NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:
THE COMBINATION
Section 1.1. The Merger and the Subsequent Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub 1 will merge with and into the Company, and the separate existence of Merger Sub 1 shall cease. The Company shall continue as the surviving corporation and as a Wholly Owned Subsidiary of Parent and shall continue to be governed by the laws of the State of Delaware (as such, the “First Surviving Corporation”). Immediately after the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, the First Surviving Corporation will merge with and into Merger Sub 2, and the separate existence of the First Surviving Corporation shall cease. Merger Sub 2 shall continue as the surviving corporation and as a Wholly Owned Subsidiary of Parent and shall continue to be governed by the laws of the State of Delaware (as such, the “Surviving Corporation”).
Section 1.2. Closing. Unless this Agreement shall have been terminated pursuant to the provisions of Section 9.1, the closing of the Combination (the “Closing”) will take place on the third Business Day after the satisfaction or waiver (subject to applicable Law) of the conditions (other than those conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted by law, waiver of those conditions as of the Closing) set forth in Article VIII (the date of the Closing, the “Closing Date”). The Closing shall be held by means of a virtual closing through electronic exchange of signatures, unless another place is agreed to in writing by the parties hereto.
Section 1.3. Effective Time. Subject to the provisions of this Agreement, on the Closing Date, the Company shall file a certificate of merger relating to the Merger as contemplated by the DGCL (the “Certificate of Merger”) with the Secretary of State of the State of Delaware (the “Secretary of State”), in such form as required by, and executed in accordance with, the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State on the Closing Date, or at such other time as Parent and the Company shall agree to and specify in the Certificate of Merger. As used herein, the “Effective Time” shall mean the time at which the Merger shall become effective. Immediately following the Effective Time, Merger Sub 2 shall file a certificate of merger relating to the Subsequent Merger as contemplated by the DGCL (the “Subsequent Certificate of Merger”) with the Secretary of State, in such form as required by, and executed in accordance with, the DGCL. The Subsequent Merger shall become effective at such time as the Subsequent Certificate of Merger is duly filed with the Secretary of State on the Closing Date or at such other time as Parent and the Company shall agree and specify in the Subsequent Certificate of Merger, but in any event immediately following the Effective Time. As used herein, the “Subsequent Effective Time” shall mean the time at which the Subsequent Merger shall become effective.
Section 1.4. Effects of the Combination. At the Effective Time, the effects of the Merger and, at the Subsequent Effective Time, the effects of the Combination, shall be as provided in this Agreement, the Certificate of Merger, the Subsequent Certificate of Merger, and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, (i) at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub 1 shall vest in the First Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub 1 shall become the debts, liabilities and duties of the First Surviving Corporation, and (ii) at the Subsequent Effective Time, all of the property, rights, privileges, powers and franchises of the First Surviving Corporation and Merger Sub 2 shall vest in the Surviving Corporation, and all debts, liabilities and duties of the First Surviving Corporation and Merger Sub 2 shall become the debts, liabilities and duties of the Surviving Corporation.
A-2
Section 1.5. Surviving Corporation Constituent Documents.
(a) The certificate of incorporation and bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation and bylaws of the First Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law, except as otherwise contemplated by this Agreement.
(b) The certificate of incorporation and bylaws of Merger Sub 2, as in effect immediately prior to the Subsequent Effective Time, shall be the certificate of incorporation and bylaws of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable Law, except as otherwise contemplated by this Agreement and except that Article I of the certificate of incorporation of the Surviving Corporation shall be amended to provide that “The name of the corporation is Zynga Inc.”
Section 1.6. Surviving Corporation Directors and Officers. From and after the Subsequent Effective Time, the directors of Merger Sub 2 in office immediately prior to the Subsequent Effective Time shall be the initial directors of the Surviving Corporation, and the officers of the First Surviving Corporation immediately prior to the Subsequent Effective Time (which shall be the officers of the Company immediately prior to the Effective Time) shall be the initial officers of the Surviving Corporation and, in each case, shall hold office from the Subsequent Effective Time until his or her respective successor is duly elected or appointed and qualified or until his or her earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation or otherwise as provided by applicable Law.
(a) At the Effective Time by virtue of the Merger and without any action on the part of the holder thereof:
(i) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares or Treasury Shares), shall be converted into (A) a number of fully paid and nonassessable shares of Parent Common Stock equal to the Exchange Ratio, subject to Section 2.5 with respect to fractional shares and the payment of cash in lieu of such fractional shares (the “Stock Consideration”) and (B) the right to receive $3.50 per share in cash, without interest (the “Cash Consideration”) (the consideration described in the foregoing clauses (A) and (B), collectively, the “Merger Consideration”).
(ii) All shares of Company Common Stock (other than shares referred to in Section 1.7(a)(v) and Section 1.7(a)(vi)) shall cease to be issued and outstanding and shall be cancelled and retired and shall cease to exist, and each holder of a valid certificate or certificates that immediately prior to the Effective Time represented any such shares of Company Common Stock (a “Certificate”) or that were shares of Company Common Stock evidenced by way of book-entry in the register of stockholders of the Company immediately prior to the Effective Time (“Uncertificated Company Stock”), shall thereafter cease to have any rights with respect to such shares of Company Common Stock, except the right to receive the applicable Merger Consideration and any dividends or other distributions to which the holder of such share becomes entitled pursuant to Section 2.3.
(iii) Each share of common stock, par value $0.01 per share, of Merger Sub 1 issued and outstanding immediately prior to the Effective Time shall be converted into one share of Class A Common Stock, par value $0.00000625 per share, of the First Surviving Corporation.
(iv) At the Subsequent Effective Time, all shares of common stock of Merger Sub 2 issued and outstanding immediately prior to the Subsequent Effective Time shall be cancelled and retired and shall cease to exist. At the Subsequent Effective Time, each share of Class A Common Stock of the First Surviving Corporation issued and outstanding immediately prior to the Subsequent Effective Time shall be converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation.
A-3
(v) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that are owned by stockholders that have properly demanded their rights of appraisal within the meaning of Section 262 of the DGCL (the “Dissenting Shares”) shall not be converted into the right to receive the Merger Consideration, unless and until such stockholders shall have failed to perfect any available right of appraisal under applicable Law, but, instead, the holders thereof shall be entitled to payment of the appraised value of such Dissenting Shares in accordance with Section 262 of the DGCL. If any such holder shall have failed to perfect or shall have effectively withdrawn or lost such right of appraisal, the shares of Company Common Stock held by such stockholder shall not be deemed Dissenting Shares for purposes of this Agreement and shall thereupon be deemed to have been converted into the Merger Consideration at the Effective Time in accordance with Section 1.7(a). The Company shall give Parent (A) as promptly as reasonably practicable notice of any demands for appraisal filed pursuant to Section 262 of the DGCL received by the Company, withdrawals of such demands and any other instruments or material written communications served or delivered in connection with such demands pursuant to the DGCL and received by the Company and (B) the opportunity and right to participate in all negotiations and proceedings with respect to demands made pursuant to Section 262 of the DGCL. The Company shall not, except with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), (x) make any payment to the holder of such Dissenting Shares with respect to any such demand, (y) offer to settle or settle any such demand or (z) waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with the DGCL.
(vi) Each share of Company Common Stock that is owned by the Company as treasury stock or by any of its Wholly Owned Subsidiaries (the “Treasury Shares”) immediately prior to the Effective Time shall be automatically cancelled and extinguished without payment of any consideration therefor and without any further action on the part of the Company or such Subsidiary.
(b) If prior to the Effective Time, Parent or the Company, as the case may be, should split, subdivide, consolidate, combine or otherwise reclassify the Parent Common Stock or the Company Common Stock, or pay a stock dividend or other stock distribution in Parent Common Stock or Company Common Stock, as applicable, or otherwise change the Parent Common Stock or Company Common Stock into any other securities, or make any other such stock dividend or distribution in capital stock of Parent or the Company in respect of the Parent Common Stock or the Company Common Stock, respectively, then any number or amount contained herein which is based upon the price of the Parent Common Stock or the number of shares of Company Common Stock or Parent Common Stock, as the case may be, will be appropriately adjusted to reflect such split, combination, dividend or other distribution or change.
Section 1.8. Treatment of Options, RSUs and Employee Stock Purchase Plan.
(a) Company Options. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of a Company Option, each stock option to purchase Company Common Stock granted under any Company Benefit Plan (including, for the avoidance of doubt, the Company’s Amended and Restated 2007 Equity Incentive Plan, as amended or the Company’s Amended and Restated 2011 Equity Incentive Plan, as amended (such options, the “Company Options” and such plans, collectively, the “Company Stock Plans”)), that is outstanding and unexercised as of immediately prior to the Effective Time, whether or not then exercisable or vested, shall be assumed by Parent and automatically converted into an option exercisable for that number of shares of Parent Common Stock (as converted, a “Converted Company Option”) under the Parent Equity Plan equal to the product of (A) the aggregate number of shares of Company Common Stock for which such Company Option was exercisable multiplied by (B) the Equity Award Exchange Ratio, with any resulting fractional share of Parent Common Stock rounded down to the nearest whole share. The exercise price per share of such Converted Company Option shall be adjusted so that it is equal to (x) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (y) the Equity Award Exchange Ratio, with any resulting fractional cent rounded up to the nearest cent; provided, however, that the exercise price and the number of shares of Company Common Stock purchasable pursuant to a Converted Company Option shall be
A-4
subject to such adjustments as may be necessary for the foregoing conversion to satisfy the requirements of Sections 409A, 422 and 424 of the Code and U.S. Treasury Regulations Section 1.424-1. As of the conversion pursuant to this Section 1.8(a), each Converted Company Option shall be subject to the same terms and conditions (including vesting and exercisability terms) applicable to the corresponding Company Option immediately prior to the Effective Time except as otherwise provided in this Section 1.8(a), or for administrative changes that are not adverse to the holder of such Company Option or to which the holder consents in writing.
(b) Company RSU Awards. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of a Company RSU Award, each Company RSU Award, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time, shall be assumed by Parent and automatically converted into a Parent restricted share unit award with respect to shares of Parent Common Stock under the Parent Equity Plan on the same terms and conditions as applied to the Company RSU Award as of immediately prior to the Effective Time, except that the aggregate number of shares of Parent Common Stock underlying such award will be determined by multiplying (A) the number of shares of Company Common Stock subject to such Company RSU Award immediately prior to the Effective Time by the (B) Equity Award Exchange Ratio, with any resulting fractional share rounded down to the nearest whole share of Parent Common Stock (as converted, a “Converted RSU”). As of the conversion pursuant to this Section 1.8(b), each Converted RSU shall be subject to the same terms and conditions (including vesting and exercisability terms) applicable to the corresponding Company RSU Award immediately prior to the Effective Time except as otherwise provided in this Section 1.8(b), or for administrative changes that are not adverse to the holder of such Converted RSU or to which the holder consents in writing.
(c) Company PSU Awards. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of a Company PSU Award, each Company PSU Award, whether vested or unvested (and provided, for clarity, that any such award that as of immediately prior to the Effective Time no longer is subject to performance criteria shall be subject to the treatment described in subsection (b) above for Company RSU Awards), that is outstanding as of immediately prior to the Effective Time shall be assumed by Parent and automatically be converted into a Parent restricted share unit award with respect to shares of Parent Common Stock under the Parent Equity Plan on the same terms and conditions as applied to the Company PSU Award as of immediately prior to the Effective Time, except that the aggregate number of shares of Parent Common Stock underlying such award will be determined by multiplying (A) the number of shares of Company Common Stock subject to such Company PSU Award immediately prior to the Effective Time as determined in accordance with the requirements of the applicable award agreement governing the terms of such Company PSU Award (provided, that the Company will consult with Parent in good faith on any determination of actual performance required to be measured by the compensation committee of the Company Board of Directors under the terms of such award agreement), by (B) the Equity Award Exchange Ratio (as converted, a “Converted PSU”), with any resulting fractional share rounded down to the nearest whole share of Parent Common Stock. As of the conversion pursuant to this Section 1.8(c), each Converted PSU shall be subject to the same terms and conditions (including vesting and exercisability terms) applicable to the corresponding Company PSU Award immediately prior to the Effective Time except as otherwise provided in this Section 1.8(c), or for administrative changes that are not adverse to the holder of such Converted PSU or to which the holder consents in writing.
(d) Effective as of the Effective Time, Parent shall assume the Company Options, Company RSU Awards and Company PSU Awards that are outstanding immediately prior to the Effective Time (collectively, the “Company Equity Awards”) in accordance with the terms of this Section 1.8. Parent shall take all necessary or appropriate actions to comply with the terms of this Section 1.8, including seeking any necessary regulatory or shareholder approvals. Prior to the Effective Time, the Company shall deliver written notice to each holder of a Company Equity Award informing such holder of the effect of the Merger on the Company Equity Awards. In addition, Parent may also elect to convert and assume (on the same basis as set forth in this Section 1.8) the share reserve available under the Company Stock Plans as of the Effective Time into the Parent Equity Plan to the extent permitted under and in accordance with applicable Law.
A-5
