C1 MERGER AGREEMENT | NOTE 8. C1 MERGER AGREEMENT On November 30, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, FMC Merger Subsidiary Corp., a Delaware corporation (“Merger Sub I”) and a wholly-owned subsidiary of the Company, FMC Merger Subsidiary LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”), C1 Investment Corp., a Delaware corporation, (“C1”), and Clearlake Capital Management III, L.P., in the capacity thereunder as the representative for C1’s securityholders (the “Seller Representative”). The Merger Agreement provides for a two-step merger: (i) the merger of Merger Sub I with and into C1 (the “First Merger”), with C1 continuing as the surviving corporation (the “Surviving Corporation”) and as a wholly-owned subsidiary of the Company; and (ii) the merger of the Surviving Corporation with and into Merger Sub II (the “Second Merger” and together with the First Merger, the “C1 Business Combination”), with Merger Sub II continuing as the surviving entity (the “Surviving Entity”) in the Second Merger. Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the First Merger (the “Effective Time”): (a) all shares of C1’s Class A Common Stock and Class B Common Stock (the “C1 Company Stock”) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive the Total Consideration (as defined below) along with the holders of options to purchase Company Stock (“C1 Company Options”), with each holder of C1 Company Stock and C1 Company Options being entitled to receiving its pro rata share of the Total Consideration; (b) each outstanding option, warrant or other right to subscribe or purchase any C1 Company Stock or securities convertible into or exchange for, or that otherwise confer on the holder any right to acquire any C1 Company Stock, if not exercised or converted prior to such time, will be cancelled, retired and terminated and cease to represent a right to acquire, be exchanged for or convert into shares of C1 Company Stock or if exercised prior to such time, will have the resulting shares of C1 Company Stock issued upon such exercise treated as outstanding shares of C1 Company Stock; and (c) each outstanding C1 Company Option that is unvested as of the Effective Time will become fully vested and exercisable as of the Effective Time (each such C1 Company Option subject to such accelerated vesting, an “Accelerated Option”) and holders of all C1 Company Options, including Accelerated Options, will receive (x) their pro rata portion of the Merger Consideration (as defined below) minus the per-share exercise price of such Accelerated Option and (y) their pro rata share of the Earnout Payments (as defined below), except that holders of Accelerated Options will only receive their pro rata portion of the Earnout Payments if they continue to be employed on the date that it is paid. Merger Consideration The aggregate consideration to be paid pursuant to the Merger Agreement to holders of C1 Company Stock and C1 Company Option (together, the “Company Securityholders”) will be an amount equal to (the “Merger Consideration”): (i) $1,137,000,000, minus (ii) the indebtedness of C1 and its subsidiaries (the “Target Companies”), plus (iii) the cash of the Target Companies, together with the amount of any C1 transaction expenses that are paid prior to the closing of the C1 Business Combination (the “Closing”), and plus (iv) the cash amount paid and indebtedness incurred by the Target Companies for any business acquisitions that they make between the signing of the Merger Agreement and the Closing (the “Net Acquisition Amount”). Additionally, Company Securityholders will have the contingent right to receive additional consideration from the Company based on the performance of the Company and its subsidiaries, including the Surviving Entity, for the calendar years 2018, 2019 and 2020, as described below (the “Earnout Payments” and, together with the Merger Consideration, the “Total Consideration”). The Merger Consideration will consist of cash and stock. The cash portion of the Merger Consideration (“Cash Consideration”) will include cash from the Company and/or the Target Companies (the “Cash Consideration”) in an amount equal to (A) the total cash and cash equivalents of the Company (the “Forum Cash”), including funds from a concurrent private placement equity investment (the “PIPE Investment”) expected to be consummated at the Closing and the remaining funds in the Trust Account, after giving effect to the redemption by the Company of its shares of Class A Common Stock (“Forum Common Shares”) from its public stockholders (the “Redemption”), plus (B) the cash of the Target Companies to the extent that they are permitted to be distributed pursuant to the existing credit facilities of the Target Companies (“Permitted Cash”), minus (C) $25,000,000. The stock portion of the Merger Consideration will include a number of Forum Common Shares, valued at a price per share equal to the price paid to holders of Forum Common Shares in the Redemption (the “Redemption Price”), determined by subtracting the Cash Consideration and the Deferred Payment (as defined below) from the Merger Consideration (the “Stock Consideration” and, together with the Cash Consideration and the Earnout Payments, the “Total Consideration”). There will also be a deferred cash payment of $12,000,000 after the Closing (the “Deferred Payment”) in connection with a portion of the PIPE Investment that will close after the C1 Business Combination. Notwithstanding the foregoing, Seller Representative, in its sole discretion, may increase the Stock Consideration and reduce the Cash Consideration to ensure the Company Securityholders collectively own at least 50.1% of the issued and outstanding Forum Common Shares upon consummation of the C1 Business Combination. The Merger Consideration will be paid at the Closing based on estimates and will be subject to a post-closing adjustment, except that if the adjustment in either direction is less than $2,000,000, no adjustment or payments will be made. Any such true-up adjustments will be paid by delivery of Forum Common Shares valued at the Redemption Price, with the Company delivering additional shares to Company Securityholders if the finally determined Merger Consideration is higher than the estimated Merger Consideration delivered at closing, and the Company Securityholders forfeiting Forum Common Shares on a pro rata basis if the finally determined Merger Consideration is less than the estimated Merger Consideration delivered at closing. Following the consummation of the C1 Business Combination, subject to certain terms and conditions set forth in the Merger Agreement, Company Securityholders will have the contingent right to receive the Earnout Payments from the Company in connection with the calendar years 2018, 2019 and 2020 (each such calendar year, an “Earnout Year” and such three-year calendar period, the “Earnout Period”). In the event that (i) the trailing four quarter EBITDA as of the end of any fiscal quarter after the Closing within calendar year 2018 exceeds $144,000,000 (the “2018 Target”), (ii) the trailing four quarter EBITDA as of the end of any fiscal quarter within calendar year 2019 exceeds $155,000,000 (the “2019 Target”), or (iii) the trailing four quarter EBITDA as of the end of any fiscal quarter within calendar year 2019 exceeds $165,000,000 (the “2020 Target” and together with the 2018 Target and 2019 Target, the “Earnout Targets”), then for each Earnout Target that is achieved as of a given Measurement Date, the Company Securityholders shall receive additional consideration (a “Regular Earnout Payment”) of (A) 3,300,000 Forum Common Shares (an “Earnout Stock Payment”) and (B) cash in an amount equal to $33,000,000 (an “Earnout Cash Payment”). In the event an Earnout Target is not met in the applicable Earnout Year, but the Earnout Target is achieved for a subsequent Earnout Year, the Company Securityholders will be entitled to receive the Regular Earnout Payments for any Earnout Years in which the Earnout Target was not previously achieved, payable at the same time as the Regular Earnout Payment for such Earnout Year (each such payment, a “Catchup Earnout Payment”). In the event an Earnout Target for a future Earnout Year is achieved in the current Earnout Year, then the Company Securityholders will be entitled to receive in addition to and at the same time as the Regular Earnout Payment for the current Earnout Year, the Regular Earnout Payment for such future Earnout Year (each such payment, an “Accelerated Earnout Payment”). In the event that there is a Change of Control (as defined in the Merger Agreement) during the Earnout Period, then any Regular Earnout Payments that have not previously been paid (whether or not earned) shall be deemed earned and due to the Company Securityholders upon such Change of Control (such payment, a “Change of Control Earnout Payment” and collectively with the Regular Earnout Payments, Catchup Earnout Payments and Accelerated Earnout Payments, the “Earnout Payments”). In any event, the Company Securityholders will not be entitled to receive more than one Earnout Payment attributable to each Earnout Year. If at the time any Earnout Payment is due, such Earnout Payment exceeds either (a) the amount of cash available for distribution pursuant to the credit facilities of the Target Companies or (b) the amount of cash that can be paid without causing the ratio of the consolidated debt of the Target Companies to EBITDA (assuming full payment of the Earnout Cash Payment) to exceed 4.5 to 1, then the amount of the cash consideration will be reduced to an amount of cash that can be paid without exceeding such limits and any shortfall (the “Earnout Cash Payment Shortfall”) will at the option of the Seller Representative either (i) be paid by delivery of an additional number of Forum Common Shares determined based on the trailing 20 trading day volume-weighted average price as of the end of the Measurement Date on which the Earnout Payment was achieved (the “Earnout Cash Payment Shortfall Shares”) or (ii) defer the payment of the Earnout Cash Payment Shortfall until the following Measurement Date. If the Earnout Cash Payment Shortfall is deferred, then the Seller Representative will have the option on each succeeding Measurement Date until the end of the Earnout Period to elect to be paid the Earnout Cash Payment Shortfall Shares (which will still be valued based on the trailing 20 trading day volume-weighted average price as of the end of the Measurement Date on which the original applicable Earnout Payment was achieved) in full satisfaction of the Earnout Cash Payment Shortfall or to continue to defer payment of the Earnout Cash Payment Shortfall. At the end of the Earnout Period, any remaining Earnout Cash Payment Shortfall shall automatically be converted into the Earnout Cash Payment Shortfall Shares. Notwithstanding the above provisions, each Earnout Payment otherwise payable to the Company Securityholders will be reduced by the amount of the Sponsor Earnout Shares (as more fully described below) that become vested in connection with an Earnout Payment by directly reducing each Earnout Stock Payment by the amount of the Sponsor Earnout Shares that have become vested. The Company, C1, and the Merger Subs have each made representations, warranties and covenants in the Merger Agreement that are customary for transactions of this nature. Further, notwithstanding the above provisions, the allocation of Total Consideration as among cash and Forum Common Shares payable to Company Securityholders shall be adjusted, by decreasing the cash portion and correspondingly increasing the portion of Total Consideration paid in Forum Common Shares, if and to the extent necessary to ensure that the Company Securityholders receive sufficient Forum Common Shares such that, when aggregated with Forum Common Shares previously paid as Total Consideration to the Company Securityholders (if any), the amount of Forum Common Shares is not less than the minimum amount of Forum Common Shares necessary to satisfy the requirements for qualification as a reorganization under Section 368(a)(1)(A) of the Code. Conditions to Consummation of the C1 Business Combination The consummation of the C1 Business Combination is subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the Merger Agreement by the requisite vote of the Company’s stockholders and C1’s stockholders; (ii) expiration of the applicable waiting period under any antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) receipt of requisite regulatory approval, (iv) no law or order preventing or prohibiting the C1 Business Combination or the other transactions contemplated by the Merger Agreement or the Closing; (v) the Company having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption and the PIPE Investment;(vi), the consummation of the PIPE Investment, (vii) the election or appointment of members to Forum’s board of directors in accordance with the Merger Agreement; and (viii) the effectiveness of the registration statement filed in connection with the C1 Business Combination. Private Placement In connection with the C1 Business Combination, the Company entered into subscription agreements with the investors named therein (the “PIPE Investors”), pursuant to which the Company agreed to issue and sell to the PIPE Investors 17,959,375 Forum Common Shares, for an aggregate purchase price of $143,675,000, immediately prior to closing of the Merger (except for the portion relating to the Deferred Payment) (the “PIPE Investment”). The PIPE Investment is conditioned on the concurrent closing of the C1 Business Combination and other customary closing conditions. The proceeds from the PIPE Investment will be used to fund a portion of the cash consideration for the C1 Business Combination. Registration Rights Agreement At the Closing, the Company, the Sponsor, and certain Company Securityholders will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”) amending and restating the registration rights agreement entered into by the Sponsor and the Company at the time of the Company’s Initial Public Offering. Under the Registration Rights Agreement, the Company Securityholders will hold registration rights that obligate the Company to register all or any portion of the Forum Common Shares issued as merger consideration under the Merger Agreement and the Sponsor will hold similar registration rights with respect to its Forum common stock and common stock underlying its Forum warrants. Holders of a majority-in-interest of all such registrable securities will be entitled to certain demand registration rights, as well as the right to registered the resale of their registrable securities on Form S-3 if eligible, and each holder of registrable securities will have “piggyback” registration rights. Voting Agreement Simultaneously with the execution of the Merger Agreement, the Company and C1 entered into a voting agreement (the “Voting Agreement”) with C1’s largest stockholder, Clearlake Capital Partners III (Master), L.P. (“Clearlake”), which owns a majority of C1’s outstanding capital stock. Pursuant to the Voting Agreement, Clearlake agreed, among other things, to vote all of its shares of C1 Company Stock in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions. The Voting Agreement prevents transfers of the C1 Company Stock held by Clearlake between the date of the Voting Agreement and the date of the special meeting of the Company’s stockholders to approve the C1 Business Combination. Sponsor Earnout Letter and Amendment to Escrow Agreement In accordance with the letter agreement entered into on November 30, 2017 (the “Sponsor Earnout Letter”), by and among the “ Sponsor, the Company, C1, Continental Stock Transfer & Trust Company and EBC, and Seller Representative, the Sponsor has agreed that effective upon the Closing, with respect to the Founder Shares owned by the Sponsor, the Sponsor will (a) forfeit 1,078,125 of the Founder Shares and (b) subject 2,156,250 of the Founder Shares (the “Sponsor Earnout Shares”) to potential forfeiture in the event that the Earnout Payments are not achieved by Company Securityholders. Subject to certain limited exceptions, the Sponsor Earnout Shares will be subject to lock-up from the Closing until 180 days thereafter; provided that if the volume-weighted average price of Forum Common Shares for 15 trading days is at least $12.50 per share, then 25% of the Sponsor Earnout Shares will be released from escrow immediately (but still subject to the vesting requirements under the Sponsor Earnout Letter). The Sponsor also agreed in the Sponsor Earnout Letter, on behalf of itself and its members and affiliates, to waive any rights that it has under the Company’s amended and restated certificate of incorporation to the adjustment to the conversion ratio of the Founder Shares in connection with the PIPE Investment. In consideration of the agreements by the Sponsor under the Sponsor Earnout Letter, the remaining 1,078,125 Founder Shares will be released from escrow and no longer be subject to any lock-up restrictions effective as of the Closing. the Company will seek shareholder approval for the transactions contemplated by the Sponsor Earnout Letter in connection with the C1 Business Combination. Lock-Up Agreements At the Closing, each Company Securityholder will enter into a lock-up agreement with the Company, and agree that, subject to certain limited exceptions, from the Closing until 180 days thereafter (or if earlier, the date on which the Company consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of the Company’s stockholders having the right to exchange either equity holdings in the Company for cash, securities or other property), such Company Securityholder shall be subject to the lock-up restriction contained therein. However, if the volume-weighted average price of Forum Common Shares for 15 trading days is at least $12.50 per share, then the lock-up period for 25% of the securities covered by the lock-up agreement that are then held by the Company Securityholder will immediately expire thereafter. |