Item 2.01 Entry into a Material Definitive Agreement.
Merger Agreement
On October 25, 2018, Identiv, Inc., a Delaware corporation (“Identiv”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Identiv, TSS Merger Sub, Inc., a Texas corporation and wholly owned subsidiary of Identiv (“Merger Sub 1”), TSS Acquisition, LLC., a Texas limited liability company and a wholly owned subsidiary of Identiv (“Merger Sub 2” and together with Merger Sub 1, the “Merger Subs”), Thursby Software Systems, Inc., a Texas corporation (“TSS”), and William Thursby as the sole Stockholder of the Company. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed thereto in the Merger Agreement.
Pursuant to the terms and conditions set forth in the Merger Agreement, at the effective time of the merger, Merger Sub 1 will merge with and into TSS and TSS will become a wholly-owned subsidiary of Identiv (“Merger 1”), following which TSS will merge with and into Merger Sub 2, whereupon which the separate corporate existence of TSS will cease with Merger Sub 2 surviving the merger (“Merger 2” and together with Merger 1, the “Merger”). Under the terms of the Merger Agreement, the aggregate consideration to be paid by Identiv at the closing of the Merger is approximately $5 million, consisting of (i) approximately $2.5 million in cash, subject to adjustments based on TSS’s closing working capital, and (ii) the issuance of shares of Identiv’s common stock with a value of approximately $2.5 million. Additionally, in the event that revenue from TSS products is greater than $8.0 million, $11.0 million, or $15.0 million in product shipments in 2019, Identiv will be obligated to issueearn-out consideration of up to a maximum of $7.5 million payable in shares of Identiv’s common stock (subject to certain conditions) (collectively, all consideration issuable in connection with the Merger, the “Merger Consideration”). In the even that such revenue is less than $15.0 million in 2019, but 2020 revenue from TSS products exceeds $15.0 million, then Identiv will be obligated to issue an additional $2.5 million in earnout consideration in the form of stock. The maximum total earnout consideration payable for all periods is $7.5 million in the aggregate, payable in Identiv common stock. $0.5 million of Identiv’s common stock issuable at the closing of the transaction will be held back for 12 months following the closing for the satisfaction of certain indemnification claims.
Completion of the Merger is subject to customary closing conditions, and the Merger is expected to close on or about November 1, 2018 (the “Closing”).
It is expected that the shares of common stock issued by Identiv at the Closing, and anyearn-out consideration paid out in shares (the “Identiv Shares”), will be issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D, as promulgated thereunder. Identiv has also agreed to file a registration statement on FormS-3 registering the Identiv shares issued in the Merger for resale.
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 is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the parties. The terms of the Merger Agreement govern the contractual rights and relationships, and allocate risks, among the parties in relation to the transactions contemplated by the Merger Agreement. In particular, the assertions embodied in the representations and warranties in the Merger Agreement reflect negotiations between, and are solely for the benefit of, the parties thereto and may be limited, qualified or modified by a variety of factors, including: subsequent events, information included in public filings, disclosures made during negotiations, correspondence between the parties and in confidential disclosure schedules to the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the parties rather than establishing matters as facts and may not describe the actual state of affairs at the date they were made or at any other time. Accordingly, you should not rely on the representations and warranties in the Merger Agreement as characterizations of the actual state of facts about the parties.
