Item 1.01 Entry into a Material Definitive Agreement.
Supplemental Indentures
On May 23, 2022, Zynga, Take-Two, Merger Sub II and Computershare Trust Company,
N.A. (as successor to Wells Fargo Bank, National Association) (the "Trustee")
entered into (i) the First Supplemental Indenture (the "2024 Supplemental
Indenture") to the Indenture, dated as of June 14, 2019 (the "2024 Indenture"),
between Zynga and the Trustee, relating to Zynga's 0.25% Convertible Senior
Notes due 2024 (the "2024 Notes"), and (ii) the First Supplemental Indenture
(the "2026 Supplemental Indenture" and, together with the 2024 Supplemental
Indenture, the "Supplemental Indentures") to the Indenture, dated as of
December 17, 2020 (the "2026 Indenture" and, together with the 2024 Indenture,
the "Indentures"), between Zynga and the Trustee, relating to Zynga's 0%
Convertible Senior Notes due 2026 (the "2026 Notes" and, together with the 2024
Notes, the "Notes"). As of the date hereof, approximately $690.0 million
aggregate principal amount of the 2024 Notes are outstanding and approximately
$874.5 million aggregate principal amount of the 2026 Notes are outstanding.
Each Supplemental Indenture provides, among other things, that, from and after
the Effective Time (as defined below), (a) Merger Sub II, as the successor
company to Zynga following the consummation of the Combination, shall assume all
of Zynga's rights and obligations under the Indentures, (b) the right of holders
of the Notes to convert each $1,000 principal amount of such Notes into shares
of Zynga Common Stock shall be changed into a right to convert such principal
amount of such Notes into the Reference Property (as defined in the applicable
Supplemental Indenture) and (c) that Take-Two shall guarantee Merger Sub II's,
as the successor company to Zynga, obligations under the Indentures and the
Notes as provided in the applicable Supplemental Indenture. Reference Property
is defined in each Supplemental Indenture as 0.0406 shares of Take-Two Common
Stock and $3.50 in cash, without interest, plus cash in lieu of any fractional
shares of Take-Two Common Stock.
The consummation of the Combination constitutes a Fundamental Change, a
Make-Whole Fundamental Change and a Share Exchange Event (each as defined in the
Indentures) under the Indentures. The effective date of the Fundamental Change,
Make-Whole Fundamental Change and Share Exchange Event in respect of the Notes
is May 23, 2022 (the "Notes Effective Date"), the date of the consummation of
the Combination.
As a result of the Fundamental Change, each holder of Notes will have the right
to require the Company to repurchase its Notes, pursuant to the terms and
procedures set forth in the applicable Indenture, for a cash repurchase price
equal to the Fundamental Change Repurchase Price (as defined in the applicable
Indenture). In addition, as a result of the Fundamental Change, Make-Whole
. . .
Item 1.02 Termination of a Material Definitive Agreement.
Termination of the Credit Agreement
On May 23, 2022, in connection with the consummation of the Combination, Zynga
terminated and repaid in full all outstanding obligations due under the Credit
Agreement, dated as of December 11, 2020, by and among Zynga, as borrower,
certain financial institutions, as lenders, and Bank of America, N.A., as
administrative agent for such lenders, as amended by the First Amendment dated
as of May 28, 2021 to the Credit Agreement, dated as of December 11, 2020, by
and among Zynga Inc., as borrower, certain financial institutions, as lenders,
and Bank of America, N.A., as administrative agent for such lenders. In
connection with the termination and repayment in full of all outstanding
obligations under Zynga's Credit Agreement, all related liens and security
interests securing the Credit Agreement were irrevocably terminated and
released.
Termination of Capped Call Transactions
On June 11, 2019 and June 13, 2019, in connection with the issuance of the 2024
Notes, and on December 14, 2020 and December 15, 2020, in connection with the
issuance of the 2026 Notes, Zynga entered into capped call transactions (the
"Capped Call Transactions") with certain financial institutions (each a "Capped
Call Counterparty" and, collectively, the "Capped Call Counterparties").
In connection with the Merger, Zynga entered into a termination agreement with
each Capped Call Counterparty pursuant to which the Capped Call Transactions
with such Capped Call Counterparty will terminate in exchange for a cash payment
from such Capped Call Counterparty.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On May 23, 2022, pursuant to the terms of the Merger Agreement, the Combination
was consummated. At the effective time of the Merger (the "Effective Time"),
each issued and outstanding share of Zynga's Class A Common Stock, par value
$0.00000625 per share ("Zynga Common Stock") (other than dissenting shares or
treasury shares) was canceled and extinguished and automatically converted into
the right to receive $3.50 in cash, without interest, and 0.0406 shares of
Take-Two's common stock, par value $0.01 per share ("Take-Two Common Stock").
Additionally, each (i) issued and outstanding option to purchase Zynga Common
Stock was assumed by Take-Two and automatically converted into options to
purchase 0.0702 shares of Take-Two Common Stock (the "Converted Options"), (ii)
issued and outstanding restricted stock unit covering Zynga Common Stock was
assumed by Take-Two and automatically converted into a Take-Two restricted stock
unit award with respect to 0.0702 shares of Take-Two Common Stock (the
"Converted RSUs"), and (iii) issued and outstanding performance stock unit award
covering Zynga Common Stock was assumed by Take-Two and automatically converted
into a Take-Two restricted stock unit award (which may continue to vest based on
certain performance conditions) with respect to 0.0702 shares of Take-Two Common
Stock (the "Converted PSUs" and together with the Converted Options and
Converted RSUs, the "Converted Awards"). Following the Effective Time, the
Converted Awards will vest based on continued service and will continue to be
governed by substantially the same terms and conditions as were applicable to
the corresponding Zynga equity awards prior to the Effective Time.
The description of the Merger does not purport to be complete and is qualified
in its entirety by reference to the Merger Agreement, which was filed as Exhibit
2.1 to Zynga's Current Report on Form 8-K filed on January 10, 2022, and is
incorporated by reference.
Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The information set forth in Item 1.01 and of this Current Report on Form 8-K is
incorporated by reference.
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Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 23, 2022, Zynga notified The Nasdaq Stock Market (the "NASDAQ") of the
consummation of the Merger. Zynga requested that the NASDAQ delist the Zynga
Common Stock on May 23, 2022. Trading of Zynga Common Stock on the Nasdaq Global
Select Market was suspended prior to the opening of the Nasdaq Global Select
Market on May 23, 2022. Zynga also requested that the NASDAQ file a notification
of removal from listing and registration on Form 25 with the Securities and
Exchange Commission (the "SEC") to effect the delisting of Zynga Common Stock
from the Nasdaq Global Select Market and the deregistration of Zynga's Common
Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Zynga intends to file with the SEC a Form 15 requesting
the termination of registration of the Zynga Common Stock under Section 12(g) of
the Exchange Act and the suspension of reporting obligations under Section 13
and Section 15(d) of the Exchange Act.
The information set forth in Item 2.01 of this Current Report on Form 8-K is
incorporated by reference.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 2.01, Item 3.01, Item 5.01 and Item 5.03 of
this Current Report on Form 8-K is incorporated by reference.
Item 5.01 Change in Control of Registrant.
As a result of the consummation of the Merger, a change in control of Zynga
occurred. Following the consummation of the Merger, Zynga became a wholly-owned
subsidiary of Take-Two.
The information set forth in Item 2.01 of this Current Report on Form 8-K is
incorporated by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Bernard Kim Transition
As previously announced, on May 2, 2022, Bernard Kim resigned as President of
Publishing of Zynga, effective as of May 30, 2022, and is expected to remain an
employee of Zynga through May 30, 2022 (such time period, the "Transition
Period"), while his duties are transitioned to other members of Zynga's
management team.
Zynga and Mr. Kim entered into a Transition Agreement and Release (the
"Agreement") dated May 21, 2022. Under the Agreement, Mr. Kim will continue to
receive his preexisting regular compensation during the Transition Period,
including base salary and participation in Zynga's standard benefit plans.
Mr. Kim also agreed to forfeit his outstanding equity awards that were not
vested as of April 30, 2022; provided, however, that if (i) Mr. Kim signs and
does not revoke the Agreement, (ii) the transactions contemplated by the Merger
Agreement, are consummated on or before May 29, 2022, and (iii) Mr. Kim
continues to serve as an employee of Zynga and comply with his obligations
during the Transition Period through May 30, 2022, then Mr. Kim will receive
vesting of a number of shares subject to Mr. Kim's outstanding equity awards
that are scheduled to vest after May 30, 2022, with the number of such shares
that vest having a value of $3 million. Such value will be based on the closing
price per share of Take-Two Common Stock on May 27, 2022. No additional
accelerated equity vesting or severance is to be provided. Mr. Kim will provide
Zynga with a release of claims in favor of Zynga and its affiliates and
successors.
Zynga would like to thank Mr. Kim for his years of service and wish him success
in his future endeavors.
Director Appointments and Resignations
On May 23, 2022, and as a result of the consummation of the Subsequent Merger,
Daniel Emerson and Linda Zabriskie became the directors of Zynga. The following
persons, who were directors of Zynga prior to the effective time of the
Subsequent Merger (the "Subsequent Effective Time"), resigned and are no longer
directors of Zynga: Mark Pincus, Carol G. Mills, Frank Gibeau, Janice M.
Roberts, Regina E. Dugan, Ellen F. Siminoff, William "Bing" Gordon, Noel Watson,
Louis J. Lavigne, Jr.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Pursuant to the terms of the Merger Agreement, at the Subsequent Effective Time,
the certificate of incorporation and bylaws of Zynga were amended and restated
to read in their entirety as the certificate of incorporation and bylaws,
respectively, of Merger Sub II as in effect immediately prior to the Subsequent
Effective Time, except that Article I of the certificate of incorporation of
Merger Sub II was amended to provide that "The name of the corporation is Zynga
Inc.". The amended and restated certificate of incorporation and the amended and
restated bylaws of Zynga are filed as Exhibit 3.1 and Exhibit 3.2, respectively,
and are incorporated by reference.
No Offer
This Current Report on Form 8-K does not constitute an offer to sell, or a
solicitation of an offer to buy, any security and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offering would be
unlawful.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated as of January 9, 2022, by and
among Take-Two Interactive Software, Inc., Zynga Inc., Zebra MS I,
Inc., and Zebra MS II, Inc. (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K filed by Zynga on January 10, 2022).
3.1 Amended and Restated Certificate of Incorporation of Zynga Inc.
3.2 Amended and Restated Bylaws of Zynga Inc.
4.1 First Supplemental Indenture, dated as of May 23, 2022, among Zynga
Inc., Take-Two Interactive Software, Inc., Zebra MS II, Inc. and
Computershare Trust Company, N.A.
4.2 First Supplemental Indenture, dated as of May 23, 2022, among Zynga
Inc., Take-Two Interactive Software, Inc., Zebra MS II, Inc. and
Computershare Trust Company, N.A.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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