Item 1.01 Entry into a Material Definitive Agreement.
On July 26, 2016, Citrix Systems, Inc. (
Citrix
) announced that it has entered into definitive agreements with GetGo, Inc., a
Delaware corporation and its wholly-owned subsidiary (
GetGo
), and LogMeIn, Inc., a Delaware corporation (
LogMeIn
), with respect to a Reverse Morris Trust transaction (the
RMT
). Pursuant to the
RMT and subject to the terms and conditions of those definitive agreements, (1) Citrix will transfer its GoTo family of service offerings business (the
GoTo Business
) to GetGo, (2) after which, Citrix will distribute to its
stockholders all of the issued and outstanding shares of common stock, par value $0.01 per share, of GetGo (the
GetGo Common Stock
) held by Citrix, at Citrixs sole option, by way of a pro rata dividend or an exchange offer
(the
Distribution
) and (3) immediately after the Distribution, Lithium Merger Sub, Inc., a wholly-owned subsidiary of LogMeIn (
Merger Sub
), will merge with and into GetGo (the
Merger
) and
each share of GetGo Common Stock will be converted into one share of common stock, par value $0.01 per share, of LogMeIn (
LogMeIn Common Stock
), subject to adjustment as set forth in the Merger Agreement. When the Merger is
completed, GetGo (which at that time will hold the GoTo Business) will be a wholly-owned subsidiary of LogMeIn and holders of Citrixs common stock prior to the Distribution will own approximately 50.1% of the outstanding shares of LogMeIn on a
fully diluted basis. The Distribution and the Merger are expected to be tax-free to Citrix stockholders for U.S. federal income tax purposes, except to the extent that cash is paid to Citrix stockholders in lieu of fractional shares in the
Distribution or Merger.
The definitive agreements entered into by the parties include (1) an Agreement and Plan of Merger, dated as
of July 26, 2016 (the
Merger Agreement
), by and among Citrix, LogMeIn, GetGo and Merger Sub, (2) a Separation and Distribution Agreement, dated as of July 26, 2016 (the
Separation Agreement
), by and
among Citrix, LogMeIn and GetGo, and (3) a Tax Matters Agreement, dated as of July 26, 2016 (the
Tax Matters Agreement
), by and among Citrix, LogMeIn and GetGo. In connection with the transactions, Citrix, LogMeIn and/or GetGo
will enter into additional agreements, including, among others:
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an Employee Matters Agreement, which will govern the parties respective obligations with respect to current and former employees of the GoTo Business;
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an Intellectual Property License Agreement allocating rights and interests in certain intellectual property relating to the GoTo Business;
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a Credit Agreement pursuant to which LogMeIn may borrow up to $25.0 million from Citrix for a two-year period following the closing of the Merger; and
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certain commercial, transitional and other service agreements.
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Merger Agreement
. As
described above, the Merger Agreement provides that, immediately following the consummation of the Distribution, Merger Sub will merge with and into GetGo, with GetGo becoming a wholly-owned subsidiary of LogMeIn. As a result of the Merger, each
share of GetGo Common Stock then outstanding will automatically be converted into one share of LogMeIn Common Stock, and such shares will represent approximately 50.1% of the outstanding shares of LogMeIn Common Stock on a fully diluted basis.
Immediately following the Merger, LogMeIns existing stockholders will continue to hold the remaining approximately 49.9% of the outstanding shares of LogMeIn Common Stock on a fully diluted basis. The Merger Agreement provides that GetGo have
at least $25.0 million of cash as of the closing of the Merger, and also includes a post-closing adjustment based on the net working capital and indebtedness of GetGo as of the closing of the Merger.
The Merger Agreement also provides that, as of immediately following the Merger, LogMeIn shall set the size of its board of directors (the
LogMeIn Board
) at nine members, including four individuals selected by Citrix (the
Citrix Board Designees
). The Citrix Board Designees are expected to include current Citrix directors, Robert Calderoni, Jesse
Cohn and Peter Sacripanti, and Citrixs Executive Vice President, Chief Operating Officer and Chief Financial Officer, David Henshall. In connection with the Merger, the LogMeIn Board will form an Operating Committee, which will consist of two
LogMeIn directors and two of the Citrix Board Designees, to design and oversee a plan to achieve the synergies expected to result from the Merger and undertake related activities.
Completion of the Merger is subject to various closing conditions, including, among other things, (1) approval of the issuance of the LogMeIn
Common Stock by LogMeIns stockholders (the
Share Issuance
), (2) the effectiveness of registration statements to be filed with the Securities and Exchange Commission (the
SEC
) pursuant to the Merger
Agreement, (3) the completion of the Distribution in accordance with the Separation Agreement, (4) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and approval by the
Competition and Markets Authority in the United Kingdom, (5) consent of the Federal Communications Commission and certain other state communications authorities and (6) receipt by Citrix and LogMeIn of customary opinions from their respective tax
counsel. In connection with the transactions, Citrix has entered into a Voting Agreement with Michael Simon, Chairman of the LogMeIn Board, pursuant to which Mr. Simon has agreed to vote his shares of LogMeIn Common Stock, which represent in excess
of 3.0% of the currently outstanding shares of LogMeIn Common Stock, in favor of the Share Issuance.
Citrix, GetGo, LogMeIn and Merger Sub each make certain representations, warranties and covenants
in the Merger Agreement, including covenants to conduct the GoTo Business and LogMeIn business in the ordinary course of business, and not to take certain actions, during the period between signing and closing of the Merger. LogMeIn also agreed (1)
to hold a stockholder meeting to obtain the required LogMeIn stockholder approval, (2) not to solicit alternative transactions, (3) not to enter into discussions concerning, or provide confidential information in connection with, alternative
transactions (except under limited circumstances described in the Merger Agreement), and (4) that the LogMeIn Board will recommend that stockholders of LogMeIn vote to approve the Share Issuance (with limited exceptions described in the Merger
Agreement). Citrix also agreed to certain non-competition covenants in the Merger Agreement regarding the GoTo Business.
The Merger
Agreement contains specified termination rights for Citrix and LogMeIn, and requires LogMeIn to pay Citrix a termination fee of $62.0 million under certain circumstances. In addition, the Merger Agreement provides that LogMeIn will reimburse
Citrixs transaction-related expenses in an amount up to $10.0 million if the Merger Agreement is terminated because LogMeIns stockholders do not approve the Share Issuance. The foregoing description of the Merger Agreement, and the
transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which is attached as Exhibit 2.1 and is incorporated herein by
reference.
Separation Agreement
. The Separation Agreement sets forth the terms and conditions regarding the separation of the GoTo
Business from Citrix, including, among others, the identification and transfer of assets by Citrix to GetGo and the assumption of liabilities by GetGo from Citrix related to the GoTo Business, with certain exceptions provided in the Separation
Agreement.
The Separation Agreement also governs the rights and obligations of Citrix and GetGo regarding the distribution of GetGo
Common Stock to Citrixs stockholders. At Citrixs sole election, the Distribution may be effected by means of a pro-rata distribution of GetGo Common Stock to Citrixs stockholders or through an exchange offer of common stock of
Citrix for GetGo Common Stock, followed by a pro rata, clean-up distribution of unsubscribed shares.
The Separation Agreement also sets
forth other agreements between Citrix and GetGo related to the Distribution, including, among others, provisions concerning the issuance of shares of GetGo common stock to Citrix and the termination and settlement of intercompany accounts. The
Separation Agreement governs certain aspects of the relationship between Citrix and GetGo after the Distribution, including, among others, provisions with respect to release of claims, indemnification, insurance, access to financial and other
information, and access to and provision of records. The parties will have ongoing indemnification obligations under the Separation Agreement following the Distribution with respect to liabilities related to the GoTo Business and the Citrix
business, as applicable.
Consummation of the Distribution is subject to the satisfaction or waiver of all conditions under the Merger
Agreement. The foregoing description of the Separation Agreement, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Separation Agreement,
which is attached as Exhibit 2.2 and is incorporated herein by reference.
Tax Matters Agreement.
The Tax Matters Agreement
will govern the respective rights, responsibilities, and obligations of Citrix and LogMeIn after the Distribution and the Merger with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes,
other taxes and related tax returns. In general, Citrix will be responsible for all taxes of GetGo for periods before the Distribution, and LogMeIn will be responsible for all taxes of GetGo for periods after the Distribution.
Different rules apply to any tax liability arising as a result of the Distribution and certain related transactions. While those transactions
are intended to be tax-free, significant tax liability could arise if they are not. The Tax Matters Agreement allocates this tax liability between Citrix and LogMeIn. In general, LogMeIn is liable for all or a portion of any resulting taxes if the
Distribution is taxable as a result of any action or failure to act by LogMeIn that affects the tax-free status of the Distribution. Citrix is liable in all other cases. The foregoing description of the Tax Matters Agreement, and the transactions
contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Tax Matters Agreement, which is attached as Exhibit 2.3 and is incorporated herein by reference.
Letter Agreement with Investors
. In connection with preserving the tax-free status of the RMT, Citrix, GetGo and LogMeIn entered into a
letter agreement with Elliott Associates, L.P. and Elliott International, L.P. (collectively, the
Investors
). Jesse Cohn, a director of Citrix and a Citrix Board Designee, is Senior Portfolio Manager of Elliott Management Corp. Under the general terms of the letter
agreement, the Investors agreed that, from the date of the agreement until the first anniversary of the Distribution, they would not enter into any transaction that would result in the Investors owning 5.0% or more of the outstanding shares of
common stock of any of Citrix, GetGo or LogMeIn (not including the Investors economic exposure to shares of Citrix, GetGo or LogMeIn by virtue of owning cash-settled swaps or similar investments). Such restrictions with respect to Citrix and
LogMeIn shall terminate upon the earlier of (1) termination of the Merger Agreement or (2) the resignation of Mr. Cohn from the board of directors of Citrix or LogMeIn and receipt by Citrix or LogMeIn, as applicable, of a satisfactory legal opinion
from the Investors tax counsel, and with respect to GetGo shall terminate upon termination of the Merger Agreement. This agreement is distinct from that letter agreement between Citrix and the Investors, dated as of July 28, 2015, which
continues in full force and effect. The foregoing description of the letter agreement with the Investors does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the letter agreement, which
is attached as Exhibit 10.1 and is incorporated herein by reference.
The Separation
Agreement, Merger Agreement and Tax Matters Agreement have been filed, and the above descriptions have been included, to provide investors and securityholders with information regarding the terms of such agreements. They are not intended to provide
any other factual information about Citrix, GetGo, LogMeIn, Merger Sub, their respective subsidiaries or affiliates, or the GoTo Business. The Merger Agreement contains representations and warranties that Citrix, on the one hand, and LogMeIn and
Merger Sub on the other hand, made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract between the parties to the Merger Agreement and may be subject to
important qualifications and limitations agreed by the parties in connection with negotiating the terms of the contract. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject
to a contractual standard of materiality different from those generally applicable to stockholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. For the foregoing reasons,
such representations and warranties should not be relied upon as statements of factual information.