Xactly Corporation (NYSE:XTLY) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On May29, 2017, Xactly Corporation, a Delaware corporation
(Xactly or the Company), entered into an Agreement and Plan of
Merger (the Merger Agreement) with Excalibur Parent LLC, a
Delaware limited liability company (Parent), and Excalibur Merger
Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Parent (Merger Sub), providing for the merger of Merger Sub with
and into the Company (the Merger), with the Company surviving the
Merger as a wholly owned subsidiary of Parent. Parent and Merger
Sub were formed by affiliates of Vista Equity Partners Fund VI,
L.P., a Cayman Islands exempted limited partnership (Vista Fund
VI). Capitalized terms used herein but not otherwise defined have
the meaning set forth in the Merger Agreement.
At the Effective Time, each:
| (i) |
share of common stock, par value $0.001 per share, of the Company (Company Common Stock) issued and outstanding as of immediately prior to the Effective Time (other than Owned Company Shares and Dissenting Company Shares) will be cancelled and extinguished, and automatically converted into the right to receive cash in an amount equal to $15.65, without interest thereon (the Per Share Price); |
| (ii) |
Company RSU will be cancelled and converted into the right to receive: |
| (A) |
for (1)any Company RSU that is vested as of the Effective Time (including any Company RSU that vests as a result of the transactions contemplated by the Merger Agreement or any additional action taken by the Company in connection therewith) (each, a Vested Company RSU) and (2)any additional Company RSU that becomes vested as of the Effective Time in an amount equal to the excess, if any of (x) 66 2/3% of all Company RSUs held by the holder of such Company RSU as of immediately prior to the Effective Time over (y)the total number of such holders Vested Company RSUs, an amount equal to the Per Share Price, subject to any required withholding for applicable taxes; and |
| (B) |
for any Company RSU not addressed in the paragraph above |
|
Surviving Corporation is (x)terminated without cause within twelve months following the Closing Date or (y)is a party to a change of control severance agreement, offer letter, employment agreement or any other agreement or contract that provides for vesting acceleration of such holders Company RSUs and has a qualifying termination of employment under such agreement, letter, or contract, in each case, subject to the holder satisfying certain conditions; and |
| (iii) |
Company Option will be cancelled and converted into the right to receive: |
| (A) |
for (1)any Company Option that is vested as of the Effective Time (including any Company Option that vests as a result of the transactions contemplated by the Merger Agreement or any additional action taken by the Company in connection therewith) (each, a Vested Company Option) and (2)any additional Company Option that becomes vested as of the Effective Time in an amount equal to the excess, if any of (x) 66 2/3% of all Company Options held by the holder of such Company Option as of immediately prior to the Effective Time over (y)the total number of such holders Vested Company Options, an amount equal to (x)the Per Share Price (less the exercise price per share, if any, attributable to such Company Option), multiplied by (y)the aggregate number of shares of Company Common Stock subject to such Company Option, subject to any required withholding for applicable taxes; and |
| (B) |
for any Company Option not addressed in the paragraph above (each, an Unvested Company Option), a cash amount equal to (1)the aggregate number of shares of Company Common stock subject to such Unvested Company Option multiplied by (2)the excess, if any, of the Per Share Price over the applicable per share exercise price under such Unvested Company Option, which cash amount will vest and be payable at the same time as the Unvested Company Option for which such cash amount was exchanged would have vested to its terms, subject to any required withholding for applicable taxes and subject to the holders continued employment with the Parent and its Affiliates (including the Surviving Corporation and its Subsidiaries) through the applicable vesting dates; provided, however, that the payment of such cash amount may be accelerated in the event the holders employment with the Surviving Corporation is (x)terminated without cause within twelve months following the Closing Date or (y)is a party to a change of control severance agreement, offer letter, employment agreement or any other agreement or contract that provides for vesting acceleration of such holders Company Options and has a qualifying termination of employment under such agreement, letter, or contract, in each case, subject to the holder satisfying certain conditions. |
to the Equity Commitment Letter, Vista Fund VI has committed to
invest in Parent, directly or indirectly, the cash amounts set
forth therein for the purpose of funding up to the full amount of
the aggregate purchase price at the Effective Time, subject to
the terms and conditions set forth therein. The Company is a
third party beneficiary of the Equity Commitment Letter.
Consummation of the Merger is subject to certain conditions,
including, but not limited to, the: (i)Requisite Stockholder
Approval; (ii)expiration or termination of any waiting periods
applicable to the consummation of the Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; and
(iii)absence of any law or order restraining, enjoining or
otherwise prohibiting the Merger.
The Company has made customary representations and warranties in
the Merger Agreement and has agreed to customary covenants
regarding the operation of the business of the Company and its
Subsidiaries prior to the Effective Time. The Company is subject
to customary restrictions on its ability to solicit alternative
acquisition proposals from third parties and to provide
information to, and participate in discussions and engage in
negotiations with, third parties regarding any alternative
acquisition proposals. However, prior to the receipt of the
Requisite Stockholder Approval, such restrictions are subject to
a customary fiduciary out provision that allows the Company,
under certain specified circumstances, to provide information to,
and participate in discussions and engage in negotiations with,
third parties with respect to an alternative acquisition proposal
if the Company Board determines in good faith (after consultation
with its financial advisor and outside legal counsel) that such
alternative acquisition proposal either (x)constitutes a Superior
Proposal or (y)is reasonably likely to lead to a Superior
Proposal, and the failure to explore such alternative acquisition
proposal would be inconsistent with the directors fiduciary
duties to applicable law. The parties have also agreed to use
their reasonable best efforts to consummate the Merger.
The Merger Agreement contains certain termination rights for the
Company and Parent. Upon termination of the Merger Agreement
under specified circumstances, the Company will be required to
pay Parent a termination fee. If the Merger Agreement is
terminated in connection with the Company accepting a Superior
Proposal or due to the Company Boards withdrawal of its
recommendation of the Merger, then the termination fee payable by
the Company to Parent will be $18.5million. This termination fee
will also be payable if the Merger Agreement is terminated under
certain circumstances and prior to such termination, a proposal
to acquire at least 50% of the Companys stock or assets is
publicly announced or disclosed and the Company enters into an
agreement for, or completes, any transaction involving the
acquisition of at least 50% of its stock or assets within one
year of the termination.
In addition to the foregoing termination rights, and subject to
certain limitations, the Company or Parent may terminate the
Merger Agreement if the Merger is not consummated by November29,
2017, 2017 (the Termination Date).
In connection with the execution of the Merger Agreement, Parent
has entered into voting agreements (the Voting Agreements) with
entities affiliated with Alloy Ventures, entities affiliated with
Bay Partners and entities affiliated with Rembrandt Venture
Partners, which hold, in the aggregate, approximately 23% of the
outstanding shares of Company Common Stock. Under the Voting
Agreement, these parties have agreed, during the term of the
Voting Agreement, to vote their shares of Company Common Stock
(i)in favor of the adoption of the Merger Agreement and the
approval of the Merger and the other transactions contemplated by
the Merger Agreement and/or (ii)against any acquisition proposal
or any action or agreement which would reasonably be expected to
result in any of the conditions to the Companys obligations to
consummate the Merger as specified in the Merger Agreement not
being fulfilled or any alternative acquisition proposals.The
obligations under the Voting Agreements generally terminate when
the Merger Agreement terminates.
Under the Companys Second Amended and Restated Loan and Security
Agreement (the Loan Agreement) with Silicon Valley Bank (SVB),
dated October30, 2015 and as amended from time to time, the
Company intends to pay off its obligations in connection with the
closing of the Merger and the closing of the Merger would be a
technical covenant event of default under the Loan Agreement. As
of the date of this report, the Company had $6.5million
outstanding under the revolving line of credit and $6.9million
outstanding under the term loan.
The foregoing description of the Merger Agreement and the
transactions contemplated thereby does not purport to be
complete, and is subject to, and qualified in its entirety by
reference to, the full text of the Merger Agreement, which is
attached as Exhibit2.1 and is incorporated herein by reference.
The Merger Agreement contains representations and warranties by
each of Parent, Merger Sub and the Company. These representations
and warranties were made solely for the benefit of the parties to
the Merger Agreement and:
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should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
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may have been qualified in the Merger Agreement by disclosures that were made to the other party in connection with the negotiation of the Merger Agreement; |
|
may apply contractual standards of materiality that are different from materiality under applicable securities laws; and |
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were made only as of the date of the Merger Agreement or such other date or dates as may be specified in the Merger Agreement. |
On May30, 2017, the Company and Parent issued a joint press
release announcing the entry into the Merger Agreement. A copy of
the joint press release is attached hereto as Exhibit99.1 and is
incorporated herein by reference.
Item2.04 Triggering Events That Accelerate or Increase a
Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement.
The applicable information set forth above in Item 1.01 of this
Current Report on Form 8-K regarding the Loan Agreement is
incorporated herein by reference.
Additional Information and Where to Find It
Xactly Corporation (Xactly) plans to file with the Securities and
Exchange Commission (the SEC), and furnish to its stockholders a
proxy statement in connection with the proposed merger with
Excalibur Merger Sub, Inc., to which Xactly would be acquired by
entities affiliated with Vista Equity Partners (the Merger). The
proxy statement described above will contain important
information about the proposed merger and related matters.
INVESTORS, STOCKHOLDERS AND SECURITY HOLDERS OF XACTLY ARE URGED
TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE
TRANSACTION THAT XACTLY WILL FILE WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
XACTLY AND THE TRANSACTION. Investors, stockholders and security
holders will be able to obtain free copies of these documents and
other documents filed with the SEC by Xactly through the website
maintained by the SEC at www.sec.gov. In addition, investors,
stockholders and security holders will be able to obtain free
copies of these documents from Xactly by contacting Xactlys
Investor Relations at (408) 477-3338, by e-mail at
[email protected], or by going to Xactlys Investor Relations page
on its website at investors.xactlycorp.com.
Participants in the Solicitation
The directors and executive officers of Xactly may be deemed to
be participants in the solicitation of proxies from the
stockholders of Xactly in connection with the proposed Merger.
Information regarding the interests of these directors and
executive officers in the transaction described herein will be
included in the proxy statement described above. Additional
information regarding Xactlys directors and executive officers
is also included in Xactlys proxy statement for its 2017 Annual
Meeting of Stockholders, which was filed with the SEC on May11,
2017. These documents are available free of charge as described
in the preceding paragraph.
Legal Notice Regarding Forward-Looking
Statements
This Form 8-K contains certain forward-looking statements within
the meaning of Section27A of the Securities Act of 1933 and
Section21E of the Securities Exchange Act of 1934, including, but
not limited to, statements regarding possible or assumed future
results of operations of Xactly, the expected completion and
timing of the Merger and other information relating to the
Merger. Without limiting the foregoing, the words believes,
anticipates, plans, expects, intends, forecasts, should,
estimates, contemplate, future, goal, potential, predict,
project, projection, may, will, could, should, would, assuming
and other words or expressions of similar meaning or import are
intended to identify forward-looking statements. You should,
therefore, carefully read and consider statements that contain
these words or expressions, as such forward-looking statements
involve certain risks and uncertainties that could cause actual
results to differ materially from those indicated in such
forward-looking statements, including, but not limited to, (i)the
risk that the proposed Merger may not be completed in a timely
manner or at all, which may adversely affect Xactlys business and
the price of the common stock of Xactly, (ii)the failure to
satisfy all of the conditions precedent to the consummation of
the proposed Merger, including, but not limited to, the required
consent of the stockholders of Xactly and the receipt of certain
governmental or regulatory approvals, (iii)the occurrence of any
event, change or other circumstance or condition that could give
rise to the termination of the merger agreement, (iv)the effect
of the announcement or pendency of the transaction on Xactlys
business relationships, operating results and business generally,
(v)risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention
as a result of the transaction, (vi)risks related to diverting
managements attention from Xactlys ongoing business operations,
(vii)the outcome of any legal proceedings that may be instituted
against us related to the merger agreement or the Merger and
(viii)such other risks and uncertainties as identified in Xactlys
Annual Report on Form 10-K for the fiscal year ended January31,
2017, as filed with the SEC, which contain and identify important
factors that could cause the actual results to differ materially
from those contained in the forward-looking statements. Xactly
assumes no obligation to update any forward-looking statement
contained in this Form 8-K.
Item9.01.Financial Statements and Exhibits
EXHIBIT INDEX
|
Exhibit Number |
Description |
|
| 2.1 |
Agreement and Plan of Merger, dated as of May29, 2017, by and among Excalibur Parent LLC, a Delaware limited liability company, Excalibur Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Excalibur Parent LLC, and Xactly Corporation, a Delaware corporation.* |
|
| 99.1 | Press Release of Xactly Corporation, dated as of May30, 2017. |
| * |
Schedules have been omitted to Item 601(b)(2) of Regulation S-K, but a copy will be furnished supplementally to the Securities and Exchange Commission upon request. |
to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
| XACTLY CORPORATION | ||
|
By: |
/s/ Christopher W. Cabrera |
|
| Christopher W. Cabrera | ||
| Chief Executive Officer and Director |
Date: May30, 2017
EXHIBIT INDEX
|
Exhibit Number |
Description |
|
| 2.1 |
Agreement and Plan of Merger, dated as of May29, 2017, by and among Excalibur Parent LLC, a Delaware limited liability company, Excalibur Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Excalibur Parent LLC, and Xactly Corporation, a Delaware corporation.* |
|
| 99.1 | Press Release of Xactly Corporation, dated as of May30, 2017. |
| * | Schedules have been omitted |
About Xactly Corporation (NYSE:XTLY)
Xactly Corporation is a provider of cloud-based incentive compensation solutions for employee and sales performance management. The Company delivers its solutions through a software-as-a-service (SaaS) business model. The Company has a customer base, including companies in various industries, such as business and financial services, communications, life sciences, media and Internet, SaaS and traditional software, and retail. Its SaaS solutions are delivered through a cloud-based platform. Its solutions support finance, sales, compensation administrators, information technology and human resources personnel in designing, processing and managing incentive compensation. The Company offers products, including Xactly Incent Enterprise, Xactly Incent Express, Xactly Objectives, Xactly Territories, Xactly Insights, Xactly Quota, Xactly Incent Views, Xactly Inspire and Xactly Connect. Xactly Corporation (NYSE:XTLY) Recent Trading Information
Xactly Corporation (NYSE:XTLY) closed its last trading session 00.00 at 13.40 with 108,839 shares trading hands.
