Item 1.01
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Entry Into a Material Definitive Agreement.
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Merger Agreement
On
October 4, 2021, QUALCOMM Incorporated (“Qualcomm”) entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with SSW HoldCo LP, a Delaware limited partnership (“SSW” and, together with Qualcomm, the “Acquiring Parties”),
SSW Merger Sub Corp, a Delaware corporation and a direct, wholly owned Subsidiary of SSW (“Merger Sub”) and Veoneer, Inc.,
a Delaware corporation (“Veoneer”). Subject to and in accordance with the terms and conditions of the Merger Agreement, Merger
Sub will be merged with and into Veoneer (the “Merger”), with Veoneer surviving the Merger as a direct, wholly owned subsidiary
of SSW. Shortly after the consummation of the Merger, and pursuant to that certain Investment and Separation Matters Agreement (as defined
below), Veoneer’s non-Arriver businesses (which are Tier-1 supplier businesses) will be extracted from Veoneer (the “Non-Arriver
Extraction”) and thereafter the Arriver business will be sold to Qualcomm by way of a merger of Veoneer with and into a designated
subsidiary of Qualcomm.
As a result of the Merger,
except as otherwise provided in the Merger Agreement, each share of common stock, par value $1.00 per share, of Veoneer (“Veoneer
Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will
be converted into the right to receive $37.00 per share in cash, without interest and subject to any tax withholding required by applicable
law (the “Merger Consideration”).
Pursuant to the Merger Agreement,
at the Effective Time:
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each Veoneer stock option (whether or not vested) that is outstanding immediately prior to the Effective
Time will automatically vest (if unvested) and be cancelled and converted into the right to receive an amount in cash, without interest
and subject to any tax withholding required by applicable law, equal to the product of (i) the excess, if any, of (A) the Merger
Consideration over (B) the per-share exercise price for such Veoneer stock option multiplied by (ii) the total number of shares
of Veoneer Common Stock underlying such Veoneer stock option, provided that if the exercise price per share of Veoneer Common Stock
of such Veoneer stock option is equal to or greater than the Merger Consideration, such Veoneer stock option will be cancelled without
any cash payment or other consideration being made in respect thereof;
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each Veoneer time-based restricted stock unit that is outstanding immediately prior to the Effective Time
will automatically vest (if unvested) and be cancelled and converted into the right to receive an amount in cash, without interest and
subject to any tax withholding required by applicable law, equal to the product of (i) the total number of shares of Veoneer Common
Stock underlying such Veoneer time-based restricted stock unit (including any shares of Veoneer Common Stock in respect of dividend equivalent
units credited thereon) multiplied by (ii) the Merger Consideration;
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each Veoneer performance-based restricted stock unit that is outstanding immediately prior to the Effective
Time will automatically vest (if unvested) and be cancelled and converted into the right to receive an amount in cash, without interest
and subject to any tax withholding required by applicable law, equal to the product of (i) the number of shares of Veoneer Common Stock
underlying such Veoneer PSU (including any shares of Veoneer Common Stock in respect of dividend equivalent units credited thereon) determined
based on the attainment of the applicable performance metrics at (x) the actual level of performance for any performance periods that
have concluded prior to the date of the Merger Agreement, and (y) the greater of the target level of performance or actual level of performance
measured through the date on which the closing of the Merger occurs (as determined by Veoneer’s Board of Directors), for any performance
periods that would otherwise conclude following the date of the Merger Agreement, in each case, multiplied by (ii) the Merger Consideration;
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If
the Merger is consummated, the Veoneer Common Stock will be de-listed from the New York Stock Exchange and de-registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as soon as practicable following the Effective Time.
The
parties intend that shortly after closing of the Merger, SSW will complete the sale of Veoneer’s Arriver business to Qualcomm and
retain Veoneer’s other non-Arriver businesses (which are Tier-1 supplier businesses).
Conditions to the Merger and Closing
Completion of the Merger is subject to customary
closing conditions, including (i) the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of
Veoneer Common Stock that are entitled to vote thereon at the Veoneer stockholder meeting, whether in person or by proxy (the “Requisite
Stockholder Approval”), (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the expiration of applicable waiting periods or clearance of the Merger, as applicable, under the antitrust
and foreign investment laws of certain other jurisdictions, (iii) the absence of any law or order, issued by certain governmental
authorities of competent jurisdiction, prohibiting the Merger, (iv) no Company Material Adverse Effect (as defined in the Merger
Agreement) having occurred since the date of the Merger Agreement and (v) other customary closing conditions. Completion of the Merger
is not subject to a financing condition nor the Acquiring Parties’ ability to implement Non-Arriver Extraction immediately following
closing (unless an intentional and material breach by Veoneer of its Arriver/Non-Arriver Separation Planning (as defined in the Merger
Agreement) cooperation covenant is the primary cause of such inability to implement the Non-Arriver Extraction at the time it otherwise
would have been completed following the closing). The Merger Agreement also provides that Qualcomm and SSW will not be required to complete
the merger prior to April 4, 2022 (6 months from the date of the Merger Agreement).
Termination and Fees
Either Veoneer or the Acquiring
Parties may terminate the Merger Agreement in certain circumstances, including if (i) the Merger has not been consummated on or before
July 4, 2022 (as may be extended in certain circumstances in accordance with the terms of the Merger Agreement to a date no later than
April 4, 2023) (“Outside Date”), (ii) a governmental authority of competent jurisdiction has issued a final non-appealable
law or order prohibiting the Merger or (iii) the Requisite Stockholder Approval is not obtained at the stockholders’ meeting
duly convened therefor.
Veoneer may terminate the
Merger Agreement, subject to and in accordance with the terms and conditions thereof, if (i) any of the Acquiring Parties or Merger Sub
materially breaches, and does not cure, any representation or covenant that would cause any conditions to Veoneer’s obligation to
consummate the Merger not to be satisfied, or (ii) prior to receipt of the Requisite Stockholder Approval, Veoneer’s Board of Directors
has authorized Veoneer to enter into a definitive agreement with respect to a Superior Proposal (as defined in the Merger Agreement).
The Acquiring Parties may
terminate the Merger Agreement, subject to and in accordance with the terms and conditions thereof, if (i) Veoneer materially breaches,
and does not cure, any representation or covenant that would cause any conditions to the Acquiring Parties and Merger Sub’s obligation
to consummate the Merger not to be satisfied, (ii) Veoneer’s Board of Directors has made an Adverse Recommendation Change (as defined
in the Merger Agreement), which termination right will expire upon the Requisite Stockholder Approval having been obtained, or (iii) Veoneer
has willfully breached, and does not cure, its obligations to comply with the non-solicitation provisions set out in the Merger Agreement
and such breach has resulted in the receipt of a Competing Proposal (as defined in the Merger Agreement) by Veoneer.
Veoneer will be required to
pay a termination fee of $110 million to the Acquiring Parties in certain circumstances, subject to and in accordance with the terms and
conditions of the Merger Agreement. Similarly, the Acquiring Parties will be required to pay a reverse termination fee of $225 million
to Veoneer in certain circumstances, subject to and in accordance with the terms and conditions of the Merger Agreement.
The Merger Agreement also
provides that, in connection with the termination of the Merger Agreement in certain circumstances, Veoneer will be required to reimburse
the Acquiring Parties for the $110 million termination fee that was paid by the Acquiring Parties to Magna International Inc. (“Magna”)
in connection with the termination of the previously announced agreement and plan of merger, dated as of July 22, 2021, by and among Magna,
2486345 Delaware Corporation and Veoneer.
Financing
The Acquiring Parties represented to Veoneer that
as of the date of the Merger Agreement they have access to, and at the Effective Time will have sufficient funds available to fund all
amounts required to be paid by the Acquiring Parties and/or Merger Sub for the consummation of the transaction contemplated by the Merger
Agreement.
Qualcomm will provide for a loan facility from
Qualcomm (or a third party and guaranteed by Qualcomm) providing financing to the extent requested by the Company for the quarter commencing
April 1, 2022 and each of the two subsequent quarters of $120 million per quarter (up to $360 million in the aggregate) which amounts
may in certain circumstances be forgiven with an additional $120 million (for Q1 2023) to be provided if either party extends the final
Outside Date to April 4, 2023.
Other Terms of the Merger Agreement
The Merger Agreement contains
customary representations and warranties of the parties. Veoneer has also agreed to various covenants, including, among others, (i) to
conduct its business in the ordinary course of business and comply with certain other operating covenants, (ii) to convene a meeting of
its stockholders and use its reasonable efforts to solicit proxies in favor of the adoption of the Merger Agreement by Veoneer stockholders
at such stockholder meeting, (iii) not to solicit alternative transactions to the Merger and (iv) to reasonably cooperate with the Acquiring
Parties to separate Veoneer’s Arriver business from Veoneer’s Tier-1 supplier businesses, in each case, subject to and in
accordance with the terms and conditions of the Merger Agreement. The Acquiring Parties have also agreed to certain covenants and agreements,
including, among other things, to take certain actions that may be required in order to obtain required regulatory approvals with respect
to the Merger, subject to certain limitations as provided in the Merger Agreement.
The
foregoing description of the Merger Agreement does not purport to be complete, and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
The
Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other
factual information about the parties thereto, their respective subsidiaries or affiliates. The representations, warranties and covenants
contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for
the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being
qualified by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead
of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the
representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of
the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations
and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public
disclosures made by the parties to the Merger Agreement.
Investment and Separation Matters Agreement
Concurrently with the execution
of the Merger Agreement, Qualcomm, SSW and Merger Sub entered into an Investment and Separation Matters Agreement, dated October 4, 2021,
(the “Investment and Separation Matters Agreement”), which sets forth, among other things, (i) the allocation of responsibility
between the Acquiring Parties with respect to their obligations under the Merger Agreement and (ii) the terms and conditions pursuant
to which the parties intend to separate the Arriver business from Veoneer’s Tier-1 supplier businesses.
The foregoing description
of the Investment and Separation Matters Agreement does not purport to be complete, and is qualified in its entirety by reference to the
full text of the Investment and Separation Matters Agreement, which is attached hereto as Exhibit 10.1 and is incorporated
by reference herein.
The
Investment and Separation Matters Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual information about the parties thereto, their respective subsidiaries
or affiliates. The representations, warranties and covenants contained in the Investment and Separation Matters Agreement were
made only for purposes of the Investment and Separation Matters Agreement as of the specific
dates therein, were solely for the benefit of the parties to the Investment and Separation Matters Agreement,
may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the
purposes of allocating contractual risk among the parties to the Investment and Separation Matters Agreement instead
of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to investors. Investors are not third-party beneficiaries under the Investment and Separation Matters Agreement
and should not rely on the representations, warranties and covenants or any descriptions thereof
as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of representations and warranties may change after the date of the Investment
and Separation Matters Agreement, which subsequent information may or may not be fully reflected
in public disclosures made by the parties to the Investment and Separation Matters Agreement.