|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On July 19, 2011, Quepasa Corporation (“Quepasa”), IG Acquisition Company (“Merger Sub”), a wholly-owned subsidiary of Quepasa, and Insider Guides, Inc., doing business as myYearbook.com (“myYearbook”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), providing for the acquisition of myYearbook by Quepasa. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, myYearbook will be merged with and into Merger Sub (the “Merger”). Following the Merger, Merger Sub will change its name to Insider Guides, Inc.
Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of the respective parties, if the Merger is completed, holders of myYearbook securities will receive $100 million consisting of approximately $18 million in cash and $82 million in Quepasa common stock. The number of shares of Quepasa common stock to be issued will be based upon the Transaction Share Price, which will be the lesser of (A) $10 per share and (B) the average of (i) $7.5715 and (ii) the average closing price of Quepasa common stock on the 20 trading days ending with the trading day three days prior to the closing of the Merger. The Transaction Share Price may be lower than or higher than the market price as of the time of closing.
Quepasa and myYearbook have made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, each of Quepasa and myYearbook is required, among other things, to conduct its business in the ordinary course in all material respects during the interim period between the execution of the Merger Agreement and the closing of the Merger. In addition, neither Quepasa nor myYearbook may solicit alternative business combination transactions and, subject to certain exceptions, may not engage in discussions or negotiations regarding any alternative business combination transaction. Quepasa is required to seek shareholder approval of the issuance of the Quepasa shares as part of the Merger consideration because NYSE Amex rules require shareholder approval whenever more than 20% of outstanding shares are issued in a transaction such as the Merger. Each party will call and hold a special shareholders meeting seeking to obtain these approvals. Holders of 96.7% of the myYearbook voting power agreed to vote in favor of the approval of the Merger Agreement and in favor of the other actions contemplated by the Merger Agreement and holders of 11.5% of the Quepasa voting power agreed to vote in favor of the issuance of the shares in connection with the Merger and in favor of the other actions contemplated by the Merger Agreement. Additionally, all of these security holders agreed to certain transfer restrictions on their shares until completion of the Merger.
Quepasa and certain myYearbook security holders entered into a Sales Rights Agreement which provides for the security holders to have certain registration rights with respect to the shares of Quepasa common stock they acquire in the Merger. If during the 24 month period following the closing of the Merger, Quepasa proposes to sell common stock in a public or private offering, these myYearbook security holders will have the opportunity to participate and sell their shares of common stock on a pro-rata basis in the offering.
Completion of the Merger is subject to certain conditions, including, among others: (i) approval of the issuance of the shares by Quepasa shareholders, (ii) Quepasa raising at least $10 million in equity, (iii) approval of the Merger Agreement by myYearbook’s shareholders (iv) the absence of any court order, law, or rule prohibiting the completion of the Merger, (v) the registration statement on Form S-4 used to register the Quepasa common stock to be issued as consideration for the Merger having been declared effective by the Securities and Exchange Commission (the “SEC”), (vi) the listing of the Quepasa common stock to be issued to myYearbook security holders in the Merger on the NYSE Amex having been authorized, (vii) the granting of 1,782,500 options to myYearbook employees, and (viii) Quepasa entering into new employment agreements with key myYearbook employees. The obligation of each party to complete the Merger is also conditioned upon the accuracy of the other party’s representations and warranties and the other party having performed in all material respects its obligations under the Merger Agreement. If the Merger is completed, Quepasa is obligated to appoint myYearbook designees Geoff Cook, Rick Lewis and Terry Herndon (or replacement designees selected by myYearbook) to the Quepasa board of directors and to include three myYearbook designees (who may be Messrs. Cook, Lewis and Herndon) among its director candidates for three years following the closing. In addition, Mr. Cook will be named Chief Operating Officer of Quepasa and also will serve as President of the Consumer Internet Division. Quepasa and Mr. Cook entered into an employment agreement which will be effective upon the closing. Under the employment agreement, Mr. Cook will receive (i) a base salary of $250,000 per year, (ii) 450,000 stock options vesting based on certain performance milestones and (iii) an annual bonus equivalent to 85% of the average of the bonuses paid to Quepasa’s Chief Executive Officer and Chief Financial Officer.
|