Item 1.01. Entry into a Material Definitive Agreement
Agreement and Plan of Merger
On May 23, 2016, Xura, Inc.,
a Delaware corporation (the Company), entered into an Agreement and Plan of Merger (as it may be amended from time to time, the Merger Agreement) with Sierra Private Holdings II Ltd., a private limited company incorporated
under the laws of England and Wales (Parent), and Sierra Private Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Parent (Merger Sub), under which Merger Sub will be merged with and into the Company (the
Merger), with the Company continuing after the Merger as the surviving corporation and subsidiary of Parent, subject to the terms and conditions set forth in the Merger Agreement. Parent and Merger Sub are affiliates of Siris Capital
Group, LLC (Siris). The Merger Agreement has been unanimously approved by the Companys Board of Directors.
At the effective time of the
Merger (the Effective Time), each share of the Companys common stock, par value $0.01 per share (the Common Stock), issued and outstanding immediately prior to the Effective Time (other than (i) certain shares of the
Common Stock that are held by the Company, Parent or Merger Sub or any direct or indirect wholly-owned subsidiary of either the Company or Parent, and (ii) certain shares of the Common Stock with respect to which the holder thereof shall have
properly complied with the provisions of Section 262 of the General Corporation Law of the State of Delaware as to appraisal rights) shall be converted into the right to receive $25.00 in cash, without interest, less any applicable taxes required to
be withheld (the Merger Consideration).
At the Effective Time, each award of stock options, restricted stock units, and director stock units
(whether vested or unvested) outstanding under a Company equity incentive plan immediately prior to the Effective Time shall become fully vested and shall be canceled in exchange for the payment to the holder of such canceled award of an amount in
cash (without interest and less applicable tax withholding) equal to the product of the Merger Consideration (less the applicable exercise price per share in the case of a stock option) and the number of shares of Common Stock subject to such
canceled award.
Consummation of the Merger is expected to occur in the third fiscal quarter of 2016 and is subject to certain customary closing
conditions including, among others, the absence of certain legal impediments; the expiration or termination of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; antitrust regulatory approvals in
certain other jurisdictions; certain other filings and approvals by governmental authorities in France; and the approval by the holders of at least a majority of the outstanding shares of Common Stock entitled to vote on the Merger (the
Requisite Stockholder Approval).
The Company has made customary representations and warranties in the Merger Agreement and has agreed to
customary covenants regarding the operation of its business and other matters between the execution of the Merger Agreement and the Effective Time. Under the Merger Agreement, the Company is also subject to the go-shop covenant described
below.
During the period beginning on the date of the Merger Agreement and continuing until 11:59 p.m. New York time on July 7, 2016 (the
Go-Shop Period), the Company may solicit, initiate, encourage and facilitate any competing acquisition proposal from third parties, participate in discussions and negotiations with such third parties regarding such competing acquisition
proposals and provide nonpublic information to such third parties pursuant to an Acceptable Confidentiality Agreement (as defined in the Merger Agreement) with each such third party. Following expiration of the Go-Shop
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Period and until the earlier of the Effective Time of the Merger or termination of the Merger Agreement in accordance with its terms, the Company will be subject to customary no-shop
restrictions on its ability to solicit, initiate, encourage and facilitate any competing acquisition proposals from third parties, participate in discussions and negotiations with such third parties regarding such competing acquisition proposals and
provide nonpublic information to such third parties pursuant to an Acceptable Confidentiality Agreement with each such third party, except that the Company may continue solicitation of, or discussions or negotiations with, third parties engaged by
the Company during the Go-Shop Period with whom a written acquisition proposal remains pending as of and following the expiration of the Go-Shop Period and which acquisition proposal the Companys Board of Directors (the Board)
determines in good faith constitutes or would reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement) (each such third party, an Excluded Party). Following expiration of the Go-Shop Period, the Company
is not permitted to solicit competing acquisition proposals from third parties or take certain other actions, provided that before the Company has obtained the Requisite Stockholder Approval, if the Company receives a written acquisition proposal
from a third party, the Company may furnish any information and other access to such third party and participate in discussions or negotiations with such third party, subject to (i) the Board first determining in good faith (after consultation
with its financial advisor and legal counsel) that (a) the failure to take such action would be inconsistent with the directors fiduciary duties under applicable law and (b) such proposal either constitutes, or would reasonably be
expected to lead to, a Superior Proposal and (ii) if the Company will provide nonpublic information, the Company provides any such nonpublic information to such third party pursuant to an Acceptable Confidentiality Agreement.
Prior to the Company obtaining the Requisite Stockholder Approval, the no-shop restrictions above are subject to a fiduciary out provision, which
permits the Board, subject to the Companys compliance with certain obligations described below, to change its recommendation to the Companys stockholders regarding the Merger in connection with an intervening event, or authorize or adopt
an alternative acquisition agreement with respect to a competing acquisition proposal from a third party (each such action, a Change in Company Board Recommendation). With respect to certain Changes in Company Board Recommendation,
the Board may take any such actions with respect to a competing acquisition proposal from a third party if the Board determines in good faith (after consultation with its financial advisor and legal counsel) that such proposal constitutes a Superior
Proposal and that the failure to take such action would reasonably be expected to be inconsistent with the directors fiduciary duties under applicable law. The Company would be permitted to enter an alternative acquisition agreement with
respect to such Superior Proposal only if it terminated the Merger Agreement and paid certain fees owed to Parent as described further below. However, before the Board may make any Change in Company Board Recommendation or the Company may terminate
the Merger Agreement in light of a Superior Proposal, the Company must comply with certain notice obligations with respect to Parent.
The Merger
Agreement contains certain termination rights for the Company and Parent. The Merger Agreement can be terminated by either Parent or the Company if (i) the Merger is not consummated on or before November 23, 2016 (the Outside Date),
(ii) the Merger becomes subject to a final, non-appealable law or order restraining, enjoining, rendering illegal or otherwise prohibiting the Merger, or (iii) the Requisite Stockholder Approval is not obtained following a vote of
stockholders taken thereon. In addition, the Merger Agreement includes the following termination rights:
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If the Merger Agreement is terminated by either Parent or the Company in connection with the Companys entry into a definitive agreement with respect to a Superior Proposal with an Excluded Party and such agreement
is entered into by the Company no later than five business days following the end of the Go-Shop Period, then the Company will be required to pay Parent a termination fee equal to $12.85 million;
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If the Merger Agreement is terminated (i) by Parent because the Board effects a Change in Company Board Recommendation, the Company fails to recommend the Merger and approval of the Merger Agreement by the
stockholders of the Company, the Company enters into an agreement with respect to an alternative Acquisition Proposal, the Company fails to reject a third party tender offer to acquire the Companys securities within ten business days of its
commencement; or the Company materially breaches certain of its covenants under the Merger Agreement relating to the no-shop restrictions or regarding the stockholders meeting to approve the Merger; or (ii) by the Company in connection with the
Companys entry into a definitive agreement with respect to a Superior Proposal with an Excluded Party and such agreement is entered into by the Company more than five business days following the end of the Go-Shop Period, then the Company will
be required to pay Parent a termination fee equal to $22.49 million;
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If the Merger Agreement is terminated by the Company (i) because Parent or Acquisition Sub have breached their respective representations, warranties, covenants or other agreements in the Merger Agreement in
certain circumstances and have failed to cure such breach within a certain period or (ii) because Parent has failed to consummate the Merger pursuant to the Merger Agreement notwithstanding the satisfaction or waiver of the conditions to
Parents and Acquisition Subs obligations to do so and certain notice of such failure from the Company to Parent, then Parent will be required to pay the Company a reverse termination fee equal to $38.55 million.
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Parent has secured committed financing, consisting of a combination of (i) equity to be provided by Siris Partners III, L.P. and Siris Partners III
Parallel, L.P., which are affiliates of Siris, and (ii) debt financing to be provided by affiliates of Cerberus Business Finance, LLC. The Merger Agreement does not contain a financing condition. Further, Siris Partners III, L.P. and
Siris Partners III Parallel, L.P. have provided the Company with a limited guaranty in favor of the Company guaranteeing the payment of the reverse termination fee and certain other monetary obligations, subject to the cap specified therein, that
may be owed by Parent to the Company pursuant to the Merger Agreement. The Merger Agreement also provides that either party may specifically enforce the other partys obligations under the Merger Agreement, provided that the Company may only
cause Parent to fund the equity financing if certain conditions are satisfied, including the funding of the debt financing or such funding being required to be funded at the closing pursuant to the debt financing commitments if the equity financing
is funded at the closing.
The Merger Agreement has been provided solely to inform investors of its terms. It is not intended to provide any other
factual information about the Company. In particular, the representations, warranties and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement as of specific dates, and solely for the benefit of the
parties to the Merger Agreement. The representations, warranties and covenants contained in the Merger Agreement may be subject to limitations agreed upon by the parties to the Merger Agreement and may be qualified by certain confidential
disclosures not reflected in the text of the Merger Agreement. Moreover, certain representations, warranties and covenants in the Merger Agreement may apply standards of materiality in a way that is different from what may be viewed as material by
the Companys stockholders or other investors, and may have been used for the purpose of allocating risk among the parties rather than establishing matters of fact. The Companys stockholders and other investors are not third-party
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beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or
condition of the Company or any of its subsidiaries or affiliates. 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 the Companys public disclosures.
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, the full text of the Merger Agreement, attached as Exhibit 2.1 to this Current Report on Form 8-K, which is incorporated herein by reference.