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Share Name | Share Symbol | Market | Type |
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ZAGG Inc | NASDAQ:ZAGG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 4.29 | 4.30 | 4.33 | 0 | 01:00:00 |
Filed by the Registrant ☒
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Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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ZAGG Inc
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(i)
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a proposal to adopt the Agreement and Plan of Merger, dated December 10, 2020 (as it may be amended from time to time, the “Merger Agreement”), by and among ZAGG, Zephyr Parent, Inc., a Delaware corporation (“Parent”), and Zephyr Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are indirectly controlled by Evercel, Inc., a Delaware corporation, and its co-investors (collectively, the “Evercel Group”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into ZAGG (the “Merger”), with ZAGG continuing as the surviving corporation of the Merger (the “Surviving Corporation”) and as a wholly owned subsidiary of Parent (the “Merger Proposal”);
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(ii)
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a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to approve the Merger Proposal; and
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(iii)
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a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may become payable to our named executive officers in connection with the Merger.
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Sincerely,
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/s/ TAYLOR D. SMITH
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Taylor D. Smith
Chief Financial Officer
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1.
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The Merger Proposal. To adopt the Agreement and Plan of Merger, dated December 10, 2020, by and among ZAGG, Zephyr Parent, Inc., a Delaware corporation (“Parent”), and Zephyr Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”) (as it may be amended from time to time, the “Merger Agreement”), pursuant to which, upon the satisfaction or waiver of the conditions to closing set forth therein, Merger Sub will merge with and into ZAGG (the “Merger”), with ZAGG surviving the Merger as a wholly owned subsidiary of Parent (the “Merger Proposal”);
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2.
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The Adjournment Proposal. To approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to approve the Merger Proposal (the “Adjournment Proposal”); and
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3.
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The Compensation Proposal. To approve, on a non-binding, advisory basis, certain compensation that will or may become payable to our named executive officers in connection with the Merger (the “Compensation Proposal”).
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By Order of the Board of Directors,
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/s/ TAYLOR D. SMITH
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Taylor D. Smith
Chief Financial Officer
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(i)
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to adopt the Merger Agreement (the “Merger Proposal”);
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(ii)
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to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to approve the Merger Proposal (the “Adjournment Proposal”); and
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(iii)
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to approve, on a non-binding, advisory basis, certain compensation that will or may become payable to our named executive officers in connection with the Merger (the “Compensation Proposal”).
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initiate, solicit or encourage the submission of any acquisition proposal or engage in any discussions or negotiations with respect thereto;
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approve or recommend, or publicly propose to approve or recommend, any acquisition proposal;
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withdraw, change or qualify, in a manner adverse to Parent or Merger Sub, the Board recommendation that ZAGG’s stockholders approve and adopt the Merger Agreement;
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enter into or negotiate any merger agreement, letter of intent or other similar agreement relating to any acquisition proposal; or
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resolve or agree to do any of the foregoing.
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the approval of the Merger Agreement and the Merger by the affirmative vote of the holders of a majority of the outstanding ZAGG common stock;
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the absence of any governmental order preventing or prohibiting consummation of the Merger or any other transactions contemplated in the Merger Agreement or the PPP Loan Forgiveness Rights Agreement;
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the expiration or termination of any applicable waiting periods, together with any extensions thereof, under the HSR Act and any other competition laws;
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The accuracy of the representations and warranties of ZAGG, on the one hand, and Parent, on the other hand, in the Merger Agreement, subject in some instances to materiality or “material adverse effect” qualifiers, at and as of the effective date of the Merger (except for representations and warranties that expressly relate to a specific date or time);
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the compliance or performance by ZAGG, on the one hand, and Parent, on the other hand, in all material respects with all agreements, obligations and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the effective time of the Merger; and
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since the date of the Merger Agreement, there not having occurred any Company Material Adverse Effect (as defined in “The Merger Agreement—Representations and Warranties” on page 76 of this proxy statement).
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by mutual written consent of Parent and ZAGG by action of their respective boards of directors;
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by either ZAGG or Parent:
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if the Merger shall not have been consummated prior to May 7, 2021 (the “Outside Date”);
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if any governmental entity shall have issued a final and nonappealable order permanently prohibiting the transactions contemplated by the Merger Agreement or the PPP Loan Forgiveness Rights Agreement;
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if the required ZAGG stockholder approval shall not have been obtained at the ZAGG stockholder meeting;
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by Parent:
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if, prior to receipt of the required ZAGG stockholder approval, (i) a change of Board recommendation shall have occurred; provided that Parent’s right to terminate the Merger Agreement pursuant to this provision expires at 5:00 p.m., Eastern Time, on the fifth business day following the date on which such change of Board recommendation occurs, or (ii) a tender offer or exchange offer for outstanding ZAGG common stock shall have been publicly announced (other than by Parent or an affiliate of Parent) and, prior to the earlier of (x) the date prior to the date of the ZAGG stockholder meeting and (y) 11 business days after the commencement of such tender or exchange offer pursuant to Rule 14d-2 under the Exchange Act, the Board fails to recommend unequivocally against acceptance of such offer; or
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subject to certain cure periods, if there is any breach of any representation, warranty, covenant or agreement on the part of ZAGG set forth in the Merger Agreement, such that the conditions to closing of the Merger related thereto would not be satisfied at the closing of the Merger;
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by ZAGG:
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at any time prior to the receipt of the required ZAGG stockholder approval, in order to enter into a definitive agreement with respect to a superior proposal;
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subject to certain cure periods, if there is any breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in the Merger Agreement, such that the conditions to closing of the Merger related thereto would not be satisfied at the closing of the Merger; or
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if (i) all of the conditions to Parent’s obligations to consummate the Merger (other than conditions which are to be satisfied by actions taken at the closing) have been satisfied, (ii) Parent fails to consummate the closing of the Merger within three business days following the date the closing should have occurred pursuant to the terms of the Merger Agreement, (iii) ZAGG has irrevocably notified Parent in writing that ZAGG is ready, willing and able to effect the closing of the Merger within two business days, and (iv) Parent fails to consummate the closing of the Merger on or before the second business day following the date of delivery of such written notification by ZAGG.
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Q:
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Why am I receiving these materials?
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A:
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On December 10, 2020, ZAGG entered into the Merger Agreement, pursuant to which, among other things, Merger Sub will merge with and into ZAGG, with ZAGG surviving (the “Surviving Corporation”) the Merger and becoming a wholly owned subsidiary of Parent. A copy of the Merger Agreement is attached as Appendix A to this proxy statement and is incorporated by reference herein. Our board of directors (the “Board”) is furnishing this proxy statement and proxy card to the holders of ZAGG common stock in connection with the solicitation of proxies in favor of the Merger Proposal, the Adjournment Proposal, and the Compensation Proposal (each as described below) to be voted on at a special meeting of stockholders or at any adjournments continuations, reschedulings or postponements thereof.
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Q:
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When and where is the special meeting?
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The special meeting will take place virtually via live webcast as indicated below. Should we decide to change the date, time, and location of our special meeting, we will issue a press release, file the announcement as definitive additional soliciting material with the U.S. Securities and Exchange Commission (the “SEC”), and take all reasonable steps necessary to inform other intermediaries in the proxy process.
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Who is entitled to vote at the special meeting?
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To be able to vote on the matters presented at the special meeting, you must have been a stockholder of record at the close of business on January 14, 2021 (the “Record Date”). The aggregate number of shares entitled to vote at this special meeting is 30,448,003 shares of ZAGG common stock, which is the number of shares that were outstanding as of the Record Date.
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Q:
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How many votes do I have?
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Each share of ZAGG common stock that you owned as of the close of business on the Record Date entitles you to one vote on each matter that is voted on at the special meeting.
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How can I attend the special meeting and vote?
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All stockholders of record as of the Record Date may virtually attend the special meeting on the internet through a live webcast at www.virtualshareholdermeeting.com/ZAGG2021SM. Our stockholders will continue to have the opportunity to engage with our Board during the special meeting. Our virtual meeting platform is provided by Broadridge Financial Solutions (www.virtualshareholdermeeting.com/ZAGG2021SM) and allows all participating stockholders to submit questions at any point during the special meeting. In addition, it also allows our stockholders to vote on proposals online during the special meeting. We believe that our virtual platform increases stockholder participation while also affording the same rights and opportunities to participate, as stockholders would have at a physical special meeting.
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Any stockholder can virtually attend the special meeting via the Internet at www.virtualshareholdermeeting.com/ZAGG2021SM.
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The webcast will start at 9:00 a.m. Mountain Standard Time (MST).
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Please have your 16-digit control number to enter the special meeting.
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Stockholders may vote and submit questions online while virtually attending the special meeting.
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Instructions on how to attend and participate via the internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.
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Questions regarding how to attend and participate via the internet will be answered by calling 1-800-690-6903 on the day before the special meeting and the day of the special meeting.
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Q:
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What am I being asked to vote on at the special meeting?
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You are being asked to consider and vote on the following proposals:
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to adopt the Merger Agreement (the “Merger Proposal”);
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to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to approve the Merger Proposal (the “Adjournment Proposal”); and
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to approve, on a non-binding, advisory basis, certain compensation that will or may become payable to our named executive officers in connection with the Merger (the “Compensation Proposal”).
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What will I receive if the Merger is completed?
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A:
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Upon completion of the Merger, you will be entitled to receive $4.20 in cash (the “Closing Date Consideration”) and one right (the “PPP Loan Forgiveness Right,” and collectively with the Closing Date Consideration, the “Merger Consideration”) to receive an additional amount, net of certain fees and expenses, contingent upon the satisfaction of certain conditions related to the U.S. Small Business Administration Paycheck Protection Program Loan issued to ZAGG on April 13, 2020 (the “PPP Loan”), without interest and less any applicable withholding taxes, for each share of ZAGG common stock that you own, unless you are entitled to and have properly demanded appraisal rights and have complied in all respects with Section 262 of the Delaware General Corporation Law (the “DGCL”) with respect to each such share. For example, if you own 100 shares of ZAGG common stock, you will be entitled to receive $420.00 in cash in exchange for such shares and 100 PPP Loan Forgiveness Rights upon the closing of the Merger, without interest and less any applicable withholding taxes. In either case, as a result of the Merger, your shares will be cancelled and you will not own shares in the Surviving Corporation which will be a wholly owned subsidiary of Parent following the Merger.
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What are the PPP Loan Forgiveness Rights?
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The PPP Loan Forgiveness Rights represent the right to receive an additional contingent amount based on the forgiveness of the PPP Loan and the satisfactory completion of any audit related thereto, net of (i) expenses of
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How does the Merger Consideration compare to the market price of ZAGG common stock prior to the public announcement of the Merger Agreement?
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Assuming a value of $0.25 per PPP Loan Forgiveness Right, the Merger Consideration represents a premium of approximately 10.1% over the closing price of ZAGG common stock on December 9, 2020 ($4.04), the last trading day before the Merger Agreement was approved by our Board, and a premium of 22.6% and 33.2% over the 30-day average and 60-day average, respectively, on the same date. However, we make no assurance as to what the actual amount might be or when it might be paid.
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What do I need to do now? If I am going to attend the special meeting, should I still submit a proxy?
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We encourage you to read this proxy statement, its appendices, including the Merger Agreement, and the documents incorporated by reference herein, carefully and in their entirety and consider how the Merger affects you. Whether or not you expect to virtually attend the special meeting, we encourage you to complete, sign, date, and return, as promptly as possible, the enclosed proxy card so that your shares of ZAGG common stock may be represented and can be voted at the special meeting. Submitting a proxy now to vote your shares of ZAGG common stock will not prevent you from being able to vote online during the special meeting. If you virtually attend the special meeting and vote online, your online vote will revoke any proxy previously submitted. If you hold your shares of ZAGG common stock in “street name,” please refer to the voting instruction forms provided by your broker, bank, or nominee to vote such shares.
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Should I send in my stock certificates now?
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No. If the Merger Proposal is approved, shortly after the Merger is completed, under the terms of the Merger Agreement, you will receive a letter of transmittal containing instructions for how to send your stock certificates to the paying agent in order to receive the Closing Date Consideration for each share of ZAGG common stock represented by the stock certificate or book-entry shares. You should use the letter of transmittal to exchange your stock certificates or book-entry shares for the Closing Date Consideration to which you are entitled upon completion of the Merger. If your shares of ZAGG common stock are held in “street name” through a broker, bank, or nominee, you will receive instructions from your broker, bank, or nominee as to how to effect the surrender of your “street name” shares of ZAGG common stock in exchange for the Merger Consideration. Please do not send in your stock certificates now.
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What happens if I sell or otherwise transfer my shares of ZAGG common stock after the Record Date but before the special meeting? What happens if I sell or otherwise transfer my shares of ZAGG common stock after the special meeting but before the effective time of the Merger?
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The Record Date for the special meeting is earlier than the date of the special meeting and earlier than the date the Merger is expected to be completed. If you sell or transfer your shares of ZAGG common stock after the Record Date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or transfer your shares and each of you notifies ZAGG in writing of such special arrangements, you will retain your right to vote such shares at the special meeting, but will transfer the right to receive the Merger Consideration if the Merger is completed to the person to whom you sell or transfer such shares.
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What vote is required to adopt the Merger Agreement?
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The affirmative vote of the holders of a majority of the shares of ZAGG common stock outstanding as of the Record Date and entitled to vote on the matter is required to approve the Merger Proposal.
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What vote is required to approve the Adjournment Proposal and the Compensation Proposal?
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Approval of the Adjournment Proposal or the Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of ZAGG common stock present by virtual attendance or by proxy representation at the special meeting and entitled to vote on the matter.
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What is “Merger-related compensation”?
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“Merger-related compensation” is certain compensation that is tied to or based on the completion of the Merger and may be payable to ZAGG’s named executive officers under its existing plans or agreements, which is the subject of the Compensation Proposal. See “Proposal 3: Advisory Vote on Merger-Related Named Executive Officer Compensation” on page 96 of this proxy statement.
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Why am I being asked to cast a non-binding, advisory vote to approve “Merger-related compensation” payable to ZAGG’s named executive officers under its plans or agreements?
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In accordance with the rules promulgated under Section 14(a) of the Exchange Act, we are providing you with the opportunity to cast a non-binding, advisory vote on the compensation that may be payable to our named executive officers in connection with the Merger.
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What will happen if the stockholders do not approve the Compensation Proposal at the special meeting?
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Approval of the Compensation Proposal is not a condition to the completion of the Merger. The vote with respect to the Compensation Proposal is on an advisory basis and will not be binding on ZAGG or Parent. Further, the underlying compensation plans and agreements are contractual in nature and are not, by their terms, subject to stockholder approval. Accordingly, payment of the “Merger-related compensation” is not contingent on stockholder approval of the Compensation Proposal.
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What is a quorum?
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In order for business to be conducted at the special meeting, our bylaws require that a quorum must be present. A quorum will be present at the special meeting if the holders of a majority of the shares of the ZAGG common stock outstanding and entitled to vote at the special meeting is represented at the special meeting by virtual attendance or by proxy.
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How do I vote?
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Stockholder of record: Shares registered in your name: If you are a stockholder of record (that is, your shares are registered in your own name, not in “street name” by a broker, bank, or nominee). If you are a stockholder of record on the Record Date, there are four ways to vote:
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voting at the special meeting via the Internet at www.virtualshareholdermeeting.com/ZAGG2021SM;
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completing, signing, dating, and returning your proxy card by mail, if you request a paper copy of the proxy materials;
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making a toll-free telephone call within the U.S. or Canada using a touch-tone telephone to the telephone number provided on your proxy card; or
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voting on the internet. To vote on the internet, go to the website address indicated on your proxy card. You will be asked to provide the control number from your proxy card.
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If my broker, bank, or nominee holds my shares in “street name,” will my broker, bank, or nominee vote my shares for me?
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Not without your direction. Your broker, bank, or nominee will only be permitted to vote your shares on any proposal at the special meeting if you instruct your broker, bank, or nominee on how to vote. Under applicable stock exchange rules, brokers, banks, or nominees have the discretion to vote your shares on routine matters if you fail to instruct your broker, bank, or nominee on how to vote your shares with respect to such matters. All of the proposals in this proxy statement are non-routine matters, and brokers, banks, and nominees therefore cannot vote on these proposals without your instructions. Therefore, it is important that you instruct your broker, bank, or nominee on how you wish to vote your shares of ZAGG common stock.
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May I revoke my proxy after I have mailed my signed proxy card or otherwise submitted my vote by proxy?
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Yes. If you are a stockholder of record, you may revoke your earlier proxy and/or change your vote at any time before the special meeting by taking one of the following actions (only your latest-dated proxy that is received prior to the special meeting will be counted):
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completing, signing, dating, and mailing another proxy card with a later date;
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submitting a proxy again via the Internet;
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giving our Corporate Secretary written notice that you want to revoke your proxy at the following address: ZAGG Inc, Attention: Corporate Secretary, 910 West Legacy Center Way, Suite 500, Midvale, Utah 84047; or
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virtually attending the special meeting and voting online during the special meeting. Your virtual attendance at the special meeting alone will not revoke your proxy; you must vote online or specifically request that your prior proxy be revoked.
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If a stockholder submits a proxy, how are the shares voted?
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Regardless of the method you choose to submit your proxy, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some, or none of the specific items of business to come before the special meeting.
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What should I do if I receive more than one set of voting materials?
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You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction forms. For example, if you hold your shares of ZAGG common stock in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares of ZAGG common stock are registered in more than one name, you will receive more than one proxy card. Please complete, date, sign, and return each proxy card and voting instruction form that you receive. Each proxy card you receive comes with its own prepaid return envelope; if you submit a proxy card by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.
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Who will count the votes?
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The votes will be counted by the independent inspector of election appointed for the special meeting.
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Where can I find the voting results of the special meeting?
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ZAGG intends to announce preliminary voting results of the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports that ZAGG files with the SEC are publicly available when filed. See “Where You Can Find More Information” on page 99 of this proxy statement.
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What will the holders of ZAGG restricted stock units receive in the Merger?
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At the effective time of the Merger, each outstanding award of ZAGG restricted stock units (a “Company RSU”) will, automatically without any required action on the part of ZAGG, the Parent, or the holder thereof, be cancelled and terminated and converted into the right to receive (i) the Closing Date Consideration, multiplied by the aggregate number of shares of ZAGG common stock underlying such Company RSU award immediately prior to the effective time of the Merger and (ii) an aggregate number of PPP Loan Forgiveness Rights equal to the aggregate number of shares of ZAGG common stock underlying such Company RSU award immediately prior to the effective time of the Merger.
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When do you expect the Merger to be completed?
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We are working towards completing the Merger as quickly as possible and currently expect to complete the Merger in the first quarter of 2021. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to conditions, including adoption of the Merger Agreement by the stockholders of ZAGG and the receipt of various regulatory approvals. See “The Merger—Regulatory Approvals Required for the Merger” on page 71 of this proxy statement.
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Am I entitled to appraisal rights under the DGCL?
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Yes. As a holder of ZAGG common stock, you are entitled to exercise appraisal rights under the DGCL in connection with the Merger if you take certain actions and meet certain conditions. See “The Merger—Appraisal Rights” on page 62 of this proxy statement.
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What is householding and how does it affect me?
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Some broker, bank, or nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of our proxy statement to you if our Corporate Secretary receives a call or written request from you at the address, telephone number, or email address indicated below.
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ZAGG Inc
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Attention: Abby Barraclough, Corporate Secretary
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910 West Legacy Center Way, Suite 500
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Midvale, Utah 84047
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Email: abby.barraclough@zagg.com
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Phone: 801-506-7005
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Who can help answer my questions?
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The information provided above in the Q&A format is for your convenience only and is merely a summary of some of the information in this proxy statement. We encourage you to read this proxy statement, its appendices, including the Merger Agreement, and the documents incorporated by reference herein, carefully and in their entirety and consider how the Merger affects you. If you have any questions concerning the Merger, the special meeting, or this proxy statement, would like additional copies of this proxy statement, or need help voting your shares of ZAGG common stock, please contact our proxy solicitor:
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(i)
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to adopt the Merger Agreement (the “Merger Proposal”);
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to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to approve the Merger Proposal; and
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to approve, on a non-binding, advisory basis, certain compensation that will or may become payable to our named executive officers in connection with the Merger.
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Delivering a written notice of revocation to ZAGG Inc, Attention: Corporate Secretary, 910 West Legacy Center Way, Suite 500, Midvale, Utah 84047, specifying such revocation;
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Signing another proxy card with a later date and returning it to us prior to the special meeting; or
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Virtually attending the special meeting and voting online during the special meeting.
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ZAGG Inc
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Attention: Abby Barraclough, Corporate Secretary
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910 West Legacy Center Way, Suite 500
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Midvale, Utah 84047
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Email: abby.barraclough@zagg.com
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Phone: 801-506-7005
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ZAGG may be unable to obtain stockholder approval as required for the Merger;
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The Merger Agreement may be terminated in connection with the receipt of a superior proposal, requiring us to pay a termination fee and reimburse certain of Parent’s transaction expenses;
|
•
|
The conditions to the closing of the Merger may not be satisfied or waived and required regulatory approvals may not be obtained;
|
•
|
The PPP Loan may not be forgiven, the related audit might not be satisfactorily completed (or might not be completed prior to the expiration of the PPP Loan Forgiveness Rights) and the expenses that may be deducted from the Additional Merger Consideration could be substantial;
|
•
|
The Merger may involve unexpected costs, liabilities, or delays, including the payment of a termination fee to Parent by ZAGG;
|
•
|
The business of ZAGG may suffer as a result of uncertainty surrounding the Merger;
|
•
|
The effect of the announcement or pendency of the Merger on our business relationships, including with customers and suppliers;
|
•
|
The outcome of any legal proceedings related to the Merger;
|
•
|
ZAGG may be adversely affected by other economic, business, legislative, regulatory, and/or competitive factors;
|
•
|
The occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement;
|
•
|
The attention of ZAGG’s management and employees may be diverted from ongoing business concerns as a result of the Merger;
|
•
|
Limitations placed on ZAGG’s ability to operate its business under the Merger Agreement;
|
•
|
Risks that the Merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the Merger;
|
•
|
The fact that under the terms of the Merger Agreement, ZAGG is restricted from soliciting other acquisition proposals;
|
•
|
The failure by Parent or Merger Sub to obtain the necessary debt and equity financing arrangements set forth in the commitment letters received in connection with the Merger; and
|
•
|
Other risks to consummation of the Merger, including the risk that the Merger will not be completed within the expected time period or at all.
|
•
|
Sponsor A proposed to acquire the Company for a purchase price ranging from $8.50 to $9.50 per share of ZAGG common stock;
|
•
|
Sponsor C proposed to acquire the Company for a purchase price of $7.75 per share of ZAGG common stock;
|
•
|
Sponsor D proposed to acquire the Company for a purchase price of $8.50 per share of ZAGG common stock;
|
•
|
Strategic B proposed to acquire the Company for a purchase price ranging from $7.25 to $7.75 per share of ZAGG common stock;
|
•
|
Strategic C proposed to acquire the Company for a purchase price ranging from $8.50 to $9.50 per share of ZAGG common stock; and
|
•
|
Strategic D proposed to acquire the Company for a purchase price ranging from $9 to $11 per share of ZAGG common stock.
|
•
|
determined that the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to, and in the best interests of the Company and its stockholders;
|
•
|
approved, adopted, and declared advisable the merger agreement and the transactions contemplated thereby, including the Merger;
|
•
|
directed that the Merger Agreement be submitted to the stockholders of the Company for adoption at the special meeting; and
|
•
|
recommended that the Company’s stockholders adopt the Merger Agreement.
|
•
|
the fact that the estimated Merger Consideration of up to $4.45 per share, assuming a value of $0.25 per PPP Loan Forgiveness Right, which is the amount estimated at the time of the Merger Agreement, represents a premium of approximately 10.1% over the closing price of ZAGG common stock on December 9, 2020 ($4.04), the last trading day before the Merger Agreement was approved by the Board, and a premium of 22.6% and 33.2% over the 30-day average and 60-day average, respectively, on the same date;
|
•
|
the Board’s belief that the value offered to stockholders pursuant to the Merger is more favorable to ZAGG stockholders than the potential value from other alternatives reasonably available to ZAGG, including remaining an independent public company, after reviewing ZAGG’s business, financial condition, results of operations, market trends, competitive landscape, and execution risks, and discussions with ZAGG’s management and advisors and considering:
|
○
|
the outlook for the retailers and distributors through which ZAGG sells its products and the cyclical nature of consumer retail;
|
○
|
the continued consumer acceptance of ZAGG’s products;
|
○
|
the historical, current, and prospective financial condition, results of operations, and business of ZAGG and the execution risks and uncertainties associated with achieving ZAGG’s stand-alone plan;
|
○
|
the increasingly competitive nature of ZAGG’s industry, including the presence of aggressive new entrants and aggressive competition from current industry participants, including smartphone manufacturers and current customers;
|
○
|
the reliance of the Company on smartphone manufacturers to continually and materially improve technology within smartphones each year to drive consumers to upgrade their existing smartphones;
|
○
|
the constant difficulty in product development to ensure ZAGG’s products are compatible with new and continually evolving original equipment manufacturers’ (“OEM”) smartphone technology;
|
○
|
the competition from OEMs in accessory categories, including wireless charging and cases;
|
○
|
the saturation of the smartphone market within the United States and Western Europe, combined with longer smartphone upgrade cycles for consumers, and the related impacts on sales and profitability;
|
○
|
the continued impacts of the trade war between the U.S. and China, including significant increases in tariffs on goods imported from China and related impact on ZAGG’s profitability;
|
○
|
the potential for additional internal ZAGG restructuring activities within the next 12 months to support high-margin brands and product categories while reducing or exiting low or negative-margin brand and product categories;
|
○
|
the significant costs ZAGG may continue to incur related to the SEC investigation regarding certain sales transactions from late 2018, the inventory write-down disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 28, 2020, and related accounting practices and guidance; and
|
○
|
the anticipated future trading prices of ZAGG’s common stock on a stand-alone basis, based on management estimates and adjusted for different scenarios, and the risks and uncertainties of continuing on a stand-alone basis as an independent public company.
|
•
|
the fact that $4.20 per share of the Merger Consideration will be paid in cash, and provides certainty, immediate value, and liquidity to ZAGG’s stockholders, enabling them to realize value for their interest in ZAGG while eliminating business and execution risk inherent in ZAGG’s business, including risks and uncertainties associated with achievement of the stand-alone plan;
|
•
|
the fact that ZAGG’s stockholders will be entitled to receive an additional contingent amount, to be paid if the PPP Loan is forgiven and any audit related thereto is satisfactorily completed;
|
•
|
the outreach to, and extensive discussions with, potentially interested parties regarding strategic alternatives for the Company undertaken since 2019;
|
•
|
our ability to respond to and negotiate an alternative acquisition proposal from a third party if such proposal is determined to constitute a superior proposal or could reasonably be expected to result in a superior proposal;
|
•
|
the Board’s ability to change its recommendation in accordance with the customary fiduciary out provisions;
|
•
|
our ability to terminate the Merger Agreement to accept a superior proposal with the payment of a customary termination fee and capped expense reimbursement obligation, which total termination fee and capped expense reimbursement amount the Board believes to be reasonable under the circumstances given the size of the transaction and taking into account the range of such termination fees in similar transactions and believes not to preclude or substantially impede a possible competing proposal;
|
•
|
the belief of the Board, based upon arm’s-length negotiations (as further described in the section titled “—Background of the Merger” on page 31 of this proxy statement), that the price to be paid by Parent was the highest price per share that Parent was willing to pay for ZAGG;
|
•
|
the fact that the Merger Agreement was the product of arm’s-length negotiations and contained terms and conditions that were, in the Board’s view, advisable and favorable to ZAGG and its stockholders, as well as the Board’s belief, based on these negotiations, that these were the most favorable terms available to ZAGG and its stockholders on which Parent was willing to transact;
|
•
|
the Board’s belief that Parent has access to the resources needed to complete the Merger, based on, among other factors, that Parent has obtained committed debt financing for the transaction from reputable financial institutions and committed equity financing from the Evercel Group, and that Parent has agreed to use reasonable best efforts to consummate the debt financing and the equity financing in accordance with their respective terms;
|
•
|
the financial presentation by BofA Securities and the oral opinion of BofA Securities rendered to the Board, subsequently confirmed by delivery of a written opinion dated December 10, 2020, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in the written opinion, the Merger Consideration to be received in the Merger by holders of shares of ZAGG common stock, was fair, from a financial point of view, to such holders, as more fully described in “—Opinion of BofA Securities, Inc.” beginning on page 47 of this proxy statement;
|
•
|
the likelihood that the Merger will be consummated, based upon, among other things, the likelihood of receiving the necessary approval of ZAGG’s stockholders to complete the Merger, the limited number of conditions to the Merger, the absence of a financing condition, the likelihood of obtaining required regulatory approvals and the remedies available under the Merger Agreement to ZAGG in the event of any breaches by Parent, including the provision for payment of a reverse termination fee by Parent to ZAGG under certain circumstances; and
|
•
|
the other terms and conditions of the Merger Agreement and other transaction agreements, including the following related factors:
|
○
|
the customary nature of the representations, warranties, and covenants of ZAGG in the Merger Agreement;
|
○
|
the ability of the Board, subject to certain limitations, to respond to a bona fide written acquisition proposal received from a third party prior to obtaining the stockholder approval if the Board determines in good faith, after consultation with its financial advisors and outside legal counsel, that the acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal;
|
○
|
the ability of the Board, subject to certain limitations, to withdraw or modify its recommendation that stockholders vote in favor of adoption of the Merger Agreement in connection with the receipt of a superior proposal or the occurrence of an intervening event, and to terminate the Merger Agreement to accept a superior proposal and enter into a definitive agreement with respect to such superior proposal, subject to payment to Parent of a termination fee and capped expense reimbursement obligation;
|
○
|
the conclusion of the Board that the termination fee and capped expense reimbursement obligations and the circumstances in which such termination fee and capped expense reimbursement obligation may be payable are reasonable in light of the benefit of the Merger and would not be a significant impediment to third parties interested in making an acquisition proposal;
|
○
|
the fact that Parent agreed to take all steps necessary to obtain certain regulatory approvals;
|
○
|
the absence of a financing condition to Parent’s obligation to consummate the Merger;
|
○
|
the fact that Parent has received the equity commitment letters from the Evercel Group, which will provide sufficient funds for Parent, together with the proceeds of the debt financing, to consummate the Merger;
|
○
|
the fact that, pursuant to the Merger Agreement and subject to certain limitations, ZAGG is entitled to specific performance and other equitable remedies to prevent breaches of the Merger Agreement and, under specified circumstances, may enforce Parent’s obligation to cause the equity financing to be timely completed;
|
○
|
the fact that the Merger Agreement provides that, if the Merger is not consummated under certain specified circumstances, Parent will pay ZAGG a reverse termination fee of $5,000,000, without ZAGG having to establish any damages, and that the aggregate amount of such payment obligation is guaranteed by Evercel;
|
○
|
the fact that the “Outside Date”, defined as May 7, 2021, under the Merger Agreement allows for sufficient time to complete the Merger; and
|
○
|
the availability of statutory appraisal rights to ZAGG stockholders who do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures under the DGCL.
|
•
|
the restrictions in the Merger Agreement on our actively soliciting competing bids to acquire ZAGG;
|
•
|
the restrictions in the Merger Agreement on ZAGG’s ability to terminate the Merger Agreement in connection with the receipt of a superior proposal, including the fact that the Board must (i) provide three business days’ written notice to Parent of its intention to effect a change of Board recommendation or terminate the Merger Agreement in order to provide Parent with an opportunity to match a superior proposal (and a further twenty-four hours’ written notice with respect to any subsequent material revisions to any such superior proposal) and (ii) negotiate in good faith with Parent during such period, and the discouraging effect such restrictions may have on other potential bidders;
|
•
|
the fact that, under certain circumstances in connection with the termination of the Merger Agreement (including if the Board changes its recommendation in light of a superior proposal or intervening event or if ZAGG terminates the Merger Agreement to accept a superior proposal), we will be required to pay Parent a termination fee of $3,000,000 and reimburse Parent for its out-of-pocket expenses incurred in connection with the Merger, up to a maximum of $2,000,000;
|
•
|
the fact that ZAGG stockholders will not participate in any potential future earnings or growth of ZAGG and will not benefit from any appreciation in its value as a private company;
|
•
|
the risk that the conditions to the consummation of the Merger may not be satisfied and, as a result, the possibility that the Merger may not be completed in a timely manner or at all, even if the Merger Agreement is adopted by ZAGG’s stockholders;
|
•
|
the risk that some or all of the PPP Loan may not be forgiven and, as a result, some or all of the contingent consideration payable under the PPP Loan Forgiveness Rights Agreement may not be paid to ZAGG’s stockholders;
|
•
|
the risk that the PPP Loan audit may not be satisfactorily completed (or may not be completed prior to the expiration of the PPP Loan Forgiveness Rights) and the expenses that may be deducted from the Additional Merger Consideration may be substantial;
|
•
|
the risk that some or all of the conditions in the debt commitment letters for the debt financing obtained by Parent may not be satisfied and, as a result, the possibility that Parent may not be able to obtain alternative debt financing in a timely manner;
|
•
|
the fact that a significant portion of the debt financing being arranged by Parent is proposed to be in the form of an asset-based loan and that, therefore, a drop in ZAGG’s asset base may mean that less debt funds are available to Parent;
|
•
|
the potential negative effects if the Merger is not consummated, including:
|
○
|
the trading price of ZAGG common stock could be adversely affected;
|
○
|
we will have incurred significant transaction and opportunity costs attempting to complete the Merger;
|
○
|
we could lose business partners and employees, including key executives, sales, and other personnel;
|
○
|
our business may be subject to significant disruption and decline;
|
○
|
the market’s perceptions of our prospects could be adversely affected;
|
○
|
our directors, officers, and other employees will have expended considerable time and efforts to consummate the Merger;
|
•
|
the fact that, notwithstanding our specific performance remedy under the Merger Agreement, our remedy in the event of a breach of the Merger Agreement by Parent or Merger Sub is limited to receipt of the reverse termination fee under certain circumstances, and that under certain circumstances we may not be entitled to the reverse termination fee at all;
|
•
|
the fact that any gain realized by ZAGG stockholders as a result of the Merger will generally be taxable for U.S. federal income tax purposes to those stockholders that are U.S. persons subject to taxation in the United States;
|
•
|
the restrictions in the Merger Agreement on the conduct of our business prior to the consummation of the Merger, which may delay or prevent us from undertaking business or other opportunities that may arise prior to the consummation of the Merger;
|
•
|
the potential distraction to our business from potential stockholder suits in connection with the Merger; and
|
•
|
the fact that our executive officers and directors may have interests in the Merger that may be different from, or in addition to, those of ZAGG stockholders. See “Interests of the Directors and Officers of ZAGG in the Merger” on page 56 of this proxy statement.
|
•
|
reviewed certain publicly available business and financial information relating to ZAGG;
|
•
|
reviewed certain internal financial and operating information with respect to the business, operations and prospects of ZAGG furnished to or discussed with BofA Securities by the management of ZAGG, including certain financial forecasts relating to ZAGG prepared by the management of ZAGG (the Company Projections, as defined and summarized below under “—Certain Financial Projections”);
|
•
|
discussed the past and current business, operations, financial condition and prospects of ZAGG with members of senior management of ZAGG;
|
•
|
discussed with the management of ZAGG its assessments as to the likelihood of, amount of, and timing upon which the Additional Merger Consideration may become payable;
|
•
|
reviewed the trading history for the shares of ZAGG common stock and a comparison of that trading history with the trading histories of other companies BofA Securities deemed relevant;
|
•
|
compared certain financial and stock market information of ZAGG with similar information of other companies BofA Securities deemed relevant;
|
•
|
compared certain financial terms of the Merger to financial terms, to the extent publicly available, of other transactions BofA Securities deemed relevant;
|
•
|
considered the fact that ZAGG publicly announced that it would explore its strategic alternatives and the results of BofA Securities’ efforts on behalf of ZAGG to solicit, at the direction of ZAGG, indications of interest and definitive proposals from third parties with respect to a possible acquisition of ZAGG;
|
•
|
reviewed the Merger Agreement; and
|
•
|
performed such other analyses and studies and considered such other information and factors as BofA Securities deemed appropriate.
|
•
|
Arlo Technologies, Inc.
|
•
|
Foster Electric Company
|
•
|
GoPro, Inc.
|
•
|
JVCKenwood Corporation
|
•
|
Spigen Inc.
|
•
|
Turtle Beach Corporation
|
•
|
Universal Electronics Inc.
|
|
| |
Multiple of EBITDA
|
|||
Selected Companies
|
| |
2020E
|
| |
2021E
|
Arlo Technologies, Inc.
|
| |
NM
|
| |
NM
|
Foster Electric Company
|
| |
2.9x
|
| |
2.5x
|
GoPro, Inc.
|
| |
NM
|
| |
9.7x
|
JVCKenwood Corporation
|
| |
2.5x
|
| |
2.2x
|
Spigen Inc.
|
| |
3.1x
|
| |
3.8x
|
Turtle Beach Corporation
|
| |
6.2x
|
| |
7.4x
|
Universal Electronics Inc.
|
| |
8.3x
|
| |
7.2x
|
Implied Equity Value
Reference Range Per Share
of ZAGG Common Stock
|
| |
|
|||
2020E Adjusted
EBITDA
|
| |
2021E Adjusted
EBITDA
|
| |
Merger Consideration
|
$1.60 - $4.15
|
| |
$3.40 - $8.75
|
| |
$4.45
|
Date
|
| |
Acquiror
|
| |
Target
|
| |
Enterprise Value
to LTM
EBITDA
|
5/21/20
|
| |
Global Acoustic Partners
|
| |
TEAC Corporation
|
| |
—
|
4/21/20
|
| |
Protempo US Ltd
|
| |
Outdoor Tech
|
| |
—
|
11/1/19
|
| |
Google LLC
|
| |
FitBit, Inc.
|
| |
NM
|
7/16/19
|
| |
Focusrite plc
|
| |
Pro Audio GmbH
|
| |
10.4x
|
1/3/19
|
| |
ZAGG Inc
|
| |
Halo2Cloud, LLC
|
| |
—
|
11/30/18
|
| |
ZAGG Inc
|
| |
Gear4 HK Limited
|
| |
—
|
7/31/18
|
| |
ZAGG Inc
|
| |
BRAVEN Audio
|
| |
—
|
7/30/18
|
| |
Logitech International S.A.
|
| |
Blue Microphones
|
| |
—
|
7/26/17
|
| |
EagleTree Capital
|
| |
Corsair Gaming, Inc.
|
| |
12.1x
|
7/11/17
|
| |
Logitech International S.A.
|
| |
ASTRO Gaming
|
| |
—
|
2/28/17
|
| |
Control4 Corporation
|
| |
Triad Speakers, Inc.
|
| |
—
|
11/14/16
|
| |
Samsung Electronics Co., Ltd.
|
| |
Harman International Industries, Inc.
|
| |
10.0x
|
8/24/16
|
| |
Mill Road Capital
|
| |
Skullcandy, Inc.
|
| |
11.8x
|
4/12/16
|
| |
Logitech International S.A.
|
| |
JayBird
|
| |
—
|
2/2/16
|
| |
ZAGG Inc
|
| |
mophie inc
|
| |
—
|
10/22/14
|
| |
GoerTek Inc.
|
| |
Dynaudio A/S
|
| |
—
|
9/15/14
|
| |
AwoX S.A.
|
| |
Cabasse SAS
|
| |
—
|
8/28/14
|
| |
Monomoy Capital Partners
|
| |
Cobra Electronics Corp.
|
| |
NM
|
6/17/14
|
| |
Harman International Industries, Inc.
|
| |
Yurbuds
|
| |
—
|
5/28/14
|
| |
Apple Inc.
|
| |
Beats Electronics LLC
|
| |
—
|
2/17/12
|
| |
Trilantic Capital Partners
|
| |
Nixon
|
| |
9.2x
|
6/21/11
|
| |
ZAGG Inc
|
| |
iFrogz Inc.
|
| |
—
|
1/6/11
|
| |
Audiovox Corp.
|
| |
Klipsch Group, Inc.
|
| |
—
|
Implied Equity Value Reference
Range Per Share of ZAGG
Common Stock
|
| |
Merger Consideration
|
$9.15 – $11.55
|
| |
$4.45
|
Implied Equity Value Reference
Range Per share of ZAGG
Common Stock
|
| |
Merger Consideration
|
$3.10 – $5.30
|
| |
$4.45
|
•
|
Continued pressure on retail openings and in-store shopping experience from COVID-19 into 2021 and 2022;
|
•
|
Continued pressure from COVID-19 on the overall economy, impacting discretionary spend on handset and related accessories into 2021 and beyond;
|
•
|
5G roll-out of iPhones providing overall benefit to handset sales, though much less impactful than originally thought beyond 2020;
|
•
|
Limited growth from acquired brands (HALO and Gear4) in 2021 and beyond;
|
•
|
An OEM’s 2020 entrance into wireless charging category with a new product line, including related OEM-required certification negatively impacting wireless charging and case sales, and overall margins, in late 2021 and beyond;
|
•
|
Despite the extension of tariffs exemptions in the second half of 2020, such exemptions expired on December 31, 2020 and ZAGG’s ability to effectively and profitably move manufacturing out of China may be less successful than originally believed over the long term;
|
•
|
Improvement in freight rates starting in 2021 compared to 2020;
|
•
|
Competition and retail margin pressure on core categories continuing to erode market share and overall product margins beyond 2021, including the need for additional discounting below historical margins to move through excess inventory;
|
•
|
Potential wind-down of audio category and reduced focus on keyboards/power stations leading to lower sales, but likely improved margin mix;
|
•
|
Reinstating cash bonuses in 2021 for the full year, ending hiring freeze and filling organizational gaps caused by COVID-19 mitigation cost reductions, commencing traveling, and reinstating some marketing spend (i.e., overall increase in cash operating expense); and
|
•
|
Cash operating expense growing each year, though overall operating expense margins improving.
|
(Dollars in millions, except per share data)
(Shares in thousands)
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
Net Sales
|
| |
$464.3
|
| |
$485.2
|
| |
$504.6
|
| |
$517.2
|
| |
$530.1
|
Gross Margin
|
| |
$108.2
|
| |
$162.2
|
| |
$162.5
|
| |
$165.5
|
| |
$169.1
|
% of Sales
|
| |
23.3%
|
| |
33.4%
|
| |
32.2%
|
| |
32.0%
|
| |
31.9%
|
Operating Expenses
|
| |
$153.1
|
| |
$139.0
|
| |
$140.8
|
| |
$141.7
|
| |
$142.1
|
% of Sales
|
| |
33.0%
|
| |
28.7%
|
| |
27.9%
|
| |
27.4%
|
| |
26.8%
|
Operating Income
|
| |
$(44.9)
|
| |
$23.2
|
| |
$21.7
|
| |
$23.8
|
| |
$27.0
|
% of Sales
|
| |
-9.7%
|
| |
4.8%
|
| |
4.3%
|
| |
4.6%
|
| |
5.4%
|
Other Income / (Expense)
|
| |
$(3.2)
|
| |
$(3.3)
|
| |
$(2.8)
|
| |
$(2.0)
|
| |
$(2.0)
|
Pretax Income
|
| |
$(48.1)
|
| |
$19.9
|
| |
$18.9
|
| |
$21.8
|
| |
$25.0
|
Income Tax
|
| |
$(11.0)
|
| |
$4.6
|
| |
$4.3
|
| |
$5.0
|
| |
$5.8
|
Tax Rate
|
| |
22.8%
|
| |
23.0%
|
| |
23.0%
|
| |
23.0%
|
| |
23.0%
|
Net Income
|
| |
$(37.1)
|
| |
$15.3
|
| |
$14.6
|
| |
$16.8
|
| |
$19.3
|
Diluted Shares Outstanding
|
| |
30,130
|
| |
30,130
|
| |
30,130
|
| |
30,130
|
| |
30,130
|
Diluted Earnings Per Share
|
| |
$(1.24)
|
| |
$0.51
|
| |
$0.48
|
| |
$0.56
|
| |
$0.64
|
Adjusted EBITDA(1)
|
| |
$50.4
|
| |
$47.0
|
| |
$43.7
|
| |
$44.9
|
| |
$46.8
|
Adjusted EBITDA%(2)
|
| |
10.8%
|
| |
9.7%
|
| |
8.7%
|
| |
8.7%
|
| |
8.8%
|
One-Time Benefits/Expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
P&L Impact of Duty Refunds(3)
|
| |
$(1.7)
|
| |
$(5.5)
|
| |
$—
|
| |
$—
|
| |
$—
|
P&L Impact of Duty Exemptions(4)
|
| |
$(5.5)
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
SEC Investigation Expenses(5)
|
| |
$0.7
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
Adjusted EBITDA Excluding
One-Time Benefits/Expenses
|
| |
$43.9
|
| |
$41.5
|
| |
$43.7
|
| |
$44.9
|
| |
$46.8
|
(Dollars in millions, except per share data)
(Shares in thousands)
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
Adjusted EBITDA Excluding
One-Time Benefits/Expenses%(6)
|
| |
9.4%
|
| |
8.6%
|
| |
8.7%
|
| |
8.7%
|
| |
8.8%
|
Stock-Based Compensation
|
| |
|
| |
$(5)
|
| |
$(6)
|
| |
$(6)
|
| |
$(6)
|
Income Tax
|
| |
|
| |
$(5)
|
| |
$(5)
|
| |
$(5)
|
| |
$(6)
|
Change in Net Working Capital
|
| |
|
| |
$(9)
|
| |
$(6)
|
| |
$(5)
|
| |
$(6)
|
Capital Expenditures
|
| |
|
| |
$(8)
|
| |
$(8)
|
| |
$(9)
|
| |
$(9)
|
Unlevered Free Cash Flow(7)
|
| |
|
| |
$20
|
| |
$19
|
| |
$20
|
| |
$20
|
(1)
|
ZAGG defines Adjusted EBITDA as earnings before stock-based compensation expense, depreciation and amortization, other expense, net, transaction costs, BRAVEN employee retention bonus, former CFO retention bonus, inventory step-up amount in connection with the acquisition of HALO, severance expense, March 2020 inventory write-down, impairment of goodwill, loss on disposal of intangible assets and equipment (loss of discontinued brands, product lines, and related product tooling), adjustments to fair value of acquisition contingent consideration, and income tax provision (benefit).
|
(2)
|
Represents Adjusted EBITDA as a percentage of Net Sales.
|
(3)
|
Represents the net projected income statement benefit from an exemption received from the U.S. Trade Representative that provides ZAGG the ability to claim and receive refunds of certain duties paid from 2018 through 2020.
|
(4)
|
Represents the projected income statement benefit of an exemption received from the U.S. Trade Representative on duties for certain ZAGG products imported from China from August through December 2020. This exemption expires on December 31, 2020.
|
(5)
|
Represents a preliminary projection of 2020 expenses associated with the SEC Investigation.
|
(6)
|
Represents Adjusted EBITDA Excluding One-Time Benefits/Expenses as a percentage of Net Sales.
|
(7)
|
Represents Adjusted EBITDA less stock-based compensation, income taxes, change in net working capital and capital expenditures.
|
Name
|
| |
Company
RSUs (#)
|
| |
Company
RSUs ($)
|
| |
ZAGG
Common
Stock (#)
|
| |
ZAGG
Common
Stock ($)
|
| |
Total
Value ($)
|
Executive Officers
|
| |
|
| |
|
| |
|
| |
|
| |
|
Chris Ahern
|
| |
239,692
|
| |
$1,066,629
|
| |
119,871
|
| |
$533,426
|
| |
$1,600,055
|
Taylor Smith
|
| |
57,004
|
| |
$253,668
|
| |
52,777
|
| |
$234,858
|
| |
$488,526
|
Jim Kearns
|
| |
57,431
|
| |
$255,568
|
| |
16,430
|
| |
$73,114
|
| |
$328,682
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Non-Employee Directors
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cheryl A. Larabee
|
| |
—
|
| |
$—
|
| |
160,146
|
| |
$712,650
|
| |
$712,650
|
Daniel R. Maurer
|
| |
—
|
| |
$—
|
| |
130,715
|
| |
$581,682
|
| |
$581,682
|
Michael T. Birch
|
| |
—
|
| |
$—
|
| |
33,455
|
| |
$148,875
|
| |
$148,875
|
Scott Stubbs
|
| |
—
|
| |
$—
|
| |
57,364
|
| |
$255,270
|
| |
$255,270
|
Ronald G. Garriques
|
| |
—
|
| |
$—
|
| |
27,046
|
| |
$120,355
|
| |
$120,355
|
Edward Terino
|
| |
27,046
|
| |
$120,355
|
| |
30,000
|
| |
$133,500
|
| |
$253,855
|
•
|
a cash payment equal to the sum of (i) 100% of the executive’s then-current annual base salary, payable in substantially equal installments over a period of one (1) year in accordance with the Company’s normal payroll practice plus (ii) a pro-rata portion of the executive’s cash performance bonus, if any, for the year in which the termination occurs, based on actual performance during the year in which the termination occurs; and
|
•
|
Company-paid COBRA premium payments for the executive and the executive’s covered dependents for up to 12 months.
|
•
|
a cash payment equal to the sum of (i) 100% (200% with respect to Mr. Ahern) of the executive’s then-current annual base salary, plus (ii) 100% (200% with respect to Mr. Ahern) of the executive’s target cash performance bonus for the year in which the termination occurs, to be paid in substantially equal installments over a period of one (1) year (two (2) years with respect to Mr. Ahern) in accordance with the Company’s normal payroll practice;
|
•
|
Company-paid COBRA premium payments for the executive and the executive’s covered dependents for up to 12 months (18 months for Mr. Ahern);
|
•
|
with respect to Mr. Ahern only, a single lump-sum payment in an amount equal to six months of his monthly COBRA premium payment; and
|
•
|
full vesting acceleration of all outstanding ZAGG equity awards, with performance stock unit awards paid at target performance values.
|
Name
|
| |
Cash(1)
|
| |
Equity(2)
|
| |
Perquisites/
Benefits(3)
|
| |
Total
|
Chris Ahern
|
| |
$4,400,000
|
| |
$1,066,629
|
| |
$41,604
|
| |
$5,508,233
|
Taylor Smith
|
| |
$570,400
|
| |
$253,668
|
| |
$20,068
|
| |
$844,136
|
Jim Kearns
|
| |
$616,000
|
| |
$255,568
|
| |
$6,458
|
| |
$878,026
|
Bradley Holiday(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Brian Stech(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
(1)
|
The amounts in this column represent (i) aggregate cash severance payments that each named executive officer (other than Messrs. Holiday and Stech) would be entitled to receive under the Severance Plan if his employment were terminated by ZAGG without Cause or by the named executive officer for Good Reason on the Record Date and (ii) the retention awards that would be payable to Messrs. Ahern and Smith in connection with the consummation of the Merger. See “The Merger—Interests of the Directors and Executive Officers of ZAGG in the Merger—Executive Severance Plan” and “The Merger—Interests of the Directors and Executive Officers of ZAGG in the Merger—Retention Awards” on pages 57 and 58 of this proxy statement for a description of each named executive officer’s severance rights and retention awards, if applicable.
|
Name
|
| |
Cash Salary
Severance ($)
|
| |
Incentive
Compensation
Severance ($)
|
| |
Retention
Award ($)
|
| |
Total
|
Chris Ahern
|
| |
$1,200,000
|
| |
$1,200,000
|
| |
$2,000,000
|
| |
$4,400,000
|
Taylor Smith
|
| |
$336,000
|
| |
$134,400
|
| |
$100,000
|
| |
$570,400
|
Jim Kearns
|
| |
$440,000
|
| |
$176,600
|
| |
—
|
| |
$616,600
|
(2)
|
The amounts in this column represent the aggregate Merger Consideration that each named executive officer (other than Messrs. Holiday and Stech) would receive with respect to unvested Company RSUs in connection with the Merger, calculated by multiplying the total number of such Company RSUs by the sum of (i) the Closing Date Consideration and (ii) an amount per share for illustrative purposes of $0.25 per PPP Loan Forgiveness Right, which is the amount estimated at the time of the Merger Agreement. The following table sets forth the number of unvested Company RSUs held by each named executive officer (other than Messrs. Holiday and Stech) on the Record Date.
|
Name
|
| |
Company RSUs
|
Chris Ahern
|
| |
239,692
|
Taylor Smith
|
| |
57,004
|
Jim Kearns
|
| |
57,431
|
(3)
|
The amounts in the table include the estimated value of the Company-paid COBRA insurance coverage for Messrs. Ahern, Smith, and Kearns and their eligible dependents for 12 months (18 months for Mr. Ahern), following the qualifying termination of employment, as well as an additional lump sum payment to Mr. Ahern equal to 6 months of COBRA premium payments.
|
(4)
|
Effective March 31, 2019, Mr. Holiday resigned as CFO of ZAGG. Mr. Holiday will not receive any additional compensation in connection with the Merger.
|
(5)
|
Effective July 17, 2019, Mr. Stech resigned as President of ZAGG. Mr. Stech will not receive any additional compensation in connection with the Merger.
|
•
|
you must NOT vote “FOR,” or otherwise consent in writing to, the Merger Proposal. Because a proxy that is signed and submitted but does not otherwise contain voting instructions will, unless revoked, be voted in favor of the Merger Proposal, if you submit a proxy and wish to exercise your appraisal rights, you must include voting instructions to vote your shares “AGAINST,” or as an abstention with respect to, the Merger Proposal;
|
•
|
you must continuously hold your shares of ZAGG common stock from the date of making the demand through the effective time of the Merger. You will lose your appraisal rights if you transfer your shares of ZAGG common stock before the effective time of the Merger;
|
•
|
prior to the taking of the vote on the Merger Proposal at the special meeting, you must deliver a proper written demand for appraisal of your shares; and
|
•
|
you, another stockholder, an appropriate beneficial owner, or the Surviving Corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of your shares of ZAGG common stock within 120 days after the effective time of the Merger. The Surviving Corporation is under no obligation to file any such petition in the Delaware Court of Chancery and has no intention of doing so. Accordingly, it is the obligation of ZAGG stockholders to initiate all necessary action to properly demand their appraisal rights in respect of shares of ZAGG common stock within the time prescribed in Section 262 of the DGCL.
|
|
| |
ZAGG Inc
|
|
| |
Attention: Abby Barraclough, Corporate Secretary
|
|
| |
910 West Legacy Center Way, Suite 500
|
|
| |
Midvale, Utah 84047
|
|
| |
Email: abby.barraclough@zagg.com
|
|
| |
Phone: 801-506-7005
|
•
|
U.S. expatriates and former citizens or long-term residents of the United States;
|
•
|
U.S. holders whose functional currency is not the U.S. dollar;
|
•
|
persons holding shares of ZAGG common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
|
•
|
banks, insurance companies, and other financial institutions;
|
•
|
brokers or dealers in securities;
|
•
|
traders in securities that elect to apply a mark-to-market method of accounting;
|
•
|
“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
“S corporations,” partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes or other pass-through entities (and investors therein);
|
•
|
real estate investment trusts and regulated investment companies;
|
•
|
tax-exempt organizations or governmental organizations;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to shares of ZAGG common stock being taken into account in an applicable financial statement;
|
•
|
persons deemed to sell their shares of ZAGG common stock under the constructive sale provisions of the Code;
|
•
|
persons who own an equity interest, actually or constructively, in Parent or, following the Merger, the Surviving Corporation;
|
•
|
persons who hold or received their shares of ZAGG common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
|
•
|
tax-qualified retirement plans.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
•
|
a trust that (i) is subject to the primary supervision of a U.S. court and one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) are authorized to control all substantial decisions of the trust or (ii) has a valid election in effect to be treated as a “United States person” for U.S. federal income tax purposes.
|
•
|
the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, such gain is also attributable to a permanent establishment or, in the case of an individual, a fixed base, maintained by the non-U.S. holder in the United States);
|
•
|
the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition of shares of ZAGG common stock in the Merger, and certain other requirements are met; or
|
•
|
ZAGG is or has been a U.S. real property holding corporation (“USRPHC”) for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the Merger or the period that the non-U.S. holder held shares of ZAGG common stock and the non-U.S. holder held (actually or constructively) more than 5% of the total fair market value of all shares of ZAGG common stock at any time during such five-year period.
|
•
|
were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue, due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement instead of establishing these matters as facts;
|
•
|
have been modified or qualified by certain confidential disclosures that were made among the parties to the Merger Agreement in connection with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself;
|
•
|
may no longer be true as of a given date;
|
•
|
may be subject to a contractual standard of materiality in a way that is different from those generally applicable to you or other stockholders and reports and documents filed with the SEC; and
|
•
|
may be subject in some cases to other exceptions and qualifications, including exceptions that do not result in, and would not reasonably be expected to have, a Company Material Adverse Effect, as defined in “The Merger Agreement—Representations and Warranties” on page 76 of this proxy statement.
|
•
|
the due organization, valid existence, good standing, and corporate power of ZAGG and each of its subsidiaries;
|
•
|
the organizational documents of ZAGG and its subsidiaries;
|
•
|
the capitalization of ZAGG, including the number of shares of ZAGG common stock and Company RSUs and other equity interests outstanding and the ownership of the capital stock of its subsidiaries;
|
•
|
the authority of ZAGG to enter into the Merger Agreement and complete the Merger and the other transactions contemplated by the Merger Agreement and the enforceability of the Merger Agreement against ZAGG;
|
•
|
the absence of (i) any conflict with or violation of the organizational documents of ZAGG or any ZAGG subsidiary, (ii) any conflict with or violation of applicable laws or (iii) any required consents or approvals under, or breach, violation, loss of benefit, change of control, or default under, any permit or material contract of ZAGG or its subsidiaries, in each case, as a result of the execution and delivery by ZAGG of the Merger Agreement and the completion by ZAGG of the Merger;
|
•
|
the consents, filings, and authorizations required by governmental entities in connection with the transactions contemplated by the Merger Agreement;
|
•
|
compliance with SEC filing requirements for ZAGG’s SEC filings in the three years prior to the date of the Merger Agreement, including the accuracy of information contained in such documents and compliance with GAAP and the rules and regulations of the SEC with respect to the consolidated financial statements contained therein;
|
•
|
the adequacy of disclosure controls and internal controls over financial reporting;
|
•
|
the accuracy of information contained in this proxy statement, as it may be amended or supplemented from time to time;
|
•
|
the absence of certain undisclosed liabilities;
|
•
|
the absence of certain changes and events since December 31, 2019;
|
•
|
the absence of a Company Material Adverse Effect (as defined below) since December 31, 2019;
|
•
|
employee benefit plans;
|
•
|
labor and other employment matters;
|
•
|
material customers and material vendors;
|
•
|
material contracts and the absence of breaches of or defaults under material contracts;
|
•
|
litigation matters;
|
•
|
the owned and leased real property of ZAGG and its subsidiaries;
|
•
|
intellectual property matters;
|
•
|
privacy and data security matters;
|
•
|
tax matters;
|
•
|
insurance policies and claims;
|
•
|
environmental matters;
|
•
|
receipt by the Board of an opinion of BofA Securities as to the fairness, as of the date of the Merger Agreement, from a financial point of view, of the Merger Consideration to be received by holders of shares of ZAGG common stock;
|
•
|
votes required to approve the Merger;
|
•
|
brokers’ and financial advisors’ fees related to the Merger;
|
•
|
the absence of related party transactions;
|
•
|
compliance with applicable laws and governmental orders, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and all applicable export control and import laws; and
|
•
|
the absence of any additional representations and warranties, except for the representations and warranties expressly set forth in the Merger Agreement.
|
•
|
changes in the general economic, financial, credit, or securities markets, including prevailing interest rates or currency rates, or regulatory or political conditions;
|
•
|
changes in general economic conditions in the industry or industries in which ZAGG and its subsidiaries operate;
|
•
|
the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism;
|
•
|
any hurricane, tornado, flood, earthquake, or other natural disaster;
|
•
|
the identity of, or actions or omissions of, Parent, Merger Sub, or their affiliates, or any action taken (including by ZAGG) pursuant to or in accordance with the Merger Agreement or at the request of or with the consent of Parent or Merger Sub;
|
•
|
the announcement or pendency of the Merger Agreement and performance of obligations under the Merger Agreement;
|
•
|
any change in the market price or trading volume of ZAGG common stock (but excluding the facts giving rise to such change);
|
•
|
any failure to meet any financial projections or estimates or forecasts of revenues, earnings, or other financial metrics for any period (but excluding the facts giving rise to such failure);
|
•
|
changes in any laws or regulations applicable to ZAGG and its subsidiaries or applicable accounting regulations or practices (including GAAP) or the interpretations thereof;
|
•
|
any acts of God, including any epidemic, pandemic, or disease outbreak (including in respect of COVID-19); and
|
•
|
any legal proceedings commenced by or involving any current or former stockholder of ZAGG (on their own behalf or on behalf of ZAGG) arising out of or related to the Merger Agreement or the transactions contemplated thereby (but excluding the facts giving rise to any such proceeding).
|
•
|
Parent’s and Merger Sub’s due organization, valid existence, good standing, and corporate power;
|
•
|
the authority of Parent and Merger Sub to enter into the Merger Agreement and complete the Merger and the other transactions contemplated by the Merger Agreement and the enforceability of the Merger Agreement against Parent and Merger Sub;
|
•
|
the absence of (i) any conflict with or violation of the organizational documents of Parent or Merger Sub, (ii) any conflict with or violation of applicable laws or (iii) any required consent or approval, breach, violation, loss of benefit, or default under any contract of Parent or Merger Sub, in each case, as a result of the execution and delivery by Parent and Merger Sub of the Merger Agreement and completion by Parent and Merger Sub of the Merger;
|
•
|
the consents, filings, and authorizations required by governmental entities in connection with the transactions contemplated by the Merger Agreement;
|
•
|
litigation matters;
|
•
|
the accuracy of information supplied to ZAGG by Parent or Merger Sub for use in this proxy statement, as it may be amended or supplemented from time to time;
|
•
|
the prior activities of Merger Sub;
|
•
|
the absence of brokers’ and financial advisors’ fees related to the Merger;
|
•
|
the equity and debt commitment letters;
|
•
|
the sufficiency of the funds that Parent and Merger Sub have, or will have access to, to fund the transactions contemplated in the Merger Agreement;
|
•
|
the solvency of the Surviving Corporation immediately after the Merger, subject to certain assumptions;
|
•
|
the fact that Parent and its subsidiaries are not “interested holders” of ZAGG, as such term is defined in Section 203 of the DGCL;
|
•
|
the limited guaranty provided by Evercel, pursuant to which Evercel has guaranteed payment of certain of Parent’s obligations under the Merger Agreement;
|
•
|
agreements with any stockholder of ZAGG relating to the Merger Agreement; and
|
•
|
the absence of any additional representations and warranties, except for the representations and warranties expressly set forth in the Merger Agreement.
|
•
|
amend its certificate of incorporation or bylaws;
|
•
|
merge or consolidate with any other person, except for any such transactions among its wholly-owned subsidiaries, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations, or businesses;
|
•
|
issue, sell, pledge, dispose of, grant, transfer, or encumber (or authorize any of the foregoing) any equity interests in ZAGG or any of its subsidiaries, other than (A) the issuance of shares of ZAGG common stock in connection with the vesting of Company RSUs outstanding as of the date of the Merger Agreement in accordance with their terms, or (B) the issuance of Company RSUs up to an amount equal to the amount of outstanding awards outstanding on December 10, 2020 that are forfeited or determined to be unearned or unvested pursuant to their terms prior to the closing of the Merger;
|
•
|
sell, pledge, dispose of, transfer, lease, license, guarantee, encumber, or otherwise subject to a lien (or authorize any of the foregoing), any property or assets of ZAGG or any of its subsidiaries, except pursuant to existing contracts in effect on the date of the Merger Agreement and other than non-exclusive licenses granted in the ordinary course of business consistent with past practice;
|
•
|
(i) abandon or allow any registrations (including any pending applications for registration) with respect to ZAGG intellectual property to lapse or expire for failure to pay any registration, maintenance, renewal, or other fee except for items of ZAGG intellectual property expiring at the end of their statutory terms, (ii) fail to make any filing, pay any fee, or take any other action necessary to maintain any right or interest with respect to ZAGG intellectual property, or (iii) sell, assign, lease, license, pledge, surrender, encumber, divest, transfer, or otherwise dispose of any ZAGG intellectual property that is material to the businesses of ZAGG and its subsidiaries, other than non-exclusive licenses granted in the ordinary course of business consistent with past practice;
|
•
|
make any (i) loans, guarantees, or capital contributions to or investments in any person (other than ZAGG or any of its direct or indirect wholly-owned subsidiaries) or (ii) advances to any person other than to employees in respect of expenses;
|
•
|
declare, set aside, make, or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock (other than dividends paid by a wholly-owned ZAGG subsidiary to ZAGG or to any of its other wholly-owned subsidiaries) or enter into any agreement with respect to the voting of its capital stock;
|
•
|
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, or other equity interests;
|
•
|
acquire (including by merger, consolidation, or acquisition of stock or assets) any interest in any person or purchase substantially all of the assets of any person, other than acquisitions of assets in the ordinary course of business consistent with past practice;
|
•
|
except in the ordinary course of business, consistent with past practice, incur any indebtedness for borrowed money;
|
•
|
issue any debt securities or assume, guarantee, or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than a wholly-owned ZAGG subsidiary) for borrowed money;
|
•
|
enter into, terminate, or materially amend any material contract other than in the ordinary course of business consistent with past practice;
|
•
|
make or authorize any capital expenditure in excess of ZAGG’s budget as disclosed to Parent prior to the date of the Merger Agreement, other than capital expenditures that are not, in the aggregate, in excess of $2,000,000 for ZAGG and its subsidiaries taken as a whole;
|
•
|
except as may be required by applicable law, the terms of the Merger Agreement, or an employee benefit plan in existence as of the date of the Merger Agreement: (i) grant any severance or termination pay to an officer, director, or employee or modify ZAGG’s executive severance plan; (ii) grant any increases in the compensation or benefits payable to its officers, directors, or employees, other than (x) the annual increases for non-officer employees in the ordinary course of business consistent with past practice, but in no event exceeding a total amount equal to 3% of the total base compensation for all such employees, and (y) the payment of retention or similar cash awards to executives, as determined by the Board in its sole discretion, in an aggregate amount not to exceed $500,000 plus certain agreed amounts as set forth in the Disclosure Schedule; (iii) adopt, enter into, materially amend, or terminate any employee benefit plan; or (iv) hire or terminate the employment of any officer or employee earning base cash compensation in excess of $250,000, other than for cause, death, or disability;
|
•
|
make any change in accounting policies or procedures, except as required by GAAP or by a governmental entity;
|
•
|
settle or compromise any civil, criminal or administrative claim, action, suit, audit, assessment, arbitration, hearing or inquiry, or any proceeding or investigation, by or before any governmental entity against ZAGG or any of its subsidiaries other than settlements or compromises that do not require the payment of monetary damages by ZAGG or any of its subsidiaries and do not impose equitable relief on, or the admission of wrongdoing by, ZAGG or any of its subsidiaries;
|
•
|
except as required by law, make, change, or revoke any material tax election, settle any material tax claim or assessment or enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local, or non-U.S. applicable law) with respect to any material tax, surrender any right to claim a material tax refund, file any amended tax return with respect to any material tax, or change any annual tax accounting period;
|
•
|
fail to maintain existing insurance policies or obtain comparable replacement policies; or
|
•
|
authorize or enter into any agreement or otherwise make any commitment to do any of the foregoing.
|
•
|
an “acquisition proposal” means, other than the Merger or any other proposal or offer from Parent or any of Parent’s subsidiaries, any proposal, offer, or inquiry from a third party relating to (a) any acquisition or purchase, in a single transaction or series of related transactions, of (i) 15% or more of the consolidated net revenue, consolidated net income, or consolidated assets of ZAGG and its subsidiaries, taken as a whole, or (ii) 15% or more of the voting power of ZAGG; (b) any tender offer or exchange offer that if consummated would result in any person or group acquiring beneficial ownership of 15% or more of the combined voting power of ZAGG; or (c) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, share exchange, or other transaction involving ZAGG or any of its subsidiaries in which a third party or its stockholders, if consummated, would acquire 15% or more of the voting power of ZAGG or the surviving entity or the resulting direct or indirect parent of ZAGG or such surviving entity;
|
•
|
a “superior proposal” means a bona fide written acquisition proposal made by a third party which, in the good faith judgment of the Board, taking into account the various legal, financial, financing, and regulatory aspects of the proposal and the person making such proposal (a) if accepted, is reasonably likely to be consummated, and (b) if consummated would result in a transaction that is more favorable to ZAGG’s stockholders than the transactions contemplated by the Merger Agreement (after taking into account any revisions to the terms of the transaction as contemplated by the Merger Agreement); and
|
•
|
an “intervening event” means any event, change, effect, development, state of facts, condition, or occurrence after the date of the Merger Agreement (including any acceleration or deceleration of existing changes or developments) that is material to ZAGG and its subsidiaries, taken as a whole, that (a) was not known to the Board as of or prior to the date of the Merger Agreement (or if known, the consequences of which were not known by the Board as of or prior to the date of the Merger Agreement), (b) does not involve or relate to an acquisition proposal, (c) does not result from a material breach of the Merger Agreement by ZAGG, (d) does not result from the COVID-19 pandemic or any law, order, or guideline related to COVID-19 and (e) does not relate to (i) changes in the market price or trading volume of the securities of ZAGG in and of themselves, (ii) the fact that ZAGG meets, exceeds, or fails to meet in any quantifiable respect, any internal or analyst’s projections, guidance, budgets, expectations, forecasts, or estimates for any period or (iii) changes in general economic conditions in the industry or industries in which ZAGG and its subsidiaries operate (provided that clauses (i), (ii), or (iii) shall not prevent or otherwise affect a determination that the underlying cause of any such event constitutes an “intervening event” unless otherwise excluded pursuant to the foregoing clauses (a), (b), (c), or (d), as applicable).
|
•
|
initiate, solicit, or encourage the submission of any acquisition proposal or engage in any discussions or negotiations with respect thereto, provided, however, that ZAGG may (i) ascertain facts from any person making an acquisition proposal for the purpose of the Board informing itself about such acquisition proposal and the third party making it and (ii) waive, and does waive, any standstill restrictions contained in any confidentiality agreement or other similar agreements;
|
•
|
approve or recommend, or publicly propose to approve or recommend, any acquisition proposal;
|
•
|
withdraw, change, or qualify, in a manner adverse to Parent or Merger Sub, the Board recommendation that ZAGG’s stockholders approve and adopt the Merger Agreement;
|
•
|
enter into or negotiate any merger agreement, letter of intent, or other similar agreement relating to any acquisition proposal; or
|
•
|
resolve or agree to do any of the foregoing.
|
•
|
furnish information with respect to ZAGG and its subsidiaries to the third party making such acquisition proposal, its representatives, and potential sources of financing; and
|
•
|
participate in discussions or negotiations with the third party making such acquisition proposal regarding such acquisition proposal.
|
•
|
ZAGG shall have provided to Parent at least three business days’ prior written notice of ZAGG’s intention to take such action, which notice shall specify the material terms and conditions of such acquisition proposal and include a copy of the available proposed transaction agreement to be entered into in respect of such acquisition proposal (which may be redacted to omit the identity of the third party making such acquisition proposal);
|
•
|
during such notice period, if requested by Parent, ZAGG shall have engaged in good faith negotiations with Parent regarding any amendment to the Merger Agreement proposed in writing by Parent and intended to cause the relevant proposal to no longer constitute a superior proposal; and
|
•
|
the Board (or any duly authorized committee thereof) shall have considered any adjustments and/or proposed amendments to the Merger Agreement (including a change to the price terms thereof) and the other agreements contemplated thereby that may be irrevocably offered in writing by no later than 11:59 a.m., New York City time, on the last day of such notice period and shall have determined in good faith that the superior proposal would continue to constitute a superior proposal if such proposed changed terms were to be given effect.
|
•
|
take, or cause to be taken, all actions, and do, or cause to be done, all things, necessary, proper, or advisable to cause the conditions to the closing of the Merger to be satisfied as promptly as practicable (and in any event no later than the Outside Date) and to consummate and make effective, in the most expeditious manner reasonably practicable, the Merger, including preparing and filing promptly and fully all documentation to effect all necessary filings, notifications, notices, petitions, statements, registrations, submissions of information, applications, and other documents;
|
•
|
obtain promptly (and in any event no later than the Outside Date) all approvals, consents, clearances, expirations or terminations of waiting periods, registrations, permits, authorizations and other confirmations from any governmental entity or third party necessary, proper or advisable to consummate the Merger;
|
•
|
cooperate in all respects with each other in connection with any filing or submission with a governmental entity in connection with the transactions contemplated by the Merger Agreement and in connection with any investigation or other inquiry by or before a governmental entity relating to the Merger, including any proceeding initiated by a private person;
|
•
|
promptly inform the other party of (and supply to the other party) any communication received by such party from, or given by such party to any governmental entity and any material communication received or given in connection with any proceeding by a private person, in each case, regarding the Merger;
|
•
|
permit the other parties to review in advance and incorporate the other parties’ reasonable comments in any filing or other communication to be given by it to any governmental entity with respect to obtaining any clearances required under any competition law in connection with the transactions contemplated hereby;
|
•
|
consult with the other parties in advance of any meeting or teleconference with any governmental entity or, in connection with any proceeding by a private person, with any other person, and, to the extent not prohibited by the governmental entity or other person, give the other parties the opportunity to attend and participate in such meetings and teleconferences; and
|
•
|
if any administrative or judicial action or proceeding, including any proceeding by a private person, is instituted (or threatened to be instituted) challenging the Merger as violative of any competition law, contest and resist any such action or proceeding, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary, or permanent, that is in effect and that prohibits, prevents, or restricts consummation of the Merger.
|
•
|
proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, the sale, divestiture, or disposition of any businesses, assets, equity interests, product lines or properties of Parent (or any affiliates of Parent) or the Surviving Corporation or any equity interest in any joint venture held by Parent (or any affiliates of Parent) or the Surviving Corporation;
|
•
|
creating, terminating, or divesting relationships, ventures, contractual rights or obligations of Parent (or of any of the affiliates of Parent), or the Surviving Corporation; and
|
•
|
otherwise taking or committing to take any action that would limit Parent’s freedom of action with respect to, or its ability to retain or hold, directly or indirectly, any businesses, assets, equity interests, product lines, or properties of Parent (including any of the affiliates of Parent) or the Surviving Corporation or any equity interest in any joint venture held by Parent (or any of the affiliates of Parent) or the Surviving Corporation, in each case, as may be required in order to obtain all approvals, consents, clearances, expirations or terminations of waiting periods, registrations, permits, authorizations and other confirmations required directly or indirectly under any competition law or to avoid the commencement of any action to prohibit the transactions contemplated by the Merger Agreement under any competition law, or, in the alternative, to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order, or other order in any action or proceeding seeking to prohibit the Merger or delay the closing of the Merger beyond the Outside Date.
|
•
|
waive any preexisting conditions or limitations, eligibility waiting periods, actively at work requirements, evidence of insurability requirements, or required physical examinations under any health or similar plan of the Surviving Corporation, Parent, or any of their respective affiliates applicable to any Continuing Employees (except to the extent applicable under any ZAGG benefit plans immediately before the effective time of the Merger); and
|
•
|
fully credit each Continuing Employee with all deductible payments, co-payments, and other out-of-pocket expenses incurred by such Continuing Employee under the benefit plans of ZAGG prior to the closing of the Merger during the plan year in which the closing of the Merger occurs, as if such amounts had been paid in accordance with the applicable benefit plan of the Surviving Corporation, Parent, or any of their respective affiliates.
|
•
|
indemnify and hold harmless each Indemnified Party to the fullest extent authorized or permitted by applicable law in connection with any claim or action against any losses, claims, damages, liabilities, costs, indemnification expenses, judgments, fines, penalties, and amounts paid in settlement, including all interest, assessments, and other charges paid, arising out of matters existing or occurring at or prior to the effective time of the Merger; and
|
•
|
promptly pay on behalf of or, within 15 days after any request for advancement, an advance to each of the Indemnified Parties (provided that the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification) any indemnification expenses incurred in defending or serving as a witness with respect to or otherwise participating with respect to any such claim or action in advance of the final disposition of such claim or action.
|
•
|
for a period of six years from the effective date of the Merger, the applicable organizational documents of ZAGG and its subsidiaries will contain provisions no less favorable with respect to indemnification, advancement of expenses, exculpation, and limitations on liability of directors and officers than are set forth in the applicable organizational documents of ZAGG and its subsidiaries and that such provisions will not be amended, repealed, or otherwise modified for a period of six years from the effective time of the Merger in any manner that would adversely affect the rights of the Indemnified Parties, unless such modification is required by law;
|
•
|
Parent will purchase a “tail” insurance policy to become effective at the effective time of the Merger with a claims period of at least six years from the effective time of the Merger with respect to directors’ and officers’ liability insurance and fiduciary liability insurance with benefits and levels of coverage no less favorable as ZAGG’s existing policies with respect to matters existing or occurring at or prior to the effective time of the Merger (including in connection with the Merger Agreement or the transactions or actions contemplated hereby);
|
•
|
if Parent, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges with or into any other person and is not the surviving entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its assets to any person, then, and in each such case, proper provision will be made so that the successors and assigns of Parent or the Surviving Corporation assume the indemnification obligations set forth in the Merger Agreement;
|
•
|
the indemnification obligations set forth in the Merger Agreement will not be terminated or modified in such a manner as to adversely affect any person to whom such provisions apply without the written consent of such affected person; and
|
•
|
Parent will cause the Surviving Corporation to perform all of its indemnification obligations set forth in the Merger Agreement.
|
•
|
maintain in effect the equity commitment letter in accordance with the terms and subject to the conditions thereof;
|
•
|
satisfy on a timely basis all conditions to funding that are applicable to Parent and Merger Sub in the equity commitment letter; and
|
•
|
if the conditions to funding have been satisfied or waived, consummate the equity financing at or prior to the closing of the Merger, including by causing the parties to the equity commitment letter to fund the equity financing at the closing of the Merger.
|
•
|
maintain in effect the debt commitment letters in accordance with the terms and subject to the conditions thereof;
|
•
|
comply with its obligations under the debt commitment letters;
|
•
|
negotiate, execute, and deliver definitive agreements with respect to the debt financing contemplated by the debt commitment letters on the terms and conditions contemplated by the debt commitment letters;
|
•
|
satisfy, or cause to be satisfied, on a timely basis (or obtain a waiver to) all conditions to funding that are applicable to Parent, Merger Sub, and guarantor in the debt commitment letters that are within its control; and
|
•
|
if the conditions to funding have been satisfied or waived, and upon the satisfaction of the applicable conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing of the Merger, but subject to the fulfilment or waiver of such conditions), consummate the debt financing at or prior to the closing of the Merger, including using reasonable best efforts to cause the debt financing sources committing to fund the debt financing to fund the debt financing at the closing of the Merger.
|
•
|
participating in and preparing for (and causing ZAGG’s senior management and representatives to participate in and prepare for) meetings, presentations, sessions with rating agencies and other customary syndication activities, and otherwise cooperating with the marketing efforts for any of the debt financing;
|
•
|
assisting Parent and the debt financing sources with the timely preparation of customary presentations, offering documents, prospectuses, memoranda and similar documents in connection with the debt financing;
|
•
|
identifying any material nonpublic information contained in the marketing materials related to the debt financing and complying with Regulation FD to the extent applicable to such material non-public information;
|
•
|
assisting Parent in connection with the preparation and registration of (but not executing) any pledge and security documents, supplemental indentures, interest hedging arrangements and other definitive financing documents as may be reasonably requested by Parent or the debt financing sources and otherwise reasonably facilitating the pledging of collateral and the granting of security interests in respect of the debt financing;
|
•
|
providing financial statements and information of ZAGG and its subsidiaries as necessary pursuant to the debt commitment letters;
|
•
|
executing and delivering (or assisting Parent in obtaining) customary certificates, legal opinions, or other documents and instruments as may be reasonably requested by Parent in connection with the debt financing;
|
•
|
taking corporate action reasonably necessary to permit the completion of the debt financing;
|
•
|
cooperating with Parent to obtain customary corporate and, if applicable, facilities ratings from the rating agencies contemplated by the debt commitment letters;
|
•
|
providing authorization or representation letters to the debt financing sources authorizing the distribution of information regarding ZAGG and its subsidiaries to prospective lenders or investors;
|
•
|
using reasonable efforts to ensure that any syndication efforts in connection with the debt financing benefit from existing lending and investment banking relationships of ZAGG and its subsidiaries; and
|
•
|
promptly furnishing Parent and the debt financing sources with all documentation and other information about ZAGG and its subsidiaries as is reasonably requested by Parent relating to applicable “beneficial ownership”, “know your customer” and anti-money laundering rules and regulations.
|
•
|
the approval of the Merger Agreement and the Merger by the affirmative vote of the holders of a majority of the outstanding ZAGG common stock;
|
•
|
the absence of any governmental order preventing or prohibiting consummation of the Merger or any other transactions contemplated in the Merger Agreement or the PPP Loan Forgiveness Rights Agreement; and
|
•
|
the expiration or termination of any applicable waiting periods, together with any extensions thereof, under the HSR Act and any other competition laws.
|
•
|
the representations and warranties of ZAGG set forth in the Merger Agreement regarding ZAGG’s corporate organization, authority to conduct its business, capitalization, and the absence of any Company Material Adverse Effect being true and correct as of the date of the closing of the Merger as though made on and as of such date and time (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except, in the case of any de minimis inaccuracies with respect to capitalization;
|
•
|
the representations and warranties of ZAGG set forth in the Merger Agreement regarding the corporate organization of ZAGG’s subsidiaries, ZAGG’s authority to execute and deliver the Merger Agreement and consummate the transactions contemplated thereby, and the absence of brokers’ and financial advisors’ fees related to the Merger being true and correct in all material respects as of the date of the closing of the Merger;
|
•
|
the representations and warranties of ZAGG set forth in the Merger Agreement (other than those set forth in the two bullets immediately above) being true and correct as of the date of the closing of the Merger (without giving effect to any references to any “Company Material Adverse Effect” or other “materiality” qualifications) as though made on and as of the date of the closing of the Merger (except that those representations and warranties which address matters only as of a particular date need only be true and correct as of such date), except, in each case, where the failure to be so true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect;
|
•
|
the compliance or performance by ZAGG in all material respects with all agreements, obligations, and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the effective time of the Merger;
|
•
|
Parent’s receipt of a certificate signed by the Chief Executive Officer or Chief Financial Officer of ZAGG certifying that the conditions set forth in the foregoing bullets have been satisfied;
|
•
|
Parent’s receipt of a certificate executed by ZAGG, in a form reasonably acceptable to Parent, duly completed and executed pursuant to Sections 1.897-2(h) and 1.1445-2(c) of the treasury regulations promulgated under the Code (the “Treasury Regulations”), certifying that ZAGG is not a United States real property holding corporation; and
|
•
|
since the date of the Merger Agreement, there not having occurred any Company Material Adverse Effect.
|
•
|
the representations and warranties of Parent contained in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the date of the closing of the Merger (without giving effect to any references to any “Parent material adverse effect” or other “materiality” qualifications) as though made on and as of the date of the closing of the Merger (except that those representations and warranties which address matters only as of a particular date need only be true and correct as of such date), except where failure to be so true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a Parent material adverse effect;
|
•
|
Parent having performed or complied in all material respects with all agreements, obligations, and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the effective time of the Merger; and
|
•
|
ZAGG’s receipt of a certificate of a responsible officer of Parent certifying that the conditions set forth in the foregoing bullets have been satisfied.
|
•
|
by mutual written consent of Parent and ZAGG by action of their respective boards of directors;
|
•
|
by either ZAGG or Parent:
|
•
|
if the Merger shall not have been consummated prior to the Outside Date; provided, further that such right to terminate is not available to any party whose failure to fulfill any obligation under the Merger Agreement has been the primary cause of, or resulted in, the failure of the Merger to occur on or before such date;
|
•
|
if any governmental entity shall have issued a final and nonappealable order permanently prohibiting the transactions contemplated by the Merger Agreement or the PPP Loan Forgiveness Rights Agreement; provided, that the party seeking to terminate the Merger Agreement pursuant to this provision shall not be in material violation of the Merger Agreement; or
|
•
|
if the required ZAGG stockholder approval shall not have been obtained at the ZAGG stockholder meeting;
|
•
|
by Parent:
|
•
|
if, prior to receipt of the required ZAGG stockholder approval, (i) a change of Board recommendation shall have occurred; provided that Parent’s right to terminate the Merger Agreement pursuant to this provision expires at 5:00 p.m., Eastern Time (ET), on the fifth business day following the date on which such change of Board recommendation occurs, or (ii) a tender offer or exchange offer for outstanding ZAGG common stock shall have been publicly announced (other than by Parent or an affiliate of Parent) and, prior to the earlier of (x) the date prior to the date of the ZAGG stockholder meeting and (y) 11 business days after the commencement of such tender or exchange offer pursuant to Rule 14d-2 under the Exchange Act, the Board fails to recommend unequivocally against acceptance of such offer; or
|
•
|
subject to certain cure periods, if there is any breach of any representation, warranty, covenant, or agreement on the part of ZAGG set forth in the Merger Agreement, such that the conditions to closing of the Merger related thereto would not be satisfied at the closing of the Merger;
|
•
|
by ZAGG:
|
•
|
at any time prior to the receipt of the required ZAGG stockholder approval, in order to enter into a definitive agreement with respect to a superior proposal; provided, that ZAGG has not materially breached the non-solicitation provisions of the Merger Agreement if such breach related to the party (or an affiliate of the party) that made the superior proposal;
|
•
|
subject to certain cure periods, if there is any breach of any representation, warranty, covenant, or agreement on the part of Parent or Merger Sub set forth in the Merger Agreement, such that the conditions to closing of the Merger related thereto would not be satisfied at the closing of the Merger; or
|
•
|
if (i) all of the conditions to Parent’s obligations to consummate the Merger (other than conditions which are to be satisfied by actions taken at the closing) have been satisfied, (ii) Parent fails to consummate the closing of the Merger within three business days following the date the closing should have occurred pursuant to the terms of the Merger Agreement, (iii) ZAGG has irrevocably notified Parent in writing that ZAGG is ready, willing, and able to effect the closing of the Merger within two business days, and (iv) Parent fails to consummate the closing of the Merger on or before the second business day following the date of delivery of such written notification by ZAGG.
|
•
|
in the event that the Merger Agreement is terminated by Parent due to a change of Board recommendation or commencement of a tender offer;
|
•
|
in the event that this Agreement is terminated by ZAGG in order to enter into a definitive agreement with respect to a superior proposal; or
|
•
|
in the event that (i) the Merger Agreement is terminated by ZAGG or Parent due to failure to consummate the Merger by the Outside Date or failure to obtain the required stockholder approval, (ii) an acquisition proposal has been publicly announced and not expressly and publicly withdrawn prior to the ZAGG stockholder meeting (x) prior to the date of termination with respect to any termination due to failure to consummate the Merger by the Outside Date, and (y) prior to the ZAGG stockholder meeting, with respect to termination due to failure to obtain the required stockholder approval, and (iii) within 12 months of such termination, ZAGG enters into an alternative acquisition agreement with respect to, or has consummated, an acquisition proposal.
|
•
|
in the event that the Merger Agreement is terminated by ZAGG due to breach of Parent or Merger Sub’s representations or warranties; or
|
•
|
in circumstances where the conditions to Parent’s obligations have been satisfied and the Parent fails to consummate the closing of the Merger as set forth above.
|
•
|
each of our named executive officers for the fiscal year ended December 31, 2020;
|
•
|
each of our directors;
|
•
|
all of our directors and executive officers as a group; and
|
•
|
each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of ZAGG common stock.
|
Name and Address of Beneficial Owner(1)
|
| |
ZAGG
Common
Stock
|
| |
+
|
| |
Unvested
Restricted
Stock Units(2)
|
| |
=
|
| |
Total
Beneficial
Ownership(2)
|
| |
Percentage of
ZAGG
Common
Stock
Beneficially
Owned(3)
|
Named Executive Officers and Directors:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Chris Ahern
|
| |
119,871
|
| |
|
| |
151,692
|
| |
|
| |
271,563
|
| |
0.9%
|
Taylor Smith
|
| |
52,777
|
| |
|
| |
35,804
|
| |
|
| |
88,581
|
| |
0.3%
|
Jim Kearns
|
| |
16,430
|
| |
|
| |
36,231
|
| |
|
| |
52,661
|
| |
0.2%
|
Cheryl A. Larabee
|
| |
160,146
|
| |
|
| |
0
|
| |
|
| |
160,146
|
| |
0.5%
|
Daniel R. Maurer
|
| |
130,715
|
| |
|
| |
0
|
| |
|
| |
130,715
|
| |
0.4%
|
Michael T. Birch
|
| |
33,455
|
| |
|
| |
0
|
| |
|
| |
33,455
|
| |
0.1%
|
Scott Stubbs
|
| |
57,364
|
| |
|
| |
0
|
| |
|
| |
57,364
|
| |
0.2%
|
Ronald G. Garriques
|
| |
27,046
|
| |
|
| |
0
|
| |
|
| |
27,046
|
| |
0.1%
|
Edward Terino
|
| |
30,000
|
| |
|
| |
27,046
|
| |
|
| |
57,046
|
| |
0.2%
|
All directors and executive officers as a group
(9 persons)
|
| |
627,804
|
| |
|
| |
250,773
|
| |
|
| |
878,577
|
| |
2.9%
|
>5% or More Beneficial Owners(4):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Dimensional Fund Advisors LP (5)
|
| |
1,739,469
|
| |
|
| |
—
|
| |
|
| |
1,739,469
|
| |
5.7%
|
RBC Global Asset Management (U.S.) Inc.(6)
|
| |
1,567,072
|
| |
|
| |
—
|
| |
|
| |
1,567,072
|
| |
5.1%
|
*
|
Less than 1% of the outstanding ZAGG common stock.
|
(1)
|
Unless otherwise indicated, the address of each beneficial owner listed is c/o ZAGG, 910 Legacy Center Way, Suite 500, Midvale, UT 84047.
|
(2)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. For purposes of this table, Company RSUs granted subject to performance conditions that have not yet been realized are excluded.
|
(3)
|
Shares of ZAGG common stock (i) granted as Company RSUs (excluding Company RSUs granted subject to performance conditions that have not yet been realized) and (ii) subject to options, warrants or convertible securities exercisable or convertible within 60 days of January 14, 2021 were deemed outstanding for computing the percentage of the person holding such Company RSUs, options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person, and was based upon the number of shares of ZAGG common stock issued and outstanding, as of January 14, 2021, which was 30,448,003 shares.
|
(4)
|
Unless otherwise indicated below, to our knowledge, all persons listed below had sole voting and investing power with respect to their shares of capital stock, except to the extent authority was shared by spouses under applicable community property laws.
|
(5)
|
This information is based on a Schedule 13F filed with the SEC on November 12, 2020 by Dimensional Fund Advisors LP. Pursuant to the Schedule 13F, Dimensional Fund Advisors LP reports sole voting power with respect to 1,634,921 shares of ZAGG common stock and sole dispositive power with respect to 1,739,469 shares of ZAGG common stock. The principal business address for Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.
|
(6)
|
This information is based on a Schedule 13F filed with the SEC on February 10, 2020 with respect to RBC Global Asset Management (U.S.) Inc., an investment advisor. Pursuant to the Schedule 13F, RBC Global Asset Management (U.S.) Inc. reports shared voting power with respect to 898,350 shares of ZAGG common stock and shared dispositive power with respect to 1,567,072 shares of ZAGG common stock. The principal business address for RBC Global Asset Management (U.S.) Inc. is 50 South Sixth Street, Suite 2350, Minneapolis, MN 55402.
|
|
| |
ZAGG Inc
|
|
| |
Attention: Abby Barraclough, Corporate Secretary
|
|
| |
910 West Legacy Center Way, Suite 500
|
|
| |
Midvale, Utah 84047
|
|
| |
Email: abby.barraclough@zagg.com
|
|
| |
Phone: 801-506-7005
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| | | |
a.
|
Conversion Generally. Each share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time (other than any shares of Excluded Company Common Stock to be canceled pursuant to Section 2.1(b) and any Dissenting Shares), shall be converted, subject to Section 2.3(d), into the right to receive from the Surviving Corporation (i) the Closing Date Per Share Merger Consideration in cash, payable to the holder thereof in accordance with Section 2.3, and (ii) one PPP Loan Forgiveness Right, representing the right to receive any Per Share Additional Merger Consideration that may become payable to the holder thereof as provided in the PPP Loan Rights Agreement (collectively, the “Merger Consideration”). All such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates”) or any non-certificated shares of Company Common Stock represented in book-entry form (the “Book-Entry Shares”) shall thereafter represent the right to receive the Merger Consideration therefor. Certificates or Book-Entry Shares previously representing shares of Company Common Stock shall be exchanged for the Merger Consideration upon the surrender of such Certificates or Book-Entry Shares in accordance with the provisions of Section 2.3, without interest and subject to any deduction for withholding Taxes required by applicable Law in accordance with Section 2.3(g).
|
b.
|
Cancellation of Certain Company Common Stock. Each share of Company Common Stock held by Parent, Merger Sub, any wholly-owned subsidiary of Parent or Merger Sub, in the treasury of the Company or by any wholly-owned subsidiary of the Company immediately prior to the Effective Time (collectively, the “Excluded Company Common Stock”) shall be canceled and extinguished without any conversion thereof and no payment shall be made with respect thereto.
|
c.
|
Merger Sub. Each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and be exchanged for one newly and validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
|
d.
|
Change in Company Common Stock. If between the date of this Agreement and the Effective Time the outstanding shares of Company Common Stock shall have been changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Merger Consideration and RSU Consideration shall be correspondingly adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares.
|
a.
|
Exchange Agent.
|
i.
|
On or prior to the Effective Time, Parent shall designate Empire Stock Transfer or another bank or trust company designated by Parent and reasonably satisfactory to the Company to act as exchange agent in the Merger (the “Exchange Agent”). On the Closing Date, (A) Parent shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of shares of Company Common Stock, for exchange in accordance with this Article 2, through the Exchange Agent, cash in U.S. dollars in an amount sufficient to pay the Closing Date Per Share Merger Consideration with respect to all of the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Excluded Company Common Stock to be canceled pursuant to Section 2.1(b) and any Dissenting Shares) as provided in Section 2.1(a) (which, for the avoidance of doubt shall not include the Closing Date RSU Consideration to be paid as provided in Section 2.2) and (B) Parent will, or will cause to be deposited with the Surviving Corporation, cash in an amount sufficient to pay the aggregate Closing Date RSU Consideration to be paid in accordance with Section 2.2 (such cash, and any interest and earnings thereon in clauses (A) and (B), in the aggregate, being hereinafter referred to as the “Exchange Fund”) payable pursuant to Section 2.1(a) or Section 2.2, as applicable. The Exchange Fund shall not be used for any other purpose other than to fund payments due pursuant to this Article 2.
|
ii.
|
The Exchange Agent shall invest any cash remaining in the Exchange Fund as directed by Parent, provided, that (A) no such investment or losses thereon shall affect the Merger Consideration payable to the holders of Company Common Stock, (B) following any such losses or events that result in the Exchange Fund becoming not immediately available or that result in the amount of funds in the Exchange Fund being insufficient to promptly pay the portion of the aggregate Merger Consideration that remains unpaid, Parent shall promptly provide additional funds to the Exchange Agent for the benefit of the holders of Company Common Stock to the extent of such insufficiency and (C) such investments shall be in the following (or a combination thereof): (I) short-term direct obligations of the United States of America with maturities of no more than thirty days, (II) short term obligations for which the full faith and credit of the United States of America is pledged to provide for payment of all principal and interest, (III) commercial paper obligations rated P-1 or A-1 or better by Moody’s Investor Services, Inc. or Standard & Poor’s Corporation, respectively, (IV) money market funds of the highest rating issued by either Moody’s Investor Services, Inc. or Standard & Poor’s Corporation, or (V) certificates of deposit or similar instruments issued by commercial banks with not less than $1 billion of capital. Any interest or other income resulting from the investment of such funds shall be added to the Exchange Fund and any amounts in excess of the amounts payable pursuant to Section 2.1(a) or Section 2.2 shall be returned to the Surviving Corporation.
|
iii.
|
The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger Consideration contemplated to be paid pursuant to Section 2.1(a) out of the Exchange Fund.
|
b.
|
Exchange Procedures. As soon as reasonably practicable and in any event not later than the second (2nd) Business Day after the Effective Time, Parent shall instruct the Exchange Agent to mail to each holder of record of a Certificate or Book-Entry Shares (except to the extent representing Excluded Company Common Stock or Dissenting Shares) which, in each case, were converted into a right to receive the Merger Consideration at the Effective Time pursuant to this Agreement: (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent and shall be in customary form) and (ii) instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Merger Consideration. Upon surrender of a Certificate (or affidavit of loss in lieu thereof in accordance with Section 2.3(f)) or a Book-Entry Share for cancellation to the Exchange Agent together with such letter of transmittal, properly completed and duly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share (other than the Excluded Company Common Stock and Dissenting Shares) shall be entitled to receive in exchange therefor the Merger Consideration which such holder has the right to receive in respect of each share of Company Common Stock formerly represented by such Certificate or Book-Entry Share (subject to deduction for withholding Taxes required by applicable Law in accordance with Section 2.3(g)), and the Certificate or Book-Entry Share so surrendered shall forthwith be immediately canceled. No interest will be paid or accrued on any Merger Consideration payable to holders of Certificates or Book-Entry Shares. In the event of a transfer of ownership of shares of Company Common Stock which is not registered in the transfer records of the Company, the Merger Consideration may be issued to a transferee if the Certificate representing such shares of Company Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer Taxes have been paid. Until surrendered as contemplated by this Section 2.3, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration.
|
c.
|
Further Rights in Company Common Stock. The Merger Consideration paid or issued upon the surrender for exchange of Certificates (or affidavit of loss in lieu thereof in accordance with Section 2.3(f)) or Book-Entry Shares in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Common Stock.
|
d.
|
No Liability. None of Parent, Merger Sub, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any holder of shares of Company Common Stock for any amounts (whether in respect of such Company Common Stock or otherwise) delivered from the Exchange Fund or otherwise to a public official pursuant to any abandoned property, escheat or similar Law.
|
e.
|
Distribution of Exchange Fund to Parent. Any portion of the Exchange Fund (including any interest or other amounts earned with respect thereto) that remains undistributed to the holders of shares of Company Common Stock (other than shares of Excluded Company Common Stock or Dissenting Shares) on the date that is one hundred eighty (180) days after the Effective Time shall be delivered to Parent upon demand, and any holders of Company Common Stock who have not theretofore surrendered their Certificates or Book-Entry Shares representing such shares of Company Common Stock that were issued and outstanding immediately prior to the Effective Time for exchange pursuant to the provisions of this Section 2.3 shall thereafter look for payment of the Merger Consideration payable in respect of the shares of Company Common Stock formerly represented by such Certificates or Book-Entry Shares solely to Parent or the Surviving Corporation, as general creditors thereof, for any claim to the applicable Merger Consideration (without interest) to which such holders may be entitled pursuant to the provisions of Section 2.1(a) (subject to abandoned property, escheat or other similar Laws and any deduction for withholding Taxes required by applicable Law in accordance with Section 2.3(g)).
|
f.
|
Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable thereon pursuant to Section 2.1(a) without any interest thereon (subject to any deduction for withholding Taxes required by applicable Law in accordance with Section 2.3(g)).
|
g.
|
Withholding. Parent, the Company, the Surviving Corporation (and any of their respective Subsidiaries) and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable
|
a.
|
The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock. As of December 10, 2020, (i) 36,925,435 shares of Company Common Stock were issued and outstanding (all of which were duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights), (ii) 7,076,929 shares of Company Common Stock were held in the treasury of the Company or by the Company Subsidiaries and (iii) there were outstanding Company RSU Awards with respect to 1,527,763 shares of Company Common Stock (assuming, with respect to any Company RSU Award that is subject to vesting based on the achievement of performance goals, the achievement of “target” performance goals). Except for Company RSU Awards and the arrangements and agreements set forth in Section 3.3 of the Company Disclosure Schedule, there are no options, warrants, stock appreciation rights, redemption rights, repurchase rights or other rights, agreements, arrangements or commitments of any character to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary is bound relating to the issued or unissued capital stock or other Equity Interests of the Company or any Company Subsidiary, or securities convertible into or exchangeable or exercisable for such capital stock or other Equity Interests, or obligating the Company or any Company Subsidiary to issue or sell any shares of its capital stock or other Equity Interests, or securities convertible into or exchangeable or exercisable for such capital stock of, or other Equity Interests in, the Company or any Company Subsidiary. Since December 10, 2020, the Company has not issued any shares of its capital stock or other Equity Interests, or securities convertible into or exchangeable for such capital stock or other Equity Interests, other than those shares of capital stock reserved for issuance as set forth in this Section 3.3 or Section 3.3 of the Company Disclosure Schedule. Except as set forth on Section 3.3 of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or any Company Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (iv) requiring the registration for sale of, or (v) granting any preemptive or antidilutive right with respect to, any shares of Company Common Stock
|
b.
|
Each Company RSU Award was granted in material compliance with all applicable Laws and all of the terms and conditions of the applicable plan pursuant to which it was issued.
|
c.
|
Except as expressly contemplated by this Agreement, there are no voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party or otherwise to the Knowledge of the Company with respect to the voting of any capital stock or other Equity Interests of the Company or any Company Subsidiary.
|
d.
|
Each Company Subsidiary is as of the date hereof and, as of immediately prior to the Closing will be, in compliance with all statutory minimum capitalization requirements under all applicable Laws, and, as of immediately prior to the Closing, there will be no requirement under any applicable Law for any Person to make contributions of capital to, or to provide letters of support or comfort in respect of the obligations of, any Company Subsidiary in order to comply with all such statutory minimum capitalization requirements.
|
a.
|
The Company has all necessary corporate power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated by this Agreement and each Ancillary Agreement to which it is a party to be consummated by the Company. The execution and delivery of this Agreement and each Ancillary Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company and no stockholder votes are necessary to authorize this Agreement or any Ancillary Agreement or to consummate the transactions contemplated hereby or thereby other than the Required Company Stockholder Approval and the filing of the Certificate of Merger with the Secretary of the State of Delaware. The Company Board has unanimously (i) determined that the Merger and the other transactions contemplated by this Agreement are fair to and in the best interests of the Company and its stockholders, (ii) approved this Agreement and each Ancillary Agreement in accordance with the requirements of the DGCL, (iii) declared advisable the transactions contemplated hereby and thereby, (iv) directed that this Agreement and each Ancillary Agreement and the transactions contemplated hereby and thereby be submitted to the Company’s stockholders for approval at a meeting of such stockholders, and (v) recommended that the Company’s stockholders approve and adopt this Agreement and authorize the transactions contemplated herein (such recommendation, the “Company Board Recommendation”). This Agreement and each Ancillary Agreement have been duly authorized and validly executed and delivered by the Company and constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms (except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar Law affecting the enforcement of creditors’ rights generally or by general equitable principles).
|
b.
|
The Company has taken all appropriate actions so that the restrictions on business combinations contained in Section 203 of the DGCL will not apply with respect to or as a result of this Agreement or any Ancillary Agreement and the transactions contemplated hereby and thereby, including the Merger, without any further action on the part of the stockholders or the Company Board. True and complete copies of all resolutions of the Company Board reflecting such actions have been previously provided to Parent. No other state takeover statute or similar statute or regulation is applicable to or purports to be applicable to the Merger or any other transaction contemplated by this Agreement or any Ancillary Agreement.
|
a.
|
The execution and delivery of this Agreement and each Ancillary Agreement by the Company does not, and the performance of this Agreement and each Ancillary Agreement by the Company will not (with or without notice or lapse of time or both), (i) assuming the Required Company Stockholder Approval is obtained, conflict with or violate any provision of the Company Certificate or Company By-laws or any equivalent organizational documents of any Company Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described in Section 3.5(b) have been obtained and all filings and notifications described in Section 3.5(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound or affected, (iii) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a change of control or default under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation or acceleration of any obligations under a Lien or other encumbrance on any property or asset of the Company or any Company Subsidiary pursuant to any Company Material Contract, (iv) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a change of control or default under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation or acceleration of any obligations under a Lien or other encumbrance on any property or asset of the Company or any Company Subsidiary pursuant to, any note, bond, mortgage, indenture, Contract, license, Company Permit or other instrument or obligation or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or by which any of its assets are bound, except, with respect to the preceding clauses (ii), (iv) and (v), for any such conflicts, violations, breaches, defaults or other occurrences which have not had or would not, individually or in the aggregate, reasonably be expected to (A) prevent or materially delay consummation of the Merger, (B) otherwise prevent or materially delay performance by the Company of any of its material obligations under this Agreement or any Ancillary Agreement or (C) have a Company Material Adverse Effect.
|
b.
|
The execution and delivery of this Agreement and each Ancillary Agreement by the Company does not, and the performance of this Agreement and each Ancillary Agreement by the Company will not (with or without notice or lapse of time or both), require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or any other Person, except (i) under the Exchange Act, Securities Act, any applicable Blue Sky Law, the rules and regulations of the Exchange, HSR Act, foreign or supranational antitrust and competition laws and the filing and recordation of the Certificate of Merger as required by the DGCL and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications to a Person other than a Governmental Entity, has not had or would not, individually or in the aggregate, reasonably be expected to (1) prevent or materially delay consummation of the Merger, (2) otherwise prevent or materially delay performance by the Company of any of its material obligations under this Agreement or any Ancillary Agreement, or (3) have a Company Material Adverse Effect.
|
a.
|
In the past three (3) years, the Company has timely filed or otherwise furnished (as applicable) all registration statements, prospectuses, forms, reports, definitive proxy statements, schedules and documents required to be filed by it under the Securities Act or the Exchange Act, as the case may be (collectively, the “Company SEC Filings”). Each Company SEC Filing (i) as of its date, complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not, at the time it was filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation is made as to the accuracy of any financial projections or forward-looking statements or the completeness of any information furnished by the Company to the SEC solely for the purposes of complying with Regulation FD promulgated under the Exchange Act. As of the date of this Agreement, no Company Subsidiary is subject to the periodic reporting requirements of the Exchange Act.
|
b.
|
Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Filings was prepared in accordance with GAAP applied (except as may be indicated in the notes thereto and, in the case of unaudited quarterly financial statements, as permitted by Form 10-Q under the Exchange Act) on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), and each presented fairly the consolidated financial position, results of operations and cash flows of the Company and the consolidated Company Subsidiaries as of the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal year-end adjustments). The books and records of the Company and each Company Subsidiary have been, and are being, maintained in accordance with applicable legal and accounting requirements.
|
c.
|
The Company has designed and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting for the Company and the Company Subsidiaries. The Company (i) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (ii) since December 31, 2017 has disclosed to the Company’s auditors and the audit committee of the Company Board (1) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any
|
d.
|
Since December 31, 2017, the Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the Exchange. Except as permitted by the Exchange Act, including Sections 13(k)(2) and (3) or rules of the SEC, since the enactment of the Sarbanes-Oxley Act, neither the Company nor any of its Affiliates has made, arranged or modified (in any material way) any extensions of credit in the form of a personal loan to any executive officer or director of the Company.
|
a.
|
The Proxy Statement and any Other Filings, and any amendments or supplements thereto, when filed by the Company with the SEC, or when distributed or otherwise disseminated to the Company’s stockholders, as applicable, will comply as to form in all material respects with the applicable requirements of the Exchange Act and other applicable Laws.
|
b.
|
The Proxy Statement, as supplemented or amended, if applicable, at the time such Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company, at the time such stockholders vote on adoption of this Agreement, and at the Effective Time and (ii) any Other Filings or any supplement or amendment thereto, at the time of the filing thereof and at the time of any distribution or dissemination thereof, in each case, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, except that no representation or warranty is made by the Company with respect to (1) statements therein based on information supplied by Parent or Merger Sub for inclusion in the Proxy Statement or (2) any financial projections or forward-looking statements.
|
a.
|
Section 3.11(a) of the Company Disclosure Schedule sets forth a complete list of each material (i) “employee benefit plan” as that term is defined in Section 3(3) of ERISA, (ii) employment, consulting, pension, retirement, profit sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, bonus or other incentive plans, programs, policies or agreements and (iii) medical, vision, dental or other health plans, or life insurance plans, in each case, maintained, sponsored or contributed to by the Company or any Company Subsidiary, or required to be maintained, sponsored or contributed to by the Company or any Company Subsidiary for the benefit of any current or former employees, directors, officers or consultants
|
b.
|
Except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) (A) each Employee Plan that is intended to be qualified under Section 401(a) of the Code either has received a favorable determination letter from the IRS or may rely upon a favorable prototype opinion letter from the IRS as to its qualified status, and, to the Knowledge of the Company, nothing has occurred since the date of the latest favorable determination letter or prototype opinion letter, as applicable, that would reasonably be expected to cause the loss of qualification of any such Employee Plan and (B) all outstanding participant loans under such Employee Plans are in good standing, (ii) each Employee Plan has been maintained and administered in material compliance, with ERISA, the Code and other applicable Laws, and (iii) in the last three (3) years, other than routine claims for benefits, there are no suits, claims, proceedings, actions, governmental audits or investigations that are pending or, to the Knowledge of the Company, threatened against the Company or any Company Subsidiary or involving any Employee Plan. Except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, each Non-U.S. Benefit Plan that is intended to qualify for favorable Tax benefits under the Laws of any jurisdiction is so qualified and/or properly registered, as applicable, has been maintained in good standing with all applicable regulatory authorities, and, to the Knowledge of the Company, no condition exists or event has occurred that could reasonably be expected to result in the revocation or loss of such status.
|
c.
|
No Employee Plan is, and none of the Company or any of its ERISA Affiliates sponsors, maintains or contributes to, or has, within the past six (6) years, established, sponsored, maintained or contributed to, or in any way has any current or potential liability, directly or indirectly, with respect to any plan that is, (i) a “multiemployer plan” (as defined in Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) (a “Multiemployer Plan”) or (ii) subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code or a “defined benefit” plan within the meaning of Section 414(j) of the Code or Section 3(35) of ERISA (whether or not subject thereto).
|
d.
|
No Employee Plan provides, or reflects or represents any liability to provide, for post-retirement welfare benefits, other than (i) health care continuation coverage required by Section 4980B of the Code (“COBRA”) or other applicable Law, (ii) coverage through the end of the calendar month in which a termination of employment occurs or (iii) pursuant to an applicable agreement, plan or policy requiring the Company or any Company Subsidiary to pay or subsidize COBRA premiums for a terminated employee following the employee’s termination.
|
e.
|
Except as set forth in Section 3.11(e) of the Company Disclosure Schedule or required by the terms of this Agreement, neither the execution by the Company of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or upon occurrence of any additional or subsequent events): (i) entitle any current or former employee, consultant or director of the Company or any Company Subsidiary to any payment of compensation; (ii) increase the amount of compensation or benefits due to any such employee, consultant or director; (iii) accelerate the vesting, funding or time of payment of any
|
a.
|
In the past three (3) years, (i) neither the Company nor any Company Subsidiary is or has been the subject of any pending or, to the Knowledge of the Company, threatened proceeding alleging that the Company or any Company Subsidiary has engaged in any unfair labor practice under any Law and (ii) there is and has been no pending or, to the Knowledge of the Company, threatened labor strike, dispute, walkout, work stoppage, slowdown or lockout with respect to employees of the Company or any Company Subsidiaries. Neither the Company nor any Company Subsidiary is a party to any collective bargaining agreement, labor agreement or similar agreement with any labor union, works council, or similar employee representative bodies, and there are no labor unions or other organizations representing, or, to the Knowledge of the Company purporting to represent or attempting to represent, any employee of the Company or any Company Subsidiary.
|
b.
|
Except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and each Company Subsidiary is, and during the past three (3) years have been, in material compliance with all applicable Laws relating to employment, including Laws relating to discrimination, hours of work, the payment of wages or overtime wages, labor relations, fair employment practices, consultation and/or information, worker classification, disability rights, leaves of absence, affirmative action, plant closing and mass layoff issues, unemployment insurance, immigration and workers’ compensation. Except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and each Company Subsidiary have paid in full all wages, salaries, commissions, other compensation and benefits, and all levies, assessments, contributions and payments to Third Parties, that are due to or on behalf of their current and former employees.
|
c.
|
To the Knowledge of the Company, each employee of the Company or any Company Subsidiary who is working in the United States is a United States citizen or has a current and valid work visa or otherwise has the lawful right to work in the United States. The Company has in its files a Form I-9 that, to the Knowledge of the Company, was completed in accordance with Law for each such employee for whom such form is required under Law.
|
a.
|
Section 3.13(a) of the Company Disclosure Schedule lists (i) the twenty (20) largest customers (the “Material Customers”) of the Company and the Company Subsidiaries, taken as a whole (measured by revenue), and (ii) the twenty (20) largest suppliers or service providers (the “Material Vendors”) of the Company and the Company Subsidiaries, taken as a whole (measured by annual spend), during the twelve (12) month period ended December 31, 2019 and the eleven month period ended November 30, 2020 (together with the annual revenue to, or annual spend by, as applicable, the Company and the Company Subsidiaries, taken as a whole).
|
b.
|
Except as set forth on Section 3.13(b) of the Company Disclosure Schedule, in the twelve (12) months prior to the date of this Agreement, no Material Customer or Material Vendor has terminated its relationship with or materially changed the terms of its agreement or other relationship with the Company or any Company Subsidiary, none of the Company or any Company Subsidiary has received any written notice that any such Material Customer or Material Vendor plans to do so, and to the Knowledge of the Company, no such Material Customer or Material Vendor plans to do so; provided, however, that the fact that any particular agreement, contract or commitment with any Material Customer or Material Vendor is scheduled to expire shall not, in and of itself, constitute notice of any of the foregoing matters.
|
a.
|
As of the date hereof, except as filed as exhibits to the Company SEC Filings filed prior to the date of this Agreement, or as disclosed in or Section 3.11(a) or Section 3.14 of the Company Disclosure Schedule, none of the Company or any Company Subsidiary is a party to or bound by any Contract that falls into any of the following categories:
|
i.
|
any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
|
ii.
|
any joint venture, partnership or similar arrangement, including arrangements for the sharing of revenue, profits, losses, costs or liabilities from operations relating to such arrangements;
|
iii.
|
any Contract that provides for the sale, assignment, acquisition or disposition (by merger, purchase or sale of stock or assets or otherwise) of material assets or properties requiring the payment of an annual amount by or to the Company or the Company Subsidiaries in excess of $2,000,000;
|
iv.
|
any Contract with any Material Customer or Material Vendor;
|
v.
|
any Contracts as to which the Company or any Company Subsidiary is a party and pursuant to which the Company or any Company Subsidiary is authorized to use, or authorizes any third party to use, any Company Intellectual Property (other than Incidental Licenses);
|
vi.
|
other than as otherwise disclosed pursuant to this Section 3.14, any Contract that involved payments in excess of $2,000,000 in fiscal years 2019 or 2020 (A) by the Company or any Company Subsidiary or (B) to the Company or any Company Subsidiary;
|
vii.
|
any Contract relating to Indebtedness for borrowed money or any financial guaranty having an outstanding principal amount in excess of $2,000,000;
|
viii.
|
any Contract that contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to the Company, any Company Subsidiary or any of the Company’s current or future Affiliates, or which restricts the conduct of any line of business by the Company, any Company Subsidiary or any of the Company’s current or future Affiliates (including Contracts containing “most favored nation” provisions) or any geographic area in which the Company, any Company Subsidiary or any of the Company’s current or future Affiliates may conduct business;
|
ix.
|
any Contract relating to the employment or retention of consulting services of any Person (including employment agreements, consulting agreements, severance arrangements, retention arrangements, change of control arrangements, transaction bonus arrangements) and providing annual base salary or compensation in excess of $100,000 (other than any “at-will” contract that may be terminated without payment of any severance);
|
x.
|
other than as disclosed pursuant to clause (ix) above or Section 3.25 of the Company Disclosure Schedule, any Contract with any current or former stockholders, officers, directors, employees or consultants of the Company or any Company Subsidiary;
|
xi.
|
any Contract for future capital expenditures by the Company or any Company Subsidiary (excluding any Contracts with Material Vendors and purchase orders placed for tooling in the ordinary course of business) in excess of $1,500,000;
|
xii.
|
any Contract with any Governmental Entity;
|
xiii.
|
any Contract that contains any material indemnification rights or obligations other than those incurred in the ordinary course of business (pursuant to customer or vendor contracts or otherwise) consistent with past practices; or
|
xiv.
|
any Contract for the lease, sublease or other use of personal property or real property involving aggregate payments by or to the Company or any Company Subsidiary or any of their respective Affiliates in excess of $2,000,000 in any calendar year.
|
b.
|
Each Company Material Contract is valid and binding on the Company and each Company Subsidiary party thereto and, to the Company’s Knowledge, each other party thereto, and is in full force and effect (except to the extent that such Company Material Contract’s enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar Law affecting the enforcement of creditors’ rights generally or by general equitable principles), and each of the Company and each Company Subsidiary has in all material respects performed all obligations required to be performed by it to the date hereof under each Company Material Contract. None of the Company or any Company Subsidiary is (with or without notice or the lapse of time or both) in material breach or default under any Company Material Contract and, to the Knowledge of the Company, no other party to any Company Material Contract is (with or without the lapse of time or the giving of notice, or both) in material breach or default thereunder and none of the Company or any Company Subsidiary has received written notice of any violation or default under any Company Material Contract or any other Contract to which it is a party or by which it or any of its properties or assets is bound, except, in each case, for violations or defaults that have not, or would not, individually or in the aggregate, reasonably be expected to (i) prevent or materially delay consummation of the Merger, (ii) otherwise prevent or materially delay performance by the Company of any of its material obligations under this Agreement or any Ancillary Agreement or (iii) have a Company Material Adverse Effect.
|
a.
|
Section 3.16(a) of the Company Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of all real property owned in fee by the Company or a Company Subsidiary (each such real property so listed, an “Owned Real Property”), and the record owner of each such Owned Real Property (the “Owner”). The Owner for each Owned Real Property has insurable title to such Owned Real Property, in each case, free and clear of any Liens, other than Permitted Liens.
|
b.
|
Section 3.16(b) of the Company Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of all Leased Real Property and a description of the Contract under which each such Leased Real Property is leased (collectively, the “Real Property Leases”). The Company has made available to Parent a correct copy of each Real Property Lease. Each of the Company and each Company Subsidiary (each, in such capacity, a “Tenant”) has a valid leasehold interest under each Real Property Lease to which it is a party. Each such Real Property Lease is in full force and effect and constitutes a legal, valid, and binding obligation of the applicable Tenant and, to the Knowledge of the Company, of the other parties thereto, enforceable against such Tenant and such other parties in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar Law affecting the enforcement of creditors’ rights generally or by general equitable principles. Except as set forth on Section 3.16(b) of the Company Disclosure Schedule, or except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, no default, event or circumstance has occurred that, with or without notice or lapse of time, or both, would constitute a material default or breach by any Tenant or, to the Company’s Knowledge, by any other party under any such Real Property Lease.
|
c.
|
Except as would not have a Company Material Adverse Effect, the Company and the Company Subsidiaries are in possession of and have good and marketable title to, or valid leasehold interests in or valid rights under contract to use, the machinery, equipment, furniture, fixtures, and other tangible personal property and assets owned, leased, or used by the Company or any Company Subsidiary, free and clear of all Liens other than Permitted Liens.
|
a.
|
The Company or a Company Subsidiary owns or has the right to use, whether through ownership, licensing or otherwise, all Intellectual Property that is owned by or registered in the name of the Company or a Company Subsidiary or is used in the operation of the businesses of the Company and each Company Subsidiary in the same manner as such businesses are conducted on the date hereof (the “Company Intellectual Property”), and all such Company Intellectual Property that is owned by the Company or a Company Subsidiary is hereinafter referred to as “Owned Intellectual Property”. All Registered Intellectual Property of the Company or any Company Subsidiary, as well as the jurisdictions in which such Registered Intellectual Property has been registered or in which an application for such registration has been filed, as applicable, including the respective registration or application numbers and the names of all registered owners, has been set forth in Section 3.17(a)(i) of the Company Disclosure Schedule. Section 3.17(a)(ii) of the Company Disclosure Schedule sets forth a list of all (i) material patents issued to the Company or a Company Subsidiary that have expired during 2019 or 2020, (ii) social media identifiers owned or used by the Company or a Company Subsidiary, and (iii) proprietary software owned by the Company or a Company Subsidiary.
|
b.
|
Except as set forth in Section 3.17(b) of the Company Disclosure Schedule and except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (A) no use of the Owned Intellectual Property by or on behalf of the Company or any Company Subsidiary infringes, violates or misappropriates the Intellectual Property rights of any third party, (B) during the three (3) year period prior to the date hereof, no written claim of invalidity or conflicting ownership rights with respect to any Owned Intellectual Property has been made by a Third Party and no such Owned Intellectual Property is the subject of any pending Action; and (C) during the three (3) year period prior to the date hereof, no Person has given written notice to the Company or any Company Subsidiary that the Company or any Company Subsidiary or its or their respective use of any Owned Intellectual Property is infringing upon any other Person’s rights or interests in Intellectual Property;
|
c.
|
In the past three (3) years, none of the Company or any Company Subsidiary has given written notice to any Person that such Person is infringing upon the Company or a Company Subsidiary’s rights in their Owned Intellectual Property. Except as set forth in Section 3.17(c) of the Company Disclosure Schedule, and except as has not had or would not, individually or in the aggregate, reasonably be expected to result in a material liability to the Company or any Company Subsidiary, to the Company’s Knowledge, there have been no (i) material failures, errors, or outages with respect to any Business IT System, or (ii) material breaches of the security of the computer networks of the Company or any Company Subsidiary that have resulted in unauthorized access, loss, destruction or transfer of any confidential or personally identifiable information in the possession or control of the Company or any Company Subsidiary.
|
d.
|
In the past three (3) years, each of the Company and each Company Subsidiary has complied with all of the requirements of all applicable Governmental Entities to maintain the Registered Intellectual Property that is material to the business of the Company or any Company Subsidiary in full force and effect, including paying all required fees when due to such offices or agencies. Except as set forth in Section 3.17(d) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary needs to take any of the following actions within one hundred twenty (120) days of the date of this Agreement with respect to any of the Registered Intellectual Property: (i) pay any registration, maintenance or renewal fees with the United States Patent and Trademark Office or foreign counterparts, as the case may be, or (ii) file any responses to the United States Patent and Trademark Office or foreign counterparts, as the case may be, for the purpose of obtaining, maintaining, perfecting or preserving or renewing the Registered Intellectual Property. All Registered Intellectual Property is subsisting and enforceable and has not been abandoned or passed into the public domain, except for any item of Registered Intellectual Property that has expired at the end of its statutory term or that has been allowed to be abandoned or to pass in the public domain based on the reasonable business judgment of the Company or any Company Subsidiary. The Company and the Company Subsidiaries have taken reasonable steps to preserve, police and protect the integrity of their respective trademark rights included in their Owned Intellectual Property that is material to the business of the Company or any Company Subsidiary. With respect to the Company Intellectual
|
e.
|
In the past three (3) years, no employees, agents, consultants and independent contractors of the Company or any Company Subsidiary have (i) asserted any claim in writing against the Company or any Company Subsidiary in connection with such Person’s involvement in the conception and development of any Owned Intellectual Property or (ii) to the Knowledge of the Company, been named as an inventor on any patent owned by, or pending patent application by, the Company or any Company Subsidiary for any device, process, design or invention of any kind now used by the Company or any Company Subsidiary in the conduct of the business of the Company or any Company Subsidiary, except for inventions that have been assigned to the Company or any Company Subsidiary.
|
f.
|
In the past three (3) years, the Company and the Company Subsidiaries have taken commercially reasonable steps to maintain, enforce and protect the Owned Intellectual Property that is material to the businesses of the Company and the Company Subsidiaries, including protecting the confidentiality of all such non-public Owned Intellectual Property. In the past three (3) years, the Company and each Company Subsidiary have obtained from all parties (including employees and current or former consultants, independent contractors and subcontractors) who have created any portion of, or otherwise who are or were involved in the creation or development of, any Owned Intellectual Property that is material to the business of the Company or any Company Subsidiary, valid and enforceable written agreements pursuant to which each such party assigned to the Company or the Company Subsidiary, as applicable, all rights in and to such Owned Intellectual Property. To the Knowledge of the Company, no employee, independent contractor or agent of the Company or any Company Subsidiary is bound by or otherwise subject to any obligations to a third-party restricting such employee, independent contractor or agent from performing his or her duties for the Company or any Company Subsidiary or in breach of any contract with any former employer or other entity concerning any Owned Intellectual Property.
|
g.
|
To the Knowledge of the Company, no Governmental Entity, university or educational institution has funded research and development activities of the Company or any Company Subsidiary under an agreement or arrangement that would provide such Governmental Entity, university or educational institution with any claim of ownership to any Owned Intellectual Property.
|
h.
|
All maintenance fees, support fees, license fees and other amounts required to be paid by the Company and the Company Subsidiaries to maintain the Business IT Systems have been timely paid when due.
|
a.
|
In connection with the Company’s and any Company Subsidiary’s collection, use, disclosure, storage and other processing of Personal Data, the Company and any Company Subsidiary have (i) in all material respects and at all times during the past three (3) years complied with all applicable Data Protection Legislation in all relevant jurisdictions and with all contractual obligations to which the Company or any Company Subsidiary are bound, as applicable, and (ii) implemented privacy and security policies, practices and procedures for the collection, processing, use, transfer, disclosure, access and protection of Personal Data that comply with all applicable Data Protection Legislation in all material respects.
|
b.
|
With respect to all Personal Data and other data collected, stored, used or maintained by or for the Company or any Company Subsidiary, each of the Company and each Company Subsidiary has used commercially reasonable efforts to protect the Personal Data and other data against loss and against unauthorized access, use, modification, disclosure or other misuse, and, to the Knowledge of the Company, there has been no material unauthorized access to, or unauthorized manipulation, erasure, processing, use or disclosure of, any data (including Personal Data) owned, used, stored, received, or controlled by the Company, any Company Subsidiary (or, to the Knowledge of the Company, any service provider in the course of providing services for or on behalf of the business of the Company or any Company Subsidiary). A copy of the most recent internally or externally prepared reports or audits that describe or evaluate the information security procedures of the Company and the Company Subsidiaries have been made available to Parent. The Company and the Company Subsidiaries implement and maintain, consistent with industry standard practices, commercially reasonable disaster recovery plans and procedures designed to protect the integrity
|
c.
|
In the past three (3) years, except as set forth in Section 3.18(c) of the Company Disclosure Schedule, none of the Company or any Company Subsidiary has received any written notice from any Person of any lawsuits, investigations, legal claims or material complaints regarding its collection, storage, transfer, maintenance and use of any Personal Data or for a breach of applicable Data Protection Legislation.
|
d.
|
To the Knowledge of the Company, neither the Company nor any Company Subsidiary has disclosed, made accessible or transferred any Personal Data, even for transit purposes, to any third party outside the country where the Company or any Company Subsidiary is established or where its Personal Data is collected from, if such disclosure, accessibility or transfer is prohibited by applicable Data Protection Legislation. If such disclosure, accessibility, or transfer is not prohibited, the Company and the Company Subsidiaries have implemented reasonable measures and guarantees designed to ensure the disclosure, accessibility, or transfer in compliance with applicable Data Protection Legislation.
|
a.
|
The Company and each Company Subsidiary has timely filed all Tax Returns with the appropriate Tax Authority required to be filed, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were complete and correct, and the Company and each Company Subsidiary has paid all Taxes required to be paid (whether or not shown as due) with respect to such Tax Returns or provided adequate reserves in accordance with GAAP in their financial statements for any Taxes that have not been paid.
|
b.
|
Section 3.19(b) of the Company Disclosure Schedule sets forth a list of all audits or other administrative proceedings or court proceedings presently pending with regard to any Taxes or Tax Returns of the Company or any Company Subsidiary (and any written notices of any such proposed audits or proceedings). No requests for waivers of time to assess any material Taxes are pending and none of the Company or any Company Subsidiary has waived any statute of limitations with respect to material Taxes or agreed to any extension of time with respect to any material Tax assessment or deficiency for any open Tax year.
|
c.
|
There are no material Tax Liens upon any property or assets of the Company or any Company Subsidiary except for (i) Liens for current Taxes not yet due and payable and (ii) Liens for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves are reflected on the Company’s consolidated financial statements contained or incorporated by reference in the Company SEC Filings.
|
d.
|
The Company and each Company Subsidiary has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other Third Party.
|
e.
|
None of the Company or any Company Subsidiary is responsible for the Taxes of any other Person (other than the Company or any Company Subsidiary) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor or otherwise. None of the Company or any Company Subsidiary has ever been a member of any affiliated, consolidated, combined or unitary group filing a consolidated income Tax Return for U.S. federal income tax purposes or any similar group for state, local or foreign income tax purposes other than a group the parent of which is the Company or any Company Subsidiary.
|
f.
|
Except as set forth in Section 3.19(f) of the Company Disclosure Schedule, none of the Company or any Company Subsidiary is a party to, is bound by or has any obligation under any Tax sharing, Tax allocation or Tax indemnity agreement or similar Contract or arrangement (other than customary commercial agreements whose primary purpose does not relate to Taxes).
|
g.
|
None of the Company or any Company Subsidiary has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution otherwise constituting a part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.
|
h.
|
Section 3.19(h) of the Company Disclosure Schedule describes all any “deferred gains” of the Company or any Company Subsidiary with respect to “intercompany transactions” within the meaning of Treasury Regulations § 1.1502-13.
|
i.
|
Neither the Company nor any Company Subsidiary has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897 of the Code.
|
j.
|
There is no Contract, plan or arrangement covering any employee or former employee of the Company or any Company Subsidiary that provides or could provide for the payment of any amount that would not be deductible under Section 162(a)(1) or 404 of the Code.
|
k.
|
None of the Company or any Company Subsidiary will be required to include in taxable income for any Tax period (or portion thereof) beginning after the Closing Date any (i) adjustment as a result of any change prior to the Closing in a method of accounting for a Pre-Closing Tax Period under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign Law); (ii) “closing agreement” as described in Section 7121 of the Code executed prior to the Closing; (iii) installment sale or open transaction disposition made or entered into prior to the Closing Date; (iv) prepaid amount or deferred revenue received on or prior to the Closing Date other than in the ordinary course of business; (v) election under Section 108(i) of the Code; (vi) inclusion pursuant to Section 951 or Section 951A of the Code with respect to income earned or accrued in a Pre-Closing Tax Period; or (vii) deferral of a payment obligation or advance of a credit with respect to Taxes, including, but not limited to, the delay of payment of employment taxes under Section 2302 of the Coronavirus Aid, Relief, and Economic Security Act and any similar or successor legislation in effect as of the Closing Date, including any presidential memoranda or executive orders, relating to the COVID-19 pandemic, as well as any applicable guidance (including IRS Notice 2020-65, 2020-38 IRB) issued thereunder or relating thereto (the “CARES Act”), the advance refunding of credits under Section 3606 of the CARES Act and any delay in the payment of estimated Taxes. None of the Company or any Company Subsidiary has any liability under Section 965 of the Code. None of the Company or any Company Subsidiary has extended, deferred or delayed the payment of any Taxes under the CARES Act or otherwise as a result of the effects of the COVID-19 pandemic.
|
l.
|
None of the Company or any Company Subsidiary is or has been a “reporting corporation” subject to the information reporting and record maintenance requirements of Section 6038A of the Code and the regulations promulgated thereunder. Each of the Company and each Company Subsidiary has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. None of the Company or any Company Subsidiary has engaged in a transaction that the Internal Revenue Service has identified by regulation or other form of published guidance as a “listed transaction,” as such term is defined in Treasury Regulations Section 1.6011-4(b)(2).
|
m.
|
In the past seven (7) years, none of the Company or any Company Subsidiary has received any written notice from any Tax Authority that it has a permanent establishment in any jurisdiction in which it has not filed Tax Returns. Neither the Company nor any Company Subsidiary constitutes a permanent establishment of any other Person for any tax purpose.
|
n.
|
No claim has been made in writing by any Tax Authority in any jurisdiction in which Company or any Company Subsidiary does not file Tax Returns that it may be subject to taxation by that jurisdiction.
|
o.
|
All Company Subsidiaries organized outside the U.S. are, and will be through the Closing, “controlled foreign corporations” for U.S. federal income Tax purposes.
|
p.
|
No Company Subsidiary is or has been a passive foreign investment company within the meaning of Section 1297(a) of the Code.
|
q.
|
None of the Company or any Company Subsidiary is, or at any time has been, subject to (i) the dual consolidated loss provisions of Section 1503(d) of the Code, (ii) the overall foreign loss provisions of Section 904(f) of the Code or (iii) the re-characterization provisions of Section 952(c)(2) of the Code.
|
r.
|
There are no outstanding powers of attorney granted by the Company or any Company Subsidiary with respect to Taxes that will remain outstanding after Closing.
|
s.
|
All related party transactions involving the Company and/or any Company Subsidiary have been, in all material respects, on an arms’-length basis in accordance with Section 482 of the Code and any state or foreign law equivalent, and are supported by contemporaneous transfer pricing documentation.
|
t.
|
None of the Company or any Company Subsidiary has a current plan or intention to enter into a transaction or series of transaction outside the ordinary course of business consistent with past practice (which shall include for purposes hereof any transfer (or deemed transfer for Tax purposes) of intellectual/intangible property by or to an entity that is or was not considered a tax resident in its jurisdiction of organization) that is reasonably expected to be taxable or result in an increase to the expected effective tax rate of the Company or any Company Subsidiary (or relevant combination thereof).
|
u.
|
None of the Company or any Company Subsidiary is a partner for Tax purposes with respect to any joint venture, partnership, or other arrangement or Contract that is treated as a partnership for U.S. federal income tax purposes.
|
v.
|
No representation or warranty is made in this Agreement with respect to the amount, sufficiency or usability of any net operating loss, capital loss, Tax basis or other Tax attribute, or the availability of any Tax positions in periods after the Closing.
|
a.
|
Except as set forth on Section 3.21 of the Company Disclosure Schedule, as of the date of this Agreement, the Company and the Company Subsidiaries are in material compliance with all Environmental Laws, except for any such instances of non-compliance that have not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except as set forth on Section 3.21 of the Company Disclosure Schedule, the Company and the Company Subsidiaries hold, and are in material compliance with, all material permits required under applicable Environmental Laws to permit the Company and the Company Subsidiaries to operate their respective assets in a manner in which they are now operated and maintained and to conduct the business of the Company and the Company Subsidiaries as currently conducted, except where the absence of any such permit has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except as set forth on Section 3.21 of the Company Disclosure Schedule, as of the date of this Agreement, there are no written claims or notices of any material violation pending or, to the Knowledge of the Company, issued to or threatened, against the Company or any of the Company Subsidiaries alleging material violations of or material liability under any Environmental Law (collectively, “Environmental Claims”).
|
b.
|
None of the Company or any Company Subsidiary has (i) entered into or agreed to any Governmental Order requiring compliance by the Company or Company Subsidiary with any Environmental Law or the investigation or cleanup of Hazardous Materials, (ii) assumed any liability for cleanup, compliance or required capital expenditures in connection with any Environmental Claim with respect to the Company or
|
a.
|
None of the Company or any Company Subsidiary nor any of their managers, directors, officers, employees or other agents acting on behalf of the Company or any Company Subsidiary, except as has not had or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect:
|
i.
|
directly or indirectly (through third parties) (A) has given, paid, provided, made, offered or promised to make, or authorized the making of, any unlawful gift, payment or provision of money, political or charitable contribution, financial advantage, or anything else of value, to any Person, including, but not limited to, any Government Official, for purposes of obtaining, retaining, or directing permits, licenses, favorable tax or court decisions, special concessions, contracts, business, or any other improper advantage, (B) has otherwise incurred, given, offered or promised to give, or authorized the giving of, any bribe, kickback, or other corrupt or unlawful payment, expense, contribution, gift, entertainment, travel, or other benefit or advantage (collectively, “Restricted Benefits”) to or for the benefit of any Person, including, but not limited to, any Government Official, (C) has solicited, requested or received any Restricted Benefit, unlawful payment, gift, political or charitable contribution or other thing of value or advantage from any Person, (D) has violated, has caused other parties to be in violation of, or is currently violating, any applicable provision of the U.S. Foreign Corrupt Practices Act of 1977 as amended
|
ii.
|
is a Government Official or has immediate family members who are Government Officials;
|
iii.
|
has established or maintained any slush fund or other unlawful or unrecorded fund or account, or inserted, concealed, or misrepresented corrupt, illegal, or improper payments, expenses or other entries in the books and records of the Company or any Company Subsidiary; and
|
iv.
|
has (A) concealed or disguised the existence, illegal origins, and/or illegal application of criminally derived income/assets or otherwise caused such income or assets to appear to have legitimate origins or constitute legitimate assets, or (B) used any funds to finance terrorist, drug-related, or other illegal activities.
|
b.
|
There have been no false, fictitious or fraudulent entries made in the books or records of the Company or any Company Subsidiary in a manner that would violate any provision of the Anti-Bribery/AML Laws. Each of the Company and each Company Subsidiary has maintained and followed a system of internal accounting controls to provide reasonable assurances that its transactions are properly authorized by management, executed, and recorded.
|
c.
|
None of the Company or any Company Subsidiary has provided, sold to, transferred, or otherwise traded, without any required and applicable governmental approvals, any products or services, directly or indirectly through third parties, to or with any organization, entity, or individual appearing on the list of financial institutions of primary money laundering concern as set out in Section 311 USA Patriot Act 2001 (available at http://www.fincen.gov/statutes_regs/patriot/section311.html).
|
a.
|
Each of the Company and each Company Subsidiary and its managers, directors, officers, employees, distributors, resellers, consultants, agents, and other Third Parties acting on behalf of the Company or any Company Subsidiary (collectively, “Company Persons”) are and, during the past five (5) years, have been in material compliance with all applicable Export Control/Import Laws.
|
b.
|
Each of the Company and each Company Subsidiary has obtained all material registrations, approvals, and licenses necessary for exporting, importing, and providing its products and services in accordance with all applicable Export Control/Import Laws, and to the Knowledge of the Company, there are no material claims of non-compliance with such registrations, approvals and licenses. Each of the Company and each Company Subsidiary has provided to Parent copies of all such registrations, approvals, and licenses.
|
c.
|
Each of the Company and each Company Subsidiary acknowledges that, to the extent required by Export Control/Import Laws, each of the Company and each Company Subsidiary has treated in all material respects its controlled technology and technical data as exported as soon as it has been released or transferred to a foreign national (when such foreign national is not a United States citizen), even if such Person is or was based in the United States. Each of the Company and each Company Subsidiary has, to the extent required by any Export Control/Import Laws, procured all material required export licenses and approvals prior to releasing, sharing, or otherwise exporting any technology or technical data to any foreign nationals, wherever located.
|
d.
|
None of the Company or any Company Subsidiary has participated directly or indirectly in any boycotts or other similar practices in material violation of, or triggering material penalties under, the regulations of the United States Department of Commerce or Section 999 of the Code.
|
e.
|
None of the Company or any Company Subsidiary has licensed, provided, sold to, or otherwise transferred products, Intellectual Property, technology, or services, directly or indirectly, without any required approval or authorization from the U.S. Government, to (i) Cuba, Iran, North Korea, Sudan, Syria, the Crimea region of Ukraine or any other country against which the United States maintains comprehensive trade sanctions and/or economic embargoes (the “Restricted Countries”); (ii) any instrumentality, agent, entity, or individual that is acting on behalf of, or directly or indirectly owned or controlled by, any Governmental Entity of any Restricted Country; (iii) any national of any Restricted Country; (iv) business organizations
|
f.
|
None of the Company, Company Subsidiaries or Company Persons, (i) appear on any of the Prohibited Party Lists, (ii) are owned or Controlled by, or acting for or on behalf of, a party appearing on any of the Prohibited Party Lists, or (iii) are headquartered, organized under the laws of, or are permanently resident in a Restricted Country.
|
g.
|
During the past five (5) years, (i) neither the Company nor any Company Subsidiary has received any written communication alleging that it is not in material compliance with any Export Control/Import Laws, and (ii) to the Knowledge of the Company, neither the Company nor any Company Subsidiary has filed, or intends to file, any disclosures (voluntary or otherwise) of possible material export or import violations relating to the Company or any Company Subsidiary or its operations.
|
h.
|
There are no allegations, complaints, charges, investigations, or administrative enforcement actions, pending or closed, or to the Knowledge of the Company, expected or threatened, by any Governmental Entity with respect to any potential material violation or liability of the Company or any Company Subsidiary arising under or relating to any Export Control/Import Laws.
|
a.
|
The execution and delivery of this Agreement and each Ancillary Agreement to which Parent or Merger Sub is a party do not, and the performance thereof by Parent and Merger Sub will not (with or without notice or lapse of time or both), (i) conflict with or violate any provision of the Certificate of Incorporation or By-laws or any equivalent organizational documents of Parent or Merger Sub, (ii) assuming that all consents, approvals, authorizations and permits described in Section 4.3(b) have been obtained and all filings and notifications described in Section 4.3(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to Parent or Merger Sub or any other subsidiary of Parent (each a “Parent Subsidiary” and, collectively, the “Parent Subsidiaries”) or by which any property or asset of Parent, Merger Sub or any Parent Subsidiary is bound or affected, (iii) require any consent or approval under, result in any breach of or, any loss of any benefit under, or constitute a change of control or default under, or give to others any right of termination, vesting amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property or asset of Parent, Merger Sub or any Parent Subsidiary pursuant to any note, bond, mortgage, indenture, Contract, license, permit, other instrument or obligation or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or any Parent Subsidiaries or by which any of their respective assets are bound, except, with respect to the immediately preceding clauses (ii), (iii) and (iv), for any such conflicts, violations, breaches, defaults or other occurrences which has not had or would not, individually or in the aggregate, reasonably be expected to (A) prevent or materially delay consummation of the Merger, (B) otherwise prevent or materially delay performance by Parent or Merger Sub of any of their respective material obligations under this Agreement or any Ancillary Agreement or (C) have a Parent Material Adverse Effect.
|
b.
|
The execution and delivery of this Agreement and each Ancillary Agreement to which Parent or Merger Sub is a party do not, and the performance hereof and thereof by Parent and Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or other Person, except (i) under the Exchange Act, Securities Act, any applicable Blue Sky Laws, the rules and regulations of the Exchange, the HSR Act, foreign or supranational antitrust and competition laws, filing and recordation of the Certificate of Merger as required by the DGCL and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, has not had or would not, individually or in the aggregate, reasonably be expected to (A) prevent or materially delay consummation of the Merger, (B) otherwise prevent or materially delay performance by Parent or Merger Sub of any of their respective material obligations under this Agreement or any Ancillary Agreement or (C) have a Parent Material Adverse Effect.
|
a.
|
Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement.
|
b.
|
Except for obligations or liabilities incurred in connection with its incorporation or organization and the transactions contemplated by this Agreement and each Ancillary Agreement, Merger Sub has not and will not have incurred, directly or indirectly, through any Subsidiary or Affiliate, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person.
|
a.
|
Except as set forth in the Commitment Letters, there are no conditions precedent to the obligations of the counterparties thereto (including, with respect to the Debt Commitment Letters and to the extent applicable, pursuant to any “flex” provisions in the related fee letter or otherwise) to provide the Financing or any contingencies that would permit the counterparties thereto to reduce the total amount of the below the Required Amount (as defined below). Assuming the conditions set forth in Section 6.1 and Section 6.2 are satisfied, as of the date of this Agreement, Parent does not have any reason to believe that it will be unable to satisfy on a timely basis any term or condition to Closing to be satisfied by it in the Commitment Letters or that the Required Amount of the Financing will not be made available, on the Closing Date. There are no conditions precedent or other contingencies to the funding of the Financing other than as set forth in the Commitment Letters. No Person has any right to impose, and none of the Debt Financing Sources under
|
b.
|
Assuming the conditions set forth in Section 6.1 and Section 6.2 are satisfied, the Financing, when funded in accordance with the Commitment Letters, shall provide Parent with immediately available cash on the Closing Date sufficient for Parent and Merger Sub, together with available cash and cash equivalents of the Company, to fund the Closing Date Per Share Merger Consideration, and any other cash amounts payable by Parent and Merger Sub at the Closing in connection with the consummation of the transactions contemplated hereby, including the Merger, and to pay all related fees and expenses of Parent and Merger Sub required to be paid at Closing in connection therewith (the “Required Amount”).
|
c.
|
Each Commitment Letter is the legal, valid, binding and enforceable obligation of Parent, the Investors (as applicable) and, to the knowledge of Parent, each other party thereto and is in full force and effect (except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar Law affecting the enforcement of creditors’ rights generally or by general equitable principles). Parent is not in breach of any of the terms or conditions set forth in the Commitment Letters and no event has occurred that, with or without notice, lapse of time, or both, would reasonably be expected to constitute a default or breach or a failure to satisfy a condition precedent on the part of Parent under the terms and conditions of such Commitment Letter. As of the date hereof, no Commitment Letter has been withdrawn, rescinded or terminated or otherwise amended or modified in any respect, and no such amendment or modification is contemplated, other than, in the case of the Debt Commitment Letters, any joinders which do not alter the terms thereof except for the purposes of joining additional Debt Financing Sources that have not executed the Debt Commitment Letters as of the date hereof. As of the date of this Agreement, no counterparty to any Commitment Letter has notified Parent of its intention to terminate such Commitment Letter or not to provide such Financing. Parent has paid in full any and all commitment fees or other fees and expenses required to be paid by Parent on or before the date of this Agreement pursuant to the terms of the Commitment Letters.
|
d.
|
Each of Parent and Merger Sub expressly acknowledges and agrees that the receipt or availability of any funds or financing (including, for the avoidance of doubt, the Financing) by Parent or any Affiliate of Parent or any other financing or other transactions is not a condition to any of Parent’s (or its Affiliates’) obligations hereunder (including its and Merger Sub’s obligations to consummate the Merger).
|
a.
|
amend, waive any provision of, or otherwise change the Company Certificate or the Company By-laws;
|
b.
|
merge or consolidate the Company or any Company Subsidiary with any other Person, except for any such transactions among wholly-owned Company Subsidiaries, or restructure, reorganize or completely or
|
c.
|
(i) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, or encumbrance of any shares of capital stock of, or other Equity Interests in, the Company or any Company Subsidiary of any class, or securities convertible or exchangeable or exercisable for any shares of such capital stock or other Equity Interests, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or other Equity Interests or such convertible or exchangeable securities, or any other ownership interest (including any such interest represented by contract right), of the Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock in connection with the vesting of Company RSU Awards outstanding as of the date hereof in accordance with their terms, or (B) the issuance of Company RSU Awards up to an amount equal to the amount of outstanding awards outstanding on December 10, 2020 that are forfeited or determined to be unearned or unvested pursuant to their terms prior to Closing, or (ii) sell, pledge, dispose of, transfer, lease, license, guarantee, encumber or otherwise subject to a Lien (other than a Permitted Lien), or authorize the sale, pledge, disposition, transfer, lease, license, guarantee, encumbrance of, or Lien on (other than a Permitted Lien), any property or assets of the Company or any Company Subsidiary, except pursuant to existing Contracts in effect on the date hereof and other than non-exclusive licenses granted in the ordinary course of business consistent with past practice;
|
d.
|
(i) abandon or allow any registrations (including any pending applications for registration) included in the Registered Intellectual Property to lapse or expire for failure to pay any registration, maintenance, renewal or other fee, except for items of Registered Intellectual Property expiring at the end of their statutory terms, (ii) fail to make any filing, pay any fee, or take any other action necessary to maintain any right or interest in any Owned Intellectual Property, or (iii) sell, assign, lease, license, pledge, surrender, encumber, divest, transfer or otherwise dispose of any Owned Intellectual Property that is material to the businesses of the Company and the Company Subsidiaries, other than non-exclusive licenses granted in the ordinary course of business consistent with past practice;
|
e.
|
make any (i) loans, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Company Subsidiary) or (ii) advances to any Person other than to employees in respect of expenses;
|
f.
|
declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock (other than dividends paid by a wholly-owned Company Subsidiary to the Company or to any other wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
|
g.
|
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, other Equity Interests or other securities, except in connection with the satisfaction of Tax withholding obligations in connection with the issuance of shares of Company Common Stock upon the vesting of any Company RSU Award;
|
h.
|
(i) acquire (including by merger, consolidation, or acquisition of stock or assets) any interest in any Person or any division thereof or purchase substantially all of the assets of any Person, other than acquisitions of assets in the ordinary course of business consistent with past practice, (ii) except in the ordinary course of business, consistent with past practice, incur any Indebtedness for borrowed money, (iii) issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person (other than a wholly-owned Company Subsidiary) for borrowed money, (iv) enter into, terminate or materially amend any Company Material Contract other than in the ordinary course of business consistent with past practice, or (v) make or authorize any capital expenditure in excess of the Company’s budget as disclosed to Parent prior to the date hereof, other than capital expenditures that are not, in the aggregate, in excess of $2,000,000 for the Company and the Company Subsidiaries taken as a whole;
|
i.
|
except as may be required by applicable Law, the terms of this Agreement (including Section 5.1(c)), or an Employee Plan in existence as of the date hereof: (A) grant any severance or termination pay to an officer, director or employee or modify the Executive Severance Plan (provided, that, notwithstanding the terms of any Employee Plan, any proposed severance or termination pay for any officer, director or
|
j.
|
make any change in accounting policies or procedures, except as required by GAAP or by a Governmental Entity;
|
k.
|
settle or compromise any Action against the Company or the Company Subsidiaries other than settlements or compromises that do not require the payment of monetary damages by the Company or any Company Subsidiary and do not impose equitable relief on, or the admission of wrongdoing by, the Company or any Company Subsidiary;
|
l.
|
except as required by Law, make, change or revoke any material Tax election, settle any material Tax claim or assessment or enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. applicable Law) with respect to any material Tax, surrender any right to claim a material Tax refund, file any amended Tax Return with respect to any material Tax or change any annual Tax accounting period;
|
m.
|
fail to maintain existing insurance policies or obtain comparable replacement policies; or
|
n.
|
authorize or enter into any agreement or otherwise make any commitment to do any of the foregoing.
|
a.
|
As promptly as practicable following the date of this Agreement, and in any event within twenty (20) Business Days following the date of this Agreement, the Company shall prepare and cause to be filed with the SEC in preliminary form a proxy statement relating to the Company Stockholder Meeting (as defined herein) (together with any amendments or supplements thereto, the “Proxy Statement”). Except as contemplated by Section 5.4, the Proxy Statement shall include the Company Board Recommendation with respect to the Merger. The Company shall promptly notify Parent upon the receipt of any comments from the SEC (or the staff of the SEC) or any request from the SEC (or the staff of the SEC) for amendments or supplements to the Proxy Statement, and shall provide Parent with copies of all correspondence between the Company and its Representatives, on the one hand, and the SEC (or the staff of the SEC), on the other hand. Each of the parties hereto shall use commercially reasonable efforts to respond as promptly as reasonably practicable to any comments of the SEC (or the staff of the SEC) with respect to the Proxy Statement. The Company shall use commercially reasonable efforts so that the Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated thereunder. Prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC (or the staff of the SEC) with respect thereto, the Company shall provide Parent a reasonable opportunity to review and to propose comments on such document or response (which comments shall be provided promptly and be considered in good faith; provided that the Company shall be under no obligation to incorporate such comments).
|
b.
|
Parent shall promptly furnish to the Company all information concerning Parent and Merger Sub as may be reasonably requested by the Company in connection with the Proxy Statement, including such information that is required by the Exchange Act and the rules and regulations promulgated thereunder to
|
c.
|
The Company shall, as promptly as reasonably practicable, (x) establish a record date for and give notice of a meeting of its stockholders, for the purpose of voting upon the adoption of this Agreement (including any adjournment or postponement thereof, the “Company Stockholder Meeting”) and (y) mail to the holders of Company Common Stock as of the record date established for the Company Stockholder Meeting a Proxy Statement (such mailing date, the “Proxy Date”). The Company shall duly call, convene and hold the Company Stockholder Meeting as promptly as reasonably practicable after the Proxy Date; provided, however, that, without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), the Company Stockholder Meeting shall not be held later than twenty-five (25) Business Days after the clearance of the Proxy Statement by the SEC; provided, further, that the Company may postpone, recess or adjourn the Company Stockholder Meeting: (i) with the consent of Parent (not to be unreasonably withheld, conditioned or delayed), (ii) for the absence of a quorum, (iii) to solicit additional proxies for the purpose of obtaining the Required Company Stockholder Approval, or (iv) to allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure which the Company Board has determined in good faith (after consultation with its outside legal counsel) is necessary under applicable Laws and for such supplemental or amended disclosure to be disseminated to and reviewed by the Company’s stockholders prior to the Company Stockholder Meeting. Unless the Company Board shall have effected a Change of Board Recommendation, the Company shall use commercially reasonable efforts to solicit proxies in favor of the adoption of this Agreement.
|
d.
|
If at any time prior to the Effective Time any event or circumstance relating to the Company or Parent or any of the Company’s or Parent’s Subsidiaries, or their respective officers or directors, is discovered by the Company or Parent, respectively, which, pursuant to the Exchange Act, should be set forth in an amendment or a supplement to the Proxy Statement, such party shall promptly inform the others. Each of Parent, Merger Sub and the Company agrees to correct any information provided by it for use in the Proxy Statement which shall have become false or misleading.
|
a.
|
Upon reasonable notice, during the Pre-Closing Period, the Company shall, and shall cause each Company Subsidiary and each of the Company Representatives to (i) provide to Parent and Merger Sub and the Parent Representatives access, at reasonable times and upon prior notice, to the Company Representatives and the properties, offices and other facilities of the Company and the Company Subsidiaries and to the books and records thereof and (ii) furnish promptly such information concerning the business, properties, Contracts, assets, liabilities, personnel and other aspects of the Company and the Company Subsidiaries as Parent may reasonably request; provided that such investigation shall only be upon reasonable notice and shall be at Parent’s sole cost and expense; and provided further, that any such access shall be subject to feasibility/permissibility under applicable Law (including any COVID-19 Measures). No investigation conducted pursuant to this Section 5.3 shall affect or be deemed to modify or limit any representation or warranty made in this Agreement.
|
b.
|
With respect to the information disclosed pursuant to Section 5.3(a), the parties shall comply with, and shall cause their respective Representatives to comply with, all of their respective obligations under the Confidentiality Agreement, dated as of November 9, 2020, previously executed by the Company and Evercel, Inc. (the “Confidentiality Agreement”).
|
c.
|
This Section 5.3 shall not require the Company to permit any access, or to disclose any information (i) that in the reasonable, good faith judgment (after consultation with counsel, which may be in-house counsel) of the Company would reasonably be expected to result in any violation of any Contract or Law to which the Company or any of the Company Subsidiaries is a party or is subject or cause any privilege (including
|
a.
|
Subject to Section 5.4(b), from and after the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with Article 7, the Company shall not, and shall cause the Company Subsidiaries not to, and shall instruct the Company Representatives not to on behalf of the Company: (i) initiate, solicit or encourage the submission of any Acquisition Proposal or engage in any discussions or negotiations with respect thereto (other than informing any Third Party of the existence of the provisions contained in this Section 5.4), provided, however, that the Company may (A) ascertain facts from any Person making an Acquisition Proposal for the purpose of the Company Board informing itself about such Acquisition Proposal and the Third Party making it and (B) waive, and hereby does waive, any standstill restrictions contained in any confidentiality agreement or other similar agreements, (ii) approve or recommend, or publicly propose to approve or recommend, any Acquisition Proposal, (iii) withdraw, change or qualify, in a manner adverse to Parent or Merger Sub, the Company Board Recommendation, (iv) enter into or negotiate any merger agreement, letter of intent or other similar agreement relating to any Acquisition Proposal (an “Alternative Acquisition Agreement”), or (v) resolve or agree to do any of the foregoing (any action set forth in the foregoing clause (ii), (iii) or (iv) (to the extent related to the foregoing clause (ii) or (iii)), a “Change of Board Recommendation”, which term shall also include any action described in clauses (ii) and (iii) in connection with an Intervening Event as provided in Section 5.4(f)). From and after the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with Article 7, the Company shall cease and cause to be terminated any discussion or negotiation with any Persons conducted prior to the date hereof by the Company, the Company Subsidiaries or any of the Company Representatives with respect to any Acquisition Proposal.
|
b.
|
Notwithstanding anything to the contrary contained in Section 5.4(a), (i) if at any time following the date of this Agreement and prior to receipt of the Required Company Stockholder Approval (A) the Company or any of its Representatives has received a bona fide written Acquisition Proposal from a Third Party, (B) the Company has not breached this Section 5.4 in any material respect with respect to such Acquisition Proposal and (C) the Company Board (or a duly authorized committee thereof) determines in good faith, after consultation with its financial advisors and outside counsel, based on information then available, that such Acquisition Proposal constitutes or could reasonably be expected to lead to a Superior Proposal, then (ii) as to each such Third Party, in each case, the Company may (A) furnish information with respect to the Company and the Company Subsidiaries to the Third Party making such Acquisition Proposal, its Representatives and potential sources of financing and (B) participate in discussions or negotiations with the Third Party making such Acquisition Proposal regarding such Acquisition Proposal; provided that the Company (1) will not, and will cause the Company Subsidiaries not to and will instruct the Company
|
c.
|
If, at any time following the date of this Agreement, any Company Representative receives any Acquisition Proposal, the Company shall promptly (and in any event within twenty-four (24) hours) provide Parent with a copy of such Acquisition Proposal (which copy may be redacted to omit any information regarding the identity of the party making such Acquisition Proposal) or provide Parent with a summary of an oral Acquisition Proposal and, without limiting the foregoing, the Company shall promptly (and in any event within twenty-four (24) hours after such determination) advise Parent if the Company determines to begin providing information or to engage in discussions or negotiations concerning an Acquisition Proposal pursuant to Section 5.4(b).
|
d.
|
Notwithstanding anything to the contrary contained in Section 5.4(b), if the Company has received a written Acquisition Proposal that the Company Board (or any duly authorized committee thereof) determines, after consultation with its financial advisors and outside counsel, constitutes a Superior Proposal (or could reasonably be expected to result in a Superior Proposal), the Company Board may at any time prior to receipt of the Required Company Stockholder Approval, (i) effect a Change of Board Recommendation with respect to such Superior Proposal or fail to include the Company Board Recommendation in any disclosure to stockholders required by Rule 14d-9 and/or (ii) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal, in either case subject to the requirements of this Section 5.4(d) and Article 7. The Company shall not be entitled to effect a Change of Board Recommendation pursuant to this Section 5.4(d) or terminate this Agreement pursuant to this Section 5.4(d) and Section 7.1(f) unless the Company shall have provided to Parent at least three (3) Business Days’ prior written notice (the “Notice Period”) of the Company’s intention to take such action, which notice shall specify the material terms and conditions of such Acquisition Proposal (which shall not be required to include the identity of the party making such Acquisition Proposal), and shall have provided to Parent a copy of the available proposed transaction agreement to be entered into in respect of such Acquisition Proposal (which copy may be redacted to omit any information regarding the identity of the party making such Acquisition Proposal), and
|
i.
|
during the Notice Period, if requested by Parent, the Company shall have, and shall have caused the Company Representatives to have, engaged in good faith negotiations with Parent regarding any amendment to this Agreement proposed in writing by Parent and intended to cause the relevant proposal to no longer constitute a Superior Proposal; and
|
ii.
|
the Company Board (or any duly authorized committee thereof) shall have considered any adjustments and/or proposed amendments to this Agreement (including a change to the price terms hereof) and the other agreements contemplated hereby that may be irrevocably offered in writing by Parent (the “Proposed Changed Terms”) no later than 11:59 a.m., New York City time, on the last day of the Notice Period and shall have determined in good faith that the Superior Proposal would continue to constitute a Superior Proposal if such Proposed Changed Terms were to be given effect.
|
e.
|
In the event of any material revisions to such Superior Proposal offered in writing by the party making such Superior Proposal, the Company shall be required to deliver a new written notice to Parent and to again comply (but only on two (2) additional occasions) with the requirements of this Section 5.4(d) with respect to such new written notice, except that the Notice Period shall be twenty-four (24) hours with respect to any such revised Superior Proposal, but no such new written notice shall shorten the original Notice Period.
|
f.
|
Notwithstanding anything to the contrary contained in Section 5.4(a), the Company Board (or any duly authorized committee thereof) may at any time prior to receipt of the Required Company Stockholder Approval effect a Change of Board Recommendation if (i) the Company Board (or any duly authorized committee thereof) determines that an Intervening Event has occurred and is continuing and (ii) the Company Board (or such duly authorized committee thereof) determines in good faith, after consultation with outside counsel, that the failure to effect a Change of Board Recommendation in response to such Intervening Event would be inconsistent with its fiduciary duties to the stockholders of the Company.
|
g.
|
Nothing contained in this Section 5.4 shall prohibit the Company Board (or any duly authorized committee thereof) from (i) disclosing to the stockholders of the Company a position contemplated by Rule 14e-2(a), Rule 14d-9 and Item 1012(a) of Regulation M-A promulgated under the Exchange Act; or (ii) making any disclosure to the stockholders of the Company if the Company Board determines in good faith, after consultation with outside counsel, that the failure to make such disclosure would be reasonably likely to be inconsistent with its fiduciary duties. The issuance by the Company or the Company Board of a “stop, look and listen” statement pending disclosure of its position, as contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, shall not constitute a Change of Board Recommendation.
|
a.
|
Subject to the terms and conditions of this Agreement, during the Pre-Closing Period, each of Parent, on the one hand, and the Company, on the other hand, will cooperate with the other and use (and will cause their respective Subsidiaries to use) commercially reasonable efforts to (i) take, or cause to be taken, all actions, and do, or cause to be done, all things, necessary, proper or advisable to cause the conditions to the Closing to be satisfied as promptly as practicable (and in any event no later than the Outside Date) and to consummate and make effective, in the most expeditious manner reasonably practicable, the Merger, including preparing and filing promptly and fully all documentation to effect all necessary filings, notifications, notices, petitions, statements, registrations, submissions of information, applications and other documents (including any required or recommended filings under applicable Competition Laws), (ii) obtain promptly (and in any event no later than the Outside Date) all approvals, consents, clearances, expirations or terminations of waiting periods, registrations, permits, authorizations and other confirmations from any Governmental Entity or Third Party necessary, proper or advisable to consummate the Merger and (iii) obtain all necessary consents, approvals or waivers from third parties. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall require the Company to pay any consideration to a Third Party from whom consent, approval or waiver is requested.
|
b.
|
In furtherance and not in limitation of the foregoing, each party hereto agrees to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable and in any event within ten (10) days after the date of this Agreement and to supply as promptly as reasonably practicable any additional information and documentary material that may be requested by any Governmental Entity pursuant to the HSR Act or any other Competition Law and use commercially reasonable efforts to take, or cause to be taken (including by their respective Subsidiaries), all other actions consistent with this Section 5.5 reasonably necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable (and in any event no later than the Outside Date).
|
c.
|
Each of the parties hereto will use commercially reasonable efforts to (i) cooperate in all respects with each other in connection with any filing or submission with a Governmental Entity in connection with the transactions contemplated hereby and in connection with any investigation or other inquiry by or before a Governmental Entity relating to the Merger, including any proceeding initiated by a private Person, (ii) promptly inform the other party of (and supply to the other party) any communication received by such party from, or given by such party to, the Federal Trade Commission, the Antitrust Division of the Department of Justice, or any other Governmental Entity and any material communication received or given in connection with any proceeding by a private Person, in each case, regarding the Merger, (iii) permit the other parties to review in advance and incorporate the other parties’ reasonable comments in any filing or other communication to be given by it to any Governmental Entity with respect to obtaining any clearances required under any Competition Law in connection with the transactions contemplated hereby and (iv) consult with the other parties in advance of any meeting or teleconference with any Governmental Entity or, in connection with any proceeding by a private Person, with any other Person, and, to the extent not prohibited by the Governmental Entity or other Person, give the other parties the opportunity to attend and participate in such meetings and teleconferences. Subject to Section 5.3, the parties hereto will use commercially reasonable efforts to share information protected from disclosure under the attorney-client privilege, work product doctrine, joint defense privilege or any other privilege pursuant to this Section 5.5(c) in a manner so as to preserve the applicable privilege.
|
d.
|
Parent agrees to take, or cause to be taken (including by any Affiliates of Parent), any and all steps and to make, or cause to be made (including by any Affiliates of Parent), any and all undertakings necessary to
|
e.
|
In furtherance and not in limitation of the covenants of the parties contained in this Section 5.5, if any administrative or judicial action or proceeding, including any proceeding by a private Person, is instituted (or threatened to be instituted) challenging the Merger as violative of any Competition Law, each of Parent and the Company will use commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Merger.
|
a.
|
Effective as of the Effective Time and thereafter, Parent and its Affiliates shall recognize, or shall cause the Surviving Corporation to recognize, each Continuing Employee’s employment or service with the Company (including any current or former Affiliate thereof or any predecessor of the Company) prior to the Closing for all purposes, including for purposes of determining, as applicable, eligibility for participation, vesting and entitlement of the Continuing Employee under all employee benefit plans maintained by the Surviving Corporation, Parent or any of their respective Affiliates, including vacation plans or arrangements, 401(k) or other retirement plans and any severance or welfare plans, except to the extent such recognition would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing, effective as of the Effective Time and thereafter, Parent and its Affiliates shall, or shall cause the Surviving Corporation to use commercially reasonable efforts to, (a) cause any pre-existing conditions or limitations, eligibility waiting periods, actively at work requirements, evidence of insurability requirements or required physical examinations under any health or similar plan of the Surviving Corporation, Parent or any of their respective Affiliates applicable to any Continuing Employees to be waived with respect to Continuing Employees and their eligible dependents, except to the extent that any waiting period, exclusions or requirements still applied to such Continuing Employee under the comparable Employee Plan in which such Continuing Employee participated immediately before the Effective Time, and (b) fully credit each Continuing Employee with all deductible payments, co-payments and other out-of-pocket expenses incurred by such Continuing Employee and his or her covered dependents under the medical, dental, pharmaceutical or vision benefit plans of the Company prior to the Closing during the plan year in which the Closing occurs for the purpose of determining the extent to which such Continuing Employee has satisfied the deductible, co-payments, or maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for such plan year under any medical, dental, pharmaceutical or vision benefit plan of the Surviving Corporation, Parent or any of their respective Affiliates, as if such amounts had been paid in accordance with such plan.
|
b.
|
The provisions of this Section 5.8 are solely for the benefit of the parties to this Agreement, and no Continuing Employee (including any beneficiary or dependent thereof) shall be regarded for any purpose as a third-party beneficiary of this Agreement, and no provision of this Section 5.8 shall create such rights in any such Persons. Nothing herein shall (a) guarantee employment for any period of time or preclude the ability of Parent, the Surviving Corporation or any of their respective Affiliates, as applicable, to terminate the employment of any Continuing Employee at any time and for any reason; (b) require Parent, the Surviving Corporation or any of their respective Affiliates, as applicable, to continue any Employee Plans, or other employee benefit plans or arrangements or prevent the amendment, modification or termination thereof after the Effective Time; or (c) amend any Employee Plans or other employee benefit plans or arrangements.
|
a.
|
Without limiting any additional rights that any director, officer, trustee, employee, agent, or fiduciary may have under any employment or indemnification agreement, the Company Certificate and the Company By-laws, this Agreement or, if applicable, similar organizational documents or agreements of any of the Company Subsidiaries, from and after the Effective Time, Parent and the Surviving Corporation, jointly and severally, will: (i) indemnify and hold harmless each Person who is now, or has been or becomes at any time prior to the Effective Time, an officer, director or employee of the Company or any Company Subsidiary, solely when acting in his, her or its capacity as a director, officer, employee of the Company or any Company Subsidiary or when acting in his, her or its capacity as a member, trustee or fiduciary of another corporation, foundation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (whether or not such other entity or enterprise is affiliated with the Company) at the request of
|
b.
|
Without limiting the foregoing, Parent and Merger Sub agree that all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time now existing in favor of the indemnitees as provided in the Company Certificate or the Company By-laws and indemnification agreements of the Company or any Company Subsidiary will be assumed by the Surviving Corporation and Parent in the Merger, without further action, at the Effective Time and will survive the Merger and continue in full force and effect in accordance with their terms.
|
c.
|
For a period of six (6) years from the Effective Time, the certificate of incorporation, by-laws, limited liability company agreements and similar organizational documents, as applicable, of the Company and the
|
d.
|
Parent shall purchase and pay for a “tail” insurance policy to become effective at the Effective Time with a claims period of at least six (6) years from and after the Effective Time from an insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance and with benefits and levels of coverage no less favorable as the Company’s existing policies with respect to matters existing or occurring at or prior to the Effective Time (including in connection with this Agreement or the transactions or actions contemplated hereby); provided, however, that in no event shall Parent be required to expend for such policies a premium amount in excess of the amount set forth in Section 5.9(d) the Company Disclosure Schedule.
|
e.
|
If Parent, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges with or into any other Person and is not the continuing or surviving corporation, partnership or other entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision will be made so that the successors and assigns of Parent or the Surviving Corporation assume the obligations set forth in this Section 5.9.
|
f.
|
The obligations of Parent under this Section 5.9 will not be terminated or modified in such a manner as to adversely affect any Person to whom this Section 5.9 applies without the written consent of such affected Person.
|
g.
|
Parent will cause the Surviving Corporation to perform all of its obligations under this Section 5.9.
|
h.
|
This Section 5.9 survives the consummation of the Merger and is intended to be for the benefit of, and to be enforceable by, the Indemnified Parties and their respective heirs and personal representatives, and will be binding on Parent, the Surviving Corporation and their respective successors and assigns.
|
a.
|
No Amendments to Commitment Letters. Subject to the terms and conditions of this Agreement, each of Parent and Merger Sub will not permit any amendment or modification to be made to, or any waiver of any provision or remedy pursuant to, the Commitment Letters without the prior written consent of the Company, if such amendment, modification or waiver would (i) reduce the amount of the Equity Financing, or reduce the aggregate amount of the Debt Financing below the amount necessary to consummate the Merger, (ii) impose new or additional conditions or other terms to the Financing, or otherwise expand, amend or modify any of the conditions to the receipt of the Financing, in a manner that would reasonably be expected to prevent, impede or materially delay the consummation of the Merger, or (iii) materially and adversely impact the ability of Parent, Merger Sub or the Company (solely with respect to the Equity Commitment Letter), to enforce its rights against the other parties to the Commitment Letters; provided, that for the avoidance of doubt, Parent may amend any of the Debt Commitment Letters or any definitive
|
b.
|
Equity Financing. Subject to the terms and conditions of this Agreement, each of Parent and Merger Sub will use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper and advisable to arrange and obtain the Equity Financing on the terms and conditions described in the Equity Commitment Letter, including using its reasonable best efforts to:
|
i.
|
maintain in effect the Equity Commitment Letter in accordance with the terms and subject to the conditions thereof;
|
ii.
|
satisfy on a timely basis all conditions to funding that are applicable to Parent and Merger Sub in the Equity Commitment Letter; and
|
iii.
|
if the conditions to funding therein have been satisfied or waived, consummate the Equity Financing at or prior to the Closing, including by causing the parties to the Equity Commitment Letter to fund the Equity Financing at the Closing.
|
c.
|
Debt Financing. Each of Parent and Merger Sub will use its respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or advisable to arrange the Debt Financing and to consummate the Debt Financing on the Closing Date in accordance with the terms of the Debt Commitment Letters (including, to the extent required, the full exercise of any flex provisions), including using its reasonable best efforts to:
|
i.
|
maintain in effect the Debt Commitment Letters in accordance with the terms and subject to the conditions thereof;
|
ii.
|
comply with its obligations under the Debt Commitment Letters;
|
iii.
|
negotiate, execute and deliver definitive agreements with respect to the Debt Financing contemplated by the Debt Commitment Letters on the terms and conditions contemplated by the Debt Commitment Letters;
|
iv.
|
satisfy, or cause to be satisfied, on a timely basis (or obtain a waiver to) all conditions to funding that are applicable to Parent, Merger Sub and Guarantor in the Debt Commitment Letters that are within its control; and
|
v.
|
if the conditions to funding therein have been satisfied or waived, and upon the satisfaction of the conditions set forth in Sections 6.1 and 6.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfilment or waiver of such conditions), consummate the Debt Financing at or prior to the Closing, including using its reasonable best efforts to cause the Debt Financing Sources committing to fund the Debt Financing to fund the Debt Financing at the Closing; provided, however, that neither Parent nor the Merger Sub shall be required to commence or pursue litigation, and the Company does not have the right to compel Parent or the Merger Sub to commence or pursue litigation, to enforce the obligations of the Debt Financing Sources to fund the Debt Financing.
|
d.
|
Information. Parent and Merger Sub shall keep the Company reasonably informed on a reasonably current basis of material developments in their efforts to arrange the Financing. Without limiting the generality of the foregoing, Parent and Merger Sub shall give the Company notice as promptly as practicable of (i) any material breach or repudiation by any party to the Commitment Letters of which it becomes aware if such breach could reasonably be expected to result in a material delay of the Closing Date, (ii) the receipt of any written notice of termination of any Commitment Letter or (iii) any material dispute or disagreement among any parties to a Commitment Letter (which, for the avoidance of doubt, shall not include disputes arising in the good faith ordinary course negotiation of the documents related to the Debt Financing); provided, that in no event will Parent and Merger Sub be under any obligation to disclose any information that Parent and Merger Sub determine, in good faith and after consultation with their outside legal counsel(s), would result in any violation or breach of any applicable legal privileges (including attorney-client privilege) and confidentiality obligations if so disclosed.
|
e.
|
Alternative Debt Financing. In the event any portion of the Debt Financing becomes unavailable on the terms and conditions set forth in any of the Debt Commitment Letters, Parent shall, as promptly as practicable, notify the Company of such event and the reasons therefor and use its reasonable best efforts to obtain alternative financing (“Alternative Debt Financing”) on terms and conditions not materially less favorable, in the aggregate, to Parent (as determined by Parent in good faith) than those set forth in such Debt Commitment Letter and in an amount, when added to the portion of the Financing being replaced that is still available, such that the aggregate funds available to Parent at Closing will be sufficient to consummate the transactions contemplated by this Agreement. In the event that Parent obtains Alternative Debt Financing pursuant to this Section 5.11(e), references to the “Debt Financing,” the “Financing,” the “Debt Commitment Letters” and the “Commitment Letters” (and other like terms in this Agreement) shall be deemed to be modified to refer to such Alternative Debt Financing.
|
a.
|
Cooperation. Prior to the Effective Time, the Company will, and will cause each of its Subsidiaries to, in each case, use its commercially reasonable efforts, and to instruct its Representatives, to provide Parent and Merger Sub with all cooperation reasonably requested by Parent or Merger Sub to assist them in arranging the Debt Financing, including the following:
|
i.
|
participating in and preparing for (and cause senior management and Representatives, with appropriate seniority and expertise, of the Company to participate in and prepare for) a customary and reasonable number of meetings, presentations, road shows, due diligence sessions, drafting sessions, lender meetings, sessions with rating agencies and other customary syndication activities, and otherwise cooperating with the marketing efforts for any of the Debt Financing;
|
ii.
|
assisting Parent and the Debt Financing Sources with the timely preparation of customary (A) rating agency presentations, bank information memoranda, lender presentations and similar documents required, advisable or reasonably requested by Parent or the Debt Financing Sources in connection with the Debt Financing; and (B) offering documents, prospectuses, memoranda and similar customary documents, in each case, required in connection with the Debt Financing;
|
iii.
|
identifying any material nonpublic information contained in the marketing materials related to the Debt Financing and complying with Regulation FD to the extent applicable to such material non-public information;
|
iv.
|
assisting Parent in connection with the preparation and registration of (but not executing) any pledge and security documents, supplemental indentures, interest hedging arrangements and other definitive financing documents as may be reasonably requested by Parent or the Debt Financing Sources (including assisting Parent with obtaining any required title insurance policies, insurance certificate and endorsements, real property surveys, landlord lien waivers or estoppels, as reasonably required, and using commercially reasonable efforts to cause the independent accountants of the Company to participate in customary accounting due diligence sessions, and to assist Parent in obtaining, to the extent applicable, consents of accountants for use of their reports in any materials relating to the Debt Financing and accountants’ comfort letters (including as to negative assurances) and including delivery of customary management representation letters, in each case, as reasonably requested by Parent), and otherwise reasonably facilitating the pledging of collateral and the granting of security interests in respect of the Debt Financing, it being understood that such pledge and security documents will not take effect until the Effective Time;
|
v.
|
furnishing Parent, Merger Sub and the Debt Financing Sources, as promptly as practicable, with (A) the financial statements of the Company and its Subsidiaries necessary to satisfy the conditions set forth in paragraph 6 of Exhibit C to each of the Debt Commitment Letters (as in effect on the date hereof) other than the Debt Commitment Letter from the Lender , and (B) other financial data and such other pertinent and customary information regarding the Company and its Subsidiaries as may be reasonably requested by Parent to the extent that such information is of the type and form customarily included in an offering memorandum for private placements of non-convertible debt securities pursuant to Rule 144A promulgated under the Securities Act in Rule 144A-for-life offerings (including other information required by Regulation S-K and Regulation S-X under the Securities Act) (which, for the avoidance of doubt, will not include (or be deemed to require the Company to prepare) any (1)
|
vi.
|
executing and delivering (or assisting Parent in obtaining from local counsel to the Company and its Subsidiaries) customary certificates, legal opinions or other documents and instruments as may be reasonably requested by Parent, as are in each such case, necessary and customary in connection with the Debt Financing (which shall not be effective prior to and shall be subject to the occurrence of the Closing);
|
vii.
|
taking corporate action (which shall not be effective prior to the Closing) reasonably necessary to permit the completion of the Debt Financing;
|
viii.
|
cooperating with Parent to obtain customary corporate and, if applicable, facilities ratings from the rating agencies contemplated by the Debt Commitment Letters;
|
ix.
|
providing authorization or representation letters to the Debt Financing Sources authorizing the distribution of information regarding the Company and its Subsidiaries to prospective lenders or investors and containing a representation to the Debt Financing Sources that the public side versions of such documents, if any, do not include material non-public information about the Company and its subsidiaries and a representation as to the absence of material misstatements;
|
x.
|
using reasonable efforts to ensure that any syndication efforts in connection with the Debt Financing benefit from existing lending and investment banking relationships of the Company and its Subsidiaries; and
|
xi.
|
promptly furnishing (and in any event at least three (3) Business Days prior to the Closing Date) Parent and the Debt Financing Sources with all documentation and other information about the Company and its Subsidiaries as is reasonably requested by Parent relating to applicable “beneficial ownership”, “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, to the extent requested by Parent or its Debt Financing Sources at least ten (10) Business Days prior to the expected Closing Date and, to the extent applicable, any beneficial ownership certifications required under the beneficial ownership regulations.
|
b.
|
Obligations of the Company. Nothing in this Section 5.12 will require the Company or any Company Subsidiaries to (i) waive or amend any terms of this Agreement or agree to pay any fees or reimburse any expenses prior to the Effective Time for which it has not received prior reimbursement or is not otherwise indemnified by or on behalf of Parent; (ii) enter into any definitive agreement prior to the Closing or distribute any cash prior to the Effective Time; (iii) give any indemnities in connection with the Debt Financing that are effective prior to the Effective Time; (iv) take any action that would unreasonably interfere with the conduct of the business of the Company or any Company Subsidiaries or create an unreasonable risk of damage or destruction to any property or assets of the Company or any Company Subsidiaries; (v) take any action that would not be permitted by or reasonably feasible under any applicable COVID-19 Measures or (vi) take any action that will conflict with or violate its organizational documents or any applicable Laws in any material respect. In addition, (A) no action, liability or obligation of the Company or any Company Subsidiaries or any of its or their respective Representatives pursuant to any certificate, agreement, arrangement, document or instrument relating to the Debt Financing (other than customary representation letters and authorization letters (including with respect to the presence or absence of material non-public information and the accuracy of the information regarding the Company and its Subsidiaries contained in the disclosure and marketing materials related to the Debt Financing)) will be effective until the Effective Time, and the Company and its Subsidiaries will not be required to take any action pursuant to any certificate, agreement, arrangement, document or instrument (other than customary representation letters and authorization letters (including with respect to the presence or absence of material non-public information and the accuracy of the information regarding the Company and its Subsidiaries contained in the disclosure and marketing materials related to the Debt Financing)) that is not contingent on the occurrence of the Closing or that must be effective prior to the Effective Time; and (B) any bank information memoranda and high-yield offering prospectuses or memoranda prepared in relation to the Debt Financing will contain disclosure reflecting the Surviving Corporation or its Subsidiaries as the obligor. Nothing in this Section 5.12 will require (1) any officer or Representative of the Company or any Company Subsidiaries to deliver any certificate or opinion or take any other action under this Section 5.12 that could reasonably be expected to result in personal liability to such officer or Representative; (2) the Company Board to approve any financing or Contracts related thereto; (3) the Company or any Company Subsidiaries or any persons who are directors, officers or employees of the Company or any Company Subsidiaries to pass resolutions or consents (except those which are subject to the occurrence of the Effective Time passed by directors or officers continuing in their positions after the Effective Time); or (4) legal counsel (other than local counsel) to the Company to deliver any legal opinions in connection with the Debt Financing.
|
c.
|
Confidentiality. All non-public or other confidential information provided by the Company or any of its Representatives pursuant to this Agreement will be kept confidential in accordance with the Confidentiality Agreement, except that Parent and Merger Sub will be permitted to disclose such information to any Debt Financing Sources or prospective financing sources and other financial institutions and investors that may become parties to the Debt Financing and to any underwriters, initial purchasers or placement agents in connection with the Debt Financing (and, in each case, to their respective counsel and auditors) so long as such Persons (i) agree to be bound by the Confidentiality Agreement as if parties thereto; or (ii) are subject to other confidentiality undertakings reasonably satisfactory to the Company and of which the Company is a beneficiary.
|
d.
|
Reimbursement. To the extent the Closing does not occur, and promptly upon request by the Company, Parent will reimburse the Company for any documented and reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by the Company and its Subsidiaries in connection with the cooperation of the Company and its Subsidiaries contemplated by this Section 5.12.
|
e.
|
Indemnification. The Company, the Company Subsidiaries and their respective Representatives will be indemnified and held harmless by Parent from and against any and all out-of-pocket liabilities, losses, damages, claims, costs, expenses (including reasonable attorneys’ fees), interest, awards, judgments, penalties and amounts paid in settlement suffered or incurred by them in connection with their cooperation in arranging the Debt Financing pursuant to this Agreement or the provision of information utilized in connection therewith; provided that Parent shall not be liable for any of the foregoing to the extent (i) relating to inaccuracies in historical information furnished in writing by or on behalf of the Company or any Company Subsidiary or any of their respective Representatives, including financial statements, solely to the extent such inaccuracies would constitute a material breach of Section 3.7, or (ii) arising from the gross negligence, willful misconduct, bad faith or fraud of any of the Company, any Company Subsidiary or any of their respective Representatives.
|
f.
|
No Financing Condition. Each of Parent and Merger Sub expressly acknowledges and agrees that the receipt or availability of any funds or financing (including, for the avoidance of doubt, the Financing) by Parent or any Affiliate of Parent or any other financing or other transactions is not a condition to any of Parent’s (or its Affiliates’) obligations hereunder (including its and Merger Sub’s obligations to consummate the Merger). If the Financing has not been obtained, Parent and Merger Sub will each continue to be obligated, subject to the satisfaction or waiver of the conditions set forth in Article 6 and subject to the requirements of Section 8.16 being satisfied, to consummate the Merger.
|
a.
|
Stockholder Approval. This Agreement and the Merger shall have been approved and adopted by the Required Company Stockholder Approval.
|
b.
|
No Order. No Governmental Entity shall have issued any Governmental Order (whether temporary, preliminary or permanent), in any case which is in effect and which prevents or prohibits consummation of the Merger or any other transactions contemplated in this Agreement or any Ancillary Agreement.
|
c.
|
HSR Act. Any applicable waiting periods, together with any extensions thereof, under the HSR Act and any other Competition Laws shall have expired or been terminated.
|
a.
|
Representations and Warranties. Each of the representations and warranties of the Company contained in (i) the first and third sentences of Section 3.1 (Organization and Qualification; Subsidiaries), Section 3.3 (Capitalization) and Section 3.9(a) (Absence of Certain Changes or Events) shall be true and correct as of the Closing Date as though made on and as of such date and time (except to the extent such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except in the case of Section 3.3 for any de minimis inaccuracies; (ii) the second sentence of Section 3.1 (Organization and Qualification; Subsidiaries), Section 3.4 (Authority) and Section 3.24 (Brokers) shall be true and correct in all material respects as of the Closing Date; and (iii) this Agreement (other than those set forth in clauses (i) and (ii)) shall be true and correct as of the Closing Date (without giving effect to any references to any “Company Material Adverse Effect” or other “materiality” qualifications) as though made on and as of the Closing Date (except that those
|
b.
|
Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements, obligations and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.
|
c.
|
Officer’s Certificate. Parent shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of the Company that the conditions set forth in Section 6.2(a) and Section 6.2(b) have been satisfied.
|
d.
|
FIRPTA Certificate. Parent shall have received a certificate executed by the Company, in a form reasonably acceptable to Parent, duly completed and executed pursuant to Sections 1.897-2(h) and 1.1445-2(c) of the Treasury Regulations, certifying that the Company is not a United States real property holding corporation.
|
e.
|
Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Company Material Adverse Effect.
|
a.
|
Representations and Warranties. Each of the representations and warranties of Parent contained in this Agreement shall be true and correct as of the date hereof and as of the Closing Date (without giving effect to any references to any “Parent Material Adverse Effect” or other “materiality” qualifications) as though made on and as of the Closing Date (except that those representations and warranties which address matters only as of a particular date need only be true and correct as of such date), except where failure to be so true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
|
b.
|
Agreements and Covenants. Parent shall have performed or complied in all material respects with all agreements, obligations and covenants required by this Agreement and each Ancillary Agreement to be performed or complied with by it on or prior to the Effective Time.
|
c.
|
Officer’s Certificate. The Company shall have received a certificate of a responsible officer of Parent that the conditions set forth in Section 6.3(a) and Section 6.3(b) have been satisfied.
|
a.
|
by mutual written consent of Parent and the Company, by action of their respective board of directors (or similar governing bodies);
|
b.
|
by either the Company or Parent if the Merger shall not have been consummated prior to May 7, 2021 (the “Outside Date”); provided, further that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the primary cause of, or resulted in, the failure of the Merger to occur on or before such date;
|
c.
|
by either the Company or Parent if any Governmental Entity shall have issued a Governmental Order permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement or any Ancillary Agreement, and such Governmental Order shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 7.1(c) shall not be in material violation of this Agreement (including Section 5.5);
|
d.
|
by either Parent or the Company if the Required Company Stockholder Approval shall not have been obtained at the Company Stockholder Meeting;
|
e.
|
by Parent, if, prior to receipt of the Required Company Stockholder Approval, (i) a Change of Board Recommendation shall have occurred; provided that Parent’s right to terminate this Agreement pursuant to this Section 7.1(e)(i) shall expire at 5:00 p.m., Eastern Time, on the fifth (5th) Business Day following the date on which such Change of Board Recommendation occurs, or (ii) a tender offer or exchange offer for outstanding Company Common Stock shall have been publicly announced (other than by Parent or an Affiliate of Parent) and, prior to the earlier of (x) the date prior to the date of the Company Stockholder Meeting and (y) eleven (11) Business Days after the commencement of such tender or exchange offer pursuant to Rule 14d-2 under the Exchange Act, the Company Board fails to recommend unequivocally against acceptance of such offer;
|
f.
|
by the Company, at any time prior to the receipt of the Required Company Stockholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal; provided, that the Company has not materially breached Section 5.4 if such breach related to the party (or an Affiliate of the party) that made the Superior Proposal;
|
g.
|
by Parent, if there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, such that the conditions specified in Section 6.2(a) or Section 6.2(b) would not be satisfied at the Closing (a “Terminating Company Breach”), except that, if such Terminating Company Breach is curable by the Company through the exercise of commercially reasonable efforts, then, until the earlier of (x) thirty (30) days after receipt by the Company of notice from Parent of such breach, but only as long as the Company continues to use commercially reasonable efforts to cure such Terminating Company Breach and (y) the Outside Date (such earlier date, the “Company Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period;
|
h.
|
by the Company, if there is any breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement, such that the conditions specified in Section 6.3(a) or Section 6.3(b) would not be satisfied at the Closing (a “Terminating Parent Breach”), except that, if such Terminating Parent Breach is curable by Parent or Merger Sub through the exercise of commercially reasonable efforts, then, until the earlier of (x) thirty (30) days after receipt by Parent of notice from the Company of such breach, but only as long as Parent or Merger Sub, as applicable, continues to use commercially reasonable efforts to cure such Terminating Parent Breach and (y) the Outside Date (such earlier date, “Parent Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Parent Breach is not cured within the Parent Cure Period; or
|
i.
|
by the Company, if (i) all of the conditions set forth in Section 6.1 and Section 6.2 (other than conditions which are to be satisfied by actions taken at the Closing) have been satisfied, (ii) Parent fails to consummate the Closing within three (3) Business Days following the date the Closing should have occurred pursuant to Section 1.1, (iii) the Company has irrevocably notified Parent in writing that the Company is ready, willing and able to effect the Closing within two (2) Business Days, and (iv) Parent fails to consummate the Closing on or before the second (2nd) Business Day following the date of delivery of such written notification by the Company.
|
a.
|
Limitation on Liability. In the event of termination of this Agreement by either the Company or Parent as provided in Section 7.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, Merger Sub or the Company or their respective Subsidiaries, officers or directors except with respect to Section 5.3 (Access to Information; Confidentiality), Section 5.7 (Public Announcements), Section 5.17 (No Recourse to Debt Financing Sources), this Section 7.2 and Article 8 (General Provisions); provided, however, that nothing in this Section 7.2 relieves any of Parent, Merger Sub or the Company of any liability for fraud or as provided in the Confidentiality Agreement, in which case the aggrieved party shall be entitled to all rights and remedies available at law or in equity.
|
b.
|
Termination Fee.
|
i.
|
In the event that this Agreement is terminated by Parent pursuant to Section 7.1(e), then the Company shall pay to Parent within three (3) Business Days of such termination a termination fee of $3,000,000 (the “Company Termination Fee”) and shall promptly (and in any event within five Business Days
|
ii.
|
In the event that this Agreement is terminated by the Company pursuant to Section 7.1(f), then the Company shall pay to Parent, concurrently with such termination, the Company Termination Fee and the Company shall also be subject to the Expense Reimbursement Obligation.
|
iii.
|
In the event that (A) this Agreement is terminated by the Company or Parent pursuant to Section 7.1(b) or Section 7.1(d), (B) an Acquisition Proposal has been publicly announced and not expressly and publicly withdrawn prior to the Company Stockholder Meeting (x) prior to the date of termination with respect to any termination pursuant to Section 7.1(b), and (y) prior to the Company Stockholder Meeting, with respect to termination pursuant to Section 7.1(d), and (C) within twelve (12) months of such termination contemplated by clause (A), (x) the Company enters into an Alternative Acquisition Agreement with respect to, or has consummated, an Acquisition Proposal within twelve (12) months of such termination contemplated by the preceding clause (A), then the Company shall pay to Parent, concurrently with the consummation of such Acquisition Proposal, the Company Termination Fee and the Company shall also be subject to the Expense Reimbursement Obligation.
|
iv.
|
In the event that this Agreement is terminated by the Company pursuant to Section 7.1(h) or Section 7.1(i), then Parent shall pay, or cause to be paid, to the Company within three (3) Business Days of such termination a termination fee of $5,000,000 (the “Parent Termination Fee”).
|
v.
|
The parties acknowledge that the agreements contained in this Section 7.2(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement, and that neither the Company Termination Fee (or the related Expense Reimbursement Obligation) nor the Parent Termination Fee is a penalty, but rather is liquidated damages in a reasonable amount that will compensate Parent or the Company, as applicable, in the circumstances in which the Company Termination Fee or Parent Termination Fee, as applicable, is payable. If the Company or Parent, as applicable, fails to promptly pay the Company Termination Fee (or satisfy the Expense Reimbursement Obligation) or the Parent Termination Fee when due pursuant to this Section 7.2(b), such amount shall accrue interest at the annual rate of 5% plus the prime rate as published in The Wall Street Journal in effect on the date such payment was required to be made through the date such payment was actually received, or a lesser rate that is the maximum permitted by applicable Law. If a party commences an Action that results in a final, non-appealable judgment against another party for the Company Termination Fee, the Expense Reimbursement Obligation or the Parent Termination Fee, as applicable, or any portion of such fees, the breaching party shall pay to the non-breaching party its reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) in connection with such Action.
|
vi.
|
Notwithstanding anything to the contrary contained in this Agreement, Parent’s right to receive payment of the Company Termination Fee (and reimbursement of expenses pursuant to the Expense Reimbursement Obligation) under the circumstances set forth in this Section 7.2(b) shall be Parent’s sole and exclusive remedy (whether based in contract, tort or strict liability, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Laws or otherwise) against the Company and its Affiliates and any of their respective current or former Representatives relating to or arising out of this Agreement or the transactions contemplated herein (including for any breach or failure to perform hereunder or otherwise). Upon the Company’s payment of the Company Termination Fee (and satisfaction of the Expense Reimbursement Obligation) under the circumstances described in Section 7.2(b), none of the Company and its Affiliates or their respective Representatives shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated herein under such circumstances. The parties acknowledge and agree that in no event will the Company be required to pay the Company Termination Fee (or satisfy the Expense Reimbursement Obligation) on more than one occasion, whether or not the Company Termination Fee may be payable (or the Expense Reimbursement Obligation may become effective) pursuant to more than one provision of this Agreement at the same or at different times and upon the occurrence of different events.
|
vii.
|
Notwithstanding anything to the contrary contained in this Agreement, the Company’s right to receive (A) payment of the Parent Termination Fee under the circumstances set forth in this Section 7.2(b) and (B) any indemnification or expense reimbursement obligations under Section 5.12(d) and Section 5.12(e) shall be the Company’s sole and exclusive remedy (whether based in contract, tort or strict liability, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Laws or otherwise) against Parent and the Debt Financing Sources and any of their respective Affiliates and any of their respective current or former Representatives relating to or arising out of this Agreement or the transactions contemplated herein (including for any breach or failure to perform hereunder or otherwise). Upon Parent’s payment of the Parent Termination Fee and any indemnification or expense reimbursement obligations under Section 5.12(d) and Section 5.12(e), none of Parent or the Debt Financing Sources or any of their respective Affiliates or any of their current or former Representatives shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated herein or otherwise. The parties acknowledge and agree that in no event will Parent be required to pay the Parent Termination Fee on more than one occasion, whether or not the Parent Termination Fee may be payable pursuant to more than one provision of this Agreement at the same or at different times and upon the occurrence of different events.
|
viii.
|
For the purposes of this Section 7.2(b), the Affiliates of Parent shall include any “Funding Party”, as such term is defined in the Equity Commitment Letter.
|
c.
|
All Payments. All payments under Section 7.2 shall be made by wire transfer of immediately available funds to an account designated by the party entitled to receive payment. In addition, and without limiting the generality of Section 5.17, in the event of termination of this Agreement in accordance with this Article 7, there shall be no liability on the part of any of the Debt Financing Sources (and/or any of their respective Affiliates and/or Representatives). This Section 7.2 is intended to be for the benefit of, and shall be enforceable by, the Debt Financing Sources and their respective successors and assigns.
|
If to Parent or Merger Sub, addressed to it at:
|
||||||
|
| |
|
| |
|
|
| |
c/o Evercel, Inc.
|
|||
|
| |
382 NE 191st Street, Suite 90959
|
|||
|
| |
Miami, Florida 33179-3899
|
|||
|
| |
|
| |
|
|
| |
Attention:
|
| |
Dan Allen, Chief Executive Officer
|
|
| |
Email:
|
| |
dan@coronapark.com
|
|
| |
|
| |
|
|
| |
with a mandated copy to:
|
|||
|
| |
|
| |
|
|
| |
Morgan, Lewis & Bockius LLP
|
|||
|
| |
600 Anton Boulevard, Suite 1800
|
|||
|
| |
Costa Mesa, California 92626
|
|||
|
| |
|
| |
|
|
| |
Attention:
|
| |
James W. Loss and Randall J. Wood
|
|
| |
Email:
|
| |
jim.loss@morganlewis.com and randy.wood@morganlewis.com
|
“Agreement”
|
| |
Preamble
|
“Alternative Acquisition Agreement”
|
| |
Section 5.4(a)
|
“Alternative Debt Financing”
|
| |
Section 5.11(e)
|
“Anti-Bribery/AML Laws”
|
| |
Section 3.26(a)(i)
|
“Book-Entry Shares”
|
| |
Section 2.1(a)
|
“CARES Act”
|
| |
Section 3.19(k)
|
“Certificate of Merger”
|
| |
Section 1.3
|
“Certificates”
|
| |
Section 2.1(a)
|
“Change of Board Recommendation”
|
| |
Section 5.4(a)
|
“Claim”
|
| |
Section 5.9(a)
|
“Closing”
|
| |
Section 1.1
|
“Closing Date”
|
| |
Section 1.1
|
“Closing Date RSU Consideration”
|
| |
Section 2.2
|
“COBRA”
|
| |
Section 3.11(d)
|
“Commitment Letters”
|
| |
Section 4.8(a)
|
“Company”
|
| |
Preamble
|
“Company Board”
|
| |
Recitals
|
“Company Board Recommendation”
|
| |
Section 3.4(a)
|
“Company By-laws”
|
| |
Section 3.2
|
“Company Certificate”
|
| |
Section 3.2
|
“Company Common Stock”
|
| |
Section 2.1(a)
|
“Company Cure Period”
|
| |
Section 7.1(g)
|
“Company Disclosure Schedule”
|
| |
Article 3
|
“Company Financial Advisor”
|
| |
Section 3.22
|
“Company Form 10-K”
|
| |
Section 3.2
|
“Company Intellectual Property”
|
| |
Section 3.17(a)
|
“Company Material Contract”
|
| |
Section 3.14
|
“Company Permits”
|
| |
Section 3.6
|
“Company Persons”
|
| |
Section 3.27(a)
|
“Company SEC Filings”
|
| |
Section 3.7(a)
|
“Company Stockholder Meeting”
|
| |
Section 5.2(c)
|
“Company Termination Fee”
|
| |
Section 7.2(b)(i)
|
“Confidentiality Agreement”
|
| |
Section 5.3(b)
|
“Debt Commitment Letters”
|
| |
Section 4.8(a)
|
“Debt Financing”
|
| |
Section 4.8(a)
|
“DGCL”
|
| |
Recitals
|
“Dissenting Shares”
|
| |
Section 2.4
|
“Divestiture Action”
|
| |
Section 5.5(d)
|
“Effective Time”
|
| |
Section 1.3
|
“Electronic Delivery”
|
| |
Section 8.15
|
“Equity Commitment Letters”
|
| |
Section 4.8(a)
|
“Equity Financing”
|
| |
Section 4.8(a)
|
“Employee Plan”
|
| |
Section 3.11(a)
|
“Environmental Claims”
|
| |
Section 3.21(a)
|
“Exchange Agent”
|
| |
Section 2.3(a)
|
“Exchange Fund”
|
| |
Section 2.3(a)
|
“Excluded Company Common Stock”
|
| |
Section 2.1(b)
|
“Expense Reimbursement Obligation”
|
| |
Section 7.2(b)(i)
|
“Financing”
|
| |
Section 4.8(a)
|
“Guarantors”
|
| |
Recitals
|
“Indemnification Expenses”
|
| |
Section 5.9(a)
|
“Indemnified Parties”
|
| |
Section 5.9(a)
|
“Investors”
|
| |
Section 4.8(a)
|
“Merger”
|
| |
Recitals
|
“Merger Consideration”
|
| |
Section 2.1(a)
|
“Merger Sub”
|
| |
Preamble
|
“Multiemployer Plan”
|
| |
Section 3.11(c)
|
“Non-U.S. Benefit Plan”
|
| |
Section 3.11(a)
|
“Notice Period”
|
| |
Section 5.4(d)
|
“Outside Date”
|
| |
Section 7.1(b)
|
“Owned Intellectual Property”
|
| |
Section 3.17
|
“Owned Real Property”
|
| |
Section 3.16(a)
|
“Owner”
|
| |
Section 3.16(a)
|
“Parent”
|
| |
Preamble
|
“Parent Cure Period”
|
| |
Section 7.1(h)
|
“Parent Subsidiary”; “Parent Subsidiaries”
|
| |
Section 4.3(a)
|
“Parent Termination Fee”
|
| |
Section 7.2(b)(iv)
|
“party”
|
| |
Section 8.5(h)
|
“Pre-Closing Period”
|
| |
Section 5.1
|
“Prohibited Party Lists”
|
| |
Section 3.27(e)
|
“Proposed Changed Terms”
|
| |
Section 5.4(d)(ii)
|
“Proxy Date”
|
| |
Section 5.2(c)
|
“Proxy Statement”
|
| |
Section 5.2(a)
|
“Real Property Leases”
|
| |
Section 3.16(b)
|
“Regulatory Conditions”
|
| |
Section 7.1(b)
|
“Required Company Stockholder Approval”
|
| |
Section 3.23
|
“Required Financing Information”
|
| |
Section 5.12(a)(v)
|
“Restricted Benefits”
|
| |
Section 3.26(a)(i)
|
“Restricted Countries”
|
| |
Section 3.27(e)
|
“RSU Consideration”
|
| |
Section 2.2
|
“Solvent”
|
| |
Section 4.9
|
“Sponsor Guaranty”
|
| |
Recitals
|
“Support Agreements”
|
| |
Recitals
|
“Surviving Corporation”
|
| |
Section 1.2
|
“Tenant”
|
| |
Section 3.16(b)
|
“Terminating Company Breach”
|
| |
Section 7.1(g)
|
“Terminating Parent Breach”
|
| |
Section 7.1(h)
|
a.
|
Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation,” and (vi) the word “or” shall be disjunctive but not exclusive.
|
b.
|
Unless the context of this Agreement otherwise requires, references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.
|
c.
|
The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction shall be applied against any party.
|
d.
|
Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.
|
e.
|
The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.
|
f.
|
All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
|
g.
|
All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement.
|
h.
|
The word “party” shall, unless the context otherwise requires, be construed to mean a party to this Agreement. Any reference to a party to this Agreement or any other agreement or document contemplated hereby shall include such party’s successors and permitted assigns.
|
i.
|
Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful currency of the United States.
|
j.
|
An item shall be considered “made available” (or other similar phrase) to Parent if such item has been made available for viewing by Parent in the electronic data room established by the Company in connection with the transactions contemplated by this Agreement after the date of the Confidentiality Agreement and prior to the date hereof.
|
a.
|
This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without regard to laws that may be applicable under conflicts of laws principles. Notwithstanding anything to the contrary contained in this Agreement or otherwise, any disputes involving the Debt Financing Sources (and/or any of their respective Affiliates and/or Representatives) shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to laws that may be applicable under conflicts of laws principles. This Section 8.13 is intended to be for the benefit of, and shall be enforceable by, the Debt Financing Sources and their respective successors and assigns.
|
b.
|
Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any Action arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or
|
c.
|
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY (I) IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND (II) IN RESPECT OF ANY ACTION (WHETHER AT LAW, IN EQUITY, IN CONTRACT, IN TORT, OR OTHERWISE) AGAINST ANY OF THE DEBT FINANCING SOURCES (AND/OR ANY OF THEIR RESPECTIVE AFFILIATES AND/OR REPRESENTATIVES) IN ANY WAY RELATING TO THIS AGREEMENT, THE DEBT FINANCING, THE DEBT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.13(c). THIS SECTION 8.13 IS INTENDED TO BE FOR THE BENEFIT OF, AND SHALL BE ENFORCEABLE BY, THE DEBT FINANCING SOURCES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
|
a.
|
The parties hereto agree that if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and accordingly, subject to the limitations set forth in this Section 8.16(a) and Section 8.16(b), (i) the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific performance of the terms hereof, in each case in Delaware Court of Chancery, or in the event that the Delaware Court of Chancery lacks jurisdiction, the United States District Court for the District of Delaware, this being in addition to any other remedy to which they are entitled at Law or in equity, (ii) the parties waive any requirement for the securing or posting of any bond in connection with the obtaining of any specific performance or injunctive relief and (iii) the parties will waive, in any action for specific performance, the defense of adequacy of a remedy at law. The Company’s and Parent’s pursuit of specific performance at any time (A) will not be deemed an election of remedies or waiver of the right to pursue any other right or remedy to which such party may be entitled, including the right to pursue remedies for liabilities or damages incurred or suffered by such party in the case of a breach of this Agreement involving fraud and (B) will not restrict, impair or otherwise limit Parent or the Company from, in the alternative and as applicable, seeking to terminate the Agreement and collect the Company Termination Fee (or enforce the Expense Reimbursement Obligation) or the Parent Termination Fee, as applicable, pursuant to Article 7; provided, however, that in no event will such Persons be permitted or entitled to receive both a grant of an injunction, specific performance or other equitable relief or any other remedies under this Agreement or available at law or equity, on the one hand, and payment of any monetary damages whatsoever or the payment of all or a portion of the Company Termination Fee (and satisfaction of the Expense Reimbursement Obligation) or the Parent Termination Fee, as applicable, on the other hand.
|
b.
|
Notwithstanding anything herein (including Section 8.16(a)) or in the Equity Commitment Letter or the Sponsor Guaranty to the contrary, it is hereby acknowledged and agreed that the Company shall be entitled to enforce or seek to enforce specifically Parent’s obligation to cause all or any portion of the Equity Financing to be funded (whether under this Agreement or the Equity Commitment Letter) or otherwise cause Parent to consummate the Merger or the other transactions contemplated hereby in accordance with the terms of this Agreement only if: (i) all of the conditions set forth in Section 6.1 and Section 6.2 (other than conditions which are to be satisfied by actions taken at the Closing) have been (and continue to be) satisfied (or have been waived) at the time when the Closing should have occurred pursuant to Section 1.1; (ii) the Debt Financing has been funded or will be funded at the Closing upon the funding of the Equity Financing; (iii) the Company has notified Parent in writing that it is ready, willing and able to consummate the Closing if the Equity Financing and the Debt Financing are funded, and such notice has not been revoked; and (iv) Parent and Merger Sub have failed to consummate the Merger by the date the Merger should have occurred pursuant to Section 1.1.
|
|
| |
Parent:
|
|||
|
| |
|
| |
|
|
| |
ZEPHYR PARENT, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ DANIEL ALLEN
|
|
| |
Name:
|
| |
Daniel Allen
|
|
| |
Title:
|
| |
President
|
|
| |
Merger Sub:
|
|||
|
| |
|
| |
|
|
| |
ZEPHYR MERGER SUB, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ DANIEL ALLEN
|
|
| |
Name:
|
| |
Daniel Allen
|
|
| |
Title:
|
| |
President
|
|
| |
Company:
|
|||
|
| |
|
| |
|
|
| |
ZAGG INC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ CHRIS AHERN
|
|
| |
Name:
|
| |
Chris Ahern
|
|
| |
Title:
|
| |
Chief Executive Officer
|
a.
|
The PPP Loan Forgiveness Rights may not be sold, assigned, transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, directly or indirectly, other than transfers (i) by will or intestacy, (ii) by instrument to an inter vivos or testamentary trust where the PPP Loan Forgiveness Rights are to be passed to beneficiaries upon the death of the trustee, (iii) pursuant to a court order (such as in connection with divorce, bankruptcy or liquidation), (iv) by operation of law (including a consolidation or merger), or in connection with the dissolution, liquidation or termination of a corporation, limited liability company, partnership or other entity which is the holder thereof, or (v) in the case of PPP Loan Forgiveness Rights payable to a nominee, from a nominee to a beneficial owner (and, if applicable, through an intermediary) or from such nominee to another nominee for the same beneficial
|
b.
|
To the extent the conditions to payment of the PPP Loan Forgiveness Rights have not been satisfied as of December 31, 2022 (the “Expiration Date”), the PPP Loan Forgiveness Rights shall expire on such date and shall thereafter be of no force or effect (except solely as necessary to pay amounts payable hereunder that arise on or prior to the Expiration Date).
|
a.
|
The Company shall furnish or cause to be furnished to the Rights Agent the name, address, Tax Identification Number, and number of PPP Loan Forgiveness Rights of each Holder within five (5) Business Days of the Closing. The Rights Agent shall keep a register (the “Register”) for the registration of PPP Loan Forgiveness Rights in a book-entry position for each Holder. The Register shall set forth the name, address, and number of PPP Loan Forgiveness Rights of each Holder. The Rights Agent is hereby initially appointed “Registrar” for purposes of registering PPP Loan Forgiveness Rights and Permitted Transfers of PPP Loan Forgiveness Rights as herein provided; provided that any successor Rights Agent appointed pursuant to Section 2.2 shall automatically be deemed to be the successor Registrar.
|
b.
|
Subject to the restrictions set forth in Section 1.3, every request made to transfer a PPP Loan Forgiveness Right must be in writing and accompanied by a written instrument or instruments of transfer and any other requested documentation in form reasonably satisfactory to the Company and the Registrar, duly executed by the registered Holder thereof, the Holder’s attorney duly authorized in writing, the Holder’s personal representative, or the Holder’s survivor, and setting forth in reasonable detail the circumstances relating to the transfer. Upon receipt of such written notice, the Registrar shall, subject to its reasonable determination that the transfer instrument is in proper form and the transfer otherwise complies with the other terms and conditions herein, register the transfer of the PPP Loan Forgiveness Rights in the Register. The Company and the Rights Agent may require payment from the transferor of a sum sufficient to cover any Tax that is imposed in connection with any such registration of transfer. Neither the Rights Agent nor the Registrar shall have any duty or obligation to take any action under any section of this Agreement that requires the payment by a Holder of applicable Taxes unless and until the Rights Agent and Registrar are satisfied that all such Taxes have been paid. All duly transferred PPP Loan Forgiveness Rights registered in the Register shall be the valid obligations of the Company and shall entitle the transferee to the same benefits and rights under this Agreement as those held immediately prior to the transfer by the transferor. No transfer of a PPP Loan Forgiveness Right shall be valid until registered in the Register, and any transfer not duly registered in the Register will be void ab initio.
|
c.
|
A Holder may make a written request to the Registrar to change such Holder’s address of record in the Register. The written request must be duly executed by the Holder. Upon receipt of such written notice, the Registrar shall promptly record the change of address in the Register. The Rights Agent shall provide a copy of the Register to the Company upon request.
|
a.
|
Payment of the PPP Loan Forgiveness Rights is subject to the receipt by the Company on or prior to the Expiration Date of (i) written confirmation from the U.S. Small Business Administration that the U.S. Small Business Administration’s audit of the PPP Loan has been satisfactorily completed and (ii) written confirmation from the U.S. Small Business Administration and KeyBank, N.A. of forgiveness of all, or a
|
b.
|
The Company’s obligation to pay amounts to the Rights Agent hereunder, and the Rights Agent’s obligation to pay the applicable amount to the Holders, shall be conditioned on no court or other Governmental Entity having enacted, issued, promulgated, enforced or entered any order that is in effect and restrains, enjoins or otherwise prohibits or imposes any penalty upon such payment, and the payment otherwise being lawful.
|
c.
|
Any funds that remain undistributed to the Holders as of June 30, 2023 (whether as the result of any check not having been cashed, the inability of the Rights Agent to deliver any check to any Holder, or for any other reason) shall be delivered to the Company by the Rights Agent, and upon demand, any Holder who has not theretofore received cash in exchange for such Holder’s PPP Loan Forgiveness Rights shall thereafter look only to the Company for payment of such Holder’s claim therefor. No interest shall be paid with respect to any amount payable to any Holder. Notwithstanding any other provisions of this Agreement, any portion of the Additional Merger Consideration that remains unclaimed immediately prior to such time as such funds would otherwise escheat to, or become the property of, any Governmental Entity shall, to the extent permitted by applicable Law, become the property of the Company free and clear of any claims or interest of any Person previously entitled thereto, subject to any escheatment Laws.
|
d.
|
The Rights Agent shall deduct and withhold, or cause to be deducted or withheld, from any amount payable pursuant to this Agreement, such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law; provided, however, that in determining the required amount to be withheld, the Rights Agent will give effect to any properly presented form (e.g., Form W-8 or W-9 as applicable) eliminating or reducing the amount required to be withheld. To the extent that amounts are so withheld or paid over to or deposited with the relevant Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Holder in respect of which such deduction and withholding was made.
|
e.
|
Following the Closing, the Company shall use its commercially reasonable efforts to obtain forgiveness of the PPP Loan and cooperate with the U.S. Small Business Administration’s audit of the PPP Loan and to otherwise satisfy the conditions in Section 1.7(a) prior to the Expiration Date. Without limiting the generality of the foregoing, the Company shall use its commercially reasonable efforts to timely comply with all deadlines, requests, inquiries and similar items with respect to any such audit or application for forgiveness of the PPP Loan.
|
a.
|
The Rights Agent may consult at any time with legal counsel satisfactory to it, and the Rights Agent shall incur no liability or responsibility to the Company in respect of any action taken or not taken in connection with this Agreement, except to the extent of its gross negligence, bad faith, willful misconduct, or fraud.
|
1
|
Note to Draft: Subject to review and approval of the Rights Agent.
|
b.
|
Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be provided or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless such evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board of Directors, Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, or one of the Vice Presidents of the Company delivered to the Rights Agent, and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
|
c.
|
The Company agrees to pay the Rights Agent reasonable compensation for all services rendered by the Rights Agent in the performance of its duties under this Agreement (as agreed by the Company and the Rights Agent on the date hereof by separate written agreement), to reimburse the Rights Agent for all expenses, Taxes (other than income Taxes), and other charges of any kind and nature incurred by the Rights Agent (including reasonable fees and expenses of the Rights Agent’s counsel) in the performance of its duties under this Agreement, and to indemnify the Rights Agent and save it harmless against any and all liabilities, including judgments, costs and counsel fees, for anything done or omitted by the Rights Agent in the performance of its duties under this Agreement, except as a result of the Rights Agent’s gross negligence, bad faith, willful misconduct, or fraud.
|
d.
|
The Rights Agent will not incur any liability or responsibility to the Company for any action taken in reliance on any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document reasonably and in good faith believed by it to be genuine and to have been signed or presented by the proper party or parties.
|
a.
|
The Rights Agent may resign at any time by giving written notice thereof to the Company specifying a date when such resignation shall take effect, which notice shall be sent at least thirty (30) days prior to the date so specified but in no event will such resignation become effective until a successor Rights Agent has been appointed.
|
b.
|
The Company shall have the right to remove the Rights Agent or any successor Rights Agent at any time by giving the Rights Agent or successor Rights Agent thirty (30) days’ written notice.
|
c.
|
If the Rights Agent shall resign, be removed, or become incapable of acting, the Company shall promptly appoint a qualified successor Rights Agent. The successor Rights Agent so appointed shall, upon its acceptance of such appointment in accordance with this Section 2.2(c), become the successor Rights Agent.
|
d.
|
If a successor Rights Agent has not been appointed and accepted such appointment by the end of the thirty (30) day period specified in this Section 2.2, the Rights Agent may apply to a court of competent jurisdiction for the appointment of a successor Rights Agent. Any such successor to the Rights Agent shall agree to be bound by the terms of this Agreement and shall, upon receipt of all relevant books and records relating thereto, become the Rights Agent hereunder. Upon delivery of all of the relevant books and records pursuant to the terms of this Section 2.2 to a successor Rights Agent, the Rights Agent shall thereafter (but not before) be discharged from any further obligations hereunder. The Rights Agent is hereby authorized, in any and all events, to comply with and obey any and all final judgments, orders and decrees of any court of competent jurisdiction which may be filed, entered, or issued, and all final arbitration awards and, if it shall so comply or obey, it shall not be liable to any other Person by reason of such compliance or obedience.
|
e.
|
Any successor Rights Agent appointed hereunder shall execute, acknowledge, and deliver to the Company and to the retiring Rights Agent an instrument accepting such appointment and a counterpart of this Agreement, and thereupon such successor Rights Agent, without any further act, deed or conveyance, shall become vested with all of the rights, powers, trusts, and duties of the retiring Rights Agent; provided that, on request of the Company or the successor Rights Agent, such retiring Rights Agent shall execute and deliver an instrument transferring to such successor Rights Agent all of the rights, powers, and trusts of the retiring Rights Agent.
|
a.
|
Any notices or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission or by e-mail of a pdf attachment (but only if promptly followed by transmittal by another method described in this Section 3.1; which, for the avoidance of doubt, may include e-mail of a pdf attachment if the initial notice is given by facsimile or by facsimile if the initial notice is given by e-mail of a pdf attachment) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next Business Day if transmitted by national overnight courier, in each case as follows:
|
If to the Company:
|
|||
|
| ||
|
| |
ZAGG Inc.
910 West Legacy Center Drive, Suite 500
Midvale Utah
|
|
| |
|
|
| |
Attention: General Counsel
Email: abby.barraclough@zagg.com
|
|
| |
|
|
| |
with a copy to:
|
|
| |
|
|
| |
Morgan, Lewis & Bockius LLP
600 Anton Boulevard, Suite 1800
Costa Mesa, California 92626
|
|
| |
|
|
| |
Attention: James W. Loss and Randall J. Wood
Email: jim.loss@morganlewis.com and randy.wood@morganlewis.com
|
b.
|
Where this Agreement provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his, her or its address as it appears in the Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.
|
a.
|
Without the consent of any Holders, the Company and the Rights Agent, at any time and from time to time, may enter into one or more amendments hereto, for any of the following purposes only: (i) to evidence the succession of another Person selected in accordance with Section 2.2 as a successor Rights Agent and the assumption by any successor of the covenants and obligations of the Rights Agent herein; (ii) to add to the covenants of the Company such further covenants, restrictions, conditions, or provisions as the Company and the Rights Agent shall consider to be for the protection of the Holders; provided, that in each case, such provisions shall not adversely affect the interests of the Holders in any respect; (iii) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement; provided that, in each case, such provisions shall not adversely affect the interests of the Holders in any
|
b.
|
With the consent of Holders holding a majority of the outstanding PPP Loan Forgiveness Rights, the Company and the Rights Agent may enter into one or more amendments hereto to add, eliminate, or change any provisions of this Agreement, even if such addition, elimination, or change is in any way adverse to the interests of the Holders.
|
c.
|
Promptly after the execution of any amendment pursuant to the provisions of this Section 3.2, the Company shall mail or cause the Rights Agent to mail a notice thereof by first-class mail to the Holders at their addresses in the Register setting forth in general terms the substance of such amendment.
|
a.
|
This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without regard to laws that may be applicable under conflicts of laws principles.
|
b.
|
Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any Action arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby irrevocably and unconditionally (i) agrees not to commence any such Action except in such courts, (ii) agrees that any claim in respect of any such Action shall be heard and determined in such Delaware State court or, to the extent permitted by Law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Action in any such Delaware State or Federal court, and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Action in any such Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 3.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.
|
c.
|
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.5(c).
|
|
| |
COMPANY:
|
|||
|
| |
|
| |
|
|
| |
ZAGG INC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
|
| |
|
| |
|
|
| |
RIGHTS AGENT:
|
|||
|
| |
|
| |
|
|
| |
[•]
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
a.
|
From the date hereof until termination of this Agreement in accordance with Section 5.1, each Stockholder hereby agrees that at the Company Stockholder Meeting and at any other meeting of the stockholders of the Company, however called, including any adjournment or postponement thereof, and in connection with any written consent of the stockholders of the Company, such Stockholder shall, in each case to the extent that the Covered Company Shares are entitled to vote thereon or consent thereto:
|
i.
|
appear at each such meeting or otherwise cause all of such Stockholder’s Covered Company Shares to be counted as present thereat for purposes of calculating a quorum; and
|
ii.
|
vote (or cause to be voted), in person or by proxy, or if applicable deliver (or cause to be delivered) a written consent covering, all of such Stockholder’s Covered Company Shares:
|
1.
|
in favor of the adoption of the Merger Agreement and approval of the Merger and the transactions contemplated thereby and any other action reasonably requested by Parent in furtherance thereof;
|
2.
|
in favor of any proposal to adjourn a meeting of the stockholders of the Company to solicit additional proxies in favor of the adoption of the Merger, the Merger Agreement and the transactions contemplated thereby;
|
3.
|
against any Acquisition Proposal; and
|
4.
|
against any other action, agreement or transaction that is intended to, or would reasonably be expected to, impede, interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the Merger or the other transactions contemplated thereby (including the consummation in each case thereof) or this Agreement or the performance by the Company of its obligations under the Merger Agreement or by such Stockholder of its obligations under this Agreement, including any action, agreement or transaction that would reasonably be expected to result in any condition to the consummation of the Merger set forth in the Merger Agreement not being satisfied, or that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of such Stockholder contained in this Agreement.
|
b.
|
Any vote required to be cast or consent required to be executed pursuant to this Section 2.1 shall be cast or executed in accordance with the applicable procedures relating thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present (if applicable) and for purposes of recording the results of that vote or consent. Nothing contained in this Agreement shall require any Stockholder (or shall entitle any proxy of any Stockholder) to convert, exercise or exchange any option, warrants or convertible securities in order to obtain any underlying shares of Company Common Stock.
|
a.
|
Organization. Such Stockholder, to the extent such Stockholder is an entity, is duly organized and validly existing under the Laws of the jurisdiction of its incorporation, formation or organization, as applicable.
|
b.
|
Authority; Execution and Delivery; Enforceability. Stockholder has all necessary power and authority and legal capacity to execute, deliver and perform all of Stockholder’s obligations under this Agreement, and consummate the transactions contemplated hereby, and no other proceedings or actions on the part of Stockholder or, as applicable, its board of directors, trustees or other governing body are necessary to authorize the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. Such Stockholder has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the other Parties to this Agreement, this Agreement constitutes such Stockholder’s legal, valid and binding obligation, enforceable against such Stockholder in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors’ rights and
|
c.
|
Ownership of Shares. As of the date hereof, except as described in a Schedule 13D or Schedule 13G filed by or on behalf of the Stockholders with the SEC prior to the date of this Agreement (the “Beneficial Ownership Disclosure”), such Stockholder is the sole Beneficial Owner of the Existing Shares set forth opposite such Stockholder’s name on Schedule I hereto, free and clear of any Liens and free of any limitation or restriction on the right to vote, sell, transfer or otherwise dispose of such Existing Shares (other than (i) this Agreement or (ii) any limitations or restrictions imposed under applicable Laws), and such Existing Shares constitute all of the shares of Company Common Stock Beneficially Owned or owned of record by such Stockholder. Except as set forth on Schedule I hereto or described in the Beneficial Ownership Disclosure, such Stockholder has and will have at all times from the date hereof until termination of this Agreement in accordance with Section 5.1 (except to the extent such Existing Shares are transferred after the date hereof pursuant to a Permitted Transfer) sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Section 2.1, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such Stockholder’s Existing Shares.
|
d.
|
No Conflicts. Neither the execution and delivery of this Agreement by such Stockholder nor compliance by it with any of the terms or provisions hereof will (i) with respect to such Stockholder that is not a natural person, violate any provision of the certificate of incorporation, bylaws, or other organizational or governing documents of such Stockholder, (ii) conflict with or violate any Law applicable to such Stockholder or by which any of such Stockholder’s properties or assets are bound or affected, (iii) violate, conflict with, result in any breach of any provision of, or loss of any benefit under, constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination, acceleration or cancellation under, or require the consent of, notice to, or filing with any third party pursuant to any terms or provisions of any Contract to which such Stockholder is a party or by which any of the Covered Company Shares are bound or affected, or result in the creation of any Lien (other than any Permitted Lien) upon any of the Covered Company Shares, except, in the case of the foregoing clauses (ii) or (iii), for such violations as, individually or in the aggregate, would not reasonably be expected to impair such Stockholder’s ability to perform its obligations under this Agreement on a timely basis.
|
e.
|
Consents and Approvals. The execution, delivery and performance by such Stockholder of this Agreement do not and will not require any consent of, or filing with, any Governmental Entity (excluding filings with the SEC under applicable securities Laws and applicable antitrust Laws).
|
f.
|
Legal Proceedings. As of the date of this Agreement, there are no proceedings pending, or to the knowledge of such Stockholder, threatened against such Stockholder or any of such Stockholder’s assets or properties that would reasonably be expected to impair such Stockholder’s ability to perform such Stockholder’s obligations under this Agreement. Such Stockholder is not, and none of such Stockholder’s properties or assets is or are, subject to any Governmental Order that would reasonably be expected to impair such Stockholder’s ability to perform its obligations under this Agreement.
|
a.
|
Organization. Parent is duly organized and validly existing under the Laws of Delaware.
|
b.
|
Authority; Execution and Delivery; Enforceability. Parent has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance by Parent of this Agreement and the compliance by Parent with each of its obligations herein have been duly and validly authorized by all necessary corporate action on the part of Parent. Parent has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the other Parties to this Agreement, this Agreement constitutes Parent’s legal, valid and binding obligation, enforceable against it in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or
|
c.
|
No Conflicts. Neither the execution and delivery of this Agreement by Parent nor compliance by Parent with any of the terms or provisions hereof will (i) violate any provision of the certificate of incorporation, bylaws, or other organizational or governing documents of Parent, (ii) conflict with or violate any Law applicable to Parent or by which any of Parent’s properties or assets are bound or affected, (iii) violate, conflict with or result in any breach of any provision of, or result in the loss of any benefit under, or constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination, acceleration or cancellation of or require the consent of, notice to or filing with any third party pursuant to any of the terms or provisions of any material Contract to which Parent is a party or by which any property or asset of Parent is bound, or result in the creation of any Lien (other than any Permitted Lien) upon any of the properties or assets of Parent, except, in the case of the foregoing clauses (ii) or (iii), for such violations as, individually or in the aggregate, would not reasonably be expected to impair Parent’s ability to perform its obligations under this Agreement.
|
d.
|
No Other Representations. Parent acknowledges and agrees that other than the representations expressly set forth in this Agreement, no Stockholder has made, or is making, any representations or warranties to Parent with respect to the Company, such Stockholder’s ownership of Company Common Stock, the Merger Agreement or any other matter. Parent hereby specifically disclaims reliance upon any representations or warranties (other than the representations expressly set forth in this Agreement).
|
|
| |
1.
|
| |
if to Parent, to:
|
|
| |
|
| |
|
|
| |
|
| |
c/o Evercel, Inc.
|
|
| |
|
| |
382 NE 191st Street, Suite 90959
|
|
| |
|
| |
Miami, Florida 33179-3899
|
|
| |
|
| |
Attention: Dan Allen, Chief Executive Officer
|
|
| |
|
| |
Email: dan@coronapark.com
|
|
| |
|
| |
|
|
| |
|
| |
with a copy (which shall not constitute notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Morgan, Lewis & Bockius LLP
|
|
| |
|
| |
600 Anton Boulevard, Suite 1800
|
|
| |
|
| |
Costa Mesa, California 92626
|
|
| |
|
| |
Attention: James W. Loss and Randall J. Wood
|
|
| |
|
| |
Email: jim.loss@morganlewis.com and randy.wood@morganlewis.com
|
|
| |
|
| |
|
|
| |
2.
|
| |
if to the Company, to:
|
|
| |
|
| |
|
|
| |
|
| |
ZAGG Inc
|
|
| |
|
| |
910 West Legacy Center Drive, Suite 500
|
|
| |
|
| |
Midvale, Utah 84047
|
|
| |
|
| |
Attention: Legal Department (Abby Barraclough)
|
|
| |
|
| |
Email: legal@zagg.com and abby.barraclough@zagg.com
|
|
| |
|
| |
|
|
| |
|
| |
with a copy (which shall not constitute notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Latham & Watkins LLP
|
|
| |
|
| |
355 South Grand Avenue, Suite 100
|
|
| |
|
| |
Los Angeles, California 90071
|
|
| |
|
| |
Attention: Steven B. Stokdyk
|
|
| |
|
| |
Email: steven.stokdyk@lw.com
|
|
| |
|
| |
|
|
| |
3.
|
| |
if to a Stockholder, as set forth on Schedule II hereto.
|
a.
|
This Agreement shall be binding upon, inure solely to the benefit of and be enforceable by each Party hereto and their respective permitted successors and assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
|
b.
|
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto by operation of Law or otherwise without the prior written consent of the other Parties. Any purported assignment in violation of this Section 6.9(b) shall be null and void.
|
a.
|
The Parties hereto have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted collectively by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.
|
b.
|
The words “hereof,” “herein,” “hereby,” “hereunder” and “herewith” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs and schedules are to the articles, sections and paragraphs of, and schedules to, this Agreement, unless otherwise specified, and the headings in this Agreement are for reference
|
ZEPHYR PARENT, INC.
|
| |
|
|||
|
| |
|
| |
|
By:
|
| |
/s/ DANIEL ALLEN
|
| |
|
|
| |
Name: Daniel Allen
|
| |
|
|
| |
Title: President
|
| |
|
|
| |
|
| |
|
ZAGG INC
|
| |
|
|||
|
| |
|
| |
|
By:
|
| |
/s/ CHRIS AHERN
|
| |
|
|
| |
Name: Chris Ahern
|
| |
|
|
| |
Title: Chief Executive Officer
|
| ||
|
| |
|
| |
|
By:
|
| |
/s/ CHERYL A. LARABEE
|
| |
|
|
| |
Cheryl A. Larabee
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ DANIEL R. MAURER
|
| |
|
|
| |
Daniel R. Maurer
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ EDWARD TERINO
|
| |
|
|
| |
Edward Terino
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ MICHAEL T. BIRCH
|
| |
|
|
| |
Michael T. Birch
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ P. SCOTT STUBBS
|
| |
|
|
| |
P. Scott Stubbs
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ RONALD G. GARRIQUES
|
| |
|
|
| |
Ronald G. Garriques
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ CHRIS AHERN
|
| |
|
|
| |
Chris Ahern
|
| |
|
|
| |
|
| |
|
By:
|
| |
/s/ TAYLOR SMITH
|
| |
|
|
| |
Taylor Smith
|
| |
|
Name of Stockholder
|
| |
Existing Shares
|
Cheryl A. Larabee
|
| |
160,146
|
Daniel R. Maurer
|
| |
130,715
|
Edward Terino
|
| |
57,046
|
Michael T. Birch
|
| |
33,455
|
P. Scott Stubbs
|
| |
57,364
|
Ronald G. Garriques
|
| |
27,046
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Chris Ahern
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| |
178,875
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Taylor Smith
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72,029
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Name of Stockholder
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Notices
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Cheryl A. Larabee
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[redacted]
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Daniel R. Maurer
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[redacted]
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Edward Terino
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[redacted]
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Michael T. Birch
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[redacted]
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P. Scott Stubbs
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[redacted]
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Ronald G. Garriques
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[redacted]
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Chris Ahern
|
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[redacted]
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Taylor Smith
|
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[redacted]
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(a)
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Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
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(b)
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Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:
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(1)
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Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or, in the case of a merger pursuant to § 251(h), as of immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
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(2)
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Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
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a.
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Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
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b.
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Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
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c.
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Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
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d.
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Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
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(3)
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In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
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(4)
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[Repealed.]
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(c)
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Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d),(e), and (g) of this section, shall apply as nearly as is practicable.
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(d)
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Appraisal rights shall be perfected as follows:
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(1)
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If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
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(2)
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If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
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(e)
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Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon request given in writing (or by electronic transmission directed to an information processing system (if any) expressly designated for that purpose in the notice of appraisal), shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in § 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such stockholder’s request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection.
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(f)
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Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
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(g)
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At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
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(h)
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After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the
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(i)
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The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
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(j)
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The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
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(k)
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From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.
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(l)
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The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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BofA Securities, Inc.
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GLOBAL CORPORATE &
INVESTMENT BANKING
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(1)
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reviewed certain publicly available business and financial information relating to Zagg;
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(2)
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reviewed certain internal financial and operating information with respect to the business, operations and prospects of Zagg furnished to or discussed with us by the management of Zagg, including certain financial forecasts relating to Zagg prepared by the management of Zagg (such forecasts, the, “Zagg Revised Base Case Forecasts”), respectively;
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(3)
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discussed the past and current business, operations, financial condition and prospects of Zagg with members of senior management of Zagg;
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(4)
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discussed with the management of Zagg its assessments as to the likelihood of, amount of, and timing upon which the Per Share Additional Merger Consideration may become payable;
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(5)
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reviewed the trading history for the shares of Zagg Common Stock and a comparison of that trading history with the trading histories of other companies we deemed relevant;
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(6)
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compared certain financial and stock market information of Zagg with similar information of other companies we deemed relevant;
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(7)
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compared certain financial terms of the Merger to financial terms, to the extent publicly available, of other transactions we deemed relevant;
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(8)
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considered the fact that Zagg publicly announced that it would explore its strategic alternatives and the results of our efforts on behalf of Zagg to solicit, at the direction of Zagg, indications of interest and definitive proposals from third parties with respect to a possible acquisition of Zagg;
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(9)
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reviewed the Agreement; and
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(10)
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performed such other analyses and studies and considered such other information and factors as we deemed appropriate.
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