UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 12, 2007
GOAMERICA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29359 22-3693371
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
433 HACKENSACK AVENUE, HACKENSACK, NJ 07601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 996-1717
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|X| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement with Hands On:
As previously announced, GoAmerica, Inc. (the "Company" or "GoAmerica")
executed a definitive merger agreement, dated as of September 12, 2007 (the
"Merger Agreement"), with Hands On Video Relay Services, Inc. ("HOVRS"),
pursuant to which HOVRS will become a wholly-owned subsidiary of the Company and
the stockholders of HOVRS will receive up to $35 million in cash and up to 6.7
million shares of the Company's Common Stock. This acquisition will be financed
by the issuances of GoAmerica Series A Preferred Stock and debt totaling $45
million to Clearlake Capital Group, pursuant to an Amended and Restated Stock
Purchase Agreement and an Amended and Restated Second Lien Commitment Letter
executed concurrently with the Merger Agreement and described below.
Each HOVRS stockholder will be entitled to elect to receive either cash,
GoAmerica Common Stock or a combination of cash and GoAmerica Common Stock in
exchange for its HOVRS common or preferred stock. To the extent the HOVRS common
and preferred stockholders elect to receive more than the available amount of
stock or cash, the available stock or cash will be pro rated in accordance with
procedures and formulas set forth in the Merger Agreement.
The Merger Agreement provides that all HOVRS options that are vested
immediately prior to the closing date must be exercised by that date, or else
they will expire. The HOVRS stock issued on exercise of these options will be
exchanged for a portion of the merger consideration.
GoAmerica will assume certain HOVRS options that are not vested as of the
closing date (up to a maximum of 220,498), which following the merger will
become exercisable for the same number of shares of GoAmerica Common Stock as
their holders would have received had they exercised their options immediately
before the effectiveness of the merger. The parties executed a side letter,
dated September 17, 2007 (the "Side Letter"), which amended the Merger Agreement
to provide that HOVRS may, with GoAmerica's approval, grant options after the
signing of the Merger Agreement to persons hired as employees of HOVRS after the
date of the Merger Agreement. The Side Letter provides that any options so
granted will not be counted toward the 220,498 maximum, and any options so
granted will be assumed by GoAmerica.
The proposed acquisition of HOVRS and the related equity issuances are
subject to both GoAmerica and HOVRS stockholders' approval. The merger with
HOVRS also is conditioned on consummation of GoAmerica's acquisition of the
assets of Verizon's Telecommunications Relay Services ("TRS") business. The
execution of the asset purchase agreement pertaining to the Verizon acquisition
was announced on August 2, 2007.
HOVRS is a privately held company headquartered in Rocklin, California,
and a growing provider of video relay services. HOVRS also provides audio and
video communications that allow deaf and hard-of-hearing people to communicate
effectively and naturally with the hearing world by linking callers, via the
Internet, to certified Video Interpreters, who interpret between the visual
language of American Sign Language and the auditory language of a hearing
person. HOVRS offers video relay services under the
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"Hands On" brand and privately labeled for AT&T and Sprint, as well as
community-based sign language interpreting services.
Escrow Agreement:
Pursuant to an Escrow Agreement to be executed at the closing of the HOVRS
transaction, at the closing, a total of $5 million in cash will be deposited in
an escrow fund with an independent escrow agent and an additional $200,000 will
be held in a hold back fund controlled by a stockholder's agent, who will act as
the agent of the former HOVRS stockholders for purposes of administering the
escrow fund. The $5 million in escrow will secure the indemnification
obligations of the former HOVRS stockholders to GoAmerica under the Merger
Agreement. The $200,000 held in the hold back fund will be used to pay any
out-of-pocket expenses of the stockholder's agent. The escrow fund will be
released 12 months after the closing, to the extent there are then no claims
against it. In the event there is any investigation pending by the Federal
Communications Commission of HOVRS' marketing programs as of the 12th month
following the closing, up to $2 million will be retained in the escrow fund
after the initial 12 month period up to and through 24 months and, if a claim is
brought within such time, until such claim is resolved.
Lock-up and Registration Rights Agreement:
At the closing of the merger, GoAmerica will enter into a Lock-Up and
Registration Rights Agreement with all of the former HOVRS stockholders,
pursuant to which they will
o receive certain registration rights in the event that after the
first anniversary of the closing of the transaction, GoAmerica
shares of Common Stock maintain an average closing price of $20 or
greater over any ninety day period; and
o agree not to sell any GoAmerica Common Stock acquired in the merger
during the first year following the closing of the merger, and not
to sell GoAmerica stock in excess of the amounts allowed by SEC Rule
144 during the second year following the closing of the merger
(which generally permits an individual to sell, during any three-
month period, the greater of (1) 1% of GoAmerica's outstanding
Common Stock or (2) the average weekly trading volume for
GoAmerica's Common Stock as reported by NASDAQ).
Support and Lock-up Agreement:
A Support and Lock-Up Agreement was entered into on September 12, 2007, by
and among GoAmerica and Ronald and Denise Obray, Edmond Routhier, Caymus
Investment Group II, LLC, and Caymus Obray, LLC, stockholders representing more
than 80% of the ownership of HOVRS. It provides that between signing of the
Merger Agreement and consummation of the merger, such stockholders will not sell
or otherwise transfer any direct or indirect interest in their shares of HOVRS,
will not vote in favor of
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any transaction involving HOVRS other than the transaction with GoAmerica, and
will not otherwise frustrate or impede consummation of the merger.
Transaction Financing:
The acquisition of HOVRS will be financed through $5 million of committed
equity financing and $40 million of committed senior debt financing, funded in
each case by Clearlake Capital Group ("Clearlake Capital"). As previously
announced on August 2, 2007, the transaction with Verizon will be financed
through $35 million of committed equity financing and $30 million of committed
senior debt financing, funded in each case by Clearlake Capital. Accordingly,
Clearlake Capital's total financing commitment to GoAmerica, for both the HOVRS
and Verizon transactions, is $110 million in debt and equity.
Amended and Restated Stock Purchase Agreement:
Concurrently with the execution of the HOVRS Merger Agreement, but subject
to certain closing conditions, GoAmerica and one of the Clearlake Capital funds
("Clearlake") executed an amended and restated stock purchase agreement, dated
as of September 12, 2007 (the "Amended and Restated Stock Purchase Agreement"),
pursuant to which Clearlake agreed to purchase, in connection with the closing
of the merger with HOVRS, an additional 967,118 shares of GoAmerica Series A
Preferred Stock at a previously negotiated price of $5.17 per share. The Amended
and Restated Stock Purchase Agreement amended and restated the stock purchase
agreement between the parties dated as of August 1, 2007, pursuant to which
Clearlake agreed to purchase 6,479,691 shares of Series A Preferred Stock at a
price of $5.17 per share upon the closing of the acquisition of Verizon's TRS
Division. Accordingly, the Amended and Restated Stock Purchase Agreement
provides for the issuance of an aggregate of 7,446,809 shares of Series A
Preferred Stock. As previously announced, Clearlake purchased 290,135 shares of
Series A Preferred Stock from GoAmerica at a price of $5.17 per share pursuant
to another stock purchase agreement between the parties, dated as of August 1,
2007.
The issuances of Series A Preferred Stock under the Amended and Restated
Stock Purchase Agreement, the purchase of assets from Verizon and the merger
with HOVRS are subject to approval by GoAmerica's stockholders.
Amended and Restated Investor Rights Agreements:
As previously announced, GoAmerica and Clearlake executed an investor
rights agreement, dated August 1, 2007 (the "Investor Rights Agreement"),
pursuant to which GoAmerica granted Clearlake certain registration and other
rights. On September 12, 2007, GoAmerica and Clearlake agreed on the form of a
First Amended and Restated Investor Rights Agreement, to be entered into upon
the closing of the Verizon transaction, unless the Verizon transaction closes
concurrently with the HOVRS transaction, in which case the parties (including
the former stockholders of HOVRS) will
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execute a Second Amended and Restated Investor Rights Agreement, described
below. The First Amended and Restated Investor Rights Agreement amends and
restates the Investor Rights Agreement, and grants Clearlake rights to receive
certain information about the Company. Clearlake agrees to keep such information
confidential to the extent it constitutes material non-public information.
Also on September 12, 2007, the Company, Clearlake and HOVRS agreed on the
form of a Second Amended and Restated Investor Rights Agreement, which will be
executed in connection with the closing of the acquisition of HOVRS. The Second
Amended and Restated Investor Rights Agreement provides that the Common Stock of
the Company to be issued to the former HOVRS stockholders in connection with the
HOVRS acquisition will be included in the registration statements the Company is
required to file pursuant to the Second Amended and Restated Investor Rights
Agreement, to the extent described therein. In addition, the Second Amended and
Restated Investor Rights Agreement provides that Clearlake and all of the
holders of HOVRS capital stock immediately prior to the merger will take all
necessary action to cause the Board of Directors of the Company after the
closing of the HOVRS transaction to be comprised of up to eight directors, two
of whom will be designated by Clearlake; provided that, if Clearlake at any time
ceases to own at least 1,600,000 shares of Common Stock (as adjusted for stock
dividends, splits, combinations or similar events, and including shares of
Common Stock issuable upon conversion of the Series A Preferred Stock), then
Clearlake will only be entitled to designate one director, and if Clearlake at
any time ceases to own any Common Stock, then Clearlake will cease to be
entitled to designate a director. It is also contemplated that the initial
post-HOVRS acquisition Board of Directors will be comprised of three individuals
designated by HOVRS.
Credit Agreement and Amended and Restated Debt Commitment Letters:
As previously announced, GoAmerica entered into a Credit Agreement, dated
as of August 1, 2007 (the "Credit Agreement"), with the Lenders named therein
and Clearlake Capital, as Administrative Agent and Collateral Agent, pursuant to
which GoAmerica received a $1.0 million bridge loan, which may be increased to
up to $3.5 million. On September 14, 2007, GoAmerica drew down another $1.75
million under the Credit Agreement. Interest on the loan is payable monthly, at
the LIBO rate, plus 8%. Interest is payable in cash, except that a portion of
the interest equal to 4% will be payable in kind in the form of additional
loans. The loan will be repaid upon the closing of the Verizon transaction, and
in any event not later than August 2, 2008. The loan is secured by substantially
all of the assets of GoAmerica and its principal subsidiaries and the stock of
such principal subsidiaries.
GoAmerica and Clearlake Capital executed an amended and restated first
lien commitment letter, dated September 12, 2007 (the "Amended and Restated
First Lien Commitment Letter"), which amended and restated the first lien
commitment letter, dated August 1, 2007, executed by the parties. The principal
substantive change in the Amended and Restated First Lien Commitment Letter
pertains to the description of the
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capital expenditure covenant that will be contained in the definitive loan
documents. Under the Amended and Restated First Lien Commitment Letter,
GoAmerica agrees that the maximum amount of annual capital expenditures
(excluding capitalized labor) will equal 30% of a plan agreed to by the parties.
Pursuant to the Amended and Restated First Lien Commitment Letter, Clearlake
commits to loan GoAmerica $30 million of senior debt to finance the purchase of
the VRS business from Verizon, for the repayment of expenses and working capital
purposes and for the repayment of certain of the Company's existing secured
debt. The loan, which will close upon the closing of the Verizon transaction,
will bear interest at the rate of LIBOR plus 700 basis points per annum, payable
quarterly in arrears. The loan will be secured by the equity interests of
GoAmerica's material subsidiaries and by substantially all of the assets of
GoAmerica and such subsidiaries. GoAmerica's material subsidiaries will
guarantee the repayment of the loan. These financial terms are the same as those
contained in the first lien commitment letter executed in August 2007.
GoAmerica and Clearlake Capital executed an amended and restated second
lien commitment letter, dated September 12, 2007 (the "Amended and Restated
Second Lien Commitment Letter"), pursuant to which Clearlake commits to provide
$40 million of senior debt financing in connection with the acquisition of
HOVRS. The loan, which will close upon the closing of the HOVRS Merger
Agreement, will bear interest at the rate of LIBOR plus 900 basis points per
annum, payable quarterly in arrears. The loan will be secured by the equity
interests of GoAmerica's material subsidiaries and by substantially all of the
assets of GoAmerica and such subsidiaries. Go America's material subsidiaries
will guarantee the repayment of the loan.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01 above.
Item 5.03 Amendments to Articles of Incorporation or By-Laws; Change in Fiscal
Year.
On September 12, 2007, the Company's Board of Directors amended its
By-laws to correct and clarify the stockholder vote required to approve various
matters.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit 3.2 GoAmerica, Inc.'s By-laws, As Amended and Restated
through September 12, 2007.
Exhibit 10.1 Merger Agreement and Side Letter
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Exhibit 10.2 Support and Lock-up Agreement
Exhibit 10.3 Amended and Restated Stock Purchase Agreement
Exhibit 10.4 Credit Agreement, dated as of August 1, 2007,
among GoAmerica, Inc., the Lenders named therein
and Clearlake Capital Group, L.P., as
Administrative Agent and Collateral Agent, is
incorporated by reference to Exhibit 10.5 to the
Company's Current Report on Form 8-K filed with
the SEC on August 7, 2007.
Exhibit 99.1 Amended and Restated First Lien Commitment Letter,
dated September 12, 2007, between GoAmerica, Inc.
and Clearlake Capital Group, L.P.
Exhibit 99.2 Amended and Restated Second Lien Commitment
Letter, dated September 12, 2007, between
GoAmerica, Inc. and Clearlake Capital Group, L.P.
Exhibit 99.3 Form of Escrow Agreement
Exhibit 99.4 Form of Lock-up and Registration Rights Agreement
Exhibit 99.5 Form of First Amended and Restated Investor Rights
Agreement
Exhibit 99.6 Form of Second Amended and Restated Investor
Rights Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOAMERICA, INC.
By: /s/ Wayne D. Smith
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Wayne D. Smith
Executive Vice President, General Counsel and Secretary
Dated: September 18, 2007
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Exhibit Index
Exhibit No. Description
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Exhibit 3.2 GoAmerica, Inc.'s By-laws, As Amended and
Restated through September 12, 2007.
Exhibit 10.1 Merger Agreement and Side Letter
Exhibit 10.2 Support and Lock-up Agreement
Exhibit 10.3 Amended and Restated Stock Purchase
Agreement
Exhibit 10.4 Credit Agreement, dated as of August 1,
2007, among GoAmerica, Inc., the Lenders
named therein and Clearlake Capital Group,
L.P., as Administrative Agent and Collateral
Agent, is incorporated by reference to
Exhibit 10.5 to the Company's Current Report
on Form 8-K filed with the SEC on August 7,
2007.
Exhibit 99.1 Amended and Restated First Lien Commitment
Letter, dated September 12, 2007, between
GoAmerica, Inc. and Clearlake Capital Group,
L.P.
Exhibit 99.2 Amended and Restated Second Lien Commitment
Letter, dated September 12, 2007, between
GoAmerica, Inc. and Clearlake Capital Group,
L.P.
Exhibit 99.3 Form of Escrow Agreement
Exhibit 99.4 Form of Lock-up and Registration Rights
Agreement
Exhibit 99.5 Form of First Amended and Restated Investor
Rights Agreement
Exhibit 99.6 Form of Second Amended and Restated Investor
Rights Agreement
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