SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to § 240.14a-12
Glu Mobile Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
Common Stock, par value $0.0001 per share, of Glu Mobile Inc. (the “common stock”)
(2)
Aggregate number of securities to which transaction applies:
As of March 5, 2021, there were outstanding (i) 176,299,773 shares of common stock; (ii) 8,007,132 shares of common stock issuable upon the exercise of stock options with an exercise price below $12.50 per share (“Company Options”); (iii) 0 shares of common stock issuable upon the settlement of time-based restricted stock units (“Company RSUs”); (iv) 0 shares of common stock issuable upon the settlement of performance-based restricted stock units (“Company PSUs”), assuming maximum achievement; (v) 3,607,279 shares of common stock issuable upon the settlement of performance-based stock options assuming maximum achievement (“Company PSOs”); and (vi) 100,000 shares of common stock issuable upon the exercise of warrants to purchase shares of common stock (the “Company Warrants”).
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
Solely for the purpose of calculating the filing fee, the underlying value of the transaction was determined based upon the sum of: (i) 176,299,773 shares of common stock issued and outstanding multiplied by $12.50 per share; (ii) 8,007,132 shares of common stock issuable upon the exercise of Company Options with an exercise price below $12.50 per share multiplied by $9.09 (which is the difference between $12.50 and the weighted average exercise price per share of such Company Options); (iii) 0 shares of common stock issuable upon the settlement of time-based restricted stock units (“Company RSUs”) multiplied by $12.50 per share; (iv) 0 shares of common stock issuable upon the settlement of performance-based restricted stock units (“Company PSUs”), assuming maximum achievement, multiplied by $12.50 per share; (v) 3,607,279 shares of common stock issuable upon the settlement of Company PSOs, assuming maximum achievement, multiplied by $8.54 (which is the difference between $12.50 and the weighted average exercise price per share of such Company PSOs); and (vi) 100,000 shares of common stock issuable upon the exercise of the Company Warrants, multiplied by $8.22 (which is the difference between $12.50 and the weighted average exercise price per share of such Company Warrants). In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the sum calculated in the preceding sentence by .0001091.
(4)
Proposed maximum aggregate value of transaction:
$2,308,160,156
(5)
Total fee paid:
$251,821

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

 
PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION
GLU MOBILE INC.
875 Howard Street, Suite 100
San Francisco, California 94103
           , 2021
Dear Glu Mobile Inc. Stockholder:
You are cordially invited to attend a virtual special meeting of stockholders of Glu Mobile Inc. (the “Company” or “Glu,” “we,” “us,” or “our”). The virtual special meeting will be held exclusively online via live webcast on           , at           , Pacific Time. There will not be a physical meeting location. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions and vote online. Please note that you will not be able to attend the virtual special meeting in person. We have chosen to hold a virtual rather than an in-person meeting due to the public health impact of the COVID-19 pandemic and to support the health and well-being of our stockholders and other stakeholders. Additionally, we believe that a virtual stockholder meeting provides greater access to those who may want to attend while improving meeting efficiency and reducing costs.
At the virtual special meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of February 8, 2021, by and among Electronic Arts Inc. (“Electronic Arts”), a Delaware corporation, Giants Acquisition Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Electronic Arts, and Glu. Upon the terms and subject to the conditions of the Merger Agreement, if the merger is completed, Merger Sub will merge with and into Glu (the “Merger”), with Glu surviving the Merger as a wholly owned subsidiary of Electronic Arts.
If the Merger Agreement is adopted with the affirmative vote of the holders of a majority of Glu’s common stock, $0.0001 par value per share (the “Glu Common Stock,” and the shares of Glu Common Stock that are issued and outstanding as of immediately prior to the effective time of the Merger, the “Shares”), entitled to vote on such matter, and the Merger is completed, each share of Glu Common Stock that you own as of immediately prior to the effective time of the Merger will be converted into the right to receive cash in an amount equal to $12.50, without interest and subject to any required withholding of taxes, except for the cancelled shares and any dissenting shares.
Glu Common Stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “GLUU.” The closing price of Glu Common Stock on Nasdaq on March 5, 2021, the most recent practicable date prior to the date of the accompanying proxy statement, was $12.51 per share.
Our board of directors (“Board”) carefully considered a number of factors in evaluating the terms of the Merger Agreement. Based on such consideration, our Board unanimously determined that the Merger and the Merger Agreement are fair to and in the best interests of our stockholders. Accordingly, our Board has unanimously approved the Merger Agreement and the Merger and recommends that you vote (1) “FOR” the proposal to adopt the Merger Agreement, (2) “FOR” the approval, on a non-binding advisory basis, of the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger and (3) “FOR” the proposal to approve the adjournment of the virtual special meeting to a later date or dates, if our Board determines that it is necessary or appropriate, and is permitted by the Merger Agreement, to (i) solicit additional proxies if (a) there is not a quorum present or represented by proxy or (b) there are insufficient votes to adopt the Merger Agreement, in each case, at the time of the then-scheduled virtual special meeting, (ii) give holders of Glu Common Stock additional time to evaluate any supplemental or amended disclosure or (iii) otherwise comply with applicable law.
The enclosed proxy statement provides detailed information about the virtual special meeting, the Merger Agreement, the Merger and the other proposals to be voted on at the virtual special meeting. A copy of the Merger Agreement is attached as Annex A to the proxy statement. We encourage you to read the proxy statement carefully in its entirety.
 

 
Your vote is very important, regardless of the number of shares you own.   The proposal to adopt the Merger Agreement must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter. Only stockholders who owned shares of Glu Common Stock at the close of business on           , 2021, the record date for the virtual special meeting, will be entitled to vote at the virtual special meeting.
To vote your shares, you may submit a proxy via the Internet or by telephone, as specified in the Internet and telephone voting instructions on your proxy card, return your proxy card prior to the virtual special meeting using the postage prepaid envelope provided, or attend the virtual special meeting and vote at the meeting. If your shares are held in the name of a brokerage firm, bank, trust or other nominee, you must instruct the brokerage firm, bank, trust or other nominee how to vote your shares or obtain a proxy, executed in your favor, from that record holder, giving you the right to vote the shares at the virtual special meeting. Even if you plan to attend the virtual special meeting, we urge you to promptly submit a proxy for your shares via the Internet or by telephone or by completing, signing, dating and returning the enclosed proxy card.
If you fail to submit your proxy via the Internet or telephone, return your proxy card prior to the virtual special meeting, attend the virtual special meeting and vote at the meeting, or give voting instructions to your brokerage firm, bank, trust or other nominee, then your shares will not be counted for determining whether a quorum is present at the virtual special meeting and your decision not to respond will have the same effect as if you voted “AGAINST” the adoption of the Merger Agreement.
If you attend the virtual special meeting and wish to vote at the meeting, you may revoke your proxy and vote at the meeting. You may revoke your proxy in the manner described in the enclosed proxy statement at any time before it has been voted at the virtual special meeting.
Thank you for your continued support of Glu.
Sincerely,
Nick Earl
President and Chief Executive Officer
           , 2021
Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the Merger, passed upon the merits or fairness of the Merger Agreement or the Merger or determined if the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.
The accompanying proxy statement is dated           , 2021 and, together with the enclosed form of proxy card, is first being mailed to our stockholders on or about           , 2021.
 

 
PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION
GLU MOBILE INC.
875 Howard Street, Suite 100
San Francisco, California 94103
NOTICE OF VIRTUAL OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of Glu Mobile Inc.:
Glu Mobile Inc., a Delaware corporation (the “Company” or “Glu,” “we,” “us,” or “our”), will hold a virtual special meeting of stockholders exclusively online via live webcast on           ,           , at           , Pacific Time. There will not be a physical meeting location. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions, and vote online. We encourage you to allow ample time for online check-in, which will open at           , Pacific Time. Please note that you will not be able to attend the virtual special meeting in person. We are holding the virtual special meeting to consider and vote upon the following proposals:
1.
To adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of February 8, 2021, by and among Electronic Arts Inc. (“Electronic Arts”), a Delaware corporation, Giants Acquisition Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Electronic Arts, and Glu. Upon the terms and subject to the conditions of the Merger Agreement, if the merger is completed, Merger Sub will merge with and into Glu (the “Merger”), with Glu surviving the Merger as a wholly owned subsidiary of Electronic Arts;
2.
To approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger (the “compensation proposal”); and
3.
To approve the adjournment of the virtual special meeting to a later date or dates, if our board of directors (“Board”) determines that it is necessary or appropriate, and is permitted by the Merger Agreement, to (i) solicit additional proxies if (a) there is not a quorum present or represented by proxy or (b) there are insufficient votes to adopt the Merger Agreement, in each case, at the time of the then-scheduled virtual special meeting, (ii) give holders of our common stock, par value $0.0001 per share (the “Glu Common Stock”) additional time to evaluate any supplemental or amended disclosure or (iii) otherwise comply with applicable law (the “adjournment proposal”).
Only stockholders who owned shares of Glu Common Stock at the close of business on           , 2021, the record date for the virtual special meeting, will be entitled to vote at the virtual special meeting. Your vote is important, regardless of the number of shares of Glu Common Stock you own.
The votes required to approve each proposal are as follows:
1.
The Merger Agreement must be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter.
2.
The compensation proposal must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
3.
The adjournment proposal must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
If a quorum is not present or represented by proxy at the virtual special meeting, the chairperson of the meeting may adjourn the meeting or may direct that the holders of a majority of the outstanding shares entitled to vote who are present or represented by proxy at the virtual special meeting adjourn the meeting. If there is not a quorum of stockholders at the virtual special meeting and any proposal to adjourn the
 

 
meeting submitted to the holders who are present or represented by proxy at the virtual special meeting is not approved, our Board may set a new record date and meeting date for a virtual special meeting to consider the proposal to adopt the Merger Agreement, the compensation proposal and the adjournment proposal, in accordance with the Merger Agreement.
If the Merger is completed, our stockholders who (1) submit a written demand for an appraisal of their shares prior to the stockholder vote on the adoption of the Merger Agreement, (2) do not vote or submit a proxy in favor of the adoption of the Merger Agreement, (3) take certain actions and meet certain conditions under the Delaware General Corporation Law (the “DGCL”) and (4) do not thereafter withdraw their demand for appraisal of their shares of Glu Common Stock or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will have the right to have such shares appraised by the Delaware Court of Chancery and to receive payment of the fair value of such shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, on the amount determined to be the fair value. For a more detailed discussion of your appraisal rights, see the section captioned “Proposal 1: Adoption of the Merger — Appraisal Rights.” Section 262 of the DGCL is reproduced in its entirety in Annex C to the accompanying proxy statement and is incorporated therein by reference.
You are cordially invited to attend the virtual special meeting. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions and vote online. Whether or not you expect to attend the virtual special meeting, please submit a proxy via the Internet or by telephone, as specified in the Internet and telephone voting instructions on your proxy card or return your proxy card prior to the virtual special meeting using the postage prepaid envelope provided as promptly as possible in order to ensure your representation at the virtual special meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote at the meeting if you attend the virtual special meeting. Please note, however, that if your shares are held in the name of your brokerage firm, bank, trust or other nominee and you wish to vote at the virtual special meeting, you must instruct the brokerage firm, bank, trust or other nominee how to vote your shares or obtain a proxy, executed in your favor, from that record holder, giving you the right to vote the shares at the virtual special meeting.
If you sign, date and return your proxy card or submit a proxy via the Internet or by telephone without indicating how you wish to vote, your proxy will be voted “FOR” the proposal to adopt the Merger Agreement, “FOR” the compensation proposal and “FOR” the adjournment proposal. If you do attend the virtual special meeting and wish to vote at the meeting, you may revoke your proxy and vote at the meeting. You may revoke your proxy in the manner described in the enclosed proxy statement at any time before it has been voted at the virtual special meeting.
Our Board unanimously recommends that you vote “FOR” the proposal to adopt the Merger Agreement, “FOR” the compensation proposal and “FOR” the adjournment proposal.
The Merger is described in the accompanying proxy statement, which we urge you to read carefully. A copy of the Merger Agreement is attached as Annex A to the proxy statement. If you have any questions or need assistance in voting your shares of Glu Common Stock, please contact our proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders May Call:
Toll-Free at (888) 750-5834 (from the U.S. and Canada)
or +1 (412) 232-3651 (from other locations)
Banks & Brokers May Call Collect: (212) 750-5833
By Order of the Board of Directors,
Nick Earl
President and Chief Executive Officer
           , 2021
 

 
YOUR VOTE IS IMPORTANT
Your vote is very important, regardless of the number of shares you own. The proposal to adopt the Merger Agreement must be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter. To vote your shares, you can submit a proxy via the Internet or by telephone, as specified in the Internet and telephone voting instructions on the proxy card, return your proxy card prior to the virtual special meeting using the postage prepaid return envelope provided, or attend the virtual special meeting and vote at the meeting. We urge you to promptly submit a proxy for your shares via the Internet or by telephone or by completing, signing, dating and returning the enclosed proxy card.
If you fail to submit your proxy via the Internet or telephone, return your proxy card prior to the virtual special meeting, attend the virtual special meeting and vote at the meeting, or give voting instructions to your brokerage firm, bank, trust or other nominee, then your shares will not be counted for determining whether a quorum is present at the virtual special meeting and your decision not to respond will have the same effect as if you voted “AGAINST” the adoption of the Merger Agreement, but will have no effect on the outcome of any vote on the compensation proposal or the adjournment proposal, assuming a quorum is present.
If your shares are held in the name of a brokerage firm, bank, trust or other nominee, you must instruct the brokerage firm, bank, trust or other nominee how to vote your shares or obtain a proxy, executed in your favor, from that record holder giving you the right to vote the shares at the virtual special meeting.
REFERENCES FOR ADDITIONAL INFORMATION
If you have any questions about the accompanying proxy statement, the virtual special meeting, the Merger or need assistance with voting procedures, you should contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders May Call:
Toll-Free at (888) 750-5834 (from the U.S. and Canada)
or +1 (412) 232-3651 (from other locations)
Banks & Brokers May Call Collect: (212) 750-5833
 

 
GLU MOBILE INC.
PROXY STATEMENT
TABLE OF CONTENTS
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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION
SUMMARY
Except as otherwise specifically noted in this proxy statement, “Glu,” “we,” “our,” “us” and similar words in this proxy statement refer to Glu Mobile Inc. In addition, throughout this proxy statement, we refer to Giants Acquisition Sub, Inc. as “Merger Sub” and to Electronic Arts Inc. as “Electronic Arts.”
This summary highlights selected information from this proxy statement related to the merger of Merger Sub with and into Glu (the “Merger”) and may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should read carefully this entire proxy statement, the annexes to this proxy statement and the documents we refer to in this proxy statement. See the section captioned “Where You Can Find More Information.” The Agreement and Plan of Merger, dated as of February 8, 2021, among Electronic Arts, Merger Sub, and Glu, as such agreement may be amended from time to time (the “Merger Agreement”), is attached as Annex A to this proxy statement. We encourage you to read the Merger Agreement, which is the legal document governing the Merger.
Parties Involved in the Merger
Glu Mobile Inc.
Glu develops, publishes and markets a portfolio of free-to-play mobile games designed to appeal to a broad cross section of users who download and make purchases within our games through direct-to-consumer digital storefronts, such as the Apple App Store, Google Play Store, and others. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee and to engage with various advertisements and offers that generate revenue for us. We have a portfolio of compelling games based on our own intellectual property such as Cooking Dash, Covet Fashion, Deer Hunter, Design Home and Diner DASH Adventures, as well as games based on or significantly incorporating third party licensed brands, including Disney Sorcerer’s Arena, Kim Kardashian: Hollywood, the MLB Tap Sports Baseball franchise and Restaurant Dash with Gordon Ramsay. We are headquartered in San Francisco, California, with other U.S. offices in Foster City, California and Orlando, Florida, and international locations in Toronto, Canada and Hyderabad, India.
Electronic Arts
Electronic Arts is a global leader in digital interactive entertainment. Electronic Arts develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. Headquartered in Redwood City, California, Electronic Arts is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™, FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™ and Plants vs. Zombies™.
Giants Acquisition Sub, Inc.
Merger Sub, a Delaware corporation and a wholly owned subsidiary of Electronic Arts, was formed on January 29, 2021 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement (the “Transactions”). Merger Sub has not engaged in any business activities other than in connection with the Transactions. Upon completion of the Merger, Merger Sub will merge with and into Glu, and Merger Sub will cease to exist.
The Virtual Special Meeting
Date, Time and Place
A virtual special meeting of our stockholders will be held exclusively online via live webcast on      ,           , at      , Pacific Time. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions and vote online. Please note that you will not be able to attend the virtual special meeting in person.
 
1

 
Record Date; Shares Entitled to Vote
You are entitled to vote at the virtual special meeting if you owned shares of our common stock, $0.0001 par value per share (the “Glu Common Stock”), at the close of business on           , 2021, the record date of the virtual special meeting (the “record date”).
Purpose
At the virtual special meeting, we will ask stockholders to vote on proposals to (1) adopt the Merger Agreement, (2) approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers named in our proxy statement filed with the Securities and Exchange Commission (the “SEC”) on April 28, 2020 (the “named executive officers”) that is based on or otherwise relates to the Merger (the “compensation proposal”) and (3) approve the adjournment of the virtual special meeting to a later date or dates, if our board of directors (our “Board”) determines that it is necessary or appropriate, and is permitted by the Merger Agreement, to (i) solicit additional proxies if (a) there is not a quorum present or represented by proxy or (b) there are insufficient votes to adopt the Merger Agreement, in each case, at the time of the then-scheduled special meeting, (ii) give holders of Glu Common Stock additional time to evaluate any supplemental or amended disclosure or (iii) otherwise comply with applicable law (the “adjournment proposal”).
Quorum
As of the record date, there were           shares of Glu Common Stock entitled to vote at the virtual special meeting. The holders of a majority of the shares of Glu Common Stock outstanding and entitled to vote at the virtual special meeting, present or represented by proxy at the virtual special meeting, will constitute a quorum at the virtual special meeting.
Required Vote
The votes required to approve each proposal are as follows:
1.
The Merger Agreement must be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter.
2.
The compensation proposal must be approved, on a non-binding advisory basis, by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
3.
The adjournment proposal must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
Stock Ownership of Our Directors and Executive Officers
At the close of business on the record date for the virtual special meeting, our directors and executive officers and their respective affiliates beneficially owned and were entitled to vote           shares of Glu Common Stock at the virtual special meeting, or approximately    % of the shares of Glu Common Stock outstanding on such date. Although they are not obligated to do so, our directors and executive officers have informed us of their intent to vote all of their shares of Glu Common Stock (1) “FOR” the proposal to adopt the Merger Agreement, (2) “FOR” the compensation proposal, and (3) “FOR” the adjournment proposal.
Voting and Proxies
Any stockholder of record entitled to vote may submit a proxy via the Internet or by telephone, as specified in the Internet and telephone voting instructions on your proxy card, return your proxy card prior to the virtual special meeting using the postage prepaid envelope provided, or may vote at the virtual
 
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special meeting via the virtual meeting website. Any stockholder can attend the virtual special meeting by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where stockholders may vote and submit questions during the meeting. The virtual special meeting starts at           , Pacific Time. Please have your 16-digit control number to join the virtual special meeting. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com. If you are a beneficial owner and hold your shares of Glu Common Stock in “street name” through a bank, broker or other nominee, you should instruct your bank, broker or other nominee on how you wish to vote your shares of Glu Common Stock using the instructions provided by your bank, broker or other nominee. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote on routine matters. The proposals to be considered at the virtual special meeting are non-routine matters, and banks, brokers and other nominees cannot vote on these proposals without your instructions.Therefore, it is important that you cast your vote or instruct your bank, broker or nominee on how you wish to vote your shares.
If you are a holder of record, you may change your vote or revoke your proxy at any time before it is voted at the virtual special meeting by (1) signing another proxy card with a later date and returning it prior to the virtual special meeting; (2) submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy; (3) delivering a written notice of revocation to our Corporate Secretary; or (4) attending the virtual special meeting and voting at the meeting (your attendance at the virtual special meeting will not, by itself, revoke your proxy, so you must vote at the virtual special meeting to revoke your proxy).
If you hold your shares of Glu Common Stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the virtual special meeting if you obtain a proxy from your bank, broker or other nominee.
The Merger

Upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”), if the Merger is completed:

Merger Sub will merge with and into Glu and

Glu will continue as the surviving corporation and wholly owned subsidiary of Electronic Arts (the “Surviving Corporation”).

As a result of the Merger:

we will cease to be a publicly traded company;

each outstanding share of Glu Common Stock will be cancelled and converted into the right to receive $12.50 in cash, without interest (the “Per Share Merger Consideration”) (except for any shares owned by stockholders who are entitled to and who properly exercise appraisal rights under the DGCL); and

you will no longer own any shares of the capital stock of the Surviving Corporation.
After the Merger is completed, you will have the right to receive the Per Share Merger Consideration, but you will no longer have any rights as a stockholder (except that stockholders who properly exercise their appraisal rights may have the right to receive a payment for the “fair value” of their shares as determined pursuant to an appraisal proceeding as contemplated by the DGCL, as described below under the section captioned “Proposal 1: Adoption of the Merger Agreement — Appraisal Rights”).
Treatment of Glu Equity Awards
As a result of the Merger, at the effective time of the Merger (the “Effective Time”), the treatment of the stock options to purchase shares of Glu Common Stock (each, a “Glu Option”) and restricted stock units with respect to shares of Glu Common Stock (each, a “Glu RSU”) that are outstanding as of immediately prior to the Effective Time will be as follows:
 
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Glu Options

each vested Glu Option with a per share exercise price that equals or exceeds the Per Share Merger Consideration will be cancelled without payment of any consideration;

each vested Glu Option (or portion thereof and including any Glu PSO after giving effect to the conversion of Glu PSOs set forth below) with a per share exercise price that is less than the Per Share Merger Consideration will be cancelled and automatically converted into the right to receive an amount in cash equal to the product of (x) the aggregate number of Shares subject to such Glu Option multiplied by (y) the excess of the Per Share Merger Consideration over the applicable per share exercise price of such Glu Option, without interest and subject to any required withholding of taxes;

each unvested Glu Option (or portion thereof and including any Glu PSO after giving effect to the conversion of Glu PSOs set forth below) held by a continuing employee will be assumed by Electronic Arts and converted automatically at the Effective Time by multiplying the number of shares subject to the Glu Option by the Exchange Ratio (as defined in the Merger Agreement but generally understood to be a fraction, with the numerator being the Per Share Merger Consideration and the denominator being the average closing price of one share of Electronic Arts common stock on Nasdaq over the 10-trading day period immediately preceding the date on which the Effective Time occurs), rounded down to the nearest whole share, and the applicable per share exercise price of the Glu Option being divided by the Exchange Ratio, rounded up to the nearest whole cent, resulting in a corresponding option denominated in shares of common stock of Electronic Arts and subject to terms and conditions substantially identical to those in effect at the Effective Time; and

for each unvested Glu Option (or portion thereof) issued with performance-based metrics, terms or conditions (each, a “Glu PSO”) for which the performance period has not been completed as of the Effective Time, the applicable performance metrics will, as of immediately prior to the Effective Time, be deemed achieved at “target” and be converted to a time-based vesting schedule that corresponds to each performance period.
Glu RSUs

each vested Glu RSU (or portion thereof and including any Glu PSU after giving effect to the conversion of Glu PSUs set forth below) will be cancelled and automatically converted into the right to receive the Per Share Merger Consideration, without interest and subject to any required withholding of taxes;

each unvested Glu RSU (or portion thereof and including any Glu PSU after giving effect to the conversion of Glu PSUs set forth below) held by a continuing employee will be assumed by Electronic Arts and converted automatically at the Effective Time by multiplying the number of shares subject to the Glu RSU by the Exchange Ratio, rounded down to the nearest whole share resulting in a corresponding restricted stock unit of Electronic Arts and subject to terms and conditions substantially identical to those in effect at the Effective Time; and

for each unvested Glu RSU (or portion thereof) issued with performance-based metrics, terms or conditions (each, a “Glu PSU”) for which the performance period has not been completed as of the Effective Time, the applicable performance metrics will, as of immediately prior to the Effective Time, be deemed achieved at “target” or the equivalent of “target” if such concept is not included in the applicable Glu PSU, as determined by Glu’s board of directors (or a duly authorized committee thereof) and be converted to a time-based vesting schedule that corresponds to each performance period.
Payments with Respect to Equity Awards
The amounts described above with respect to vested Glu Options and vested Glu RSUs (to the extent not settled in shares prior to the Effective Time) will be paid as soon as practicable following the Effective Time (but in no event later than the later of the second regularly scheduled payroll date and the date that is 15 Business Days, in each case, after the Effective Time).
Treatment of the Employee Stock Purchase Plan
Our 2007 Employee Stock Purchase Plan (the “ESPP”) will terminate as of or immediately prior to the Effective Time. The final offering period of the ESPP ended February 19, 2021, and all future periods have
 
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been indefinitely suspended. No participant may elect to participate in the ESPP after the date of the Merger Agreement and no participant was permitted to increase the percentage amount of his or her payroll deduction election from that in effect on the date of the Merger Agreement. The amount of the accumulated contributions of each participant under the ESPP was used to purchase shares of Glu Common Stock on February 19, 2021, the purchase date of the final offering period, in accordance with the terms and conditions of the ESPP.
Financing of the Merger
Electronic Arts’ and Merger Sub’s obligations under the Merger Agreement are not conditioned on the receipt or availability of any funds, or subject to any financing condition. Electronic Arts intends to finance the transaction using its cash on hand and has represented to us in the Merger Agreement that it has sufficient cash resources to pay the aggregate Per Share Merger Consideration and all associated fees, costs and expenses in connection with the Merger.
Conditions to the Closing of the Merger
The obligation of Electronic Arts and Glu to consummate the Merger is subject to the satisfaction at or prior to the Effective Time, of each of the following conditions:

Company Stockholder Approval.   The approval of the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter will have been obtained.

No Injunction or Restraints.   No U.S. court or any other governmental authority of competent jurisdiction will have issued any order restraining, enjoining or prohibiting the Merger, nor is there in effect any applicable law that prevents the consummation of the Merger.

Regulatory Approvals.   All applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), relating to the consummation of the Merger will have expired or been terminated and any clearance or affirmative approval from the Austrian governmental authority will have been obtained and any mandatory waiting period related thereto has expired (the “Glu Regulatory Approvals”).
The obligation of Electronic Arts and Merger Sub to consummate the Merger is further subject to the satisfaction, or waiver at or prior to the Effective Time of each of the following conditions:

Representations and Warranties.   (A) Each of Glu’s representations and warranties relating to (i) certain of Glu’s capital structure is true and correct as of immediately prior to the Effective Time (except for such representations and warranties that relate to a specific date or time which need only be true and correct as of such date or time), in each case, except for such failures to be true and correct that, individually or in the aggregate, would not result in more than a de minimis increase in the aggregate amounts payable by Merger Sub or Electronic Arts in the Transactions, (ii) Glu’s corporate existence, corporate authority relative to the Merger Agreement, finders and brokers and the opinion of its financial advisors (1) to the extent qualified by materiality or “Company Material Adverse Effect” ​(as defined under the section captioned “The Merger Agreement — Representations and Warranties”) is true and correct in all respects as of the Effective Time as if made as of the Effective Time (except in each case for such representations and warranties that relate to a specific date or time, which need only be true and correct as of such date or time), and (2) to the extent not qualified by materiality or “Company Material Adverse Effect” is true and correct in all material respects as of the Effective Time with the same force and effect as if made as of the Effective Time (except for such representations and warranties that relate to a specific date or time, which need only be true and correct as of such date or time), and (iii) the absence of since December 31, 2019, of events or developments that would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect is true and correct in all respects as of the Effective Time as if made as of the Effective Time, and (B) all other provisions in the Merger Agreement relating to Glu’s representations and warranties (excluding those included in the foregoing clauses (A)(i), (ii) and (iii)) (without giving effect to any materiality or “Company Material Adverse Effect” qualifications therein), is true and correct as of the Effective Time as if made as of the Effective Time (except for such representations and warranties that relate to a specific date or time,
 
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which need only be true and correct in all material respects as of such date or time), in each case, except for such failures to be true and correct, individually and in the aggregate, as have not had a Company Material Adverse Effect (the “Glu Representations Condition”).

Covenants.   Glu will have performed and complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by it at or prior to the Effective Time (the “Glu Covenants Condition”).

No Material Adverse Effect.   Since February 8, 2021, there will not have occurred and be continuing a Company Material Adverse Effect.

Certificate.   Electronic Arts will have received a certificate signed on behalf of Glu by the Chief Executive Officer or Chief Financial Officer of Glu as to the satisfaction of the conditions in the three bullet points above.
The obligation of Glu to consummate the Merger will be further subject to the satisfaction or waiver at or prior to the Effective Time of each of the following conditions:

Representations and Warranties.   Each of the representations and warranties of Electronic Arts and Merger Sub in the Merger Agreement will be true and correct as of the Effective Time as if made as of the Effective Time (except for such representations and warranties that relate to a specific date or time, which need only be true and correct in all material respects as of such date or time), except for such failures to be true and correct would not, individually and in the aggregate, have a material adverse effect on the ability of Electronic Arts or Merger Sub to consummate the Merger (the “Electronic Arts Representations Condition”).

Covenants.   Electronic Arts and Merger Sub will have performed and complied in all material respects with all obligations and agreements required by the Merger Agreement to be performed or complied with by it at or prior to the Effective Time (the “Electronic Arts Covenants Condition”).

Certificate.   Glu will have received a certificate signed on behalf of Electronic Arts and Merger Sub by an executive officer of Electronic Arts and Merger Sub as to the satisfaction of the conditions in the two bullet points above.
Regulatory Approvals Required for the Merger
Under the Merger Agreement, the Merger cannot be completed until (1) the applicable waiting period under the HSR Act has expired or been terminated; and (2) the approval or clearance of the Merger has been granted by relevant antitrust authorities in Austria.
Recommendation of our Board
Our Board, after considering various factors described under the section captioned “Proposal 1: Adoption of the Merger Agreement — Recommendation of our Board and Reasons for the Merger” has unanimously (1) determined that the Merger Agreement and the Merger are fair to and in the best interests of our stockholders and (2) approved the Merger Agreement and the Merger. Our Board unanimously recommends that you vote (1) “FOR” the proposal to adopt the Merger Agreement, (2) “FOR” the compensation proposal and (3) “FOR” the adjournment proposal.
Opinion of Goldman Sachs & Co. LLC
At a meeting of the Board, Goldman Sachs & Co. LLC (“Goldman Sachs”) rendered to the Board its oral opinion, subsequently confirmed in its written opinion dated February 8, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the $12.50 in cash per share of Glu Common Stock to be paid to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated February 8, 2021, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with Goldman Sachs’ opinion, is attached to this proxy statement as Annex B-1. The
 
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summary of Goldman Sachs’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the Board in connection with its consideration of the Merger and the opinion does not constitute a recommendation as to how any holder of Glu Common Stock should vote with respect to the Merger or any other matter.
Pursuant to an engagement letter between Glu and Goldman Sachs, Glu has agreed to pay Goldman Sachs for its services in connection with the Merger a transaction fee of $15 million, $2 million of which was payable upon the presentation to the Board of the results of the study Goldman Sachs undertook in connection with its fairness opinion, and the remainder of which is contingent upon completion of the Merger.
For additional information, see the section entitled “Proposal 1: Adoption of the Merger Agreement — Opinion of Goldman Sachs & Co. LLC” beginning on page 45 and Annex B-1 to this proxy statement.
Opinion of Morgan Stanley & Co. LLC
In connection with the Merger, Morgan Stanley & Co. LLC ( “Morgan Stanley”) rendered to the Board its oral opinion, subsequently confirmed in writing, that as of February 8, 2021, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the shares of Glu Common Stock that are, as of immediately prior to the Effective Time, (i) held directly or indirectly by Glu or by any wholly owned subsidiary of Glu as treasury stock (and, in each case, not held on behalf of third parties), (ii) owned, directly or indirectly, by Electronic Arts or Merger Sub, any wholly owned subsidiary of Electronic Arts or Merger Sub, or any person that owns, directly or indirectly, all of the outstanding stock of Merger Sub, or (iii) held by any stockholder who is entitled to demand and has properly demanded appraisal for such shares of Glu Common Stock in accordance with, and who complies in all respects with, Section 262 of the General Corporation Law of the State of Delaware (clauses (i), (ii) and (iii), collectively, the “Excluded Shares”) pursuant to the Merger Agreement was fair from a financial point of view to such holders of shares of Glu Common Stock, as set forth in such opinion as more fully described in the section of this proxy statement captioned “The Merger — Opinion of Morgan Stanley & Co. LLC.”
The full text of the written opinion of Morgan Stanley, dated as of February 8, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is attached to this proxy statement as Annex B-2 and is incorporated by reference in this proxy statement in its entirety. The summary of the opinion of Morgan Stanley in this proxy statement is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Morgan Stanley’s opinion carefully and in its entirety. Morgan Stanley’s opinion was directed to the Board, in its capacity as such, and addresses only the fairness from a financial point of view of the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement as of the date of the opinion and does not address the relative merits of the Merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. It was not intended to, and does not, constitute an opinion or a recommendation as to how Glu stockholders should vote at the special meeting.
Interests of our Directors and Executive Officers in the Merger
When considering the recommendation of our Board that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of our stockholders generally. In (1) evaluating and negotiating the Merger Agreement, (2) approving the Merger Agreement and the Merger, and (3) recommending that the Merger Agreement be adopted by stockholders, our Board was aware of and considered the following interests, among other matters:
 
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our executive officers are party to retention agreements and/or stock option and restricted stock unit agreements with Glu, which provide for accelerated vesting of equity awards and other severance payments and benefits in the event of certain qualifying terminations of employment following the Merger;

the anticipated continued employment of certain of our executive officers by Electronic Arts or the Surviving Corporation following the Effective Time; and

our directors and executive officers are entitled to continued indemnification and insurance coverage pursuant to their existing agreements and the Merger Agreement.
If the proposal to adopt the Merger Agreement is approved, the shares of Glu Common Stock held by our directors and executive officers will be treated in the same manner as outstanding shares of Glu Common Stock held by all other stockholders. For more information, see the section captioned “Proposal 1: Adoption of the Merger Agreement — Interests of our Directors and Executive Officers in the Merger.”
Appraisal Rights
If the Merger is completed, stockholders who do not vote or submit a proxy in favor of the adoption of the Merger Agreement and who properly demand appraisal of their shares may be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL. This means that stockholders may be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Glu Common Stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid on the amount determined to be the fair value. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel and financial advisors with respect to the exercise of appraisal rights.
Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the aggregate Per Share Merger Consideration.
To exercise your appraisal rights, you must (1) deliver a written demand for appraisal to us before the vote is taken on the proposal to adopt the Merger Agreement; (2) not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement; and (3) continue to hold your shares of Glu Common Stock through the Effective Time. As such, merely voting against, abstaining or failing to vote on the proposal to adopt the Merger Agreement will not preserve your right to appraisal under the DGCL. Further, because a properly submitted proxy which does not include instructions on how to vote will be voted “FOR” the proposal to adopt the Merger Agreement, the submission of a proxy not marked “AGAINST” or “ABSTAIN” will result in a waiver of appraisal rights. Additionally, certain other conditions, as set forth in Section 262 of the DGCL and as briefly described herein, must be met. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is reproduced in its entirety as Annex C to this proxy statement. Only a holder of record of shares of Glu Common Stock is entitled to demand appraisal rights for the shares registered in that holder’s name. If you hold your shares of Glu Common Stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee. You also should be aware that an investment banking opinion as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the Merger, is not an opinion as to, and does not otherwise address, “fair value” under Section 262 of the DGCL.
Material U.S. Federal Income Tax Consequences of the Merger
For U.S. federal income tax purposes, the receipt of cash by a U.S. Holder (as defined under the section captioned “Proposal 1: Adoption of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger”) in exchange for such U.S. Holder’s shares of Glu Common Stock in the Merger generally will result in the recognition of gain or loss in an amount measured by the difference, if any,
 
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between the amount of cash that such U.S. Holder receives in the Merger and such U.S. Holder’s adjusted tax basis in the shares of Glu Common Stock surrendered in the Merger.
A Non-U.S. Holder (as defined under the section captioned “Proposal 1: Adoption of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of Glu Common Stock for cash in the Merger unless such Non-U.S. Holder has certain connections to the United States.
For more information, see the section captioned “Proposal 1: Adoption of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger”. Stockholders should consult their own tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of their particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
Alternative Acquisition Proposals
Under the Merger Agreement, from February 8, 2021 until the Effective Time, Glu has agreed to, and has agreed to cause its subsidiaries and its and their respective representatives not to, directly or indirectly:

initiate, solicit, knowingly facilitate or encourage (including by way of providing information) the making, submission or announcement of any Acquisition Proposal as defined under the section captioned “The Merger Agreement — Ability to Change Board Recommendation; Superior Proposal”) or Acquisition Inquiry as defined under the section captioned “The Merger Agreement — Ability to Change Board Recommendation; Superior Proposal”) or otherwise knowingly assist or participate in the making, submission or announcement of any Acquisition Proposal;

engage in, participate or continue discussions or negotiations with any person with respect to an Acquisition Proposal or Acquisition Inquiry (except that this shall not prohibit Glu or its representatives from making such person aware of these restrictions in response to the receipt of an Acquisition Proposal or Acquisition Inquiry);

enter into any merger agreement, letter of intent, term sheet, agreement in principle, memorandum of understanding, share purchase agreement, asset purchase agreement, share exchange agreement or other similar agreement constituting or relating to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement (as defined under the section captioned “Ability to Change Board Recommendation; Superior Proposal”))) (an “Alternative Acquisition Agreement”) or enter into any contract or agreement requiring Glu to abandon, terminate or fail to consummate the Transactions;

terminate, waive, amend or modify any provision of, or grant permission under, any confidentiality agreement to which Glu or any of its subsidiaries is a party;

furnish to any person (other than to Electronic Arts, Merger Sub or any designees of Electronic Arts or Merger Sub) or “group” ​(as defined under Section 13(d) of the Exchange Act) any non-public information relating to Glu or any of its subsidiaries or afford to any person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Glu or any of its subsidiaries (other than Electronic Arts, Merger Sub or any designees of Electronic Arts or Merger Sub), in any such case in connection with any Acquisition Proposal or Acquisition Inquiry or under circumstances that would reasonably be expected to lead to an Acquisition Proposal except as permitted by the Merger Agreement;

take any action to make the provisions of any anti-takeover statute or law, or any restrictive provision of Glu’s organizational documents inapplicable to any Acquisition Proposal or person making an Acquisition Proposal; or

resolve or agree or publicly propose to take any of the foregoing actions.
Notwithstanding these restrictions, if, at any time following February 8, 2021 and prior to the receipt of the approval of Glu’s stockholders to adopt the Merger Agreement, in response to a Qualifying Acquisition Proposal (as defined under the section captioned “The Merger Agreement — Nonsolicitation of Transactions”) that the Board determines in good faith (after consultation with one or more of its financial advisors and with its outside legal counsel) that such Qualifying Acquisition Proposal constitutes, or could reasonably be expected to result in, a Superior Proposal (as defined under the section captioned “The
 
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Merger Agreement — Ability to Change Board Recommendation; Superior Proposal”) and that the failure to take the action described below would be inconsistent with its fiduciary duties to Glu’s stockholders under applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, order, award, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority (or under the authority of Nasdaq) (collectively “Law”), Glu and its representatives shall be permitted to engage or participate in discussions or negotiations with the person (or such person’s representatives) that has made the Qualifying Acquisition Proposal. For more information regarding our nonsolicitation obligations under the Merger Agreement, see the section captioned “The Merger Agreement — Nonsolicitation of Transactions.”
We are not entitled to terminate the Merger Agreement to enter into an agreement for a Superior Proposal unless we comply with certain procedures in the Merger Agreement, including providing Electronic Arts with notice and the material terms and conditions of such Acquisition Proposal and negotiating with Electronic Arts, if requested, over a four business day period regarding changes to the terms of the Merger Agreement intended to cause the applicable Acquisition Proposal to no longer constitute a Superior Proposal. In addition, we are not entitled to terminate the Merger Agreement if, during such four business day period, Electronic Arts makes an irrevocable proposal that results in the applicable Acquisition Proposal no longer being a Superior Proposal, as determined in good faith by our Board (after consultation with one or more of its financial advisors and outside legal counsel). The termination of the Merger Agreement by us in order to accept a Superior Proposal will result in our payment to Electronic Arts of a $78.9 million termination fee. For more information on the termination fee that may become payable by us pursuant to the Merger Agreement, see the section captioned “The Merger Agreement — Termination Fee.”
Termination of the Merger Agreement
The Merger Agreement may be terminated, and the Merger may be abandoned by action taken or authorized by the terminating party:

by mutual written consent of Glu and Electronic Arts by action of their respective boards of directors, at any time prior to the Effective Time;

by either Glu or Electronic Arts if (i) the meeting of Glu’s stockholders at which a vote on Glu’s stockholder approval was taken will have been held and such stockholder approval will not have been obtained at such meeting or (ii) the Effective Time will not have occurred by August 7, 2021, subject to extension by Glu or Electronic Arts for a period of up to three months if all conditions to the consummation of the Transactions other than conditions relating to a legal restraint or regulatory approvals have been satisfied as of such date (such date, including any permitted extension thereof, the “Outside Date”); provided that the right to terminate the Merger Agreement pursuant to clause (ii) will not be available to any party whose failure to perform any of its obligations under the Merger Agreement has been the primary cause of, or resulted in, the failure of the Effective Time to have occurred by such date; or

by either Glu or Electronic Arts if any court of competent jurisdiction or other Governmental Authority of competent jurisdiction issues an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger, and such order will have become final and nonappealable; provided that the right to terminate the Merger Agreement pursuant to such provision is not available to any party whose failure to perform any of its obligations in the Merger Agreement has been the primary cause of, or resulted in, such order or action.
 
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by Electronic Arts if:

prior to Glu obtaining stockholder approval, (i) the Board (or a duly authorized committee thereof) effectuated a Change of Board Recommendation or (ii) Glu committed a material intentional breach of any of its nonsolicitation obligations under the Merger Agreement; or

(i) there is an inaccuracy in any representation or warranty of Glu contained in the Merger Agreement or a breach of any covenant of Glu contained in the Merger Agreement, in any case, such that the Glu Representations Condition or the Glu Covenants Condition would not then be satisfied, (ii) Electronic Arts delivers to Glu a written notice of such inaccuracy or breach of covenant and (iii) either such inaccuracy or breach of covenant is not capable of cure or at least 30 days have elapsed (or the Outside Date has passed) since the date of delivery of such written notice to Glu and such inaccuracy or breach of covenant has not been cured; provided that the right to terminate pursuant to such provision is not available to Electronic Arts if its failure to perform any of its obligations in the Merger Agreement has been the primary cause of, or resulted in, the events specified in clauses (i) or (iii).

by Glu if:

prior to obtaining Glu’s stockholder approval, the Board (or a duly authorized committee thereof) determines to accept a Superior Proposal and enter into the Alternative Acquisition Agreement, subject to, and in accordance with, the terms and conditions of Glu’s nonsolicitation obligations under the Merger Agreement; provided that such termination will not be effective unless Glu pays the Termination Fee (as defined under the section captioned “Summary — Termination Fee”) to Electronic Arts prior to or concurrently with such termination in accordance with the Merger Agreement; or

(i) there is an inaccuracy in any representation or warranty of Electronic Arts contained in the Merger Agreement or a breach of any covenant of Electronic Arts contained in the Merger Agreement, in any case, such that any of the conditions set forth Electronic Arts Representations Condition or the Electronic Arts Covenants Condition would not then be satisfied, (ii) Glu delivers to Electronic Arts a written notice of such inaccuracy or breach of covenant and (iii) either such inaccuracy or breach of covenant is not capable of cure or at least 30 days have elapsed (or the Outside Date has passed) since the date of delivery of such written notice to Electronic Arts and such inaccuracy or breach of covenant has not been cured; provided however the right to terminate pursuant to such provision is not available to Glu if its failure to perform any of its obligations in the Merger Agreement has been the primary cause of, or resulted in, the events specified in clauses (i) or (iii).
Termination Fee
Glu will be required to pay Electronic Arts a termination fee equal to $78.9 million (the “Termination Fee”) if and only if the Merger Agreement is validly terminated:

by Electronic Arts, if prior to Glu obtaining stockholder approval, (i) the Board (or a duly authorized committee thereof) has effectuated a Change of Board Recommendation or (ii) Glu has committed a material intentional breach of any of its nonsolicitation obligations under the Merger Agreement, in which case, Glu shall pay the Termination Fee to Electronic Arts after such termination;

by Glu, if prior to Glu obtaining stockholder approval, the Board (or a duly authorized committee thereof) determines to accept a Superior Proposal and enter into the Alternative Acquisition Agreement, subject to, and in accordance with, the terms and conditions of its nonsolicitation obligations under the Merger Agreement in which case, Glu will pay the Termination Fee to Electronic Arts prior to or concurrently with such termination in accordance with the Merger Agreement; or

by either Electronic Arts or Glu as a result of (i) the meeting of Glu’s stockholders at which a vote on Glu’s stockholder approval was taken having been held and such stockholder approval having not been obtained at such meeting or (ii) the Effective Time having not occurred by the Outside Date (but in the case of clause (ii), if, as of the time of such termination, (1) either party is then entitled to terminate the Merger Agreement as a result of the meeting of Glu’s stockholders at which a vote on Glu’s
 
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stockholder approval was taken having been held and such stockholder approval having not been obtained at such meeting or (2) Electronic Arts is then entitled to terminate the Merger Agreement as a result of an inaccuracy in any representation or warranty of Glu contained in the Merger Agreement or a breach of any covenant of Glu contained in the Merger Agreement, in any case, such that the Glu Representations Condition or the Glu Covenants Condition would not be satisfied) or by Electronic Arts as a result of an inaccuracy in any representation or warranty of Glu contained in the Merger Agreement or a breach of any covenant of Glu contained in the Merger Agreement, in any case, such that the Glu Representations Condition or the Glu Covenants Condition would not be satisfied, and (A) following February 8, 2021 and prior to such termination, an Acquisition Proposal has been publicly disclosed or otherwise become publicly known and (B) within 12 months after such termination, Glu enters into a definitive contract with respect to an Acquisition Proposal or consummates an Acquisition Proposal (which need not be the same Acquisition Proposal that was made, announced or publicly known prior to the termination of the Merger Agreement) (provided that for all purposes of this bullet point, references to “15%” in the definition of the term “Acquisition Proposal” shall be deemed to be references to 50%), in which case, Glu shall pay to Electronic Arts the Termination Fee concurrently with entering into a definitive contract or the consummation of such Acquisition Proposal.
The parties have agreed that in the event that the Merger Agreement is validly terminated in accordance with its terms and the Termination Fee is payable pursuant to the Merger Agreement and is paid, it is not a penalty and constitutes liquidated damages, and such payment will be the sole and exclusive remedy under the Merger Agreement of Electronic Arts against Glu. Electronic Arts may pursue a grant of specific performance in accordance with the Merger Agreement and the payment of the Termination Fee, provided that Electronic Arts may not be permitted or entitled to receive a grant of specific performance that results in the closing and any money damages, including all or any portion of the Termination Fee. The parties have agreed that in no event will Glu be required to pay the Termination Fee on more than one occasion.
Market Prices and Dividend Data
Glu Common Stock is listed on Nasdaq under the symbol “GLUU.” On February 5, 2021, the last full trading day before the public announcement of the Merger, the closing price for Glu Common Stock was $9.19 per share, and on           , 2021, the latest practicable trading day before the printing of this proxy statement, the closing price for Glu Common Stock was           $ per share.
We have never paid cash dividends on Glu Common Stock.
Effect on Glu if the Merger is Not Completed
If the Merger Agreement is not adopted by stockholders or if the Merger is not completed for any other reason, stockholders will not receive any payment for their shares of Glu Common Stock. Instead, we will remain a stand-alone public company, Glu Common Stock will continue to be listed and traded on Nasdaq and registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we will continue to file periodic reports with the SEC. Under specified circumstances, upon the termination of the Merger Agreement, we will be required to pay Electronic Arts a termination fee. For more details, see the section captioned “The Merger Agreement — Termination Fees.”
In addition, if the Merger is not completed, we expect that management will operate the business in a manner similar to that in which it is being operated today and that stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which we operate and risks related to adverse economic conditions.
 
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QUESTIONS AND ANSWERS ABOUT THE VIRTUAL SPECIAL MEETING AND THE MERGER
The following Questions and Answers About the Virtual Special Meeting and the Merger (this “Q&A”) is intended to address some commonly asked questions about the virtual special meeting of our stockholders and the Merger. This Q&A may not address all questions that may be important to you as a Glu stockholder. We urge you to read carefully the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents we refer to in this proxy statement.
General
Q:
Why am I receiving this proxy statement?
A:
You are receiving this proxy statement because you were a Glu stockholder as of           , 2021, the record date for the virtual special meeting. To complete the Merger, our stockholders holding a majority of the outstanding shares of Glu Common Stock as of           , 2021, the record date for the virtual special meeting, entitled to vote, must affirmatively vote to adopt the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement.
You are being solicited to vote in favor of the proposals (1) to adopt the Merger Agreement, (2) to approve the compensation proposal and (3) to approve the adjournment proposal.
Q:
What will happen to my Glu Common Stock as a result of the Merger?
A:
If the Merger is completed, each share of Glu Common Stock that you hold immediately prior to the Effective Time will be converted into the right to receive the Per Share Merger Consideration. This does not apply to shares of Glu Common Stock held by any of our stockholders who have properly demanded their appraisal rights under the DGCL. See the section captioned “Proposal 1: Adoption of the Merger Agreement — Appraisal Rights.”
Q:
What will happen to Glu generally as a result of the Merger?
A:
If the Merger is completed, we will cease to be a stand-alone public company and will become a wholly owned subsidiary of Electronic Arts. As a result, you will no longer have any ownership interest in Glu. Upon completion of the Merger, shares of Glu Common Stock will no longer be listed on any stock exchange or quotation system, including Nasdaq. In addition, following the completion of the Merger, the registration of Glu Common Stock and our reporting obligations under the Exchange Act will be terminated.
Q:
What are the U.S. federal income tax consequences of the Merger to me?
A:
The receipt of cash in exchange for shares of Glu Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Generally, you will recognize gain or loss equal to the difference between the amount of cash you receive and the adjusted tax basis of your shares of Glu Common Stock. If you are a U.S. holder, you will be subject to U.S. federal income tax on any gain recognized in connection with the Merger. If you are a non-U.S. holder, you will generally not be subject to U.S. federal income tax on any gain recognized in connection with the Merger unless you have certain connections to the United States. The tax consequences of the Merger to you will depend on your particular circumstances, and you should consult your own tax advisors to determine how the Merger will affect you.
For a more detailed summary of the U.S. federal income tax consequences of the Merger, see the section captioned “Proposal 1: Adoption of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger”.
Q:
Am I entitled to appraisal rights in connection with the Merger?
A:
Statutory appraisal rights under the DGCL in connection with the Merger will be available to stockholders who (1) continuously hold their shares of Glu Common Stock through the Effective Time; (2) submit a written demand for an appraisal of their shares prior to the stockholder vote on the adoption of the Merger Agreement; (3) do not vote or submit a proxy in favor of the adoption of the
 
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Merger Agreement; (4) take certain actions and meet certain conditions under the DGCL; and (5) do not thereafter withdraw their demand for appraisal of their shares of Glu Common Stock or otherwise lose their appraisal rights, in each case in accordance with the DGCL. For a more detailed discussion of your appraisal rights, see the section captioned “Proposal 1: Adoption of the Merger Agreement — Appraisal Rights.”
A copy of the full text of Section 262 of the DGCL is included as Annex C to this proxy statement. Failure to precisely follow any of the statutory procedures set forth in Section 262 of the DGCL will result in the loss of appraisal rights.
Q:
When do you expect the Merger to be completed?
A:
We are working toward completing the Merger as quickly as possible and expect the Merger to be completed in the quarter ending June 30, 2021. However, the Merger continues to be subject to various closing conditions, including our stockholders’ approval of the proposal to adopt the Merger Agreement and the receipt of regulatory approvals. Therefore, we cannot assure you that all conditions to the Merger will be satisfied or, if satisfied, the date by which they will be satisfied.
Q:
When will I receive the Per Share Merger Consideration for my shares of Glu Common Stock?
A:
After the Merger is completed, you will receive written instructions, including a letter of transmittal that explains how to exchange your shares of Glu Common Stock for the Per Share Merger Consideration. When you properly return and complete the required documentation described in the written instructions, you will receive from the paying agent a payment of the Per Share Merger Consideration for your shares of Glu Common Stock.
The Virtual Special Meeting
Q:
When and where will the virtual special meeting of our stockholders be held?
A:
The virtual special meeting of our stockholders will be held exclusively online via live webcast on             ,             , at          , Pacific Time. There will not be a physical meeting location. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions and vote online. We encourage you to allow ample time for online check-in, which will open at           , Pacific Time. Please note that you will not be able to attend the virtual special meeting in person.
Q:
What are the proposals that will be voted on at the virtual special meeting?
A:
You will be asked to consider and vote on (1) a proposal to adopt the Merger Agreement, (2) the compensation proposal, and (3) the adjournment proposal.
Q:
How does our Board recommend that I vote on the proposals?
A:
Our Board unanimously approved the Merger Agreement and the Merger and determined that the Merger Agreement and the Merger are fair to and in the best interests of our stockholders and recommends that you vote:

FOR” the proposal to adopt the Merger Agreement;

FOR” the compensation proposal; and

FOR” the adjournment proposal.
Q:
Why am I being asked to consider and vote on the named executive officer Merger-related compensation proposal?
A:
SEC rules require us to seek approval on a non-binding, advisory basis with respect to certain payments that will or may be made to our named executive officers in connection with the Merger. Approval of the named executive officer Merger-related compensation proposal is not required to complete the Merger.
 
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Q:
What do I need in order to be able to attend the virtual special meeting online?
A:
The virtual special meeting will be held via live webcast only. Any stockholder can attend the virtual special meeting live online at www.virtualshareholdermeeting.com/GLUU2021SM. The webcast will start at           , Pacific Time on           . Stockholders may vote and submit questions while attending the virtual special meeting online. In order to be able to enter the virtual special meeting, you will need the 16-digit control number, which is included on your proxy card if you are a stockholder of record of shares of Glu Common Stock or included with your voting instruction card and voting instructions you received from your broker, bank or other nominee of your shares if you hold your shares of Glu Common Stock in “street name.” Instructions on how to attend and participate online are also posted online at www.proxyvote.com.
Q:
Who is entitled to attend and vote at the virtual special meeting?
A:
The record date for the virtual special meeting is           , 2021. If you own shares of Glu Common Stock as of the close of business on the record date, you are entitled to notice of, and to vote at, the virtual special meeting or any adjournment or postponement of the virtual special meeting. As of the record date, there were approximately           shares of Glu Common Stock issued and outstanding, held by approximately           stockholders of record and beneficially by thousands of additional stockholders. Each share of Glu Common Stock outstanding as of the record date is entitled to one vote with respect to each proposal to be presented at the virtual special meeting.
Stockholders of record as of the record date of the virtual special meeting and their duly appointed proxy holders may attend the virtual special meeting and vote at the meeting. Beneficial owners of shares held in “street name” will only be able to vote at the virtual special meeting if they have a proxy, executed in their favor, from their broker, bank or other nominee of the stockholder of record of their shares, giving them the right to vote the shares at the virtual special meeting.
Q:
Do I need to attend the virtual special meeting?
A:
No. While our stockholders of record may exercise their right to vote their shares at the virtual special meeting, it is not necessary for you to attend the virtual special meeting in order to vote your shares of Glu Common Stock.
Q:
What constitutes a quorum?
A:
The presence at the virtual special meeting of the holders of a majority of the shares of Glu Common Stock issued and outstanding and entitled to vote at the virtual special meeting will constitute a quorum. Shares are counted as present at the virtual special meeting if the holder is present and votes online at the virtual special meeting or if the holder has properly submitted a proxy. Each share of Glu Common Stock outstanding as of the record date is entitled to one vote with respect to each proposal to be presented at the virtual special meeting. If you fail to return your proxy card prior to the virtual special meeting or to submit a proxy via the Internet or telephone, or if you fail to attend the virtual special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the virtual special meeting and will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. Similarly, if you hold your shares in “street name” and fail to instruct your broker, bank or other nominee how to vote your shares, your shares will not be counted for purposes of determining whether a quorum is present and will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. If you attend the virtual special meeting or if you submit (and do not thereafter revoke) a proxy by duly executing and returning a proxy card or via the Internet or telephone, even if you abstain from voting, your shares of Glu Common Stock will be counted for purposes of determining whether a quorum is present at the virtual special meeting.
Q:
What vote is required to adopt the Merger Agreement?
A:
The adoption of the Merger Agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter. If you abstain from voting, fail to cast your vote, at the virtual special meeting or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.
 
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Q:
What vote is required to approve the compensation proposal?
A:
In accordance with the rules of the SEC, stockholders have the opportunity to cast a non-binding, advisory vote to approve compensation that may be paid or become payable to our named executive officers based upon or otherwise relating to the Merger, as described in the table provided in the section captioned “Proposal 1: Adoption of the Merger Agreement — Quantification of Potential Payments and Benefits to our Named Executive Officers.” The vote to approve the compensation proposal is advisory and therefore will not be binding on us or Electronic Arts, nor will it overrule any prior decision or require our Board (or any committee of our Board) to take any action, regardless of whether the Merger is completed. The compensation that may be paid in connection with the Merger is contractual with respect to our named executive officers. Accordingly, if our stockholders adopt the Merger Agreement and the Merger is completed, the compensation based on or otherwise relating to the Merger will be paid to our named executive officers in accordance with the terms of their compensation agreements and arrangements, regardless of whether our stockholders approve the compensation proposal.
Approval of the compensation proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present at the virtual special meeting or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
If you abstain from voting, fail to cast your vote, either at the virtual special meeting or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have no effect on the outcome of the vote for the compensation proposal, provided that a quorum is present at the virtual special meeting.
Q:
What vote is required to adopt the adjournment proposal?
A:
Approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present at the virtual special meeting or represented by proxy at the virtual special meeting and are voted “FOR” or AGAINST” the proposal.
If you abstain from voting, fail to cast your vote either at the virtual special meeting or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have no effect on the outcome of the vote for the adjournment proposal, provided that a quorum is present at the virtual special meeting.
Q:
Why is my vote important? How are votes counted? What happens if I abstain?
A:
There must be a quorum for business to be conducted at the virtual special meeting. If you do not submit a proxy or voting instructions, or if you do not attend the virtual special meeting, it will be more difficult for us to obtain the necessary quorum to conduct business at the virtual special meeting.
Votes will be counted by the inspector of election appointed for the virtual special meeting, who will separately count “FOR” and “AGAINST” votes and abstentions. If you abstain from voting, fail to cast your vote, at the virtual special meeting or by proxy, it will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but will have no effect on the compensation proposal or the adjournment proposal (provided that a quorum is present).
Q:
Do any of our directors or executive officers have interests in the Merger that may differ from those of our stockholders?
A:
In considering the recommendation of our Board with respect to the Merger Agreement, you should be aware that our directors and executive officers have interests in the Merger that may be different from, or in addition to, those of our stockholders generally. These interests may create potential conflicts of interest. Our Board was aware that these interests existed and considered them, among other matters, when it approved the Merger Agreement and made its recommendation that our stockholders adopt the Merger Agreement. You should read the section captioned “Proposal 1: Adoption of the Merger Agreement — Interests of our Directors and Executive Officers in the Merger.”
 
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Q:
What do I need to do now?
A:
After carefully reading and considering the information contained in this proxy statement, including the annexes and the other documents referred to in this proxy statement, please vote your shares in one of the manners described below. Each share of Glu Common Stock outstanding as of the record date is entitled to one vote with respect to each proposal to be presented at the virtual special meeting.
Q:
How do I vote if I am a stockholder of record?
A:
You may vote:

by following the Internet voting instructions printed on your proxy card;

by following the telephone voting instructions printed on your proxy card;

by completing, signing and dating each proxy card you receive and returning it in the enclosed postage-paid envelope prior to the virtual special meeting; or

by casting your vote at the virtual special meeting via the virtual meeting website. There will not be a physical meeting location. Any stockholder can attend the virtual special meeting by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where stockholders may vote and submit questions during the meeting. The virtual special meeting starts at           , Pacific Time. We encourage you to allow ample time for online check-in, which will open at           , Pacific Time. Please have your 16-digit control number to join the virtual special meeting. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.
If you are voting via the Internet or by telephone, your voting instructions must be received by the date and time indicated on the applicable proxy card(s).
Voting via the Internet, by telephone or by mailing in your proxy card will not prevent you from attending the virtual special meeting. You are encouraged to submit a proxy via the Internet, by telephone or by mail even if you plan to attend the virtual special meeting, to ensure that your shares of Glu Common Stock are present or represented at the virtual special meeting.
Q:
What happens if I return my proxy card but I do not indicate how to vote?
A:
If you submit a proxy but do not include instructions on how to vote, your shares of Glu Common Stock will be voted “FOR” the proposal to adopt the Merger Agreement, “FOR” the approval of the compensation proposal and “FOR” the approval of the adjournment proposal. We do not currently intend to present any other proposals for consideration at the virtual special meeting.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, to be the “stockholder of record.” If you are a stockholder of record, this proxy statement and your proxy card have been sent directly to you by or on behalf of Glu.
If your shares are held through a brokerage firm, bank, broker or other nominee, you are considered the “beneficial owner” of shares of Glu Common Stock held in “street name.” If you are a beneficial owner of shares of Glu Common Stock held in “street name,” this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your brokerage firm, bank, broker or other nominee how to vote your shares by following their instructions for voting, and you are also invited to attend the virtual special meeting. However, because you are not the stockholder of record, you may not vote your shares at the virtual special meeting unless you obtain a proxy, executed in your favor, from your brokerage firm, bank, broker or other nominee giving you the right to vote your shares at the virtual special meeting.
 
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Q:
How do I vote if my shares are held by my brokerage firm, bank, trust or other nominee?
A:
If your shares are held in a brokerage account or by another nominee, such as a bank or trust, then the brokerage firm, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you still are considered to be the beneficial owner of those shares, with your shares being held in “street name.” “Street name” holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank, trust or other nominee how to vote their shares. Your brokerage firm, bank, trust or other nominee will only be permitted to vote your shares for you at the virtual special meeting if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your brokerage firm, bank, trust or other nominee regarding how to instruct them to vote your shares. If you wish to vote at the virtual special meeting, you must obtain a proxy, executed in your favor, from your brokerage firm, bank, trust or other nominee giving you the right to vote your shares at the virtual special meeting.
In addition, because any shares you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, shares held in “street name” will not be combined for voting purposes with shares you hold of record. To ensure your shares are represented and voted at the virtual special meeting, you should instruct your brokerage firm, bank, trust or other nominee to vote your shares that you hold in “street name.”
Q:
What is a broker non-vote?
A:
If you are a beneficial owner of shares held in “street name” and do not provide your broker, bank or nominee with specific voting instructions, the broker, bank or nominee may generally vote on “routine” matters, but cannot vote on “non-routine” matters. The proposal to adopt the Merger Agreement, the compensation proposal and the adjournment proposal are considered “non-routine” matters. If the broker, bank or nominee does not receive instructions from you on how to vote your shares on a non-routine matter, it will inform the inspector of election that it does not have authority to vote on this matter with respect to your shares. This is referred to as a “broker non-vote.”
You should instruct your broker, bank or other nominee how to vote your shares. Under the rules applicable to broker-dealers, your broker, bank or other nominee does not have discretionary authority to vote your shares on any of the proposals scheduled to be voted on at the virtual special meeting. Because brokers, banks and other nominees do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Glu Common Stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be counted as present or by proxy at the virtual special meeting. In addition, any broker non-vote will have the same effect as a vote “AGAINST” the adoption of the Merger Agreement, but will have no effect on the vote for the compensation proposal or the adjournment proposal (provided that a quorum is present).
Q:
What is a proxy?
A:
A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of Glu Common Stock. The written document describing the matters to be considered and voted on at the virtual special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Glu Common Stock is called a “proxy card.”
Q:
May I change my vote after I have delivered my proxy?
A:
Yes. If you are the stockholder of record of Glu Common Stock, you have the right to change or revoke your proxy at any time before the vote being taken at the virtual special meeting by:

delivering a written revocation of the proxy, or a later dated, signed proxy card, to our Corporate Secretary at Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco, California 94103, on or before the business day prior to the virtual special meeting;

attending the virtual special meeting and voting at the meeting (your attendance at the virtual special meeting will not, by itself, revoke your proxy, so you must vote at the virtual special meeting to revoke your proxy); or
 
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signing and delivering a new proxy, relating to the same shares of Glu Common Stock and bearing a later date; or by submitting another proxy by telephone or via the Internet after the date of your prior proxy and by the date and time indicated on the applicable proxy card(s).
If you are a “street name” holder of Glu Common Stock, you should contact your brokerage firm, bank, trust or other nominee to obtain instructions as to how to change or revoke your voting instructions.
Q:
What is the deadline for voting my shares of Glu Common Stock?
A:
If you are a stockholder of record, your proxy must be received via the Internet or by telephone by 11:59 p.m., Eastern Time, on the date prior to the virtual special meeting date, in order for your shares to be voted at the virtual special meeting. However, if you are a stockholder of record, you may instead mark, sign, date and return the enclosed proxy card, which must be received before the polls close at the virtual special meeting, in order for your shares to be voted at the virtual special meeting. If you are a beneficial owner, please read the voting instructions provided by your bank, broker, trust or other nominee for information on the deadline for voting your shares.
Q:
How do I exchange my Glu Common Stock for Per Share Merger Consideration?
A:
After the Merger is completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your shares of Glu Common Stock for the Per Share Merger Consideration. If your shares are held in “street name” by your brokerage firm, bank, trust or other nominee, you will receive instructions from your brokerage firm, bank, trust or other nominee as to how to effect the surrender of your “street name” shares in exchange for the Per Share Merger Consideration.
Q:
What happens if I sell my shares of Glu Common Stock after the record date but before the virtual special meeting?
A:
The record date for stockholders entitled to vote at the virtual special meeting is earlier than the date of the virtual special meeting and the Effective Time. If you transfer your shares of Glu Common Stock after the record date but before the virtual special meeting, you will, unless special arrangements are made, retain your right to vote at the virtual special meeting but will transfer the right to receive the Per Share Merger Consideration to the person to whom you transfer your shares.
In addition, if you sell your shares prior to the virtual special meeting or prior to the Effective Time, you will not be eligible to exercise your appraisal rights in respect of the Merger. For a more detailed discussion of your appraisal rights and the requirements for properly demanding your appraisal rights, see the section captioned “Proposal 1: Adoption of the Merger Agreement — Appraisal Rights” and Annex C to this proxy statement.
Q:
What happens if the proposal to adopt the Merger Agreement is not approved by our stockholders or if the Merger is not completed for any other reason?
A:
If the proposal to adopt the Merger Agreement is not approved by our stockholders or if the Merger is not completed for any other reason, our stockholders will not receive any payment for their shares in connection with the Merger. Instead, we will remain a stand-alone public company and Glu Common Stock will continue to be listed and traded on Nasdaq. Under specified circumstances, we may be required to pay to Electronic Arts a termination fee.
For more information on the termination fees that may become payable by us pursuant to the Merger Agreement, see the section captioned “The Merger Agreement — Termination Fees.”
Q:
How do our directors and executive officers intend to vote their shares of Glu Common Stock in respect of the proposal to adopt the Merger Agreement?
A:
At the close of business on the record date for the virtual special meeting, our directors and executive officers and their respective affiliates beneficially owned and were entitled to vote           shares of Glu Common Stock, or approximately    % of the shares of Glu Common Stock outstanding on
 
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such date. Although they are not obligated to do so, our directors and executive officers have informed us that they intend to vote all of their shares of Glu Common Stock in favor of the adoption of the Merger Agreement.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please sign, date and return (or grant your proxy electronically over the Internet or by telephone for) each proxy card and voting instruction form that you receive to ensure that all of your shares are voted.
Q:
What is householding and how does it affect me?
A:
The SEC’s proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement to those stockholders, unless contrary instructions have been received. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies. Certain brokerage firms may have instituted householding for beneficial owners of Glu Common Stock held through brokerage firms. If your family has multiple accounts holding Glu Common Stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or our Investor Relations department at the address below.
A separate copy of these proxy materials will be promptly delivered upon request by contacting our Investor Relations department by (1) mail at Glu Mobile Inc., Attention: Investor Relations, Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco, California 94103 or (2) e-mail at IR@glu.com.
Q:
Where can I find the voting results of the virtual special meeting?
A:
If available, we may announce preliminary voting results at the conclusion of the virtual special meeting. We intend to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the virtual special meeting. All reports that we file with the SEC are publicly available when filed. For more information, see the section captioned “Where You Can Find More Information.”
Q:
Who can answer further questions?
A:
For additional questions about the Merger, assistance in submitting proxies or voting shares of Glu Common Stock, or to request additional copies of the proxy statement or the enclosed proxy card, please contact our proxy solicitor at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders May Call:
Toll-Free at (888) 750-5834 (from the U.S. and Canada)
or +1 (412) 232-3651 (from other locations)
Banks & Brokers May Call Collect: (212) 750-5833
If your brokerage firm, bank, trust or other nominee holds your shares in “street name,” you should also call your brokerage firm, bank, trust or other nominee for additional information.
 
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FORWARD-LOOKING INFORMATION
This proxy statement contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, that are based on our current expectations, assumptions, beliefs, estimates and projections about the proposed Merger, Glu and our industry. The forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “project,” “should,” “could” and similar expressions. Factors that may affect those forward-looking statements include, among other things:

the parties’ inability to consummate the Merger due to failure to satisfy conditions to the completion of the Merger, including the receipt of stockholder approval or the regulatory approvals required for the Merger, which may not be obtained on the terms expected, on the anticipated schedule or at all;

the risk that the Merger Agreement may be terminated in circumstances that require us to pay Electronic Arts termination fees of $78.9 million in connection therewith;

the costs, fees, expenses and charges we incur related to the Merger;

risks arising from the potential diversion of management’s attention from our ongoing business operations while working to implement the Merger;

the outcome of any legal proceedings that may be instituted against us and others related to the Merger Agreement;

the effect of the announcement or pendency of the Merger on our ability to effectively recruit and retain our employees, maintain business relationships and operating results and business generally;

risks resulting from our compliance with the terms of the Merger Agreement, including restrictions on the conduct of our business during the pendency of the Merger;

the possibility that Electronic Arts could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of our assets to one or more purchasers, that could conceivably produce a higher aggregate value than that available to our stockholders in the Merger;

adverse effects on the market price of Glu Common Stock and on our operating results because of a failure to complete the Merger;

the risk that our financial results differ from those set forth in the projections described in this proxy statement; and

other risks detailed in our filings with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which discuss these and other important risk factors concerning our operations.
We caution you that reliance on any forward-looking statement involves risks and uncertainties and that, although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect. In light of these and other uncertainties, you should not conclude that we will achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to revise any of these forward-looking statements to reflect future events or circumstances.
 
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PARTIES INVOLVED IN THE MERGER
Glu Mobile Inc.
875 Howard Street, Suite 100
San Francisco, California 94103
(415) 800-6100
Glu develops, publishes and markets a portfolio of free-to-play mobile games designed to appeal to a broad cross section of users who download and make purchases within our games through direct-to-consumer digital storefronts, such as the Apple App Store, Google Play Store, and others. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee and to engage with various advertisements and offers that generate revenue for us. We have a portfolio of compelling games based on our own intellectual property such as Cooking Dash, Covet Fashion, Deer Hunter, Design Home and Diner DASH Adventures, as well as games based on or significantly incorporating third party licensed brands including Disney Sorcerer’s Arena, Kim Kardashian: Hollywood, the MLB Tap Sports Baseball franchise and Restaurant Dash with Gordon Ramsay. We are headquartered in San Francisco, California, with other U.S. offices in Foster City, California and Orlando, Florida, and international locations in Toronto, Canada and Hyderabad, India.
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, California 94065
(650) 628-1500
Electronic Arts is a global leader in digital interactive entertainment. Electronic Arts develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. Headquartered in Redwood City, California, Electronic Arts is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS™, FIFA, Battlefield™, Apex Legends™, The Sims™, Madden NFL, Need for Speed™, Titanfall™ and Plants vs. Zombies™.
Giants Acquisition Sub, Inc.
209 Redwood Shores Parkway
Redwood City, California 94065
(650) 628-1500
Merger Sub, a Delaware corporation and a wholly owned subsidiary of Electronic Arts, was formed on January 29, 2021 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement (the “Transactions”). Merger Sub has not engaged in any business activities other than in connection with the Transactions. Upon completion of the Merger, Merger Sub will merge with and into Glu, and Merger Sub will cease to exist.
 
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THE VIRTUAL SPECIAL MEETING
The enclosed proxy is solicited on behalf of our Board for use at the virtual special meeting of stockholders or at any adjournment or postponement thereof.
Date, Time and Place
We will hold the virtual special meeting exclusively online via live webcast on           ,           , at           , Pacific Time. The virtual special meeting can be accessed by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where you will be able to listen to the meeting live, submit questions and vote online. We encourage you to allow ample time for online check-in, which will open at           , Pacific time. Please note that you will not be able to attend the virtual special meeting in person.
Purpose of the Virtual Special Meeting
At the virtual special meeting, we will ask the holders of Glu Common Stock to (1) adopt the Merger Agreement; (2) approve, on a non-binding advisory basis, the compensation proposal; and (3) approve the adjournment proposal.
Upon the terms and subject to the conditions of the Merger Agreement, if the Merger is completed, Merger Sub will merge with and into Glu and Glu will continue as the Surviving Corporation.
Record Date; Shares Entitled to Vote; Quorum
Only holders of record of Glu Common Stock at the close of business on           , 2021, the record date, are entitled to notice of and to vote at the virtual special meeting, including any adjournments or postponements of the virtual special meeting. On the record date,           shares of Glu Common Stock were issued and outstanding, held by approximately           stockholders of record and beneficially by thousands of additional stockholders. Each share of Glu Common Stock outstanding as of the record date is entitled to one vote with respect to each proposal to be presented at the virtual special meeting.
The holders of a majority of the shares of Glu Common Stock issued and outstanding and entitled to vote at the virtual special meeting, present or represented by proxy at the virtual special meeting will constitute a quorum. Votes cast at the virtual special meeting, either by proxy or at the meeting, will be tabulated by the inspector of elections appointed for the virtual special meeting. If you fail to return your proxy card prior to the virtual special meeting or to submit a proxy via the Internet or telephone, or if you fail to attend the virtual special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. Similarly, if you hold your shares in “street name” and fail to instruct your broker, bank or other nominee how to vote your shares, your shares will not be counted for purposes of determining whether a quorum is present and will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. If you attend the virtual special meeting or if you submit (and do not thereafter revoke) a proxy by duly executing and returning a proxy card or via the Internet or telephone, even if you abstain from voting, your shares of Glu Common Stock will be counted for purposes of determining whether a quorum is present at the virtual special meeting.
In the event that a quorum is not present or represented by proxy at the virtual special meeting, the chairperson of the meeting may adjourn the meeting or may direct that the holders of a majority of the shares entitled to vote who are present or represented by proxy at the virtual special meeting adjourn the meeting. If there is not a quorum of stockholders at the virtual special meeting and any proposal to adjourn the meeting submitted to the holders who are present or represented by proxy at the virtual special meeting is not approved, our Board, if permitted by the Merger Agreement, may set a new record date and meeting date for a special meeting to consider the proposal to adopt the Merger Agreement, the compensation proposal and the adjournment proposal, in accordance with the Merger Agreement.
 
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Vote Required
The votes required to approve each proposal are as follows:
1.
The Merger Agreement must be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter.
2.
The compensation proposal must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
3.
The adjournment proposal must be approved by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal.
Voting by our Directors and Executive Officers
At the close of business on the record date for the virtual special meeting, our directors and executive officers and their respective affiliates beneficially owned and were entitled to vote           shares of Glu Common Stock at the virtual special meeting, or approximately    % of the shares of Glu Common Stock outstanding on such date.
Certain members of our management and our Board have interests in the Merger that are in addition to those of stockholders generally and may be different from, or in conflict with, your interests as our stockholder. See the section captioned “Proposal 1: Adoption of the Merger Agreement — Interests of our Directors and Executive Officers in the Merger.”
Voting Agreement
Electronic Arts has entered into a voting agreement with a holder of 21,000,000 shares of Glu Common Stock (representing approximately 12.1% of the voting power of Glu Common Stock), providing for all such shares to be voted in favor of the proposal to adopt the Merger Agreement. The Voting Agreement will terminate upon certain events including a termination of the Merger Agreement and a Change of Board Recommendation in response to a Superior Proposal (as defined under the section captioned “Ability to Change Board Recommendation; Superior Proposal”).
Voting of Proxies
If your shares are registered in your name, you may cause your shares to be voted at the virtual special meeting by returning a signed proxy card or voting at the virtual special meeting via the virtual meeting website. Any stockholder can attend the virtual special meeting by visiting www.virtualshareholdermeeting.com/GLUU2021SM, where stockholders may vote and submit questions during the meeting. The virtual special meeting starts at           , Pacific Time. Please have your 16-digit control number to join the virtual special meeting. Instructions on who can attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com. Additionally, you may submit a proxy authorizing the voting of your shares via the Internet or by telephone by following the instructions printed on the proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy via the Internet or by telephone.
If your shares are registered in your name, you are encouraged to submit a proxy card even if you plan to attend the virtual special meeting.
Voting instructions are included on your proxy card. All shares represented by properly executed proxies received in time for the virtual special meeting will be voted at the virtual special meeting in accordance with the instructions of the stockholder. Properly executed proxies that do not contain voting instructions will be voted “FOR” the proposal to adopt the Merger Agreement, “FOR” the approval of the compensation proposal and “FOR” the approval of the adjournment proposal.
 
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If your shares are held in “street name” through a brokerage firm, bank, trust or other nominee, you may provide voting instructions by completing and returning the voting form provided by your brokerage firm, bank, trust or other nominee or via the Internet or by telephone through your brokerage firm, bank, trust or other nominee, if such a service is provided. To provide voting instructions via the Internet or telephone, you should follow the instructions on the voting form provided by your brokerage firm, bank, trust or other nominee. If you plan to attend the virtual special meeting and wish to vote at the meeting, you will need to obtain a proxy, executed in your favor, from your brokerage firm, bank, trust or other nominee giving you the right to vote your shares at the virtual special meeting.
Revocability of Proxies
Any proxy you give pursuant to this solicitation may be revoked by you at any time before it is voted. Proxies may be revoked as follows:
If you have sent a proxy directly to us, you may revoke it by:

delivering a written revocation of the proxy or a later dated, signed proxy card, to our Corporate Secretary at Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco, California 94103, on or before the business day prior to the virtual special meeting;

attending the virtual special meeting and voting at the meeting (your attendance at the virtual special meeting will not, by itself, revoke your proxy, so you must vote at the virtual special meeting to revoke your proxy); or

signing and delivering a new proxy prior to the virtual special meeting, relating to the same shares of Glu Common Stock and bearing a later date; or by submitting another proxy by telephone or via the Internet after the date of your prior proxy and by the date and time indicated on the applicable proxy card(s).
If you have instructed your brokerage firm, bank, trust or other nominee to vote your shares, you may revoke your proxy only by following the directions received from your brokerage firm, bank, trust or other nominee to change those instructions.
Your attendance at the virtual special meeting does not alone automatically revoke your proxy. If you have instructed your brokerage firm, bank, trust or other nominee how to vote your shares, the above-described options for revoking your proxy do not apply. Instead, you must follow the directions provided by your brokerage firm, bank, trust or other nominee to change your voting instructions.
Our Board’s Recommendations
Our Board has unanimously approved the Merger Agreement and the Merger and determined that the Merger Agreement and the Merger are fair to and in the best interests of our stockholders. Our Board unanimously recommends that our stockholders (1) vote “FOR” the proposal to adopt the Merger Agreement; (2) vote “FOR” the compensation proposal; and (3) vote “FOR” the adjournment proposal. See the section captioned “Proposal 1: Adoption of the Merger Agreement — Recommendation of our Board and Reasons for the Merger.” Our stockholders should carefully read this proxy statement in its entirety for more detailed information concerning the Merger Agreement and the Transactions, including the Merger. In addition, our stockholders should carefully read the Merger Agreement, which is attached as Annex A to this proxy statement.
Effect of Abstentions and Broker Non-Votes
The Merger Agreement must be adopted by the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter. If you abstain from voting, fail to cast your vote, either at the virtual special meeting or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.
The compensation proposal and the adjournment proposal must be approved the affirmative vote of the holders of a majority of the outstanding shares of Glu Common Stock entitled to vote on such matter
 
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that are present or represented by proxy at the virtual special meeting and are voted “FOR” or “AGAINST” the proposal. If you abstain from voting, fail to cast your vote, either at the virtual special meeting or by proxy, or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have no effect on the vote for the compensation proposal or the adjournment proposal (provided that a quorum is present). It is very important that all of our stockholders vote their shares, so please promptly complete and return the enclosed proxy card.
Solicitation of Proxies
This proxy solicitation is being made by Glu on behalf of our Board and will be paid for by us. Our directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or other means of communication. These persons will not be paid additional remuneration for their efforts. We have also retained Innisfree M&A Incorporated, a proxy solicitation firm, to assist in the solicitation of proxies for a fee of up to $20,000, plus the reimbursement of out-of-pocket expenses incurred by it on our behalf. We may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. You should not send your stock certificates, if any, with your proxy card. A letter of transmittal with instructions for the surrender of your stock certificates, if any, and book-entry entitlements will be mailed to our stockholders as soon as practicable after completion of the Merger.
Stockholder List
A list of our stockholders entitled to vote at the virtual special meeting will be available for examination by any of our stockholders at the virtual special meeting. For ten days prior to the virtual special meeting, this stockholder list will be available for inspection by any stockholder for any purpose germane to the virtual special meeting during ordinary business hours at our principal executive offices located at Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco, California 94103. A list of stockholders entitled to vote at the virtual special meeting will also be available for examination on the Internet through the virtual web conference during the virtual special meeting.
Participating in the Virtual Special Meeting
To participate in the virtual special meeting, visit www.virtualshareholdermeeting.com/GLUU2021SM and enter the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.
If you wish to submit a question during the virtual special meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/GLUU2021SM, type your question into the “Ask a Question” field, and click “Submit.” If your question is properly submitted during the relevant portion of the meeting agenda, we will respond to your question during the live webcast.
If we experience technical difficulties during the virtual special meeting (e.g., a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via www.virtualshareholdermeeting.com/GLUU2021SM. If you encounter technical difficulties accessing our meeting or asking questions during the virtual special meeting, a support line will be available on the login page of the virtual meeting website.
Anticipated Date of Completion of the Merger
We are working toward completing the Merger as quickly as possible and expect the Merger to be completed in the quarter ending June 30, 2021. However, the Merger continues to be subject to various closing conditions, including our stockholder approval and the receipt of the Glu Regulatory Approvals. Therefore, we cannot assure you that all conditions to the Merger will be satisfied or, if satisfied, the date by which they will be satisfied.
 
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Householding of Virtual Special Meeting Materials
The SEC’s proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement to those stockholders, unless contrary instructions have been received. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies. Certain brokerage firms may have instituted householding for beneficial owners of Glu Common Stock held through brokerage firms. If your family has multiple accounts holding Glu Common Stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or our Investor Relations department at the address below. A separate copy of these proxy materials will be promptly delivered upon request by contacting our Investor Relations department by (1) mail at Glu Mobile Inc., Attention: Investor Relations, Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco, California 94103 or (2) e-mail at IR@glu.com.
Other Matters
At this time, we know of no other matters to be voted on at the virtual special meeting. If any other matters properly come before the virtual special meeting, your shares of Glu Common Stock will be voted in accordance with the discretion of the appointed proxy holders.
 
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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT
The following discussion describes material aspects of the Merger. While we believe that the following description covers the material terms of the Merger, the description may not contain all of the information that may be important to you. The discussion of the Merger in this proxy statement is qualified in its entirety by reference to the Merger Agreement, which is attached as Annex A to this proxy statement and incorporated by reference into this proxy statement. We encourage you to read carefully this entire proxy statement, including the Merger Agreement, for a more complete understanding of the Merger.
General
If the proposal to adopt the Merger Agreement receives the requisite Glu stockholder approval and, upon the terms and subject to the conditions of the Merger Agreement, the Merger is completed, Merger Sub will merge with and into Glu, and Glu will continue as the Surviving Corporation and as a wholly owned subsidiary of Electronic Arts.
As a result of the Merger, Glu will become a wholly owned subsidiary of Electronic Arts, and Glu Common Stock will no longer be publicly traded and will be delisted from Nasdaq. In addition, Glu Common Stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.
The Effective Time will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later time as Glu and Electronic Arts may agree and specify in such certificate of merger).
As a result of the Merger, each outstanding share of Glu Common Stock (other than the Excluded Shares) will be converted into the right to receive the Per Share Merger Consideration. In addition, the treatment of our outstanding equity awards is described in the section captioned “The Merger Agreement — Treatment of Glu Equity Awards.”
After the Merger is completed, you will have the right to receive the Per Share Merger Consideration, but you will no longer have any rights as a stockholder (except that stockholders who properly exercise their appraisal rights may have the right to receive a payment for the “fair value” of their shares as determined pursuant to an appraisal proceeding before the Delaware Court of Chancery as contemplated by the DGCL, as described in the section captioned “— Appraisal Rights”).
Background of the Merger
As part of Glu’s strategic planning process, the Board regularly reviews and discusses with senior management our performance, business strategy, prospects for growth and competitive position in the industry in which it operates. In addition, since completing an initial public offering of Glu’s shares on Nasdaq at a public offering price of $11.50 per share on March 21, 2007, the Board and senior management has regularly reviewed and evaluated various strategic alternatives, including acquisitions, dispositions, major commercial partnerships and other strategic transactions, as part of our ongoing efforts to strengthen our overall business and enhance stockholder value.
On July 29, 2020, the Board held a meeting at which a representative of Fenwick & West LLP (“Fenwick & West”), Glu’s outside legal advisor, was also present. The Board discussed the advisability of potentially collaborating with other participants in the mobile gaming and entertainment space, including parties that might be contacted for such discussions. The Board discussed that this could potentially be a way to combine scale to address the business model challenges posed by the pending release of an Apple iOS update, which would eliminate the app-based Identifier for Advertisers (IDFA), and to mitigate the increased risks and uncertainties faced by Glu as a result of the planned launch of several new titles within the same timeframe. The Board also discussed strategies to acquire other mobile game companies to further this goal. The Board requested that Mr. Niccolo de Masi, the Chair of our Board, and Mr. Nicholas Earl, our Chief Executive Officer and a member of the Board, initiate a process to confidentially contact potential partners and explore their interest in a potential collaboration in light of the IDFA and scale issues. Further, the
 
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Board noted that these discussions with other parties may include consideration of potential strategic combinations, which may also be in the best interest of stockholders.
In August 2020, Messrs. de Masi and Earl had discussions with representatives of a number of industry participants, including Electronic Arts and parties referred to as Companies A through E, regarding the potential impact of the pending IDFA changes and other developments in the industry and potential collaboration opportunities to address the challenges and opportunities facing participants.
On August 24, 2020, the Board held a meeting at which Eric Ludwig, our Chief Operating Officer and Chief Financial Officer, and a representative of Fenwick & West were present. At this meeting, Mr. Ludwig reviewed Glu’s operating results for the first half of 2020 and forecasted financial results for the second half of 2020, as well as financial and strategic goals for 2021. Mr. Earl discussed the mobile gaming landscape, factors that could result in continued industry consolidation, and the importance of increasing Glu’s scale, including through potential acquisitions or collaborations, in order to drive continued and increased profitability. The Board then discussed potential opportunities for Glu to acquire other gaming companies and potential strategic collaborations, and discussed the desirability of conducting a process to solicit interest in an acquisition of Glu. Messrs. Earl and de Masi reviewed the discussions that had been conducted with other industry participants, including Electronic Arts and Companies A through E.
On August 24, 2020, Mr. Earl contacted Andrew Wilson, Chief Executive Officer of Electronic Arts, and informed Mr. Wilson that the Board was considering a process to solicit interest in an acquisition of Glu, and on August 25, 2020, Blake Jorgensen, Chief Financial Officer of Electronic Arts, informed Mr. Earl that Electronic Arts was interested in exploring an acquisition of Glu. In these discussions, the parties did not discuss any potential terms or specific timeline.
On September 2, 2020, Mr. Earl contacted Mr. Jorgensen to indicate that the Board was interested in conducting discussions with Electronic Arts.
On September 3, 2020, Mr. Earl spoke with a representative of Company E, and the representative of Company E noted that Company E could be interested in an acquisition of Glu but needed to discuss the potential transaction further with its board and wanted to postpone further discussions until after Company E’s quarter-end.
On September 4, 2020, a representative of Company A submitted an unsolicited, written non-binding indication of interest to acquire Glu for $9.25 per share in cash, representing a 12% premium to Glu’s 30-day volume weighted average stock price and a 19% premium to Glu’s closing stock price on September 3, 2020 (the most recent trading day).
On September 4, 2020, the Board held a meeting at which members of our senior management and a representative of Fenwick & West were present. Messrs. Earl and de Masi updated the Board regarding the discussions with industry participants, companies that Glu might consider acquiring, the non-binding indication of interest received that morning from Company A, and discussions with Electronic Arts, including Electronic Arts’ potential interest in exploring a business combination. During the meeting, a representative of Fenwick & West discussed the fiduciary duties of the Board in considering the proposal from Company A, the potential interest from Electronic Arts, as well as other potential strategic alternatives. The Board determined that it might be advisable to retain financial advisors and engage in a comprehensive review of strategic alternatives, including operating under our existing stand-alone plan, potential acquisitions by Glu, a potential sale of Glu, licensing strategy, publishing strategy and other potential strategic alternatives, and directed management to contact Goldman Sachs, Morgan Stanley, UBS and certain other investment banking firms for that purpose, based on their familiarity with Glu and the mobile game industry and their experience with transactions in our industry.
In early September 2020, Messrs. Earl and de Masi contacted representatives of several investment banking firms, including Goldman Sachs, Morgan Stanley and UBS, to invite them to present to the Board their qualifications and perspectives on Glu, its industry and market and a comprehensive review of strategic alternatives.
On September 10, 2020 and September 15, 2020, Mr. Earl and Mr. Jorgensen again spoke regarding Electronic Arts’ possible interest in an acquisition of Glu. While Mr. Jorgensen reiterated Electronic Arts’ interest in a potential transaction during these calls, the parties did not discuss any potential terms or timeline.
 
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On September 14, 2020, the Board held a meeting at which members of our senior management and a representative of Fenwick & West were present. Representatives of Goldman Sachs, Morgan Stanley and UBS, as well as certain other investment banking firms, each successively joined the meeting and discussed their perspectives on the industry, market and Glu and the comprehensive review of strategic alternatives. After their respective presentations, each of the financial advisors left the meeting and the Board further discussed the comprehensive review of strategic alternatives and the retention of financial advisors.
On September 12, 2020 and September 18, 2020, Glu entered into confidentiality agreements with Company E and Company A, respectively. Each of these confidentiality agreements, and each confidentiality agreement that we entered into with other participants in our strategic process described below, including Electronic Arts, included a customary standstill provision that would expire upon the occurrence of specified events, including Glu’s entry into an agreement providing for an acquisition of Glu.
On September 15, 2020, Mr. de Masi introduced members of our senior management to representatives of Company B.
On September 18, 2020, Mr. Earl informed Company A that Glu was in the process of engaging financial advisors, that Glu would be in a better position to evaluate and respond to Company A’s indication of interest after Glu had retained financial advisors and that he would be in contact with Company A afterwards.
On October 2, 2020, the Board held a meeting at which members of our senior management, representatives of Fenwick & West and representatives of Goldman Sachs were present. At this meeting, the representatives of Goldman Sachs further presented to the Board on their perspectives on the industry, market and Glu and the comprehensive review of strategic alternatives, as well as their qualifications as a financial advisor in connection therewith. After the departure of the representatives of Goldman Sachs, the Board discussed the advisability of commencing a formal comprehensive review of strategic alternatives and determined that Glu should engage in such a review, including potential acquisitions by Glu, potential revisions to Glu’s stand-alone strategy, in each case with the goal of maximizing stockholder value and the potential engagement of financial advisors for those purposes. During this meeting, the Board authorized the engagement of Goldman Sachs, Morgan Stanley and UBS to act as our financial advisors in connection with the comprehensive review of strategic alternatives, based on their experience in advising on transactions involving companies similar to Glu and their familiarity with Glu and its business and industry, subject to agreement on the fees to be paid to these firms and other engagement terms, for which the Board provided guidance to management, Mr. de Masi and Fenwick & West.
On October 7, 2020, Mr. de Masi, through an introduction from Ann Mather, a Board member at the time, contacted an entertainment company, which we refer to as Company F, and later that day, Mr. de Masi introduced members of our senior management to representatives of Company F.
On October 12, 2020 and October 19, 2020, respectively, Glu entered into confidentiality agreements with Company B and Company F.
On October 22, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, the Board discussed the status of the communications with each of the parties that Messrs. Earl and de Masi had previously contacted regarding such party’s potential interest in collaboration opportunities with Glu and directed our senior management and financial advisors to follow up with Companies A through F and Electronic Arts to inform them that Glu would be conducting a strategic review process and soliciting proposals to acquire Glu on terms that would be attractive to our stockholders, and to arrange meetings with our senior management with those parties that expressed interest. Companies A through F were selected based on the potential strategic value to those parties of a transaction with Glu and the financial feasibility of such a transaction for each of them. In addition, the Board discussed a potential acquisition by Glu. At the end of the meeting, the Board approved the execution by us of engagement letters with each of the three financial advisors.
On October 23, 2020, Glu entered into an engagement letter with Morgan Stanley, engaging Morgan Stanley as a financial advisor in connection with a potential sale of Glu. On the same day, Mr. Earl contacted
 
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a representative of Company A to inform him that Glu had retained financial advisors who would reach out to Company A to discuss next steps.
On October 24, 2020, Mr. Earl spoke with a representative of Company A to introduce Company A to Goldman Sachs and Morgan Stanley so the parties could discuss next steps.
On October 26, 2020, Mr. Earl had a telephone conversation with Mr. Jorgensen, and informed Mr. Jorgensen that we would be interested in exploring a potential acquisition of Glu by Electronic Arts on terms that would be attractive to our stockholders. Also on October 26, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley contacted Mr. Jorgensen to discuss Electronic Arts’ participation in our strategic process and to schedule due diligence meetings with members of our senior management. On the same day, Mr. Earl spoke with a representative of Company E, and the representative of Company E reiterated that Company E could be interested in a potential acquisition of Glu and indicated that he would be in touch with Mr. Earl when Company E was in a position to evaluate such a transaction.
Also on October 26, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley contacted a representative of Company A to inform him that Glu was commencing a review of strategic alternatives and would be soliciting proposals to acquire Glu on terms that would be attractive to our stockholders and to schedule due diligence meetings with members of our senior management with representatives of Company A. The representative of Company A verbally indicated that Company A might be able to increase the proposed per share price from the $9.25 per share that it had previously proposed, after it had an opportunity to conduct additional due diligence.
On October 27, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley contacted a representative of Company D to inform Company D that Glu was commencing a review of strategic alternatives and would be soliciting proposals to acquire Glu on terms that would be attractive to our stockholders, and to determine whether Company D would be interested in participating in that process. Also on October 27, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with Mr. Jorgensen at Electronic Arts to provide a formal overview of the strategic review process and to schedule a management presentation meeting.
On October 28, 2020, a representative of Company C indicated to a representative of Morgan Stanley that Company C would not make a proposal to acquire Glu. Also on October 28, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with a representative of Company B to provide a formal overview of the strategic review process, and to inform Company B that Glu would be soliciting proposals to acquire Glu on terms that would be attractive to our stockholders and to schedule a management presentation meeting.
On October 29, 2020, the Board held its regularly scheduled quarterly meeting, at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Mr. Ludwig reviewed Glu’s fourth quarter 2020 forecast and a financial plan through 2023 prepared based on information and perspectives from Glu’s game development studios, which did not have adjustments to reflect increased marketing spend for new title launches and reflected planned contributions from new titles that were not risk-adjusted (the “Three Year Studio Plan”). In addition, Mr. Ludwig reviewed a financial plan through 2023 that had been prepared by our management and reflected increased marketing spend for new title launches and reflected less optimistic assumptions regarding contributions from new titles and from key existing core titles, which we refer to as “Growth Games” ​(the “Three Year Board Plan”). The Three Year Studio Plan and Three Year Board Plan had been circulated to the Board a week prior to the meeting. The Board discussed the Three Year Studio Plan and Three Year Board Plan and the risks and opportunities faced by Glu as an independent company, and discussed with management and representatives of Goldman Sachs and Morgan Stanley the extension of the Three Year Studio Plan and the Three Year Board Plan through 2025. Goldman Sachs and Morgan Stanley also provided perspectives on our stand-alone strategy and on potential acquisitions by Glu. The Board then discussed the risks and uncertainties related to Glu’s business and execution of the plans. Representatives of Goldman Sachs and Morgan Stanley then updated the Board on the status of discussions with interested parties, and the Board directed our management and financial advisors to continue to engage with these parties to further their due diligence, including presentations by our senior management.
 
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Also on October 29, 2020, Glu entered into a confidentiality agreement with Electronic Arts.
Between November 2, 2020 and November 11, 2020, Messrs. Earl and Ludwig, along with representatives of Goldman Sachs and Morgan Stanley, held a series of separate meetings with representatives of Electronic Arts and Company A, Company B, Company D and Company F, respectively, at which Messrs. Earl and Ludwig provided an overview of Glu’s business and information regarding Glu’s operations, technology, games, employees, financial position and market opportunity, as well as forecasted financial information from the Three Year Studio Plan, and discussed the strategic rationale behind a potential acquisition of Glu. Following these meetings, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with Jeff Chaiken, the Head of Strategy and Corporate Development of Electronic Arts, and with representatives of Companies A, B, D and F regarding their respective due diligence priorities and process.
On November 5, 2020, Glu reported its results of operations for the quarter ended September 30, 2020, and Glu’s stock price increased 27% from its closing price of $6.91 on November 5, 2020 to a closing price of $8.79 on November 6, 2020. Also on November 5, 2020, Glu entered into a confidentiality agreement with Company D.
On November 6, 2020, Glu entered into engagement letters with Goldman Sachs and UBS, engaging each of Goldman Sachs and UBS as financial advisors in connection with a potential sale of Glu.
On November 7, 2020, a representative of Company A reiterated its interest in proceeding with due diligence and indicated that Company A might be able to increase the proposed per share price from the $9.25 per share in cash that it had previously proposed after it had an opportunity to assess Glu’s game development pipeline.
On November 8, 2020, a representative of Goldman Sachs delivered to Glu a letter disclosing certain relationships of Goldman Sachs with Electronic Arts and Tencent Holdings Limited (“Tencent”), Glu’s largest stockholder, and with other relevant parties.
On November 12 and 13, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley provided Electronic Arts and Companies A, B, and D with letters describing the process for submitting indications of interest for an acquisition of Glu and requesting such indications by November 23, 2020.
On November 16, 2020 a representative of Company F indicated to representatives of Goldman Sachs and Morgan Stanley that Company F would not make a proposal to acquire Glu. Also on November 16, 2020, a representative of another gaming company, which we refer to as Company G, contacted Mr. Earl to express interest in exploring a potential business combination with or acquisition of Glu.
On November 18, 2020, at the direction of the Board, representatives of Goldman Sachs and Morgan Stanley provided Company A with additional information regarding Glu’s game development pipeline and plans to monetize Glu’s planned new game titles.
On November 19, 2020, Mr. Earl introduced a representative of Company G to representatives of Goldman Sachs and Morgan Stanley and informed Company G that Glu was engaged in a strategic review process and was soliciting proposals.
On the same day, Glu entered into a confidentiality agreement with Company G.
On November 20, 2020, a representative of Company A spoke with a representative of Morgan Stanley and confirmed that they were still evaluating their proposal to acquire Glu. Also on November 20, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with representatives of Company G regarding a potential acquisition of Glu and our strategic review process, and spoke with representatives of Company D, who indicated that Company D was still evaluating whether to make a proposal.
On November 23, 2020, Glu received a non-binding indication of interest from Electronic Arts for an acquisition of all of the outstanding common stock and common stock equivalents of Glu for a price per share of $11.50 in cash (the “November 23 Proposal”), representing a 40% premium to Glu’s 30-day volume weighted average stock price, and a 19% premium to Glu’s closing stock price on November 20, 2020 (the
 
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most recent trading day). The November 23 Proposal indicated that the proposed transaction would not be subject to any financing contingency and that Electronic Arts would want to retain Glu’s management and employees. In addition, Electronic Arts requested that Glu agree to negotiate with Electronic Arts on an exclusive basis for a period of 30 days following the date of execution, which period would be automatically extended for successive 14-day periods unless terminated by either party. A copy of the November 23 Proposal was provided to the Board.
Also on November 23, 2020, a representative of Company D informed representatives of Goldman Sachs and Morgan Stanley that Company D would not be making a proposal to acquire Glu, a representative of Company B informed representatives of Goldman Sachs and Morgan Stanley that Company B would not be making a proposal to acquire Glu at this time but would continue to evaluate the opportunity, and a representative of Company A indicated to representatives of Goldman Sachs and Morgan Stanley that there was potential for Company A to improve their $9.25 per share in cash proposal to acquire Glu subject to their ability to review our development of planned new games. Subsequently, we provided additional due diligence information to Company A regarding planned new games, including access to in-development versions of certain games.
On November 24, 2020, members of our senior management, along with representatives of Goldman Sachs and Morgan Stanley, met with members of the management of Company G, at which members of our senior management provided an overview of Glu’s business and information regarding Glu’s operations, technology, games, employees, financial position and market opportunity, and discussed the strategic rationale behind a potential acquisition of Glu.
On November 25, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, representatives of Goldman Sachs and Morgan Stanley reviewed the discussions that had occurred with the parties that had been contacted and the November 23 Proposal that had been received from Electronic Arts. The Board then discussed the risks and uncertainties of our business and requested that management develop an additional sensitivity analysis that gives further weight to the risks and uncertainties of Glu’s business and the plans, reflecting input that had been provided by the Board during its prior discussion of the Three Year Studio Plan and Three Year Board Plan. The representative of Fenwick & West then reviewed the fiduciary duties of the Board in conducting its comprehensive review of strategic alternatives and in responding to Electronic Arts. Following this discussion, the Board further discussed the November 23 Proposal and the potential response to be made to Electronic Arts, and the process to be conducted with other participants in the strategic review process. The Board then directed the representatives of Goldman Sachs and Morgan Stanley to indicate to Electronic Arts that the price per share proposed in the November 23 Proposal was not adequate and that Glu would not be able to enter into exclusivity based on the November 23 Proposal, but that Glu would provide Electronic Arts with access to additional members of our senior management, and provide access to an online data room, for purposes of Electronic Arts’ due diligence review, to enable Electronic Arts to provide a revised view of the value of Glu. In addition, the Board directed the members of our senior management and financial advisors to continue providing due diligence information to the other remaining participants in the strategic review process and to contact them to determine their continued interest in proceeding in that process and request their proposals for a transaction.
Also on November 25, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley informed a representative of Electronic Arts that the price per share proposed in the November 23 Proposal was not adequate, that Electronic Arts would need to increase its price to be competitive and that Glu would not be able to enter into exclusivity based on the November 23 Proposal, but that Glu would provide Electronic Arts with access to additional members of our senior management and access to an online data room for purposes of Electronic Arts’ due diligence review, and requested that Electronic Arts provide a revised proposal following that additional due diligence.
On November 30, 2020, a representative at Company E called Mr. Earl and asked to meet with him and Mr. Ludwig for a presentation regarding Glu’s business.
On December 1, 2020, representatives of Goldman Sachs and Morgan Stanley spoke with a representative of Company E, and the representative of Company E indicated that Company E could evaluate the potential acquisition quickly following Messrs. Earl and Ludwig’s management presentation.
 
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On December 2, 2020, representatives of Glu provided Electronic Arts with access to an online data room. Representatives of Electronic Arts and its advisors continued their due diligence review of Glu, including a review of materials in the online data room, through February 8, 2021.
Also on December 2, 2020, Messrs. Earl and Ludwig, along with representatives of Goldman Sachs and Morgan Stanley, met with members of the management of Company E and provided an overview of Glu’s business information regarding its operations, games, technology, products, employees, financial position and market opportunity, and discussed the strategic rationale behind a potential acquisition of Glu. In addition, on December 2, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with a representative of Company G who reaffirmed the interest of Company G in continuing discussions and due diligence activities.
Also on December 2, 2020, a representative of Company B informed representatives of Goldman Sachs and Morgan Stanley that Company B would not be making a proposal to acquire Glu, and on December 4, 2020, a representative of Company E informed representatives of Goldman Sachs and Morgan Stanley that Company E would not be making a proposal to acquire Glu.
On December 7, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley provided Company G with a letter describing the process for submitting proposals for an acquisition of Glu, and requesting a proposal by December 10, 2020.
Also on December 7, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, Mr. Ludwig reviewed with the Board versions of the Three Year Board Plan that extended the forecasts through 2025 but was otherwise consistent with the Three Year Board Plan (the “Board Plan”) and of the Three Year Studio Plan that extended the forecasts through 2025 but was otherwise consistent with the Three Year Studio Plan (the “Studio Plan”). Additional information regarding the Studio Plan and Board Plan is set forth under the caption “— Financial Projections.” In addition, Mr. Ludwig reviewed with the Board a financial forecast through 2025 that took into greater consideration the risks and uncertainties facing Glu as an independent company, including the risks of timely developing and launching new titles, and achieving market acceptance and profitability for new games, continuing to enhance and monetize existing games, as well as other execution risks, industry risks (including the expected IDFA changes) and macroeconomic risks including the potential impact of post COVID-19 pandemic impacting consumers appetite for mobile games (the “Sensitivity Case”). The Board members and Mr. Ludwig discussed the Studio Plan, the Board Plan and the Sensitivity Case, and following this discussion, the Board directed Mr. Ludwig to revise the Sensitivity Case to reflect lower assumptions regarding our growth in 2021, for the Board’s further review, to assist the Board’s decisions in the course of the strategic process and to be used by Glu’s financial advisors in their financial analysis of any proposed transaction. Representatives of Goldman Sachs and Morgan Stanley then reviewed the status of discussions with parties that had expressed interest in a potential transaction and a representative of Fenwick & West discussed with the Board its fiduciary duties in connection with its comprehensive review of strategic alternatives.
From December 10, 2020 through December 18, 2020, members of Glu management and representatives of Electronic Arts held diligence sessions covering topics that included finance, accounting, legal, human resources, technology, labor and key game studios.
On December 11, 2020, a representative of Company G spoke with representatives of Goldman Sachs and Morgan Stanley and verbally proposed an acquisition of Glu at a 20 to 25% premium to the current stock price (implying a price per share of $11.00 to $11.50 based on Glu’s closing stock price of $9.06 per share on December 10, 2020), in which the consideration would consist 50% of cash and 50% of Company G stock.
Later on December 11, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, Mr. Ludwig reviewed a revised Sensitivity Case, which reflected the Board’s input at its prior meeting. Additional information regarding the Sensitivity Case is set forth under the caption “— Financial Projections.” Representatives of Goldman Sachs and Morgan Stanley then described the verbal proposal received earlier that day from Company G, and the Board discussed this proposal. The Board and representatives of Goldman
 
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Sachs, Morgan Stanley and Fenwick & West then discussed the process for due diligence and further discussions with Company A, Company G and Electronic Arts. Representatives of Fenwick & West reviewed with the Board the Board’s fiduciary duties in connection with its comprehensive strategic review process, and discussed certain material terms of a draft Merger Agreement that could be provided to Electronic Arts (and, if and when appropriate, to Company A and Company G) with the goal of permitting the Board to further consider the proposal from Electronic Arts (and potential other parties), including a structure for the transaction as a tender offer, the ability of the Board to engage in discussions with respect to unsolicited proposals and to terminate the Merger Agreement to enter into an agreement for a superior proposal upon payment of a termination fee representing 2% of the equity value of Glu in the Merger, and the treatment of outstanding equity awards. The Board discussed these terms and then directed the representatives of Goldman Sachs and Morgan Stanley to provide this draft Merger Agreement to Electronic Arts and to Company A and Company G.
Also on December 11, 2020, Electronic Arts was provided with the draft Merger Agreement, and on December 12, 2020, a representative of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), Electronic Arts’ outside counsel, and a representative of Fenwick & West discussed the tender offer structure that was reflected in the draft Merger Agreement.
On December 15, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Representatives of Goldman Sachs and Morgan Stanley reviewed the proposals from Company A, Company G and Electronic Arts and the status of each party’s due diligence review. Representatives of Goldman Sachs and Morgan Stanley then presented preliminary financial analyses of Glu. The Board also provided further guidance to management and the financial and legal advisors on the strategic review process, and directed our financial advisors to continue to reach out to Company A and Company G to further their due diligence review and their evaluation of a potential acquisition of Glu.
Later on December 15, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with a representative of Company G and indicated that, based on their initial proposal, Glu would continue to engage with Company G in due diligence, and the representative of Company G indicated that Company G wished to continue to evaluate a potential acquisition of Glu. On December 16, 2020, Company G was provided with access to our online data room and the draft Merger Agreement.
On December 17, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley provided the draft Merger Agreement to Company A, and noted that there was a Board meeting on December 23, 2020 if Company A had any update to provide, and a representative of Company A responded that it would inform Goldman Sachs if Company A had any update before that date.
On December 21, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley contacted a representative of Company G to discuss whether Company G required additional due diligence meetings at that time.
Also on December 21, 2020, Electronic Arts provided a revised non-binding indication of interest for an acquisition of all of the outstanding common stock and common stock equivalents of Glu that increased its proposed price to $12.00 per share in cash (the “December 21 Proposal”), representing a 32% premium to Glu’s 30-day volume weighted average stock price, and a 25% premium to Glu’s closing stock price on December 18, 2020 (the most recent trading day). The December 21 Proposal again included a request for a 30-day exclusivity period, with such period to be automatically extended for successive 14 day periods unless terminated by either party. The December 21 Proposal was accompanied by a revised draft of the Merger Agreement that provided for, among other things, a transaction structured as a single-step merger, the conversion of unvested stock options and other equity awards into equivalent Electronic Arts equity awards, revisions to the representations and warranties to be made by Glu and covenants regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger, revisions to the circumstances under which Glu would be required to pay Electronic Arts a termination fee and an increase in the amount of the termination fee to 3.75% of the equity value of Glu in the Merger. In addition, the revised draft of the Merger Agreement provided that Electronic Arts would receive a voting agreement from an affiliate of Tencent that held approximately 12% of the outstanding Glu Common Stock. A copy of the December 21 Proposal was provided to the Board.
 
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On December 22, 2020, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Representatives of Goldman Sachs and Morgan Stanley reviewed the December 21 Proposal, and discussed the strategic review process that had been conducted to date, noting that each of Company B, Company C, Company D, Company E and Company F had expressly declined to make a proposal to acquire Glu and describing the status of discussions with Company A and Company G. The representatives of Goldman Sachs and Morgan Stanley also noted that none of the parties contacted with respect to a potential acquisition of Glu had made a proposal for a transaction other than Electronic Arts, Company A and Company G. The Board and representatives of Goldman Sachs and Morgan Stanley then discussed the approach to be taken in responding to Electronic Arts. The Board determined that the best means of achieving the highest purchase price would be to make a specific counter-proposal to Electronic Arts, and it discussed the counter-proposal to be made.
Also on December 22, 2020, a representative of Electronic Arts requested due diligence meetings with additional members of our senior management, including meetings with Glu personnel having responsibility for Glu’s games and technology, corporate functions, finance and human resources. On the same day, a representative of Company A indicated to representatives of Goldman Sachs and Morgan Stanley that Company A had not changed its initial $9.25 per share in cash proposal and would not submit a revised proposal.
On December 23, 2020, the Board met again, with members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West present. During the meeting, representatives of Goldman Sachs and Morgan Stanley again discussed the December 21 Proposal, the status of Electronic Arts’ due diligence and the discussions to date with Company A and Company G, including Company A’s indication that it had not changed its initial proposal and would not submit a revised proposal. The representatives of Goldman Sachs and Morgan Stanley then reviewed preliminary financial analyses of Glu. The Board and representatives of Goldman Sachs and Morgan Stanley then discussed the response to the December 21 Proposal, and, following this discussion, the Board directed the representatives of Goldman Sachs and Morgan Stanley to inform Electronic Arts that the $12.00 price per share in cash proposed in the December 21, 2020 Proposal was not adequate, to counter-propose a price per share of $13.25 in cash, and to indicate to Electronic Arts that Glu would not be willing to provide access to additional members of the Glu management team for due diligence discussions unless Electronic Arts increased its per share price. The Board, management and financial and legal advisors also discussed Glu’s stand-alone operating strategy and consideration of a potential acquisition by Glu, and related risks. Representatives of Fenwick & West then reviewed the principal issues raised in the revised draft of the Merger Agreement provided by Electronic Arts, and the Board provided guidance on the response to be taken with respect to those issues.
Later on December 23, 2020, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with Mr. Chaiken and other representatives of Electronic Arts and of J.P. Morgan Securities LLC (“J.P. Morgan”), Electronic Arts’ financial advisor, and counter-proposed a price per share of $13.25 in cash, and indicated that Glu would not be willing to provide access to additional members of the Glu management team for due diligence discussions unless Electronic Arts increased its per share price.
On December 27, 2020, we delivered a revised draft of the Merger Agreement to Electronic Arts. This revised draft, among other things, (i) accepted Electronic Arts’ proposed structure as a single-step merger, (ii) revised the representations and warranties made by Glu, (iii) revised the covenants regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger and (iv) revised the circumstances under which Glu would be required to pay Electronic Arts a termination fee. The draft also proposed a reduction to the amount of the termination fee to 2.75% of the equity value of Glu in the Merger, as opposed to Electronic Arts’ proposal of 3.75% of the equity value of Glu in the Merger.
On December 28, 2020, Mr. Chaiken contacted representatives of Goldman Sachs and Morgan Stanley to reiterate Electronic Arts’ request for due diligence meetings with additional members of Glu management, particularly the creative leaders for Glu’s key games.
On December 29, 2020, Mr. Earl spoke with Mr. Jorgensen and reiterated Glu’s counter-proposal for a price of $13.25 per share in cash and stated that Glu did not want to involve additional members of its
 
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management team in the due diligence process until it had confidence that there was a clear path to an agreement on price. Mr. Jorgensen responded that the additional diligence meetings were necessary in order for Electronic Arts to further its valuation analysis but that Electronic Arts was not prepared to pay $13.25 per share. He noted that Electronic Arts believed that it had already significantly stretched on value from the November 23 Proposal to the December 21 Proposal. Mr. Jorgensen spoke again with Mr. Earl later that date and reiterated Electronic Arts’ strong interest in a transaction at the $12.00 price per share previously proposed by Electronic Arts and the importance to Electronic Arts of the requested due diligence meetings. Mr. Jorgensen reiterated that at $12.00 per share, Electronic Arts had already stretched significantly on price since the November 23 Proposal and would not be able to stretch any further without additional due diligence.
Also on December 29, 2020, a representative of Simpson Thacher and a representative of Fenwick & West discussed the positions taken by Glu on certain issues in the revised draft of the Merger Agreement.
After discussing the matter with the Board, Mr. Earl spoke with Mr. Jorgensen and informed him that if Electronic Arts were to increase its indication of interest to $12.50 in cash in writing and provide for the possibility of a further price increase following completion of due diligence, then Glu could provide access to four additional members of the Glu management team for Electronic Arts’ due diligence. Mr. Earl then summarized to the Board his discussion with Mr. Jorgensen.
Also on December 30, 2020, Simpson Thacher provided Fenwick & West with a revised draft of the Merger Agreement, which proposed a number of changes to the draft circulated by Fenwick & West, including proposed revisions to (i) the representations and warranties made by Glu, (ii) the covenants regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger, (iii) covenants on the part of Electronic Arts with respect to continuation of employee compensation and benefits after the Merger, and (iv) the circumstances under which Glu would be required to pay Electronic Arts a termination fee. In addition, this revised draft increased the amount of the termination fee to 3.5% of the equity value of Glu in the Merger.
On January 1, 2021, Mr. Chaiken contacted representatives of Goldman Sachs and Morgan Stanley further emphasizing the importance of scheduling due diligence meetings with key creative leaders as soon as possible and reiterating that pending those discussions, Electronic Arts may be willing to increase its offered purchase price above the current $12.00 per share in cash purchase price.
On January 3, 2021, Mr. Earl spoke with Mr. Jorgensen and reiterated the request to receive confirmation regarding an increase in price in writing, and Mr. Jorgensen agreed that Electronic Arts would send such a written confirmation no later than January 4, 2021. Mr. Earl and Mr. Jorgensen also discussed the process for further due diligence meetings.
On January 4, 2021, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley contacted a representative of Company G and indicated that Glu’s strategic process was proceeding and asked whether Company G required additional due diligence information at that time.
Also on January 4, 2021, a representative of Electronic Arts delivered a revised non-binding indication of interest for an acquisition of Glu that proposed a per share price of up to $12.50 per share in cash (the “January 4 Proposal”), representing a 31% premium to Glu’s 30-day volume weighted average stock price, and a 39% premium to Glu’s closing stock price on December 31, 2020 (the most recent trading day). The January 4 Proposal again included a request for a 30-day exclusivity period, such period to be automatically extended for successive 14-day periods unless terminated by either party.
On January 5, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Mr. Earl and representatives of Goldman Sachs and Morgan Stanley reviewed the discussions with Electronic Arts and the Board discussed the response to the January 4 Proposal. A representative of Fenwick & West then reviewed the fiduciary duties of the Board and its officers. The Board then directed the representatives of Goldman Sachs and Morgan Stanley to inform Electronic Arts that the Board did not support proceeding if the price per share could be less than $12.50, and was looking for a higher price, but would authorize additional due diligence meetings with certain additional members of the Glu management team if there appeared to be a path to a higher price.
 
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On January 5, 2021, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with Mr. Chaiken and other representatives of Electronic Arts and of J.P. Morgan, and indicated that the Board did not support proceeding with the transaction if the price per share could be less than $12.50 and was looking for a higher price, but would authorize additional due diligence meetings with certain additional members of the Glu management team if there appeared to be a path to a higher price.
On January 7, 2021, in response to the discussions with the financial advisors on the same day, Mr. Chaiken indicated that Electronic Arts would not be able to offer more than $12.50 per share.
On January 11, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, the Board, Mr. Earl and representatives of Goldman Sachs and Morgan Stanley discussed the recent communications with Electronic Arts and the strategy to be used in negotiating the price proposed by Electronic Arts. A representative of Fenwick & West also discussed fiduciary duty considerations. The Board provided guidance to management and the financial and legal advisors regarding the negotiation strategy with Electronic Arts, Glu’s stand-alone operating strategy and other potential strategic alternatives.
On January 14, 2021, Electronic Arts delivered a revised non-binding indication of interest, dated January 13, 2021, for an acquisition of Glu that proposed a price of $12.50 per share in cash (the “January 13 Proposal”) representing a 35% premium to Glu’s 30-day volume weighted average stock price, and a 37% premium to Glu’s closing stock price on January 13, 2021 (the most recent trading day). The January 13 Proposal included a request for due diligence meetings with a list of Glu personnel, and again included a request for a 30-day exclusivity period, such period to be automatically extended for successive 14-day periods unless terminated by either party.
Also on January 14, 2021, members of our senior management held an additional due diligence meeting with representatives of Company G. Following this meeting, Company G did not request additional due diligence information or provide any further updates regarding the status of their proposal.
Also on January 14, 2021, as directed by the Board, representatives of Goldman Sachs and Morgan Stanley spoke with Mr. Chaiken and other representatives of Electronic Arts and J.P. Morgan and discussed the process for additional due diligence meetings.
On January 15, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, the Board, Mr. Earl and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West discussed the January 13 Proposal and the response to be made to Electronic Arts. The representatives of Goldman Sachs and Morgan Stanley also reviewed the discussions that had occurred with Company A and Company G, and the Board noted that the proposals made by both parties were lower than the price proposed in the January 13 Proposal, that Company A had indicated that it would not submit a revised proposal, that Company G had only sought limited due diligence, and that the Company G proposal provided for merger consideration consisting half of Company G common stock, which represented additional complexity and uncertainty, and potential delay to completion of a transaction. The Board authorized Glu to provide Electronic Arts with meetings with certain additional Glu employees, and with a review of the preliminary results of Glu for the quarter ended December 31, 2020, the Board Plan and the Sensitivity Case, and to request that Electronic Arts then reaffirm the $12.50 per share in cash purchase price indicated in the January 13 Proposal. The Board then approved the entry into exclusivity with Electronic Arts through February 8, 2021, and the scheduling of the remaining due diligence meetings requested by Electronic Arts, following (and conditioned upon), that reaffirmation.
Following that meeting, on January 15, 2021, Mr. Earl spoke with Mr. Jorgensen to discuss matters related to the due diligence meetings with the additional management personnel. On the same day, Fenwick delivered to Tencent a formal notice that Glu was contemplating a potential acquisition resulting in a change of control of Glu, in accordance with the terms of the Voting and Standstill Agreement between Glu and Tencent.
On January 17, 2021, representatives of Goldman Sachs and Morgan Stanley delivered to Electronic Arts a revised draft of the January 13 Proposal that provided for exclusivity until February 8, 2021 (or such later date as the parties may mutually agree), with no provision for automatic extension thereafter, and
 
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which would terminate if Electronic Arts proposed a reduction in the proposed price per share. On January 18, 2021, representatives of Goldman Sachs and Morgan Stanley communicated with Mr. Chaiken and representatives of J.P. Morgan about this revised draft, and a representative of Fenwick & West discussed the revised draft with a representative of Simpson Thacher. On January 19, 2021, Glu and Electronic Arts executed this revised indication of interest.
On January 20, 2021, Fenwick & West provided Simpson Thacher and Electronic Arts with a revised draft of the Merger Agreement, which proposed a number of changes to the draft previously circulated by Simpson Thacher, including proposed revisions to (i) the representations and warranties made by Glu, (ii) the covenants regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger, (iii) covenants on the part of Electronic Arts with respect to post-Merger compensation matters and (iv) the circumstances under which Glu would be required to pay Electronic Arts a termination fee. In addition, this revised draft reduced the amount of the termination fee to 3% of the equity value of Glu in the Merger.
On January 21, 2021, a representative of Morgan Stanley delivered to Glu a letter disclosing certain relationships of Morgan Stanley with Electronic Arts and with other relevant parties.
On January 22, 2021, representatives of Electronic Arts attended due diligence meetings with four creative leaders for Glu’s key games who had not previously met with representatives of Electronic Arts. Mr. Earl spoke with Mr. Jorgensen following these meetings to discuss Electronic Arts’ impressions of the meetings and the process for completing due diligence and Merger Agreement negotiations.
On January 23, 2021, Mr. Chaiken contacted representatives of Goldman Sachs and Morgan Stanley and affirmed Electronic Arts’ interest in the potential acquisition of Glu at the $12.50 price per share in cash set forth in the January 13 Proposal, and Mr. Chaiken requested due diligence meetings with additional Glu employees in the upcoming week.
Also on January 23, 2021, Fenwick & West provided Simpson Thacher with an initial draft of the disclosure schedules required by the Merger Agreement, other than schedules setting forth certain exceptions to the covenants regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger, which schedules were still under review by members of Glu’s senior management. From January 22, 2021 through February 8, 2021, representatives of Fenwick & West and Simpson Thacher negotiated the Merger Agreement and the disclosure schedules.
On January 25, 2021, Messrs. Earl and Mr. Ludwig met with representatives of Electronic Arts and J.P. Morgan to review Glu’s preliminary results of operations for the quarter ended December 31, 2020 and Glu’s expectations for 2021.
From January 26, 2021 through January 29, 2021, representatives of Electronic Arts attended due diligence meetings with additional Glu management personnel that had been requested by Electronic Arts related to Glu’s financials, corporate functions, technology, human resources and gaming studios. In addition, on January 28, 2021, Electronic Arts was provided with the Board Plan and Sensitivity Case through the online data room.
On January 26, 2021, the Board was provided with letters from each of Goldman Sachs and Morgan Stanley disclosing certain relationships between each of the financial advisors, on the one hand, and Electronic Arts and other relevant parties, on the other. The relationships disclosed in the letters from Goldman Sachs and Morgan Stanley are described in more detail under “— Opinions of Glu’s Financial Advisors.”
Also on January 26, 2021, Simpson Thacher provided an initial draft of the proposed Voting Agreement between Electronic Arts and an affiliate of Tencent, and the parties agreed on the final form of Voting Agreement on February 2, 2021.
On January 27, 2021, the Board held a regularly scheduled quarterly meeting, at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. At this meeting, representatives of Fenwick & West discussed the fiduciary duties of the Board in evaluating the proposed transaction and the terms of the Merger Agreement. The Board then reviewed the
 
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relationships of the financial advisors that were disclosed in the letters that had been provided to the Board on January 26. Representatives of Goldman Sachs and Morgan Stanley, and Messrs. Earl and Ludwig, then provided the Board an update on the recent communications with representatives of Electronic Arts and the expected process for completion of Electronic Arts’ due diligence. Representatives of Fenwick & West then reviewed the negotiations of the Merger Agreement, its material terms and the remaining open issues, and the representatives of Fenwick & West, and Mr. Earl, reviewed with the Board certain exceptions to the covenants in the Merger Agreement regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger that would be proposed to Electronic Arts relating to employee compensation and hiring (none of which related to compensation of executive officers). The Board also discussed Glu’s stand-alone operating strategy and other potential strategic alternatives. The Board then discussed the financial analyses to be performed by Goldman Sachs and Morgan Stanley and the financial forecasts to be utilized in their analyses. The representatives of Goldman Sachs and Morgan Stanley then left the meeting, and the Board, together with Messrs. Earl and Ludwig, continued to discuss this topic.
On January 28, 2021, Mr. Earl spoke with Mr. Jorgensen regarding the desire for certain exceptions to the covenants in the Merger Agreement regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger relating to employee compensation and hiring. Also on January 28, 2021, Fenwick & West provided Simpson Thacher with an initial draft of a proposed schedule of exceptions to the covenants in the Merger Agreement regarding the operation of Glu’s business between the execution of the Merger Agreement and the closing of the Merger, including exceptions relating to hiring and compensation matters (none of which related to compensation of executive officers), and representatives of Fenwick & West and Simpson Thacher, and Messrs. Earl and Jorgensen negotiated these exceptions from January 28, 2021 through February 8, 2021.
On February 1, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Mr. Ludwig discussed Glu’s proposed communications plans with regard to the Merger. Mr. Earl then provided an update on the status of the proposed transaction and his most recent discussions with Electronic Arts. Following that discussion, representatives of Goldman Sachs and Morgan Stanley presented their respective preliminary financial analyses of the offer price of $12.50 in cash per share.
From February 4 through February 8, 2021, Fenwick & West and Simpson Thacher continued to exchange drafts of the Merger Agreement and related disclosure schedules.
On February 5, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Mr. Earl provided an update on the status of the proposed transaction. Representatives of Fenwick & West then reviewed with the Board the terms of the Merger Agreement, including the resolution of open issues, and discussed the fiduciary duties of the Board in evaluating the proposed transaction and the terms of the Merger Agreement. Representatives of Goldman Sachs and Morgan Stanley reviewed their firms’ respective preliminary financial analyses of the offer price of $12.50 in cash per share.
On February 8, 2021, the Board held a meeting at which members of our senior management and representatives of Goldman Sachs, Morgan Stanley and Fenwick & West were present. Representatives of Fenwick & West reviewed with the Board the terms of the Merger Agreement, the form of which had been previously distributed to the members of the Board, and again discussed the fiduciary duties of the Board in evaluating the proposed transaction and the terms of the Merger Agreement. Representatives of Goldman Sachs then rendered to the Board Goldman Sachs’ oral opinion, subsequently confirmed in Goldman Sachs’ written opinion dated as of February 8, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the $12.50 in cash per share of Glu Common Stock to be paid to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders. For additional information, see the section entitled “Proposal 1: Adoption of the Merger Agreement — Opinion of Goldman Sachs & Co. LLC” beginning on page 45 and Annex B-1 to this proxy statement. The representatives of Morgan Stanley rendered to the Board Morgan Stanley’s oral opinion, subsequently confirmed in writing, that, as of February 8, 2021, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and
 
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limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the Excluded Shares) pursuant to the Merger Agreement was fair from a financial point of view to such holders of shares of Glu Common Stock. For a detailed discussion of the opinions of Goldman Sachs and Morgan Stanley, please see below in “— Opinions of Glu’s Financial Advisors.” The written opinions rendered by Goldman Sachs and Morgan Stanley to the Board are attached to this Proxy Statement as Annex B-1 and Annex B-2, respectively. The representatives of the Financial Advisors then left the meeting and, following additional discussion and consideration of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, the Board unanimously (i) determined that the Merger and other transactions contemplated by the Merger Agreement, individually and in the aggregate, are fair to and in the best interests of Glu and its stockholders, (ii) approved the Merger Agreement and the transactions contemplated therein (including the execution, delivery and performance thereof) and declared it advisable that Glu enter into the Merger Agreement and consummate the transactions contemplated therein in accordance with the DGCL and (iii) recommended that Glu’s stockholders adopt the Merger Agreement.
In the afternoon of February 8, 2021, upon the closing of trading on the Nasdaq Stock Market, Glu and Electronic Arts executed the Merger Agreement, Electronic Arts and an affiliate of Tencent executed the Voting Agreement and Glu and Electronic Arts issued a joint press release announcing the execution of the Merger Agreement.
Reasons for the Recommendation of the Board of Directors
Our Board unanimously (a) determined that each of the Transactions, individually and in the aggregate are fair to and in the best interests of Glu and the Glu stockholders, (b) approved the Merger Agreement and the Transactions (including the execution, delivery and performance thereof) and declared it advisable that Glu enter into the Merger Agreement and consummate the Transactions in accordance with the DGCL, and (c) recommends that the Glu stockholders adopt the Merger Agreement (the “Board Recommendation”).
In evaluating the Merger Agreement, the Merger and the other Transactions, our Board consulted with Fenwick & West, our outside legal counsel, each of Goldman Sachs and Morgan Stanley, our financial advisors, and members of our senior management. In recommending that our stockholders vote in favor of adoption of the Merger Agreement, our Board considered numerous factors relating to the Merger Agreement, the Merger and the other Transactions, including the following factors (which are not necessarily presented in order of relative importance):
Financial Terms of the Merger and Certainty of Value for our Stockholders.   Our Board considered that the Per Share Merger Consideration would provide our stockholders with the opportunity to receive a significant premium over the market price for the shares of Glu Common Stock. Specifically, our Board reviewed the Per Share Merger Consideration in light of the current and historical performance of Glu Common Stock, and considered among other things:

the fact that the Per Share Merger Consideration is payable in cash, which allows our stockholders to realize immediate and certain value for their investment in Glu and enables our stockholders to avoid further risk of holding Glu Common Stock and exposure to the risks and uncertainties of Glu’s business on a standalone basis;

the fact that the Per Share Merger Consideration is greater than any stock price at which Glu’s shares have traded since July 23, 2007 (the same year as the initial public offering of Glu’s shares on Nasdaq), and represents an approximately 36.0% premium to the closing price of $9.19 per share on February 5, 2021, the last trading day before the day on which our Board approved the Merger; and an approximately 36.6% premium to the volume weighted average price of $9.14 per share for the 30-day period ending February 5, 2021;

the fact that we, with the assistance of Fenwick & West, Goldman Sachs and Morgan Stanley, engaged in a robust strategic process that created opportunities for other potentially interested parties to negotiate a transaction with us if such parties desired to do so, in which we and our advisors contacted eight other parties, seven of which met with our senior management, and only three of whom made a proposal to acquire us, and none of which made a proposal that would be competitive with the Merger;
 
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our Board’s belief that we, with the assistance of each of Goldman Sachs and Morgan Stanley, had negotiated the highest price per share that Electronic Arts was willing to pay to acquire Glu and the highest price reasonably available for the acquisition of Glu under the circumstances;

the oral opinion of Goldman Sachs, subsequently confirmed in Goldman Sachs’ written opinion dated as of February 8, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the $12.50 in cash per share of Glu Common Stock to be paid to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders, as more fully described below under the section captioned “— Opinions of Glu’s Financial Advisors,” and in Goldman Sachs’ written opinion attached as Annex B-1 to this proxy statement; and

the oral opinion of Morgan Stanley, subsequently confirmed in writing, rendered to the Board, that as of February 8, 2021, and based upon and subject to the various assumptions made, procedures followed, matters considered, and limitations, qualifications and other matters considered in connection with the preparation of Morgan Stanley's written opinion, the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement was fair from a financial point of view to such holders of shares of Glu Common Stock, as set forth in such opinion as more fully described below in the section of this proxy statement captioned “— Opinion of Morgan Stanley & Co. LLC.”
Our Prospects and Financial Condition.   Our Board also considered our business and financial prospects and the risks of continuing to operate as a standalone company, including the following:

the challenges faced by the mobile gaming industry, including macroeconomic trends and fluctuations in the United States and global economies, including those that impact discretionary consumer spending such as may result from the current COVID-19 pandemic, as well as its easing;

the fact that the mobile gaming industry is highly competitive, including with regard to the development, distribution and sale of mobile games, characterized by frequent product introductions and rapidly emerging new platforms, technologies and storefronts;

that our success depends, in part, on unpredictable and volatile market factors beyond our control, including consumer tastes and preferences and the number of applications they are willing to download to and maintain on their devices, competing gaming and non-gaming related applications, new mobile platforms and the availability of other entertainment activities;

that our success, and ability to achieve our expected future results, depends, in part, on our ability to timely develop, acquire and or publish new high-quality, engaging games and to achieve user acceptance of those games, including willingness to make in-app purchases or view advertisements, and to continue to enhance and monetize our existing games, that there are significant risks and uncertainties in doing so, and the possibility that our games will not meet consumer expectations, or they are not brought to market in a timely and effective manner, including monetization, in which case, our business, operating results and financial condition would be harmed and we would not achieve our anticipated future results;

that we may be unable to acquire or invest in games, licenses or businesses on favorable or reasonable terms, that we may be unsuccessful in integrating or otherwise exploiting those games, licenses or businesses that we do acquire and may divert significant management resources in attempting to do so, and that any such acquisitions and investments may entail a variety of other risk and uncertainties, including those described in our public filings with the SEC as well as unknown assumed risks;

that many of our competitors have significantly greater resources than we do, and our players may prefer our competitors’ products or competing forms of entertainment;

changes in privacy practices and standards, which may adversely affect the mobile gaming industry as a whole, including Apple’s announcement in June 2020 that in connection with the release of iOS 14 in September 2020, the app-based Identifier for Advertisers (IDFA) would be opt-in by consumers rather than opt-out, which may adversely impact our user acquisition efforts as well as our ability to generate offer and advertising revenue in our games that are distributed on the Apple App Store; and
 
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the other risks and uncertainties discussed in Glu’s public filings with the SEC, including, in our Annual Report on Form 10-K for the year ended December 31, 2020, which is incorporated by reference herein.
The Terms of the Merger Agreement.   Our Board considered the terms of the Merger Agreement, including:

the nature of the conditions to completion of the Merger included in the Merger Agreement, as well as the likelihood of satisfaction or waiver of all of the conditions to the completion of the Merger;

the obligation of the parties to use reasonable best efforts to obtain approvals or clearances, as applicable, from applicable antitrust and competition authorities, including the expiration or termination of any waiting periods or receipt of any requisite consents under the HSR Act, and approval under applicable Austrian antitrust laws;

certain termination rights for the parties, including (i) the right of Glu in certain circumstances to terminate the Merger Agreement and accept a Superior Proposal, (ii) the right of either Glu or Electronic Arts to terminate the Merger Agreement if the Merger has not been completed on or before August 7, 2021, which date may be extended for a period of up to three months if all conditions other than conditions relating to a legal restraint or regulatory approvals have been satisfied as of such date, and (iii) if the approval of Glu’s stockholders is not obtained;

the obligation of Glu to pay Electronic Arts a termination fee of $78.9 million in certain circumstances, including if the Board changes or withdraws its recommendation of the Merger to Glu’s stockholders, or if Glu terminates the Merger Agreement to accept a Superior Proposal;

our Board’s belief, after discussion with Fenwick & West, that the amount of the Termination Fee was reasonable in light of the negotiation process that led to the execution of the Merger Agreement, as well as of the terms of the Merger Agreement itself, and were necessary to induce Electronic Arts to enter into the Merger Agreement;

our Board’s belief that the Termination Fee would not likely deter or preclude another party with a strategic interest in us and financial resources sufficient to consummate an alternative Acquisition Transaction with us, were one to exist, from making a competing proposal for Glu and that such Termination Fee would likely only be required to be paid in the event that our Board entered into a transaction more financially favorable to our stockholders than the Merger;

the fact that Electronic Arts’ obligations pursuant to the Merger Agreement are not subject to any financing condition or similar contingency based on Electronic Arts’ ability to obtain financing;

Glu’s right to, in accordance with the terms of the Merger Agreement, engage in negotiations with, and provide non-public information to, a third party that makes an unsolicited Acquisition Proposal that is received prior to the adoption of the Merger Agreement by Glu stockholders, if our Board determines in good faith, after consultation with one or more of our financial advisors and outside legal counsel, that (a) such Acquisition Proposal constitutes, or could reasonably be expected to result in, a Superior Proposal and (b) failure to take such action would be inconsistent with its fiduciary obligations to Glu’s stockholders under applicable Law;

the right of our Board to withdraw or modify our Board Recommendation and, in certain circumstances, terminate the Merger Agreement if, subject to compliance with the terms of the Merger Agreement and after consultation with one or more of our financial advisors and outside legal counsel, it determines in good faith that the failure to effect such withdrawal or modification, or to terminate the Merger Agreement, would be inconsistent with the Board’s fiduciary obligations to Glu’s stockholders under applicable Law, subject to Glu’s compliance with the requirements set forth in Section 4.4 of the Merger Agreement, and Glu’s obligation to pay the Termination Fee in the event of a termination of the Merger Agreement under certain circumstances following such withdrawal or modification;

the fact that Red River Investment Limited signed the Voting Agreement obligating it to vote the shares of Glu Common Stock beneficially owned by it in favor of the adoption of the Merger Agreement until termination of the Voting Agreement, which occurs upon the earliest of certain conditions,
 
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including the valid termination of the Merger Agreement in accordance with its terms without the consummation of the Merger;

the right of Glu and Electronic Arts to receive a grant of specific performance to prevent breaches and to enforce the Merger Agreement;

the nature of the representations, warranties and covenants of Glu in the Merger Agreement;

that the adoption of the Merger Agreement requires the affirmative vote of the holders of a majority of the shares of Glu Common Stock outstanding on the record date; and

our Board’s belief that the Merger Agreement was the product of arm’s-length negotiation and contains customary terms and conditions.
General Matters.   Our Board considered a number of other factors related to the Transactions, including:

the availability of statutory appraisal rights under the DGCL for the holders of Glu Common Stock who comply with the required procedures under the DGCL; and

the fact that the Merger Agreement and the Transactions were unanimously approved by our Board, which is comprised of a majority of independent directors who are neither affiliated with Electronic Arts nor employees of Glu, and which retained and received advice from Fenwick & West, Goldman Sachs and Morgan Stanley in evaluating, negotiating and recommending the terms of the Merger Agreement.
Other Considerations.   Our Board also considered a number of risks, uncertainties and potentially negative factors in its deliberations concerning the Merger Agreement and the Transactions, including:

the fact that our stockholders will not participate in any potential future earnings or growth of Glu and will not benefit from any potential appreciation in the value of Glu, including any appreciation in value that could be realized as a result of the combination of Glu with Electronic Arts;

the fact that the non-solicitation provisions of the Merger Agreement restrict Glu’s ability to solicit or, subject to certain exceptions, engage in discussions or negotiations with third parties regarding, Acquisition Proposals, and the fact that, upon termination of the Merger Agreement under certain specified circumstances, Glu will be required to pay the Termination Fee, which could have the effect of discouraging Acquisition Proposals or reduce the price of such proposals;

the need to obtain certain regulatory clearances and approvals, and the fact that Electronic Arts and its subsidiaries are not required to: (i) propose, negotiate, offer or commit to or effect, by consent decree, hold separate order or otherwise, the sale, divestiture, license or disposition of any assets or businesses of Electronic Arts, its subsidiaries or its affiliates, now owned or sought to be acquired after the Agreement Date, (ii) terminate or amend any existing relationships or contractual rights or obligations or (iii) offer or commit to take any action that would limit or modify Electronic Arts’ rights of ownership in, or ability to conduct the business of, any of its operations, divisions, businesses, product lines, customers or assets, including, after the Closing, the business of Glu, if any such foregoing action, in each of clauses (i)-(iii), (A) would reasonably be expected to, individually or in the aggregate, (1) materially reduce the reasonably anticipated benefits to Electronic Arts of the Transactions, (2) adversely impact Electronic Arts or its subsidiaries other than, after the Closing, Glu and its subsidiaries or (3) impact Glu or any of Glu’s subsidiaries in a manner that is material to Glu and its subsidiaries, taken as a whole or (B) is not contingent on the consummation of the Transactions;

the possible effects of the pendency of the Merger or termination of the Merger Agreement, including the effect of the announcement of the Merger on our ability to retain and hire key personnel and maintain relationships with players, partners and others with whom we do business, the occurrence of any circumstance or any other events that could give rise to the termination of the Transactions, or the failure to obtain the approval of Glu’s stockholders or failure to satisfy any other conditions precedent to consummate the Transactions, including the receipt of all necessary regulatory approvals on a timely basis or at all (as described above), risks that the pendency of the Merger disrupts current ongoing business operations, including diversion from day-to-day operations and risks of litigation and/or regulatory actions related to the Merger (including stockholder litigation relating to the Transactions);
 
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the restrictions on the conduct of Glu’s business prior to the consummation of the Merger, including the requirement that Glu conduct its business in the ordinary course in all material respects, subject to specific exceptions, which may delay or prevent Glu from undertaking business opportunities, including acquisitions, that may arise before the completion of the Merger and that, absent the Merger Agreement, Glu might have pursued; and

the fact that receipt of the Per Share Merger Consideration payable upon the consummation of the Merger would generally be a taxable transaction for U.S. federal income tax purposes (see the section captioned “— Material U.S. Federal Income Tax Consequences of the Merger”).
The foregoing discussion of the information and factors considered by our Board is not intended to be exhaustive, but includes the material factors considered by our Board. In view of the variety of factors considered in connection with its evaluation of the Merger and the Merger Agreement, our Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. Our Board did not undertake to make specific determinations as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Our Board based its recommendation on the totality of the information presented and concluded that the potential risks, potential uncertainties, restrictions and potentially negative factors associated with the Merger and the Merger Agreement were outweighed by the potential benefits of the Merger and the Merger Agreement to our stockholders.
In considering the recommendation of our Board that Glu’s stockholders adopt the Merger Agreement, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, yours. Our Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the terms of the Merger, and in recommending that the Merger Agreement be adopted by our stockholders. See the section captioned “— Interests of our Directors and Executive Officers in the Merger.”
Portions of this explanation of the reasons for the Merger and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section captioned “Forward-Looking Information.”
Opinion of Goldman Sachs & Co. LLC
At a meeting of the Board, Goldman Sachs rendered to the Board its oral opinion, subsequently confirmed in its written opinion dated February 8, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the $12.50 in cash per share of Glu Common Stock to be paid to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated February 8, 2021, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with Goldman Sachs’ opinion, is attached to this proxy statement as Annex B-1. The summary of Goldman Sachs’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the Board in connection with its consideration of the Merger and the opinion does not constitute a recommendation as to how any holder of Glu Common Stock should vote with respect to the Merger or any other matter.
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

the Merger Agreement;

annual reports to stockholders and Annual Reports on Form 10-K of Glu for the five years ended December 31, 2019;

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Glu;
 
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certain other communications from Glu to its stockholders;

certain publicly available research analyst reports for Glu; and

certain internal financial analyses and forecasts for Glu prepared by the management of Glu, including the Studio Plan, the Sensitivity Case and a certain range of probability weightings applied by the management of Glu to such cases, which cases and applied range of probability weightings were approved for Goldman Sachs’ use by Glu (referred to in this section, collectively, as the “Forecasts.” For additional information regarding the Forecasts, see “The Merger — Financial Projections”).
Goldman Sachs also held discussions with members of the senior management of Glu regarding their assessment of the past and current business operations, financial condition and future prospects of Glu; reviewed the reported price and trading activity for the shares of Glu Common Stock; compared certain financial and stock market information for Glu with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the gaming industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.
For purposes of rendering its opinion, Goldman Sachs, with the consent of the Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Board that the Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Glu. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Glu or any of its subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger would be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs assumed that the Merger would be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.
Goldman Sachs’ opinion does not address the underlying business decision of Glu to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to Glu; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock, as of the date of its opinion, of the $12.50 in cash per share of Glu Common Stock to be paid to such holders pursuant to the Merger Agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Glu; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Glu, or class of such persons, in connection with the Merger, whether relative to the $12.50 in cash per share of Glu Common Stock to be paid to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock pursuant to the Merger Agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which the shares of Glu Common Stock would trade at any time or as to the potential effects of volatility in the credit, financial and stock markets on Glu, Electronic Arts or the Merger, or as to the impact of the Merger on the solvency or viability of Glu or Electronic Arts or the ability of Glu or Electronic Arts to pay their respective obligations when they would come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of the opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the Board in connection with its consideration of the Merger and such opinion does not constitute a recommendation as to how any holder of shares of Glu Common Stock should vote with respect to the Merger or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.
 
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Summary of Financial Analyses
The following is a summary of the material financial analyses presented by Goldman Sachs to the Board in connection with Goldman Sachs’ rendering to the Board of the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 5, 2021, the last completed trading day before public announcement of the Merger, and is not necessarily indicative of current market conditions.
Implied Premia and Multiples
Goldman Sachs calculated the implied premia represented by the Per Share Merger Consideration of $12.50 per share relative to:

$9.19, the closing price of shares of Glu Common Stock on February 5, 2021, the last completed trading day before Goldman Sachs rendered its opinion (the “Current Price”);

$9.14, the volume weighted average price (“VWAP”) of shares of Glu Common Stock over the 30-day period ended February 5, 2021 (the “30-Day VWAP”);

$9.17, the VWAP of the shares of Glu Common Stock over the 90-day period ended February 5, 2021 (the “90-Day VWAP”);

$8.32, the VWAP of the shares of Glu Common Stock over the 6-month period ended February 5, 2021 (the “6-Month VWAP”); and

$10.50, the highest closing trading price of shares of Glu Common Stock over the 52-week period ended February 5, 2021 (the “52-Week High”).
The results of these calculations and comparisons are as follows:
Implied Premium
Represented by
the $12.50 in cash per
Share of Glu
Common Stock
Reference Price Per Share of Common Stock:
February 5, 2021 Closing Price of $9.19
36%
30-Day VWAP of $9.14
37%
90-Day VWAP of $9.17
36%
6-Month VWAP of $8.32
50%
52-Week High of $10.50
19%
In addition, Goldman Sachs calculated an implied equity value of Glu by multiplying $12.50 by the total number of fully diluted shares of Glu Common Stock outstanding as of February 4, 2021, calculated using information provided by Glu’s management and the treasury stock method. Goldman Sachs then calculated an implied enterprise value of Glu by deducting from the implied equity value it calculated Glu’s net cash as of December 31, 2020, as provided by Glu’s management.
Using the foregoing, Goldman Sachs calculated the following multiples:

The implied enterprise value for Glu as a multiple of the estimated bookings of Glu for calendar year 2021, as reflected in each of the Studio Plan, the Sensitivity Case and Institutional Brokers’ Estimate System (“IBES”) consensus estimates.

The implied enterprise value for Glu as a multiple of the estimated earnings before interest, taxes, depreciation and amortization (“EBITDA”) of Glu for calendar year 2021, as reflected in each of the Studio Plan, the Sensitivity Case, and IBES consensus estimates.
 
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The results of these calculations and comparisons are as follows:
Implied Enterprise Value as a Multiple of:
Multiples
2021E Bookings (Studio Plan)
2.9x
2021E Bookings (Sensitivity Case)
3.5x
2021E Bookings (IBES)
3.4x
2021E EBITDA (Studio Plan)
16.9x
2021E EBITDA (Sensitivity Case)
23.6x
2021E EBITDA (IBES)
20.6x
Illustrative Discounted Cash Flow Analysis
Using the Forecasts (reflecting the range of probability weightings applied by the management of Glu of 1/3 to the Studio Plan and 2/3 to the Sensitivity Case at the low end of the range, and 2/3 to the Studio Plan and 1/3 to the Sensitivity Case at the high end), Goldman Sachs performed an illustrative discounted cash flow analysis of Glu to derive a range of illustrative present values per share of Glu Common Stock.
Using discount rates ranging from 7.5% to 9%, reflecting estimates of Glu’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2020 (i) estimates of the unlevered free cash flows to be generated by Glu for the period from 2021 to 2025, as reflected in each of the Sensitivity Case and the Studio Plan, and (ii) a range of illustrative terminal values for Glu as of December 31, 2025, calculated by applying perpetuity growth rates ranging from 1% to 3% to the estimate of the terminal year unlevered free cash flow of Glu, as reflected in each of the Sensitivity Case and the Studio Plan. Goldman Sachs also discounted to present value as of December 31, 2020, using the same discount rates, the benefits estimated by Glu’s management to be derived by Glu from its utilization of estimated net operating loss carryforwards of Glu as reflected in each of the Studio Plan and the Sensitivity Case. Goldman Sachs derived the discount rates referenced above by application of the capital asset pricing model (“CAPM”), which requires certain company-specific inputs, including Glu’s target capital structure weightings, the cost of long-term debt, future applicable marginal cash tax rate and a beta for Glu, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Forecasts. Goldman Sachs derived ranges of illustrative enterprise values for Glu by adding the ranges of present values it derived as described above under each of the Studio Plan and the Sensitivity Case. Goldman Sachs then added to the ranges of illustrative enterprise values it derived under each of the Studio Plan and the Sensitivity Case the net cash of Glu as of December 31, 2020, as provided by Glu’s management, to derive ranges of illustrative equity values for Glu under each of the Studio Plan and the Sensitivity Case. Goldman Sachs then divided the ranges of illustrative equity values it derived for Glu under each of the Studio Plan and the Sensitivity Case by the fully diluted shares of Glu Common Stock calculated based on equity information provided by Glu’s management and the treasury stock method, and, applying the range of probability weightings provided by the management of Glu, at the direction of the Board, to each of the Studio Plan and the Sensitivity Case, Goldman Sachs then derived ranges of illustrative present values per share of Glu Common Stock of $9.40 to $14.60 (reflecting probability weighting of 1/3 to the Studio Plan and 2/3 to the Sensitivity Case) and $12.00 to $19.00 (reflecting probability weighting of 2/3 to the Studio Plan and 1/3 to the Sensitivity Case).
Illustrative Present Value of Future Share Price Analysis
Goldman Sachs performed an illustrative analysis to derive a range of illustrative present values per share of Glu Common Stock February 5, 2021, based on theoretical future prices calculated by Goldman Sachs for Glu Common Stock derived using estimates of Glu’s Adjusted EBITDA, as reflected in the Studio Plan and the Sensitivity Case and the range of probability weightings applied by the management of Glu of 1/3 to the Studio Plan and 2/3 to the Sensitivity Case at the low end of the range, and 2/3 to the Studio Plan and 1/3 to the Sensitivity Case at the high end.
Goldman Sachs derived a range of theoretical future enterprise values for Glu as of December 31 of each of 2021, 2022 and 2023, by applying a range of illustrative multiples of enterprise value to Adjusted
 
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EBITDA for the next twelve-month period, which is referred to in this section as “NTM EBITDA,” of 13x to 17x to the estimated Adjusted EBITDA for the following full year reflected in each of the Sensitivity Case and the Studio Plan. Goldman Sachs then derived a range of theoretical future values per share of Glu’s common stock as of December 31 of each of 2021, 2022 and 2023 by adding the estimated net debt of Glu as of that date and dividing the result by the estimated fully-diluted Glu Common Stock outstanding as of that date, all as reflected in the Sensitivity Case and the Studio Plan, as applicable. Using an illustrative discount rate of 8.5%, reflecting an estimate of Glu’s cost of equity, Goldman Sachs discounted to present value as of February 5, 2021, the range of theoretical future values per share of Glu’s common stock it derived as of December 31 of each of 2021, 2022 and 2023 under each of the Sensitivity Case and the Studio Plan.
Goldman Sachs derived the illustrative discount rate by application of CAPM, which requires certain company-specific inputs, including a beta for Glu, as well as certain financial metrics for the United States financial markets generally. The range of illustrative multiples of enterprise value to NTM EBITDA of 13x to 17x applied by Goldman Sachs as described above was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things (i) the average multiple of enterprise value to NTM EBITDA for Glu over the 1-month, 3-month, 6-month, 1-year and 2-year periods prior to February 5, 2021 and (ii) the multiple of enterprise value to NTM EBITDA of Glu as of February 5, 2021, the last completed trading day prior to public announcement of the Merger, in each case, based on information obtained from Bloomberg, Capital IQ, IBES estimates, public filings and the Forecasts.
Applying the range of probability weightings provided by the management of Glu, at the direction of the Board, to each of the Studio Plan and the Sensitivity Case, this analysis yielded a range of illustrative present values per share of Glu Common Stock of $10.20 to $14.90 (reflecting probability weighting of 1/3 to the Studio Plan and 2/3 to the Sensitivity Case) and $11.70 to $18.30 (reflecting probability weighting of 2/3 to the Studio Plan and 1/3 to the Sensitivity Case).
Selected Precedent Transactions Analysis
Goldman Sachs analyzed certain publicly available information relating to certain acquisition transactions announced since 2015 involving target companies in the gaming industry with a transaction value greater than $750 million.
While none of the target companies in the selected transactions are directly comparable to Glu and none of the selected transactions are directly comparable to the proposed transaction, the target companies in the selected transactions are companies with certain operations that, for the purposes of analysis, may be considered similar to certain operations of Glu.
Using publicly available information, for each of the selected transactions, Goldman Sachs calculated the implied enterprise value of the applicable target company based on the consideration paid in the applicable transaction, as a multiple of the target company’s estimated EBITDA for the twelve-month period ended prior to announcement of each applicable transaction (referred to as “LTM EBITDA”), as disclosed
 
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in public company filings and other publicly available information. The selected transactions and the implied enterprise value to LTM EBITDA multiples calculated for the transactions are set forth below.
Announced
Acquiror
Target
Enterprise
Value /
LTM EBITDA
13-Dec-20
Electronic Arts Inc.
Codemasters Group Holdings PLC
29.9x
27-Aug-20
Tencent Holdings Ltd.
Leyou Technologies Holdings Ltd.
15.8x
30-Nov-17
Aristocrat Leisure Ltd. Big Fish Games, Inc.
11.9x
17-Apr-17
DoubleU Games Co., Ltd.
Double Down Interactive LLC
10.5x
30-Jul-16
Giant Investment Co., Ltd.
Playtika Holdings, LLC
13.0x
21-Jun-16
Tencent Holdings Ltd. Supercell Oy.
9.8x
2-Nov-15
Activision Blizzard, Inc. King Digital Entertainment plc
5.6x
Median
11.9x
Mean
13.8x
High
29.9x
Low
5.6x
Based on the results of the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment and experience, Goldman Sachs applied a reference range of enterprise value to LTM EBITDA multiples of 10x to 14x to Glu’s estimated EBITDA for 2020, as provided by Glu’s management, to derive a range of implied enterprise values for Glu. Goldman Sachs added to this range of implied enterprise values Glu’s net cash as of December 31, 2020 as provided by Glu’s management, and divided the result by the implied total number of fully diluted shares of Glu Common Stock outstanding calculated using information provided by management and the treasury stock method, to derive a range of implied values per share of Glu Common Stock of $6.00 to $7.50.
Premia Paid Analysis
Goldman Sachs reviewed and analyzed, using publicly available data obtained from Thomson SDC, the premia paid in acquisitions of non-telecom, technology public targets in the United States with cash-only consideration announced during the period from January 1, 2015 through February 5, 2021 in which the target company had an implied enterprise value of $1 billion or greater. For the entire period and for each calendar year through December 31, 2020 and for the period from January 1, 2021 through February 5, 2021, Goldman Sachs calculated median premia, and for the entire period also the top quartile, median and bottom quartile premia, of the price paid in acquisitions announced during such period relative to (i) the target company’s share price one trading day prior to the announcement or leak of the transaction (the “undisturbed price”) and (ii) the target company’s highest closing share price over the 52-week period prior to the original announcement of the transaction. The following shows a summary of the results of the review:
 
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Premium to
Undisturbed
Price
Premium to
52-Week High
Entire Period
Top Quartile
44% 14%
Median
26% 5%
Bottom Quartile
15% (2)%
Calendar Years
2015 median
32% 5%
2016 median
30% 2%
2017 median
25% 7%
2018 median
25% 7%
2019 median
21% 0%
2020 median
27% 3%
2021 year to date median
41% 0%
Based on its review of the foregoing data and its professional judgment and experience, Goldman Sachs applied a reference range of illustrative premia of 15%-45% to the share price as of February 5, 2021, the last completed trading day prior to public announcement of the Merger, of $9.19 per share. This analysis resulted in a range of implied values per share of common stock of $10.60 to $13.30.
General
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Glu or Electronic Arts or the Merger.
Goldman Sachs prepared these analyses for purposes of providing its opinion to the Board as to the fairness from a financial point of view to the holders (other than Electronic Arts and its affiliates) of the shares of Glu Common Stock, as of the date of the opinion, of the $12.50 in cash per share of Glu Common Stock to be paid to such holders pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projections of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Glu, Electronic Arts, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasts.
The consideration of $12.50 in cash per share of Glu Common Stock was determined through arm’s-length negotiations between Glu and Electronic Arts and was approved by the Board. Goldman Sachs provided advice to the Board during Glu’s negotiations with Electronic Arts in connection with the Merger Agreement. Goldman Sachs did not, however, recommend any specific amount of consideration to Glu or that any specific amount of consideration constituted the only appropriate consideration for the Merger.
As described above, Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the delivery of its fairness opinion to the Board and is qualified in its entirety by reference to the written opinion of Goldman Sachs, attached as Annex B-1 to this proxy statement.
 
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Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Glu, Electronic Arts, any of their respective affiliates and third parties, including Tencent Holdings Limited (“Tencent”), subsidiaries of which are significant stockholders of Glu and its affiliates and portfolio companies, or any currency or commodity that may be involved in the Merger. Goldman Sachs has acted as financial advisor to Glu in connection with, and has participated in certain of the negotiations leading to, the Merger. Goldman Sachs expects to receive fees for its services in connection with the Merger, the principal portion of which is contingent upon consummation of the Merger, and Glu has agreed to reimburse certain of Goldman Sachs’ expenses arising, and indemnify Goldman Sachs against certain liabilities that may arise, out of its engagement. Goldman Sachs has provided certain financial advisory and/or underwriting services to Glu and/or its affiliates (other than Tencent) from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as joint bookrunner in connection with a public offering of 17,250,000 Shares in June 2020. During the two year period ended February 8, 2021, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Glu and/or its affiliates (other than Tencent) of approximately $2.5 million. During the two year period ended February 8, 2021, the Investment Banking Division of Goldman Sachs has not been engaged by Electronic Arts to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Tencent and/or its affiliates and portfolio companies from time to time for which its Investment Banking Division has received, and may receive, compensation, including as described in Goldman Sachs’ written opinion attached to this proxy statement as Annex B-1. During the two year period ended February 8, 2021, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Tencent and/or its subsidiaries, which may be deemed affiliates of Glu, of approximately $7 million. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Glu, Electronic Arts, Tencent and their respective affiliates, and, as applicable, portfolio companies, for which Goldman Sachs’ Investment Banking Division may receive compensation. Affiliates of Goldman Sachs also may have co-invested with Tencent and its respective affiliates from time to time and may do so in the future.
Glu selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to an engagement letter between Glu and Goldman Sachs, Glu engaged Goldman Sachs to act as its financial advisors in connection with the Merger. The engagement letter provides for a transaction fee of $15 million, $2 million of which was payable upon the presentation to the Board of the results of the study Goldman Sachs undertook in connection with its fairness opinion and the remainder of which is contingent upon completion of the Merger. In addition, Glu agreed to reimburse Goldman Sachs for certain of its expenses, including reasonable attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.
Opinion of Morgan Stanley & Co. LLC
Glu retained Morgan Stanley to provide it with financial advisory services and a financial opinion in connection with the possible sale of Glu. The Board selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, its knowledge of and involvement in recent transactions in Glu’s industry, its knowledge of Glu’s business and affairs and its understanding of Glu’s business based on its long-standing relationship with Glu. At the meeting of the Board on February 8, 2021, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, that as of February 8, 2021, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in the written opinion, the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement was fair from a financial point of view to such holders of shares of Glu Common Stock.
 
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The full text of the written opinion of Morgan Stanley, dated as of February 8, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is attached to this proxy statement as Annex B-2 and is incorporated by reference in this proxy statement in its entirety. The summary of the opinion of Morgan Stanley in this proxy statement is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Morgan Stanley’s opinion carefully and in its entirety. Morgan Stanley’s opinion was directed to the Board, in its capacity as such, and addresses only the fairness from a financial point of view of the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement as of the date of the opinion and does not address the relative merits of the Merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. It was not intended to, and does not, constitute an opinion or a recommendation as to how Glu stockholders should vote at the stockholders’ meeting to be held in connection with the Merger. The summary of the opinion of Morgan Stanley set forth below is qualified in its entirety by reference to the full text of the opinion.
In connection with rendering its opinion, Morgan Stanley, among other things:

Reviewed certain publicly available financial statements and other business and financial information of Glu;

Reviewed certain internal financial statements and other financial and operating data concerning Glu;

Reviewed certain financial projections prepared by Glu’s management (the “Projections”);

Discussed the past and current operations and financial condition and the prospects of Glu with senior executives of Glu;

Reviewed the reported prices and trading activity for Glu Common Stock;

Compared the financial performance of Glu and the prices and trading activity of Glu Common Stock with that of certain other publicly traded companies comparable with Glu, and their securities;

Reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

Participated in certain discussions and negotiations among representatives of Glu and Electronic Arts and their financial and legal advisors;

Reviewed the Merger Agreement and certain related documents; and

Performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to Morgan Stanley by Glu, and formed a substantial basis for its opinion. With respect to the Projections, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of Glu’s management of the future financial performance of Glu. Morgan Stanley expressed no view as to such Projections or the assumptions on which they were based. In addition, Morgan Stanley assumed that the Merger will be consummated in accordance with the terms set forth in the Merger Agreement without any waiver, amendment or delay of any terms or conditions and that the definitive Merger Agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley assumed that, in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley is not a legal, tax or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of Glu and its legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Glu’s officers, directors or employees, or any class of such persons, relative to the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) in the Merger. Morgan Stanley did not make any independent
 
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valuation or appraisal of the assets or liabilities of Glu, nor was Morgan Stanley furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of, February 8, 2021. Events occurring after February 8, 2021 may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley has not assumed any obligation to update, revise or reaffirm its opinion.
Summary of Financial Analyses
The following is a brief summary of the material analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter dated as of February 8, 2021 to the Board. The following summary is not a complete description of Morgan Stanley’s opinion or the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole; considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion.
In performing the financial analyses summarized below and in arriving at its opinion, Morgan Stanley utilized and relied upon the financial projections prepared by Glu’s management and which we refer to in this proxy statement as the Studio Plan, Board Plan and Sensitivity Case. These financial projections are more fully described below in the section of this proxy statement captioned “— Financial Projections.” In accordance with direction from the Board, Morgan Stanley utilized the Studio Plan, Board Plan and Sensitivity Case in its financial analyses described below but did not consider any weightings of such projections applied by Glu’s management in its financial analyses.
Public Trading Comparables Analysis
Morgan Stanley performed a public trading comparables analysis, which attempts to provide an implied value of a company by comparing it to similar companies that are publicly traded. Morgan Stanley reviewed and compared certain financial estimates for Glu with comparable publicly available consensus equity analyst research estimates for companies, selected based on Morgan Stanley’s professional judgment and experience, that share similar business characteristics and have certain comparable operating characteristics including, among other things, similarly sized revenue and/or revenue growth rates, market capitalizations, profitability, scale and/or other similar operating characteristics (these companies are referred to as the “comparable companies”). For purposes of this analysis, Morgan Stanley analyzed the ratio of aggregate value, which Morgan Stanley defined as fully-diluted market capitalization plus total debt, plus non-controlling interest, less cash and cash equivalents, to adjusted EBITDA, which, for purposes of this analysis, Morgan Stanley defined as GAAP net income adjusted for change in deferral of revenue, change in deferred platform commissions, change in deferred royalties, and adding back amortization of intangibles, stock-based compensation, transitional costs, restructuring charge, depreciation and income tax provision, for calendar year 2021, for Glu, as provided by Glu’s management, and each of these comparable companies, based on publicly available financial information for comparison purposes.
 
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These companies and their applicable multiples, as well as the corresponding multiples for Glu based on the Studio Plan, Board Plan and Sensitivity Case were the following:
AV to Estimated
2021 EBITDA
Gaming Peers
Activision Blizzard, Inc.
21.6x
Electronic Arts
16.2x
Take-Two Interactive Software, Inc.
25.7x
SciPlay Corporation
11.0x
Zynga Inc.
18.7x
Glu
Studio Plan
11.5x
Board Plan
13.4x
Sensitivity Case
16.0x
Based on its analysis of the relevant metrics for each of the comparable companies and upon the application of its professional judgment and experience, Morgan Stanley selected representative ranges of aggregate value to adjusted EBITDA multiples and applied these ranges of multiples to the estimated relevant metric for Glu. For purposes of this analysis, Morgan Stanley utilized publicly available estimates of adjusted EBITDA prepared by equity research analysts, available as of February 5, 2021 (the last full trading day prior to the meeting of the Board to approve and adopt the Merger Agreement, declare the advisability of the Merger Agreement and approve the transactions contemplated thereby, including the Merger).
Based on the outstanding shares of Glu Common Stock on a fully-diluted basis as provided by Glu’s management and Glu’s cash and debt as of December 31, 2020, Morgan Stanley calculated the estimated implied value per share of Glu Common Stock as follows:
AV to Estimated 2021
Adjusted EBITDA
Multiple Ranges
Implied Value Per
Share of Glu
Common Stock ($)
Studio Plan
14.0x – 18.0x 10.70 – 13.15
Board Plan
13.0x – 17.0x 8.96 – 11.06
Sensitivity Case
12.0x – 16.0x 7.42 – 9.18
No company utilized in the public trading comparables analysis is identical to Glu. In evaluating the comparable companies, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond Glu’s control. These include, among other things, the impact of competition on Glu’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Glu and the industry, and in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data.
Discounted Equity Value Analysis
Morgan Stanley performed a discounted equity value analysis, which is designed to provide insight into the potential future equity value of a company as a function of such company’s estimated future EBITDA. The resulting equity value is subsequently discounted to arrive at an estimate of the implied present value. In connection with this analysis, Morgan Stanley calculated a range of implied present equity values per share of the Glu Common Stock on a standalone basis for each of the Studio Plan, Board Plan and Sensitivity Case.
To calculate these discounted equity values, Morgan Stanley utilized calendar year 2023 adjusted EBITDA estimates under each of the Studio Plan, Board Plan and Sensitivity Case. Based upon the
 
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application of its professional judgment and experience, Morgan Stanley applied a forward range of aggregate value to adjusted EBITDA multiples (based on the range of aggregate value to adjusted EBITDA multiples for the comparable companies and the growth profile of Glu under each case) to these adjusted EBITDA estimates in order to reach a future implied aggregate value. Morgan Stanley then added projected net cash from such aggregate value to reach a future implied equity value, which was then divided by Glu’s projected fully diluted share count (as provided by Glu’s management) under the treasury stock method.
In each case, Morgan Stanley then discounted the resulting implied future equity value per share to January 31, 2021, at a discount rate of 8.8 percent, which rate was selected based on Glu’s estimated cost of equity, which was arrived at by applying the capital asset pricing model, to calculate the discounted equity value per share as follows:
Based on Calendar Year 2023 Estimated Adjusted EBITDA
Selected AV /
Adjusted EBITDA
Multiple Ranges
Implied Value Per
Share of Glu
Common Stock ($)
Studio Plan
14.0x – 18.0x 17.05 – 21.15
Board Plan
13.0x – 17.0x 13.90 – 17.40
Sensitivity Case
12.0x – 16.0x 8.32 – 10.33
Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis, which is designed to provide an implied value of a company by calculating the present value of the estimated future cash flows and terminal value of such company. Morgan Stanley calculated a range of equity values per share for the Glu Common Stock based on a discounted cash flow analysis to value Glu as a stand-alone entity. Morgan Stanley utilized estimates from the Studio Plan, Board Plan and Sensitivity Case for purposes of its discounted cash flow analysis, as more fully described below.
Morgan Stanley first calculated the estimated unlevered free cash flow, which is defined as adjusted EBITDA less (1) stock-based compensation expense, (2) taxes (including the impact of net operating losses) and (3) capital expenditures and plus or minus changes in net working capital. Each of the Studio Plan, Board Plan and Sensitivity Case included (1) estimates prepared by Glu’s management through 2025, (2) the respective terminal values, which were prepared by Morgan Stanley and reviewed and approved by Glu for use by Morgan Stanley, and (3) certain tax attributes. The free cash flows and terminal values were discounted, using a mid-year convention, to present values as of January 31, 2021 at a discount rate ranging from 7.8 percent to 9.8 percent, which discount rates were selected, upon the application of Morgan Stanley’s professional judgment and experience, to reflect an estimate of Glu’s estimated cost of equity determined by the application of the capital asset pricing model.
Based on the outstanding shares of Glu Common Stock on a fully-diluted basis as provided by Glu’s management and Glu’s cash and debt as of December 31, 2020, Morgan Stanley calculated the estimated implied value per share of Glu Common Stock as follows:
Implied Value Per
Glu Share of
Common Stock ($)
Studio Plan
13.61 – 22.25
Board Plan
11.61 – 18.72
Sensitivity Case
6.52 – 9.63
Precedent Transactions Analysis
Morgan Stanley performed a precedent transactions analysis, which is designed to imply a value of a company based on publicly available financial terms. Morgan Stanley compared publicly available statistics for gaming transactions since January 1, 2015. Morgan Stanley selected such comparable transactions because they shared certain characteristics with the Merger, most notably because they were similar gaming transactions. For such transactions, Morgan Stanley noted the multiple of aggregate value of the
 
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transaction to the last 12 months (which we refer to as “LTM”) estimated adjusted EBITDA based on publicly available information at the time of announcement of each such transaction.
The following is a list of the gaming transactions reviewed, together with the applicable multiples:
Selected Gaming Transactions (Target/Acquiror)
AV / LTM EBITDA
Big Fish Games, Inc. / Aristocrat Leisure Australia Pty Ltd.
11.9x
Codemasters Software Company Ltd. / Electronic Arts
29.9x
Double Down Interactive LLC / DoubleU Games Co., Ltd.
10.5x
King.com Ltd. / Activision Blizzard, Inc.
5.6x
Playtika Ltd. / Giant Network Group Co., Ltd.
13.0x
LeYou Technologies Holding Ltd. / Tencent Holdings Ltd.
15.8x
Supercell Oy / Tencent Holdings Ltd.
9.8x
Based on its analysis of the relevant metrics and time frame for each of the transactions listed above and upon the application of its professional judgment and experience, Morgan Stanley selected representative ranges of the aggregate value to the estimated LTM adjusted EBITDA multiples of the transactions and applied these ranges of multiples to the LTM adjusted EBITDA for Glu as of December 31, 2020. The following table summarizes Morgan Stanley’s analysis:
Precedent Multiples
Representative
Ranges
Implied Value Per
Share of Glu
Common Stock ($)
AV to Estimated LTM Adjusted EBITDA
8.0x – 13.0x 5.21 – 7.12
No company or transaction utilized in the precedent transactions analysis is identical to Glu or the Merger. In evaluating the precedent transactions, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond Glu’s control. These include, among other things, the impact of competition on Glu’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Glu and the industry, and in the financial markets in general, which could affect the public trading value of the companies and the aggregate value and equity value of the transactions to which they are being compared. The fact that points in the range of implied present value per share of Glu derived from the valuation of precedent transactions were less than or greater than the consideration is not necessarily dispositive in connection with Morgan Stanley’s analysis of the consideration for the Merger, but is one of many factors Morgan Stanley considered.
Other Information
Morgan Stanley observed additional factors that were not considered part of Morgan Stanley’s financial analysis with respect to its opinion, but which were noted as reference data for the Board, including the following information described under the sections of this proxy statement captioned “— Illustrative Precedent Premiums,” “— Historical Trading Ranges” and “— Equity Research Analysts’ Future Price Targets.”
Illustrative Precedent Premiums
Morgan Stanley reviewed 119 select precedent transactions occurring between 2012 and January 20, 2021 which involved U.S. publicly listed companies in the technology sector and had a transaction value of greater than $1 billion and all-cash consideration, based on publicly available financial information compiled by Thomson Reuters for comparison purposes. For these transactions, Morgan Stanley noted the distributions of the following financial statistics, where available: (1) the implied premium to the acquired company’s closing share price on the last trading day prior to announcement (or the last trading day prior to the share price being affected by acquisition rumors or similar Merger-related news); and (2) the implied premium to the acquired company’s 30-trading-day average closing share price prior to announcement (or the last 30-trading-day average closing share price prior to the share price being affected by acquisition rumors or similar Merger-related news).
 
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Based on its analysis of the premia for such transactions and based upon the application of its professional judgment and experience, Morgan Stanley selected a representative range of premia and applied such range to each of Glu’s closing share price on February 5, 2021 (the last full trading day prior to the meeting of the Board to approve and adopt the Merger Agreement, declare the advisability of the Merger Agreement and approve the transactions contemplated thereby, including the Merger).
The following table summarizes such calculation:
Premia
Representative
Ranges
Implied Value Per
Share of Glu
Common Stock ($)
Premia to 1-Day Unaffected Share Price
15% – 45% 10.57 – 13.33
Premia to 30-Day Unaffected Average Share Price
20% – 50% 10.99 – 13.73
Historical Trading Ranges
Morgan Stanley noted certain trading ranges with respect to the historical share prices of Glu Common Stock. Morgan Stanley reviewed a range of closing prices of the Glu Common Stock for various periods ending on February 5, 2021 (the last full trading day prior to the meeting of the Board to approve and adopt the Merger Agreement, declare the advisability of the Merger Agreement and approve the transactions contemplated thereby, including the Merger). Morgan Stanley observed the following:
Periods Ended February 5, 2021
Range of Trading
Prices Per
Share of Glu
Common Stock ($)
Last 30 Trading Days
8.64 – 9.92
Last 12 Months
4.53 – 10.50
Equity Research Analysts’ Future Price Targets
Morgan Stanley noted certain future public market trading price targets for Glu Common Stock prepared and published by equity research analysts prior to February 5, 2021 (the last full trading day prior to the meeting of the Board to approve and adopt the Merger Agreement, declare the advisability of the Merger Agreement and approve the transactions contemplated thereby, including the Merger). These targets reflected each analyst’s estimate of the future public market trading price of Glu Common Stock. The range of undiscounted analyst price targets for the Glu Common Stock was $10.00 to $14.25 per share as of various dates ranging from November 6, 2020 to January 28, 2021. Morgan Stanley discounted the range of analyst price targets per share for the Glu Common Stock by one year at a rate of 8.8 percent, which discount rate was selected by Morgan Stanley, upon the application of its professional judgment and experience, to reflect Glu’s cost of equity. This analysis indicated an implied range of equity values for Glu Common Stock of $9.12 to $13.00 per share, as discounted by one year based on undiscounted analyst price targets, as of February 5, 2021 (the last full trading day prior to the meeting of the Board to approve and adopt the Merger Agreement, declare the advisability of the Merger Agreement and approve the transactions contemplated thereby, including the Merger).
The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for Glu Common Stock, and these estimates are subject to uncertainties, including the future financial performance of Glu and future financial market conditions.
General
In connection with the review of the Merger by the Board, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete
 
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view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of Glu. In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond Glu’s control. These include, among other things, the impact of competition on Glu’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Glu and the industry, and in the financial markets in general. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness from a financial point of view of the Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement and in connection with the delivery of its opinion dated as of February 8, 2021 to the Board. These analyses do not purport to be appraisals or to reflect the prices at which shares of Glu Common Stock might actually trade.
The Per Share Merger Consideration to be received by the holders of shares of Glu Common Stock (other than the holders of the Excluded Shares) pursuant to the Merger Agreement was determined through arm’s-length negotiations between Glu and Electronic Arts and was approved by the Board. Morgan Stanley provided advice to the Board during these negotiations but did not, however, recommend any specific consideration to Glu or the Board, nor did Morgan Stanley opine that any specific consideration constituted the only appropriate consideration for the Merger. Morgan Stanley’s opinion did not address the relative merits of the Merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley’s opinion was not intended to, and does not, constitute an opinion or a recommendation as to how Glu stockholders should vote at the special meeting.
Morgan Stanley’s opinion and its presentation to the Board was one of many factors taken into consideration by the Board to approve and adopt the Merger Agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Board with respect to the consideration pursuant to the Merger Agreement or of whether the Board would have been willing to agree to different consideration. Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with Morgan Stanley’s customary practice.
The Board retained Morgan Stanley based upon Morgan Stanley’s qualifications, experience and expertise. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of their customers, in debt or equity securities or loans of Electronic Arts, Glu and their respective affiliates, or any other company, or any currency or commodity, that may be involved in the Merger, or any related derivative instrument.
Under the terms of its engagement letter, Morgan Stanley provided Glu financial advisory services and an opinion, described in this section and attached to this proxy statement as Annex B-2, in connection with the Merger, and Glu has agreed to pay Morgan Stanley a fee of approximately $15 million for its services, $2 million of which has been paid following delivery of the opinion described in this section and attached as this proxy statement as Annex B-2 and the remainder of which is contingent upon the consummation of the Merger. Glu has also agreed to reimburse Morgan Stanley for its expenses, including fees of outside counsel and other professional advisors, incurred in connection with its engagement. In addition, Glu has agreed to indemnify Morgan Stanley and its affiliates, its and their respective officers, directors, employees and agents and each other person, if any, controlling Morgan Stanley or any of its affiliates against
 
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certain liabilities and expenses related to, arising out of or in connection with Morgan Stanley’s engagement, including certain liabilities under the federal securities laws.
In the two years prior to the date of Morgan Stanley’s opinion, Morgan Stanley and its affiliates have provided financing services for Glu and have received aggregate fees of approximately $2.4 million in connection with such services. In the two years prior to the date of Morgan Stanley’s opinion, Morgan Stanley and its affiliates have provided equity financing services for Electronic Arts and have received aggregate fees of approximately $1 million in connection with such services. Morgan Stanley may also seek to provide financial advisory and financing services to Electronic Arts and Glu and their respective affiliates in the future and would expect to receive fees for the rendering of these services.
Financial Projections
Glu does not as a matter of course publicly disclose long term projections as to future performance, operating income or other financial results. However, Glu’s management prepared three sets of projections through the year ending December 31, 2025 (collectively, the “Projections”) that were utilized in connection with the Merger, consisting of the Studio Plan, the Board Plan and the Sensitivity Case (each as described below). The Projections are included in this Proxy Statement only because (1) portions of the Projections were made available to Electronic Arts in connection with Electronic Arts’ due diligence review of Glu; (2) the Projections were made available to the Board in connection with its consideration of the Merger; and (3) the Projections were also made available to Goldman Sachs and Morgan Stanley, Glu’s financial advisors as more fully described below under the section captioned “— Opinions of Glu’s Financial Advisors.” The Projections are not included in this proxy statement to influence any stockholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to the shares of Glu Common Stock.
The Projections are forward-looking statements. Important factors that may affect actual results and cause the Projections not to be achieved include, but are not limited to, the risks and uncertainties described below and those described in the section captioned “Forward-Looking Information.” Although the Projections are presented with numerical specificity, they reflect numerous estimates and assumptions made by Glu with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Glu’s business, all of which are difficult or impossible to predict accurately and many of which are beyond Glu’s control. The Projections reflect assumptions as to certain potential business decisions that are subject to change. Without limiting the generality of the foregoing, the Projections include assumptions relating to bookings from our game titles, including the contribution of new titles and key existing core titles, as well as levels of expenditures. The Projections cover several years and such information by its nature becomes less reliable with each successive year. The Projections were prepared on a standalone basis without giving effect to the Merger. Furthermore, the Projections do not take into account the effect of any failure of the Merger to be completed and should not be viewed as accurate or continuing in that context.
In the view of our management, the information in the Projections was prepared on a reasonable basis and reflected the best estimates and judgments available to our management at the time. However, this information is not fact and should not be relied upon as being necessarily indicative of future results. The Projections reflect subjective judgments and assumptions in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, the Projections constitute forward-looking information and are subject to many risks and uncertainties that could cause actual results to differ materially from the results forecasted in the Projections, including, but not limited to, our performance, industry performance, general business and economic conditions, our ability to develop new game titles and their market acceptance, changing consumer preferences, the impact of the announcement of the merger on Glu’s business and operating results, including the effect of the announcement of the merger on the ability of Glu to retain and hire key personnel and maintain relationships with players, partners and others with whom Glu does business; the occurrence of any circumstance or any other events that could give rise to the termination of the proposed transaction, or the failure to obtain Glu’s stockholder approval or failure to satisfy any other conditions precedent to consummate the proposed transaction, including the receipt of all necessary regulatory approvals on a timely basis or at all; risks that the pendency of the Merger disrupts current ongoing business operations; risks of litigation and/or regulatory
 
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actions related to the Merger; the impact of the COVID-19 pandemic and the easing of it; and the other risks set forth in our reports filed with the SEC. There can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than forecast. In addition, the Projections will be affected by our ability to achieve strategic goals, objectives and targets over the applicable periods. The Projections cannot, therefore, be considered a guarantee of future operating results, and this information should not be relied on as such.
The inclusion of the Projections should not be regarded as an indication that Glu, Goldman Sachs, Morgan Stanley, any of their respective affiliates, officers, directors, advisors or other representatives or anyone who received this information then considered, or now considers, them a reliable prediction of future events, and this information should not be relied upon as such. The inclusion of the Projections herein should not be deemed an admission or representation by Glu that it views such Projections as material information. The inclusion of the Projections in this Proxy Statement should not be regarded as an indication that the Projections will necessarily be predictive of actual future events given the inherent risks and uncertainties associated with such long-range forecasts. No representation is made by Glu or any other person regarding the Projections or Glu’s ultimate performance compared to such information. The Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information about Glu contained in its public filings with the SEC. For additional information, see the section captioned “Where You Can Find More Information.” In light of the foregoing factors, and the uncertainties inherent in the Projections, stockholders are cautioned not to place undue, if any, reliance on the Projections.
The Projections included in this document have been prepared by, and are solely the responsibility of, Glu’s management. Neither our independent auditor nor any other independent accountant has compiled, examined or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability.
Some of the Projections are “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with the published guidelines of the SEC regarding projections or accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures, because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.
Studio Plan
Our management prepared a financial plan through 2025 based on information and perspectives from Glu’s game development studios, which did not reflect adjustments for increased marketing spend for new title launches, and reflected planned contributions from new titles that were not risk-adjusted. This plan, which we refer to as the Studio Plan, was prepared in connection with our normal annual planning process for purposes of compensation planning and as a reference for our preparation of the Board Plan discussed below.
2021E
2022E
2023E
2024E
2025E
Bookings(1) $ 700 $ 854 $ 1,025 $ 1,210 $ 1,403
Gross profit
472 581 701 829 967
Total operating expenses
(356) (411) (473) (558) (647)
Net income
58 112 133 161 197
Adjusted EBITDA(2)
122 176 236 281 331
Stock-based compensation
(30) (31) (33) (35) (36)
Capital expenditures
(3) (6) (8) (10) (12)
Decrease (increase) in net working capital
(32) 7 (15) (15) (15)
Taxes(3) (2) 0 (33) (43) (52)
Unlevered free cash flow (excluding NOL impact)(4)
39 117 139 172 208
Unlevered free cash flow (including NOL impact)(4)
56 146 147 179 215
 
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(1)
Bookings is a non-GAAP financial measure that is equal to the total revenue we recognize in a given period, plus the net change in deferred revenue during the period.
(2)
Adjusted EBITDA is defined as GAAP income adjusted for changes in deferred revenue and changes in deferred platform commissions and changes in deferred royalties, and adding back depreciation, amortization of intangible assets and stock-based compensation. Adjusted EBITDA is a non-GAAP financial measure and is not intended to represent, or to be used, as a substitute for operating income and net income as a measure of operating performance or for cash flow from operations as a measure of liquidity.
(3)
Tax expense is net of the utilization of net operating losses generated in the past and in years in which net losses are projected, which are applied to offset projected taxable income.
(4)
Unlevered free cash flow consists of Adjusted EBITDA minus stock-based compensation, income tax provision, capital expenditures and plus or minus changes in net working capital. Unlevered free cash flow is a non-GAAP financial measure and is not intended to represent, or to be used, as a substitute for operating income and net income as a measure of operating performance or for cash flow from operations as a measure of liquidity. Unlevered free cash flow (excluding NOL impact) reflects application of Glu’s U.S. marginal tax rate to cash flow and excludes the impact of net operating loss carry forwards. Unlevered free cash flow (including NOL impact) reflects application of Glu’s U.S. effective tax rate to cash flow and includes the impact of the assumed utilization of net operating loss carry forwards.
Board Plan
Our management also prepared a financial plan through 2025 that reflected increased marketing spend for new title launches and reflected less optimistic assumptions regarding contributions from new titles and from key existing core titles. With respect to 2021, this plan, which we refer to as the Board Plan, was prepared in connection with our normal annual planning process, for purposes of corporate-level budgeting and cost planning and as a reference for developing external financial guidance, and in connection with the Board’s consideration of a potential acquisition of Glu and other strategic alternatives available to us.
2021E
2022E
2023E
2024E
2025E
Bookings(1) $ 680 $ 803 $ 931 $ 1,061 $ 1,189
Gross profit
460 542 634 728 819
Total operating expenses
(361) (396) (439) (489) (548)
Net income
43 95 119 142 167
Adjusted EBITDA(2)
104 153 202 247 281
Stock-based compensation
(30) (31) (33) (35) (36)
Capital expenditure
(6) (6) (8) (10) (12)
Decrease (increase) in net working capital
(10) (12) (11) (11) (10)
Taxes(3) (2) 0 (20) (38) (45)
Unlevered free cash flow (including NOL impact)(4)
57 104 130 153 178
(1)
Bookings is a non-GAAP financial measure that is equal to the total revenue we recognize in a given period, plus the net change in deferred revenue during the period.
(2)
Adjusted EBITDA is defined as GAAP income adjusted for changes in deferred revenue and changes in deferred platform commissions and changes in deferred royalties, and adding back depreciation, amortization of intangible assets and stock-based compensation. Adjusted EBITDA is a non-GAAP financial measure and is not intended to represent, or to be used, as a substitute for operating income and net income as a measure of operating performance or for cash flow from operations as a measure of liquidity.
 
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(3)
Tax expense is net of the utilization of net operating losses generated in the past and in years in which net losses are projected, which are applied to offset projected taxable income.
(4)
Unlevered free cash flow (including NOL impact) reflects application of Glu’s U.S. effective tax rate to cash flow and includes the impact of the assumed utilization of net operating loss carry forwards. The Board Plan did not include a projection of unlevered free cash flow that excluded the impact of net operating loss carry forwards.
Sensitivity Case
Our management also prepared a financial forecast through 2025 for use in connection with the Board’s evaluation of the Merger that took into greater consideration the risks and uncertainties facing Glu as an independent company, including the risks of timely developing and launching new titles, and achieving market acceptance and profitability for new games, continuing to enhance and monetize existing games, as well as other execution risks, industry risks (including the expected IDFA changes) and various macroeconomic risks. In particular, this forecast, which we refer to as the Sensitivity Case, assumed (i) that revenue growth would slow, and marketing and other user acquisition costs would increase as a percentage of bookings, in 2021 due to an assumption that consumer appetite for mobile games would decline with the easing of the COVID-19 pandemic, (ii) that commercial launch would be less, and market acceptance of new games would be less, than that reflected in the Board Plan, and (iii) that the year over year growth in bookings from our game titles generally would be less than that reflected in the Board Plan.
2021E
2022E
2023E
2024E
2025E
Bookings(1) $ 584 $ 637 $ 688 $ 736 $ 780
Gross profit
387 422 460 496 528
Total operating expenses
(305) (326) (349) (367) (384)
Net Income
44 56 68 70 78
Adjusted EBITDA(2)
88 102 116 134 150
Stock-based compensation
(30) (31) (33) (35) (36)
Capital expenditure
(6) (6) (8) (10) (12)
Decrease (increase) in net working capital
(3) (4) (4) (4) (4)
Taxes(3) (2) 0 0 (15) (21)
Unlevered free cash flow (excluding NOL impact)(4)
38 46 55 66 75
Unlevered free cash flow (including NOL impact)(4)
47 60 71 71 77
(1)
Bookings is a non-GAAP financial measure that is equal to the total revenue we recognize in a given period, plus the net change in deferred revenue during the period.
(2)
Adjusted EBITDA is defined as GAAP income adjusted for changes in deferred revenue and changes in deferred platform commissions and changes in deferred royalties, and adding back depreciation, amortization of intangible assets and stock-based compensation. Adjusted EBITDA is a non-GAAP financial measure and is not intended to represent, or to be used, as a substitute for operating income and net income as a measure of operating performance or for cash flow from operations as a measure of liquidity.
(3)
Tax expense is net of the utilization of net operating losses generated in the past and in years in which net losses are projected, which are applied to offset projected taxable income.
(4)
Unlevered free cash flow consists of Adjusted EBITDA minus stock-based compensation, income tax provision, capital expenditures and plus or minus changes in net working capital. Unlevered free cash flow is a non-GAAP financial measure and is not intended to represent, or to be used, as a substitute for operating income and net income as a measure of operating performance or for cash flow from operations as a measure of liquidity. Unlevered free cash flow (excluding NOL impact) reflects application of Glu’s U.S. marginal tax rate to cash flow and excludes the impact of net operating loss carry
 
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forwards. Unlevered free cash flow (including NOL impact) reflects application of Glu’s U.S. effective tax rate to cash flow and includes the impact of the assumed utilization of net operating loss carry forwards.
The Projections have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this proxy statement, and except as required by applicable securities laws.
WE DO NOT INTEND TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS OR THE SPECIFIC PORTIONS PRESENTED TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE UNDERLYING ASSUMPTIONS ARE SHOWN TO BE IN ERROR.
Interests of our Directors and Executive Officers in the Merger
When considering the recommendation of our Board that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that our directors and executive officers have interests in the Merger in addition to their interests as Glu stockholders generally. These interests are described below and may be different from, or in conflict with, your interests as a Glu stockholder. Our Board members were aware of the material facts as to these additional interests, and considered them, among other matters, when they approved the Merger Agreement.
Treatment of Glu Equity Awards
Treatment of Glu Options
As of March 5, 2021, including Glu PSOs as converted into Glu Options as discussed below, there were vested Glu Options to purchase 11,614,411 shares of Glu Common Stock with an exercise price less than $12.50 per share, and unvested Glu Options to purchase 2,218,270 shares of Glu Common Stock with an exercise price less than $12.50 per share. Of these Glu Options, vested Glu Options covering 9,884,447 shares, and unvested Glu Options covering 1,018,500 shares were held by our directors and executive officers.
With respect to all outstanding Glu Options as of immediately prior to the Effective Time, at the Effective Time:

each vested Glu Option with a per share exercise price that equals or exceeds the Per Share Merger Consideration will be cancelled without payment of any consideration;

each vested Glu Option (or portion thereof and including any Glu PSO after giving effect to the conversion of Glu PSOs set forth below) with a per share exercise price that is less than the Per Share Merger Consideration will be cancelled and automatically converted into the right to receive an amount in cash equal to the product of (x) the aggregate number of Shares subject to such Glu Option multiplied by (y) the excess of the Per Share Merger Consideration over the applicable per share exercise price of such Glu Option, without interest and subject to any required withholding of taxes;

each unvested Glu Option (or portion thereof and including any Glu PSO after giving effect to the conversion of Glu PSOs set forth below) held by a continuing employee will be assumed by Electronic Arts and converted automatically at the Effective Time by multiplying the number of shares subject to the Glu Option by the Exchange Ratio (as defined in the Merger Agreement but generally understood to be a fraction, with the numerator being the Per Share Merger Consideration and the denominator being the average closing price of one share of Electronic Arts common stock on Nasdaq over the 10-trading day period immediately preceding the date on which the Effective Time occurs), rounded down to the nearest whole share, and the applicable per share exercise price of the Glu Option being divided by the Exchange Ratio, rounded up to the nearest whole cent, resulting in a corresponding option denominated in shares of common stock of Electronic Arts and subject to terms and conditions substantially identical to those in effect at the Effective Time; and

for each unvested Glu Option (or portion thereof) issued with performance-based metrics, terms or conditions (each, a “Glu PSO”) for which the performance period has not been completed as of the
 
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Effective Time, the applicable performance metrics will, as of immediately prior to the Effective Time, be deemed achieved at “target” and be converted to a time-based vesting schedule that corresponds to each performance period.
Treatment of Glu RSUs
As of March 5, 2021, including Glu PSUs as converted to Glu RSUs as discussed below, there were 8,104,062 outstanding Glu RSUs, of which 2,511,625 Glu RSUs were held by our directors and executive officers.
With respect to all outstanding Glu RSUs as of immediately prior to the Effective Time, at the Effective Time:

each vested Glu RSU (or portion thereof and including any Glu PSU after giving effect to the conversion of Glu PSUs set forth below) will be cancelled and automatically converted into the right to receive the Per Share Merger Consideration, without interest and subject to any required withholding of taxes;

each unvested Glu RSU (or portion thereof and including any Glu PSU after giving effect to the conversion of Glu PSUs set forth below) held by a continuing employee will be assumed by Electronic Arts and converted automatically at the Effective Time by multiplying the number of shares subject to the Glu RSU by the Exchange Ratio, rounded down to the nearest whole share resulting in a corresponding restricted stock unit of Electronic Arts and subject to terms and conditions substantially identical to those in effect at the Effective Time;

for each unvested Glu RSU (or portion thereof) issued with performance-based metrics, terms or conditions (each, a “Glu PSU”) for which the performance period has not been completed as of the Effective Time, the applicable performance metrics will, as of immediately prior to the Effective Time, be deemed achieved at “target” or the equivalent of “target” if such concept is not included in the applicable Glu PSU, as determined by Glu’s board of directors (or a duly authorized committee thereof) and be converted to a time-based vesting schedule that corresponds to each performance period.
Payments with Respect to Equity Awards
The amounts described above with respect to vested Glu Options and vested Glu RSUs (to the extent not settled in shares prior to the Effective Time) will be paid as soon as practicable following the Effective Time (but in no event later than the later of the second regularly scheduled payroll date and the date that is 15 Business Days, in each case, after the Effective Time).
As of March 5, 2021, the last practicable date prior to the filing of this proxy statement, the estimated aggregate value of vested Glu Options and Glu RSUs held by our named executive officers is approximately $81,302,925. For an estimate of the amounts that may be paid or become payable to each of our named executive officers with respect to unvested equity awards in connection with the Merger, see the section captioned “— Quantification of Potential Payments and Benefits to our Named Executive Officers.” We have no executive officers other than our named executive officers. The foregoing amounts have been determined using the expected Per Share Merger Consideration of $12.50.
Equity Awards Held by Non-Employee Directors
Each outstanding and unvested Glu Option held by Glu’s non-employee directors that is outstanding and unvested as of immediately prior to the effective time of the Merger will be cancelled in exchange for the right to receive an amount in cash equal to the product of (x) the aggregate number of Shares subject to such Glu Option multiplied by (y) the excess of the Per Share Merger Consideration over the applicable per share exercise price of such Glu Option, without interest.
Each outstanding and unvested Glu RSU held by Glu’s non-employee directors that is outstanding and unvested as of immediately prior to the effective time of the Merger will be cancelled in exchange for the right to receive the Per Share Merger Consideration of $12.50 for each Share underlying such Glu RSU, without interest.
 
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As of March 5, 2021, the assumed effective date of the Merger solely for purposes of this disclosure, the estimated aggregate value of the unvested Glu Options and Glu RSUs held by the non-employee directors is $1,785,006. The foregoing amounts have been determined using the expected Per Share Merger Consideration of $12.50.
Existing Agreements or Arrangements with our Executive Officers
Employment Agreements
Nick Earl
Mr. Earl, our President and Chief Executive Officer, is party to an at-will employment agreement with us effective as of November 10, 2016. Mr. Earl’s annual base salary is $475,000 and his target annual bonus is equal to 100% of his base salary, with a maximum annual bonus equal to 200% of his base salary.
If Mr. Earl terminates his employment based on an “involuntary termination” or his employment is terminated by us other than for “cause,” other than within 12 months after a “change of control” ​(as such terms are defined in the employment agreement with Mr. Earl, described above), then, subject to his execution and non-revocation of a general release of claims, Mr. Earl will be entitled to 12 months of his then-current annual base salary, payable in lump sum and up to 12 months of COBRA continuation coverage for him (and any eligible dependents).
Eric R. Ludwig
Mr. Ludwig, our Executive Vice President, Chief Operating Officer, and Chief Financial Officer, did not enter into an employment agreement with us. Mr. Ludwig is an at-will employee. Mr. Ludwig’s annual base salary is $375,000 and his target annual bonus is equal to 100% of his base salary with a maximum annual bonus equal to 200% of his base salary.
Chris Akhavan
Mr. Akhavan, our Senior Vice President of Business Development, Corporate Development and Advertising Revenue, did not enter into an employment agreement with us. Mr. Akhavan is an at-will employee. Mr. Akhavan’s annual base salary is $400,000 and his target annual bonus is equal to 40% of his base salary, with a maximum annual bonus equal to 80% of his base salary.
Becky Ann Hughes
Ms. Hughes, our Senior Vice President of Growth, did not enter into an employment agreement with us. Ms. Hughes is an at-will employee. Ms. Hughes’ annual base salary is $360,000 and her target annual bonus is equal to 90% of her base salary, with a maximum annual bonus equal to 180% of her base salary.
Scott J. Leichtner
Mr. Leichtner, our Vice President, General Counsel, and Corporate Secretary, did not enter into an employment agreement with us. Mr. Leichtner is an at-will employee. Mr. Leichtner’s annual base salary is $345,000 and his target annual bonus is equal to 50% of his base salary, with a maximum annual bonus equal to 100% of his base salary.
Change in Control Severance Agreements
Each of our named executive officers have entered into change in control severance agreements with us (the “CIC Agreements”). The CIC Agreements provide for certain payments and benefits upon a termination of employment by us or Electronic Arts other than for “cause” or by the executive based on an “involuntary termination,” each within 12 months following a “change of control” ​(as such terms are defined in the CIC Agreements) as described below. The Merger will constitute a change of control for purposes of the CIC Agreements. These payments and benefits are conditioned upon the executive signing a general release of claims.
 
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Nick Earl
Pursuant to his CIC Agreement, Mr. Earl is eligible to receive 12 months of his then-current annual base salary, payable in a lump sum; an amount equal to his target annual bonus for the year in which termination occurs, payable in a lump sum; and up to 12 months of COBRA continuation coverage (for Mr. Earl and any eligible dependents). Mr. Earl is also eligible to receive full accelerated vesting of all of his outstanding, unvested equity awards subject to time-based vesting (after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period); provided that the equity awards granted November 23, 2020 (other than the Glu PSU issued in lieu of a fiscal year 2021 bonus) are not eligible for acceleration upon an “involuntary termination” if it occurs prior to December 31, 2021, and during such time period would only be accelerated upon a termination of employment other than for “cause.” In addition, in the event of a termination of employment by us or Electronic Arts other than for “cause” or by the executive based on an “involuntary termination” within 12 months after a “change in control,” the Glu PSU granted to Mr. Earl on November 23, 2020 in lieu of a fiscal year 2021 annual bonus, will immediately terminate in full, and in lieu of any acceleration of such award, Mr. Earl will instead receive an amount equal to his annual target bonus as discussed above.
Eric R. Ludwig
Pursuant to his CIC Agreement, Mr. Ludwig is eligible to receive 12 months of his then-current annual base salary, payable in a lump sum; an amount equal to his target annual bonus for the year in which termination occurs, payable in a lump sum; and up to 12 months of COBRA continuation coverage (for Mr. Ludwig and any eligible dependents). Mr. Ludwig is also eligible to receive full accelerated vesting of all of his outstanding, unvested equity awards (after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period); provided that the equity awards granted November 23, 2020 (other than the Glu PSU issued in lieu of a fiscal year 2021 bonus) are not eligible for acceleration upon an “involuntary termination” if it occurs prior to December 31, 2021, and during such time period would only be accelerated upon a termination of employment other than for “cause.” In addition, in the event of a termination of employment by us or Electronic Arts other than for “cause” or by the executive based on an “involuntary termination” within 12 months after a “change in control,” the Glu PSU granted to Mr. Ludwig on November 23, 2020 in lieu of a fiscal year 2021 annual bonus, will immediately terminate in full, and in lieu of any acceleration of such award, Mr. Ludwig will instead receive an amount equal to his annual target bonus as discussed above.
Chris Akhavan, Scott J. Leichtner, and Becky Ann Hughes
Pursuant to their respective CIC Agreements, each of Messrs. Akhavan and Leichtner, and Ms. Hughes is eligible to receive 6 months of his or her then-current annual base salary, payable in a lump sum; an amount equal to 50% of his or her target annual bonus for the year in which termination occurs, payable in a lump sum; and up to 6 months of COBRA continuation coverage (for the executive and any eligible dependents). Each of Messrs. Akhavan and Leichtner and Ms. Hughes is also eligible to receive partial accelerated vesting of his or her outstanding, unvested equity awards (after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period), such that any unsatisfied time-based vesting condition is deemed satisfied with respect to an additional 36 months; provided that the equity awards granted November 23, 2020 are not eligible for acceleration upon an “involuntary termination” if it occurs prior to December 31, 2021, and during such time period would only be accelerated upon a termination of employment by us other than for “cause.”
 
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New Arrangements between our Executive Officers and Electronic Arts
No new employment arrangements were entered into between any of our named executive officers and Electronic Arts in connection with the execution of the Merger Agreement.
Other Arrangements between Our Executive Officers and Electronic Arts
As of the date of this proxy statement, none of our executive officers have entered into, or committed to enter into, any arrangements or other understandings regarding continued employment or service to Electronic Arts following the Merger. While it is possible that Electronic Arts may enter to into such arrangements in the future, at this time there can be no assurance that Electronic Arts will enter into any employment or other arrangements with our management, or if so, of the terms and conditions of any such arrangements.
Insurance and Indemnification of Directors and Executive Officers
The Merger Agreement provides for indemnification and exculpation rights with respect to liabilities for acts or omissions occurring at or prior to the Effective Time, as well as related advancement of expenses and insurance rights, in favor of the present and former directors and officers of us and our subsidiaries (collectively, “Indemnified Parties”). Specifically, the Surviving Corporation shall (and Electronic Arts shall cause the Surviving Corporation to) indemnify and advance expenses to the Indemnified Parties with respect to any pending or threatened proceeding solely to the extent arising out of or relating to any actions or omissions of such Indemnified Person in their capacity as an officer or director occurring before the Effective Time, in each case to the fullest extent that Glu would have been permitted under applicable law. For a period of six years from the Effective Time, the certificate of incorporation and bylaws of the Surviving Corporation must contain provisions no less favorable with respect to exculpation, indemnification or advancement of expenses with respect to our present and former directors and officers for periods at or prior to the Effective Time than those set forth in our organizational documents as of the date of the Merger Agreement.
The Merger Agreement also provides that, for a period of six years after the Effective Time, the Surviving Corporation will maintain in full force and effect our current insurance coverage with respect to our directors and/or officers. We will, prior to the Effective Time, bind and purchase runoff insurance coverage of our current policy of directors’ and officers’ liability insurance for a period of six years from the Effective Time. If the annual premium for such insurance coverage is in excess of 300% of the last annual premium paid prior to the date of the Merger Agreement, the Surviving Corporation will be obligated to obtain the broadest insurance as possible for an annual premium equal to 300% of the last annual premium paid prior to the date of the Merger Agreement.
Quantification of Potential Payments and Benefits to our Named Executive Officers
In accordance with Item 402(t) of Regulation S-K, the below table sets forth the amount of payments and benefits that each of our named executive officers would or may receive in connection with the Merger. The payments and benefits described below are calculated based on each named executive officer’s existing employment and equity arrangements with us. Please note that the amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in footnotes to the table. For example, we have assumed that:
(i)
the relevant price per share of Glu Common Stock is $12.50, which is equal to the Per Share Merger Consideration;
(ii)
the Effective Time is March 5, 2021, the latest practicable date prior to the filing of this proxy statement; and
(iii)
except where otherwise described below, each named executive officer experiences a “double-trigger” qualifying termination (as applicable, a termination without “cause” or resignation based on an “involuntary termination”), in either case immediately following such time.
 
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The actual amounts payable to our named executive officers will depend on whether the named executive officer experiences a qualifying termination, the type of qualifying termination, the date of termination (if any) and the terms of the plans or agreements in effect at such time, and accordingly may differ materially from the amounts set forth below.
Golden Parachute Compensation
Named Executive Officer
Cash($)(1)
Equity
Awards($)(2)
Heath Insurance
Premiums($)(3)
Total($)
Nick Earl
$ 950,000 $ 16,717,109 $ 20,467 $ 17,687,576
Eric R. Ludwig
$ 750,000 $ 8,527,252 $ 33,607 $ 9,310,859
Chris Akhavan
$ 280,000 $ 2,952,519 $ 5,332 $ 3,237,851
Becky Ann Hughes
$ 342,000 $ 3,658,382 $ 7,598 $ 4,007,980
Scott J. Leichtner
$ 258,750 $ 2,437,254 $ 11,514 $ 2,707,518
(1)
Cash. Pursuant to their respective CIC Agreements with Glu, upon a termination without “cause” or an “involuntary termination,” as defined in the CIC Agreements, the named executive officer will be eligible to receive a severance payment equal to 6 months of base salary (12 months in the case of Messrs. Earl and Ludwig), plus 50% (100% in the case of Messrs. Earl and Ludwig) of his or her target annual bonus for the year in which termination occurs, payable in a lump sum. The following table separately shows the base salary and bonus components of the cash severance.
Named Executive Officer
Base Salary
Component of
Severance($)
Bonus
Component of
Severance($)
Total($)
Nick Earl
$ 475,000 $ 475,000 $ 950,000
Eric R. Ludwig
$ 375,000 $ 375,000 $ 750,000
Chris Akhavan
$ 200,000 $ 80,000 $ 280,000
Becky Ann Hughes
$ 180,000 $ 162,000 $ 342,000
Scott J. Leichtner
$ 172,500 $ 86,250 $ 258,750
(2)
Equity Awards. Pursuant to their respective CIC Agreements with Glu, upon a termination without “cause” or an “involuntary termination,” as defined in the CIC Agreements, each of Messrs. Earl and Ludwig will be eligible to receive full acceleration of any outstanding unvested equity awards (after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period); provided, however, the Glu PSUs granted to Messrs. Earl and Ludwig on November 23, 2020 in lieu of a fiscal year 2021 annual bonus are not included because they will immediately terminate in full, and in lieu of any acceleration of such award, each of Messrs. Earl and Ludwig will instead receive an amount equal to his annual target bonus as included under “Cash” in the table above. The other equity awards granted to Messrs. Earl and Ludwig on November 23, 2020 are not eligible for acceleration upon an “involuntary termination” if it occurs prior to December 31, 2021, and during such time period would only be accelerated upon a termination of employment by us other than for “cause.”
Pursuant to their respective CIC Agreements with Glu, upon a termination without “cause” or an “involuntary termination,” as defined in the CIC Agreements, each of Messrs. Akhavan and Leichtner, and Ms. Hughes, will be eligible to receive partial accelerated vesting of his or her outstanding, unvested equity awards (after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period), such that any unsatisfied time-based vesting condition is deemed satisfied with respect to an additional 36 months.
 
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The equity awards granted to Messrs. Akhavan and Leichtner, and Ms. Hughes on November 23, 2020 are not eligible for acceleration upon an “involuntary termination” if it occurs prior to December 31, 2021, and during such time period would only be accelerated upon a termination of employment by us other than for “cause.” The following table sets forth the value of each type of unvested equity award held by our named executive officers, calculated based on the Per Share Merger Consideration, and assumes (i) that any Glu Options with a per share exercise price that equals or exceeds the Per Share Merger Consideration will be cancelled for no consideration, (ii) that value of the unvested Glu Options and Glu RSUs is calculated after giving effect to the equity conversion discussed above under the section captioned “— Treatment of Glu Equity Awards”, whereby the performance metrics of each unvested Glu PSO and Glu PSU for which the performance period has not been completed as of the Effective Time will be deemed achieved at “target” and converted to a time-based vesting schedule that corresponds to such performance period, (iii) the Glu PSUs granted to Messrs. Earl and Ludwig on November 23, 2020 in lieu of a fiscal year 2021 annual bonus are not included in because they will immediately terminate in full, and (iv) in lieu of any acceleration of such award, Messrs. Earl and Ludwig will instead receive amount equal to his annual target bonus as included under “Cash” in the table above.
Named Executive Officer
Value of
Unvested
Stock Options($)
Value of
Unvested
RSUs($)
Total($)
Nick Earl
$ 3,048,959 $ 13,668,150 $ 16,717,109
Eric R. Ludwig
$ 1,482,227 $ 7,045,025 $ 8,527,252
Chris Akhavan
$ 708,894 $ 2,243,625 $ 2,952,519
Becky Ann Hughes
$ 196,457 $ 3,461,925 $ 3,658,382
Scott J. Leichtner
$ 427,591 $ 2,009,663 $ 2,437,254
(3)
Health Insurance Premiums. Pursuant to their respective CIC Agreements with Glu, upon a termination without “cause” or an “Involuntary Termination,” as defined in the CIC Agreements, the named executive officer will be eligible to receive up to 6 months (12 months in the case of Messrs. Earl and Ludwig) of COBRA continuation coverage (for the executive and any eligible dependents).
Treatment of the Employee Stock Purchase Plan
Our 2007 Employee Stock Purchase Plan (the “ESPP”) will terminate as of or immediately prior to the Effective Time. The final offering period of the ESPP ended February 19, 2021, and all future periods have been indefinitely suspended. No participant may elect to participate in the ESPP after the date of the Merger Agreement and no participant was permitted to increase the percentage amount of his or her payroll deduction election from that in effect on the date of the Merger Agreement. The amount of the accumulated contributions of each participant under the ESPP was used to purchase shares of Glu Common Stock on February 19, 2021, the purchase date of the final offering period, in accordance with the terms and conditions of the ESPP.
Financing of the Merger
Electronic Arts’ and Merger Sub’s obligations under the Merger Agreement are not conditioned on the receipt or availability of any funds, or subject to any financing condition. Electronic Arts intends to finance the transaction using its cash on hand and has represented to us in the Merger Agreement that it has sufficient cash resources to pay the aggregate Per Share Merger Consideration.
Closing and Effective Time
The Closing will take place as promptly as practicable, but in any event no later than the third Business Day after the satisfaction or waiver in accordance with the Merger Agreement of all the conditions to Closing (as described under the section captioned “The Merger Agreement — Conditions to the Closing of the Merger”), other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted by the Merger Agreement) of all conditions at the Closing.
 
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Concurrently with the Closing, Electronic Arts and Glu will cause a certificate of merger to be executed, acknowledged and delivered to the Office of the Secretary of State of the State of Delaware for filing, all in accordance with the applicable provisions of the DGCL. The Merger will become effective on such date and at such time as when the certificate of merger has been received for filing by the Secretary of State of the State of Delaware or at such later time and date as may be agreed by Electronic Arts, Glu, and Merger Sub in writing and specified in the certificate of merger.
Appraisal Rights
If the Merger is completed, stockholders who do not vote or submit a proxy in favor of the adoption of the Merger Agreement, who properly demand and perfect their appraisal rights, who do not withdraw such demand and who continuously hold such shares through the Effective Time will be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL.
The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL, which is attached to this proxy statement as Annex C and incorporated herein by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that stockholders exercise their appraisal rights under Section 262 of the DGCL. All references in Section 262 of the DGCL and in this summary to a “stockholder” or a “holder of shares” are to the record holder of shares of Glu Common Stock unless otherwise noted herein. Only a holder of record of shares of Glu Common Stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A person having a beneficial interest in shares of Glu Common Stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.If you hold your shares of Glu Common Stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee.
Any stockholder contemplating the exercise of such appraisal rights should review carefully the provisions of Section 262 of the DGCL, which is attached hereto as Annex C, particularly the procedural steps required to properly demand and perfect such rights. Failure to follow the steps required by Section 262 of the DGCL for demanding and perfecting appraisal rights may result in the loss of such rights.
Under Section 262 of the DGCL, holders of shares of Glu Common Stock who (1) do not vote or submit a proxy in favor of the adoption of the Merger Agreement; (2) continuously are the record holders of such shares through the Effective Time; (3) follow the procedures set forth in Section 262 of the DGCL; and (4) do not thereafter withdraw their demand for appraisal of such shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will be entitled to have their shares of Glu Common Stock appraised by the Delaware Court of Chancery and to receive payment in cash of the amount determined by the Delaware Court of Chancery to be the “fair value” of the shares of Glu Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid on the amount determined to be the fair value. However, the Delaware Court of Chancery will dismiss appraisal proceedings as to all holders of shares of Glu Common Stock who are otherwise entitled to appraisal rights unless (x) the total number of shares for which appraisal rights have been demanded and perfected exceeds 1% of the outstanding shares of Glu Common Stock as measured in accordance with subsection (g) of Section 262 of the DGCL or (y) the value of the aggregate Per Share Merger Consideration in respect of such shares exceeds $1,000,000. We refer to these conditions as the “ownership thresholds.” Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the Effective Time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period; provided, however, that at any time before the Delaware Court of Chancery enters judgment in the appraisal proceeding, the Surviving Corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case any such interest will accrue after the time of such payment only on the amount that equals the sum of (1) the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery and (2) interest theretofore accrued, unless paid at such time. The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Stockholders
 
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considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the $12.50 per share consideration payable pursuant to the Merger Agreement if they did not seek appraisal of their shares.
Under Section 262 of the DGCL, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the special meeting, must notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available that appraisal rights are available and include in the notice a copy of Section 262 of the DGCL. This proxy statement constitutes our notice to stockholders that appraisal rights are available in connection with the Merger, and the full text of Section 262 of the DGCL is attached to this proxy statement as Annex C, in compliance with the requirements of Section 262 of the DGCL. In connection with the Merger, any holder of shares of Glu Common Stock who wishes to exercise appraisal rights or who wishes to preserve such holder’s right to do so should review Annex C carefully. Failure to strictly comply with the requirements of Section 262 of the DGCL in a timely and proper manner may result in the loss of appraisal rights under the DGCL. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of Glu Common Stock, we believe that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel and financial advisors. A stockholder who effectively withdraws or loses his, her or its appraisal rights, as provided in the DGCL, will be entitled to receive the Per Share Merger Consideration as described in the Merger Agreement, but without interest.
Stockholders wishing to exercise the right to seek an appraisal of their shares of Glu Common Stock must fully comply with Section 262 of the DGCL, which means doing, among other things, ALL of the following:

the stockholder must not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement;

the stockholder must deliver to us a written demand for appraisal before the vote on the Merger Agreement at the special meeting;

the stockholder must continuously hold his, her or its shares of Glu Common Stock from the date of making the demand through the Effective Time (a stockholder will lose appraisal rights if the stockholder transfers the shares before the Effective Time); and

the stockholder or the Surviving Corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the Effective Time. The Surviving Corporation is under no obligation to file any petition and has no intention of doing so.
In addition, one of the ownership thresholds must be met.
Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the Merger Agreement, a stockholder who votes by submitting a proxy and who wishes to exercise appraisal rights must not return a blank proxy, but rather must submit a proxy containing instructions to vote against the adoption of the Merger Agreement or to abstain from voting on the adoption of the Merger Agreement.
You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the Merger, is not an opinion as to fair value under Section 262 of the DGCL. Although we believe that the Per Share Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Per Share Merger Consideration. Moreover, none of Glu, Electronic Arts or Merger Sub anticipates offering more than the Per Share Merger Consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of a share of Glu Common Stock is less than the Per Share Merger Consideration.
Filing Written Demand
Any holder of shares of Glu Common Stock wishing to exercise appraisal rights must deliver to us, before the vote on the adoption of the Merger Agreement at the virtual special meeting, a written demand
 
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for the appraisal of the stockholder’s shares, and that stockholder must not vote or submit a proxy in favor of the adoption of the Merger Agreement.
A holder of shares of Glu Common Stock exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the Effective Time. The demand must reasonably inform us of the identity of the holder and state that the person intends thereby to demand appraisal of the holder’s shares in connection with the Merger. A proxy that is submitted and does not contain voting instructions will, unless timely revoked, be voted in favor of the adoption of the Merger Agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the Merger Agreement or abstain from voting on the adoption of the Merger Agreement. Neither voting against the adoption of the Merger Agreement nor abstaining from voting or failing to vote on the proposal to adopt the Merger Agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the Merger Agreement. A proxy or vote against the adoption of the Merger Agreement will not constitute a demand. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the Merger Agreement at the virtual special meeting may constitute a waiver of appraisal rights.
Only a holder of record of shares of Glu Common Stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of Glu Common Stock issued and outstanding immediately prior to the Effective Time should be executed by or on behalf of the holder of record, fully and correctly, as his, her or its name appears on his, her or its stock certificates, and must state that such person intends thereby to demand appraisal of his, her or its shares of Common Stock issued and outstanding immediately prior to the Effective Time in connection with the Merger. If the shares of Glu Common Stock are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner in such capacity, and if the shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners. A record holder, such as a broker who holds shares of Glu Common Stock as nominee for several beneficial owners, may exercise appraisal rights with respect to the shares of Glu Common Stock issued and outstanding immediately prior to the Effective Time held for one or more beneficial owners while not exercising such rights with respect to the shares of Glu Common Stock held for other beneficial owners; in such case, however, the written demand should set forth the number of shares of Glu Common Stock issued and outstanding immediately prior to the Effective Time as to which appraisal is sought and where no number of shares of Common Stock is expressly mentioned the demand will be presumed to cover all shares of Common Stock which are held in the name of the record owner. Stockholders who hold their shares of Glu Common Stock in brokerage accounts or other nominee forms and who wish to exercise appraisal rights are urged to consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.
A beneficial owner of shares of Glu Common Stock held in “street name” who desires appraisal should take such actions as may be necessary to ensure that a timely and proper demand for appraisal is made by the record holder of such shares. Shares held through brokerage firms, banks and other financial institutions are frequently deposited with and held of record in the name of a nominee of a central security depository, such as Cede & Co. Any beneficial holder desiring appraisal who holds shares through a brokerage firm, bank or other financial institution is responsible for ensuring that the demand for appraisal is made by the record holder. The beneficial holder of such shares should instruct such firm, bank or institution that the demand for appraisal be made by the record holder of the shares, which may be the nominee of a central security depository if the shares have been so deposited. As required by Section 262 of the DGCL, a demand for appraisal must reasonably inform us of the identity of the holder(s) of record (which may be a nominee as described above) and of such holder’s intention to seek appraisal of such shares.
 
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ONLY A HOLDER OF RECORD OF SHARES OF GLU COMMON STOCK IS ENTITLED TO DEMAND APPRAISAL RIGHTS FOR THE SHARES REGISTERED IN THAT HOLDER’S NAME. STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.
All written demands for appraisal pursuant to Section 262 of the DGCL should be mailed or delivered to:
Glu Mobile Inc.
Attention: Corporate Secretary
875 Howard Street, Suite 100
San Francisco, California 94103
Any holder of shares of Glu Common Stock who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the Merger Agreement by delivering to us a written withdrawal of the demand for appraisal and an acceptance of the Merger. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the Surviving Corporation. Once a petition for appraisal is filed, no appraisal proceeding in the Delaware Court of Chancery will be dismissed without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just. However, notwithstanding the foregoing, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such stockholder’s demand for appraisal and accept the terms offered upon the Merger within 60 days after the Effective Time.
Notice by the Surviving Corporation
If the Merger is completed, within ten days after the Effective Time, the Surviving Corporation must notify each holder of shares of Glu Common Stock who has made a written demand for appraisal in accordance with Section 262 of the DGCL and who has not voted in favor of the adoption of the Merger Agreement that the Merger has become effective and the effective date thereof.
Filing a Petition for Appraisal
Within 120 days after the Effective Time, but not thereafter, the Surviving Corporation or any holder of shares of Glu Common Stock who has complied with Section 262 of the DGCL and is entitled to appraisal rights, under Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the Surviving Corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all our stockholders entitled to appraisal. The Surviving Corporation is under no obligation, and has no present intention, to file a petition, and holders should not assume that the Surviving Corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of Glu Common Stock. Accordingly, any holders of shares of Glu Common Stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of Glu Common Stock within the time and in the manner prescribed in Section 262 of the DGCL. The failure of a holder of Glu Common Stock to file such a petition within the period specified in Section 262 of the DGCL could nullify the stockholder’s previous written demand for appraisal.
Within 120 days after the Effective Time, any holder of shares of Glu Common Stock who has complied with the requirements for exercise of appraisal rights will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares not voted
 
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in favor of the adoption of the Merger Agreement and with respect to which we have received demands for appraisal, and the aggregate number of holders of such shares. The Surviving Corporation must mail this statement to the requesting stockholder within ten days after receipt of the written request for such a statement or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the Surviving Corporation the foregoing statement. As noted above, however, the demand for appraisal can only be made by a stockholder of record.
If a petition for an appraisal is duly filed by a holder of shares of Glu Common Stock and a copy thereof is served upon the Surviving Corporation, the Surviving Corporation will then be obligated, within 20 days after such service, to file with the Delaware Register in Chancery a duly verified list (the “Verified List”) containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order that notice of the time and place fixed for the hearing on the petition be mailed to the Surviving Corporation and all of the stockholders shown on the Verified List at the addresses stated therein. Such notice will also be published at least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware, or in another publication determined by the Delaware Court of Chancery. The costs of these notices are borne by the Surviving Corporation.
After notice to the stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 of the DGCL and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal of their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss that stockholder from the proceedings. The Delaware Court of Chancery will dismiss appraisal proceedings as to all our stockholders who are otherwise entitled to appraisal rights unless (1) the total number of shares for which appraisal rights have been demanded and perfected exceeds 1% of the outstanding shares of Glu Common Stock as measured in accordance with subsection (g) of Section 262 of the DGCL or (2) the value of the aggregate Per Share Merger Consideration in respect of such shares exceeds $1,000,000.
Determination of Fair Value
After the Delaware Court of Chancery determines the stockholders entitled to an appraisal, the appraisal proceeding will be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of Glu Common Stock subject to appraisal, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Upon application by the Surviving Corporation or by any stockholder entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any holder of shares whose name appears on the Verified List and, if such shares are represented by certificates and if so required, who has submitted such stockholder’s certificates of stock to the Delaware Register in Chancery, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights or that neither of the ownership thresholds is met. The Delaware Court of Chancery will direct the payment of the fair value of the shares, together with interest, if any, on the amount determined to be the fair value by the Surviving Corporation to the stockholders entitled thereto. Payment will be made to each such stockholder, in the case of holders of uncertificated stock, forthwith, and in the case of holders of shares represented by certificates, upon the surrender to the Surviving Corporation of the certificate(s) representing such stock. The Delaware Court of Chancery’s decree may be enforced as other decrees in such court may be enforced. Unless the court in its discretion determines otherwise for good cause shown, interest from the Effective Time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. However, the Surviving Corporation has the right, at any
 
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point prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each stockholder seeking appraisal. If the Surviving Corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262 of the DGCL during the period between the Effective Time and the date of payment of the judgment, interest will accrue thereafter only on the sum of (1) the difference, if any, between the amount paid by the Surviving Corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery and (2) interest theretofore accrued, unless paid at that time.
In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.” In Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd., 177 A.3d 1 (Del. 2017) and DFC Global Corp. v. Muirfield Value Partners, L.P., 172 A.3d 346 (Del. 2017), the Delaware Supreme Court declined to adopt a presumption favoring reliance upon the deal price in determining fair value, but noted that the deal price is one of the relevant factors to be considered, and can often be the best evidence of fair value in arm’s-length mergers with a robust sales process.
Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the Merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a Merger is not an opinion as to, and may not in any manner address, “fair value” under Section 262 of the DGCL. Although we believe that the Per Share Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Per Share Merger Consideration. Neither we nor Electronic Arts anticipates offering more than the Per Share Merger Consideration to any stockholder exercising appraisal rights, and we and Electronic Arts each reserve the right to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262 of the DGCL, the “fair value” of a share of Glu Common Stock is less than the Per Share Merger Consideration. If a petition for appraisal is not timely filed or if neither of the ownership thresholds is met, then the right to an appraisal will cease.
The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by a stockholder in connection with an appraisal, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to appraisal. In the absence of such an order, each party bears its own expenses.
If any stockholder who demands appraisal of his, her or its shares of Glu Common Stock under Section 262 of the DGCL fails to perfect, or loses or successfully withdraws, such holder’s right to appraisal, as provided in the DGCL, the stockholder’s shares of Glu Common Stock will no longer be entitled to an appraisal under Section 262 of the DGCL and will instead be deemed to have been converted at the Effective
 
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Time into the right to receive the consideration payable in the Merger, without interest and subject to any applicable withholding taxes. A stockholder will fail to perfect, or effectively lose or withdraw, the holder’s right to appraisal if no petition for appraisal is filed within 120 days after the Effective Time, if neither of the ownership thresholds is met or if the stockholder delivers to the Surviving Corporation a written withdrawal of the holder’s demand for appraisal and an acceptance of the consideration payable in the Merger in accordance with Section 262 of the DGCL, except that any such attempt to withdraw made more than 60 days after the Effective Time will require the written approval of the Surviving Corporation.
From and after the Effective Time, no stockholder who has duly demanded appraisal rights will be entitled to vote such shares of Glu Common Stock subject to such demand for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions on the holder’s shares of Glu Common Stock, if any, payable to stockholders as of a time prior to the Effective Time.
Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the loss of a stockholder’s statutory appraisal rights, in which event a holder of Glu Common Stock will be entitled to receive the Per Share Merger Consideration. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.
Accounting Treatment
The Merger will be accounted for as a “purchase transaction” for financial accounting purposes.
Material U.S. Federal Income Tax Consequences of the Merger
The following discussion is a summary of material U.S. federal income tax consequences of the Merger that may be relevant to U.S. Holders and Non-U.S. Holders of shares of Glu Common Stock whose shares are converted into the right to receive cash at closing pursuant to the Merger. This discussion is based upon the United States Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (the “Code”), Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations, possibly with retroactive effect. This discussion is limited to holders who hold their shares of Glu Common Stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment).
This discussion is for general information only and does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances. For example, this discussion does not address:

tax consequences that may be relevant to holders who may be subject to special treatment under U.S. federal income tax laws, such as, for example, financial institutions; tax-exempt organizations; holders who acquired Glu Common Stock through a 401(k), deferred compensation plan or retirement plan; S corporations; any entities or arrangements classified as partnerships or pass-through entities for U.S. federal income tax purposes or investors in such pass-through entities; insurance companies; mutual funds; dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of accounting for their securities; regulated investment companies; real estate investment trusts; entities that are “controlled foreign corporations” or “passive investment companies” for U.S. federal income tax purposes; Non-U.S. Holders that hold, directly or constructively (or that held, directly or constructively, at any time during the five-year period ending on the date of the merger), 5% or more of the outstanding Glu Common Stock; or certain former citizens or long-term residents of the United States;

tax consequences to holders who hold their common stock as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;

tax consequences to holders that received their shares of Glu Common Stock pursuant to the exercise of Glu Options or other compensation arrangements;

tax consequences to holders who hold their Glu Common Stock as “qualified small business stock” under Section 1202 of the Code or as “Section 1244 stock” as defined in Section 1244 of the Code;
 
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tax consequences to holders exercising appraisal rights;

tax consequences to holders who own an equity interest, actually or constructively, in Electronic Arts or the Surviving Corporation following the Merger;

tax consequences to U.S. Holders whose “functional currency” is not the U.S. dollar;

tax consequences to holders who hold their Glu Common Stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;

any U.S. federal estate, gift or alternative minimum tax consequences; or

any state, local or non-U.S. tax consequences.
If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of Glu Common Stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of Glu Common Stock and partners therein should consult their tax advisors regarding the consequences of the Merger.
No opinion of counsel or ruling from the IRS has been or will be obtained regarding the U.S. federal income tax consequences of the Merger described below. If the IRS contests a conclusion set forth herein, no assurance can be given that a holder would ultimately prevail in a final determination by a court.
A HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.
U.S. Holders
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of Glu Common Stock that is for U.S. federal income tax purposes:

an individual who is a citizen or resident of the United States;

a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code; or (2) that has a valid election in effect under applicable Treasury regulations to be treated as a United States person.
The receipt of cash by a U.S. Holder in exchange for shares of Glu Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the completion of the Merger. A reduced tax rate on capital gain generally will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to certain limitations. If a U.S. Holder acquired different blocks of Glu Common Stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Glu Common Stock.
A surtax of up to 3.8% applies to so-called “net investment income” of certain U.S. citizens and residents, and to undistributed “net investment income” of certain estates and trusts. Net investment income generally includes any gain recognized on the receipt of cash in exchange for shares of Glu Common Stock pursuant to the Merger. U.S. Holders should consult their own tax advisors regarding the applicability of this tax to any gain recognized pursuant to the Merger.
 
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Non-U.S. Holders
For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of shares of Glu Common Stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.
Any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or a fixed base maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of 30% (or a lower rate under an applicable income tax treaty);

such Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year that includes the Merger, and certain other specified conditions are met, in which case such gain generally will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty); or

we are or have been a “United States real property holding corporation” as such term is defined in Section 897(c) of the Code (“USRPHC”) at any time within the shorter of the five-year period ending on the date of completion of the Merger or such Non-U.S. Holder’s holding period with respect to the applicable shares of Glu Common Stock (the “relevant period”) and, assuming (as we expect) that shares of Glu Common Stock are regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such Non-U.S. Holder owns (or is deemed to own pursuant to certain attribution rules) more than five percent of all Glu Common Stock or at any time during the relevant period, in which case such gain with respect to shares of Glu Common Stock generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons (as described in the first bullet point above), except that the branch profits tax will not apply. Although no assurances can be given in this regard, we believe that we are not, and have not been, a USRPHC at any time during the five-year period preceding the Merger.
Information Reporting and Backup Withholding
Information reporting and backup withholding (currently at a rate of 24%) may apply to proceeds received by a holder pursuant to the Merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such holder is not subject to backup withholding on IRS Form W-9 (or a successor form), (2) a Non-U.S. Holder that provides a certification of such holder’s foreign status on the appropriate series of IRS Form W-8 (or a successor form), or (3) a holder that otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Each holder should consult such holder’s own tax advisor regarding the information reporting and backup withholding tax rules.
THE DISCUSSION SET FORTH ABOVE IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX CONSEQUENCES RELEVANT TO HOLDERS OF GLU COMMON STOCK. THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER. YOU SHOULD CONSULT YOUR TAX ADVISOR CONCERNING THE U.S. FEDERAL, STATE, LOCAL, NON-U.S. INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER TO YOU.
Regulatory Approvals Required for the Merger
In the Merger Agreement, Electronic Arts and Glu agree, and Electronic Arts and Glu each agree to use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate and make effective the Merger and the transactions contemplated thereby as promptly as practicable (but in no event later than August 7,
 
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