Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
As previously announced, on December 10, 2020, ZAGG, Inc ("we" or "ZAGG")
entered into a Merger Agreement by and among Zephyr Parent, Inc., a Delaware
corporation ("Parent"), and Zephyr Merger Sub, Inc., a Delaware corporation and
wholly owned subsidiary of Parent (such transaction, the "Merger"). On or about
January 21, 2021, we commenced mailing to our stockholders a proxy statement
dated January 21, 2021 (the "Proxy Statement") relating to the special meeting
of stockholders of ZAGG scheduled to be hosted on the internet through a live
webcast at www.virtualshareholdermeeting.com/ZAGG2021SM, at 9:00 a.m. Mountain
Standard Time (MST) on February 18, 2021 (the "Special Meeting").
Since the initial public announcement of the Merger on December 11, 2020, nine
lawsuits, including two class action lawsuits, have been filed by purported ZAGG
stockholders in connection with the Merger. Two lawsuits filed in the United
States District Court for the District of Delaware are captioned Stein v. ZAGG
Inc, et al., Case 1:21-cv-00019 (filed January 8, 2021) and Garcia v. ZAGG Inc,
et al., Case 1:21-cv-00028 (filed January 12, 2021); five lawsuits filed in the
United States District Court for the Southern District of New York are captioned
Nikoughadem v. ZAGG Inc, et al., Case 1:21-cv-00358 (filed January 14, 2021),
Hui v. ZAGG Inc, et al., Case 1:21-cv-00580 (filed January 22, 2021), Strickland
v. ZAGG Inc, et al., Case 1:21-cv-00631 (filed January 25, 2021 and voluntarily
dismissed February 4, 2021), Elder v. ZAGG Inc, et al. Case 1:21-cv-00672 (filed
January 26, 2021) and Wilhelm v. ZAGG Inc, et al., Case 1:21-cv-00723 (filed
January 26, 2021); and two lawsuits filed in the United States District Court
for the District of New Jersey are captioned Rosa v. ZAGG Inc, et al., Case
1:21-cv-01415 (filed January 29, 2021) and Wurst v. ZAGG Inc, et al., Case
2:21-cv-00954 (filed January 21, 2021) (all nine lawsuits, collectively, the
"Merger Litigation")
The complaints assert, among other things, that the Proxy Statement filed by
ZAGG in connection with the Merger contained alleged material misstatements
and/or omissions in violation of federal law. ZAGG believes that the claims
asserted in the Merger Litigation are without merit and that no supplemental
disclosure is required under applicable law. However, in order to avoid the risk
of the Merger Litigation delaying or adversely affecting the Merger and to
minimize the costs, risks and uncertainties inherent in litigation, and without
admitting any liability or wrongdoing, ZAGG has determined to voluntarily
supplement the Proxy Statement and will be filing supplemental proxy materials
relating to the Proxy Statement. Nothing in this Current Report on Form 8-K or
in any other filings related to these matters shall be deemed an admission of
the legal necessity or materiality under applicable laws of any of the
disclosures set forth. To the contrary, ZAGG specifically denies all allegations
in the Merger Litigation that any additional disclosure was or is required.
In addition, ZAGG intends to send the following text message to each ZAGG
stockholder: "Dear ZAGG Inc Stockholder: The special meeting to approve the
merger with Evercel, Inc. is 10 days away. PLEASE call 855-208-8901 to vote
today!" ZAGG also intends to send the below email message to each ZAGG
stockholder:
"Dear ZAGG Inc Stockholder,
ZAGG Inc's special meeting of shareholders is scheduled for February 18th, 2021.
As a stockholder, your vote is of the utmost importance to the company and the
Board of Directors wants to be sure you have a chance to cast your vote.
MEETING DATE: February 18th, 2021 for Shareholders as of January 14th, 2021
Proposals to be voted on:
1) The Merger Proposal
2) The Adjournment Proposal
3) The Compensation Proposal
The Board of Directors unanimously recommends that you vote or give instruction
to vote "FOR" each of those proposals.
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The following materials regarding the meeting are available for your review:
Proxy Statement - Click Here
To vote you can call the Company's proxy solicitor, Okapi Partners LLC,
toll-free at 1-855-208-8901 to quickly vote your account(s) over the phone.
Voting will take less than 2 minutes of your time.
Your vote is needed, even if you sold your shares.
Thank you for your support!"
Additional Information and Where to Find It
In connection with the proposed transaction, the Company filed relevant
materials with the Securities and Exchange Commission (the "SEC"), including the
Proxy Statement on Schedule 14A. Promptly after filing the Proxy Statement with
the SEC, the Company mailed the Proxy Statement to each stockholder entitled to
vote at the special meeting relating to the transaction. INVESTORS AND
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE
THEREIN) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION
THAT THE COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES TO THE
TRANSACTION. The definitive proxy statement, the preliminary proxy statement,
and other relevant materials in connection with the transaction (when they
become available) and any other documents filed by the Company with the SEC, may
be obtained free of charge at the SEC's website (www.sec.gov).
Participants in the Solicitation
The Company and its directors and executive officers may be deemed, under SEC
rules, to be participants in the solicitation of proxies from the Company's
stockholders in connection with the transaction. Information regarding the
interests of such individuals in the proposed transaction are included in the
proxy statement relating to such transaction filed with the SEC. You may obtain
information about the Company's executive officers and directors in the
Company's definitive proxy statement for its 2020 annual meeting of
stockholders, which was filed with the SEC on April 28, 2020. These documents
may be obtained free of charge from the SEC's website at www.sec.gov and the
Company's website (www.zagg.com).
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains (and oral communications made by us may
contain) "forward-looking statements" within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "predict," "project,"
"target," "future," "seek," "likely," "strategy," "may," "should," "will," and
similar references to future periods. Examples of forward-looking statements
include, among others, statements we make regarding our outlook for the Company,
the duration of salary reductions, workforce reductions and other cost-cutting
measures as a result of the COVID-19 pandemic, and the impact of additional
borrowings and statements that estimate or project future results of operations
or the performance of the Company.
Forward-looking statements are neither historical facts nor assurances of future
performance. Instead, they are based only on our current beliefs, expectations,
and assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy, and other
future conditions. Because forward-looking statements relate to the future, they
are subject to inherent uncertainties, risks, and changes in circumstances that
are difficult to predict and many of which are outside of our control. Our
actual results and financial condition may differ materially from those
indicated in the forward-looking statements. Therefore, you should not rely on
any of these forward-looking statements. Important factors that could cause our
actual results and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, the following:
a. the risk that one or more closing conditions to the transaction may not be
satisfied or waived, on a timely basis or otherwise;
b. the failure to obtain stockholder approval;
c. the risk that the transaction does not close when anticipated, or at all,
including the risk that the requisite regulatory approvals may not be
obtained;
d. matters arising in connection with the parties' efforts to comply with and
satisfy applicable regulatory approvals and closing conditions relating to the
transaction;
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e. there may be a material adverse change of ZAGG or its business may suffer as a
result of uncertainty surrounding the transaction;
f. the transaction may involve unexpected costs, liabilities, or delays;
g. the adverse impact of competitive product announcements;
h. revenues and operating performance;
i. changes in overall economic conditions and markets, including the current
credit markets;
j. the impacts of certain environmental and health risks, including the recent
COVID-19 pandemic and its potential impact on the Company's operations,
sourcing from China, and future demand for the Company's products for an
uncertain duration of time;
k. the ability to design, produce, and distribute the creative product solutions
required to retain existing customers and to attract new customers;
l. building and maintaining marketing and distribution functions sufficient to
gain meaningful international market share for our products;
m. the ability to respond quickly with appropriate products after the adoption
and introduction of new mobile devices by major manufacturers like Apple®,
Samsung®, and Google®;
n. changes or delays in announced launch schedules for (or recalls or withdrawals
of) new mobile devices by major manufacturers like Apple, Samsung, and Google;
o. the ability to successfully integrate new operations or acquisitions;
p. the impacts of inconsistent quality or reliability of new product offerings;
q. the impacts of lower profit margins in certain new and existing product
categories, including certain mophie products;
r. the impacts of changes in economic conditions, including on customer demand;
s. managing inventory in light of constantly shifting consumer demand;
t. the failure of information systems or technology solutions or the failure to
secure information system data, failure to comply with privacy laws, security
breaches, or the effect on the Company from cyber-attacks, terrorist incidents
or the threat of terrorist incidents;
u. changes in U.S. and international trade policy and tariffs, including the
effect of increases in U.S.-China tariffs on selected materials used in the
manufacture of products sold by the Company which are sourced from China;
v. adoption of or changes in accounting policies, principles, or estimates; and
w. changes in the law, economic and financial conditions, including the effect of
enactment of U.S. tax reform or other tax law changes.
Any forward-looking statement made by us in this report speaks only as of the
date on which such statement is made. New factors emerge from time to time and
it is not possible for management to predict all such factors, nor can it assess
the impact of any such factor on the business or the extent to which any factor,
or combination of factors, may cause results to differ materially from those
contained in any forward-looking statement. Readers should also review the risks
and uncertainties listed in our most recent Annual Report on Form 10-K and other
reports we file with the U.S. Securities and Exchange Commission, including (but
not limited to) Item 1A - "Risk Factors" in the Form 10-K and Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
risks described therein from time to time. We undertake no obligation to
publicly update any forward-looking statement, whether written or oral, that may
be made from time to time, whether as a result of new information, future
developments or otherwise. The forward-looking statements contained in this
report are intended to qualify for the safe harbor provisions of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.
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