Item 1.01. Entry into a Material Definitive Agreement.
Apollo Stockholders Agreement
On
Concurrently with the consummation of the Merger, the Company, the
Board and Governance Terms
Board Seats
If the Board increases its size, for every three additional directors added, the
The right to designate members of the Board will step down as the Apollo
Parties' ownership decreases. When the Apollo Parties no longer own a (i) at
least 17,951,780 of the Apollo Closing Shares, one Apollo Designee will be
required to resign, and (ii) at least 11,967,853 of the Apollo Closing Shares,
the second Apollo Designee will be required to resign and the
Board Committees
One Apollo Designee will be entitled to serve on the audit committee of the
Board (the "Audit Committee"), subject to satisfaction of all eligibility
requirements (including "independence" requirements) for membership on the Audit
Committee as mandated by applicable law, the rules of the
Item 2.01. Completion of Acquisition or Disposition of Assets.
As described in Item 1.01 of this Current Report under the heading "Apollo
Stockholders Agreement," on
As previously disclosed, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger:
• each share of Diamond common stock issued and outstanding immediately prior to the effective time of the Merger was cancelled and converted into and exchanged for the right to receive a number of shares of HGV's common stock and/or cash in lieu of any fractional shares of HGV's common stock, calculated in the manner set forth in the Merger Agreement and allocated among the various sellers based on their respective ownership interests in Diamond in accordance with the Merger Agreement (the "Merger Consideration"); • each in-the-money option, whether vested or unvested, to purchase shares of Diamond common stock automatically ceased to be outstanding and was converted into and exchanged for the right to receive, without any interest thereon, a number of shares of HGV's common stock and/or cash in lieu of any fractional shares of HGV's common stock equal to (x) (1) the product of (A) the number of Diamond common stock subject to such in-the-money option, multiplied by (B) the Exchange Ratio (as defined in the Merger Agreement) and multiplied by (C) the Parent Stock Value (as defined in the Merger Agreement) minus (2) the aggregate exercise price of such in-the-money option, minus (3) an amount equal to the tax withholding obligation that would be withheld pursuant to the Merger Agreement with respect to the payment to the holder of such in-the-money options of an amount equal to the preceding clause (1) minus the preceding clause (2), divided by (y) the Parent Stock Value (as defined in the Merger Agreement) (the "Option Consideration") (assuming full satisfaction of any performance-vesting conditions applicable to such in-the-money option); and • all Diamond options outstanding immediately prior to the effective time of the Merger other than in-the-money options (x) to the extent not then vested, became fully vested as of immediately prior to the effective time of the Merger (assuming full satisfaction of any performance-vesting conditions applicable to such option) and (y) automatically were cancelled and terminated at the effective time of the Merger without payment therefor, and, to such extent, will have no further force or effect.
No fractional shares of HGV common stock were issued in the Merger. The value of any fractional interests of shares of HGV common stock to which a holder was otherwise entitled was, or will be, paid in cash. Each of the parties to the Merger Agreement and the exchange agent are entitled to deduct and withhold from amounts otherwise payable pursuant to the Merger Agreement those amounts that it is required to deduct and withhold from such payments under applicable tax law.
The information provided in Item 1.01 of this Current Report under the heading
"Term Loan Credit Facility" is incorporated by reference herein. In addition, as
disclosed in HGV's Current Reports on Forms 8-K dated
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet
Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report under the heading "Term Loan Credit Facility" is incorporated by reference herein.
Item 3.02. Unregistered Sales of
The information provided in Item 1.01 of this Current Report under the heading
"Apollo Stockholders Agreement" and in Item 2.01 of this Current Report with
respect to the portion of the Merger Consideration and Option Consideration
payable in shares of HGV's common stock pursuant to the Merger Agreement are
incorporated herein by reference. In connection with the closing of the Merger,
on
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers. Apollo Directors
The information provided in Item 1.01 of this Current Report under the heading
"Apollo Stockholders Agreement" is incorporated herein by reference. On
In connection with their service as directors, each of Messrs. Sambur and
The Board, together with input from the
HGV has entered into an indemnification agreement with each of Messrs. Sambur
and
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Re-alignment of the Executive Team
On
•Gordon S. Gurnik's title was changed from Executive Vice President and Chief Operating Officer to Senior Executive Vice President and Chief Operating Officer; •Daniel J. Mathewes's title was changed from Executive Vice President and Chief Financial Officer to Senior Executive Vice President and Chief Financial Officer; • Each ofDennis A. DeLorenzo , HGV's Executive Vice President andChief Sales Officer , andStan R. Soroka , HGV's Executive Vice President and Chief Customer Officer, will report toMr. Gurnik , withMr. Gurnik having the ultimate authority over and policy making oversight of each of Messrs. DeLorenzo's and Soroka's respective areas of business unit, division or function; and •Matthew A. Sparks , HGV's Executive Vice President and Chief Development Officer, will report toMr. Mathewes , withMr. Mathewes having the ultimate authority over and policy making oversight of,Mr. Spark's area of business unit, division or function.
In addition,
The Executive Realignment was conditioned upon the closing of the Merger and
became effective on
As previously disclosed,
Compensation Matters
On
Compensation Adjustments
The Compensation Committee approved adjustments to the base salaries, short-term
and long-term incentive award opportunities for certain executive officers in
connection with their expanded responsibilities following the closing of the
Merger and the Executive Realignment, including for
Item 8.01 Other Events.
On
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofMarch 10, 2021 , by and amongHilton Grand Vacations Inc. ,Hilton Grand Vacations Borrower LLC ,Dakota Holdings, Inc. , and certain stockholders named therein (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed onMarch 12, 2021 )* 2.2 Amendment to Agreement and Plan of Merger, dated as ofJuly 7, 2021 , by and amongHilton Grand Vacations Inc. ,Hilton Grand Vacations Borrower LLC ,Dakota Holdings, Inc. , andAP VIII Dakota Holdings, L.P. , in its capacity as Seller Representative (incorporated by reference to Annex A to Registrant's Additional Definitive Materials on Schedule 14A filed onJuly 7, 2021 ) 10
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Exhibit No. Description 10.1 Stockholders Agreement, dated as ofAugust 2, 2021 , by and amongHilton Grand Vacations Inc. ,AP VIII Dakota Holdings, L.P. ,AP Dakota Co-Invest, L.P. , and, for the purposes of Sections 7.2 and 7.3 thereof, Hilton Worldwide Holdings Inc. 10.2 Joinder Agreement, dated as ofAugust 2, 2021 , of AP VIII DakotaHoldings Borrower, L.P. 10.3 Credit Agreement, dated as ofAugust 2, 2021 , by and among HiltonGrand Vacations Parent LLC , as parent,Hilton Grand Vacations Borrower LLC , as the borrower, the guarantors from time to time party thereto andBank of America, N.A ., as administrative agent and collateral agent. 10.4 Form of Transaction Incentive Performance RSU Agreement (CEO) 10.5 Form of Transaction Incentive Performance RSU Agreement (Non-CEO) 99.1 Press Release, datedAugust 2, 2021 Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules have been
omitted. HGV agrees to furnish supplementally a copy of any omitted schedule to
theSEC upon request. Forward Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act. Forward-looking statements convey management's expectations as to the Company's future, and are based on management's beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time the Company makes such statements. Forward-looking statements include all statements that are not historical facts, including those related to the proposed Merger and the Company's revenues, earnings, cash flow and operations, and may be identified by terminology such as the words "outlook," "believe," "expect," "potential," "goal," "continues," "may," "will," "should," "could," "seeks," "approximately," "projects," predicts," "intends," "plans," "estimates," "anticipates" "future," "guidance," "target," or the negative version of these words or other comparable words.
The Company cautions you that forward-looking statements involve known and
unknown risks, uncertainties and other factors, including those that are beyond
the Company's control, that may cause its actual results, performance or
achievements to be materially different from the future results. Factors that
could cause the Company's actual results to differ materially from those
contemplated by its forward-looking statements include: the occurrence of any
event, change or other circumstances that could give rise to the termination of
the Merger Agreement; risks related to disruption of management's attention from
the Company's ongoing business operations due to the transaction; the effect of
the announcement of the proposed Merger on the Company's relationships,
operating results and business generally; the risk that the proposed Merger will
not result in the anticipated synergies in a timely manner; exceeding the
expected costs of the Merger; the material impact of the COVID-19 pandemic on
the Company's business, operating results, and financial condition; the extent
and duration of the impact of the COVID-19 pandemic on global economic
conditions; the Company's ability to meet its liquidity needs; risks related to
the Company's indebtedness; inherent business risks, market trends and
competition within the timeshare and hospitality industries; the Company's
ability to successfully source inventory and market, sell and finance VOIs;
default rates on the Company's financing receivables; the reputation of and the
Company's ability to access Hilton Worldwide Holdings Inc.'s ("Hilton") brands
and programs, including the risk of a breach or termination of the Company's
license agreement with Hilton; compliance with and changes to
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For a more detailed discussion of these factors, see the information under the
captions "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's most recent Annual Report
on Form 10-K filed with the
The Company's forward-looking statements speak only as of the date of this communication or as of the date they are made. The Company disclaims any intent or obligation to update any "forward looking statement" made in this communication to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
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