Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On December 19, 2019, The Rubicon Project, Inc., a Delaware corporation
("Rubicon Project"), Madison Merger Corp., a Delaware corporation and direct
wholly owned subsidiary of Rubicon Project ("Merger Sub"), and Telaria, Inc., a
Delaware corporation ("Telaria"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"). The Merger Agreement provides for, among other things
and subject to the satisfaction or waiver of specified conditions, the merger of
Merger Sub with and into Telaria (the "Merger"), with Telaria surviving the
Merger as a wholly owned subsidiary of Rubicon Project.
Each share of Telaria common stock issued and outstanding as of the effective
time of the Merger (the "Effective Time") (except for shares held by Telaria as
treasury stock and shares owned directly or indirectly by Rubicon Project or
Merger Sub) will be converted into the right to receive 1.082 (the "Exchange
Ratio") fully paid and nonassessable shares of Rubicon Project common stock
(and, if applicable, cash in lieu of fractional shares) (the "Merger
Consideration"), less any applicable withholding taxes.
Each Telaria equity award granted under Telaria's equity compensation plans
(other than vested Telaria restricted stock unit awards) outstanding as of the
Effective Time will be converted into a corresponding award with respect to
Rubicon Project common stock, with the number of shares underlying such award
(and, in the case of stock options, the applicable exercise price) adjusted
based on the Exchange Ratio. In addition, each vested Telaria restricted stock
unit award outstanding as of the Effective Time will be cancelled and the holder
shall be entitled to receive the Merger Consideration in respect of each share
underlying such award.
The Merger Agreement, among other matters, addresses certain post-closing
governance matters, including, (1) that the executive chairman of Telaria as of
the date of the Merger Agreement will be appointed as non-executive Chairman of
the Board of Rubicon Project; (2) that the Chief Executive Officer ("CEO") of
Rubicon Project as of immediately prior to the Effective Time will continue to
serve as the CEO of Rubicon Project; (3) that the CEO of Telaria as of the date
of the Merger Agreement will be appointed to serve as President and Chief
Operating Officer of Rubicon Project with certain responsibilities; and (4) the
roles of certain other executives and employees of Telaria. In addition,
effective as of the Effective time and until the second anniversary of the
Effective Time, the board of directors of Rubicon Project will have nine
directors, of which four will be current members of the board of directors of
Rubicon Project (or successors nominated by such Rubicon Project directors),
four will be former members of the board of directors of Telaria (or successors
nominated by such former Telaria directors), and the remaining director will be
the then serving CEO of Rubicon Project. If the initial non-executive Chairman
of the Board of Rubicon Project ceases to serve as such, the non-executive
Chairman of the Board of Rubicon Project will then be designated by the board of
directors of Rubicon Project (by both a majority of the Rubicon Project
designees and a majority of the Telaria designees) from among its members.
Effective as of the Effective Time, the bylaws of Rubicon Project will be
amended and restated to reflect the foregoing governance arrangements and
certain related matters.
The completion of the Merger is subject to customary conditions, including:
(1) the adoption of the Merger Agreement by Telaria stockholders and the
approval of the issuance of shares of Rubicon Project common stock in connection
with the Merger by Rubicon Project stockholders; (2) the expiration or
termination of the applicable waiting period (or any extension thereof) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (3) the
receipt of any authorization or consent from a governmental entity required to
be obtained with respect to the Merger under certain antitrust laws; (4) the
absence of any order or law that has the effect of enjoining or otherwise
prohibiting the consummation of the Merger; (5) the approval for listing of the
shares of common stock of Rubicon Project forming part of the Merger
Consideration on the New York Stock Exchange and the
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effectiveness of a registration statement with respect to such common stock;
(6) subject to certain exceptions, the accuracy of the representations and
warranties of the other party; (7) performance by the other party in all
material respects of its obligations under the Merger Agreement; (8) the receipt
of an officer's certificate executed by an executive officer of the other party
certifying the party's accuracy of its representations and warranties and
material performance of its obligations; and (9) receipt by each of Telaria and
Rubicon Project of an opinion of its respective outside counsel to the effect
that the Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement includes customary representations and warranties of
Telaria and Rubicon Project and each party has agreed to customary covenants,
including, among others, covenants relating to (1) the conduct of its business
during the interim period between execution of the Merger Agreement and the
Effective Time, (2) its obligation to call a meeting of its stockholders to
adopt the Merger Agreement (in the case of Telaria) or approve the issuance of
shares of Rubicon Project common stock in connection with the Merger (in the
case of Rubicon Project) and (3) its non-solicitation obligations in connection
with alternative acquisition proposals (however, under certain circumstances, a
party may change its recommendation to its stockholders in response to a
superior proposal or an intervening event if such party's board of directors
determines in good faith that the failure to take such action would be
inconsistent with the directors' fiduciary duties under Delaware law).
The Merger Agreement provides for certain termination rights for both Rubicon
Project and Telaria and provides that, in connection with a termination of the
Merger Agreement under certain specified circumstances, Telaria will be required
to pay Rubicon Project a termination fee of $13.7 million or Rubicon Project
will be required to pay Telaria a termination fee of $16 million.
A copy of the Merger Agreement is attached as Exhibit 2.1 to this Current Report
on Form 8-K and is incorporated herein by reference. The foregoing description
of the Merger Agreement does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement.
The representations, warranties and covenants set forth in the Merger Agreement
have been made only for the purposes of that agreement and solely for the
benefit of the parties to the Merger Agreement, may be subject to limitations
agreed upon by the contracting parties, including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these
matters as facts, as well as by information contained in each party's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q, and may be subject to
standards of materiality applicable to the contracting parties that differ from
those applicable to investors. In addition, such representations and warranties
(1) will not survive completion of the Merger and cannot be the basis for any
claims under the Merger Agreement by the other party after termination of the
Merger Agreement, except as a result of fraud or a willful breach, and (2) were
made only as of the dates specified in the Merger Agreement. Accordingly, the
Merger Agreement is included with this filing only to provide investors with
information regarding the terms of the Merger Agreement and not to provide
investors with any other factual information regarding the parties or their
respective businesses.
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Voting Agreements
In connection with entering into the Merger Agreement, each of the named
executive officers and directors of Telaria, in their respective capacities as
stockholders of Telaria, have entered into a voting agreement with Rubicon
Project (the "Telaria Voting Agreement"), pursuant to which such individuals
have agreed, among other things, to vote their respective shares of Telaria
common stock in favor of the adoption of the Merger Agreement and against any
alternative proposal.
The foregoing description of the Telaria Voting Agreement does not purport to be
complete and is qualified in its entirety by reference to the form of Telaria
Voting Agreement, which is attached as Exhibit 10.1 to this Current Report on
Form 8-K and is incorporated herein by reference.
In connection with entering into the Merger Agreement, each of the named
executive officers and directors of Rubicon Project, in their respective
capacities as stockholders of Rubicon Project, have entered into a voting
agreement with Telaria (the "Rubicon Project Voting Agreement"), pursuant to
which such individuals have agreed, among other things, to vote their respective
shares of Rubicon Project common stock in favor of the approval of the issuance
of shares of Rubicon Project common stock pursuant to the Merger Agreement and
against any alternative proposal.
The foregoing description of the Rubicon Project Voting Agreement does not
. . .
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously disclosed, each of Michael Barrett, Rubicon Project's President
and CEO; David Day, Rubicon Project's Chief Financial Officer; and Thomas
Kershaw, Rubicon Project's Chief Technology Officer, is party to an Executive
Severance and Vesting Acceleration Agreement (a "Severance Agreement") that
provides for certain severance and equity acceleration benefits in the event any
such executive experiences an Involuntary Termination (as defined in the
Severance Agreements) in connection with a Sale Transaction (as defined in the
Severance Agreements). Notwithstanding that the Merger is not expected to
qualify as a Sale Transaction under such agreements, the board of directors of
Rubicon Project has approved providing each such executive with the benefits he
would be entitled to receive under his Severance Agreement in the event that he
were to experience an Involuntary Termination in connection with a Sale
Transaction upon, or on or before the date that is 13 months following, the
closing of the Merger.
Forward-Looking Statements
This document may contain forward-looking statements, including statements based
upon or relating to Rubicon Project's and Telaria's expectations, assumptions,
estimates, and projections. In some cases, you can identify forward-looking
statements by terms such as "may," "might," "will," "objective," "intend,"
"should," "could," "can," "would," "expect," "believe," "design," "anticipate,"
"estimate," "predict," "potential," "plan" or the negative of these terms, and
similar expressions. Forward-looking statements may include, but are not limited
to, statements concerning anticipated financial performance, including, without
limitation, revenue, advertising spend, non-GAAP loss per share, profitability,
net income (loss), Adjusted EBITDA, earnings per share, and cash flow; strategic
objectives, including focus on header bidding, mobile, video, Demand Manager,
and private marketplace opportunities; investments in Rubicon Project's or
Telaria's business; development of Rubicon Project's or Telaria's technology;
introduction of new offerings; the impact of transparency initiatives Rubicon
Project or Telaria may undertake; the
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impact of Rubicon Project's or Telaria's traffic shaping technology on their
businesses; the effects of cost reduction initiatives; scope and duration of
client relationships; the fees Rubicon Project or Telaria may charge in the
future; business mix and expansion of Rubicon Project's or Telaria's mobile,
video and private marketplace offerings; sales growth; client utilization of
Rubicon Project's or Telaria's offerings; Rubicon Project's or Telaria's
competitive differentiation; Rubicon Project's or Telaria's market share and
leadership position in the industry; market conditions, trends, and
opportunities; user reach; certain statements regarding future operational
performance measures including ad requests, fill rate, paid impressions, average
CPM, take rate, and advertising spend; benefits from supply path optimization;
anticipated benefits of the Merger, including estimated synergies and cost
savings resulting from the Merger; the expected timing of completion of the
Merger; estimated costs associated with such transactions; and other statements
that are not historical facts. These statements are not guarantees of future
performance; they reflect Rubicon Project's and Telaria's current views with
respect to future events and are based on assumptions and estimates and subject
to known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to be materially different from
expectations or results projected or implied by forward-looking statements.
These risks include, but are not limited to: occurrence of any event, change or
other circumstances that could give rise to the termination of the Merger
agreement or the failure to satisfy the closing conditions; the possibility that
the consummation of the proposed transactions is delayed or does not occur,
including the failure of the parties' stockholders to approve the proposed
transactions; uncertainty as to whether the parties will be able to complete the
Merger on the terms set forth in the Merger Agreement; uncertainty regarding the
timing of the receipt of required regulatory approvals for the Merger and the
possibility that the parties may be required to accept conditions that could
reduce or eliminate the anticipated benefits of the Merger as a condition to
obtaining regulatory approvals or that the required regulatory approvals might
not be obtained at all; the outcome of any legal proceedings that have been or
may be instituted against the parties or others following announcement of the
transactions contemplated by the Merger Agreement; challenges, disruptions and
costs of closing, integrating and achieving anticipated synergies, or that such
synergies will take longer to realize than expected; risks that the Merger and
other transactions contemplated by the Merger Agreement disrupt current plans
and operations that may harm the parties' businesses; the amount of any costs,
fees, expenses, impairments and charges related to the Merger; uncertainty as to
the effects of the announcement or pendency of the Merger on the market price of
the parties' respective common stock and/or on their respective financial
performance; uncertainty as to the long-term value of Rubicon Project's and
Telaria's common stock; the business, economic and political conditions in the
markets in which Rubicon Project and Telaria operate; Rubicon Project's and
Telaria's ability to continue to grow and to manage their growth effectively;
Rubicon Project's and Telaria's ability to develop innovative new technologies
and remain market leaders; the effect on the advertising market and Rubicon
Project's and Telaria's businesses from difficult economic conditions or
uncertainty; the freedom of buyers and sellers to direct their spending and
inventory to competing sources of inventory and demand; Rubicon Project's and
Telaria's ability to adapt effectively to shifts in digital advertising; the
effects, including loss of market share, of increased competition in Rubicon
Project's and Telaria's markets and increasing concentration of advertising
spending, including mobile spending, in a small number of very large
competitors; the effects of consolidation in the ad tech industry; acts of
competitors and other third parties that can adversely affect Rubicon Project's
and Telaria's businesses; Rubicon Project's and Telaria's ability to
differentiate their offerings and compete effectively in a market trending
increasingly toward commodification, transparency, and disintermediation;
potential adverse effects of malicious activity such as fraudulent inventory and
malware; costs associated with defending intellectual property infringement and
other claims; Rubicon Project's and Telaria's ability to attract and retain
qualified employees and key personnel; and Rubicon Project's and Telaria's
ability to comply with, and the effect on their businesses of, evolving legal
standards and regulations, particularly concerning data protection and consumer
privacy and evolving labor standards.
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The foregoing review of important factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements that are
included herein and elsewhere, including the risk factors included in Rubicon
Project's and Telaria's most recent reports on Form 10-K, Form 10-Q, Form 8-K
and other documents on file with the SEC. These forward-looking statements
represent estimates and assumptions only as of the date made. Unless required by
federal securities laws, Rubicon Project and Telaria assume no obligation to
update any of these forward-looking statements, or to update the reasons actual
results could differ materially from those anticipated, to reflect circumstances
or events that occur after the statements are made. Given these uncertainties,
investors should not place undue reliance on these forward-looking statements.
Investors should read this document with the understanding that Rubicon
Project's and Telaria's actual future results may be materially different from
what Rubicon Project and Telaria expect. Rubicon Project and Telaria qualify all
of their forward-looking statements by these cautionary statements.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed merger, Rubicon Project intends to file with the
United States Securities and Exchange Commission ("SEC") a registration
statement on Form S-4, which will include a document that serves as a prospectus
of Rubicon Project and a joint proxy statement of Rubicon Project and Telaria
(the "joint proxy statement/prospectus"). After the registration statement has
been declared effective by the SEC, the joint proxy statement/prospectus will be
delivered to stockholders of Rubicon Project and Telaria. SECURITY HOLDERS OF
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of December 19, 2019, by and
among The Rubicon Project, Inc., Madison Merger Corp. and Telaria,
Inc.*
10.1 Form of Telaria Voting Agreement
10.2 Form of Rubicon Project Voting Agreement
* Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K.
Rubicon Project agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the Securities and Exchange Commission upon request.
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