| Item 1.01 | Entry into a Material Definitive Agreement. |
Agreement and Plan of Merger
On October 5, 2020, Avalara, Inc., a Washington corporation (“Avalara”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tannin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Avalara (“Merger Sub”), Transaction Tax Resources, Inc., a Delaware corporation (“TTR”), and Northwest Cloud Co. LLC, a Delaware limited liability company, solely in its capacity as the Stockholder Representative. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into TTR (the “Merger”), with TTR surviving the Merger and becoming a wholly owned subsidiary of Avalara. The Merger was consummated on October 5, 2020.
The aggregate purchase price for all of the outstanding equity of TTR is approximately $377 million, subject to certain working capital and other adjustments (the “Aggregate Consideration”), which will be paid in cash. Pursuant to the Merger Agreement, a total of approximately $57.6 million will be withheld from the Aggregate Consideration and deposited into a segregated account to secure certain indemnification and other potential obligations of TTR’s equity holders, as set forth in the Merger Agreement. In addition, approximately $26.4 million of stockholder proceeds payable to TTR’s founder, Shon Holyfield, will be held back and subject to forfeiture in the event TTR fails to achieve certain performance metrics during the 2021 and 2022 fiscal years.
Each of Avalara, Merger Sub, and TTR have made customary representations, warranties, covenants, and indemnities in connection with the Merger.
The foregoing descriptions of the Merger Agreement and the Merger do not purport to be complete and are qualified in their entirety by reference to the Merger Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement contains representations and warranties that the parties made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Merger Agreement. In addition, such representations and warranties: (i) may not be accurate or complete as of any specified date; (ii) are modified and qualified in important part by the underlying disclosure schedules; (iii) may be subject to a contractual standard of materiality different from those generally applicable to investors; or (iv) may have been used for the purpose of allocating risk among the parties to the Merger Agreement, rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Avalara’s public disclosures. For the foregoing reasons, the representations and warranties should not be relied upon as statements of factual information.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information regarding the Merger Agreement and the Merger set forth in Item 1.01 is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
On October 5, 2020, Avalara issued a press release announcing the execution of the Merger Agreement, a copy of which is furnished as Exhibit 99.1.
The information set forth in or incorporated by reference into this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
