TMCnet News
GARNERO GROUP ACQUISITION CO FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits(Edgar Glimpses Via Acquire Media NewsEdge) Item 1.01 Entry into a Material Definitive Agreement. General; Structure of Business Combination On October 30, 2014, Garnero Group Acquisition Company, a Cayman Islands exempted company ("GGAC"), entered into a Share Purchase Agreement (the "SPA") by and among GGAC, WISeKey SA, a Swiss company (the "Company" or "WISeKey"), WISeTrust SA, a Swiss company ("WISeTrust"), the shareholders listed on the signature page thereto (the "Shareholders"), and the optionholders listed on the signature page thereto (the "Optionholders" and together with WISeTrust and the Shareholders, collectively, the "Sellers"). Simultaneously with the execution of the SPA, GGAC entered into an Asset Purchase Agreement (the "APA") by and among GGAC, WISeKey and WISeTrust. WISeKey is a digital information security company. Headquartered in Geneva, Switzerland, WISeKey presides over physical infrastructures, mobile networks, and the Web to ensure secure communications, exclusive relationships, protected identities, and authenticated transactions. As a fully-autonomous and independent organization, WISeKey creates protected and trusted digital identities for individuals, groups, organizations and communities around the world. Since its inception in 1999, WISeKey has enabled public and private organizations to identify individuals and assets and engage in safe, secure and confidential electronic communications and transactions. Pursuant to the SPA, GGAC will acquire from the Sellers approximately 70% of the common shares of WISeKey for an aggregate of 10,035,970 ordinary shares, par value $0.0001 per share ("GGAC Ordinary Shares"), of GGAC, subject to adjustment upon certain events. Additionally, as part of the SPA, GGAC will cause to be submitted to the holders of the remaining approximately 30% WISeKey shares an irrevocable and binding offer to purchase such common shares from them (such tender process referred to herein as the "Interim Tender Process"). If the holders of all of the remaining WISeKey shares accept such offer, it would result in the issuance of an additional 4,349,911 GGAC Ordinary Shares, or a total of 14,385,881 GGAC Ordinary Shares for 100% of the WISeKey shares. Pursuant to the APA, GGAC will acquire from WISeKey and WISeTrust all of the equity interests in WISeKey USA Inc. and certain rights and assets owned by WISeTrust related to the operations of WISeKey USA in exchange for an aggregate of Fifteen Million Dollars ($15,000,000) in cash and an aggregate of 1,026,323 GGAC Ordinary Shares. Upon the consummation of the business combination, assuming approval of GGAC shareholders at the Special Meeting (defined below), GGAC will change its name to "WISeKey International, Inc." The business combination is expected to be consummated in the first quarter of 2015 after the required approval by the shareholders of GGAC and the fulfillment of certain other conditions, all as described herein and in the SPA and APA. The following summaries of the SPA, the APA, and the other agreements to be entered into by the parties in connection with the business combination are qualified in their entirety by reference to the text of the agreements, certain of which are attached as exhibits hereto and are incorporated herein by reference. 4 Lock-Up Notwithstanding the registration rights described below, the shareholders of WISeKey will not be able to sell any of the GGAC Ordinary Shares that they receive in the business combination for one year after the closing, subject to certain exceptions. Registration Rights WISeKey shareholders will be granted the right, pursuant to a registration rights agreement ("RRA"), to demand that GGAC register for resale under the Securities Act of 1933, as amended (the "Securities Act"), all of the ordinary shares of GGAC to be issued to them in the transactions following the closing. In addition, such shareholders will be granted certain "piggyback" registration rights with respect to such shares. Indemnification of GGAC and Company Shareholders The Sellers have agreed to indemnify and hold harmless GGAC for any inaccuracies or breaches of their representations and warranties or for the non-fulfillment or breach of any covenant or agreement contained in the SPA and APA. To provide a fund for payment to GGAC with respect to its post-closing rights to indemnification under the SPA and APA, there will be placed in escrow (with an independent escrow agent) an aggregate of 10% of the GGAC Ordinary Shares issuable to the Sellers at closing ("Indemnity Escrow Fund") under the SPA and APA. The escrow will be the sole remedy for GGAC with respect to its rights to indemnification under the SPA and APA. On the date that is the earlier of (i) 5 business days after the date on which GGAC is required to file its Annual Report on Form 10-K for its 2015 fiscal year or (ii) April 15, 2016, the shares remaining in the Indemnity Escrow Fund will be released to WISeKey holders except for any shares subject to pending claims and certain other matters. No amount for indemnification shall be payable to GGAC unless and until the aggregate amount of all indemnifiable losses otherwise payable exceeds a set deductible amount. The aggregate liability for losses of GGAC shall not in any event exceed the value of the Indemnity Escrow Fund. GGAC shall have no claim for indemnity against the Sellers other than for any of the shares placed in escrow. Representations and Warranties The SPA and APA contain representations and warranties of WISeKey, the Sellers and GGAC relating to, among other things, (a) proper organization and similar corporate matters, (b) capital structure of each constituent company, (c) the authorization, performance and enforceability of the SPA and APA, (d) licenses and permits, (e) taxes, (f) financial information and absence of undisclosed liabilities, (g) holding of leases and ownership of real property and other properties, including intellectual property, (h) accounts receivable, (i) contracts, (j) title to, and condition of, properties and environmental condition thereof, (k) absence of certain changes, (l) employee matters, (m) compliance with laws, (n) litigation and (o) regulatory matters. 5 Covenants GGAC and WISeKey have each agreed to take such actions as are necessary, proper or advisable to consummate the transactions contemplated by the SPA and APA. They have also agreed to continue to operate their respective businesses in the ordinary course prior to the closing and not to take certain specified actions without the prior written consent of the other party. The SPA and APA also contain additional covenants of the parties, including, among others, covenants providing for: (i) The parties to use commercially reasonable best efforts to obtain all necessary approvals from governmental agencies and other third parties that are required for the consummation of the transactions contemplated by such agreements; (ii) The protection of confidential information of the parties and, subject to the confidentiality requirements, the provision of reasonable access to information; (iii) The preparation and filing by GGAC of a proxy statement to solicit proxies from the GGAC shareholders regarding, among other things, the approval of the transactions contemplated by the SPA and APA, approval of amendments to GGAC's Amended and Restated Memorandum and Articles of Association ("Charter Documents"), including the change of GGAC's name to "WISeKey International, Inc.," adoption of a share option plan, and election of directors to GGAC's board of directors; (iv) GGAC to use its commercially reasonable best efforts to maintain the listing of GGAC's ordinary shares and warrants on Nasdaq; (v) WISeKey to provide periodic financial information to GGAC through the closing; (vi) WISeKey and the Sellers to waive their rights to make claims against GGAC to collect from the trust fund established for the benefit of the holders of the shares sold in GGAC's IPO ("Public Shares") for any monies that may be owed to them by GGAC; (vii) GGAC to engage in the Interim Tender Process; and (viii) The conversion of WISeKey's 2012 and 2013 audited financial statements and nine-month 2014 interim unaudited financial statements from Swiss GAAP to U.S. GAAP. Conditions to Closing General Conditions Consummation of the transactions is conditioned on (i) the GGAC shareholders approving the transactions contemplated by the SPA and APA at a meeting called for such purposes (the "Special Meeting"), and (ii) the holders of not more than 12,042,649 of the Public Shares exercising their right to convert their Public Shares into a pro-rata portion of the trust fund. In addition, the consummation of the transactions contemplated by the business combination is conditioned upon, among other things, (i) no order, injunction, judgment or decree being issued by any governmental authority or enactment of any statute, rule, regulation or other order which would prohibit in whole or in part, the consummation of such transactions, (ii) the execution by and delivery to each party of each of the various transaction documents, (iii) the delivery by each party to the other party of a certificate to the effect that the representations and warranties of each party are true and correct in all material respects as of the closing and all covenants contained in the business combination have been materially complied with by each party and (iv) the . . . Item 7.01 Regulation FD Disclosure. Press Release GGAC is filing the attached press release (Exhibit 99.1 to this Form 8-K) as Regulation FD Disclosure material. Investor Meetings To comply with certain Federal securities laws, GGAC and WISeKey will be prohibited from engaging in presentations for certain of GGAC's shareholders, as well as other persons who might be interested in purchasing GGAC securities, regarding the transactions described herein, until the Interim Tender Process is completed. The information under this Item 7.01, including the exhibits attached hereto, is intended to be furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing. Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits. (d) Exhibits: Exhibit Description 2.1 Share Purchase Agreement, dated as of October 30, 2014, by and among Garnero Group Acquisition Company, WISeKey SA, WISeTrust SA, the shareholders listed on the signature page thereto, and the optionholders listed on the signature page thereto.* 2.2 Asset Purchase Agreement, dated as of October 30, 2014, by and among Garnero Group Acquisition Company and WISeTrust SA.* 99.1 Press release dated October 31, 2014. * Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). GGAC agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. 9 |