Item 1.01. Entry into a material definitive agreement.
On July 31, 2018, DocuSign, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, SpringCM Inc., a Delaware corporation (“SpringCM”), Sparrow Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and TF Corporate Services LLC, as the stockholders’ representative thereunder. Pursuant to the Merger Agreement, Merger Sub will be merged with and into SpringCM, with SpringCM continuing as the surviving company and becoming a wholly-owned subsidiary of the Company (the “Acquisition”). The aggregate consideration payable in exchange for all of the outstanding equity interests of SpringCM is approximately $220 million in cash, subject to adjustments as set forth in the Merger Agreement. In addition, certain continuing employees of SpringCM will receive performance-vested restricted stock units as well as other retention incentives.
The Acquisition has been approved by the board of directors of each of the Company and SpringCM, and has been approved by the stockholders of SpringCM.
The Merger Agreement contains representations, warranties and covenants of the Company, SpringCM and Merger Sub that are customary for a transaction of this nature, including among others, covenants by SpringCM regarding the conduct of its business during the pendency of the transactions contemplated by the Merger Agreement, public disclosures and other matters.
The Merger Agreement also contains customary indemnification provisions whereby the stockholders of SpringCM will indemnify the Company for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of SpringCM,pre-closing taxes of SpringCM, and certain other matters, subject to certain caps and thresholds. The Company also purchased abuy-side representations and warranties insurance policy under which it may seek coverage for breaches of SpringCM’s representations and warranties to supplement an indemnity escrow. The representations and warranties insurance policy is subject to certain customary exclusions and deductibles.
SpringCM and the Company have agreed to use their respective reasonable best efforts, subject to certain exceptions, to consummate the transactions contemplated in the Merger Agreement as promptly as reasonably practicable and obtain any required regulatory approvals. Prior to the completion of the Acquisition, the Company and SpringCM will continue to operate as separate companies.
The Acquisition is expected to close in the third quarter of the Company’s fiscal year. Consummation of the Acquisition is subject to various conditions, including, among others, the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The obligation of each party to consummate the Acquisition is also conditioned on the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated by reference herein. 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 Company, SpringCM or Merger Sub. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in a confidential disclosure letter provided by SpringCM to the Company in connection with the signing of the Merger Agreement. This confidential disclosure letter contains information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purposes of allocating risk between the Company and SpringCM rather than establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement should not be relied on as characterization of the actual state of facts about the Company, SpringCM or Merger Sub.
On July 31, 2018, the Company and SpringCM issued a joint press release relating to the transaction. A copy of the press release is attached hereto as Exhibit 99.1.
Forward Looking Statements
This report contains forward-looking information related to the Company, SpringCM and our acquisition of SpringCM that involves substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this communication include, among other things, statements about the potential benefits of the proposed transaction, the anticipated timing of closing of the proposed transaction, our ability to develop our System of Agreement platform and deliver product innovation, our possible or
