Item 1.01
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Entry into a Material Definitive Agreement.
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SeaChange International, Inc. (SeaChange) has entered into a Cooperation Agreement, effective as of February 28, 2019 (the
Cooperation Agreement), with TAR Holdings LLC and Karen Singer (collectively, TAR Holdings). As of the date of the Cooperation Agreement, TAR Holdings beneficially owned 7,352,526 shares, or approximately 20.6%, of the
outstanding shares of common stock, par value $0.01 per share, of SeaChange (the Common Stock). Pursuant to the Cooperation Agreement, SeaChange agreed to take all necessary actions to: (i) set the size of the Board of Directors of
SeaChange (the Board) at eight members, (ii) appoint Robert M. Pons to the Board as a Class II director with a term to expire at the 2019 annual meeting of stockholders (the 2019 Annual Meeting) and
(iii) appoint Jeffrey M. Tuder to the Board as a Class III director with a term to expire at the 2020 annual meeting of stockholders (the 2020 Annual Meeting).
So long as TAR Holdings continues to beneficially own at least 8.0% of the Common Stock, as adjusted for actions by SeaChange that increase
the number of outstanding shares of Common Stock (the Eight Percent Ownership Condition), SeaChange agreed that the Board will not increase the size of the Board to more than eight members during the Standstill Period (as defined below)
without the prior written consent of TAR Holdings.
So long as TAR Holdings has not been found to have materially breached its obligations
pursuant to the Cooperation Agreement (subject to a
10-day
cure period) and continues to beneficially own at least 5.0% of the Common Stock, as adjusted for actions by SeaChange that increase the number of
outstanding shares of Common Stock (the Five Percent Ownership Condition), SeaChange agreed that the Board and all applicable committees and subcommittees of the Board shall take all necessary actions to nominate, recommend support and
solicit proxies for Mr. Pons for election at the 2019 Annual Meeting for a term expiring at the 2022 annual meeting of stockholders in the same manner as SeaChange recommends, supports and solicits proxies for the election of each other
Class II nominee recommended for election by the Board at the 2019 Annual Meeting.
So long as TAR Holdings has not been found to
have materially breached its obligations pursuant to the Cooperation Agreement (subject to a
10-day
cure period), during the Standstill Period, TAR Holdings has the right to recommend replacement directors
(each, a Replacement Director) for appointment to the Board, subject to approval of the Corporate Governance and Nominating Committee and the Board, to replace: (1) each of Messrs. Pons and Tuder (collectively, the New
Directors) and their respective Replacement Directors, in the event the New Directors or any of their respective Replacement Directors are unable to serve as directors, resign as directors or are removed as directors provided that the Eight
Percent Ownership Condition has been satisfied, and (2) only one of the New Directors or one of their respective Replacement Directors, in the event that one or more New Directors or any of their respective Replacement Directors are unable to
serve as directors, resign as directors or are removed as directors provided that the Five Percent Ownership Condition has been satisfied but the Eight Percent Ownership Condition has not been satisfied. If TAR Holdings ceases to satisfy the Five
Percent Ownership Condition, TAR Holdings right to recommend the appointment of any Replacement Director terminates.
SeaChange
agreed to take all necessary actions to appoint each of the New Directors as a member of at least one committee of the Board. During the Standstill Period, SeaChange agreed that each committee and subcommittee of the Board will include at least one
New Director in accordance with the listing standards of the Nasdaq Stock Market LLC.
If both New Directors (or their respective
Replacement Directors) are serving on the Board and TAR Holdings ceases to satisfy the Eight Percent Ownership Condition, one New Director (or Replacement Director), as chosen by TAR Holdings in its sole discretion, will resign from the Board. If,
at any time, either (i) TAR Holdings ceases to satisfy the Five Percent Ownership Condition or (ii) TAR Holdings has been found to have materially breached its obligations pursuant to the Cooperation Agreement (subject to a
10-day
cure period), each New Director and each Replacement Director will resign from the Board.
The
Cooperation Agreement further provides that, during the Standstill Period, TAR Holdings will appear in person or by proxy at any meeting of SeaChanges stockholders and vote all of its shares in favor of any proposal supported by a majority of
the Board. However, if the recommendation of Institutional Shareholder Services Inc. (ISS) or Glass, Lewis & Co. (Glass Lewis) differs from the Boards recommendation with respect to any matter (other than
nominees for election as directors to the Board), TAR Holdings shall have the right to vote in accordance