Gemini common stock to be issued in connection with the Merger to be approved for listing on Nasdaq prior to the closing of the Merger, and (5) Gemini filing with the U.S. Securities and Exchange Commission (the “SEC”) and causing to become effective a registration statement to register the shares of Gemini common stock to be issued in connection with the Merger (the “Registration Statement”).
Consummation of the Merger is subject to certain closing conditions, including, among other things, (1) approval by Gemini stockholders of the Gemini Voting Proposals, (2) approval by the Disc stockholders of the adoption of the Merger Agreement, (3) Nasdaq’s approval of the listing of the shares of Gemini common stock to be issued in connection with the Merger, and (4) the effectiveness of the Registration Statement. Each party’s obligation to consummate the Merger is also subject to other specified customary conditions, including regarding the accuracy of the representations and warranties of the other party and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the date of the closing of the Merger.
The Merger Agreement contains certain termination rights of each of Gemini and Disc. Upon termination of the Merger Agreement under specified circumstances, Gemini may be required to pay Disc a termination fee of $3,000,000 and/or reimburse Disc’s expenses up to a maximum of $750,000, and Disc may be required to pay Gemini a termination fee of $7,800,000 and/or reimburse Gemini’s expenses up to a maximum of $750,000.
At the effective time of the Merger (the “Effective Time”), the Board of Directors of Gemini is expected to consist of nine (9) members, eight (8) of whom will be designated by Disc and one (1) of whom will be designated by Gemini.
Financing Transaction
Concurrently with the execution and delivery of the Merger Agreement, certain parties have entered into agreements with Disc pursuant to which they have agreed, subject to the terms and conditions of such agreements, to purchase prior to the consummation of the Merger shares of Disc common stock for an aggregate purchase price of approximately $53.5 million. The consummation of the transactions contemplated by such agreements is conditioned on the satisfaction or waiver of the conditions set forth in the Merger Agreement. Shares of Disc common stock issued pursuant to this financing transaction will be converted into shares of Gemini common stock in the Merger in accordance with the Exchange Ratio.
Contingent Value Rights Agreement
At or prior to the Effective Time, the Company will enter into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent (“Rights Agent”) pursuant to which the Company’s pre-Merger common stockholders will receive one contingent value right (each, a “CVR”) for each outstanding share of Gemini common stock held by such stockholder on such date. Each CVR will represent the contractual right to receive payments, in the form of shares of stock of the Company, upon the actual receipt by the Company or its affiliates of certain proceeds derived from consideration paid to the Company as a result of the disposition of the Company’s pre-Merger legacy assets, net of certain expenses and other deductions. Any payments under the CVR Agreement will be in the form of shares of the Company, determined on the basis of a volume weighted average for the five (5) trading days prior to the date of issuance.
The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any payment of any Company shares will be made or that any holders of CVRs will receive any amounts with respect thereto.