because (a) the Merger is not completed by January 22, 2022, (b) of Medallia’s failure to obtain the required approval of its stockholders or (c) of a material breach of Medallia’s representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied; (2) prior to such termination (but after the date of the Merger Agreement) a proposal, generally speaking, to acquire at least 50 percent of Medallia’s stock or assets is publicly announced or disclosed by a third party; and (3) Medallia subsequently enters into a definitive agreement providing for a transaction involving the acquisition of at least 50 percent of its stock or assets within one year of such termination and such transaction is ultimately consummated.
Upon termination of the Merger Agreement under other specified circumstances, Parent will be required to pay Medallia a termination fee of $382,220,000. Specifically, this termination fee is payable by Parent to Medallia if the Merger Agreement is terminated by Medallia following (1) Parent’s failure to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement; or (2) Parent or Merger Sub’s material breach of its representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied. However this termination fee will be increased to $445,920,000 if (1) the closing conditions in Medallia’s favor are satisfied on or prior to October 27, 2021; (2) Parent elects to delay the closing until November 1, 2021; and (3) this termination fee is paid after November 1, 2021. An investment fund affiliated with Thoma Bravo has provided Medallia with a limited guaranty in favor of Medallia (the “Limited Guaranty”). The Limited Guaranty guarantees, among other things, the payment of the termination fee payable by Parent, subject to the conditions set forth in the Limited Guaranty.
In addition to the foregoing termination rights, and subject to certain limitations, each of Medallia or Parent may terminate the Merger Agreement if the Merger is not consummated by January 22, 2022.
The Merger Agreement also provides that Medallia, on one hand, or Parent and Merger Sub, on the other hand, may specifically enforce the obligations under the Merger Agreement, except that Medallia may only cause Parent to consummate the Merger, and the investment fund affiliated with Thoma Bravo to provide the equity financing, if certain conditions are satisfied, including the funding or availability of the debt financing.
Pursuant to an equity commitment letter dated July 25, 2021, an investment fund affiliated with Thoma Bravo committed to provide Parent, at the effective time of the Merger, with an equity contribution of up to approximately $5 billion. Pursuant to a debt commitment letter dated July 25, 2021, the lenders party to that letter committed to provide Parent, at the effective time of the Merger, with a debt financing of approximately $1.8 billion.
The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 and is incorporated into this report by reference.
The Merger Agreement contains representations and warranties by each of Parent, Merger Sub and Medallia. These representations and warranties were made solely for the benefit of the parties to the Merger Agreement and:
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should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
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may have been qualified in the Merger Agreement by disclosures that were made to the other party in connection with the negotiation of the Merger Agreement;
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