm
|
Mean <$150
mm
|
SpaceDev
|
|
LTM
EBITDA margin:
|
12.4%
|
14.3%
|
12.1%
|
12.1%
|
4.8%
|
Selected
Companies
|
SpaceDev
|
||||||
Low
|
Median
|
Mean
|
High
|
Multiple
implied by merger consideration
|
Multiple
implied by adjusted merger consideration
|
||
Enterprise
value as a multiple of:
|
|||||||
LTM
revenue
|
0.8x
|
1.0x
|
1.1x
|
2.0x
|
0.9x
|
0.8x
|
|
LTM
EBITDA
|
5.6x
|
9.0x
|
8.9x
|
10.8x
|
18.5x
|
17.3x
|
|
CY08E
revenue
|
0.9x
|
1.1x
|
1.1x
|
1.9x
|
0.8x
|
0.8x
|
|
CY08E
EBITDA
|
7.5x
|
9.3x
|
9.2x
|
11.8x
|
14.1x
|
13.2x
|
Selected
Companies
|
|||
Median
|
Mean
|
SpaceDev
|
|
EBITDA
margins:
|
|||
LTM
|
11.9%
|
12.7%
|
4.8%
|
CY08E
|
12.2%
|
12.2%
|
5.8%
|
Implied
Premium/(Discount)
|
||||||
Stock
Price
|
Merger
consideration
|
Adjusted
merger consideration
|
||||
October
17, 2008
|
$0.40
|
79.6%
|
69.4%
|
|||
Historical Prices
|
||||||
Trading
Days Prior:
|
||||||
1
Day
|
$0.42
|
71.1%
|
61.3%
|
|||
20
Days
|
0.51
|
40.9%
|
32.9%
|
|||
30
Days
|
0.60
|
19.8%
|
12.9%
|
|||
60
Days
|
0.52
|
37.9%
|
30.1%
|
|||
90
Days
|
0.60
|
19.8%
|
12.9%
|
|||
180
Days
|
0.70
|
2.6%
|
(3.2%)
|
|||
52-Week
High
|
0.95
|
(24.4%)
|
(28.7%)
|
|||
52-Week
Low
|
0.40
|
79.6%
|
69.4%
|
|||
Historical Average Prices
|
||||||
Trading
Days Prior:
|
||||||
30
Days
|
$0.49
|
47.0%
|
38.7%
|
|||
60
Days
|
0.52
|
38.8%
|
30.9%
|
|||
90
Days
|
0.55
|
30.5%
|
23.1%
|
|||
180
Days
|
0.61
|
17.2%
|
10.5%
|
|||
52-Week
|
0.68
|
6.3%
|
0.0%
|
·
|
retirement
of all Series C Preferred Stock in exchange for approximately $2.9 million
in cash;
|
·
|
retirement
of all Series D-1 Preferred Stock in exchange for approximately $1.7
million in
cash;
|
·
|
contractual
satisfaction of all the issued and outstanding stock options for cash
equal to $0.10 per option share or, if higher, the option spread (merger
consideration minus exercise price) per option share, amounting to
approximately $1.1 million in the
aggregate;
|
·
|
contractual
satisfaction of certain issued and outstanding warrants for cash equal to
the warrant spread (merger price minus exercise price) per warrant share
or (if so required by the terms of the warrants) for the Black-Scholes
value of the warrants, amounting to approximately $300,000 in the
aggregate;
|
·
|
investment
banking and legal fees of approximately $1.5 million to $2.0 million in
cash; and,
|
·
|
based
upon the above assumptions approximately $32 million for the Company's
common stock pursuant to the merger agreement, resulting in a
calculated merger consideration of approximately $0.70 to $0.72 per
share.
|
·
|
With
respect to shares subject to each unexercised Company stock option held by
such person immediately before the effective time of the merger
(irrespective of vesting restrictions other than as set forth below), the
greater of (A) $0.10 per share, or (B) the excess of the common stock
merger consideration per share over the exercise price per share under
such Company stock option; and
|
·
|
With
respect to participants in the Employee Stock Purchase Plan, the product
of:
|
o
|
the
participant’s contributions to the Employee Stock Purchase Plan during the
current offering period through the last business day before the effective
time of the merger divided by 95% of the Company’s closing ask stock price
on the OTCBB on August 1, 2008, multiplied
by
|
o
|
the
common stock merger consideration per
share.
|
·
|
an
individual citizen or resident of the United
States;
|
·
|
a
corporation, or other entity taxable as a corporation for federal income
tax purposes, created or organized in or under the laws of the United
States or any State or the District of
Columbia;
|
·
|
a
trust if it (1) is subject to the primary supervision of a court within
the United States and one or more U.S. persons have the authority to
control all substantial decisions of the trust or (2) 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
amount of cash received in exchange for such Company shares;
and;
|
·
|
costs
or obligations in excess of $1,250,000 in connection with redemptions or
repurchases of Series D-1 Preferred
Stock,
|
·
|
costs
or obligations in connection with the retirement of Series C Preferred
Stock,
|
·
|
costs
or obligations in connection with terminating or satisfying warrants,
stock options and Employee Stock Purchase Plan participants (not including
(1) exercise thereof in accordance with their terms (as such terms stood
on the date of the merger agreement), (2) net-exercise of
in-the-money warrants and stock options consistent with the “spread” value
indicated by the merger agreement per-share price, or (3) any amounts paid
under SNC-approved cashout
agreements),
|
·
|
costs
or obligations in excess of $250,000 to the Company’s investment bankers,
financial advisors, lawyers, and auditors in connection with the
transaction contemplated by the merger agreement, and
|
·
|
the
Closing
Adjustment.
|
·
|
their
organization, good standing and corporate power to operate their
properties and conduct their
businesses;
|
·
|
their
corporate power and authority to enter into the merger agreement and to
consummate the transactions contemplated by the merger
agreement;
|
·
|
the
absence of any violation of or conflict with their organizational
documents, applicable law or certain agreements as a result of entering
into the merger agreement and consummating the
merger;
|
·
|
consents
and approvals of governmental entities as a result of the
merger;
|
·
|
the
information supplied by SNC and Merger Sub for inclusion in this proxy
statement;
|
·
|
the
absence of certain investigations and
litigation;
|
·
|
the
financing necessary for the merger;
and
|
·
|
Merger
Sub’s operations and prior
activities.
|
·
|
our
and our subsidiaries' organization, good standing and corporate power to
operate our businesses;
|
·
|
our
organizational documents;
|
·
|
our
capitalization and ownership of certain
subsidiaries;
|
·
|
our
corporate power and authority to enter into the merger agreement and to
consummate the transactions contemplated by the merger
agreement;
|
·
|
the
absence of any violation of or conflict with our organizational documents,
applicable law or certain agreements as a result of entering into the
merger agreement and consummating the
merger;
|
·
|
consents
and approvals of governmental entities in order to consummate the
merger;
|
·
|
certain
of our SEC filings and the consolidated financial statements included in
the SEC documents;
|
·
|
our
compliance with the applicable provisions of the Sarbanes-Oxley Act of
2002;
|
·
|
our
disclosure controls and procedures and internal controls over financial
reporting;
|
·
|
the
absence of undisclosed liabilities;
|
·
|
since
March 31, 2008, our having conducted our businesses only in the ordinary
course consistent with past practice in all material
respects;
|
·
|
the
absence of any change, condition, event or development since March 31,
2008 that would have, individually or in the aggregate, a material adverse
effect on the Company;
|
·
|
this
proxy statement;
|
·
|
the
absence of undisclosed broker's
fees;
|
·
|
our
employee benefit plans;
|
·
|
labor
matters;
|
·
|
the
absence of certain investigations and
litigation;
|
·
|
taxes;
|
·
|
our
and our subsidiaries' compliance with
laws;
|
·
|
our
and our subsidiaries' possession of all necessary licenses, permits,
consents, certificates, approvals and orders of any governmental entity
necessary to conduct our respective
businesses;
|
·
|
environmental
matters;
|
·
|
our
intellectual property;
|
·
|
our
real properties and leases;
|
·
|
our
personal property;
|
·
|
our
material contracts;
|
·
|
our
insurance policies;
|
·
|
our
related party transactions;
|
·
|
receipt
by our Board of Directors of a fairness opinion from Cowen and Company,
LLC;
|
·
|
the
required stockholder vote to approve and adopt the merger agreement and
the transactions contemplated
therein;
|
·
|
takeover
statutes and laws; and
|
·
|
our
accounts and notes receivable.
|
·
|
prevent
or materially delay the consummation by the Company of the transactions
contemplated by the merger agreement;
or
|
·
|
result
in a materially adverse effect on the business, assets, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole.
|
·
|
changes
in national or international economic or business conditions generally,
unless such changes disproportionately affect the Company and its
subsidiaries, taken as a whole, compared to companies of similar size and
situation in its industry;
|
·
|
changes
resulting from public disclosure of the transactions contemplated by the
merger agreement or from the
merger;
|
·
|
the
outbreak or escalation of hostilities including acts of war and terrorism,
which do not disproportionately affect the Company and its subsidiaries,
taken as a whole, as so compared;
|
·
|
changes
generally affecting the industries or markets in which the Company and its
subsidiaries operate, which do not disproportionately affect the Company
and its subsidiaries, taken as a whole, as so
compared;
|
·
|
any
action of the Company or any of its subsidiaries required by the merger
agreement or taken at the request of SNC or Merger
Sub;
|
·
|
changes
in any generally accepted accounting principles, laws or regulations or
interpretations thereof; or
|
·
|
disruptions
in financial, banking or securities markets
generally.
|
·
|
the
Company and its subsidiaries will conduct their operations according to
their ordinary and usual course of business consistent with past practice;
and;
|
·
|
the
Company will, and will cause its subsidiaries to, pay its and their
material obligations when due, and use commercially reasonable efforts
consistent with past practice to preserve intact their present business
organization and employee base and preserve their relationships with
customers, suppliers, licensors, licensees, and others with which they
have business dealings, and keep in force its insurance policies (or
obtain replacement or revised
policies).
|
·
|
enter into any customer contract
that is material in amount;
|
·
|
declare,
set aside or pay any dividends on, or make any other distributions in
respect of, or convertible into or exchangeable or exercisable for, any of
its capital stock (other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent and other
than dividends required to be accrued or paid on the Company’s Preferred
Stock in accordance with the Company’s charter documents); adjust, split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or any of its other
securities; or purchase, redeem or otherwise acquire any shares of its
capital stock or any other of its securities or any rights, warrants or
options to acquire any such shares or other securities (other than
Preferred Stock);
|
·
|
issue,
deliver, sell, grant, pledge or otherwise dispose of or encumber any
shares of its capital stock, voting debt, any other voting securities or
any securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares, voting debt, voting
securities or convertible or exchangeable securities (other than (i) the
issuance of common stock pursuant to the exercise of options or warrants,
(ii) the issuance of common stock pursuant to the terms of the Company’s
Employee Stock Purchase Plan, or (iii) the conversion of Company’s
Preferred Stock in accordance with the provisions of the Company’s charter
documents, in each case in the ordinary course of business consistent with
past practice);
|
·
|
amend
the Company’s or its subsidiaries’ charter
documents;
|
·
|
acquire
(i) any business organization or division thereof or (ii) any assets
outside the ordinary course of business which have an aggregate value in
excess of $100,000;
|
·
|
sell,
lease, license, assign, pledge, subject to a lien or otherwise dispose of
or encumber any properties or assets of the Company or of any of its
subsidiaries outside the ordinary course of business which have an
aggregate value in excess of
$100,000;
|
·
|
(i)
incur or assume any indebtedness for borrowed money (other than under the
Company’s existing revolving credit facility) or guarantee any
indebtedness of another person or entity (other than the Company’s
guarantee of permitted indebtedness of a wholly-owned subsidiary of the
Company) or amend any such existing indebtedness or guarantee, (ii) issue
or sell any debt securities or warrants or other rights to acquire any
debt securities of the Company or any of its subsidiaries, (iii) guarantee
any debt securities of another person or entity (other than a wholly-owned
subsidiary of the Company) or enter into any “keep well” or other
agreement to maintain any financial condition of another person or entity
(other than a wholly-owned subsidiary of the Company), (iv) enter into any
material commitment or transaction requiring a capital expenditure by the
Company, other than capital expenditures incurred or committed in fiscal
2008 which are (A) not in excess of 110% of the capital expenditures
included in the Company's capital expenditures budget for fiscal 2008, as
such budget was previously provided to SNC, and (B) consistent with the
proposed timing of such capital expenditures in the budget, or (v) enter
into any arrangement having the economic effect of any of the
foregoing;
|
·
|
make
any material changes in accounting methods or principles or revalue any of
its assets, except as may be required by a change in GAAP or SEC
requirements as may be advised by the Company’s independent
accountants;
|
·
|
except
as required to comply with applicable law or agreements, plans or
arrangements binding on the Company (including the merger agreement), (i)
adopt, enter into, terminate or amend any material employment, retention,
severance or similar agreement or benefit plan, including any employee
benefit plan, policy, trust, fund or program or other arrangement for the
benefit or welfare of any current or former director, officer, employee or
consultant, or any collective bargaining agreement; (ii) increase in any
manner the compensation or benefits of any present or former directors,
officers, employees or consultants of the Company or its subsidiaries,
except, in the case of non-officer employees of the Company or one of its
subsidiaries, for normal salary increases in the ordinary course of
business consistent with past practice; (iii) accelerate the payment,
right to payment or vesting of any compensation or benefits, including any
outstanding options or restricted stock awards or waive any stock
repurchase rights, other than as required by the merger agreement; (iv)
grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or benefit plan (provided, that payments
made be made under such plans upon achievement of objectives pursuant to
arrangements which were in place as of before the execution of the merger
agreement), or (v) loan or advance any money or other property to any
present or former director, officer or employee of the Company or its
subsidiaries, other than routine advances for business expenses in the
ordinary course consistent with past practice and the Company’s written
expense reimbursement policies;
|
·
|
enter
into any joint venture, partnership or other similar arrangement except in
the ordinary course of business;
|
·
|
make
any loan, advance or capital contribution to or investment in any person,
other than (i) inter-company loans, advances or capital contributions
among the Company or any other wholly-owned subsidiary and any
wholly-owned subsidiary, (ii) investments in any wholly-owned subsidiary
of the Company or (iii) routine advances for business expenses in the
ordinary course consistent with past practice and in accordance with the
Company’s written expense reimbursement policies as in effect on the date
hereof;
|
·
|
cancel
any debts or waive any claims or rights (including the cancellation,
compromise, release or assignment of any indebtedness owed to, or claims
held by, the Company or any its subsidiaries), except for cancellations
made or waivers granted in the ordinary course of business consistent with
past practice;
|
·
|
enter
into, or materially amend, modify or supplement any material contract or
lease outside the ordinary course of business or waive, release, grant,
assign or transfer any of its material rights or
claims;
|
·
|
effect
any material restructuring activities by the Company or any of its
subsidiaries with respect to their respective employees, including any
material reductions in force;
|
·
|
amend
any material state or federal tax returns, make any material election
relating to taxes, change any material election relating to taxes already
made, adopt any material accounting method relating to taxes, change any
material accounting method relating to taxes unless required by a change
in the Internal Revenue Code, or settle, consent, or enter into any
closing agreement relating to any audit or consent to any waiver of the
statutory period of limitations in respect of any
audit;
|
·
|
cancel
or terminate without reasonable substitute policy therefor, or amend in
any material respect or enter into, any material insurance policy, other
than the renewal of existing insurance
policies;
|
·
|
enter
into any contracts containing, or otherwise subject the surviving
corporation or SNC to, any (i) non-competition, (ii) “most favored
nation,” or (iii) exclusivity or other material restrictions on the
Company or the surviving corporation or SNC, or any of their respective
businesses, following the closing of the
merger;
|
·
|
provide
any refund, credit or rebate to any customer, reseller or distributor, in
each case, other than in the ordinary course of business consistent with
past practice;
|
·
|
hire
any non-officer employees other than in the ordinary course of business
consistent with past practice or hire, elect or appoint any officers other
than the addition of a title to an existing officer to fill vacancies in
legally required offices;
|
·
|
enter
into any agreement to purchase or sell any interest in real property or
grant any security interest in any real property, enter into any material
lease, sublease or other occupancy agreement with respect to any real
property or materially alter, amend, modify or terminate any of the terms
of any lease;
|
·
|
enter
into any contract that materially and adversely affects any intellectual
property or intellectual property licenses of the Company, its
subsidiaries or any other affiliates of such
entity;
|
·
|
dispose
of or transfer (except to the extent that such disposition or transfer is
required under contracts or obligations in force as of the date hereof),
or permit to lapse or abandon any intellectual property or intellectual
property licenses or dispose of or unlawfully disclose to any person,
other than representatives of SNC, any trade
secrets;
|
·
|
abandon
or permit to lapse any rights to any United States patent or patent
application;
|
·
|
take
any action that is intended or would reasonably be expected to prevent or
materially impede the consummation of any of the transactions contemplated
by the merger agreement, including with respect to any “poison pill” or
similar plan, agreement or arrangement, any other anti-takeover measure,
or any state takeover statute;
|
·
|
discharge,
settle or satisfy any disputed claim, litigation, arbitration, disputed
liability or other controversy (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the discharge or satisfaction in the
ordinary course of business consistent with past practice or in accordance
with their terms of liabilities reflected or reserved against in the
Company’s financial statements or incurred since March 31, 2008, in the
ordinary course of business consistent with past practice, or waive any
material benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which the Company or
any of its subsidiaries is a party;
|
·
|
take
any action that is intended or would reasonably be expected to result in
any of the conditions to merger not being satisfied;
or
|
·
|
take,
agree (in writing or otherwise) or announce the intention to take any of
the foregoing actions.
|
·
|
the
Company receives a bona fide written acquisition proposal from a third
party and the Board of Directors of the Company determines in good faith,
after consultation with its financial advisors and outside counsel, that
such acquisition proposal constitutes, or is reasonably likely to result
in, a superior proposal;
|
·
|
the
Company has not breached the provisions in the merger agreement relating
to solicitation of other offers;
and
|
·
|
after
consultation with its outside counsel, the Board of Directors of the
Company determines in good faith that the failure to take such action
would violate its fiduciary duties to the stockholders of the Company
under applicable laws, then the Company may (1) furnish information with
respect to the Company and its subsidiaries to the person making such
acquisition proposal and (2) engage in discussions or negotiations with
such person as long as the Company and its subsidiaries and
representatives does not disclose any non-public information to such
persons without first entering into a confidentiality agreement meeting
certain criteria with such persons and promptly provides to SNC any
material non-public information provided to such other person which was
not previously provided to SNC. We have also agreed to notify SNC if we
provide information or engage in discussions or negotiations concerning an
acquisition proposal with any such
person.
|
·
|
any
acquisition proposal or indication by any person that it is considering
making an acquisition proposal;
|
·
|
any
request for non-public information relating to the Company or any of its
subsidiaries other than requests for information in the ordinary course of
business and unrelated to an acquisition proposal;
or
|
·
|
any
inquiry or request for discussions or negotiations regarding any
acquisition proposal.
|
·
|
enter
into any agreement requiring the Company to abandon, terminate or fail to
consummate the merger and the transactions contemplated by the merger
agreement or to breach our obligations under the merger agreement;
or
|
·
|
enter
into any merger agreement or other similar agreement relating to an
acquisition proposal.
|
·
|
we receive a bona fide
unsolicited written acquisition proposal that our board of directors
determines in good faith is a superior proposal (see “Solicitation of
Other Offers” beginning on page 51);
|
·
|
the Company and its respective
representatives comply with the restrictions described in “Solicitation of
Other Offers” starting on page 51 in connection with such
acquisition proposal;
|
·
|
we
comply with our obligations to (i) promptly notify SNC within 48 hours,
orally and in writing, of receipt of such acquisition proposal, indication
that a third party is considering making an acquisition proposal or of any
request for information or for access to the business, properties, assets,
books or records concerning the Company, (ii) keep SNC reasonably informed
regarding the status and material terms of such acquisition proposal,
including any material or proposed amendments and (iii) provide SNC with
any non-public information concerning the Company provided to any other
party that was not previously provided to
SNC;
|
·
|
we
provide advance notice to SNC of the Company’s Board of Directors’ intent
to withdraw or modify its recommendation, or terminate the merger
agreement to enter into an agreement with respect to the superior
proposal, and we comply with our requirements to negotiate with SNC in
good faith (to the extent SNC desires to negotiate) to make such
adjustments in the terms and conditions of the merger agreement so that
such acquisition proposal ceases to constitute a superior proposal;
and
|
·
|
our
board of directors determines in good faith, after considering advice from
outside legal counsel, that the failure to take such action would
reasonably be expected to result in a breach of its fiduciary duties under
applicable law.
|
1.
|
by
the mutual written consent of the Company and
SNC;
|
2.
|
by
either SNC or the Company, if any order, decree or ruling permanently
restraining or otherwise prohibiting the consummation of the merger has
become final and non-appealable;
|
3.
|
by
either the Company or SNC, if the merger has not been consummated on or
before the "outside date," which is defined in the merger agreement as
December 31, 2008;
|
4.
|
by
either the Company or SNC, if the Annual Meeting is convened and a vote is
taken and the required stockholder vote in favor of approving and adopting
the merger agreement is not obtained at the Annual Meeting (or at any
adjournment or postponement of the Annual
Meeting);
|
5.
|
by
SNC, if:
|
a.
|
the
Company’s Board of Directors or any committee thereof shall for any reason
have withdrawn or shall have amended or modified in a manner adverse to
SNC its recommendation in favor of the adoption of the merger agreement by
the stockholders of the Company;
|
b.
|
the
Company’s Board of Directors fails to reaffirm (publicly, if so requested,
in connection with an acquisition proposal that has been publicly
announced or otherwise known to the public generally) its recommendation
in favor of the adoption of the merger agreement by the stockholders of
the Company within 10 business days after SNC requests in writing that
such recommendation be affirmed;
|
c.
|
the
Company’s Board of Directors or any committee thereof fails to reject
within 10 Business Days after the receipt thereof or shall have approved
or publicly recommended any acquisition
proposal;
|
d.
|
the
Company shall have entered into any (A) letter of intent, memorandum of
understanding or agreement in principle with respect to an acquisition
proposal or (B) any alternative acquisition
agreement;
|
e.
|
a
tender or exchange offer relating to its securities shall have been
commenced by a person unaffiliated with SNC, and the Company shall not
have sent to its security holders, within 10 business days after such
tender or exchange offer is first published, sent or given, a statement
disclosing that the Company’s Board of Directors recommends rejection of
such tender or exchange offer;
|
f.
|
the
Company breaches certain of its non-solicitation
obligations;
|
g.
|
the
Company breaches or fails to perform in any material respect any of its
respective representations, warranties, covenants or other agreements in
the merger agreement such that certain closing conditions to the merger
would not be satisfied and cannot be cured by a specified time or before
the "outside date" (and SNC is not in breach);
or
|
h.
|
a
Company material adverse effect has occurred and cannot be cured by a
specified time or before the “outside
date”;
|
6.
|
by
the Company, if:
|
a.
|
the
Company enters, or decides to enter, into a binding agreement with respect
to a Superior Proposal (as defined in “Solicitation of Other Offers”
beginning on page 51) in compliance with the non-solicitation provision of
the merger agreement, and simultaneously with such termination, the
Company pays SNC a termination fee of approximately $1.5 million;
provided, that the Company (A) has notified SNC, in writing and at least
five business days prior to such termination, of its intention to
terminate the merger agreement and to enter into a binding written
agreement concerning an acquisition proposal that constitutes a superior
proposal, attaching the most current version of such agreement, and (B)
SNC has not made, within five calendar days of receipt of such written
notification, an offer that is at least as favorable to the stockholders
of the Company as such Superior Proposal, it being understood that the
Company shall not enter into any such binding agreement during such five
calendar day period; or
|
b.
|
SNC
or Merger Sub breaches or fails to perform in any material respect any of
its respective representations, warranties, covenants or other agreements
in the merger agreement such that certain closing conditions to the merger
would not be satisfied and cannot be cured by a specified time or before
the "outside date."
|
·
|
as
promptly as practicable, obtain from any governmental entity or any other
third party any consents, licenses, permits, waivers, approvals,
authorizations, or orders required to be obtained by the Company or SNC or
any of their subsidiaries in connection with the authorization, execution
and delivery of the merger agreement and the consummation of the
transactions contemplated by the merger
agreement;
|
·
|
make
all necessary filings, notifications, and thereafter make any other
required submissions, with respect to the merger agreement and the merger
required under any applicable law;
|
·
|
contest
any legal proceeding relating to the merger or the other transactions
contemplated by the merger agreement;
and
|
·
|
execute
or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, the
merger agreement.
|
·
|
subject
to certain restrictions and limitations, to (1) give SNC and Merger Sub
and certain of their representatives reasonable access to our employees,
plants, offices, warehouses and other facilities and to the Company’s
books, contracts, commitments and records, work papers and such other
information as SNC or Merger Sub may reasonably request, (2) permit SNC
and Merger Sub to make inspections as they may require, (3) furnish SNC
and Merger Sub with such financial and operating data and other
information with respect to the Company’s and its subsidiaries' business,
properties and personnel as SNC or Merger Sub may from time to time
request, and (4) furnish promptly to SNC and Merger Sub a copy of each
report, schedule and other document filed by the Company or any of its
subsidiaries pursuant to the requirements of the federal or state
securities laws;
|
·
|
to
give prompt notice to SNC of the occurrence or non-occurrence of any event
that, individually or in the aggregate, would make the timely satisfaction
of any of the conditions to the merger impossible or
unlikely;
|
·
|
to
use reasonable best efforts to keep SNC informed, on a current basis, of
any events, discussions, notices or changes with respect to any material
proceeding involving the Company or any of its
subsidiaries;
|
·
|
not
to issue any press release or announcement concerning the transactions
contemplated by the merger agreement that is not consistent with prior
public releases or announcements without the prior written consent of SNC,
except as may be required by law;
and
|
·
|
to
use commercially reasonable efforts to take, or cause to be taken, all
actions, and do or cause to be done all things, reasonably necessary,
proper or advisable on our part to ensure that the Company common stock
remain listed on the OTCBB and to enable the delisting by the surviving
corporation of the Company common stock from the OTCBB and other exchanges
and the deregistration of the Company shares under the Exchange Act;
and
|
·
|
to
use commercially reasonable efforts to obtain third-party consents for
certain identified contracts.
|
·
|
the
receipt of the required stockholder vote for the approval and adoption of
the merger agreement;
|
·
|
the
absence of any order, injunction, decree or other legal restraint issued
by any governmental entity or other law, rule or legal restraint
preventing, restraining or rendering illegal the consummation of the
merger or any of the transactions contemplated by the merger agreement;
and
|
·
|
the
absence of any proceeding by a governmental entity seeking to enjoin,
restrain or otherwise prohibit the merger or any of the transactions
contemplated by the merger
agreement;
|
·
|
the
correctness in all material respects of each representation and warranty
of the Company (without giving effect to any limitation on any
representation or warranty indicated by the words "material adverse
effect," "in all material respects," "material" or similar terms) as of
the date of the merger agreement and as of the effective time of the
merger, except to the extent any such representation or warranty is
expressly made as of an earlier date (in which case such representation or
warranty shall be true and correct on and as of such earlier
date);
|
·
|
the
performance in all material respects by the Company of all obligations
required to be performed by it under the merger agreement at or before the
effective time of the merger;
|
·
|
the
delivery to SNC of a certificate signed on behalf of the Company by an
officer of the company certifying as to the matters described in the two
preceding bullet points;
|
·
|
the
Company has not experienced a Company Material Adverse
Effect;
|
·
|
the
receipt by the Company of any required governmental consents and certain
identified third-party consents;
and
|
·
|
the
ineligibility of at least 95% of the Company common stock to pursue
appraisal rights under Delaware
law;
|
·
|
all
shares of Series C Preferred Stock shall have been converted into Company
common stock or shall have been acquired by SNC or redeemed or repurchased
by the Company, and all shares of Series D-1 Preferred Stock shall have
been acquired by SNC or redeemed or repurchased by the
Company;
|
·
|
rights
to acquire shares of capital stock in the surviving corporation pursuant
to any Company warrant, Company stock option, the Company’s 1999 Employee
Stock Purchase Plan or any other right or instrument following the
effective time of the merger shall (i) represent the collective right to
purchase not more than an aggregate of 500,000 shares of the Company’s
capital stock, and (ii) be held by not more than 20 distinct holders, of
which (A) none can have been officers or directors of the Company at any
time during the period after September 1, 2008, and (B) no more than 10
can hold such rights to purchase in excess of an aggregate of 10,000
shares of the Company’s capital
stock.
|
·
|
the
correctness in all material respects of each representation or warranty of
SNC and Merger Sub as of the date of the merger agreement and as of the
effective time of the merger, except to the extent any such representation
or warranty is expressly made as of an earlier date (in which case such
representation or warranty shall be true and correct on and as of such
earlier date);
|
·
|
the
performance in all material respects by SNC and Merger Sub of all
obligations required to be performed by them under the merger agreement at
or before the effective time of the merger;
and
|
·
|
the
delivery to the Company by SNC of a certificate signed on behalf of SNC by
an officer of SNC certifying as to the matters described in the two
preceding bullet points.
|
|
•
|
you
must hold your shares of Company common stock as of the date you make your
demand for appraisal rights and continue to hold your shares of Company
common stock through the effective time of the
merger;
|
|
•
|
you
must deliver to the Company a written notice of your demand for appraisal
of your shares of Company common stock before the taking of the vote at
the Company’s Annual Meeting;
|
|
•
|
you
must not have voted in favor of adoption of the merger agreement; if you
vote by proxy and wish to exercise appraisal rights, you must vote against
the adoption of the merger agreement or mark your proxy card to indicate
that you abstain from voting on the adoption of the merger agreement;
and
|
|
•
|
you
must file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares within 120 days after the
effective time of the merger.
|
Quarter
Ending
|
Quarterly
High
|
Quarterly
Low
|
12/31/2007
|
$0.88
|
$0.65
|
3/31/2008
|
$1.06
|
$0.60
|
6/30/2008
|
$0.75
|
$0.58
|
9/30/2008
|
$0.72
|
$0.37
|
Partial
period ending:
11/7/2008
|
$0.62
|
$0.35
|
PROPOSAL
2
|
Name
and Age
|
Position
with the Company and Principal Occupations
|
Mark
N. Sirangelo (47)
|
Mark
N. Sirangelo, is currently our Chairman and CEO. He joined the
company as Vice Chairman and Chief Executive Officer in December 2005 and
took on the position of Chairman in September 2006 upon the resignation of
James W. Benson. Prior to SpaceDev, Mr. Sirangelo was the managing partner
of the QuanStar Group, LLC. Mr. Sirangelo has a bachelor's
degree in science, a master's degree in business, and juris doctorate
degree from Seton Hall University. Mr. Sirangelo is a director
of the California Space Authority and the Personal Spaceflight
Federation.
|
Richard
B. Slansky (51)
|
Richard
B. Slansky is currently our president, chief financial officer, director,
and corporate secretary. He joined us in February 2003 as chief
financial officer and corporate secretary. In November 2004, Mr. Slansky
was appointed as president and a director. Mr. Slansky earned a
bachelor's degree in economics and science from the University of
Pennsylvania's Wharton School of Business and a master's degree in
business administration in finance and accounting from the University of
Arizona.
|
Scott
Tibbitts (51)
|
Scott
Tibbitts was appointed our managing director and a director at the closing
of the Starsys merger on January 31, 2006. Mr. Tibbitts
co-founded Starsys Research Corporation in 1988 and served as president,
chief executive officer, and a member of the board of directors from 1988
until May 2005; and from May 2005 to January 2006 served as chief
executive officer and a member of the board of directors of
Starsys. Mr. Tibbitts has a bachelor's degree in chemical
engineering from the University of Wisconsin.
|
Arthur
A. Benson, II (64)
|
Arthur
A. Benson, II is being nominated for election to our board of directors to
fill the seat of his brother, James W. Benson, our founder, who passed
away on October 10, 2008. Mr. A. Benson has for many years practiced law
in Kansas City, Missouri; his practice areas include legal malpractice,
constitutional law, civil rights, equal opportunity, and commercial
litigation. Mr. A. Benson received his bachelor’s degree from Williams
College and juris doctorate from Northwestern
University.
|
Curt
Dean Blake
(50)
|
Curt
Dean Blake was appointed to our board of directors as an independent
director in September 2000. He serves as chairman of our audit
committee and is a member of our compensation committee. In 2003 Mr. Blake
formed, and currently remains the chief executive officer of GotVoice,
Inc., a voicemail consolidation and messaging business. Mr.
Blake has a master's degree and juris doctorate from the University of
Washington.
|
G.
Scott Hubbard (59)
|
G.
Scott Hubbard was appointed to our board of directors as an independent
director in November 2007. Mr. Hubbard is also a member of our audit,
government security, and nominating and corporate governance committees.
Mr. Hubbard is currently a professor at Stanford University School of
Engineering, Department of Aeronautics and Astronautics. In 2006 and 2007
he was also a Visiting Scholar at the Stanford University Electrical
Engineering Department and Carl Sagan Chair for the Study of Life in the
Universe, SETI Institute. From 1987 to 2006 Mr. Hubbard held a variety of
positions with NASA Ames Research Center including Director of NASA Ames,
Deputy Director for Research, Mars Program Director, Deputy Director of
the Space Directorate, Deputy Chief, Space Products, and Chief, Space
Instrumentation and Studies. He holds a bachelor’s degree in Physics and
Astronomy from Vanderbilt University, a doctorate honoris causa from
Polytechnic University of Madrid, and doctor of arts honoris causa from
Cogswell Polytechnical College.
|
Scott
McClendon (69)
|
Scott
McClendon was appointed to our board of directors as an independent
director in July 2002. He is currently chairman of our
compensation committee and a member of our audit committee. Mr.
McClendon is chairman of the board of directors for Overland Storage,
Inc., a data storage company. He became the chairman of the
board after serving as president and chief executive officer from October
1991 to March 2001. In addition to SpaceDev and Overland Storage, Mr.
McClendon is currently serving on the board of directors of Procera
Networks, Inc., a global provider of intelligent network traffic
identification, control, and service management infrastructure equipment.
Mr. McClendon received a bachelor's degree in electrical engineering, and
a master's degree in electrical engineering from Stanford University
School of Engineering.
|
Patricia
G. Smith (60)
|
Patricia
G. Smith was appointed to our board of directors as an independent
director in August 2008 and is a member of our government security
committee. Ms. Smith is currently an independent Aerospace
consultant and has over 25 years of experience including her position as
the Associate Administrator of Commercial Space Transportation for the
Federal Aviation Administration from 1998 through early 2008. Ms. Smith
received her bachelor’s degree from Tuskegee University and did graduate
work at Auburn University, George Washington University, and Harvard
University School of Business.
|
Hans
J. Steininger (47)
|
Hans
J. Steininger was appointed to our board of directors in November 2007.
Mr. Steininger was appointed chief executive officer of MT Aerospace AG in
June 2007. Mr. Steininger is also a co-investor in MT
Aerospace, which in July 2005 emerged in the course of the acquisition of
MAN Technology AG by OHB Technology AG/Bremen and Apollo Capital
Partners/Munich. From 2005 to May 2007, he acted as chief
financial officer of MT Aerospace AG. In 1999, Mr. Steininger
founded Apollo Capital Partners, a Munich based private equity firm, of
which he remains a managing partner. From 1991 until 1998, he
acted in various management positions within BMW Rolls Royce GmbH and BMW
AG. Mr. Steininger earned a master’s degree from the Technical University
in Munich in Aeronautical Engineering and in Business
Administration.
|
Robert
S. Walker (65)
|
Robert
S. Walker was appointed to our board of directors as an independent
director in April 2001. He is currently a member of our
government security and nominating and corporate governance
committees. Mr. Walker has acted as chairman of Wexler &
Walker Public Policy Associates in Washington, D.C. since January 1997.
Mr. Walker was a member of the U.S. House of Representatives from 1977 to
1997, during which time he served as chairman of the House Science
Committee, and vice-chairman of the Budget Committee, and participated in
House Republican leadership activities. Mr. Walker was the first sitting
member of the U.S. House of Representatives to be awarded NASA's highest
honor, the Distinguished Service Medal. Mr. Walker was on the board of
directors of The Aerospace Corporation from March 1997 to November 2005.
Mr. Walker became chairman of the board of The Space Foundation in January
2006.
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership(1)
|
Percent
of Ownership
|
||||||||||
Mark
N. Sirangelo
|
2,142,500 | (2 | ) | 4.72 | % | |||||||
Richard
B. Slansky
|
2,237,886 | (3 | ) | 4.90 | % | |||||||
Scott
F. Tibbitts
|
1,909,394 | 4.39 | % | |||||||||
Curt
Dean Blake
|
155,656 | (4 | ) | 0.36 | % | |||||||
Scott
McClendon
|
135,626 | (5 | ) | 0.31 | % | |||||||
General
Howell M. Estes, III
|
130,510 | (7 | ) | 0.30 | % | |||||||
Robert
S. Walker
|
82,389 | (7 | ) | 0.19 | % | |||||||
Scott
Hubbard
|
16,666 | (8 | ) | 0.04 | % | |||||||
Patricia
Grace Smith
|
- | (9 | ) | 0.00 | % | |||||||
Hans
Steininger
|
5,979,846 | (10 | ) | 13.74 | % | |||||||
Arthur
Benson
|
165,487 | (11 | ) | 0.38 | % | |||||||
Susan
C. Benson
|
7,184,107 | (12 | ) | 16.50 | % | |||||||
OHB
Technology AG
|
7,973,129 | (13 | ) | 18.32 | % | |||||||
Loeb
Partners Corporation
|
4,792,300 | (14 | ) | 11.01 | % | |||||||
Laurus
Master Fund, Ltd.
|
4,480,861 | (15 | ) | 9.99 | % | |||||||
Executive
Officers and Directors as a group (10 Persons)
|
12,790,473 | (16 | ) | 25.71 | % |
(1)
|
Where
persons listed on this table have the right to obtain additional shares of
common stock through the exercise of outstanding options or warrants or
the conversion of convertible securities within 60 days from October 20,
2008, these additional shares are deemed to be outstanding for the purpose
of computing the percentage of common stock owned by such persons, but are
not deemed outstanding for the purpose of computing the percentage owned
by any other person. Percentages are based on total outstanding
shares of 43,528,769 on October 20,
2008.
|
(2)
|
Includes
vested options to purchase up to an aggregate of 1,900,000
shares.
|
(3)
|
Includes
vested options to purchase up to an aggregate of 2,125,000
shares.
|
(4)
|
Includes
vested options to purchase up to an aggregate of 75,166 common
shares. Mr. Blake also holds an additional 8,334 options to
purchase shares of common stock which are currently not
vested.
|
(5)
|
Includes
vested options to purchase up to an aggregate of 105,166 common
shares. Mr. McClendon also holds an additional 8,334 options to
purchase shares of common stock which are currently not
vested.
|
(6)
|
Includes
vested options to purchase up to an aggregate of 62,666 common
shares. Gen. Estes also holds an additional 8,334 options to
purchase shares of common stock which are currently not vested. Gen. Estes
is not seeking re-election to the
Board.
|
(7)
|
Includes
vested options to purchase up to an aggregate of 50,166 common
shares. Mr. Walker also holds an additional 8,334 options to
purchase shares of common stock which are currently not
vested.
|
(8)
|
Includes
vested options, and options that will vest within 60 days of October 20,
2008, to purchase up to an aggregate of 16,666 common
shares. Mr. Hubbard also holds an additional 33,334 options to
purchase shares of common stock which are currently not
vested.
|
(9)
|
Ms.
Smith holds 50,000 options to purchase shares of common stock which are
currently not vested.
|
(10)
|
Mr.
Steininger is the chief executive officer of MT Aerospace AG and is listed
as beneficial owner of the shares owned by
it.
|
(11)
|
Mr.
Arthur Benson is a director nominee. He is the brother of our founder, the
late James W. Benson. He disclaims beneficial ownership of
shares owned by the estate of James W. Benson and by Susan C. Benson, and
by their affiliates and family members. Includes 54,000 shares held as a
trustee of a trust for Mr. A. Benson’s adult
daughter.
|
(12)
|
Includes
beneficial ownership of 289,413 shares held by the Space Development
Institute, of which she is a director, and 500,000 shares underlying stock
options issued in the name of James W.
Benson.
|
(13)
|
Includes
5,979,846 shares held by their subsidiary MT Aerospace
AG.
|
(14)
|
The
following table details the holdings of Loeb and its
affiliates:
|
Total
|
|
Loeb
Arbitrage Fund
|
1,563,429
|
Loeb
Partners Corporation
|
221,583
|
Loeb
Offshore Fund Ltd.
|
356,363
|
Loeb
Arbitrage B Fund LP
|
506,822
|
Loeb
Offshore B Fund Ltd.
|
158,803
|
Loeb
Marathon Fund, LP
|
1,190,332
|
Loeb
Marathon Offshore Fund, Ltd.
|
794,968
|
Total
|
4,792,300
|
(15)
|
Includes
vested warrants and convertible preferred shares in the amount of
4,834,270 adjusted down by approximately 3,370,000 to maintain the 9.99%
blocker on the beneficial ownership mandated in the Series D-1 Preferred
Stock charter provisions as well as the 4.99% blocker on the beneficial
ownership mandated in the Series C Preferred Stock charter
provisions.
|
(16)
|
Executive
Officers and Directors as a group include our ten current board members,
three of whom are also Executive
Officers.
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Option
Awards ($)
|
Total
($)
|
Mark
N. Sirangelo
|
-
|
-
|
-
|
Richard
B. Slansky
|
-
|
-
|
-
|
James
W. Benson
|
1,500
|
-
|
1,500
|
Scott
Tibbitts
|
-
|
-
|
-
|
Curt
Dean Blake
|
6,750
|
4,380
|
11,130
|
General
Howell M. Estes, III
|
3,750
|
4,380
|
8,130
|
Wesley
T. Huntress
|
3,750
|
4,380
|
8,130
|
Scott
McClendon
|
7,500
|
4,380
|
11,880
|
Robert
S. Walker
|
2,250
|
4,380
|
6,630
|
Scott
Hubbard
|
1,500
|
20,872
|
22,372
|
Hans
Steininger
|
-
|
-
|
-
|
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
All
other compensation ($)
|
Total
|
||
Mark
N. Sirangelo
|
2007
|
313,962
|
-
|
-
|
$ 313,962
|
||
Chief
Executive Officer
|
2006
|
292,730
|
25,000
|
(5)
|
60,000
|
(1)
|
377,724
|
Richard
B. Slansky
|
2007
|
221,815
|
-
|
1,431
|
(2)
|
223,244
|
|
President
and Chief Financial Officer
|
2006
|
195,877
|
25,000
|
(5)
|
101,458
|
(2),(3)
|
322,330
|
Scott
Tibbitts
|
2007
|
150,000
|
-
|
101,475
|
(2),(4)
|
251,475
|
|
Managing
Director
|
2006
|
143,360
|
-
|
100,214
|
(2),(4)
|
243,573
|
(1)
|
Compensation
received for moving and temporary living expenses over the initial term of
his employment agreement.
|
(2)
|
Company
contributions to the individual’s 401(k) plan were $1,431 and $1,458 for
Mr. Slansky in 2007 and 2006, respectively; $1,475 and $2,703 for Mr.
Tibbitts in 2007 and 2006,
respectively
|
(3)
|
Compensation
paid in the amount of $100,000 in respect of the sale of common and
preferred stock under a previous employment
agreement.
|
(4)
|
Payments
made under a non-compete agreement entered into upon the acquisition of
Starsys in January 2006 of $100,000 and $97,511 in 2007 and 2006,
respectively.
|
(5)
|
Pursuant
to Messrs. Sirangelo and Slansky’s employment agreements dated December
20, 2005, a bonus of $25,000 was paid to each for the achievement of
performance objectives related to a financing
transaction.
|
Name
|
Number
of securities underlying unexercised options exercisable
(#)
|
Number
of securities underlying unexercised options unexercisable
(#)
|
Equity
incentive plan award: number of securities underlying unexercised unearned
options (#)
|
Option
exercise price($)
|
Option
expiration date
|
Mark
N. Sirangelo
|
1,900,000
|
-
|
-
|
$ 1.40
|
12/20/2010
|
Richard
B. Slansky
|
1,400,000
|
-
|
-
|
1.40
|
12/20/2010
|
330,000
|
-
|
-
|
0.51
|
2/10/2009
|
|
395,000
|
-
|
-
|
0.92
|
3/25/2010
|
|
Scott
Tibbitts
|
-
|
-
|
-
|
-
|
-
|
(a)
|
(b)
|
(c)
|
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights.
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
Equity
compensation plans approved by security holders
|
7,358,726
|
$1.11
|
2,215,773
|
Equity
compensation plans not approved by security holders
|
3,800,000
|
1.35
|
-
|
Total
|
11,158,726
|
$1.24
|
2,215,773
|
PROPOSAL
3
|
2007
|
2006
|
|
Audit
Fees
|
166,262
|
$ 101,690
|
Audit
Related Fees
|
17,312
|
82,445
|
Tax
Fees
|
21,370
|
24,088
|
All
Other Fees
|
17,000
|
285
|
Total
|
$ 221,944
|
$ 208,508
|
ANNEX
A - AGREEMENT AND PLAN OF MERGER
|
ARTICLE
I THE MERGER
|
1
|
|
1.1
|
Effective
Time of the Merger
|
1
|
1.2
|
Closing
|
1
|
1.3
|
Effects
of the Merger
|
2
|
1.4
|
Certificate
of Incorporation
|
2
|
1.5
|
Bylaws
|
2
|
1.6
|
Directors
and Officers of the Surviving Corporation.
|
2
|
ARTICLE
II CONVERSION OF SECURITIES
|
2
|
|
2.1
|
Conversion
of Capital Stock
|
2
|
2.2
|
Exchange
of Certificates
|
5
|
2.3
|
Appraisal
Rights.
|
7
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
7
|
|
3.1
|
Organization;
Standing and Power; Charter Documents; Subsidiaries.
|
7
|
3.2
|
Capital
Structure.
|
9
|
3.3
|
Authority;
No Conflict; Required Filings and Consents.
|
10
|
3.4
|
SEC
Filings; Financial Statements; Information Provided.
|
12
|
3.5
|
No
Undisclosed Liabilities
|
14
|
3.6
|
Absence
of Certain Changes or Events
|
14
|
3.7
|
Taxes.
|
15
|
3.8
|
Owned
and Leased Real Properties
|
16
|
3.9
|
Tangible
Personal Property
|
16
|
3.10
|
Intellectual
Property.
|
17
|
3.11
|
Contracts.
|
19
|
3.12
|
Litigation
|
21
|
3.13
|
Environmental
Matters
|
21
|
3.14
|
Employee
Benefit Plans.
|
22
|
3.15
|
Compliance
With Laws
|
25
|
3.16
|
Permits
|
26
|
3.17
|
Labor
Matters
|
26
|
3.18
|
Insurance
|
27
|
3.19
|
Transactions
with Affiliates
|
27
|
3.20
|
State
Takeover Statutes
|
27
|
3.21
|
Opinion
of Financial Advisor
|
27
|
3.22
|
Brokers;
Fees
|
28
|
3.23
|
Accounts
Receivable.
|
28
|
3.24
|
No
Other Representations and Warranties
|
28
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER
SUB
|
28
|
|
4.1
|
Organization,
Standing and Power.
|
28
|
4.2
|
Authority;
No Conflict; Required Filings and Consents.
|
29
|
4.3
|
Information
Provided.
|
30
|
4.4
|
Operations
of Merger Sub
|
30
|
4.5
|
Litigation
|
30
|
4.6
|
Financing
|
30
|
4.7
|
No
Other Representations and Warranties
|
30
|
ARTICLE
V COVENANTS; CONDUCT OF BUSINESS
|
31
|
|
5.1
|
Ordinary
Course
|
31
|
5.2
|
Required
Consents
|
31
|
5.3
|
Buyer
Actions
|
35
|
ARTICLE
VI ADDITIONAL AGREEMENTS
|
35
|
|
6.1
|
No
Solicitation.
|
35
|
6.2
|
Proxy
Statement
|
39
|
6.3
|
Stockholders
Meeting.
|
40
|
6.4
|
Access
to Information
|
41
|
6.5
|
Legal
Requirements.
|
41
|
6.6
|
Public
Disclosure
|
42
|
6.7
|
Indemnification.
|
42
|
6.8
|
Notification
of Certain Matters
|
44
|
6.9
|
Exemption
from Liability Under Section 16
|
44
|
6.10
|
Employee
Stock Purchase Plan
|
44
|
6.11
|
Options
and Related Matters
|
45
|
6.12
|
Warrants
|
45
|
6.13
|
Employee
Matters
|
45
|
6.14
|
Third-Party
Consents
|
46
|
6.15
|
Buyer
Financing.
|
47
|
6.16
|
Option/ESPP
Offer.
|
47
|
6.17
|
Company
Bonus Plan.
|
48
|
ARTICLE
VII CONDITIONS TO MERGER
|
48
|
|
7.1
|
Conditions
to Each Party’s Obligation to Effect the Merger
|
48
|
7.2
|
Additional
Conditions to Obligations of Buyer and Merger Sub
|
48
|
7.3
|
Additional
Conditions to Obligations of the Company
|
50
|
ARTICLE
VIII TERMINATION AND AMENDMENT
|
51
|
|
8.1
|
Termination
|
51
|
8.2
|
Effect
of Termination
|
53
|
8.3
|
Fees
and Expenses.
|
53
|
8.4
|
Amendment
|
54
|
8.5
|
Extension;
Waiver
|
54
|
ARTICLE
IX MISCELLANEOUS
|
54
|
|
9.1
|
Nonsurvival
of Representations, Warranties and Agreements
|
54
|
9.2
|
Notices
|
55
|
9.3
|
Entire
Agreement
|
56
|
9.4
|
No
Third Party Beneficiaries
|
56
|
9.5
|
Assignment
|
56
|
9.6
|
Severability
|
56
|
9.7
|
Counterparts
and Signature
|
56
|
9.8
|
Interpretation
|
57
|
9.9
|
Governing
Law
|
57
|
9.10
|
Remedies
|
57
|
Defined
Terms
|
Reference
in Agreement
|
Acquisition
Proposal
|
Section
6.1(f)
|
Affiliate
|
Section
3.4(b)
|
Agreement
|
Preamble
|
Alternative
Acquisition Agreement
|
Section
6.1(b)(ii)
|
Anti-Bribery
Laws
|
Section
3.15(c)
|
Business
Day
|
Section
1.2
|
Buyer
|
Preamble
|
Buyer
Material Adverse Effect
|
Section
4.1
|
Buyer/Surviving
Corporation Employee Plan
|
Section
6.12
|
Cashed-Out
Options
|
Section
6.11(c)
|
Certificate
|
Section
2.2(b)
|
Certificate
of Incorporation
|
Section
2.1(d)
|
Change
in the Company Recommendation
|
Section
6.1(b)(iii)
|
Closing
|
Section
1.2
|
Closing
Adjustment
|
Section
2.1(f)
|
Closing
Date
|
Section
1.2
|
Code
|
Section
2.2(g)
|
Company
|
Preamble
|
Company
Balance Sheet
|
Section
3.5
|
Company
Board
|
Section
3.3(a)
|
Company
Change in Control Transaction
|
Section
8.3(b)
|
Company
Charter Documents
|
Section
3.1(b)
|
Company
Common Consideration
|
Section
2.1(c)
|
Company
Common Stock
|
Section
2.1(c)
|
Company
Disclosure Schedule
|
Article
III
|
Company
Employees
|
Section
3.14(a)
|
Company
Employee Plans
|
Section
3.14(a)
|
Company
Financials
|
Section
3.4(a)
|
Company
Material Adverse Effect
|
Section
3.1(a)
|
Company
Material Contract
|
Section
3.11(a)
|
Company
Permits
|
Section
3.16
|
Company
Preferred Stock
|
Section
2.1(e)
|
Company
Recommendation
|
Section
6.3
|
Company
SEC Reports
|
Section
3.4(a)
|
Company
Stock Options
|
Section
3.2(b)
|
Company
Stock Plans
|
Section
3.2(b)
|
Company
Stockholders Meeting
|
Section
3.3(d)
|
Company
Voting Proposal
|
Section
3.3(a)
|
Confidentiality
Agreement
|
Section
6.4
|
Continuing
Employees
|
Section
6.12
|
Contract
|
Section
3.11(a)
|
Costs
|
Section
6.7(a)
|
Cowen
|
Section
3.21
|
DGCL
|
Recitals
|
Dissenting
Shares
|
Section
2.3(a)
|
Effective
Time
|
Section
1.1
|
Employee
Benefit Plan
|
Section
3.14(a)
|
Employee
Stock Purchase Plan
|
Section
3.2(b)
|
Environmental
Law
|
Section
3.13(b)
|
ESPP
Rights
|
Section
6.16(a)
|
ESPP
Buy Price
|
Section
6.16(a)
|
ERISA
|
Section
3.14(a)
|
ERISA
Affiliate
|
Section
3.14(a)
|
ESPP
Termination Date
|
Section
6.10
|
Exchange
Act
|
Section
3.3(c)
|
Exchange
Fund
|
Section
2.2(a)
|
Excluded
Person
|
Section
6.1(a)
|
Existing
Indemnity Obligations
|
Section
6.7(a)
|
Export
Control Laws
|
Section
3.15(b)
|
GAAP
|
Section
3.4(a)
|
Governmental
Entity
|
Section
3.3(c)
|
Hazardous
Substance
|
Section
3.13(c)
|
Holder
Agreements
|
Recitals
|
Indemnified
Parties
|
Section
6.7(a)
|
Intellectual
Property
|
Section
3.10(a)
|
Intellectual
Property Licenses
|
Section
3.10(b)
|
IRS
|
Section
3.7(b)
|
Leased
Real Property
|
Section
3.8
|
Leases
|
Section
3.8
|
Liens
|
Section
3.1(c)
|
Merger
|
Recitals
|
Merger
Consideration
|
Section
2.1(e)
|
Merger
Sub
|
Preamble
|
Open
Source Materials
|
Section
3.10(g)
|
Option
Consideration
|
Section
6.11
|
Option/ESPP
Offer
|
Section
6.16(a)
|
Outside
Date
|
Section
8.1(b)
|
Paying
Agent
|
Section
2.2(a)
|
Permitted
Liens
|
Section
3.9
|
Person
|
Section
2.2(b)
|
Pre-Closing
Period
|
Section
5.1
|
Proxy
Statement
|
Section
3.4(b)
|
PSV
Policies
|
Section
6.13
|
Required
Company Stockholder Vote
|
Section
3.3(d)
|
Representatives
|
Section
6.1(a)
|
Sarbanes-Oxley
Act
|
Section
3.4(c)
|
SEC
|
Section
3.3(c)
|
Securities
Act
|
Section
3.3(c)
|
Series
C Consideration
|
Section
2.1(d)
|
Series
C Preferred Stock
|
Section
2.1(d)
|
Series
D-1 Consideration
|
Section
2.1(e)
|
Series
D-1 Preferred Stock
|
Section
2.1(e)
|
Subsidiary
|
Section
3.1(a)
|
Subsidiary
Charter Documents
|
Section
3.1(b)
|
Superior
Proposal
|
Section
6.1(f)
|
Surviving
Corporation
|
Section
1.3
|
Surviving
Rights
|
Section
2.1(f)
|
Tax
Returns
|
Section
3.7(a)
|
Taxes
|
Section
3.7(a)
|
Triggering
Event
|
Section
8.1(f)
|
Voting
Agreements
|
Recitals
|
Voting
Debt
|
Section
3.2(c)
|
Window
Shop End Time
|
Section
6.1(a)
|
SIERRA
NEVADA CORPORATION
|
|||||||
By:
|
/s/ Fatih Ozmen | ||||||
Name:
Fatih
Ozmen
|
|||||||
Title:
President
|
|||||||
SDV
ACQUISITION CORP.
|
|||||||
By:
|
/s/ Fatih Ozmen | ||||||
Name:
Fatih Ozmen
|
|||||||
Title:
President
|
|||||||
SPACEDEV,
INC.
|
|||||||
By:
|
/s/ Mark N. Sirangelo | ||||||
Name:
Mark N. Sirangelo
|
|||||||
Title:
Chief Executive Officer
|
|||||||
ANNEX
B - OPINION OF COWEN AND COMPANY,
LLC
|
·
|
a
draft of the Agreement dated October 10, 2008, which is the most recent
draft made available to us;
|
·
|
certain
publicly available financial and other information for the Company and
certain other relevant financial and operating data furnished to Cowen by
the management of the Company;
|
·
|
certain
internal financial analyses, financial forecasts, reports and other
information concerning the Company (the “Company Forecasts”) prepared by
the management of the Company;
|
·
|
discussions
we have had with certain members of the management of the Company
concerning the historical and current business operations, financial
condition and prospects of the Company and such other matters we deemed
relevant;
|
·
|
the
reported price and trading histories of the shares of Company Common Stock
as compared to the reported price and trading histories of certain
publicly traded companies we deemed
relevant;
|
·
|
certain
financial terms of the Transaction as compared to the financial terms of
certain selected business combinations we deemed
relevant;
|
·
|
based
on the Company Forecasts, the cash flows generated by the Company on a
stand-alone basis to determine the present value of the discounted cash
flows; and
|
·
|
such
other information, financial studies, analyses and investigations and such
other factors that we deemed relevant for the purposes of this
opinion.
|
ANNEX C - SECTION
262 OF THE DELAWARE GENERAL CORPORATION
LAW
|