Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On
Pursuant to the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), and as a result of the Merger, (x) each share of the
Company's common stock, par value
Pursuant to the Merger Agreement, at the Effective Time, and as a result of the
Merger, each share of Series B preferred stock, par value
Pursuant to the Merger Agreement, at the Effective Time:
(i) each outstanding Company stock option and Company stock appreciation right,
in each case, will be cancelled and converted into the right to receive an amount in cash (without interest and less applicable Tax withholdings) equal to the product of (x) the number of Shares subject to such option or right, as applicable, immediately prior to the Effective Time and (y) the excess, if any, of (A) the Merger Consideration over (B) the exercise price per Share of such option or the base price per Share of such right, as applicable;
(ii) each outstanding Company stock option and Company stock appreciation right,
in each case, for which the exercise price per Share or the base price per Share, as applicable, is equal to or greater than the Merger Consideration shall be cancelled without payment of any consideration; (iii) each outstanding Company restricted stock unit and each outstanding Company phantom stock unit will be cancelled and converted into the right to receive (without interest and less applicable Tax withholdings) a payment in cash in an amount equal to (x) the number of Shares or phantom Shares subject to such restricted stock unit or phantom stock unit, as applicable, multiplied by (y) the Merger Consideration;
(iv) each outstanding unvested Company restricted share shall be cancelled and
converted into the right to receive an amount in cash equal to the Merger Consideration, less applicable Tax withholdings;
(v) the number of performance-based restricted stock units and performance-based
phantom stock units, as applicable, earned with respect to each outstanding Company performance stock unit and phantom performance stock unit, in each case, granted in 2020 (the "2020 Company Performance Awards"), shall be determined based on actual performance through the end of the performance period applicable to such 2020 Company Performance Awards and paid in accordance with the terms of the applicable award agreement; provided, however, that (x) performance in respect of the total shareholder return metric shall be determined using a per share price equal to the Merger Consideration and (y) if the Effective Time occurs before payment has occurred with respect to the 2020 Company Performance Awards, at the Effective Time, each then outstanding 2020 Company Performance Award shall be cancelled and converted into the right to receive an amount in cash (without interest and less applicable Tax withholdings), equal to (A) the number of performance-based restricted stock units or the number of performance-based phantom stock units, as applicable, earned under the terms of the applicable 2020 Company Performance Award, multiplied by (B) the Merger Consideration; and
(vi) each outstanding Company performance stock unit and phantom performance
stock unit, in each case, granted in 2021 or 2022 (the "Post-2020 Company Performance Awards"), shall be cancelled and converted into the contractual right to receive a cash payment (without interest and less applicable Tax withholdings) in an amount equal to (A) the "target" number of performance-based restricted stock units or the "target" number of performance-based phantom stock units, as applicable, awarded pursuant to the terms of the applicable Post-2020 Company Performance Award (without proration for any portion of the performance period that has not yet been completed), multiplied by (B) the Merger Consideration.
A special committee (the "Special Committee") of the board of directors of the Company (the "Board"), consisting solely of non-management independent members of the Board not affiliated with Paine Schwartz, has unanimously recommended that the Board approve and authorize the Merger Agreement and the Merger and recommend that the Company stockholders vote to adopt and approve the Merger Agreement, and the Board, acting on the Special Committee's recommendation, resolved by the unanimous vote of the members of the Board present at the meeting to recommend that the stockholders of the Company vote to adopt and approve the Merger Agreement and the consummation of the transactions contemplated thereby.
Parent and Merger Sub have secured committed equity financing to be provided by an investment fund affiliated with Paine Schwartz, the aggregate proceeds of which will be sufficient for Parent and Merger Sub to fund any and all amounts required to be paid by them in connection with the Merger Agreement at Closing including any and all related fees and expenses. The Company is a third-party beneficiary of such equity financing.
Assuming satisfaction or waiver (to the extent permitted) of the conditions set forth in the Merger Agreement, the Company currently expects the transactions contemplated thereby to close in the first quarter of 2023.
The stockholders of the Company will be asked to vote on the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated thereby at a meeting of the Company's stockholders. The Merger is subject to certain closing conditions, including:
· the approval by holders of a majority of the aggregate voting power of (i) the outstanding Shares (including those held by Paine Schwartz and its affiliates) and the outstanding Series B Shares, voting together as a single class, and (ii) the outstanding Shares held by stockholders who are not affiliated with Paine Schwartz, members of the Board, certain officers of the Company, or any of their respective associates or members of their immediate family (clauses (i) and (ii), the "Requisite Stockholder Approvals");
· the expiration or termination of all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
· the absence of an injunction or law restraining, enjoining, rendering illegal
or otherwise prohibiting consummation of the Merger;
· subject to customary materiality qualifiers, the accuracy of the
representations and warranties contained in the Merger Agreement, including the representation that the Company has not suffered a "Material Adverse Effect" (as defined in the Merger Agreement) betweenDecember 31, 2021 and the date of the Merger Agreement;
· material performance by the parties of their respective covenants under the
Merger Agreement; and
· there having been no "Material Adverse Effect" (as defined in the Merger
Agreement) since the date of the Merger Agreement that is continuing.
The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants by the Company to use its reasonable best efforts to conduct its business in the ordinary course between execution of the Merger Agreement and the Effective Time, not to engage in certain kinds of transactions (including paying dividends) during such period and to convene a meeting of the Company's stockholders to consider and vote upon the adoption and approval of the Merger Agreement. Additionally, the Company is bound by a covenant not to initiate, solicit, propose, knowingly induce, knowingly encourage, knowingly assist or knowingly facilitate any competing acquisition proposals. However, at any time before receiving the Requisite Stockholder Approvals, if the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its financial advisor and outside legal counsel, that an unsolicited competing acquisition proposal is or is reasonably likely to result in a "Superior Proposal" (as defined in the Merger Agreement), then the Company is permitted to engage in discussions or negotiations with the third party with respect to such third party's unsolicited competing acquisition proposal, subject to certain requirements set forth in the Merger Agreement. If, prior to receiving the Requisite Stockholder Approvals, the Company receives an unsolicited competing acquisition proposal that the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith to be a Superior Proposal, after consultation with its financial advisors and outside legal counsel, and that the failure to terminate the Merger Agreement or change its recommendation that the Company's stockholders vote in favor of the Merger would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law, the Board (acting on the recommendation of the Special Committee) or the Special Committee may terminate the Merger Agreement and enter into an agreement providing for such competing acquisition proposal or change its recommendation that the Company's stockholders vote in favor of the Merger, subject in each case to the Company fulfilling certain requirements before taking such action.
Prior to the receipt of the Requisite Stockholder Approvals, the Board (acting on the recommendation of the Special Committee) or the Special Committee may also change its recommendation that the Company's stockholders vote in favor of the Merger in response to an "Intervening Event" (as defined in the Merger Agreement), if the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law, subject in each case to the Company fulfilling certain requirements before taking such action.
The Merger Agreement may be terminated by mutual written consent of the Company and Parent. Either party may terminate the Merger Agreement if:
· the Merger has not been consummated on or before 180 days after
2022 (the "Outside Date"), provided, however,that, such right to terminate the Merger Agreement shall not be available to any party whose material breach or failure to comply in any material respect with its obligations under the Merger Agreement was the primary cause of, or primarily resulted in, the failure of the Closing to occur on or prior to such date;
· the Requisite Stockholder Approvals are not obtained if a vote has been taken
thereon at a meeting of the Company's stockholders or any postponement, recess or adjournment thereof taken in accordance with the Merger Agreement;
· if any court or other Governmental Authority of competent jurisdiction enacts,
issues, promulgates or enters any final and non-appealable order that permanently restrains, enjoins, renders illegal or otherwise permanently prohibits the consummation of the Merger except the right to terminate shall not be available to any party whose failure to comply in any material respects with its obligations under the Merger Agreement has been the primary cause of, or has primarily resulted in, such order; or
· if the other party materially breaches any of its representations, warranties
or covenants that would cause certain closing conditions not to be satisfied,
and the breach is not curable or, if curable, is not cured within the time
period set forth in the Merger Agreement. . . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofNovember 21, 2022 , by and amongProject Cloud Holdings, LLC ,Project Cloud Merger Sub, Inc. andAgroFresh Solutions, Inc. * 10.1 Voting and Support Agreement, dated as ofNovember 21, 2022 , by and amongAgroFresh Solutions, Inc. ,Paine Schwartz Partners, LLC ,Paine Schwartz Food Chain Fund V GP, L.P. ,Paine Schwartz Food Chain Fund V GP, Ltd. ,PSP AGFS Holdings, L.P. ,Kevin Schwartz and, solely for purposes of Section 10(b) and Sections 12 through 23 thereof,Paine Schwartz Food Chain Fund V, L.P. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A
copy of any omitted schedule will be furnished supplementally to the
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