Item 2.01
|
Completion of Acquisition or Disposition of Assets.
|
Merger Agreement
On February 14, 2018, Identiv, Inc., a Delaware corporation (Identiv) completed the previously announced acquisition of 3VR Security, Inc., a
California corporation (3VR), pursuant to an Agreement and Plan of Merger (the Merger Agreement) by and among Identiv, Eagle Acquisition, Inc., a California corporation and a wholly owned subsidiary of Identiv (Merger
Sub), 3VR, and Fortis Advisors LLC, a Delaware limited liability company, acting as Securityholder Representative (Securityholder Representative). Pursuant to the Merger Agreement, after the signing of the Merger Agreement, at the
effective time, Merger Sub merged with and into 3VR and 3VR became a wholly-owned subsidiary of Identiv (the Acquisition). Capitalized terms used and not otherwise defined herein have the meanings set forth in the Merger Agreement.
Under the terms of the Merger Agreement, at the closing of the Acquisition, Identiv is obligated to pay an aggregate consideration of approximately
$6.9 million, consisting of (i) approximately $1.6 million in cash, (ii) the issuance of subordinated unsecured promissory notes by Identiv in an aggregate principal amount of $2.0 million (the Promissory Notes),
and (iii) the issuance of shares of Identivs common stock with a value of approximately $3.3 million. $1.0 million of Identivs common stock issued at the closing of the transaction will be held back for up to 12 months
following the closing for the satisfaction of certain indemnification claims.
Additionally, in the event that the surviving corporation achieves
$24.1 million in product shipments in 2018, Identiv will be obligated to issue a further
earn-out
consideration of $3.5 million payable in shares of Identivs common stock (subject to certain
conditions) with a potential maximum
earn-out
value of $7.0 million in the event that such shipments exceed $48.2 million. Further, in calendar year 2019 Identiv may also be obligated to pay, in
cash, and subject to certain conditions, contingent consideration equal to the lesser of (A) 35% of the gross margin of certain products sold and services rendered by the surviving corporation in 2018 pursuant to a supply arrangement and (B)
$25.0 million, each subject to adjustments (collectively, all consideration issuable in connection with the Acquisition, the Merger Consideration).
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger
Agreement, a copy of which was originally filed as an exhibit to Identivs Current Report on Form
8-K
filed on February 6, 2018, and is incorporated herein by reference.
Securityholder Agreement
Concurrently with entry into
the Merger Agreement, Identiv entered into a Securityholder Agreement (the Securityholder Agreement), dated as of February 6, 2018, with (i) the shareholders of 3VR (3VR Shareholders), (ii) certain holders of
convertible notes issued by 3VR (3VR Noteholders), and (iii) participants in the Management
Carve-out
Plan of 3VR (the 3VR Management
Carve-out
Plan, and (i), (ii) and (ii) together, the Securityholders).
The Securityholder Agreement, among other things, prohibits the
Securityholders from selling any of the Identiv Shares for a period of six months following Closing, and thereafter, prohibits them from selling more than 50% of such shares for an additional three months. The Securityholder Agreement also provides
the Securityholders with certain registration rights related to the Identiv Shares.
The foregoing description of the Securityholder Agreement does not
purport to be complete and is qualified in its entirety by reference to the full text of the Securityholder Agreement, a form of which was originally filed as Exhibit 10.1 to Identivs Current Report on Form
8-K
filed on February 6, 2018, and is incorporated herein by reference.
Subordinated Unsecured Promissory Notes
As part of the Merger Consideration, Identiv is obligated to issue Promissory Notes in an aggregate principal amount of $2.0 million. The Promissory Notes
bear simple interest at the rate of 3% per annum and mature on the
one-year
anniversary of Closing, unless repayment thereof is accelerated pursuant to a change in control of Identiv or other standard events
of default. The Promissory Notes are subordinated to Identivs existing and future secured indebtedness to banks, insurance companies, lease financing institutions or other lending institutions.
The foregoing description of the Promissory Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the
Subordinated Unsecured Promissory Notes, a form of which was originally filed as Exhibit 10.2 to Identivs Current Report on Form
8-K
filed on February 6, 2018, and is incorporated herein by
reference.