Item 1.01. Entry Into A Material Definitive Agreement.
On March 2, 2022, E2open Parent Holdings, Inc. (“E2open”) entered into and closed a Membership Interest Purchase Agreement (the “MIPA”) by and among E2open, LLC (“LLC”), Logistyx Technologies, LLC (“Logistyx”) and Logistyx Holdings, LLC (the “Seller,” and collectively, the “Parties”), whereby LLC acquired 100% of the issued and outstanding membership interests of Logistyx (the “Transaction”). As inducement for the Seller to enter into the MIPA, E2open and Seller also entered into a Registration Rights Agreement. The MIPA, related agreements and the transactions contemplated thereby were unanimously approved by the board of directors of E2open.
Membership Interest Purchase Agreement
The MIPA provides that, on the terms set forth in the MIPA, LLC acquired all the outstanding membership interests of Logistyx, and Logistyx became a subsidiary of LLC (the “Transaction”). The consideration payable in the Transaction is approximately $185.0 million (subject to standard working capital adjustments), which shall be payable by LLC (in the case of cash consideration) or issuable by E2open (in the case of Class A common stock of E2open (“E2open Shares”) as follows:
•On March 2, 2022, LLC paid in cash to Seller an amount equal to $90.0 million (as adjusted for the estimated amounts of Logistyx's cash on hand, indebtedness, transaction expenses, and net working capital);
•On May 31, 2022, an amount equal to $37,375,000 will be paid to the Seller, which amount will be settled, in the sole discretion of LLC, in cash, E2open Shares or a combination of the two provided that the May 31st payment shall consist of at least $5,000,000 in cash; and
•On August 29, 2022, an amount equal to $57,625,000 (as adjusted for the final amounts of Logistyx's cash, indebtedness, transaction expenses, and net working capital and reduced for an indemnity escrow), will be payable to the Seller, which amount will be settled, in the sole discretion of LLC, in cash, E2open Shares or a combination of the two provided that the August 29th payment shall consist of at least $26,100,000 in cash.
The parties to the MIPA have each made customary representations, warranties and covenants. E2open expects to fund the Transaction with a combination of cash on hand, E2open Shares and existing borrowing capacity.
Registration Rights Agreement
In connection with the Transaction, E2open entered into a Registration Rights Agreement (the “RR Agreement”) with the Seller. As disclosed above, LLC has the right to settle certain amounts of the May 31st and August 29th payments in the form of E2open Shares in lieu of cash. The RR Agreement provides the Seller (and its equityholders subject to certain conditions) registration rights in respect of the shares of Class A Common Stock of E2open issued as consideration for the Transaction on a Form S-3 Shelf Registration Statement.
A copy of the MIPA and the RR Agreement are attached as Exhibit 2.1 and 10.1 hereto and are incorporated herein by reference, and the foregoing description of the MIPA and the RR Agreement are qualified in its entirety by reference thereto.
The above description of the MIPA has been included to provide investors with information regarding its terms. The MIPA contains representations and warranties made by and to the Parties thereto as of specific dates. The statements embodied in those representations and warranties were made for the purpose of allocating risk between the Parties rather than establishing matters as facts and are subject to qualifications and limitations agreed upon by the Parties in connection with negotiating the terms of the MIPA. In addition, certain representations and warranties were made as of a specified date and may be subject to a contractual standard of materiality different from those generally applicable to investors.