Item 6.
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Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
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In connection with the Purchase Agreement, Torgerson Trust, 989 and the Issuer entered into a Registration Rights,
Lock-Up
and Standstill Agreement (the Registration Rights Agreement). Pursuant to the terms and conditions of the Registration Rights Agreement, for a period of 18 months after April 2, 2018,
Torgerson Trust and 989 will agree not to transfer any of their Common Shares without the Issuers prior written consent, with certain limited exceptions for permitted transfers. Following such
18-month
period, Torgerson Trust and 989 will be permitted to transfer Common Shares under Rule 144 or an effective registration statement under the U.S. Securities Act of 1933, subject to a limitation restricting transfers of more than 10% of the Common
Shares issued to Torgerson Trust and 989 pursuant to the Purchase Agreement (including Common Shares received upon conversion of the Preferred Share Consideration) during any
90-day
period. The Registration
Rights Agreement also provides that, as soon as practicable following the date that is 18 months after April 2, 2018, but in no event more than 30 days thereafter, the Issuer will use its commercially reasonable efforts to prepare and file a
shelf registration statement under the Securities Act of 1933 covering the public offering of the registrable securities held by Torgerson Trust and 989 and cause such shelf registration statement to become effective within 150 days after filing. In
addition, under the Registration Rights Agreement, Torgerson Trust and 989 have customary piggy-back rights with respect to public offerings of Common Shares by the Issuer. No piggyback rights will be available incidental to any public
offering by the Issuer (i) relating to any employee benefit, compensation, incentive or savings plan or dividend reinvestment plans, (ii) relating to the acquisition or merger by the Issuer or any of its subsidiaries of or with any other
business, (iii) under the Issuers existing shelf registration statement on Form
S-3,
(iv) to be registered on a registration statement on Form
S-4
or Form
S-8
(or any successor forms thereto) or a registration statement for the offering or sale of the Common Shares issuable upon conversion of debt securities, or (v) only to existing holders of securities issued
by the Issuer (including Torgerson Trust and 989).
Additionally, pursuant to the Registration Rights Agreement, Torgerson Trust and 989 each agreed to be
subject to customary standstill restrictions, including a restriction on additional purchases of Common Shares, and a restriction on voting Common Shares that limits the voting by such holders of Common Shares (including Common Shares held in
escrow) in excess of 15% of the voting power of the outstanding Common Shares, which will be voted consistently with all other shareholders of the Issuer. In addition, Torgerson Trust and 989 each agreed not to, directly or indirectly,
(i) solicit shareholders for the approval of any shareholder proposals, (ii) propose or seek to effect a change of control of the Issuer, (iii) engage in a proxy solicitation involving the Issuer, or (iv) form, join or otherwise
participate in a group or voting trust with respect to Common Shares (other than a group comprised solely of Torgerson Trust and 989, their affiliates and permitted transferees) for the purpose of acquiring, holding, voting or disposing of Common
Shares. The restrictions described in the preceding sentence shall not apply if the Issuer has entered into a definitive agreement, the consummation of which would result in a change of control of the Issuer, or any person has commenced a
public tender or exchange offer which if consummated would result in a change of control of the Issuer. The standstill and voting restrictions in the Registration Rights Agreement shall terminate at such time as the Common Shares owned by Torgerson
Trust and 989 in the aggregate no longer constitute at least five percent of the Common Shares then outstanding (calculated assuming conversion of all of the outstanding preferred shares) or upon specified bankruptcy or change of control events.
The foregoing summary of the terms of the Registration Rights Agreement is not complete and is entirely qualified by reference to the full text of the
Registration Rights Agreement, a copy of which is attached as Exhibit 99.2 hereto.
Pursuant to the Purchase Agreement (as amended by the Amending
Agreement), at the closing of the Noralta Acquisition, the parties to the Purchase Agreement placed 2,340,824 shares of the Common Share Consideration and 692 shares of the Preferred Share Consideration (collectively, the Supplemental Escrow
Shares) into an escrow account to be released to the Issuer, on the one hand, and/or 989 and Torgerson Trust, on the other hand, based on the actual increased employee compensation costs that may be incurred by Noralta as a result of the union
certification of certain classes of Noralta employees by UNITE HERE Local 47, as described in the Issuers Current Report on Form
8-K
filed on March 16, 2018. The actual expected increased employee
compensation costs will not be known until a collective bargaining agreement has been reached between Noralta and UNITE HERE Local 47. Additionally, pursuant to the Purchase Agreement (as amended by the Amending Agreement), at the closing of the
Noralta Acquisition, the parties to the Purchase Agreement placed 13,491,100 shares of the Common Share Consideration (the Initial Escrow Shares and, together with the Supplemental Escrow Shares, the Escrow Shares) in an
escrow account to be held and released from escrow in three equal installments upon the satisfaction of certain conditions related to a customer contract remaining in place in June 2021, June 2022 and June 2023. Until such time as any such Escrow
Shares are released to the Issuer, on the one hand, and/or 989 and Torgerson Trust, on the other hand, 989 and Torgerson Trust (as applicable) will remain the registered and direct owners of the Escrow Shares for all purposes, including, without
limitation, entitlements to dividends and distributions and the right to exercise all voting and other shareholder rights (subject to the limitations set forth in the Registration Rights Agreement described above). On December 19, 2018 the
Supplemental Escrow Shares were released from escrow, of which: (i) 2,156,349 Common Shares and 637 shares of the Preferred Share Consideration were released to the Issuer; (ii) 184,475 Common Shares were released to 989; and (iii) 55 shares of the
Preferred Share Consideration were released to Torgerson Trust.