UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant   ☒

Filed by a Party other than the Registrant   ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under Rule 14a-12

KALEYRA, INC.

(Exact name of registrant as specified in its charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☐		No fee required.
☒		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

August 17, 2023

Dear Stockholder:

You are cordially invited to attend a Special Meeting of the stockholders of Kaleyra, Inc., a Delaware corporation (the “Company”), which will be held virtually at https://www.cstproxy.com/kaleyra/2023, on September 28, 2023, at 11:00 a.m. Eastern Time.

At the Special Meeting, holders of our common stock, par value $0.0001 per share (“Company Common Stock”), will be asked to consider and vote on a proposal to approve the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of June 28, 2023, by and among Tata Communications Limited, a company listed on BSE Limited and National Stock Exchange of India Limited (“Tata Communications”) and the Company. Pursuant to the Merger Agreement, at the closing, upon the terms and subject to the conditions set forth therein, TC Delaware Technologies Inc., a Delaware corporation and wholly owned subsidiary of Tata Communications (“Merger Sub”) will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Tata Communications (the “Merger”). As a result of the Merger, each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock or owned by Tata Communications or any of its subsidiaries (including Merger Sub), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive $7.25 in cash, without interest thereon. Under the terms of the Merger Agreement, all debt of the Company (approximately $157.4 million of net debt outstanding as of June 30, 2023) will become debt of the Surviving Corporation, which will be a wholly owned subsidiary of Tata Communications after the Merger.

The board of directors of the Company (the “Board”) has unanimously approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and determined that it is advisable, fair to and in the best interests of the Company and its stockholders to enter into the Merger Agreement.

The Board unanimously recommends that the stockholders of the Company vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. In addition, the Board unanimously recommends that the stockholders of the Company vote “FOR” the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger and “FOR” the proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies.

The enclosed proxy statement describes the Merger Agreement and the Merger and provides specific information concerning the Special Meeting. In addition, you may obtain information about the Company from documents filed with the Securities and Exchange Commission (the “SEC”). We urge you to, and you should, read the entire proxy statement carefully, as it sets forth the details of the Merger Agreement and other important information related to the Merger.

 

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Your vote is very important. The Merger cannot be completed unless holders of at least a majority of the outstanding shares of Company Common Stock vote in favor of the approval of the Merger Agreement and the Merger. If you fail to vote on the proposal to approve the Merger Agreement and the Merger or abstain from voting, the effect will be the same as a vote against the approval of the Merger Agreement and the Merger. As more fully described in “Voting and Support Agreements” beginning on page 60, (i) Emilio Hirsch, a director of the Company, along with two of his affiliated entities, ESSE EFFE S.P.A and EFFE PI Società Semplice, and (ii) Dario Calogero, a director of the Company, and his affiliated entity, Maya Investments Ltd., which collectively own approximately 25% of the outstanding Company Common Stock as of the record date, have agreed to, among other things, vote the shares of Company Common Stock owned by them in favor of the approval of the Merger Agreement and the Merger, subject to the terms of voting and support agreements entered into with Tata Communications.

While stockholders may exercise their right to vote their shares in person, we recognize that many stockholders may not be able to attend the Special Meeting. Accordingly, we have enclosed a proxy that will enable your shares of Company Common Stock to be voted on the matters to be considered at the Special Meeting. If you are a stockholder of record and desire your shares of Company Common Stock to be voted in accordance with the Board’s recommendation on all proposals, you need only sign, date and return the proxy in the enclosed postage-paid envelope. Otherwise, please mark the proxy to indicate your voting instructions; sign and date the proxy; and return it in the enclosed postage-paid envelope. You also may submit a proxy by using a toll-free telephone number or the Internet. We have provided instructions on the proxy card for using these convenient services. Submitting a proxy will not prevent you from voting your shares of Company Common Stock in person if you subsequently choose to attend the Special Meeting. Even if you plan to attend the Special Meeting in person, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares of Company Common Stock will be represented at the Special Meeting if you are unable to attend.

If you hold your shares of Company Common Stock in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares of Company Common Stock. Without those instructions, your shares of Company Common Stock will not be voted, which will have the same effect as voting against the proposal to approve and adopt the Merger Agreement and the Merger.

If you have any questions or need assistance in voting your shares, please contact our proxy solicitor, Okapi Partners LLC, toll-free at (844) 203-3605 or by email at info@okapipartners.com.

Thank you for your continued support.

Sincerely,

 

/s/ Dr. Avi S. Katz Dr. Avi S. Katz Chairman of the Board and Secretary August 17, 2023

Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger, the Merger Agreement or the other transactions contemplated thereby or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated August 17, 2023 and is first being mailed to stockholders on or about August 17, 2023.

 

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Kaleyra, Inc.

85 BROAD STREET NEW YORK, NY 10004

New York, New York 10018

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

The Special Meeting of Kaleyra, Inc., a Delaware corporation, will be held virtually at https://www.cstproxy.com/kaleyra/2023, on September 28, 2023, at 11:00 a.m. Eastern Time to consider and vote upon the following proposals:

 

1.

to approve and adopt (a) the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of June 28, 2023 by and among Tata Communications Limited, a company listed on BSE Limited and National Stock Exchange of India Limited (“Tata Communications”), and the Company, and (b) the merger of TC Delaware Technologies Inc., a Delaware corporation and wholly owned subsidiary of Tata Communications (“Merger Sub”), with and into the Company with the Company surviving as a wholly owned subsidiary of Tata Communications (the “Merger”) pursuant to the terms of the Merger Agreement;

 

2.

to approve, on an advisory (non-binding) basis, the compensation that may become payable to the Company’s named executive officers in connection with the Merger; and

 

3.

to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal to approve and adopt the Merger Agreement and the Merger.

The Company will transact no other business at the Special Meeting except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof. Please refer to the attached proxy statement for additional information with respect to the business to be transacted at the Special Meeting.

The holders of record of our common stock, par value $0.0001 per share (“Company Common Stock”), at the close of business on August 8, 2023 are entitled to notice of and to vote at the Special Meeting or at any adjournment thereof. All stockholders of record are cordially invited to attend the Special Meeting in person. For ten days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our principal offices located at 85 Broad Street, New York, NY 10004.

The board of directors of the Company (the “Board”) has unanimously approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and determined that it is advisable, fair to and in the best interests of the Company and its stockholders to enter into the Merger Agreement.

The Board unanimously recommends that the stockholders of the Company vote “FOR” Proposal 1, Proposal 2 and Proposal 3.

Your vote is important, regardless of the number of shares of Company Common Stock you own. The approval of the Merger Agreement and the Merger by the affirmative vote of holders of at least a majority of the

 

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voting power of the outstanding shares of Company Common Stock is a condition to the consummation of the Merger. The advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger and the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies, each requires the affirmative vote of the holders of a majority of the votes cast, in person or represented by proxy, at the Special Meeting.

If you are a stockholder of record and you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of the approval of the Merger Agreement and the Merger, the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger and the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies. If you fail to vote or submit your proxy, the effect will be that your shares of Company Common Stock may not be counted for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as a vote against the approval of the Merger Agreement and the Merger, but will not affect the advisory vote to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger or the vote regarding the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies.

You may revoke your proxy at any time before the vote at the Special Meeting by following the procedures outlined in the accompanying proxy statement. If you are a stockholder of record, you may revoke your proxy by attending the meeting and voting in person.

By order of the Board of Directors,

 

/s/ Dr. Avi S. Katz Dr. Avi S. Katz Chairman of the Board and Secretary

August 17, 2023

 

 

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TABLE OF CONTENTS

 

		Page
SUMMARY			1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			10
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			17
THE COMPANIES			19
Kaleyra, Inc.			19
Tata Communications Limited			19
THE SPECIAL MEETING			20
Date, Time and Place of the Special Meeting			20
Purposes of the Special Meeting			20
Recommendation of the Company’s Board of Directors			20
Record Date and Quorum			21
Required Vote			21
Voting by the Company’s Directors and Executive Officers			21
Voting; Proxies; Revocation			22
Abstentions			23
Adjournments and Postponements			24
Solicitation of Proxies			24
Other Information			24
THE MERGER (PROPOSAL 1)			25
Certain Effects of the Merger			25
Background of the Merger			25
Reasons for the Merger			31
Recommendation of the Company’s Board of Directors			34
Fairness Opinion of Northland Securities, Inc.			35
Unaudited Prospective Financial Information			40
Financing			42
Interests of the Company’s Directors and Executive Officers in the Merger			42
Material U.S. Federal Income Tax Consequences of the Merger			48
Regulatory Approvals			50
Delisting and Deregistration of Company Common Stock			51
THE MERGER AGREEMENT			52
Explanatory Note Regarding the Merger Agreement			52
Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers			52
Closing and Effective Time of the Merger			53
Effect of the Merger on Capital Stock			53
Treatment of Company Equity Awards			53
Treatment of Company Warrants			54
Dissenting Shares			54
Payment; Surrender of Shares; Stock Transfer Books			54
Representations and Warranties			55
Covenants Related to the Conduct of Business			59
Voting and Support Agreements			60
No Solicitation by the Company			61
Other Covenants and Agreements			63
Employee Matters			65
Other Covenants			66
Conditions to the Merger			67
Termination			67
Amendments and Waivers			69

		Page
Expenses			70
Specific Performance			70
Governing Law and Jurisdiction; Waiver of Jury Trial			70
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION (PROPOSAL 2)			71
VOTE ON ADJOURNMENT (PROPOSAL 3)			72
MARKET PRICE OF THE COMPANY COMMON STOCK			73
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			74
APPRAISAL RIGHTS			76
MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS			80
SUBMISSION OF STOCKHOLDER PROPOSALS			80
WHERE YOU CAN FIND ADDITIONAL INFORMATION			82
ANNEX A Agreement and Plan of Merger			A-1
ANNEX B Fairness Opinion of Northland Securities, Inc.			B-1
ANNEX C Voting Agreements			C-1

 

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SUMMARY

This summary discusses the material information contained in this proxy statement, including with respect to the Merger Agreement and the Merger. We encourage you to, and you should, read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement, as this summary may not contain all of the information that may be important to you. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies (page 19)

Kaleyra, Inc.

Kaleyra, Inc. (“Kaleyra,” the “Company,” “we,” “our” or “us”) is a Delaware corporation. The Company provides mobile communication services for financial institutions and enterprises of all sizes worldwide. Through its proprietary platforms, Kaleyra manages multi-channel integrated communication services on a global scale, comprised of messages, push notifications, e-mail, instant messaging, voice services and chatbots. The Company’s subsidiaries include: Kaleyra, S.p.A. (Italy), Buc Mobile, Inc. (Delaware), Solutions Infini Technologies Private Limited (India), The Campaign Registry, Inc. (Delaware), Campaign Registry, Inc. (Canada), Solutions Infini FZE (Dubai International Financial Centre), Kaleyra US Inc. (Delaware), Kaleyra UK, Ltd (United Kingdom), Kaleyra Dominicana SRL (Dominican Republic), mGage Athens PC (Greece) and mGage SA de CV (Mexico). See the section of this proxy statement entitled “The Companies—Kaleyra, Inc.” on page 19.

Additional information about the Company is contained in its public filings, which are incorporated by reference herein. See the section of this proxy statement entitled “Where You Can Find Additional Information” on page 82.

Tata Communications Limited

Tata Communications Limited (“Tata Communications”) is a company listed on BSE Limited and National Stock Exchange of India Limited. Tata Communications is a leading global digital ecosystem enabler. With a leadership position in emerging markets, and an infrastructure that spans the globe, Tata Communications leverages its advanced solutions capabilities and domain expertise across its global network to deliver managed solutions to multinational companies and service providers. Tata Communications partners with 300 of the Fortune 500 companies with its state-of-the-art solutions, including a wide range of communication, collaboration, cloud, mobility, connected solutions, network and data center services. See the section of this proxy statement entitled “The Companies—Tata Communications Limited” on page 19.

TC Delaware Technologies Inc.

TC Delaware Technologies Inc. (“Merger Sub”) is a Delaware corporation and wholly owned subsidiary of Tata Communications that was formed on June 21, 2023, solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement. See the section of this proxy statement entitled “The Companies—TC Delaware Technologies Inc.” on page 19.

The Merger Proposal (page 21)

You will be asked to consider and vote upon the proposal to approve and adopt (i) the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of June 28, 2023, by and among Tata Communications Limited, a company listed on BSE Limited and National Stock Exchange of India Limited (“Tata Communications”), and the Company and (ii) the merger of a newly formed Delaware corporation and wholly owned subsidiary of Tata Communications(“Merger Sub”) with and into the Company

 

- 1 -

with the Company surviving as a wholly owned subsidiary of Tata Communications (the “Merger”) pursuant to the terms of the Merger Agreement. As a result of the Merger, each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock or owned by Tata Communications or any of its subsidiaries (including Merger Sub), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive $7.25 in cash, without interest thereon (the “Per Share Price”). Under the terms of the Merger Agreement, all debt of the Company (approximately $157.4 million of net debt outstanding as of June 30, 2023) will become debt of the Surviving Corporation, which will be a wholly owned subsidiary of Tata Communications after the Merger.

The Merger will become effective as of the date and time of the filing of the certificate of merger with the Secretary of State of the State of Delaware, or such later time as specified in the certificate of merger and as is agreed to by the Company and Tata Communications (the “Effective Time”).

The Special Meeting (page 20)

The Special Meeting will be held at virtually at https://www.cstproxy.com/kaleyra/2023, on September 28, 2023, at 11:00 a.m. Eastern Time.

Record Date and Quorum (page 21)

The holders of record of the Company Common Stock as of the close of business on August 8, 2023 (the “record date”) are entitled to receive notice of and to vote at the Special Meeting.

The presence at the Special Meeting, in person or by proxy, of stockholders of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at such meeting will constitute a quorum, permitting the Company to conduct its business at the Special Meeting.

Shares of Company Common Stock held by stockholders of record that submit a proxy, but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card will be counted for the purpose of determining whether a quorum is present at the Special Meeting.

Shares of Company Common Stock held by stockholders in “street name” by a broker, bank or other nominee that do not instruct the nominee how to vote such shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting.

Required Vote for the Merger (page 21)

Each share of Company Common Stock outstanding at the close of business on the record date is entitled to one vote at the Special Meeting.

For the Company to complete the Merger, stockholders holding at a majority of the voting power of the outstanding shares of Company Common Stock at the close of business on the record date must vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger.

A failure to vote your shares of Company Common Stock or an abstention from voting for the proposal to approve and adopt the Merger Agreement and the Merger will have the same effect as a vote against the proposal to approve and adopt the Merger Agreement and the Merger.

As of the record date, there were 13,325,920 shares of Company Common Stock issued and outstanding.

 

- 2 -

Conditions to the Merger (page 67)

Each party’s obligation to complete the Merger is subject to the satisfaction or waiver by the Company and Tata Communications of the following conditions at or prior to the Effective Time:

 

•

the approval of the Merger Agreement and the Merger by the requisite vote of stockholders of the Company;

 

•

the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”);

 

•

the Company and Tata Communications have received approval of the Merger from the Committee on Foreign Investment in the United States (“CFIUS Approval”);

 

•

the expiration or termination of any applicable waiting periods and all required clearances and regulatory approvals have been obtained from certain U.S. governmental entities and certain non-U.S. governmental entities as applicable;

 

•

in the event that any governmental authority has commenced, or communicated that it is considering or intends to commence, proceedings or an investigation relating to the transactions contemplated by the Merger Agreement, written confirmation from such governmental authority that any such proceedings or investigations have concluded or that it has cleared the transactions contemplated by the Merger Agreement; and

 

•

the absence of any order, law or injunction (whether temporary, preliminary or permanent) by any governmental authority in effect that prevents or otherwise makes illegal the consummation of the Merger.

The respective obligations of Tata Communications and Merger Sub to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

•

the accuracy of the representations and warranties of the Company (subject to certain materiality qualifications);

 

•

the Company’s performance of and compliance with its covenants, obligations and conditions under the Merger Agreement in all material respects;

 

•

the delivery of an officer’s certificate by the Company certifying that the conditions described in the two preceding bullet points have been satisfied;

 

•

the absence of any Company material adverse effect that has occurred and is continuing since the date of the Merger Agreement; and

 

•

the absence of any restraint in effect which would result in a burdensome condition.

The obligation of the Company to complete the Merger is subject to the satisfaction or waiver of the following additional conditions:

 

•

the accuracy of the representations and warranties of Tata Communications and Merger Sub (subject to certain materiality qualifications);

 

•

Tata Communication’s and Merger Sub’s performance of and compliance with their covenants, obligations and conditions under the Merger Agreement in all material respects; and

 

•

the delivery of an officer’s certificate by Tata Communications and Merger Sub certifying that the conditions described in the two preceding bullet points have been satisfied.

The consummation of the Merger is not subject to any financing condition.

 

- 3 -

When the Merger Becomes Effective

We are working toward completing the Merger as promptly as possible, but as of the date of this proxy statement we cannot accurately estimate the closing date of the Merger because the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to Tata Communications, Merger Sub and the Company’s respective obligations to consummate the Merger, some of which are not within the parties’ control. We expect to complete the Merger promptly after the requisite Company vote is obtained and all required regulatory clearances have been received.

Reasons for the Merger; Recommendation of the Company’s Board of Directors in Favor of the Merger (page 31)

The Board of Directors of the Company (the “Board” or “Board of Directors”) unanimously recommends that the stockholders of the Company vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. For a description of the reasons considered by the Board in deciding to recommend approval and adoption of the Merger Agreement and the Merger, see the section of this proxy statement entitled “The Merger—Reasons for the Merger.”

Fairness Opinion of Northland Securities, Inc. (page 35)

Northland Securities, Inc. (“Northland”) delivered its written opinion to the Board that, as of June 28, 2023 and based upon and subject to the factors and assumptions set forth therein, the $7.25 in cash per share of the Company Common Stock to be paid to the holders of the outstanding shares of Company Common Stock pursuant to the Merger Agreement was fair from a financial point of view to the Company and the common stockholders.

The full text of the written opinion of Northland, dated June 28, 2023, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Northland provided its opinion for the information and assistance of the Board in connection with its consideration of the Merger and did not otherwise serve as a financial advisor to the Company in connection with the Merger. The Northland opinion is not a recommendation as to how any holder of shares of Company Common Stock should vote with respect to the Merger or any other matter.

Pursuant to an engagement letter between the Company and Northland, the Company has agreed to pay Northland a non-refundable fee of $400,000.

For additional information, see the section of this proxy statement entitled “Fairness Opinion of Northland Securities, Inc.” beginning on page 35 and Annex B to this proxy statement.

Certain Effects of the Merger (page 25)

If the conditions to the closing of the Merger are either satisfied or, to the extent permitted, waived, Merger Sub will be merged with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will continue as the surviving corporation (the “Surviving Corporation”), with all of its property, rights, privileges, powers and franchises continuing unaffected by the Merger. Upon completion of the Merger, each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock or owned by Tata Communications or any of its subsidiaries (including Merger Sub), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive the Per Share Price, without interest thereon. Following completion of the Merger, the Company Common Stock will no longer be publicly traded, and the Company’s existing stockholders will cease to have any ownership interest in the Company.

 

- 4 -

Treatment of Company Equity Awards (page 53)

Each outstanding Company restricted stock unit (which we refer to as a “Company RSU”) under the Company Stock Plans (as such term is defined in the Merger Agreement) that is vested as of immediately prior to the Effective Time of the Merger (but not yet settled) or that vests as a result of the consummation of the transactions contemplated by the Merger Agreement (which we refer to as a “Vested Company RSU”) will be cancelled and converted solely into the right to receive an amount in cash (without interest) equal to (1) the total number of shares of Company Common Stock subject to such Vested Company RSU as of immediately prior to the Effective Time of the Merger, multiplied by (2) the Per Share Price, less applicable withholding taxes.

Each outstanding Company RSU under the Company Stock Plan that is not a vested Company RSU (which we refer to as an “Unvested Company RSU”) will be cancelled and converted solely into the contingent right to receive an aggregate amount in cash (without interest) (which we refer to as a “converted cash award”) equal to (1) the total number of shares of Company Common Stock subject to such Unvested Company RSU as of immediately prior to the Effective Time of the Merger, multiplied by (2) the Per Share Price, less applicable withholding taxes. Except as otherwise provided in the Merger Agreement, each such converted cash award will continue to have, and will be subject to, the same vesting terms and conditions as applied to the corresponding Unvested Company RSU immediately prior to the Effective Time of the Merger, with payment forfeited to the extent vesting is not satisfied; provided, however, that if a holder of a converted cash award is terminated by Tata Communications or the Surviving Corporation without “cause” (as defined in such holder’s then-effective employment agreement with the Company or one of its subsidiaries or, if none, determined consistently in accordance with the Company’s past practices) in connection with the closing of the Merger or thereafter but on or prior to December 31, 2024, such holder’s then unvested converted cash award will automatically accelerate and become vested upon such date of termination.

Interests of the Company’s Directors and Executive Officers in the Merger (page 42)

In considering the recommendation of the Board that you vote to approve and adopt the Merger Agreement and the Merger, you should be aware that aside from their interests as stockholders of the Company, some of the Company’s directors and executive officers may have interests in the Merger that are different from, or in addition to, those of other stockholders of the Company generally. The Board was aware of and considered these interests, among other matters, in evaluating the Merger Agreement and the Merger, and in recommending to the stockholders of the Company that the Merger Agreement and the Merger be approved and adopted. See the section of this proxy statement entitled “The Merger—Background of the Merger” and see the section of this proxy statement entitled “The Merger—Reasons for the Merger.” The Company’s stockholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. These interests are described in more detail below in the section of the proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger,” and certain of them are quantified in the disclosure below.

Interests of executive officers and directors that may be different from or in addition to the interests of the Company’s stockholders include:

 

•

The treatment of equity awards held by our executive officers and directors, including accelerated vesting of certain outstanding Unvested Company RSUs.

 

•

Certain of the Company’s executive officers are party to existing employment agreements with the Company that provide for severance benefits in the case of a qualifying termination of employment within specified periods following a change in control, which will include completion of the Merger.

 

•

Some or all of the Company’s directors and executive officers may receive success and closing retention bonuses in an aggregate amount not to exceed $10 million, as will be determined prior to closing of the Merger by the Board in consultation with Tata Communications.

 

- 5 -

•

The Company’s directors and executive officers are entitled to continued indemnification coverage under the Merger Agreement and the Company’s organizational documents.

 

•

Each of the Company’s non-executive directors is a member of a special committee (the “Special Committee”), which committee is authorized to oversee the due diligence and negotiation process with respect to the Merger and manage the pre-closing process with Tata Communications regarding the Merger; to the extent a member of the Special Committee devotes in excess of five hours to committee activities during any week, the Company shall pay such member $700 for each excess hour of work, provided that no member shall be entitled to receive in excess of $85,000 in any calendar month for such work.

 

•

Some of the Company’s directors and executive officers may be offered post-closing employment, consulting arrangements or directorships by Tata Communications or one or more of its affiliates.

As of the date of this proxy statement, Mauro Carobene, the Company’s Chief Business Officer has recently entered into an agreement with the Company to become the Head of the Kaleyra Business immediately as the Merger is closed and is expected to enter into a formal employment agreement memorializing the terms of his post-closing employment, including any related severance benefits, at a later date. As of the date of this proxy statement, none of our other executive officers or directors has been offered any employment, consulting arrangement or directorship with Tata Communications or one or more of its affiliates. Prior to or following the closing of the Merger, however, certain of our executive officers or directors may enter into agreements with Tata Communications or their respective affiliates regarding employment, consulting arrangements or directorships with Tata Communications or one or more of its affiliates.

Financing (page 42)

We understand that the Company and Tata Communications intend to fund the amount of their respective fees through available cash.

Material U.S. Federal Income Tax Consequences of the Merger (page 47)

If you are a U.S. holder, the receipt of cash in exchange for shares of Company Common Stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. If you are a non-U.S. holder, the Merger will generally not be a taxable transaction to you for U.S. federal income tax purposes unless you have certain connections to the United States. You should consult your own tax advisors regarding the particular tax consequences to you of the exchange of shares of Company Common Stock for cash pursuant to the Merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws).

Regulatory Approvals Required for the Merger (page 50)

Under the Merger Agreement, the respective obligations of the Company, Tata Communications and Merger Sub to effect the Merger are subject to, among other things, (i) the waiting period under the HSR Act having expired or been earlier terminated, (ii) having obtained CFIUS Approval, (iii) having obtained a certain approval from the Royal Bank of India, which approval was received on July 17, 2023, and (iv) certain other regulatory filings as required or applicable.

The Company and Tata Communications filed their respective Notification and Report Forms under the HSR Act with the Antitrust Division of the U.S. Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”) on July 13, 2023. The waiting period expired at 11:59 p.m. Eastern Time on August 14, 2023.

The Company and Tata Communications filed a declaration with CFIUS on August 6, 2023.

See the section of this proxy statement entitled “The Merger Agreement —Regulatory Approval” for additional information.

 

- 6 -

Dissenting Shares (page 54)

Under Delaware law, if the Merger is completed, holders of Company Common Stock who (1) do not vote in favor of approval and adoption of the Merger Agreement, (2) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their applicable shares of Company Common Stock through the effective date of the Merger, (3) properly demand appraisal of their applicable shares, (4) meet certain statutory requirements described in this proxy statement, and (5) do not withdraw their demands or otherwise lose their rights to appraisal will have the right to seek appraisal under Section 262 of the Delaware General Corporation Law (the “DGCL”). This means that these holders of record and beneficial owners may be entitled to have their shares of Company Common Stock appraised by the Delaware Court of Chancery and to receive the judicially determined “fair value” of their shares of Company Common Stock in lieu of receiving the merger consideration. A copy of the Delaware statutory provisions related to appraisal rights may be accessed without subscription or cost at the following publicly available website https://delcode.delaware.gov/title8/c001/sc09/#262 and a summary of these provisions can be found under “Appraisal Rights.” This appraisal value could be more than, the same as or less than the merger consideration that would have otherwise been received for those shares.

Delisting and Deregistration of Company Common Stock (page 51)

If the Merger is completed, the Company Common Stock will be delisted from the New York Stock Exchange (“NYSE”) and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, the Company would no longer file periodic reports with the Securities and Exchange Commission (the “SEC”) with respect to the Company Common Stock. See the section of this proxy statement entitled “Delisting and Deregistration of Company Common Stock.”

Voting and Support Agreement (page 60)

In connection with the execution of the Merger Agreement, (i) Emilio Hirsch along with two of his affiliated entities, ESSE EFFE S.P.A and EFFE PI Società Semplice, and (ii) Dario Calogero and his affiliated entity, Maya Investments Ltd. (collectively, the “Holders”), executed voting agreements (the “Voting Agreements”) in favor of Tata Communications. Subject to the terms and conditions set forth in the Voting Agreements, the Holders agreed, among other things, to vote the shares of Company Common Stock owned by them in favor of the approval and adoption of the Merger Agreement.

The Voting Agreements also contain certain restrictions on the transfer of shares of Company Common Stock beneficially owned by the Holders and include a waiver of appraisal rights (including under Section 262 of the DGCL) by the Holders. The Voting Agreements will terminate upon the earliest to occur of: (a) the date the Merger Agreement is validly terminated in accordance with its terms, (b) the Effective Time, (c) at the election of the Holder, the effectiveness of any amendment of the Merger Agreement that reduces or changes the form of the consideration payable pursuant to the Merger Agreement or (d) a Company Board Recommendation Change (as defined in the Merger Agreement). A copy of the Voting Agreements are attached to this proxy statement as Annex C.

As of the record date, the Company Common Stock held by the Holders represented approximately 25% of the voting power of the outstanding shares of Company Common Stock.

No Solicitation by the Company (page 61)

The Merger Agreement generally restricts the Company’s ability to solicit acquisition proposals from third parties, or participate in discussions or negotiations with third parties regarding any acquisition proposal. Under certain circumstances, however, the Board may consider and pursue an unsolicited acquisition proposal received between signing and closing that is or is reasonably likely to lead to a Superior Proposal (as defined below under

 

- 7 -

“The Merger Agreement—No Solicitation by the Company”). Under certain circumstances, the Company is permitted to terminate the Merger Agreement prior to the approval and adoption of the Merger Agreement by the Company’s stockholders, in order to enter into an alternative transaction in response to an unsolicited acquisition proposal that constitutes a Superior Proposal, upon payment by the Company of a $5 million termination fee to Tata Communications. See the section of this proxy statement entitled “The Merger Agreement—No Solicitation by the Company” for additional information.

Termination (page 67)

The Company and Tata Communications may terminate the Merger Agreement by mutual written consent at any time before the Effective Time.

In addition, either the Company or Tata Communications may terminate the Merger Agreement if:

 

•

the Merger is not consummated on or before December 28, 2023, subject to an extension until March 28, 2024 if the required regulatory approvals have not been received (the “Termination Date”), provided that such right to terminate the Merger Agreement shall not be available to any party if the failure of such party, has been the primary cause of or primarily resulted in the failure of the consummation of the Merger to have occurred on or before the Termination Date;

 

•

any governmental law or order or other legal restraint or prohibition restraining or prohibiting the Merger becomes final and non-appealable or any law is in effect that permanently prevents or makes illegal the consummation of the Merger, provided that the right to terminate the Merger Agreement will not be available to a party if the issuance of such permanent injunction or other final and non-appealable judgment or order, or statute, rule or regulation was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement; or

 

•

the requisite vote of the stockholders of the Company to approve and adopt the Merger Agreement and the Merger is not obtained at the Special Meeting (including any adjournments or postponements).

The Company may also terminate the Merger Agreement:

 

•

in connection with entering into a definitive agreement related to a Superior Proposal prior to the receipt of the required vote of the stockholders of the Company to approve and adopt the Merger Agreement and the Merger, subject to the terms and conditions of the Merger Agreement, as further described below under “The Merger Agreement—Termination;” or

 

•

if Tata Communications or Merger Sub has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement, such that the conditions to the Company’s obligations to complete the Merger would not be satisfied, and such breach is not cured within 30 days following notice of breach, as further described below under “The Merger Agreement—Termination.”

Tata Communications may also terminate the Merger Agreement:

 

•

In the event of a Company Board Recommendation Change (as defined in the Merger Agreement), provided that Tata Communications may not terminate the Merger Agreement if it fails to exercise such right within ten business days after Tata Communication receives notices of the change of recommendation; or

 

•

if the Company has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement, such that the conditions to Tata Communications’ obligations to complete the Merger would not be satisfied, and such breach is not cured within 30 days following notice of breach, as further described below under “The Merger Agreement—Termination.”

 

- 8 -

The Company will pay a termination fee of $5,000,000 (the “Company Termination Fee”) in the following scenarios:

 

•

if (i) the Merger Agreement is validly terminated by Tata Communications as a result of: (x) the Merger not being consummated by the Termination Date, (y) the requisite consent of the Company’s stockholders adopting the Merger Agreement not being obtained by the Termination Date, or (z) the Company’s breach of the representations, warranties or covenants in a manner that would cause the conditions to the closing of the Merger set forth in the Merger Agreement to not be satisfied, (ii) prior to such termination, a third party announced and did not publicly withdraw or abandon a proposal for an alternative transaction for the Company, and (iii) within twelve months following such termination, the Company consummated an alternative business combination transaction or entered into a definitive agreement providing for the consummation an alternative business combination transaction;

 

•

if, prior to obtaining the requisite stockholder approval, (i) Tata Communications terminates the Merger Agreement because the board of directors of the Company changes its recommendation regarding the Merger; or

 

•

the Company terminates the Merger Agreement to enter into a definitive agreement providing for an alternative business combination transaction the board of directors of the Company deems to be superior to the Merger.

Tata Communications will be required to pay the Company a termination fee equal to $5,000,000 (the “Parent Termination Fee”) in the following scenarios:

 

•

if (i) either party terminates the Merger Agreement due to a failure to consummate the Merger prior to the Termination Date and (ii) at the time of such termination, all closing conditions have been satisfied or waived other than Tata Communications’ receipt of a certain approval from the Royal Bank of India, which approval was subsequently obtained on July 17, 2023.

 

- 9 -

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the Special Meeting, the Merger Agreement and the Merger. These questions and answers may not address all of the questions that may be important to you as a stockholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

 

Q:	Why am I receiving this proxy statement?

 

A:

On June 28, 2023, the Company entered into a Merger Agreement providing for the Merger of Merger Sub, a wholly owned subsidiary of Tata Communications, with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Tata Communications. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the proposal to approve and adopt the Merger Agreement and the Merger and the other matters to be voted on at the Special Meeting.

 

Q:	What is the proposed transaction?

 

A:

The proposed transaction is the acquisition of the Company by Tata Communications through the Merger of Merger Sub with and into the Company pursuant to the Merger Agreement. As a result of the Merger, following the Effective Time, the Company will become a wholly owned subsidiary of Tata Communications, and you will no longer own shares in the Company, only the right to receive the merger consideration.

 

Q:	What will I receive in the Merger?

 

A:

If the Merger is completed, you will be entitled to receive $7.25 in cash, without interest, for each share of Company Common Stock owned by you. For example, if you own 100 shares of Company Common Stock, you will be entitled to receive $725.00 in cash in exchange for your shares of Company Common Stock. You will not be entitled to receive shares in the Surviving Corporation or in Tata Communications.

The merger consideration represents a premium of (i) approximately 51% over the closing price of the Company Common Stock on June 27, 2023 (the last trading day prior to the public announcement of the Merger) and (ii) more than 145% over the volume-weighted average closing share price of the Company Common Stock during the 90 days prior to the Board’s approval of the Merger.

 

Q:	Where and when is the Special Meeting?

 

A:	The Special Meeting will take place virtually at https://www.cstproxy.com/kaleyra/2023, on September 28, 2023, at 11:00 a.m. Eastern Time.

 

Q:	What matters will be voted on at the Special Meeting?

 

A:	You will be asked to consider and vote on the following proposals:

 

•

to approve and adopt the Merger Agreement and the Merger;

 

•

to approve, on an advisory (non-binding) basis, the compensation that may be payable to the named executive officers of the Company in connection with the Merger; and

 

•

to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal to approve the Merger Agreement and the Merger.

 

- 10 -

Q:	What vote of the Company’s stockholders is required to approve the Merger Agreement and the Merger?

 

A:

Stockholders holding at least a majority of the voting power of the outstanding shares of Company Common Stock at the close of business on the record date for the determination of stockholders entitled to vote at the Special Meeting must vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. A failure to vote your shares of Company Common Stock or an abstention from voting will have the same effect as a vote against the proposal to approve and adopt the Merger Agreement and the Merger.

As of the close of business on August 8, 2023, the record date for the Special Meeting, there were 13,325,920 shares of Company Common Stock entitled to vote. Each share of Company Common Stock will be entitled to one vote.

 

Q:	Have any significant stockholders indicated how they intend to vote at the Special Meeting?

 

A:

Directors Dario Calogero and Emilio Hirsch and their respective affiliates, who collectively control approximately 25% of the voting power of the outstanding Company Common Stock as of the record date, have entered voting and support agreements with Tata Communications pursuant to which such holders are required to vote their shares “FOR” the proposal to approve and adopt the Merger Agreement and the Merger, subject to the terms and conditions to such agreements.

 

Q:	How many shares are needed to constitute a quorum?

 

A:

The presence at the Special Meeting, in person or by proxy, of stockholders of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at such meeting will constitute a quorum. If a quorum is not present at the Special Meeting, the Special Meeting may be adjourned or postponed from time to time until a quorum is obtained.

If you are a stockholder of record and you submit a proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card, your shares will be counted for the purpose of determining whether a quorum is present at the Special Meeting.

If you hold your shares of Company Common Stock in “street name” with your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, these shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting since all of the proposals currently expected to be voted on at the Special Meeting are considered non-routine matters.

 

Q:	What vote of our stockholders is required to approve other matters to be discussed at the Special Meeting?

 

A:

The advisory (non-binding) proposal to approve the compensation that may be payable to the named executive officers of the Company in connection with the Merger and the proposal regarding adjournment of the Special Meeting each requires the affirmative vote of the holders of a majority of the votes cast in person or represented by proxy at the Special Meeting.

 

Q:	What is the difference between a stockholder of record and a “street name” holder?

 

A:

If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust company or other nominee, then the broker, bank, trust company or other nominee is considered to be the stockholder of record with respect to those shares, while you are considered the beneficial owner of those shares. In the latter case, your shares are said to be held in “street name.”

 

- 11 -

Q:	If I am a beneficial owner of shares held in street name, how do I vote?

 

A:

If you hold your shares in a stock brokerage account or if your shares are held by a bank, trust company or other nominee (that is, in street name), you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker or nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to the Company or by voting in person at the Special Meeting. Further, brokers who hold shares of Company Common Stock on behalf of their customers may not give a proxy to the Company to vote those shares without specific instructions from their customers.

If you are a Company Common Stockholder who holds shares of Company Common Stock in “street name” and you do not instruct your broker on how to vote your shares, your broker may not vote your shares, which will have the same effect as a vote against the proposal to approve and adopt the Merger Agreement and the Merger and, assuming a quorum is present, will have no effect on the other proposals.

 

Q:	What will happen if I return my proxy card without indicating how to vote?

 

A:	If you are a stockholder of record and you sign, date and return your proxy card without indicating how you wish to vote on any particular proposal, the Company Common Stock represented by your proxy will be voted in favor of each of the proposals.

 

Q:	How does the Board recommend that I vote?

 

A:	The Board unanimously recommends that our stockholders vote:

 

•

“FOR” the proposal to approve and adopt the Merger Agreement and the Merger;

 

•

“FOR” the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger; and

 

•

“FOR” the proposal regarding adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies.

 

Q:	What are some of the effects the Merger will have on the Company?

 

A:

The Company Common Stock is currently registered under the Exchange Act, and is traded on the NYSE under the symbol “KLR.” As a result of the Merger, the Company will cease to be a publicly traded company and will become a wholly owned subsidiary of Tata Communications. Following the consummation of the Merger, the Company Common Stock will be delisted from the NYSE and deregistered under the Exchange Act, and the Company will no longer be required to file periodic reports with the SEC with respect to the Company Common Stock, in each case in accordance with applicable law, rules and regulations.

 

Q:	What happens if the Merger is not consummated?

 

A:

If the Merger Agreement and the Merger are not approved by the Company’s stockholders, or if the Merger is not consummated for any other reason, the Company’s stockholders will not receive any payment for their shares in connection with the Merger. Instead, the Company will remain a public company, and shares of the Company Common Stock will continue to be listed and traded on the NYSE.

 

Q:	What will happen if stockholders do not approve the advisory proposal on executive compensation that may become payable to the Company’s named executive officers in connection with the Merger?

 

A:	The approval of this proposal is not a condition to the completion of the Merger. The vote on this proposal is an advisory vote and will not be binding on the Company or Tata Communications. If the Merger

 

- 12 -

Agreement and the Merger are approved by the Company’s stockholders and the Merger is completed, the Merger-related compensation may be paid to the Company’s named executive officers even if stockholders fail to approve this proposal.

 

Q:	What do I need to do now? How do I vote my shares of Company Common Stock?

 

A:

We urge you to read this proxy statement carefully, including its annexes and the documents incorporated by reference in this proxy statement, and to consider how the Merger affects you. Your vote is important. If you are a stockholder of record, you can ensure that your shares are voted at the Special Meeting by submitting your proxy via:

 

•

mail, using the enclosed postage-paid envelope;

 

•

telephone, by calling the toll-free number listed on each proxy card; or

 

•

the Internet, by accessing the address provided on each proxy card.

If you are a stockholder of record and you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposal to approve and adopt the Merger Agreement and the Merger, the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger, and the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies.

If you hold your shares of Company Common Stock in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting “AGAINST” the proposal to approve and adopt the Merger Agreement and the Merger.

 

Q:	Can I revoke my proxy?

 

A:

Yes. You can revoke your proxy at any time before the vote is taken at the Special Meeting. If you are a stockholder of record, you may revoke your proxy by notifying the Company’s Corporate Secretary in writing at Kaleyra, Inc., Via Marco D’Aviano 2, 20131 Milano, Italy, Attention: Corporate Secretary, or by submitting a new proxy by telephone, the Internet or mail, in each case, dated after the date of the proxy being revoked. In addition, you may revoke your proxy by attending the Special Meeting and voting in person (simply attending the Special Meeting will not cause your proxy to be revoked). Please note that if you hold your shares in “street name” and you have instructed a broker, bank or other nominee to vote your shares, the above-described options for revoking your voting instructions do not apply, and instead you must follow the instructions received from your broker, bank or other nominee to revoke your voting instructions.

 

Q:	What happens if I do not vote?

 

A:

The vote to approve and adopt the Merger Agreement and the Merger is based on the total number of shares of Company Common Stock issued and outstanding as of the close of business on the record date, not just the shares that are voted. If you do not vote, it will have the same effect as a vote “AGAINST” the proposal to approve and adopt the Merger Agreement and the Merger.

 

Q:	Will my shares of Company Common Stock held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?

 

A:	No. Because any shares of Company Common Stock you may hold in “street name” will be deemed to be held by a different stockholder than any shares of Company Common Stock you hold of record, any shares of Company Common Stock so held will not be combined for voting purposes with shares of Company

 

- 13 -

Common Stock you hold of record. Similarly, if you own shares of Company Common Stock in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign, date and return, a separate proxy card for those shares of Company Common Stock because they are held in a different form of record ownership. Shares of Company Common Stock held by a corporation or business entity must be voted by an authorized officer of the entity. Shares of Company Common Stock held in an individual retirement account must be voted under the rules governing the account.

 

Q:	What happens if I sell my shares of Company Common Stock before completion of the Merger?

 

A:	If you transfer your shares of Company Common Stock, you will have transferred your right to receive the merger consideration in the Merger. In order to receive the merger consideration, you must hold your shares of Company Common Stock through completion of the Merger.

The record date for stockholders entitled to vote at the Special Meeting is earlier than the consummation of the Merger. So, if you transfer your shares of Company Common Stock after the record date but before the closing of the Merger, you will have transferred your right to receive the merger consideration in the Merger, but you will have retained the right to vote at the Special Meeting.

 

Q:	Should I send in my stock certificates or other evidence of ownership now?

 

A:

No. After the Merger is completed, you will receive a letter of transmittal and related materials from the paying agent for the Merger with detailed written instructions for exchanging your shares of Company Common Stock for the merger consideration. If your shares of Company Common Stock are held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the merger consideration. Do not send in your certificates now.

 

Q:	I do not know where my stock certificate is—how will I get the merger consideration for my shares of Company Common Stock?

 

A:

If the Merger is completed, the transmittal materials you will receive after the completion of the Merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your stock certificate. The Company may also require that you post a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any potential loss.

 

Q:	Am I entitled to exercise dissenters’ or appraisal rights instead of receiving the merger consideration for my shares of Company Common Stock?

 

A:

Yes. Under Delaware law, if the Merger is completed, holders of Company Common Stock who (i) do not vote in favor of the approval and adoption of the Merger Agreement, (ii) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their applicable shares of Company Common Stock through completion of the Merger, (iii) properly demand appraisal of their applicable shares, (iv) meet certain statutory requirements described in this proxy statement, and (v) do not withdraw their demands or otherwise lose their rights to appraisal will have the right to seek appraisal under Section 262 of the DGCL. This means that such holders may be entitled to have their shares of Company Common Stock appraised by the Delaware Court of Chancery and to receive the judicially determined “fair value” of their shares of Company Common Stock in lieu of receiving the merger consideration. This appraisal value could be more than, the same as, or less than the merger consideration that would have otherwise been received for those shares.

Due to the complexity of the appraisal process, any persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights. The DGCL

 

- 14 -

requirements for perfecting and exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, which may be accessed without subscription or cost at the following publicly available website https://delcode.delaware.gov/title8/c001/sc09/#262.

 

Q:	Will I have to pay taxes on the merger consideration I receive?

 

A:

If you are a U.S. holder, the receipt of cash in exchange for shares of Company Common Stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. If you are a non-U.S. holder, the Merger will generally not be a taxable transaction to you for U.S. federal income tax purposes unless you have certain connections to the United States. You should consult your own tax advisors regarding the particular tax consequences to you of the exchange of shares of Company Common Stock for cash pursuant to the Merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws).

 

Q:	What does it mean if I get more than one proxy card or voting instruction card?

 

A:

If your shares of Company Common Stock are registered differently or are held in more than one account, you will receive more than one proxy or voting instruction card. Please complete and return all of the proxy cards or voting instruction cards you receive (or submit each of your proxies by telephone or the Internet, if available to you) to ensure that all of your shares of Company Common Stock are voted.

 

Q:	What is householding and how does it affect me?

 

A:

The SEC permits companies to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of Company Common Stock held through brokerage firms. If your family has multiple accounts holding Company Common Stock, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q:	Who can help answer my other questions?

 

A:

If you have more questions about the Merger, or require assistance in submitting your proxy or voting your shares or need additional copies of the proxy statement or the enclosed proxy card, please contact Okapi Partners LLC, which is acting as the proxy solicitor for the Company in connection with the Merger, or the Company.

 

- 15 -

Okapi Partners LLC, toll-free at (844) 203-3605 or by email at info@okapipartners.com.

Okapi Partners LLC

1212 Avenue of the Americas, 17^th Floor

New York, New York 10036

Stockholders Call Toll-Free at: (844) 203-3605

Banks and Brokerage Firms Call at: (212) 297-0720

E-mail: info@okapipartners.com

or

Kaleyra, Inc.

Via Marco D’Aviano 2

2031, Milan, Italy

Attention: Investor Relations

(203) 741-8811

E-mail: investors@kaleyra.com

If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.

 

- 16 -

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements within the meaning of U.S. federal securities laws. Such forward-looking statements include, but are not limited to, its omnichannel and other product and global customer developments, its expectations, beliefs, intentions, plans, prospects or strategies regarding the business plans of Kaleyra’s management team. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this communication are based on certain assumptions and analyses made by Kaleyra in light of its experience and perception of historical trends, current conditions and expected future developments and their potential effects on Kaleyra as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting Kaleyra will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the parties) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including Kaleyra’s ability to regain compliance with the NYSE Listing Company Manual, the mix of services utilized by Kaleyra’s customers and such customers’ needs for these services, including any variability by geography, market acceptance of new service offerings, the ability of Kaleyra to expand what it does for existing customers as well as to add new customers, that Kaleyra will have sufficient capital to operate as anticipated, and the impact of other geopolitical and macroeconomic factors such as the war in Ukraine, may have on Kaleyra’s operations, the demand for Kaleyra’s products, global supply chains and economic activity in general. Additional risk factors that that may cause such a difference include, but are not limited to:

 

•

the ability of the parties to consummate the proposed Merger in a timely manner or at all;

 

•

the satisfaction (or waiver) of closing conditions to the consummation of the proposed Merger, and potential delays in consummation of the proposed Merger;

 

•

the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement;

 

•

significant transaction costs associated with the proposed Merger;

 

•

potential litigation relating to the proposed Merger;

 

•

the risk that disruptions from the proposed transaction will harm Kaleyra’s business, including current plans and operations;

 

•

the ability of Kaleyra to retain and hire key personnel;

 

•

potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Merger;

 

•

legislative, regulatory and economic developments affecting Kaleyra’s business;

 

•

general economic and market developments and conditions;

 

•

the evolving legal, regulatory and tax regimes under which Kaleyra operates; and

 

•

potential business uncertainty, including changes to existing business relationships, during the pendency of the Merger that could affect Kaleyra’s financial performance.

Therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Should one or more of these risks or uncertainties materialize or should any of the assumptions being made prove incorrect, actual results may vary in material respects from those

 

- 17 -

projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

- 18 -

THE COMPANIES

Kaleyra, Inc.

Kaleyra, Inc. is a Delaware corporation with principal executive offices located at 85 Broad Street, New York, New York 10018, telephone number 917-508-9185. The Company provides mobile communication services for financial institutions and enterprises of all sizes worldwide. Through its proprietary platforms, Kaleyra manages multi-channel integrated communication services on a global scale, comprised of messages, push notifications, e-mail, instant messaging, voice services and chatbots. The Company’s subsidiaries include: Kaleyra, S.p.A. (Italy), Buc Mobile, Inc. (Delaware), Solutions Infini Technologies Private Limited (India), The Campaign Registry, Inc. (Delaware), Campaign Registry, Inc (Canada), Solutions Infini FZE (Dubai International Financial Centre),(Kaleyra US Inc. (Delaware), Kaleyra UK, Ltd (United Kingdom), Kaleyra Dominicana SRL (Dominican Republic), mGage Athens PC (Greece) and mGage SA de CV (Mexico).

Additional information about the Company is contained in its public filings, which are incorporated by reference herein. See the section of this proxy statement entitled “Where You Can Find Additional Information” on page 82.

Tata Communications Limited

Tata Communications Limited is a company listed on BSE Limited and National Stock Exchange of India Limited. Tata Communications’ registered office is at VSB, Mahatma Gandhi Road, Fort, Mumbai 400 001, India (and its telephone number is +91-22-6628 1968). Tata Communications is a leading global digital ecosystem enabler. With a leadership position in emerging markets, and an infrastructure that spans the globe, Tata Communications leverages its advanced solutions capabilities and domain expertise across its global network to deliver managed solutions to multinational companies and service providers. Tata Communications partners with 300 of the Fortune 500 companies with its state-of-the-art solutions, including a wide range of communication, collaboration, cloud, mobility, connected solutions, network and data center services.

TC Delaware Technologies Inc.

TC Delaware Technologies Inc. is a Delaware corporation and wholly owned subsidiary of Tata Communications with principal executive office located at 11911 Freedom Drive Suite 250 Reston, VA 20190, telephone number (703) 547-590. Merger Sub was formed on June 21, 2023, solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to the Company’s stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting. This proxy statement provides the Company’s stockholders with the information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held which will be held virtually at https://www.cstproxy.com/kaleyra/2023, on September 28, 2023, at 11:00 a.m. Eastern Time to consider and vote upon the following proposals.

Purposes of the Special Meeting

One purpose of the Special Meeting is for our stockholders to consider and vote upon the proposal to approve and adopt the Merger Agreement and the Merger. Our stockholders must approve and adopt the Merger Agreement and the Merger for the Merger to occur. If our stockholders fail to approve and adopt the Merger Agreement and the Merger, the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A, and the material provisions of the Merger Agreement are described under “The Merger Agreement.”

In addition, in accordance with Section 14A of the Exchange Act, the Company is providing its stockholders with the opportunity to cast an advisory (non-binding) vote on the compensation that may be payable to its named executive officers in connection with the Merger, the value of which is disclosed in the table in the section of this proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger.” The vote on executive compensation that may become payable in connection with the Merger is a vote separate and apart from the vote to approve and adopt the Merger Agreement and the Merger. Accordingly, a stockholder may vote to approve and adopt the Merger Agreement and the Merger and vote not to approve the executive compensation and vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either the Company or Tata Communications.

Our stockholders are also being asked to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve and adopt the Merger Agreement and the Merger.

This proxy statement and the enclosed form of proxy are first being mailed to stockholders on or about August 17, 2023.

Recommendation of the Company’s Board of Directors

After careful consideration, the Board has unanimously approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and determined that it is advisable, fair to and in the best interests of the Company and its stockholders to enter into the Merger Agreement. Certain factors considered by the Board in reaching its decision to approve and adopt the Merger Agreement and the Merger may be found in the section of this proxy statement entitled “The Merger—Reasons for the Merger.”

 

In addition, the Board unanimously recommends that the stockholders of the Company vote “FOR” the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger and “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies.

 

- 20 -

Record Date and Quorum

The holders of record of Company Common Stock as of the close of business on August 8, 2023, the record date, are entitled to receive notice of and to vote at the Special Meeting. As of the close of business on the record date, 13,325,920 shares of Company Common Stock were issued and outstanding.

The presence at the Special Meeting, in person or by proxy, of holders entitled to cast a majority of all votes entitled to be cast at the meeting at the close of business on the record date will constitute a quorum, permitting the Company to conduct its business at the Special Meeting. Once a share is represented at the Special Meeting, it will be counted for the purpose of determining a quorum at the Special Meeting. However, if a new record date is set for an adjourned Special Meeting, then a new quorum will have to be established. Proxies received but marked as abstentions as described below under the sub-heading “The Special Meeting—Voting; Proxies; Revocation—Providing Voting Instructions by Proxy” will be included in the calculation of the number of shares considered to be present at the Special Meeting.

Shares of Company Common Stock held by stockholders of record that submit a proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card will be counted for the purpose of determining whether a quorum is present at the Special Meeting.

Shares of Company Common Stock held by stockholders in “street name” by a broker, bank or other nominee that do not instruct the nominee how to vote such shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting.

Directors Dario Calogero and Emilio Hirsch and their respective affiliates, who collectively control approximately 25% of the voting power of the outstanding Company Common Stock as of the record date, have entered voting and support agreements with Tata Communications pursuant to which such holders are required to vote their shares “FOR” the proposal to approve and adopt the Merger Agreement and the Merger, subject to the terms and conditions to such agreements.

Required Vote

Each share of Company Common Stock issued and outstanding at the close of business on the record date is entitled to one vote at the Special Meeting.

For the Company to complete the Merger, stockholders holding at least a majority of the voting power of the outstanding shares of Company Common Stock at the close of business on the record date must vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. A failure to vote your shares of Company Common Stock or an abstention from voting will have the same effect as a vote against the proposal to approve and adopt the Merger Agreement and the Merger.

Approval of each of the advisory (non-binding) proposal on executive compensation that may become payable to the Company’s named executive officers in connection with the Merger and the adjournment proposal requires the affirmative vote of a majority of the votes cast, in person or represented by proxy at the Special Meeting. An abstention will have the same effect as a vote against these proposals, but the failure to vote your shares will have no effect on the outcome of these proposals.

Voting by the Company’s Directors and Executive Officers

As of the close of business on the record date, directors and executive officers of the Company were entitled to vote 4,022,392 shares of Company Common Stock, or approximately 30% of the shares of Company Common Stock issued and outstanding on that date. We currently expect that the Company’s directors and executive officers will vote their shares in favor of the proposal to approve and adopt the Merger Agreement and the Merger and the other proposals to be considered at the Special Meeting, although none of them is obligated to do so, except as required pursuant to the terms of the Voting Agreements.

 

- 21 -

Voting; Proxies; Revocation

Attendance

All holders of shares of Company Common Stock as of close of business on the August 8, 2023 record date, including stockholders of record and beneficial owners of Company Common Stock registered in the “street name” of a bank, broker or other nominee, are invited to attend the Special Meeting. If you are a stockholder of record, please be prepared to provide proper identification, such as a driver’s license. If you hold your shares in “street name,” you will need to provide proof of ownership, such as a recent account statement or voting instruction form provided by your bank, broker or other nominee or other similar evidence of ownership, along with proper identification.

Voting in Person

Stockholders of record will be able to vote in person at the Special Meeting. If you are not a stockholder of record, but instead hold your shares of Company Common Stock in “street name” through a bank, broker or other nominee, you must provide a proxy executed in your favor from your bank, broker or other nominee in order to be able to vote in person at the Special Meeting.

Providing Voting Instructions by Proxy

To ensure that your shares of Company Common Stock are voted at the Special Meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the Special Meeting in person.

Shares of Common Stock Held by Record Holder

If you are a stockholder of record, you may provide voting instructions by proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting voting instructions. You may vote by telephone by calling the toll-free number or via the Internet by accessing the Internet address as specified on the enclosed proxy card. Your shares of Company Common Stock will be voted as you direct in the same manner as if you had completed, signed, dated and returned your proxy card, as described below.

Submit a Proxy Card by Mail. If you complete, sign, date and return the enclosed proxy card by mail so that it is received in time for the Special Meeting, your shares of Company Common Stock will be voted in the manner directed by you on your proxy card.

If you fail to return your proxy card and you are a holder of record on the record date, unless you attend the Special Meeting and vote in person, the effect will be that your shares of Company Common Stock will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, will have the same effect as a vote against the proposal to approve and adopt the Merger Agreement and the Merger and will not affect the vote regarding the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies, or the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposal to approve and adopt the Merger Agreement and the Merger, the advisory (non-binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the Merger, and the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies.

 

- 22 -

Shares of Company Common Stock Held in “Street Name”

If your shares of Company Common Stock are held by a bank, broker or other nominee on your behalf in “street name,” your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your shares. Many banks and brokerage firms have a process for their customers to provide voting instructions by telephone or via the Internet, in addition to providing voting instructions by a voting instruction form.

In accordance with the rules of the NYSE, banks, brokers and other nominees who hold shares of Company Common Stock in “street name” for their customers do not have discretionary authority to vote the shares with respect to the proposal to approve and adopt the Merger Agreement and the Merger or any of the other proposals described in this proxy statement. Accordingly, if banks, brokers or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to the proposal to approve and adopt the Merger Agreement and the Merger or any of the other proposals described in this proxy statement. Since all of the proposals currently expected to be voted on at the Special Meeting are considered non-routine matters, shares held in “street name” through a broker, bank or other nominee will not be counted as present for the purpose of determining the existence of a quorum if such broker, bank or other nominee does not have instructions to vote on any such proposals. For shares of Company Common Stock held in “street name,” only shares of Company Common Stock affirmatively voted “FOR” the proposal to approve and adopt the Merger Agreement and the Merger will be counted as a favorable vote for such proposal.

Revocation of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted. If you are a stockholder of record, you may revoke your proxy at any time before the vote is taken at the Special Meeting by:

 

•

submitting a new proxy with a later date, by using the telephone or Internet proxy submission procedures described above, or by completing, signing, dating and returning a new proxy card by mail to the Company;

 

•

attending the Special Meeting and voting in person; or

 

•

delivering to the Corporate Secretary of the Company a written notice of revocation c/o Kaleyra, Inc., Via Marco D’Aviano 2, 20131 Milano, Italy.

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to the Company or by sending a written notice of revocation to the Company, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by the Company before the Special Meeting.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee in order to revoke your proxy or submit new voting instructions.

Abstentions

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares of Company Common Stock represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote “AGAINST” the proposal to approve and adopt the Merger Agreement and the Merger, a vote “AGAINST” the advisory (non-binding) proposal on executive compensation that may become payable to the Company’s named executive officers in connection with the Merger, and a vote “AGAINST” the adjournment proposal.

 

- 23 -

Adjournments and Postponements

Although it is not currently expected, the Special Meeting may be adjourned or postponed for the purpose of soliciting additional proxies. In the event that there is present, in person or by proxy, sufficient favorable voting power to secure the vote of the stockholders of the Company necessary to approve the proposal to approve and adopt the Merger Agreement and the Merger, the Company does not anticipate that it will adjourn or postpone the Special Meeting unless it is advised by counsel that failure to do so could reasonably be expected to result in a violation of applicable law.

The Special Meeting may be adjourned by the Board or the chairperson of the Special Meeting as long as the holders of a majority of the shares of Company Common Stock are present in person or represented by proxy at the Special Meeting. In addition, regardless of whether a quorum is present, the chairperson of the Special Meeting has the power under the Company’s bylaws to adjourn the Special Meeting from time to time. Any signed proxies received by the Company in which no voting instructions are provided on such matter will be voted in favor of an adjournment in these circumstances. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned or postponed.

Solicitation of Proxies

The Board is soliciting your proxy, and the Company will bear the cost of this solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of outstanding Company Common Stock. Okapi Partners LLC, a proxy solicitation firm, has been retained to assist the Company in the solicitation of proxies for the Special Meeting, and the Company will pay Okapi Partners LLC $50,000, plus reimbursement of out-of-pocket expenses for these services. Proxies may be solicited by mail, personal interview, e-mail, telephone, or via the Internet by Okapi Partners LLC, or, without additional compensation, by certain of the Company’s directors, officers and employees.

Other Information

You should not return your stock certificate or send documents representing Company Common Stock with the proxy card. If the Merger is completed, the paying agent for the Merger will send you a letter of transmittal and related materials and instructions for exchanging your shares of Company Common Stock for the merger consideration.

 

- 24 -

THE MERGER

(PROPOSAL 1)

Certain Effects of the Merger

If the Merger Agreement and Merger are approved and adopted by the Company’s stockholders and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into the Company with the Company continuing as the Surviving Corporation in the Merger and a wholly owned subsidiary of Tata Communications.

Upon the consummation of the Merger, each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock or owned by Tata Communications or any of its subsidiaries (including Merger Sub), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive $7.25 in cash, without interest thereon. Under the terms of the Merger Agreement, all debt of the Company (approximately $157.4 million of net debt outstanding as of June 30, 2023) will become debt of the Surviving Corporation, which will be a wholly owned subsidiary of Tata Communications after the Merger.

The Company Common Stock is currently registered under the Exchange Act and is traded on the NYSE under the symbol “KLR.” As a result of the Merger, the Company will cease to be a publicly traded company and will be wholly owned by Tata Communications. Following the consummation of the Merger, the Company Common Stock will be delisted from the NYSE and deregistered under the Exchange Act, and the Company will no longer be required to file periodic reports with the SEC with respect to the Company Common Stock, in each case in accordance with applicable law, rules and regulations.

Background of the Merger

As part of their ongoing evaluation of the Company’s business, the Board and the Company’s senior management periodically review and assess the Company’s operations, liquidity and debt obligations, financial performance, strategic direction, and prospects in light of industry conditions and the general economic environment and their potential impact on the Company’s long-term strategic goals and plans, as well as the impact of the Company’s capital structure and indebtedness agreements on its business, operations and prospects. In the past, this review and assessment have included, among other things, whether to partner with another company, whether to accept investment from third parties, whether to pursue potential merger and acquisition opportunities or opportunities to sell business units, and whether, as a general matter, it remained in the best interests of the Company’s stockholders to remain a publicly traded company in light of prevailing market conditions and the current and anticipated future prospects for the Company’s business and operations.

On June 9, 2022 the Company received an unsolicited proposal from the TCR Acquisition Corporation, LLC to purchase The Campaign Registry Inc. (“TCR”) from the Company. The proposed purchase price to be paid was based on a multiple of TCR’s revenue, which proposal was subsequently made public by TCR Acquisition Corporation, LLC. After careful consideration and with the assistance of its advisors, the Board unanimously concluded, based on, among other things, the tentative price to be paid, the identity of the prospective purchasers and the purported financing, that the unsolicited, non-binding proposal from TCR Acquisition LLC significantly undervalued TCR, and was not in the best interests of the Company and its stockholders.

Following the unsolicited proposal, on June 13, 2022, the Board discussed the possible engagement of a major investment bank as a strategic advisor for the Company to assess potential strategic transactions. On June 18, 2022, the Company entered into a confidentiality agreement with this investment bank to facilitate a potential engagement. The Company did not ultimately engage this investment bank as its advisor.

 

- 25 -

From April of 2022 until September of 2022, the Company entered into confidentiality and standstill agreements with three potential strategic bidders and one financial sponsor to explore potential strategic transactions.

On August 3, 2022, the Board approved the formation of a strategic transaction committee (the “Strategic Transaction Committee”) to assist the Board in discharging its oversight duties with respect to evaluating and reviewing potential strategic transactions, including mergers, material acquisitions or divestitures and other material purchase or sale transactions, and to make related recommendations to the Board. The Strategic Transaction Committee was comprised of board members Dr. Avi Katz, as chairman, Matteo Lodrini and Dario Calogero, and was not formed for the purpose of mitigating potential conflicts of interest.

By the end of September 2022, the Company had received preliminary indications of interest from two strategic buyers for a strategic merger or combination and the Company provided access to diligence materials to both bidders in order to facilitate their assessment of a potential transaction.

On September 29, 2022, the Board discussed the proposals received from the strategic bidders. One of the bidders (“Entity A”) proposed a possible cash transaction pursuant to which Entity A, a private company, would acquire the Company for a modest premium and take the Company private. Following the board meeting, a representative of the Strategic Transaction Committee had a phone conversation with a representative of Entity A. During this conversation, the representative of the Strategic Transaction Committee noted that the Company had outstanding $200 million principal amount of convertible notes and asked for confirmation as to whether this proposal included assumption of these notes. The representative of Entity A was unable to confirm the proposal included assumption of the convertible notes and stated that he would need to respond after checking with others from Entity A. Following this conversation, the Company did not receive this confirmation and did not receive an updated proposal from Entity A. The other bidder (“Entity B”), a public company with stock listed on an overseas exchange, proposed a merger with the Company, which was structured as a stock for stock exchange. The Board authorized Willkie to conduct an analysis of the ramifications of such a transaction under the Company’s convertible notes indenture and authorized Company management to prepare a financial analysis of the combined company.

Subsequently, the members of the Strategic Transaction Committee, after taking into consideration then current market conditions, the potential value to shareholders and the ability of the bidders to consummate the transaction, decided that the potential strategic transactions with Entity A or Entity B were not in the best interest of the Company and its stockholders and to not recommend to the full Board that the Company further pursue either possible transaction.    

In February and March 2023, the Company entered into two confidentiality and standstill agreements with strategic buyers to discuss the potential sale of TCR. The Board subsequently decided these potential transactions were not in the best interest of the Company and its stockholders taking into consideration the current market conditions and the alternatives available (including selling the Company as a whole or continuing as a standalone entity and executing on the Company’s Value Creation Program announced on February 15, 2023), and terminated all further discussions as of March 16, 2023, when the Company entered into the exclusivity agreement and the non-binding letter of intent with Tata Communications as further described below. These strategic buyers did not make any proposals as to the proposed price to be paid in these potential transactions and did not make any proposals regarding a strategic transaction involving the whole Company.

On January 6, 2023, Dr. Avi Katz, the Chairman of the Board, received an unsolicited email from representatives of Lazard, acting on behalf of Tata Communications, requesting a meeting to discuss a potential acquisition of the Company by Tata Communications. On January 24, 2023, the Company entered into a confidentiality agreement with Tata Communications (containing confidentiality and standstill provisions) to explore a potential strategic transaction. On January 9, 2023 and January 11, 2023, Dr. Katz had calls with representatives from Lazard to discuss the potential acquisition and had further discussions on January 19, 2023

 

- 26 -

and January 27, 2023, including to schedule a meeting among Tata Communications’ management and Dr. Katz. During this time, through the execution by Kaleyra of the exclusivity agreement and the non-binding letter of intent with Tata Communications on March 16, 2023, and the Merger Agreement on June 28, 2023, Dr. Katz provided frequent reports to members of the Company’s Board of Directors, including at board meetings on April 20, 2023, May 8, 2023, June 6, 2023, June 15, 2023, June 21, 2023 and June 27, 2023 regarding the ongoing discussions with Tata Communications and its representatives, and Dr. Katz organized meetings between Company management and certain members of the Board with executives of Tata Communications.

On December 12, 2022, the Company announced that Mr. Dario Calogero, its founder and Chief Executive Officer, notified the Board of his intention to step down from his position as Chief Executive Officer of the Company. The Board subsequently retained a leading independent executive search firm to assist with the Chief Executive Officer search process. During the course of the Company’s negotiations with Tata Communications, the Board was also in discussions with a candidate to become the Company’s next Chief Executive Officer, with negotiations beginning in early April 2023. Around the time of execution of the Merger Agreement at the end of June 2023, these discussions terminated.

In January 2023 the Company launched a Company-wide restructuring and cost reduction program titled the Value Creation Program. This program has produced results starting in the first quarter of 2023, with cost savings and cash flow improvements. The Company publicly announced the program in connection with announcement of its financial results for 2022.

On the afternoon of February 1, 2023, board members Dr. Avi Katz, Mr. Neil Miotto and Mr. John Mikulsky met with Mr. Tri Pham, Chief Strategy and Innovation Officer of Tata Communications, and Mr. Madhusudhan Mysore, Executive Vice President of Tata Communications, in an office in California to discuss the potential acquisition. Later that evening, Dr. Avi Katz, Mr. Neil Miotto, and Mr. John Mikulsky met for dinner with Mr. Madhusudhan Mysore, Mr. Tri Pham and representatives for Lazard to further discuss the potential acquisition.

On February 3, 2023, Dr. Katz and directors Neil Miotto and John Mikulsky had a call with representatives of Lazard to discuss the meeting with Tata Communications and expressed that the Company was still interested in pursuing a potential transaction.

On February 9, 2023, Dr. Katz had a call with representatives of Lazard to continue discussions regarding a potential transaction. Later that day, the Board met to discuss the initial discussions with Tata Communications, and among other things, potential strategic alternatives including a possible sale of TCR and a potential PIPE transaction. The Board considered the pros and cons of each option.

On February 28, 2023, Dr. Katz, representatives of Lazard and representatives of Tata Communications discussed the potential acquisition and, in response to a verbal request from Tata Communications on February 28, 2023 for an exclusivity period to further diligence the potential transaction, Dr. Katz, based on discussions with and guidance from the Board, indicated that, in order for the Board to elaborate on and potentially agree to exclusivity, any offer would need to reflect a robust premium to the Company’s current share price.

On March 11, 2023, representatives from Lazard discussed the potential acquisition with Dr. Avi Katz and proposed, on behalf of Tata Communications, a price per share for the Company’s Common Stock ranging from $2.00 - $2.30 (without taking into account the reverse stock split), which corresponds to a $7.00 - $8.00 per share price after factoring in the reverse stock split. This was the first time a share price was proposed by Tata Communications.

On March 12, 2023, Dr. Katz received a non-binding letter of intent and draft exclusivity agreement from Tata Communications, which included a range for the price per share of Company Common Stock of $7.00 - $8.00

 

- 27 -

(which represented a 215% - 260% premium to the closing share price on March 10, 2023 of $2.22). On March 14, 2023, the Board held a special meeting via videoconference and was joined by representatives from Willkie Farr & Gallagher LLP (“Willkie”), counsel to the Company, to discuss the proposal. At the meeting, Willkie reviewed and the Board discussed its fiduciary duties in connection the proposal and the draft exclusivity agreement, as well as the material legal terms of the proposal and exclusivity letter, including the two-month exclusivity period. The Board engaged in a further discussion of the proposal, including the price range, the reputation of Tata Communications and its ability to consummate a transaction, the lack of any financing contingency in the proposal, the Company’s ongoing liquidity needs including its outstanding debt obligations and the significant annual interest payments related to such debt obligations, the Company’s recent non-compliance with the market capitalization requirements of the NYSE and the risk of being de-listed from the NYSE, and potential alternative transactions, including a possible sale of TCR, for which the Company had received unsolicited indications of interest in the recent past. Relative to the alternatives available to the Company, including (a) pursuing a sale of TCR or the Company to potential other strategic bidders or (b) continuing with the Company’s Value Creation Program announced on February 15, 2023, and after discussion and consideration of the significant premium to the Company’s current share price, the risks to the Company’s operating budget, the Company’s ongoing liquidity needs and debt obligations, the interests of the stockholders and the Company’s financing options, the Board approved pursuing a potential transaction with Tata Communications. The Board unanimously agreed to authorize the Company to further pursue the proposal and enter into the exclusivity agreement, to permit the counterparty to commence due diligence of the Company and to commence negotiations with Tata Communications. Following the meeting, the Company executed the exclusivity letter and Dr. Katz communicated to Tata Communications, on behalf of the Board, that the Company would like to move forward with exploring the potential transaction and begin the due diligence process.

Following the execution of the exclusivity agreement on March 16, 2023, on March 21, 2023 Tata Communications provided the Company with a detailed due diligence request list. The Company commenced with preparing responses and gathering documents and, on March 22, 2023, the Company granted Tata Communications access to a virtual data room where responses to certain of Tata Communications’ diligence requests were posted. Over the next two months, representatives of Tata Communications, Lazard and the Company met periodically in-person and via videoconference and teleconference to discuss various aspects of Tata Communications’ due diligence review of the Company, including its operations, product portfolio and roadmap, business unit and customer trends, unit economics, cost structure, financial forecast and growth strategy.

On April 20, 2023, the Board held a special meeting via video conference, during which the Board discussed the possible formation of a new transaction committee of the Board (the “Special Committee”) as a matter of convenience and efficiency to manage the diligence and communication process for the Company for the potential transaction with Tata Communications. The Special Committee was not formed due to any potential conflicts of interest. Following discussion, the Board unanimously adopted resolutions establishing the Special Committee and adopting the charter of the Special Committee, authorizing it to manage on behalf of the Company the due diligence process with Tata Communications, including managing all communications and discussions and to oversee the negotiation of a proposed Merger Agreement with Tata Communications. The Board appointed Dr. Katz, as chairman of the Special Committee, and Dr. Emilio Hirsch, Matteo Lodrini, Kathleen Miller, John Mikulsky, Neil Miotto and K.J. Tjon as the other members of the Special Committee.

During April and May 2023, Tata Communications continued its business and legal due diligence of the Company and no post-transaction employment or compensation terms for current management were discussed at any time prior to the execution of the Merger Agreement.

On May 29, 2023, following a meeting with Tata Communications, Dr. Katz informed the Board that Tata Communications had substantially completed its due diligence and intended on delivering a draft Merger Agreement on June 2, 2023, together with an exclusivity extension letter. Following deliberation by the Board and at their instruction, Dr. Katz indicated that, while the Board would be willing to extend exclusivity for a few

 

- 28 -

days, the Board would need Tata Communications to confirm its proposed price (which should fully reflect Tata Communication’s due diligence on the Company over the last two months) before extending exclusivity any further.

On June 2, 2023, Mr. Tri Pham sent Dr. Katz a draft Merger Agreement, an exclusivity extension letter and a reaffirmation of the letter of intent with a proposed per share price of $7.00 (representing the lower end of the range originally provided). Goodwin Procter LLP, outside counsel to Tata Communications (“Goodwin”), also delivered the same materials to Willkie.

On June 6, 2023, the Board met by videoconference with representatives from Willkie to discuss the materials received from Tata Communications and Goodwin. At the meeting, the Board reviewed and discussed the terms of the draft Merger Agreement, with assistance from Willkie, including: (i) the proposed per share price of $7.00 and the premium it represented to the Company’s recent stock price, (ii) the no shop provision restricting the Company from soliciting alternative bids but allowing the Company to terminate in favor of a Superior Proposal, subject to the payment of a termination fee of $5 million dollars, (iii) the request for the Company to reimburse Tata Communications up to $2.5 million for its expenses in the event that, after the signing of the Merger Agreement, the Company failed to obtain stockholder approval, (iv) certainty of closing, including Tata Communications’ ability to terminate in the event of any limitations or divestiture requirements imposed by a regulator (even if de minimis) and closing conditions for the receipt of regulatory approvals, (v) the voting and support agreements requested to be executed by certain stockholders concurrently with the signing of the Merger Agreement and (vi) certain restrictions on the operations of the Company during the executory period. The Board also reviewed and discussed the proposal with respect to the treatment of the Company’s restricted stock units (“RSUs”) in the Merger, which provided that (x) vested RSUs would be cashed out for the per share merger price and (y) unvested RSUs would be converted to a cash award based on the per share merger price that would be paid out to RSU holders subject to such holder’s continued employment. After discussing the draft Merger Agreement, the Board reviewed potential alternatives to a transaction with Tata Communications. After this discussion, the Board elected to continue to pursue negotiations with Tata Communications and to respond to the draft Merger Agreement by, among other things: (i) proposing a go-shop period with a lower termination fee if the Company pursued an alternative transaction in the go shop period, (ii) reducing the termination fee in the event the Company entered into a Superior Proposal, (iii) eliminating the payment of expenses in the event stockholder approval was not obtained and (iv) proposing more stringent covenants by Tata Communications to obtain regulatory approvals. The Board declined to respond at such time on the proposed per share price, but agreed to focus on other remaining issues and continue with the negotiations with Tata Communications and approved the entry into the exclusivity extension letter, which extended exclusivity until June 30, 2023 and was executed by the Company promptly thereafter.

On June 8, 2023, at the direction of the Board, Willkie sent a revised draft Merger Agreement to Goodwin.

On June 15, 2023, Goodwin returned a revised draft Merger Agreement to Willkie, which reiterated Tata Communications’ position with respect to the required efforts required to receive regulatory approvals and the $5 million termination fee, and included a new closing condition for any ongoing proceedings or investigations initiated by a governmental agency following signing.

On June 15, 2023, at a special meeting of the Board, the Board discussed the revised draft of the Merger Agreement, and noted their concerns around the potential conditionality in the draft Merger Agreement relating to the regulatory efforts obligations of Tata Communications and the closing condition relating to the absence of ongoing regulatory communications and investigations. The Board instructed Willkie to remove the closing condition and propose more customary terms relating to the regulatory efforts. The Board also discussed the proposed treatment of the RSUs in the Merger, as well as exclusions from the interim operating covenants for potential success and closing retention bonuses and potential equity awards for a prospective new CEO (as part of the Company’s ongoing CEO transition), in order to, among other things, help retain relevant Company employees and to attempt to ensure the continuity of the Company’s business up until the closing of the proposed

 

- 29 -

Merger. With respect to RSUs, the Board directed Willkie to propose to Goodwin that, to the extent an employee is terminated within one year of closing without cause, all of such employee’s converted cash awards in respect of the underlying unvested RSUs will immediately vest upon such date of termination.

At the same meeting, the Board discussed the engagement of Northland Securities, Inc. (“Northland”) to provide a fairness opinion to the Board in connection with the Merger, following which the Board, after considering Northland’s qualifications and proposed fee, unanimously approved engaging Northland to provide a fairness opinion on the terms described in the draft engagement letter with Northland that was previously distributed to the Board before this meeting.

Following the Board meeting and after further discussions, on June 17, 2023, Dr. Katz on behalf of the Board, communicated to representatives of Lazard a per share price of $7.50 per share and noted that Willkie would send back a revised draft of the Merger Agreement to Goodwin, which Willkie delivered promptly thereafter.

On June 22, 2022, Goodwin returned a revised draft of the Merger Agreement to Willkie, which included among other things, having employees’ converted cash awards in respect of underlying unvested RSUs accelerate if employees are terminated (without cause) within one year of closing, reverting to the proposed $7.00 per share price, reverting to the initial position on regulatory efforts, an increase of the termination fee payable in the go shop period and an outside date of six months, which would be extended for an additional three months if any regulatory approvals remain outstanding.

On June 24, 2023, following discussions among other directors and Willkie, Dr. Katz and representatives of Tata Communications discussed the proposed share price, the no shop/go shop provisions and related termination fees and the appropriate efforts standard to obtain regulatory approvals.

Following further discussions regarding the Merger Agreement, including a revised draft delivered by Goodwin on June 25, 2023, on June 26, 2023, Goodwin sent a comprehensive response on the remaining major open issues in the Merger Agreement proposing; (i) a $7.00 per share price, (ii) removing the go shop and including a no shop termination fee of $5 million, (iii) agreeing to accelerated vesting of converted cash awards in respect of a holder’s underlying unvested RSUs if such holder’s employment is terminated (without cause) on or prior to December 31, 2024, (iv) agreeing to a heightened efforts standard including the duty to litigate and to divest certain de minimis assets if required, (v) removing the closing condition for ongoing regulatory communications and investigations, (vi) inserting a closing condition for receipt of certain approvals or deemed approvals from the Royal Bank of India, and (vii) consultation rights with respect to transaction bonuses. Later that evening, representatives from Willkie and Goodwin discussed the remaining open issues.

On the night of June 26, 2023, representatives of Tata Communications and Dr. Katz, together with certain other members of the Special Committee, discussed the remaining major open issues in the draft Merger Agreement. Following the meeting, after further discussion and deliberation among the Board of the Company, Dr. Katz communicated to Tata Communications that Willkie would be sending back a proposed final Merger Agreement, including a price per share of $7.25, which reflected an approximately $3 million reduction to the aggregate value of (i) the total pool for permitted potential success and closing retention bonuses (which shall not exceed $10 million) and (ii) potential equity awards for a prospective new CEO, which actual amount of reduction applied to the foregoing (i) and (ii) would be determined in the Company’s discretion.

On June 27, 2023, following its review, Goodwin returned a revised draft Merger Agreement, which accepted the Company’s position on the remaining open items.

Later that day, on June 27, 2023, the Board, representatives of Willkie and Northland met via videoconference to discuss the proposed final Merger Agreement. Representatives of Willkie reviewed the Board’s fiduciary duties and other legal matters in connection with the Board’s consideration of the proposed

 

- 30 -

Merger Agreement, and reviewed with the Board the terms of the proposed Merger Agreement. Representatives of Northland then reviewed and discussed its financial analyses with respect to the Company and the proposed Merger. Thereafter, at the request of the Board, Northland rendered its oral opinion to the Board (which was subsequently confirmed in writing by delivery of Northland’s written opinion dated June 28, 2023) to the effect that, as of such date, the fairness, from a financial point of view, to the Company and the holders of Company common stock, of the merger consideration to be received by such stockholders in the Merger pursuant to the Merger Agreement.

The Board then discussed and considered the benefits of the proposed Merger, versus the risks and opportunities of continuing on a stand-alone basis or soliciting proposals from other bidders or pursuing alternatives such as the sale of one or more of the Company’s business units. As part of this discussion, the Board considered the terms of the Merger Agreement that would allow the Company to entertain certain unsolicited third-party proposals following the execution and announcement of the Merger Agreement subject to the payment of the termination fee if the Board were to pursue an alternative proposal that was superior to the Merger, if the Superior Proposal was received prior to the special meeting of stockholders to adopt the Merger Agreement. After discussion, the Board concluded that it would be in the best interests of the Company and its stockholders to secure the benefits of the proposed transaction with Tata Communications. The Board unanimously approved the Merger Agreement as being in the best interests of the Company and its stockholders, and unanimously authorized the execution and delivery of the Merger Agreement.

On the morning of June 28, 2023, the Company and Tata Communications executed the Merger Agreement.

On the morning of June 28, 2023, prior to the commencement of trading on the NYSE, the Company and Tata Communications issued a joint press release announcing the transaction and their execution of a definitive Merger Agreement.

Reasons for the Merger

As described above in the section of this proxy statement entitled “The Merger—Background of the Merger,” prior to and in reaching its determination to approve the Merger Agreement and the Merger, the Board consulted with and received the advice of Northland and Willkie, discussed certain issues with the Company’s management and considered a variety of factors weighing positively in favor of the Merger Agreement and the Merger, each of which the directors believed supported their decision, including the following material factors:

 

•

that the $7.25 per share price to be paid in cash in respect of each share of Company Common Stock represented a premium of (i) approximately 51% over the closing price of the Company Common Stock on June 27, 2023 (the last trading day prior to the public announcement of the Merger), (ii) more than 145% over the volume-weighted average closing share price of the Company Common Stock during the 90 days prior to the Board’s approval of the Merger Agreement, and (iii) more than 232% over the closing price of the Company Common Stock on March 16, 2023, the day of signing of the initial exclusivity agreement;

 

•

that the merger consideration of $7.25 in cash per share of Company Common Stock is likely to be more favorable to the Company’s stockholders than the potential value that might result from other alternatives reasonably available to the Company, including the continued operation of the Company on a stand-alone basis taking into account its long-term prospects, in light of a number of factors, including the risks, costs, challenges, timing considerations, financial and industry-specific considerations and uncertainty associated with those alternatives;

 

•

that under the terms of the Merger Agreement, all of the Company’s outstanding debt (approximately $157.4 million of net debt outstanding as of June 30, 2023) will become debt of the Surviving Corporation, which will be a wholly owned subsidiary of Tata Communications after the Merger;

 

- 31 -

•

the Company is currently not in compliance with Section 802.01B of the NYSE’s Listed Company Manual, which requires the average market capitalization of the Company over a consecutive 30 trading-day period to be greater than $50 million, and in the absence of the Merger the Company may not be able to regain compliance with this requirement, which could lead to delisting of the Company Common Stock;

 

•

that the Company and the independent auditor of the Company’s audited financial statements for fiscal year 2022 had raised doubt as to the Company’s ability to continue to operate as a going concern, as reflected in the Company’s public filings;

 

•

the Board’s understanding of the Company’s business, operations, financial condition, earnings, historical and projected financial performance, competitive position and the nature of the industries in which the Company competes;

 

•

the review by Company management of the historical and projected future financial performance of the Company’s business segments, including certain business lines that face challenging operating and financial conditions;

 

•

the provisions of the Merger Agreement that permit the Company to explore a Superior Proposal, including

 

•

the Company’s ability to receive unsolicited proposals during the no-shop period and to furnish information to and engage in negotiations with third parties under the terms and conditions of the Merger Agreement as more fully described in the section of this proxy statement entitled “The Merger Agreement—No Solicitation by the Company” beginning on page 61;

 

•

the Board’s ability to consider, and under certain conditions, to accept, a Superior Proposal, and the Company’s corresponding right to terminate the Merger Agreement in order to enter into a definitive agreement providing for such Superior Proposal, subject to the terms and conditions of the Merger Agreement;

 

•

the financial analyses reviewed and discussed with the Board by representatives of Northland as well as the oral opinion of Northland rendered to the Board on June 27, 2023 (which was subsequently confirmed in writing by delivery of Northland’s written opinion dated June 28, 2023) to the effect that, as of such date and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the merger consideration to be received in the Merger by the holders of Company Common Stock was fair, from a financial point of view, to the Company and the holders of Company Common Stock, as more fully described below in the section of this proxy statement entitled “The Merger—Fairness Opinion of Northland Securities, Inc.;”

 

•

the Board’s assessment, taking into account the foregoing factors, of the Company’s value on a stand-alone basis relative to the $7.25 per share in cash to be paid in the Merger;

 

•

that the Company announced a CEO transition plan in December 2022 that was still ongoing prior to the date of the execution of the Merger Agreement;

 

•

that the consideration to be paid by Tata Communications is all cash, which provides certainty of value and liquidity to the Company’s stockholders immediately upon the closing of the Merger, especially when viewed against the risks and uncertainties inherent in the Company’s businesses, including long-term business and execution risks, the Company’s outstanding debt obligations and uncertainty in global economic conditions;

 

•

Tata Communications’ track record in successfully acquiring other companies, Tata Communications’ market capitalization and financial strength, the fact that Tata Communications has the financial capacity to consummate the Merger and the Company’s ability to seek specific performance to prevent breaches of the Merger Agreement and to enforce specifically the terms of the Merger Agreement;

 

•

that the Merger is not subject to approval by Tata Communications’ stockholders;

 

- 32 -

•

that the Company’s stockholders who do not vote to approve the Merger Agreement and who follow certain prescribed procedures are entitled to dissent from the Merger and demand payment of the “fair value” of their shares of Company Common Stock, as and to the extent provided by Delaware law (as more fully described under “Appraisal Rights”);

 

•

the belief that the terms of the Merger Agreement, taken as a whole, provide protection against the risk that the consummation of the Merger is delayed or that the Merger cannot be completed due to required regulatory approvals, based on, among other things:

 

•

the covenants contained in the Merger Agreement obligating each of the parties to use reasonable best efforts to cause the Merger to be consummated, subject to the terms and conditions of the Merger Agreement;

 

•

the requirement that Parent and Merger Sub take certain actions to obtain the regulatory approvals required to consummate the Merger, subject to and in accordance with the terms and conditions of the Merger Agreement;

 

•

the limited nature of the conditions to completion of the Merger as provided by the Merger Agreement, including the absence of a financing condition; and

 

•

the fact that affiliates of directors Emilio Hirsch and Dario Calogero, who hold approximately 25% of the voting power of the outstanding shares of Company Common Stock, have duly executed and entered into the Voting Agreements, pursuant to which such stockholders have agreed to vote his or their respective shares in favor of the approval and adoption of the Merger Agreement, subject to, and in accordance with, the terms and conditions of the Voting Agreements;

 

•

the belief that the terms of the Merger Agreement, taken as a whole, including the parties’ representations, warranties and covenants, and the conditions to the parties’ respective obligations, are reasonable; and

 

•

the fact that a vote of the Company’s stockholders is required under Delaware law to approve the Merger Agreement, and that, under the Company’s certificate of incorporation, a vote of stockholders holding at least a majority of the voting power of the Company Common Stock is required to approve the Merger Agreement.

In the course of its deliberations, the Board also considered a variety of risks and countervailing factors related to the Merger Agreement and the Merger, including the following material factors:

 

•

the possibility that the Merger might not be consummated in a timely manner or at all due to a failure of certain conditions to the parties’ obligations to complete the Merger, including with respect to the required approval of the transaction by certain regulatory authorities, which is beyond the Company’s control, and by the Company’s stockholders;

 

•

the risks and costs to the Company if the Merger does not close in a timely manner or at all, including the potential negative impact on the Company’s ability to retain key employees, the diversion of management and employee attention, the potential disruptive effect on the Company’s day-to-day operations and the Company’s business relationships, and the market’s perception of the Company’s prospects, which could lead to a decline in the price of Company Common Stock;

 

•

the restrictions on the conduct of the Company’s business prior to the consummation of the Merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action that it might otherwise take with respect to the operations of the Company pending completion of the Merger;

 

•

the fact that the stockholders of the Company will have no ongoing equity interest in the Surviving Corporation following the Merger, meaning that the stockholders will not participate in Tata Communications’ or the Company’s future earnings or growth, if any, or in the value of the common

 

- 33 -

stock, and will not participate in any potential future sale of the Company or any of its assets to a third party;

 

•

the provisions of the Merger Agreement that restrict the Company’s ability to participate in discussions or negotiations regarding alternative business combination transactions, subject to specified conditions, limitations and exceptions, and that require the Company to negotiate with Tata Communications (if Tata Communications desires to negotiate) prior to the Company being able to terminate the Merger Agreement to accept a Superior Proposal;

 

•

the possibility of distracting litigation from stockholder suits in connection with the Merger or attempts by stockholders to discourage a vote in favor of the Merger;

 

•

the significant costs involved in connection with negotiating the Merger Agreement and completing the Merger, including in connection with any litigation that may result from the announcement or pendency of the Merger, and the fact that if the Merger is not consummated the Company may be required to bear such costs; and

 

•

the fact that the receipt of cash by stockholders in exchange for shares of common stock pursuant to the Merger will be taxable to the Company’s stockholders that are U.S. holders for U.S. federal income tax purposes.

In addition to considering the factors described above, the Board also identified and considered a variety of other factors, including the fact that certain of the Company’s directors and executive officers may have financial interests in the Merger that may be different from, or in addition to, those of the Company’s stockholders generally, including those interests that are a result of potential compensation arrangements with the Company and potential post-closing compensation or employment arrangements with Tata Communications or its affiliates, as described more fully below in the section of this proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger.”

The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but rather includes the material factors considered by the Board. The Board collectively reached the conclusion to approve the Merger Agreement and deem the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, to be advisable and in the best interests of the Company, in light of the various factors described above and other factors that the members of the Board believed were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the Merger and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board. Rather, the Board made its recommendation based on the totality of the information available to the Board, including discussions with, and questioning of, the Company’s management and the financial and legal advisors. In considering the factors discussed above, individual members of the Board may have given different weights to different factors

This explanation of the Board’s reasons for recommending the approval of the Merger Agreement and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 17.

Recommendation of the Company’s Board of Directors

After careful consideration, the Board has unanimously approved and adopted the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and its stockholders.

 

- 34 -

The Board unanimously recommends that the stockholders of the Company vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger.

Fairness Opinion of Northland Securities, Inc.

The Board retained Northland to act as its fairness opinion provider in connection with the Merger. In selecting Northland, the Board considered, among other things, Northland’s qualifications, expertise, reputation, and knowledge of our business and the industry in which we operate and of the Company.

On June 27, 2023, Northland rendered its oral opinion to the Board, which was subsequently confirmed in a letter dated June 28, 2023, stating that, as of the date of the letter and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications in such letter, the merger consideration to be paid to our common stockholders under the Merger Agreement is fair, from a financial point of view, to us and our Company Common Stock holders.

The full text of Northland’s written opinion letter, dated as of June 28, 2023, is attached as Annex B. You should read Northland’s opinion letter carefully and in its entirety for a discussion of, among other things, the scope of the review undertaken and the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Northland in connection with its opinion. This summary is qualified in its entirety by reference to the full text of the opinion letter. Northland’s opinion letter was directed to the Board, in its capacity as the Board, and addressed only the fairness from a financial point of view, as of the date of the opinion, to us and our Company Common Stock holders of the merger consideration to be paid to our Company Common Stock holders under the Merger Agreement. The opinion letter does not constitute a recommendation as to how any stockholder should vote with respect to the approval of the Merger or any other matter and does not in any manner indicate the price at which our securities will trade at any time. Northland assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger would be obtained without any material adverse effect on us or the Merger. Northland was not asked to, nor did Northland, offer any opinion as to the material terms of the Merger Agreement or the form of the transactions contemplated thereby. In rendering its opinion, Northland assumed, with our consent, that the final executed form of the Merger Agreement would not differ in any material respect from the drafts that Northland examined, and that the conditions to the Merger in the Merger Agreement will be satisfied and that the Merger will be consummated on a timely basis in the manner contemplated by the Merger Agreement.

In connection with rendering its opinion, Northland has informed us that, among other things, it reviewed:

 

1.

the draft of the Merger Agreement, dated June 28, 2023;

 

2.

our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with the SEC pursuant to the Exchange Act;

 

3.

our historical financial statements for the calendar years ending December 31, 2020, December 31, 2021 and December 31, 2022 and the quarter ending March 31, 2023;

 

4.

our projected financial statements for the calendar years ending December 31, 2023, December 31, 2024 and December 31, 2025, prepared by our management;

 

5.

certain of our projected financial information for the calendar years ending December 31, 2026, December 31, 2027 and December 31, 2028, prepared by our management;

 

6.

certain of our non-public financial and business information provided to Northland by us and our advisors;

 

7.

certain of our internal financial information, estimates, and financial and operations forecasts, prepared by our management;

 

- 35 -

8.

certain of our issued press releases;

 

9.

certain industry and research reports relevant to the industry in which we operate;

 

10.

(i) the reported historical price and trading activity for our securities, (ii) certain of our financial stock market information, (iii) certain financial stock market information for certain other publicly traded companies, (iv) the financial terms of certain recent business combinations, and (v) other studies and analyses Northland has deemed appropriate; and

 

11.

other material documents made available in our virtual data room.

In its review and analysis and in arriving at its opinion, Northland assumed and relied on the accuracy and completeness of all of the financial and other information provided to or otherwise discussed with Northland or publicly available. Northland was not engaged to, and did not independently attempt to, verify any of such information. Northland also relied upon information provided by our management as to the reasonableness and achievability of the financial and production projections (and the assumptions and bases therefor) provided to Northland, and, with our consent, Northland assumed that the projections were reasonably prepared and reflect the best currently available estimates and judgments of our management. Northland was not engaged to assess the reasonableness or achievability of the projections or the assumptions on which they were based, and Northland expressed no view as to such projections or assumptions. In addition, Northland did not conduct a physical inspection or appraisal of any of the assets, properties or facilities of the Company, and Northland was not furnished with any such evaluation or appraisal.

Northland’s opinion was based on economic and market conditions and other circumstances existing on, and information made available to Northland as of, June 27, 2023 and does not address any matters subsequent to such date. Northland’s opinion was limited to the fairness from a financial point of view, as of the date of the opinion, to us and our common stockholders of the merger consideration to be paid under the Merger Agreement to our Company Common Stock holders. Northland’s opinion does not address our underlying business decision to effect the Merger or any other terms of the Merger Agreement. Although subsequent developments may affect Northland’s opinion, Northland does not have any obligation to update, revise, or reaffirm its opinion. Northland’s opinion was approved by the Northland Fairness Opinion Committee.

The following is a summary of the material financial analyses performed by Northland in arriving at its opinion. Northland’s opinion letter was only one of many factors considered by the Board in evaluating the Merger. Neither Northland’s opinion nor its financial analyses were determinative of the merger consideration or of the views of our Board or our management with respect to the merger consideration or the Merger. None of the analyses performed by Northland were necessarily assigned a greater significance by Northland than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Northland. The summary text set forth below describing each financial analysis does not constitute a complete description of Northland’s financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Northland. Northland calculated the Company’s Implied Enterprise Value (“EV”) to be $259,000,000 based on the merger consideration.

The summary text set forth below does not represent and should not be viewed by anyone as constituting conclusions reached by Northland with respect to any of the analyses performed by it in connection with its opinion. Rather, Northland made its determination as to the fairness, from a financial point of view, to us and our Company Common Stock holders of the merger consideration to be paid to our Company Common Stock holders under the Merger Agreement.

 

- 36 -

Selected Public Companies Analysis

Northland reviewed and compared certain publicly available financial data, ratios and trading multiples for comparable publicly traded companies that Northland determined, based on its experience and professional judgment, were similar in one or more respects to us, including, but not limited to, the nature of the business, size, diversification, margin profile and financial performance. The six selected public companies are shown below:

 

•  8x8, Inc.		•  Telefonaktiebolaget LM Ericsson (publ)
•  Bandwidth Inc.		•  Twilio Inc.
•  Sinch AB (publ)		•  Zenvia Inc.

Financial data of the selected public companies were based on publicly available information, including information from public filings, third party equity research analysts’ estimates, and other publicly available information. Northland reviewed data, including EV, last twelve months (“LTM”) revenue, calendar year 2023 estimated revenue, calendar year 2024 estimated revenue, calendar year 2025 estimated revenue, LTM gross profit, calendar year 2023 estimated gross profit, calendar year 2024 estimated gross profit, calendar year 2025 estimated gross profit, calendar year 2023 estimated earnings before interest, taxes, depreciation and amortization (“EBITDA”), calendar year 2024 estimated EBITDA, and calendar year 2025 estimated EBITDA of each of the selected publicly traded companies described above, the operations of which Northland deemed similar for purposes of this analysis, based on its professional judgement and experience. The multiples for each of the selected companies were calculated using their respective closing prices on June 27, 2023 and were based on the most recent publicly available information through S&P Capital IQ.

The low and high multiple outliers (Zenvia Inc. and Twilio Inc.) are excluded from the revenue multiples range shown below, based on Northland’s professional judgment and experience, given the unique distinguishing characteristics of those companies. The following table reflects the results of these analyses with respect to the selected public companies:

 

Low

Mean

Median

High

LTM revenue multiples

0.6x

1.1x

1.1x

1.3x

Calendar year 2023 estimated revenue multiples

0.6x

1.1x

1.1x

1.3x

Calendar year 2024 estimated revenue multiples

0.6x

1.0x

1.0x

1.2x

Calendar year 2025 estimated revenue multiples

0.6x

0.9x

0.9x

1.2x

LTM gross profit multiples

0.5x

2.6x

2.4x

5.3x

Calendar year 2023 estimated gross profit multiples

0.4x

2.5x

2.4x

4.7x

Calendar year 2024 estimated gross profit multiples

0.3x

2.2x

2.1x

4.1x

Calendar year 2025 estimated gross profit multiples

0.3x

1.9x

1.6x

3.5x

Calendar year 2023 estimated EBITDA multiples

1.8x

9.3x

8.6x

16.2x

Calendar year 2024 estimated EBITDA multiples

1.1x

7.2x

7.4x

13.8x

Calendar year 2025 estimated EBITDA multiples

0.9x

6.3x

7.1x

10.3x

Northland made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics of the Company’s assets and the selected public companies that could affect their public trading values in order to provide a context in which to consider the results of the quantitative analysis.

Northland then applied the low to high LTM and calendar years 2023, 2024, and 2025 revenue multiples and gross profit multiples described above derived from the selected public companies to the corresponding data of the Company. This analysis indicated approximate implied enterprise value reference ranges for the Company of approximately $221 million to $438 million, $230 million to $451 million, $262 million to $501 million, and $302 million to $578 million based on LTM revenue of approximately $342 million and 2023, 2024, and 2025 revenue estimates of approximately $356 million, $412 million, and $486 million, respectively, and approximate

 

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implied enterprise value reference ranges for the Company of approximately $34 million to $386 million, $35 million to $381 million, $31 million to $396 million, and $35 million to $418 million based on LTM gross profit of approximately $74 million and 2023, 2024, and 2025 gross profit estimates of approximately $81 million, $96 million and $120 million, respectively. Northland then applied the low to high calendar years 2023, 2024, and 2025 EBITDA multiples to the corresponding data of the Company. This analysis indicated approximate implied enterprise value reference ranges for the Company of approximately $52 million to $473 million, $42 million to $498 million, and $48 million to $555 million based on 2023, 2024, and 2025 adjusted EBITDA estimates of approximately $29 million, $36 million, and $54 million, respectively, as compared to the Company’s EV of $259,000,000 based on the merger consideration. Adjusted EBITDA, a non-GAAP financial measure, as used per management, means income (loss) from operations plus transaction and one-off costs, various value creation and cost saving items, company restructuring, depreciation and amortization, RSUs bonus, and RSUs.

No company used in the selected public companies analysis is identical to the Company. In evaluating the selected public companies, Northland made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond our control, such as the impact of competition on us and the industry generally, industry growth and the absence of any adverse material change in our financial conditions and prospects or the industry or the financial markets in general.

Selected Precedent Transactions

In connection with its analysis, Northland compared publicly available statistics for technology transactions that were publicly announced with sufficient data to analyze, closed since January 1, 2019, and for companies deemed similar to ours in one or more respects, including, but not limited to, the nature of the business, size, diversification, margin profile and financial performance. The following were the selected precedent transactions used in the analysis:

 

Closed		Buyer / Acquirer		Target
December 2021		Sinch AB (publ)		Inteliquent, Inc.
March 2021		Centre Lane Partners V, L.P.		Synacor, Inc.
March 2021		Alianza, Inc.		CounterPath Corporation
November 2020		Sinch AB (publ)		SAP Digital Interconnect Of SAP SE
May 2019		Enghouse Systems Limited		Vidyo, Inc.
April 2019		Tanla Platforms Limited		Karix Mobile Private Limited

Northland also reviewed and compared certain publicly available transaction valuation metrics that Northland determined, based on its professional judgment, including revenue and EBITDA. Certain of this information was derived from S&P Capital IQ as of June 27, 2023.

The following table reflects the results of these analyses with respect to the selected precedent transactions:

 

Low

Mean

Median

High

LTM revenue multiples

0.6x

1.2x

0.9x

2.1x

LTM EBITDA multiples

7.6x

11.9x

11.5x

16.8x

Northland then applied the low to high LTM revenue and EBITDA multiples described above derived from the selected precedent transactions to the corresponding data of the Company. This analysis indicated approximate implied enterprise value reference ranges for the Company of approximately $190 million to $732 million and approximately $136 million to $299 million based on LTM revenue of approximately $342 million and adjusted EBITDA of approximately $18 million, respectively, as compared to the Company’s EV of $259,000,000 based on the merger consideration.

 

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No transaction used in the selected precedent transactions analysis is identical to the Company or the Merger. In evaluating the selected precedent transactions, Northland made judgments and assumptions with regard to general business, market and financial conditions and other matters, which are beyond our control. These include, among other things, the impact of competition on the business of the Company or the industry generally, industry growth and the absence of any adverse material change in the financial condition of the Company or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value and equity value of the transactions to which they are being compared.

Discounted Cash Flow Analysis

Northland performed a discounted cash flow analysis of the Company, by calculating the estimated present value (as of June 27, 2023) of the unlevered, after-tax free cash flows that the Company was forecasted to generate during the calendar years ending December 31, 2023 through December 31, 2028 based on financial projections and estimates of our management. Northland calculated implied terminal values for the Company by applying to the calendar year 2028 estimated unlevered, after-tax free cash flow of us a selected range of perpetuity growth rates of 0.5% to 2.5%. The present values (as of June 27, 2023) of the cash flows and terminal values were then calculated using a selected range of discount rates of 10.0% to 16.0% derived from a weighted cost of capital calculation. This analysis indicated an approximate implied aggregate enterprise value reference range for the Company of $247 million to $485 million, as compared to the Company’s EV of $259,000,000 based on the merger consideration.

Although discounted cash flow analysis is a widely accepted and practiced valuation methodology, it relies on a number of assumptions, including commodity prices and discount rates. The valuation derived from the discounted cash flow analysis is not necessarily indicative of the Company’s present or future value or results. Discounted cash flow analysis in isolation from other analyses is not an effective method of evaluating transactions.

Miscellaneous

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Northland did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Northland made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

In connection with Northland’s services as our financial advisor in connection with the Merger, Northland is entitled receive a non-refundable fee of $400,000, of which $200,000 was payable immediately upon the delivery of their opinion and $200,000 upon the signing of the Merger Agreement. In the event any additional opinion is delivered, we will pay an additional fee of $15,000 immediately upon delivery of each additional opinion. No portion of the fee was based upon whether Northland delivered a favorable opinion with respect to the merger consideration to be paid to our common stockholders pursuant to the Merger Agreement. In addition, we have agreed to reimburse Northland for certain of its expenses and to indemnify Northland and related persons against various potential liabilities, including certain liabilities that may arise in connection with Northland’s engagement.

Northland, as a customary part of its investment banking business, is continually engaged in performing financial analyses regarding businesses and their securities in connection with acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions for estate, corporate and other purposes. Northland provides investment banking and other services to a wide range of entities and individuals from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Northland may trade or otherwise effect transactions in debt or equity securities of the Company, Tata Communications or certain of their respective affiliates. During the

 

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two-year period prior to the date of Northland’s opinion, no material relationship existed between Northland or any of its affiliates and the Company or Tata Communications pursuant to which compensation was received by Northland or any of its affiliates. Northland or its affiliates may in the future provide investment banking and other financial services to the Company and Tata Communications and their respective affiliates for which it or they would expect to receive compensation.

Unaudited Prospective Financial Information

In the ordinary course of business and not in connection with the Merger, management of the Company prepared certain unaudited prospective financial information of the Company for the calendar years 2023 through 2028, which information is referred to as the “Projections.” The Projections were prepared in the ordinary course for internal use only and not for public disclosure and were provided to the Board for the purposes of considering, analyzing and evaluating the Merger. The Projections were also provided to and approved by the Company for use by, Northland for purposes of its fairness opinion, as described in the section of this proxy statement entitled “The Merger—Fairness Opinion of Northland Securities, Inc.” The Projections were provided to Tata Communications in connection with its consideration and evaluation of the Merger.

The Projections are not included in this proxy statement to influence any decision on whether to vote for the Merger proposal, but rather we have included a summary of these Projections below to give our stockholders access to certain nonpublic information provided to the Board and Northland in connection with the Merger. The inclusion of the Projections should not be regarded as an indication that the Board, the Company, Tata Communications, Merger Sub, their respective affiliates, officers, directors, advisors or other representatives or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of actual future results.

The Projections reflect numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond the Company’s control. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than projected. The Projections were prepared for internal use and were not prepared with a view toward public disclosure or toward compliance with United States generally accepted accounting principles (“GAAP”), published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Projections included in this proxy statement have been prepared by, and are the responsibility of, the Company’s management. EY S.p.A., the Company’s independent registered public accounting firm, has neither examined, compiled nor performed any procedures with respect to the accompanying prospective financial information, and accordingly, EY S.p.A. does not express an opinion or any other form of assurance with respect thereto. The EY S.p.A. report incorporated by reference in this proxy statement relates to the Company’s historical financial information. It does not extend to the Projections and should not be read to do so.

Projections of this type are based on estimates and assumptions in many respects, and as a result, subject to interpretation. While presented with numeric specificity, these Projections were based on numerous variables and assumptions (including, but not limited to, industry performance and competition and general business, economic, market and financial conditions and additional matters specific to the Company’s businesses) that are inherently subjective and uncertain and are beyond the control of our management. Important factors that may affect actual results and cause these Projections to not be achieved include, but are not limited to, risks and uncertainties relating to our business (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and other factors described in the “Risk Factors” section of our Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement. Also see the section of this proxy statement entitled “Where You Can Find More Information.” These Projections also reflect numerous variables, expectations and assumptions available at the time they were prepared as to certain business decisions that are subject to change. As a result, actual results may differ materially from those

 

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contained in these Projections. Since the Projections cover multiple years, such information by its nature becomes less predictive with each successive year. Accordingly, there can be no assurance that the forecasted results summarized below will be realized.

The Projections contain certain adjusted financial measures that our management believes the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating the performance of the Company. The adjusted financial measures are not meant to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. While we believe these adjusted financial measures provide meaningful and useful information to investors, analysts, rating agencies and others who use financial information in evaluating the performance of the Company, there are limitations associated with the use of these adjusted financial measures. These adjusted financial measures are not prepared in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. The SEC rules that would otherwise require a reconciliation of an adjusted financial measure to a GAAP financial measure do not apply to adjusted financial measures provided to a board of directors or a financial advisor in connection with a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of adjusted financial measures were not relied upon by our Board or our financial advisor in connection with their respective evaluation of the Merger. Accordingly, we have not provided a reconciliation of the adjusted financial measures included in the Projections to the relevant GAAP financial measures.

The following is a summary of the Projections:

Summary of the Unaudited Prospective Financial Information

(dollars in millions)

 

		Calendar Year
		2023				2024				2025
Revenue		$	356.5			$	411.8			$	485.5
Gross Profit		$	81.2			$	96.5			$	119.7
Net Income (Loss)		($	29.6	)		($	26.8	) (2)		($	6.9	)
Adjusted EBITDA (1)		$	29.2			$	35.2	(2)		$	53.7
		Calendar Year
		2026				2027				2028
Adjusted EBITDA (1)		$	57.1	(2)		$	66.9	(2)		$	69.0	(2)

 

(1)

Adjusted EBITDA is defined as of any date of calculation, the consolidated earnings or loss of Kaleyra and its subsidiaries, before finance income and finance cost (including bank charges), tax, depreciation and amortization calculated from the unaudited consolidated financial statements of such party and its subsidiaries, plus (i) transaction and one-off expenses, (ii) without duplication of clause (i), severance or change of control payments, (iii) any expenses related to company restructuring, (iv) any compensation expenses relating to stock options, restricted stock units, restricted stock or similar equity interests as may be issued by Kaleyra or any of its subsidiaries to its or their employees and (v) any provision for the write down of assets. In performing its discounted cash flow analysis, Northland relied on the prospective financial information summarized in the above chart.

(2)

In the Projections used by Northland, Net Loss and Adjusted EBITDA were $(25.9) million and $36.1 million in 2024, and Adjusted EBITDA in 2026, 2027 and 2028 was $56.4 million, $66.2 million and $68.3 million, respectively; the small differences are due to the exclusion of savings from the Value Creation Program.

Readers of this proxy statement are cautioned not to place undue reliance on the specific portions of the Projections set forth above. No one has made or makes any representation to any stockholder regarding the information included in the Projections.

 

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For the foregoing reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this proxy statement should not be regarded as an indication that the Projections will necessarily be predictive of actual future events, and they should not be relied on as such. Except as required by applicable securities laws, the Company does not intend to update or otherwise revise the Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

Financing

We understand that Tata Communications intends to fund the merger consideration through available cash.

Interests of the Company’s Directors and Executive Officers in the Merger

In considering the recommendation of the Board that you vote to approve and adopt the Merger Agreement and the Merger, you should be aware that aside from their interests as stockholders of the Company, the Company’s directors and executive officers have interests in the Merger that are different from, or in addition to, those of other stockholders of the Company generally. Members of the Board were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending to the stockholders of the Company that the Merger Agreement and the Merger be approved and adopted. See the section of this proxy statement entitled “The Merger—Background of the Merger” and the section entitled “The Merger—Reasons for the Merger.” The Company’s stockholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve and adopt the Merger Agreement and the Merger. These interests are described in more detail below, and certain of them are quantified in the disclosure below.

Treatment of Company Equity Awards

At the Effective Time of the Merger, each Vested Company RSU will be cancelled and converted solely into the right to receive an amount in cash (without interest) equal to (1) the total number of shares of Company Common Stock subject to such Vested Company RSU as of immediately prior to the Effective Time of the Merger, multiplied by (2) the Per Share Price, less applicable withholding taxes.

At the effective time of the Merger, each Unvested Company RSU will be cancelled and converted solely into the contingent right to receive a converted cash award equal to (1) the total number of shares of Company Common Stock subject to such Unvested Company RSU as of immediately prior to the Effective Time of the Merger, multiplied by (2) the Per Share Price, less applicable withholding taxes. Except as otherwise provided in the Merger Agreement, each such converted cash award will continue to have, and will be subject to, the same vesting terms and conditions as applied to the corresponding Unvested Company RSU immediately prior to the Effective Time of the Merger, with payment forfeited to the extent vesting is not satisfied; provided, however, that if a holder of a converted cash award is terminated by Tata Communications or the Surviving Corporation without “cause” (as defined in such holder’s then-effective employment agreement with the Company or one of its subsidiaries or, if none, determined consistently in accordance with the Company’s past practices) in connection with the closing of the Merger or thereafter but on or prior to December 31, 2024, such holder’s then unvested converted cash award will automatically accelerate and become vested upon such date of termination.

 

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As of the date of this proxy statement, the aggregate number of shares of Company Common Stock subject to Unvested Company RSU held by the Company’s directors and by members of the Company’s prior advisory board (which was terminated) as of December 31, 2023 (which we are using as the assumed closing date of the Merger solely for purposes of determining the number of Unvested Company RSU subject to vest at the closing of the Merger (the “Assumed Closing Date”)), is approximately 194,462, each of which will vest in connection with the closing of the Merger.    As of the date of this proxy statement, the aggregate number of shares of Company Common Stock subject to Unvested Company RSU held by the Company’s executive officers is approximately 208,000, and approximately 47,000 of those will vest on or prior to the Assumed Closing Date.

 

Name		Number of Shares Subject to Company RSUs
Kathleen Miller			39,554
Karin-Joyce Tjon			39,554
Avi Katz			36,909
Neil Miotto			18,455
John Mikulsky			18,455
Matteo Lodrini			17,646
Emilio Hirsch			16,428
Dinu Raluca (1)			2,392
Carlo Enrico (1)			1,784
Frederic Mazurier (1)			1,784
Peter Wang (1)			1,501

 

(1)	Member of the Company’s prior advisory board.

The table above sets forth the number of shares of Company Common Stock, rounded to the nearest whole share, subject to Company RSUs held by each of the Company’s directors and former members of the Company’s prior advisory board (which was terminated) as of the Assumed Closing Date, which vest on the Company’s standard vesting dates on each February 20, May 20, August 20 and November 20 during the applicable vesting schedule. The number of shares subject to Company RSUs is subject to change prior to the Assumed Closing Date.

Success and Closing Retention Bonuses

Some or all of the Company’s directors and executive officers may receive success and closing retention bonuses in an aggregate amount not to exceed $10 million, as will be determined prior to closing of the Merger by the Board in consultation with Tata Communications. These bonuses are payable in recognition of the extraordinary efforts put forth by the recipients to facilitate the Merger and to help retain the relevant Company employees to attempt to ensure the continuity of the Company’s business up until the closing of the Merger.

Post-Closing Services

Certain of the Company’s directors and executive officers may be offered post-closing employment, consulting arrangements or directorships by Tata Communications or one or more of its affiliates. As of the date of this proxy statement, Mauro Carobene, the Company’s Chief Business Officer has recently entered into an agreement with the Company to become the Head of the Kaleyra Business immediately as the Merger is closed and is expected to enter into a formal employment agreement memorializing the terms of his post-closing employment, including any related severance benefits, at a later date. As of the date of this proxy statement, none of our other executive officers or directors has been formally offered any employment, consulting arrangement or directorship with Tata Communications or one or more of its affiliates. Prior to or following the closing of the Merger, however, certain of our executive officers or directors may enter into agreements with Tata Communications or their respective affiliates regarding employment, consulting arrangements or directorships with Tata Communications or one or more of its affiliates.

 

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Special Committee

Each of the Company’s non-executive directors is a member of the Special Committee, which committee is authorized to oversee the due diligence and negotiation process with respect to the Merger and manage the pre-closing process with Tata Communications regarding the Merger. To the extent a member of the Special Committee devotes in excess of five hours to committee activities during any week, the Company shall pay such member $700 for each excess hour of work, provided that no member shall be entitled to receive in excess of $85,000 in any calendar month for such work.

Indemnification

Under the Merger Agreement, from and after the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to, honor and fulfill all obligations of the Company and its subsidiaries pursuant to any indemnification agreements between the Company and any of its subsidiaries or affiliates on the one hand and any of their respective current or former directors (“indemnified parties”). From and after the Effective Time until the sixth anniversary of the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to cause the organizational documents of the Surviving Corporation and its subsidiaries to contain provisions with respect to indemnification, exculpation and the advancement of expenses at least as favorable as the indemnification, exculpation and advancement of expenses provisions in the organizational documents of the Company and its subsidiaries as of the date of the Merger Agreement.

From and after the Effective Time until the sixth anniversary of the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to, subject to certain limitations, indemnify, defend and hold harmless the indemnified parties, against any and all losses, claims, damages, costs, expenses, fines, liabilities or judgments or amounts incurred by such person in connection with any claim, action, suit, proceeding or investigation (including amounts paid in settlement or compromise of such proceedings) arising directly or indirectly, out of or pertains, directly or indirectly to (i) the fact that such person is or was a director or officer of the Company or any of its subsidiaries; (ii) any act or omission taken in such person’s capacity as a director or officer or (iii) the Merger.

From the Effective Time until the sixth anniversary of the Effective Time, the Surviving Corporation will (and Tata Communications will cause the Surviving Corporation to) maintain in effect the Company’s current directors’ and officers’ liability and similar insurance (“D&O Insurance”) in respect of acts or omissions occurring at or prior to the Effective Time on terms (including with respect to coverage, conditions, retentions, limits and amounts) that are equivalent to those of the D&O Insurance. Prior to the Effective Time, the Company will purchase a prepaid six year “tail” policy with respect to the D&O Insurance from an insurance carrier with the same or better credit rating as the Company’s current directors’ and officers’ liability insurance carrier.

Change in Control Severance Benefits Under Existing Relationships

Severance Entitlements

On December 9, 2022, the Company entered into the Transition and Employment Agreement with Dario Calogero (the “Calogero Employment Agreement”), which contains terms substantially similar to those in Mr. Calogero’s prior employment agreement with the Company, effective as of November 26, 2019, and provides that if Mr. Calogero is terminated for “cause” by the Company or because he resigns without “good reason” (as such terms are defined in the Calogero Employment Agreement and together defined as a “Calogero Qualifying Termination”), then he will be paid his unpaid base salary for the period prior to the effective date of termination (if any), any accrued but unused vacation time as of the effective date of termination (if any), all unreimbursed expenses as of the effective date of termination (if any), and other payments entitlements or benefits Mr. Calogero held rights to prior to the effective date of termination (if any) (collectively, the “Other Rights”). If the Company terminates Mr. Calogero’s employment without “cause,” or he terminates his

 

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employment for “good reason” (each as defined in the Calogero Employment Agreement), he will receive additional payments from the Company, subject to him entering into a release in favor of the Company. If such termination is not within the two (2)-year period following a Change in Control (as such term is defined in the Calogero Employment Agreement and which includes the Merger), then Mr. Calogero will receive as severance, in addition to the Other Benefits, a lump sum amount equal to two (2) times the sum of (A) his then-current base salary plus (B) an amount equal to his annual target bonus. If such termination is within the two (2)-year period following a “change in control” (as defined in the Calogero Employment Agreement and which includes the Merger), then the severance amount will be for three (3) times, rather than two (2) times, the sum of (1) his then-current base salary, plus (2) an amount equal to his annual target bonus, which will also be payable in a lump sum. In each case, Mr. Calogero will also receive a bonus for the year of termination, as well as immediate vesting of any service-based vesting conditions applicable to long-term awards previously granted to him, provided that any performance-vesting conditions will still apply. In addition, Mr. Calogero will receive insurance coverage for Mr. Calogero and members of his family that is no less favorable than the insurance coverage provided by the Company for the shorter of (i) the two (2)-year period following any such Calogero Qualifying Termination or (ii) the date on which Mr. Calogero obtains comparable coverage under a subsequent employer plan. Such severance payments and benefits will be conditioned on Mr. Calogero’s compliance with certain restrictive covenants, including a confidentiality provision, an invention assignment provision and twelve (12)-month post-termination non-competition and non-solicitation covenants.

On June 1, 2021, the Company entered into an employment agreement with Giacomo Dall’Aglio (the “Dall’Aglio Employment Agreement”). Under the Dall’Aglio Employment Agreement, either party may terminate the Dall’Aglio Employment Agreement at any time. If Mr. Dall’Aglio’s employment is terminated by the Company without “cause”, or Mr. Dall’Aglio resigns for “good reason” (each as defined in the Dall’Aglio Employment Agreement and together defined as a “Dall’Aglio Qualifying Termination”), in each case other than in connection with a “change in control” (as defined in the Dall’Aglio Employment Agreement and which includes the Merger), Mr. Dall’Aglio will be entitled to receive (A) a lump sum cash payment equal to the sum of (i) his then-current base salary and (ii) the amount equal to 100% of his annual target bonus, (B) Mr. Dall’Aglio’s then applicable target annual bonus for the year in which the termination occurred, (C) accelerated vesting of any service-based vesting conditions applicable on any outstanding long-term awards, (D) any other benefits Mr. Dall’Aglio is entitled to in accordance with any terms of any plan, arrangement or program maintained by the Company, and (E) insurance coverage for Mr. Dall’Aglio and members of his family that is no less favorable than the insurance coverage provided by the Company for the shorter of (i) the one (1)-year period following any such Dall’Aglio Qualifying Termination or (ii) the date on which Mr. Dall’Aglio obtains comparable coverage under a subsequent employer plan. If the Dall’Aglio Qualifying Termination occurs within a one (1)-year period following a “change in control,” then Mr. Dall’Aglio will be entitled to receive the same severance amounts as described above. The receipt of any severance is subject to Mr. Dall’Aglio’s signing a release of claims in favor of the Company. The Dall’Aglio Employment Agreement also contains restrictive covenants relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. The non-compete and non-solicitation covenants generally continue for a period of twelve (12) months following the termination of employment.

On January 14, 2020, Kaleyra S.p.A and Mr. Nicola Vitto entered into an employment agreement in connection with his appointment as Chief Product & Technology Officer, effective as of January 16, 2020 (the “Vitto Employment Agreement”). The Vitto Employment Agreement does not provide for enhanced severance or notice provisions in connection with a change in control and can be terminated in accordance with the notice periods applicable by law. Any severance payment is payable in accordance with the terms of Italian law, including Article 8(8) of Legislative Decree no. 252 of December 5, 2005. Mr. Vitto has announced his resignation from the Company, with such resignation to be effective on September 4, 2023.

Quantification of Payments and Benefits to the Company’s Named Executive Officers

The information in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about certain compensation for each of the Company’s named executive officers that is based on or otherwise related to the Merger, and assumes, among other things, that each named

 

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executive officer will experience a qualifying termination immediately following the consummation of the Merger. Please note that the amounts described and quantified below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date and do not reflect certain compensation actions that may occur before the effective time of the Merger.

For purposes of calculating the amounts included in the table below, we have used the information available as of July 27, 2023 and assumed that a termination of each named executive officer’s employment (other than for Mr. Vitto, who resigned from his positions as Chief Product & Technology Officer of the Company, to be effective September 4, 2023) by Tata Communications or its subsidiaries without cause immediately following the effective time of the Merger. The calculations in the table below do not include amounts the named executive officers were already entitled to receive or will be vested in as of the closing of the Merger. For purposes of calculating the amounts below, the per share value of a share of Company Common Stock was based on the per share merger consideration ($7.25 per share).

Golden Parachute Compensation

 

Name		Cash ($) (1)				Equity ($) (2)				Perquisites and Benefits ($) (3)				Total ($) (4)
Dario Calogero		$	3,290,000			$	413,004			$	57,350			$	3,760,354
Giacomo Dall’Aglio		$	630,000			$	322,234			$	26,888			$	979,122
Nicola Junior Vitto (5)			—				—				—				—

 

(1)

Cash. Represents severance payments under the executive’s employment agreement upon a termination without “cause” or resignation for “good reason” (as defined in the respective employment agreements), including (i) with respect to Mr. Calogero, a cash severance payment in an amount equal to the sum of (A) three (3) times (1) his annual base salary ($470,000), plus (2) 100% of his annual target bonus ($470,000), and (B) a bonus for the year of termination ($470,000), and (ii) with respect to Mr. Dall’Aglio, a cash severance payment in an amount equal to the sum of (A) (1) his annual base salary ($315,000), plus (2) 100% of his annual target bonus ($157,500), and (B) a bonus for the year of termination ($157,500). In each case, severance is payable in a lump sum. Receipt of these payments is subject to the employee’s execution of a general release of claims in favor of the Company and its affiliates. For purposes of calculating the amounts included in the table above, we have assumed that the employee’s employment will be terminated by the Company without cause immediately following the effective time of the Merger. The amount payable to each named executive officer is a “double-trigger” payment, which means the amount will become payable only upon a qualifying termination of employment following the effective time of the Merger. The Vitto Employment Agreement does not provide for enhanced severance or notice provisions in connection with a change in control and can be terminated in accordance with the notice periods applicable by law.

 

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(2)

Equity. The numbers in this column represent the value of accelerated vesting of outstanding Unvested Company RSUs at the Assumed Closing Date of the Merger for Messrs. Calogero and Dall’Aglio. Mr. Vitto resigned from his positions as Chief Product & Technology Officer of the Company, to be effective September 4, 2023, and as of the date of this proxy statement, will not receive any compensation that is based on or otherwise relates to the Merger. As described in the section of this proxy statement captioned “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards,” outstanding Unvested Company RSUs will be cancelled and converted into the contingent right to receive a cash payment subject to vesting, subject to earlier payment upon a termination without “cause” in connection with the closing of the Merger or thereafter but on or prior to December 31, 2024. The amounts set forth below in respect of the unvested Company RSUs constitute “double-trigger” payments, as such amounts represent the value of the converted cash awards to be received in respect of such Company RSUs, which will become payable only upon a “qualifying termination” of employment following the effective time of the Merger. Set forth below is the value attributable to the unvested Company RSUs held by each named executive officer:

 

Name		Company RSUs ($)
Dario Calogero		$	413,004
Giacomo Dall’Aglio		$	322,234
Nicola Junior Vitto			—

For a more detailed discussion regarding the treatment of equity awards, see the section of this proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards.”

 

(3)

Perquisites and Benefits. Amounts in this column represent estimated insurance coverage for Messrs. Calogero and Dall’Aglio, for the shorter of (i) the two (2)-year or one (1)-year period, respectively, following the date of a termination without “cause” or resignation for “good reason” (as defined in the respective employment agreements) or (ii) the date on which the executive obtains comparable insurance coverage. The amount payable to each named executive officer is a “double-trigger” payment, which means the amount will become payable only upon a qualifying termination of employment following the effective time of the Merger. The Vitto Employment Agreement does not provide for continued coverage in the Company’s insurance plans following his termination of employment and any such coverage would be determined under applicable law.

 

Name		Continued Insurance Coverage ($) (1)
Dario Calogero		$	57,350
Giacomo Dall’Aglio		$	26,888
Nicola Junior Vitto			—

 

(1)

Insurance coverage was estimated based upon the healthcare and life insurance benefits received by each of the Company’s named executive officer in fiscal year 2022, as disclosed in the Annual Report on Form 10-K filed with the SEC on March 16, 2023.

 

(4)	280G. The amounts in this column do not reflect any potential reductions to such amounts that may occur pursuant to the Section 280G best-net cutback provisions included in Messrs. Calogero’s and Dall’Aglio’s employment agreements.

 

(5)

Mr. Vitto resigned from his positions as Chief Product & Technology Officer of the Company, to be effective September 4, 2023, and as of the date of this proxy statement, will not receive any compensation that is based on or otherwise relates to the Merger. He has been included in the above table in accordance with the requirements of Item 402(t) of Regulation S-K.

 

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Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences of the Merger to holders of Company Common Stock whose shares are exchanged for cash pursuant to the Merger. This discussion is based on the provisions of the Internal Revenue Code of 1986 (the “Code”), applicable U.S. Treasury regulations, judicial opinions and administrative rulings and published positions of the Internal Revenue Service, each as in effect as of the date hereof. These authorities are subject to change, possibly on a retroactive basis, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences arising under the Medicare contribution tax on net investment income, nor does it address any tax considerations under state, local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax. This discussion is not binding on the Internal Revenue Service or the courts and, therefore, could be subject to challenge, which could be sustained. No ruling is intended to be sought from the Internal Revenue Service with respect to the Merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Company Common Stock that is:

 

•

a citizen or individual resident of the United States for U.S. federal income tax purposes;

 

•

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

 

•

a trust if (i) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or

 

•

an estate the income of which is subject to U.S. federal income tax regardless of its source.

For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of Company Common Stock, other than a partnership or other entity taxable as a partnership for U.S. federal income tax purposes, that is not a U.S. holder.

This discussion applies only to holders of shares of Company Common Stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a holder in light of its particular circumstances, or that may apply to a holder that is subject to special treatment under the U.S. federal income tax laws (including, for example, insurance companies, controlled foreign corporations, passive foreign investment companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, holders subject to the alternative minimum tax, U.S. holders that have a functional currency other than the U.S. dollar, tax-exempt organizations, banks and certain other financial institutions, mutual funds, certain expatriates, partnerships, S corporations, or other pass-through entities or investors in partnerships or such other entities, holders who hold shares of Company Common Stock as part of a hedge, straddle, constructive sale or conversion transaction, holders who will hold, directly or indirectly, an equity interest in the Surviving Corporation, holders who acquired their shares of Company Common Stock through the exercise of employee stock options or other compensation arrangements and holders who own or have owned (directly, indirectly or constructively) five percent (5%) or more of the Company Common Stock (by vote or value)).

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of Company Common Stock, the tax treatment of a partner in such partnership will generally depend on the status of the partners and the activities of the partnership. If you are a partner of a partnership holding shares of Company Common Stock, you should consult your tax advisor.

Holders of Company Common Stock are urged to consult their own tax advisors to determine the particular tax consequences to them of the Merger, including the applicability and effect of the alternative minimum tax and any U.S. federal, state, local, foreign or other tax laws.

 

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Consequences to U.S. Holders

A U.S. holder whose shares of Company Common Stock are converted into the right to receive cash in the Merger generally will recognize gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received and (ii) the U.S. holder’s adjusted tax basis in such shares.

If a U.S. holder’s holding period in the shares of Company Common Stock surrendered in the Merger is greater than one year as of the date of the Merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S. holder acquired different blocks of Company Common Stock at different times and different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of Company Common Stock.

Consequences to Non-U.S. Holders

A non-U.S. holder whose shares of Company Common Stock are converted into the right to receive cash in the Merger generally will not be subject to U.S. federal income taxation unless:

 

•

gain resulting from the Merger is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by any applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder); or

 

•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the individual’s taxable year in which the Merger occurs and certain other conditions are satisfied.

Any gain recognized by a non-U.S. holder described in the first bullet above generally will be subject to U.S. federal income tax on a net income basis at regular graduated U.S. federal income tax rates in the same manner as if such holder were a “U.S. person” as defined under the Code. A non-U.S. holder that is a corporation may also be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in the U.S. business.

Gain described in the second bullet above generally will be subject to U.S. federal income tax at a flat 30% rate, but may be offset by certain U.S. source capital losses, if any, of the non-U.S. holder.

Information Reporting and Backup Withholding

Payments made in exchange for shares of Company Common Stock pursuant to the Merger may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 24%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption should complete and return Internal Revenue Service Form W-9, certifying that such U.S. holder is a U.S. person, the taxpayer identification number provided is correct and such U.S. holder is not subject to backup withholding. In general, a non-U.S. holder will not be subject to U.S. federal backup withholding and information reporting with respect to cash payments to the non-U.S. holder pursuant to the Merger if the non-U.S. holder has provided the appropriate Internal Revenue Service Form W-8 (or applicable successor form).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the Internal Revenue Service in a timely manner.

This summary of the material U.S. federal income tax consequences is for general information purposes only and is not tax advice. Holders of shares of Company Common Stock should consult their tax advisors as to the specific tax consequences to them of the Merger, including the applicability and effect of the alternative minimum tax and the effect of any U.S. federal, state, local, foreign or other tax laws.

 

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Regulatory Approvals

Antitrust Approval in the U.S.

Under the HSR Act and related rules, certain transactions, including the proposed Merger, may not be completed until notifications have been given and information furnished to the Antitrust Division of the DOJ, and the FTC and all statutory waiting period requirements have been satisfied. On July 13, 2023, both parties filed their respective Notification and Report Forms under the HSR Act with the Antitrust Division and the FTC. The required waiting period under the HSR Act expired at 11:59 p.m. (Eastern Time) on August 14, 2023.

At any time before or after the expiration of the statutory waiting period under the HSR Act, or before or after the effective time of the Merger, the Antitrust Division or the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the Merger, to rescind the Merger or to conditionally approve the Merger upon the divestiture of assets of the Company or Tata Communications (or its controlling parent) or subject to regulatory conditions or other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the merger or permitting completion subject to regulatory conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances. Although neither the Company nor Tata Communications believes that the Merger will violate federal antitrust laws, there can be no assurance that a challenge to the Merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

CFIUS Approval

The Merger is conditioned on the receipt of CFIUS Approval, which shall mean that (i) the Company and Tata Communications have received notice from CFIUS that (a) CFIUS has determined that the Merger is not a “covered transaction” and is not subject to review under Section 721 of Title VII of the Defense Production Act of 1950, as amended and as may be amended from time to time, including the regulations promulgated thereunder, codified at 31 C.F.R. Part 800, et seq. (the “DPA”), (b) CFIUS has concluded an assessment, review or investigation of the Merger and determined that there are no unresolved national security concerns, and has therefore terminated all action under the DPA, or (c) CFIUS has determined, pursuant to 31 C.F.R. § 800.407(a)(2), that it is not able to conclude action pursuant to a CFIUS declaration but has not requested the submission of a CFIUS notice; or (ii) if CFIUS has sent a report to the President of the United States requesting the President’s decision, then the President has (A) announced a decision not to take any action to suspend or prohibit the Merger or (B) not taken any action to suspend or prohibit the Merger after 15 days from the date of receipt of the report from CFIUS.

The Company and Tata Communications filed a short-form “declaration” with CFIUS pursuant to 31 C.F.R. § 800.402 on August 6, 2023. Following CFIUS’s acceptance of the declaration, CFIUS will begin a 30-day assessment period of the transaction, after which CFIUS will either (1) issue the CFIUS Approval under one of the circumstances described above, or (2) request that the parties file a long-form “notice,” which would involve a review period of up to 45 days, followed, if necessary, by an investigation period of up to 45 days.

Other Merger Filings or Clearances

Pursuant to the applicable requirements of the Foreign Exchange Management (Overseas Investment) Directions, 2022 (the “Directions”), Tata Communications submitted an Application to the Special Director of the Enforcement Directorate of India on May 17, 2023 seeking their No Objection Certificate under Rule 10(1) of the Directions. The waiting period with respect to such notice expired on July 17, 2023 and Tata Communications is deemed to have received requisite approval for the transaction.

 

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Timing

Although Tata Communications and the Company do not expect the relevant regulatory authorities to raise any significant concerns in connection with their review of the Merger, there is no assurance that Tata Communications or the Company, as applicable, will obtain all required regulatory approvals on a timely basis, if at all, or that these approvals will not include a restriction, limitation or condition which, in such case, would permit Tata Communications or the Company to refuse to close the transactions contemplated by the Merger Agreement and consummate the Merger.

Other

Other than the approvals and notifications described above, neither the Company nor Tata Communications is aware of any material regulatory approvals required to be obtained, or waiting periods required to expire, after the making of a filing. If the Company or Tata Communications discover that other approvals or filings and waiting periods are necessary, they will seek to obtain or comply with them, although, as is the case with the regulatory approvals described above, there can be no assurance that they will be obtained on a timely basis, if at all. Tata Communications and the Company are each required to use their respective reasonable best efforts to file all the necessary documentation and obtain consents of the relevant governmental authorities in order to consummate the acquisition.

Delisting and Deregistration of Company Common Stock

If the Merger is completed, the Company Common Stock will be delisted from the NYSE and deregistered under the Exchange Act. As such, we would no longer be required to file periodic reports with the SEC with respect to the Company Common Stock.

 

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THE MERGER AGREEMENT

The following is a summary of the material provisions of the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and which is incorporated by reference into this proxy statement. This summary may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read carefully the Merger Agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The following summary of the Merger Agreement, and the copy of the Merger Agreement attached hereto as Annex A to this proxy statement, are intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about the Company in its periodic and current reports filed with the SEC. In particular, the Merger Agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company or its subsidiaries or affiliates. The Merger Agreement contains representations and warranties by the Company, Tata Communications and Merger Sub that were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement, may be subject to qualifications and limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may apply contractual standards of materiality or material adverse effect that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Moreover, the description of the Merger Agreement below does not purport to describe all of the terms of such agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Annex A to this proxy statement and which is incorporated herein by reference.

Additional information about the Company may be found elsewhere in this proxy statement and the Company’s other public filings. See section entitled “Where You Can Find Additional Information.”

Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

At the Effective Time, Merger Sub, a wholly owned subsidiary of Tata Communications, will merge with and into the Company and the separate corporate existence of Merger Sub will cease. The Company will be the Surviving Corporation in the Merger. As a result of the Merger, the Company will become a wholly owned subsidiary of Tata Communications. Merger Sub was formed solely for purposes of the Merger and has no material assets or operations of its own.

At the Effective Time, the certificate of incorporation and the amended and restated bylaws of the Company, as in effect immediately prior to the effective time of the Merger will be amended and restated as of the effective time of the Merger to be, in the case of the certificate of formation, in the form of the certificate of incorporation exhibited to the Merger Agreement and, in the case of the bylaws, in the form (except with respect to the name of the Company) of the bylaws of Merger Sub, and as so amended will be the certificate of incorporation and bylaws of the Surviving Corporation. The directors of Merger Sub immediately before the effective time of the Merger will be the initial directors of the Surviving Corporation and will hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, resignation or removal. The officers of the Company immediately before the effective time of the Merger will be the initial officers of the Surviving Corporation and will hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

 

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Closing and Effective Time of the Merger

The closing of the Merger will take place at 9:00 a.m. Eastern Time on a date to be agreed upon by the Company, Merger Sub and Tata Communications that is no later than the fifth business day after the satisfaction or waiver of all of the conditions described in the section of this proxy statement entitled “The Merger Agreement—Conditions of the Merger” beginning on page 67 (other than any condition that by its nature cannot be satisfied until the closing of the Merger, but subject to satisfaction of any such condition), remotely by exchange of documents and signatures, unless another date or place is agreed to in writing by the Company, Tata Communications and Merger Sub.

The Merger will become effective as of the date and time of the filing of the certificate of Merger with the Secretary of State of the State of Delaware, or such later time as specified in the certificate of Merger and as is agreed to by the Company and Tata Communications.

Effect of the Merger on Capital Stock

The Merger Agreement provides that, at the Effective Time, each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock or owned by Tata Communications or any of its subsidiaries (including Merger Sub), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive the Per Share Price. Following the Effective Time, each holder of Company Common Stock will cease to have any rights with respect to such Company Common Stock, except for the right to receive the merger consideration therefor, without interest.

Each share of Company Common Stock owned by Tata Communications or any of its subsidiaries (including Merger Sub) immediately prior to the Effective Time will be automatically cancelled and extinguished without any conversion thereof or consideration paid therefor. Each share of Company Common Stock held in the treasury of the Company will be cancelled and extinguished and no payment or other consideration will be made with respect to such shares.

Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately before the Effective Time of the Merger will thereafter represent one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

Treatment of Company Equity Awards

At the Effective Time, each Vested Company RSU will be cancelled and converted solely into the right to receive an amount in cash (without interest) equal to (1) the total number of shares of Company Common Stock subject to such Vested Company RSU as of immediately prior to the Effective Time, multiplied by (2) the Per Share Price, less applicable withholding taxes.

At the Effective Time, each Unvested Company RSU will be cancelled and converted solely into the contingent right to receive a converted cash award equal to (1) the total number of shares of Company Common Stock subject to such Unvested Company RSU immediately prior to the Effective Time, multiplied by (2) the Per Share Price, less applicable withholding taxes. Except as otherwise provided in the Merger Agreement, each such converted cash award will continue to have, and will be subject to, the same vesting terms and conditions as applied to the corresponding Unvested Company RSU immediately prior to the Effective Time, with payment forfeited to the extent vesting is not satisfied; provided, however, that if a holder of a converted cash award is terminated by Tata Communications or the Surviving Corporation without “cause” (as defined in such holder’s then-effective employment agreement with the Company or one of its subsidiaries or, if none, determined consistently in accordance with the Company’s past practices) in connection with the closing of the Merger or thereafter but on or prior to December 31, 2024, such holder’s then unvested converted cash award will automatically accelerate and become vested upon such date of termination.

 

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Treatment of Company Warrants

At the Effective Time, each issued and outstanding warrant to purchase shares of Company Common Stock, whether listed on the NYSE or otherwise (each, a “Company Warrant”), outstanding as of immediately prior to the Effective Time will, pursuant to the terms of the Warrant Agreement, dated December 7, 2017, by and between GigCapital, Inc. and Continental Stock Transfer & Trust Company (the “Warrant Agreement”), be automatically cancelled and converted into the right to receive (without interest) an amount in cash equal to the product of (i) the total number of shares of Company Common Stock underlying such Company Warrant multiplied by (ii) the excess, if any of (A) the Per Share Price over (B) the Exercise Price (as defined in the Warrant Agreement), as reduced as described below.

In connection with the Merger Agreement, on June 28, 2023, the Company and Continental Stock Transfer & Trust Company, entered into an amendment to the Warrant Agreement (the “Warrant Amendment”), amending the Company’s warrant holders’ (“Warrant Holders”) rights under the Warrant Agreement. The Warrant Agreement provides that, upon the completion of the Merger, the Exercise Price (as defined in the Warrant Agreement) will be reduced by an amount equal to the difference between (A) the Exercise Price in effect prior to such reduction minus (B) (I) the Per Share Price minus (II) the Black-Scholes Warrant Value (as defined in the Warrant Agreement). The Warrant Amendment provides that immediately following (and after giving effect to) the reduction of the Exercise Price as set forth in the immediately preceding sentence, each outstanding Company Warrant will be automatically cancelled with no action required from the Warrant Holders and converted into a right to receive an amount in cash, without interest, equal to (A) the total number of shares of Common Stock underlying such Company Warrant multiplied by (B) the excess, if any, of (I) the Per Share Price over (II) the Exercise Price (as reduced).

At or prior to the closing, Tata Communications will deposit (or cause to be deposited) with the Payment Agent (as defined below in Payment; Surrender of Shares), by wire transfer of immediately available funds, the aggregate consideration owed to all holders of Company Warrants (the “Warrant Consideration”). As promptly as reasonably practicable, but in any event no later than fifteen business days after the closing, the Warrant Consideration will be paid by the Company or the Surviving Corporation all amounts required to be paid to such holders in respect of Company Warrants that are cancelled and converted pursuant to the Merger Agreement and the Warrant Agreement.

Dissenting Shares

Pursuant to the Merger Agreement, shares of Company Common Stock held by a holder who has demanded and perfected such holder’s demand for appraisal of such holder’s shares of Company Common Stock in accordance with Delaware law and as of the effective time has neither effectively withdrawn nor lost such holder’s right to such appraisal (such shares, “dissenting shares”), will not be converted into or represent a right to receive cash pursuant to the Merger Agreement, but the holder of such dissenting shares will be entitled to only such rights as are granted to holders of dissenting shares by Delaware law.

Payment; Surrender of Shares

Before the Effective Time, Tata Communications will designate a nationally recognized bank or trust company reasonably acceptable to the Company to act as the payment agent for the Merger (the “Payment Agent”). At or prior to the closing, Tata Communications will deposit (or cause to be deposited) with the Payment Agent, by wire transfer of immediately available funds, for payment to the holders of shares of Company Common Stock, an amount of cash equal to the aggregate consideration to which such holders of Company Common Stock are owed under the Merger Agreement.

Promptly following the Effective Time (and in any event within three business days), Tata Communications and the Surviving Corporation will cause the paying agent to mail to each holder of record as of immediately

 

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prior to the Effective Time of one or more certificates that immediately prior to the Effective Time represented issued and outstanding shares of Company Common Stock (other than shares owned by Tata Communications or its subsidiaries and dissenting shares, as applicable) (the “Certificates”) (i) a letter of transmittal and (ii) instructions on how to surrender certificates representing such Company Common Stock in exchange for the price payable with respect to the shares of Company Common Stock formerly represented thereby. Upon delivery of the Certificates for cancellation and the letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, holders of such Certificates will be entitled to receive in exchange therefor an amount in cash equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common Stock represented by such Certificates by (y) the Per Share Price.

No record holder of uncertificated shares of Company Common Stock (the “Uncertificated Shares”) will be required to deliver a Certificate or an executed letter of transmittal to the Payment Agent in order to receive the payment that such holder is entitled to receive pursuant to the Merger Agreement. Instead, such record holder, upon receipt of an “agent’s message” by the Payment Agent (or such other evidence, if any, of transfer as the Payment Agent may reasonably request), will be entitled to receive an amount in cash equal to the product obtained by multiplying (1) the aggregate number of shares of Company Common Stock represented by such holder’s transferred Uncertificated Shares by (2) the Per Share Price, and the transferred Uncertificated Shares will be cancelled.

No interest will be paid or accrued for the benefit of holders of the Certificates and Uncertificated Shares on the Per Share Price payable upon the surrender of such Certificates and transfer of Uncertificated Shares. Until surrendered or transferred, outstanding Certificates and Uncertificated Shares will be deemed from and after the Effective Time to evidence only the right to receive the Per Share Price.

If payment of the Per Share Price is to be made to a person other than the person in whose name surrendered Certificates or transferred Uncertificated Share is registered, it will be a condition to such payment that:

 

•

the person requesting such exchange present proper evidence of transfer or will otherwise be in proper form for transfer; and

 

•

the person requesting such payment will have paid any transfer and other taxes required by reason of the payment of the Per Share Price to a person other than the registered holder of such Certificate or Uncertificated Share surrendered or will have established to the reasonable satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable.

Prior to the Effective Time, Tata Communications and the Company will cooperate to establish procedures with the Payment Agent and the Depository Trust Company (“DTC”) with the objective that the Payment Agent will transmit to DTC or its nominee on the closing date an amount in cash, by wire transfer of immediately available funds, equal to (i) the number of shares of Company Common Stock (other than shares owned by Tata Communications or its subsidiaries and dissenting shares) held of record by DTC or such nominee immediately prior to the Effective Time multiplied by (ii) the Per Share Price.

Each certificate representing Company Common Stock that is surrendered will be cancelled. You should not send in your Company Common Stock certificates until you receive a letter of transmittal with instructions from the paying agent. Do not send Company Common Stock certificates with your proxy card.

Representations and Warranties

The Merger Agreement contains representations and warranties made by the Company, Tata Communications and Merger Sub. The statements embodied in those representations and warranties were made for purposes of the Merger Agreement and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Merger Agreement (including in the confidential disclosure letter

 

- 55 -

delivered by the Company to Tata Communications in connection therewith). In addition, some of those representations and warranties were made as of specified dates, may be subject to a contractual standard of materiality or material adverse effect different from that generally applicable to stockholders or may have been used for the purpose of allocating contractual risk between the parties to the Merger Agreement rather than establishing matters as facts.

The representations and warranties made by the Company (including, in certain cases, with respect to its subsidiaries) relate to, among other things, the following:

 

•

due organization, valid existence, good standing and corporate power to own its properties and assets and conduct its business as currently conducted;

 

•

qualification to do business;

 

•

the corporate power and authority of the Company to execute and deliver the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement;

 

•

the valid authorization of the execution, delivery and performance of the Merger Agreement by the Company and the consummation by it of the Merger and the other transactions contemplated by the Merger Agreement;

 

•

the absence of any consents or approvals of, or any declaration, filing or registration with, any governmental entity being necessary to consummate the Merger;

 

•

the absence of conflicts with, or violations of, the organizational documents, governmental orders, or applicable law and certain material contracts as a result of the execution, delivery and performance of the Merger Agreement;

 

•

the capitalization of the Company, the ownership of its subsidiaries and the absence of any other subsidiaries;

 

•

the Company’s SEC filings since December 31, 2021 and the financial statements included therein, and the implementation and maintenance of disclosure controls and procedures;

 

•

the absence of any material adverse effect on the Company since December 31, 2022 and the absence of certain other changes or events;

 

•

the absence of certain undisclosed liabilities;

 

•

compliance with applicable laws, regulations, orders and other requirements of applicable governmental entities;

 

•

compliance with all governmental licenses, authorizations, approvals and orders held by the Company and its subsidiaries;

 

•

material contracts and the validity and enforceability of material contracts;

 

•

accuracy of the information in this proxy statement;

 

•

absence of legal proceedings;

 

•

employee compensation and benefits matters;

 

•

labor matters;

 

•

matters related to the Company’s owned real property and the Company’s leases;

 

•

intellectual property matters;

 

•

environmental matters and compliance with environmental laws;

 

•

data privacy matters;

 

- 56 -

•

anti-corruption and compliance, sanctions matters and compliance with import-export matters;

 

•

the payment of taxes, the filing of tax returns and other tax matters;

 

•

the receipt by the Board of a fairness opinion from Northland;

 

•

absence of brokers’, finder’s and similar fees payable in connection with the Merger and the other transactions contemplated by the Merger Agreement; and

 

•

transactions with affiliates.

For purposes of the Merger Agreement, “Company Material Adverse Effect” means an effect, individually or in the aggregate, which has or would reasonably be expected to, (i) have a material adverse effect on the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole or (ii) prevent, materially impair or materially delay the ability of the Company to consummate the Merger, except to the extent such material adverse effect under clause (i) results from:

 

•

general economic conditions, or conditions in the global, international or regional economy generally, including changes in inflation, supply chain disruptions, and labor shortages;

 

•

conditions in the equity, credit, debt, financial, currency or capital markets, including (i) changes in interest rates or credit ratings; (ii) changes in exchange rates for the currencies of any country; or (iii) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;

 

•

conditions in the industries in which the Company and its subsidiaries conduct business or in any specific jurisdiction or geographical area in which the Company conducts business, or changes therein;

 

•

any political or geopolitical conditions, outbreak of hostilities, armed conflicts, acts of war (whether or not declared), rebellion, insurrection, sabotage, cyber-attacks by or sponsored by a governmental authority, terrorism or military actions, including any escalation or worsening of the foregoing or any threats thereof, in each case, in the United States or any other country or region in the world;

 

•

earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, nuclear incidents, foreign or domestic social protest or social unrest (whether or not violent) or other natural or man-made disasters, weather conditions, power outages or electrical black-outs, and other force majeure events, including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world;

 

•

the negotiation, execution, delivery or performance of the Merger Agreement or the announcement of the Merger Agreement or the pendency of the Merger, including the impact thereof on the relationships, contractual or otherwise, of the Company and its subsidiaries with customers, suppliers, lenders, lessors, business partners, employees, governmental authorities, vendors or any other third person;

 

•

the compliance by any party with the express terms of the Merger Agreement, including any action taken or refrained from being taken pursuant to the express terms of the Merger Agreement;

 

•

any action taken or refrained from being taken, in each case to which Tata Communications has, in writing, approved or consented to following the date of the Merger Agreement;

 

•

changes or proposed changes in GAAP or other accounting standards, in any applicable laws (or the enforcement or interpretation of any of the foregoing) or in any regulatory or legislative conditions, including the adoption, implementation, repeal, modification, reinterpretation or proposal of any law, regulation or policy (or the enforcement thereof) by any governmental authority, or any panel or advisory body empowered or appointed thereby;

 

•

any epidemics, pandemics (including COVID-19 and any evolutions or mutations thereof), plagues, other outbreaks of illness or public health events (including quarantine restrictions mandated by any

 

- 57 -

governmental authority), including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world;

 

•

any anti-dumping actions, international tariffs, sanctions, trade policies or disputes or any “trade war” or similar actions (including in connection with any dispute involving the Russian Federation and Ukraine);

 

•

any changes in the price or trading volume of the Company Common Stock, in and of itself (it being understood that the underlying cause of such change may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder);

 

•

any failure by the Company and its subsidiaries to meet (i) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period; or (ii) any budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the underlying cause of any such failure in clauses (i) or (ii) may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder);

 

•

the availability or cost of equity, debt or other financing to Tata Communications or Merger Sub;

 

•

any transaction litigation or any demand or legal proceeding for appraisal of the fair value of any shares of Company Common Stock pursuant to the DGCL in connection herewith;

 

•

the identity of, or any facts or circumstances relating to Tata Communications, Merger Sub, or their respective affiliates, the respective financing sources of or investors in the foregoing, with respect to the Company or its business; or

 

•

any breach by Tata Communications or Merger Sub of the Merger Agreement.

The representations and warranties made by Tata Communications and Merger Sub to the Company are more limited and relate to, among other things, the following:

 

•

due organization, valid existence, good standing and corporate power to own its properties and assets and conduct its business as currently conducted;

 

•

the corporate power and authority of Tata Communications and Merger Sub to execute, deliver and perform its respective obligations under the Merger Agreement and to consummate the transactions contemplated thereby, and no other corporate proceedings being necessary to authorize the Merger Agreement or the transactions contemplated thereby;

 

•

the absence of violations of or conflicts with organizational documents, applicable law or governmental orders and certain material contracts as a result of Tata Communications and Merger Sub executing, delivering and performing the Merger Agreement;

 

•

the absence of any consents, waivers, authorizations or approvals of any governmental entity or any declaration or notice or filing or registration with any governmental entity being necessary or required in connection with Tata Communications’ or Merger Sub’s execution, delivery and performance of the Merger Agreement;

 

•

the accuracy of the information provided by Tata Communications and Merger Sub in this proxy statement;

 

•

the absence of a vote or approval requirement by Tata Communications;

 

•

the availability of funds to pay the merger consideration on the closing date;

 

•

the operations of Merger Sub; and

 

•

the absence of legal proceedings.

 

- 58 -

Certain of the representations and warranties of Tata Communications and Merger Sub are qualified as to, among other things, “materiality” or certain events, changes, circumstances, effects, developments or state of facts that would reasonably be expected to have a material adverse effect on the ability of Tata Communications or Merger Sub to satisfy its obligations under the Merger Agreement.

The representations and warranties contained in the Merger Agreement will terminate upon the earlier of the Effective Time or the termination of the Merger Agreement pursuant to its terms.

Covenants Related to the Conduct of Business

The Company has agreed to covenants in the Merger Agreement that affect the conduct of its business and that of its subsidiaries between the date of the Merger Agreement and the effective time of the Merger (or the earlier termination of the Merger Agreement). In addition, subject to certain exceptions specified in the Merger Agreement, required by applicable law or as agreed to by the parties, unless Tata Communications gives its written consent, the Company and each of its subsidiaries are restricted from, among other things:

 

•

conducting its business outside the ordinary course of business and inconsistent with past practice;

 

•

making any change in any of its organizational documents;

 

•

proposing or adopting a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization

 

•

issuing, selling, delivering or agreeing or committing to issue, sell or deliver any Company securities (except as required by the terms of any specified employment agreements or arrangements or any award agreements under the Company Stock Plan or otherwise with respect to, and upon the vesting, exercise or settlement of, Company RSUs);

 

•

except for transactions solely among the Company and its subsidiaries or solely among the subsidiaries of the Company, reclassifying, splitting, combining, subdividing or redeeming, repurchasing, purchasing or otherwise acquiring or amending the terms of, directly or indirectly, any of the Company’s capital stock or other equity or voting interest (other than the withholding of shares of Company Common Stock to satisfy tax obligations incurred in connection with the vesting and settlement of Company RSUs and the acquisition by the Company of Company RSUs in connection with the forfeiture of such awards, in each case in accordance with their terms);

 

•

adjusting, splitting, combining or reclassifying any shares of capital stock, or issuing or authorizing or proposing the issuance of any other Company securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest; declaring, setting aside or paying any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned subsidiary of the Company to the Company or one of its other wholly owned subsidiaries; modifying the terms of any shares of its capital stock or other equity or voting interest; pledging or encumbering any shares of its capital stock or other equity or voting interest;

 

•

incurring, assuming, or guaranteeing any indebtedness (other than indebtedness between the Company and its subsidiaries, performance bonds and surety bonds entered into in the ordinary course of business or any indebtedness for borrowed money in an amount not to exceed $350,000 in the aggregate at any time);

 

•

except as required by applicable law or under the terms of any Company employee benefit plan in effect as of the date of the Merger Agreement, or in the ordinary course of business with respect to persons eligible to earn an annual base salary or wages of $200,000 or less, or in conjunction with annual renewal or plan design changes for Company employee benefit plans that are made in the ordinary course of business and do not materially increase the cost of the Company and its subsidiaries,

 

- 59 -

increasing the compensation payable to any officers, directors or employees or independent contractors of the Company; entering into, adopting, amending, modifying or terminating any employee benefit plan or making or granting any award under any employee benefit plan (other than payment of 2023 annual bonuses in the ordinary course of business, consistent with past practice); or hiring or terminating (other than for “cause”) any employee or other individual independent contractor of the Company;

 

•

selling, assigning, transferring, or otherwise disposing of, any of the Company’s or its subsidiaries’ material assets, other than such sales, assignments, transfers or other dispositions that are sales of products and services or dispositions of tangible assets in the ordinary course of business, do not have a purchase price that exceeds $500,000 individually or $1,000,000 in the aggregate, or expire in accordance with their statutory terms;

 

•

settling, releasing, waiving or compromising any pending or threatened legal proceeding for an amount equal to or in excess of $1,000,000 individually or $3,000,000 in the aggregate other than (i) any settlement where the amount paid by the Company is covered by insurance and (ii) as reflected or reserved against in the financial statements of the Company for amounts not in excess of those so reflected or reserved;

 

•

materially changing the accounting methods, principles or practices used by the Company or its subsidiaries unless required by GAAP, Regulation S-X of the Exchange Act or other law;

 

•

making, authorizing, or making any commitment with respect to, capital expenditures that are in the aggregate in excess of $1,000,000 for the Company or any of its subsidiaries, failing to operate in all material respects in accordance with the capital expenditure budget or asset maintenance plan, or entering into any lease of personal property or any renewals thereof except in the ordinary course of business substantially consistent with past practice;

 

•

except in the ordinary course of business, entering into or amending any material contracts;

 

•

acquiring any division any division, assets, properties, businesses or equity securities other than (i) in or from any wholly owned subsidiary of the Company or (ii) acquisitions of products and service in the ordinary course of business;

 

•

making any loans, advances or capital contributions to or investments in any third party, other than trade credit and similar loans and advances made to employees, customers and suppliers in the ordinary course of business or loans to subsidiaries of the Company in amounts less than $500,000 in the aggregate;

 

•

entering into, amending, or terminating any collective bargaining agreement or other labor agreement with a labor union, works counsel, or similar labor organization;

 

•

entering into any new line of business;

 

•

amending (i) the Company’s pricing terms in any contract other than in the ordinary course of business and pursuant to the terms of the contract or (ii) the Company’s standard pricing policy in effect as of the date of the Merger Agreement in a manner adverse to the Company and its subsidiaries;

 

•

failing to maintain in all material respects any material insurance policies;

 

•

entering into an agreement, contract, commitment or arrangement to do any of the foregoing;

Voting and Support Agreements

In connection with the consummation of the transactions contemplated by the Merger Agreement, certain stockholders of the Company affiliated with directors Dario Calogero and Emilio Hirsch have executed Voting Agreements in favor of Tata Communications concurrently with the execution of the Merger Agreement, pursuant to which such stockholders have agreed, among other things, to vote all shares of Company Common

 

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Stock owned by them in favor of the approval and adoption of the Merger Agreement and the Merger. A copy of the Voting Agreements are attached to this proxy statement as Annex C.

No Solicitation by the Company

From the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement and the Effective Time, the Company and its subsidiaries will not, and will not authorize or knowingly permit any of their respective representatives to, directly or indirectly:

 

•

solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or offer that constitutes or could reasonably be expected to lead to, an Acquisition Proposal (as defined below);

 

•

furnish to any person any non-public information relating to the Company or any of its subsidiaries with the intent to induce or knowingly encourage or facilitate, any proposal or offer that constitutes or could reasonably be expected to lead to an Acquisition Proposal;

 

•

participate or engage in discussions or negotiations with any person with respect to an Acquisition Proposal (or inquiries, proposals or offers that could reasonably be expected to lead to an Acquisition Proposal);

 

•

approve, endorse or recommend an Acquisition Proposal; or

 

•

enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an Acquisition Transaction (as defined below), other than an acceptable confidentiality agreement (any such letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an Acquisition Transaction, an “Alternative Acquisition Agreement”).

The Company has agreed under the Merger Agreement to, within two business days of the execution of the Merger Agreement:

 

•

request the prompt return or destruction of all non-public information concerning the Company or its subsidiaries furnished to any third party with whom a confidentiality agreement was entered into at any time within the six-month period immediately preceding the date of the Merger Agreement; and

 

•

immediately cease and use its reasonable best efforts to cause each of its subsidiaries and its and their respective representatives to immediately (x) cease any discussions, communications or negotiations with any third party in connection with an Acquisition Proposal (or inquiries, proposals or offers that could reasonably be expected to lead to an Acquisition Proposal) by such third party, in each case that exists as of the date of the Merger Agreement and (y) shut off all access of any third party to any electronic data room maintained by the Company with respect to the transactions contemplated by the Merger Agreement (except for the Company, Tata Communications and their respective representatives).

Until the earlier to occur of the termination of the Merger Agreement and the Effective Time, the Company will be required to enforce, and will not be permitted to waive, terminate or modify, any provision of any standstill or similar provision that prohibits a proposal being made to the Board (or any committee thereof) unless the Board (or any committee thereof) has determined in good faith that failure to take such action would be inconsistent with its fiduciary duties under applicable law. The Merger Agreement provides that, notwithstanding the restrictions described above, if, at any time following the execution of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement and the Company’s receipt of the requisite stockholder approval of the Merger Agreement and the Merger, the Company and the Board may participate or engage in discussions or negotiations with, furnish any non-public information relating to the Company or any of its subsidiaries to, any person or such person’s representatives that has made, renewed or

 

- 61 -

delivered to the Company an Acquisition Proposal after the date of the Merger Agreement that the Board has determined in good faith either constitutes a Superior Proposal (as defined below) or could reasonably be expected to lead to a Superior Proposal; provided, that the Company provides to Tata Communications and Merger Sub any material non-public information or data that is provided to any person given such access that was not previously made available to Tata Communications or Merger Sub within 48 hours following the time provided to such person.

Notwithstanding the restrictions described above, at any time prior to the receipt of requisite stockholder approval of the Merger Agreement:

 

•

the Board (or a committee thereof) may effect a Company Board Recommendation Change (as defined below) in response to an intervening event if the Board (or a committee thereof) determines in good faith that the failure to do so would be inconsistent with its fiduciary duties under applicable law; provided, that the Board (or a committee thereof) will not affect such a Company Board Recommendation Change unless:

 

•

the Company has provided prior written notice to Tata Communications at least five business days in advance to the effect that the Board (or a committee thereof) intends to effect a Company Board Recommendation Change, which notice will specify the basis for such Company Board Recommendation Change; and

 

•

prior to effecting such Company Board Recommendation Change, the Company and its representatives, during such five business day period, has been available to negotiate with Tata Communications and its representatives in good faith (to the extent that Tata Communications desires to so negotiate) to enable Tata Communications to make such adjustments to the terms and conditions of this Agreement in such a manner that would obviate the need to effect a Company Board Recommendation Change.

In the event the Company received an Acquisition Proposal that the Board has determined in good faith constitutes a Superior Proposal, then the Company Board may (i) effect a Company Board Recommendation Change with respect to such Acquisition Proposal, or (ii) cause the Company to terminate the Merger Agreement in order to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal; provided, that the Board (or a committee thereof) will not take any action described in the foregoing clauses (i) and (ii) unless:

 

•

the Board (or a committee thereof) determines in good faith that the failure to do so is inconsistent with its fiduciary duties under applicable law;

 

•

the Company and its subsidiaries and their respective representatives have complied in all material respects with their obligations pursuant to the Merger Agreement with respect to such Acquisition Proposal;

 

•

the Company has (A) provided prior written notice to Tata Communications five business days in advance (such notice period, including any extension thereto, the “Notice Period”), and (B) prior to effecting such Company Board Recommendation Change or termination, the Company and its representatives, during the Notice Period, have been available to negotiate with Tata Communications in good faith to enable Tata Communications to make adjustments to the terms and conditions of the Merger Agreement; and

 

•

in the event of any termination of this Agreement in order to cause or permit the Company or any of its subsidiaries to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal, the Company will pay a termination fee to Tata Communications equal to $5 million.

The Company will as promptly as reasonably practicable (and, in any event, within 24 hours) notify Tata Communications if any Acquisition Proposal or any bona fide inquiries, offers or proposals that could reasonably

 

- 62 -

be expected to lead to an Acquisition Proposal are received by the Company. The Company must keep Tata Communications reasonably informed, on a prompt basis, of the status and terms of any such Acquisition Proposal or bona fide inquiries, offers or proposals and the status of any related discussions or negotiations.

Under the Merger Agreement:

 

•

“Acquisition Proposal” means any bona fide written offer or proposal (other than an offer or proposal by Tata Communications or Merger Sub) to engage in an Acquisition Transaction;

 

•

“Acquisition Transaction” means any transaction or series of related transactions (other than the Merger) involving (i) any direct or indirect purchase or other acquisition by any person or group of shares of Company Common Stock representing more than 15% of the Company Common Stock outstanding after giving effect to the consummation of such purchase or other acquisition, (ii) any direct or indirect purchase or other acquisition by any person or group of more than 15% of the consolidated assets, net revenue or net income, or gross profit of the Company and its subsidiaries taken as a whole (measured by the fair market value thereof as determined in good faith by the Board), (iii) any merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving the Company or any of its Subsidiaries pursuant to which any person or group would hold, directly or indirectly, shares of Company Common Stock representing more than 15% of the equity interests of the surviving or resulting entity of such transaction after giving effect to the consummation of such transaction, or (iv) any combination of (i)-(iii).

 

•

“Superior Proposal” is an acquisition proposal (i) that the Board determines (taking into account all legal, regulatory, financial and other aspects of the proposal) is more favorable to the Company’s stockholders (from a financial point of view) than the Merger Agreement with Tata Communications; and (ii) which the Board determines is reasonably likely to be consummated.

 

•

“Company Board Recommendation Change” means the following actions (i) withholding, withdrawing, amending or modifying, or publicly propose to withhold, withdraw, amend or modify, the Company’s recommendation in favor of the Merger Agreement and the Merger in a manner adverse to Tata Communications in any material respect; (i) adopting, approving or recommending to the Company Common Stockholders an Acquisition Proposal; (ii) failing to include the Company’s recommendation in favor of the Merger and the Merger Agreement in this proxy statement; (iv) if an Acquisition Proposal structured as a tender or exchange offer is commenced, failing to publicly recommend against acceptance of such tender or exchange offer by the Company’s stockholders within ten business days of commencement thereof; or (v) failing to publicly reaffirm the Company’s recommendation in favor of the Merger and the Merger Agreement within five business days after Tata Communications so requests in writing

Other Covenants and Agreements

Stockholder Meeting

The Company has agreed to, as promptly as reasonably practicable after the date of the Merger Agreement, take all actions in accordance with applicable law, its constituent documents and the rules of NYSE, duly call, give notice of, convene and hold a Special Meeting of the Company’s stockholders for the purpose of considering and taking action upon stockholder approval of the Merger Agreement, which meeting is the subject of this proxy statement.

Efforts to Complete the Merger

Prior to the closing of the Merger, the Company, Tata Communications and Merger Sub have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things, in each case as are necessary, proper or advisable pursuant to applicable laws to consummate and make

 

- 63 -

effective as promptly as practicable the Merger and the transactions contemplated by the Merger Agreement, including by obtaining all consents, waivers, approvals, orders and authorizations from governmental authorities, and making all registrations, declarations and filings with governmental authorities, in each case that are necessary or advisable to consummate the transactions.

In addition, the Company and Tata Communications have agreed to use reasonable best efforts to:

 

•

file the required notification under the HSR Act as promptly as practicable (and in any event within 10 business days of the Merger Agreement) and all other required notifications, filings, forms and submissions, including any draft notifications requiring pre-notification, with the relevant governmental authorities as are required by certain foreign regulatory laws as applicable;

 

•

make any filings as may be required or deemed desirable to submit to CFIUS;

 

•

cooperate and coordinate (and will cause its respective affiliates to cooperate and coordinate) with the other in the making of such filings and supply each other (or cause to be supplied) with any information that may be required in order to make such filings; and

 

•

supply (or cause to be supplied) any additional information that may be required or requested by the FTC, CFIUS, the DOJ or the governmental authorities of other applicable jurisdiction in which any such filing is made.

Notwithstanding anything to the contrary in the Merger Agreement, Tata Communications will not be required to, and the Company will not, without consent of Tata Communications, offer, negotiate, commit to or effect, other than such actions the effects of which are de minimis in the aggregate to Tata Communications and its subsidiaries taken as a whole:

 

•

the sale, divestiture, transfer, license, disposition, or hold separate (through the establishment of a trust or otherwise), of any or all of the capital stock or other equity or voting interest, assets (whether tangible or intangible), rights, properties, products or businesses of Tata Communications and Merger Sub (and their respective affiliates, if applicable) or of the Company and its subsidiaries;

 

•

the termination, modification, or assignment of existing relationships, joint ventures, Contracts, or obligations of Tata Communications and Merger Sub (and their respective affiliates, if applicable) or of the Company and its subsidiaries;

 

•

the modification of any course of conduct regarding future operations of Tata Communications and Merger Sub (or their respective affiliates, if applicable) or of the Company or its subsidiaries; and

 

•

any other restrictions on the activities of Tata Communications or Merger Sub (and their respective affiliates, if applicable) or of the Company or its subsidiaries.

Tata Communications will oppose any request for, the entry of, and seek to have vacated or terminated, any order, judgment, decree, injunction or ruling of any governmental authority that could restrain, prevent or delay any required consents applicable to the Merger, including by defending through litigation, any action asserted by any person in any court or before any governmental authority and by exhausting all avenues of appeal, including appealing properly any adverse decision or order by any governmental authority.

Indemnification

Under the Merger Agreement, from and after the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to, honor and fulfill all obligations of the Company and its subsidiaries pursuant to any indemnification agreements between the Company and any of its subsidiaries or affiliates on the one hand and any of their respective current or former directors (“indemnified parties”). From and after the Effective Time until the sixth anniversary of the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to cause the organizational documents of the Surviving

 

- 64 -

Corporation and its subsidiaries to contain provisions with respect to indemnification, exculpation and the advancement of expenses at least as favorable as the indemnification, exculpation and the advancement of expenses provisions in the organizational documents of the Company and its subsidiaries as of the date of the Merger Agreement.

From and after the Effective Time until the sixth anniversary of the Effective Time, Tata Communications has agreed that it will, and will cause the Surviving Corporation to, subject to certain limitations, indemnify, defend and hold harmless the indemnified parties, against any and all losses, claims, damages, costs, expenses, fines, liabilities or judgments or amounts incurred by such person in connection with any claim, action, suit, proceeding or investigation (including amounts paid in settlement or compromise of such proceedings) arising directly or indirectly, out of or pertains, directly or indirectly to (i) the fact that such person is or was a director or officer of the Company or any of its subsidiaries; (ii) any act or omission taken in such person’s capacity as a director or officer or (iii) the Merger.

From the Effective Time until the sixth anniversary of the Effective Time, the Surviving Corporation will (and Tata Communications will cause the Surviving Corporation to) maintain in effect the Company’s current directors’ and officers’ liability and similar insurance (“D&O Insurance”) in respect of acts or omissions occurring at or prior to the Effective Time on terms (including with respect to coverage, conditions, retentions, limits and amounts) that are equivalent to those of the D&O Insurance. Prior to the Effective Time, the Company will purchase a prepaid six year “tail” policy with respect to the D&O Insurance from an insurance carrier with the same or better credit rating as the Company’s current directors’ and officers’ liability insurance carrier.

Employee Matters

From and after the Effective Time, the Surviving Corporation will (and Tata Communications will cause the Surviving Corporation to) assume and honor all of the Company’s Employee Plans (as defined in the Merger Agreement) in accordance with their terms as in effect immediately prior to the Effective Time, except that nothing will prohibit the Surviving Corporation from amending or terminating any such Employee Plans in accordance with their terms.

We refer to each individual who is an employee of the Company or any of its subsidiaries immediately prior to the Effective Time and continues to be an employee of Tata Communications or one of its subsidiaries (including the surviving corporation) immediately following the Effective Time as a “continuing employee.”

During the 12-month period following the Effective Time, during which a continuing employee remains employed by the Surviving Corporation or one of its subsidiaries, the Surviving Corporation and its subsidiaries will (and Tata Communications will cause the Surviving Corporation and its subsidiaries to) provide each continuing employee with (i) base salary or wage rate and annual cash incentive opportunities that are, in each case, not less than the base salary or wage rate and annual cash incentive opportunities in effect for such continuing employee immediately before the Effective Time; (ii) employee benefits (excluding, in each case, severance, nonqualified deferred compensation, retention, change in control compensation, or equity or equity-based plans or arrangements) that are substantially similar in the aggregate to those in effect for (or available to) such continuing employee as of the Effective Time; and (iii) severance benefits that are substantially similar in the aggregate to either (a) the applicable severance benefits for such continuing employee as required by local laws or (y) the applicable severance benefits provided to similarly situated employees of Tata Communications. However, the terms and conditions of employment for any continuing employees covered by a collective bargaining agreement or other agreement with any labor union, works council, or other labor organization will be governed by such applicable agreement until it is modified, superseded or terminated in accordance with its terms and/or applicable law.

In addition, the Merger Agreement provides that the Surviving Corporation and its subsidiaries will (and Tata Communications will cause the Surviving Corporation and its subsidiaries to) use commercially reasonable

 

- 65 -

efforts to cause to be granted to each continuing employee credit for all service with the Company or any of its subsidiaries prior to the Effective Time for purposes of eligibility to participate, and vesting where length of service is relevant, except to the extent that it would result in duplication of coverage or benefits for the same period of service or for purposes of any defined contribution pension plan. In addition, Tata Communications will or will cause the Surviving Corporation and its subsidiaries to use commercially reasonable efforts to provide that:

 

•

each continuing employee will be immediately eligible to participate, without any waiting period, in any and all employee benefit plans made available to continuing employees at or after the Effective Time (which we refer to as the “new plans”) to the extent that coverage pursuant to any new plan replaces coverage pursuant to a corresponding Company plan in which such continuing employee participates immediately before the Effective Time (which we refer to as the “old plans”);

 

•

for purposes of each new plan providing life insurance, medical, dental, pharmaceutical, vision, or disability benefits to any continuing employee, all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such new plan are to be waived for such continuing employee and his or her covered dependents, subject to approval of the insurance carrier(s) of such new plans, to the extent such conditions were inapplicable or waived under the comparable Company employee plan in which such continuing employee participated immediately prior to the Effective Time; and

 

•

for purposes of each new plan providing medical, dental, pharmaceutical, or vision benefits, any eligible expenses incurred by the continuing employees and their covered dependents during the portion of the plan year of the old plan ending on the date that continuing employees’ participation in the corresponding new plan begins, if such participation begins in the year in which the Effective Time occurs, to be given full credit, subject to approval of the insurance carrier(s) of such new plan, pursuant to such new plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such continuing employees and their covered dependents for the applicable plan year as if such amounts had been paid in accordance with such new plan.

Any vacation or paid time off accrued but unused by a continuing employee as of immediately prior to the Effective Time will be credited to such continuing employee following the Effective Time, and will otherwise be subject to the terms of such vacation and/or paid time off policies as determined by Tata Communications and its affiliates from time to time (but in no event subject to forfeiture).

Other Covenants

The Merger Agreement contains additional agreements between the Company and Tata Communications relating to, among other things:

 

•

access to information prior to the effective time of the Merger and confidentiality of such information;

 

•

the coordination of press releases and other public announcements or filings relating to the transactions contemplated by the Merger Agreement;

 

•

the notification of stockholder litigation or claims in connection with the Merger Agreement;

 

•

notification of any occurrence or non-occurrence reasonably likely to result (i) in an inaccuracy of a representation or warranty under the Merger Agreement, (ii) in an unsatisfied condition (in any material respect) to the Merger at the effective time of the Merger and (iii) in a material failure by the Company, Tata Communications or Merger Sub to comply with and satisfy any covenant under the Merger Agreement; and

 

•

compliance of Merger Sub with all of its obligations under or related to the Merger Agreement.

 

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Conditions to the Merger

Each party’s obligation to complete the Merger is subject to the satisfaction or waiver by the Company and Tata Communications of the following conditions at or prior to the Effective Time:

 

•

the approval of the Merger Agreement and the Merger by the requisite vote of stockholders of the Company;

 

•

the expiration or termination of any applicable waiting period under the HSR Act;

 

•

the Company and Tata Communications have received CFIUS Approval;

 

•

the expiration or termination of any applicable waiting periods and all required clearances and regulatory approvals have been obtained from the relevant U.S. governmental entities and certain non-U.S. governmental entities as applicable;

 

•

in the event that any governmental authority has commenced, or communicated that it is considering or intends to commence, proceedings or an investigation relating to the transactions contemplated by the Merger Agreement, written confirmation from such governmental authority that any such proceedings or investigations have concluded or that it has cleared the transactions contemplated by the Merger Agreement; and

 

•

the absence of any order, law or injunction (whether temporary, preliminary or permanent) by any governmental authority in effect that prevents or otherwise makes illegal the consummation of the Merger.

The respective obligations of Tata Communications and Merger Sub to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

•

the accuracy of the representations and warranties of the Company (subject to certain materiality qualifications);

 

•

the Company’s performance of and compliance with its covenants, obligations and conditions under the Merger Agreement;

 

•

the delivery of an officer’s certificate by the Company certifying that the conditions described in the preceding bullet points have been satisfied;

 

•

the absence of any Company Material Adverse Effect that has occurred and is continuing since the date of the Merger Agreement; and

 

•

the absence of any restraint in effect which would result in a burdensome condition.

The obligation of the Company to complete the Merger is subject to the satisfaction or waiver of the following additional conditions:

 

•

the accuracy of the representations and warranties of Tata Communications and Merger Sub (subject to certain materiality qualifications);

 

•

Tata Communication’s and Merger Sub’s performance of and compliance with their covenants, obligations and conditions under the Merger Agreement in all material respects; and

 

•

the delivery of an officer’s certificate by Tata Communications and Merger Sub certifying that the conditions described in the two preceding bullet points have been satisfied.

The consummation of the Merger is not subject to any financing condition.

Termination

The Company and Tata Communications may terminate the Merger Agreement by mutual written consent at any time before the Effective Time.

 

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In addition, either the Company or Tata Communications may terminate the Merger Agreement if:

 

•

the Merger is not consummated on or before December 28, 2023, subject to an extension until March 28, 2024 if the required regulatory approvals have not been received (the “Termination Date”), provided that such right to terminate the Merger Agreement shall not be available to any party if the failure of such party, has been the primary cause of or primarily resulted in the failure of the consummation of the Merger to have occurred on or before the Termination Date;

 

•

any governmental law or order or other legal restraint or prohibition restraining or prohibiting the Merger becomes final and non-appealable or any law is in effect that permanently prevents or makes illegal the consummation of the Merger, provided that the right to terminate the Merger Agreement will not be available to a party if the issuance of such permanent injunction or other final and non-appealable judgment or order, or statute, rule or regulation was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement; or

 

•

the requisite vote of the stockholders of the Company to approve and adopt the Merger Agreement and the Merger is not obtained at the Special Meeting (including any adjournments or postponements).

The Company may also terminate the Merger Agreement:

 

•

in connection with entering into a definitive agreement related to a Superior Proposal prior to the receipt of the required vote of the stockholders of the Company to approve and adopt the Merger Agreement and the Merger, subject to the terms and conditions of the Merger Agreement; or

 

•

if Tata Communications or Merger Sub has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement, such that the conditions to the Company’s obligations to complete the Merger would not be satisfied, and such breach is not cured within 30 days following notice of breach.

Tata Communications may also terminate the Merger Agreement:

 

•

in the event of a Company Board Recommendation Change, provided that Tata Communications may not terminate the Merger Agreement if it fails to exercise such right within ten Business Days after it receives notices of the change of recommendation; or

 

•

if the Company has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement, such that the conditions to Tata Communications’ obligations to complete the Merger would not be satisfied, and such breach is not cured within 30 days following notice of breach.

The Company will pay a termination fee of $5,000,000 in the following scenarios:

 

•

if (i) the Merger Agreement is validly terminated by Tata Communications as a result of: (x) the Merger not being consummated by the Termination Date, (y) the requisite consent of the Company’s stockholders adopting the Merger Agreement not being obtained by the Termination Date, or (z) the Company’s breach of the representations, warranties or covenants in a manner that would cause the conditions to the closing of the Merger set forth in the Merger Agreement to not be satisfied, (ii) prior to such termination, a third party announced and did not publicly withdraw or abandon a proposal for an alternative transaction for the Company, and (iii) within twelve months following such termination, the Company consummated an alternative business combination transaction or entered into a definitive agreement providing for the consummation an alternative business combination transaction;

 

•

if, prior to obtaining the requisite stockholder approval, Tata Communications terminates the Merger Agreement because the board of directors of the Company changes its recommendation regarding the Merger; or

 

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•

the Company terminates the Merger Agreement to enter into a definitive agreement providing for an alternative business combination transaction the board of directors of the Company deems to be superior to the Merger.

The Company can terminate the Merger Agreement:

 

•

prior to the approval and adoption of the Merger Agreement and the Merger by the Company’s stockholders at the Special Meeting, in order to concurrently enter into a definitive agreement with respect to a Superior Proposal, subject to Board authorization and the Company’s compliance with the non-solicitation provisions of the Merger Agreement; or

 

•

if either Tata Communications or Merger Sub breaches or fails to perform or comply with any of its representations, warranties, agreements or covenants contained in the Merger Agreement, which breach or failure to perform or comply would give rise to the failure to satisfy certain conditions to completion of the Merger, and such breach or failure cannot be cured by the outside date (provided that the Company is not then in material breach of any representation, warranty, agreement or covenant contained in the Merger Agreement).

Tata Communications will be required to pay the Company a termination fee equal to $5,000,000 in the following scenarios:

 

•

if (i) either party terminates the Merger Agreement due to a failure to consummate the Merger prior to the Termination Date and (ii) at the time of such termination, all closing conditions have been satisfied or waived other than Tata Communications’ receipt of a certain approval or deemed approval from the Royal Bank of India.

Payment of the Company Termination Fee is the sole and exclusive remedy available to Parent and Merger Sub, with respect to the Merger Agreement in the event the Company Termination Fee becomes due and payable pursuant to the terms of the Merger Agreement, and is paid, except for fraud or willful and material breach.

Payment of the Parent Termination Fee is the sole and exclusive remedy available to the Company, with respect to the Merger Agreement in the event the Parent Termination Fee becomes due and payable pursuant to the terms of the Merger Agreement, and is paid, except for fraud or willful and material breach.

As of July 17, 2023, Parent is deemed to have received approval under Rule 10(1) of the Foreign Exchange Management (Overseas Investment) Rules of 2022 and as such the Parent Termination Fee will not become payable.

Amendment and Waivers

Subject to applicable law, the Merger Agreement may be amended by the parties at any time by execution of an instrument in writing signed on behalf of each of Tata Communications, Merger Sub and the Company (pursuant to authorized action by the Company Board (or a committee thereof), except that in the event that the Company has received the requisite stockholder approval, no amendment may be made to the Merger Agreement that requires the approval of the Company Common Stockholders pursuant to the DGCL without such approval. Any time prior to the effective time of the Merger, any party to the Merger Agreement may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties to the Merger Agreement, (ii) waive any inaccuracies in the representations and warranties by the other party contained in the Merger Agreement or in any document delivered pursuant thereto, and (iii) subject to the requirements of applicable law, waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement.

 

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Expenses

Subject to any exceptions set forth in the Merger Agreement, all fees, costs and expenses (including all legal, accounting, broker, finder or investment banker fees) incurred in connection with the Merger Agreement and Merger will be paid by the party incurring such fees, costs and expenses.

Specific Performance

The parties are entitled to an injunction or any other appropriate form of specific performance or equitable relief to prevent breaches or threatened breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement, in addition to any other remedy to which they are entitled at law or in equity.

Governing Law and Jurisdiction; Waiver of Jury Trial

The Merger Agreement is governed by Delaware law. Each party to the Merger Agreement has consented to submit to the jurisdiction of the Chancery Court of the State of Delaware. In addition, each party has irrevocably waived any right to a trial by jury in respect of any litigation arising out of or relating to the Merger Agreement or the transactions contemplated thereby.

 

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ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION (PROPOSAL 2)

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, the Company is required to submit a proposal to the Company’s stockholders for an advisory (non-binding) vote to approve the payment by the Company of certain compensation to the named executive officers of the Company that is based on or otherwise related to the Merger. This proposal is commonly known as “say-on-golden parachutes,” and we refer to it as the named executive officer Merger-related compensation proposal. This compensation is summarized in the Golden Parachute Compensation table under “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger,” including the footnotes to that table and the related narrative discussion. The various plans and arrangements pursuant to which these compensation payments may be made generally have previously formed part of the Company’s overall compensation program for the Company’s named executive officers and previously have been disclosed to stockholders in public filings, including the Company’s annual proxy statement. These historical arrangements were adopted and approved by the Board or the Compensation Committee of the Board, which is composed solely of non-employee directors, and are believed to be reasonable and in line with marketplace norms.

The Board encourages you to review carefully the named executive officer Merger-related compensation information disclosed in this proxy statement.

The Board unanimously recommends that the Company’s stockholders approve the following resolution:

“RESOLVED, that the stockholders of Company hereby approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise related to the Merger as disclosed pursuant to Item 402(t) of Regulation S-K in the Golden Parachute Compensation table, the footnotes to that table and the related narrative discussion.”

The vote on the named executive officer Merger-related compensation proposal is a vote separate and apart from the vote on the proposal to approve and adopt the Merger Agreement and the Merger. Accordingly, you may vote to approve and adopt the Merger Agreement and the Merger and vote not to approve the named executive officer Merger-related compensation proposal and vice versa. Because the vote on the named executive officer Merger-related compensation proposal is advisory only, it will not be binding on either the Company or Tata Communications. Accordingly, if the Merger Agreement and Merger are approved and adopted and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the advisory (non-binding) vote of the Company’s stockholders.

The above resolution approving the Merger-related compensation of the Company’s named executive officers on an advisory basis will require the affirmative vote of the holders of a majority of the votes cast, in person or represented by proxy, at the Special Meeting at which a quorum is present.

 

 

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VOTE ON ADJOURNMENT (PROPOSAL 3)

The Company’s stockholders are being asked to approve a proposal that will give the Company authority to adjourn the Special Meeting, if necessary or appropriate, for the purpose of soliciting additional proxies in favor of the proposal to approve and adopt the Merger Agreement and the Merger, if there are not sufficient votes at the time of the Special Meeting to approve and adopt the Merger Agreement and the Merger. If this adjournment proposal is approved, the Special Meeting could be adjourned by the Board to any date. In addition, regardless of whether a quorum is present, the chairperson of the Special Meeting has the power under the Company’s bylaws to adjourn the Special Meeting from time to time. Furthermore, the Board could postpone the Special Meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons.

If the Special Meeting is adjourned for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign, date and return a proxy and do not indicate how you wish to vote on any proposal, or if you sign, date and return a proxy and you indicate that you wish to vote in favor of the proposal to approve and adopt the Merger Agreement and the Merger but do not indicate a choice on the adjournment proposal, your shares of Company Common Stock will be voted in favor of the adjournment proposal. The Company does not intend to call a vote on this proposal if Proposal 1 has been approved at the Special Meeting.

 

 

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MARKET PRICE OF THE COMPANY COMMON STOCK

The Company Common Stock is traded on the NYSE under the symbol “KLR.”

The following table sets forth during the periods indicated the high and low sales prices of the Company Common Stock for each of the Company’s fiscal quarters since 2021:

 

		Market Price
		High				Low
2023 (through July 27, 2023)		$	7.00			$	1.57
First Quarter		$	4.69			$	1.63
Second Quarter		$	6.88			$	1.57
Third Quarter (through August 16, 2023)		$	7.00			$	6.51
2022		$	35.84			$	1.79
First Quarter		$	35.84			$	20.16
Second Quarter		$	24.29			$	6.75
Third Quarter		$	10.85			$	3.39
Fourth Quarter		$	5.42			$	1.79
2021		$	72.64			$	31.11
First Quarter		$	72.64			$	31.50
Second Quarter		$	56.56			$	36.56
Third Quarter		$	46.13			$	33.07
Fourth Quarter		$	49.80			$	31.11

The closing sale price of the Company Common Stock on June 27, 2023, which was the last trading day before the announcements of the transaction, was $4.80 per share. On August 16, 2023, the most recent practicable date before this proxy statement was mailed to stockholders, the closing price for the Company Common Stock was $6.78 per share. You are encouraged to obtain current market quotations for the Company Common Stock in connection with voting your shares of Company Common Stock.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of shares of Company Common Stock of Kaleyra by:

 

•

each person known to be the beneficial owner of more than 5% of the Company Common Stock of Kaleyra;

 

•

each of Kaleyra’s officers and directors; and

 

•

all executive officers and directors of Kaleyra as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including RSUs and warrants that are currently exercisable or exercisable within 60 days, or restricted stock units that will vest within 60 days. As of August 16, 2023 there were 13,325,920 shares of Company Common Stock outstanding.

Unless otherwise indicated, Kaleyra believes that all persons named in the table have sole voting and investment power with respect to all shares of Company Common Stock beneficially owned by them.

 

Name and Address of Beneficial Owner (1)		Number of Shares (8)				% of Class (2)
Esse Effe S.p.A. (3)			1,633,039				12.25	%
EFFE PI Società Semplice (3)			1,659,641				12.45	%
Maya Investments Limited (4)			1,524,595				11.44	%
Dr. Avi S. Katz (5)			375,075				2.81	%
Neil Miotto (6)			99,668				*
John Mikulsky			45,164				*
Dario Calogero			1,702,328				12.77	%
Giacomo Dall’Aglio			50,888				*
Mauro Carobene			31,343				*
Matteo Lodrini			73,159				*
Nicola Junior Vitto			38,173				*
Geoffrey Grauer			14,324				*
Dr. Emilio Hirsch (3)			1,699,285				12.75	%
Karin-Joyce Tjon Sien Fat			16,559				*
Kathleen Miller			16,559				*
All directors and executive officers (12 individuals) as a group			4,162,526				31.24	%
Lynrock Lake LP (7)			1,419,529				10.65	%

 

*	Less than 1%.

(1)

Unless otherwise indicated, the business address of each of Dr. Avi S. Katz, Neil Miotto and John Mikulsky is 1731 Embarcadero Road, Suite 200, Palo Alto, CA 94303. The address for Esse Effe S.p.A. and EFFE PI Società Semplice is 41, Via Valeggio, Torino, Italy, 10129, Maya Investments Limited is Corso Di Porta Nuova 16, Milan, Italy, 20121 and the other individuals is c/o Kaleyra, Inc., 85 Broad Street, New York, NY 10004

(2)

Based on 13,325,920 shares of Company Common Stock outstanding on August 16, 2023. In accordance with SEC rules, percent of class as of August 16, 2023, is calculated for each person and group by dividing the number of shares beneficially owned by the sum of the total shares outstanding plus the number of shares subject to securities exercisable by that person or group within 60 days.

(3)	Esse Effe S.p.A is affiliated with EFFE PI Società Semplice (“EFFE PI”), which is affiliated with Dr. Emilio Hirsch who is a director of Kaleyra, and the shares are beneficially owned by EFFE PI and Mr. Hirsch.

 

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(4)	Maya Investments Limited is affiliated with Dario Calogero and the shares are beneficially owned by Mr. Calogero who is the Chief Executive Officer and a director of Kaleyra.

(5)	Includes 45,425 shares of Company Common Stock underlying warrants that are currently exercisable.

(6)	Includes 5,047 shares of Company Common Stock underlying warrants that are currently exercisable.

(7)

Based on the Form 13G/A filed by Lynrock Lake LP with the SEC on February 14, 2023, Lynrock Lake Master Fund LP directly held 1,419,529 shares of common stock, which included 1,343,338 shares of common stock issuable upon conversion of the Company’s 6.125% Convertible Senior Note due 2026. Lynrock Lake LP is the investment manager of Lynrock Lake Master Fund LP, and pursuant to an investment management agreement, Lynrock Lake LP has been delegated full voting and investment power over securities of the Company held by Lynrock Lake Master Fund LP. Cynthia Paul, the Chief Investment Officer of Lynrock Lake LP and Sole Member of Lynrock Lake Partners LLC, the general partner of Lynrock Lake LP, may be deemed to exercise voting and investment power over securities of the Company held by Lynrock Lake Master Fund LP. The address of the foregoing entities is c/o Lynrock Lake LP, 2 International Drive, Suite 130, Rye Brook, NY 10573.

(8)	Share information after giving effect to the reverse stock split executed as of March 9, 2023.

 

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APPRAISAL RIGHTS

Under Delaware law, holders of the Company Common Stock are entitled to dissenters’ rights of appraisal in connection with the Merger, provided that such holders meet all of the conditions set forth in Section 262 of the DGCL (“Section 262”). Pursuant to Section 262, stockholders of the Company who do not vote in favor of the Merger and who comply with the applicable requirements of Section 262 will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery (the “Court”) if the Merger is completed. It is possible that the fair value as determined by the Court may be more or less than, or the same as, the merger consideration. Stockholders should note that investment banking opinions as to the fairness from a financial point of view of the consideration payable in a sale transaction, such as the Merger, are not opinions as to, and do not in any manner address, fair value under the DGCL. Stockholders electing to exercise appraisal rights must comply with the strict procedures set forth in Section 262 in order to demand and perfect their rights. Any stockholder of the Company wishing to preserve its rights to appraisal must make a demand for appraisal as described below.

The following is intended as a brief summary of the material provisions of Section 262 required to be followed by dissenting Company Common Stockholders wishing to demand and perfect their appraisal rights. This summary, however, is not a complete statement of all applicable requirements and is subject to and qualified in its entirety by reference to Section 262, the full text of which appears in Annex C to this proxy statement.

Under Section 262, the Company is required to notify stockholders not less than 20 days before the Special Meeting to vote on the Merger that appraisal rights will be available. A copy of Section 262 must be included with that notice. The Special Meeting will be held on September 28, 2023.

This proxy statement constitutes the Company’s notice to its stockholders of the availability of appraisal rights in connection with the Merger under Section 262 of the DGCL.

If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 and consult your legal advisor. A copy of the Delaware statutory provisions related to appraisal rights may be accessed without subscription or cost at the following publicly available website https://delcode.delaware.gov/title8/c001/sc09/#262. If you fail to timely and properly comply with the requirements of Section 262, your appraisal rights may be lost. To exercise appraisal rights with respect to your shares of Company Common Stock, you must:

 

•

NOT vote your shares of Company Common Stock in favor of the approval and adoption of the Merger Agreement and the Merger;

 

•

deliver to the Company a written demand for appraisal of your shares before the date of the Special Meeting, as described further below under “—Written Demand and Notice;”

 

•

continuously hold your shares of Company Common Stock through the date the Merger is consummated; and

 

•

otherwise comply with the procedures set forth in Section 262.

If you sign, date and return a proxy card, or submit a proxy by telephone or through the internet, that does not contain voting instructions, you will effectively waive your appraisal rights because such shares represented by the proxy, unless the proxy is revoked, will be voted for the approval and adoption of the Merger Agreement and the Merger. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the approval and adoption of the Merger Agreement and the Merger or abstain from voting on the approval and adoption of the Merger Agreement and the Merger.

Only a holder of record of shares of Company Common Stock, or a person duly authorized and explicitly purporting to act on that stockholder’s behalf, is entitled to assert appraisal rights for the shares of Company

 

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Common Stock registered in that stockholder’s name. A demand for appraisal will be sufficient if it reasonably informs the Company of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s Company Common Stock. A proxy or vote against the Merger will not constitute such a demand. Beneficial owners who do not also hold the shares of record may not directly make appraisal demands to the Company. The beneficial owner must, in such cases, have the registered stockholder submit the required demand in respect of those shares.

If the shares of Company Common Stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of the demand must be made in that capacity, and if the shares of Company Common Stock are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand must be executed by or on behalf of all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, the agent is acting as agent for such owner or owners. Stockholders who hold their shares of Company Common Stock in brokerage accounts or other nominee forms and who wish to exercise appraisal rights are urged to consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.

Failure to strictly follow the procedures set forth in Section 262 may result in the loss, termination or waiver of appraisal rights. Stockholders who vote in favor of the adoption and approval of the Merger Agreement and the Merger will not have a right to have the fair market value of their shares of Company Common Stock determined. However, failure to vote in favor of the approval and adoption of the Merger Agreement and the Merger is not sufficient to perfect appraisal rights. If you desire to exercise your appraisal rights, you must also submit to the Company a written demand for payment of the fair value of the Company Common Stock held by you. In order to assist stockholders in determining whether to exercise appraisal rights, copies of the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022 are incorporated by reference in this proxy statement.

Written Demand and Notice

A written demand for appraisal should be filed with the Company before the Special Meeting. The demand notice will be sufficient if it reasonably informs the Company of your identity and that you wish to seek appraisal with respect to your shares of Company Common Stock. All demands should be delivered to: Kaleyra, Inc., Via Marco D’Aviano 2, 20131 Milano, Italy, Attention: Corporate Secretary.

The Surviving Corporation, within 10 days after the effective date of the Merger, will notify each stockholder who has complied with Section 262 and who has not voted in favor of the Merger of the effective date of the Merger.

Judicial Appraisal

Within 120 days after the effective date of the Merger, the Surviving Corporation or any stockholder who is entitled to appraisal rights and has otherwise complied with Section 262 may commence an appraisal proceeding by filing a petition with the Court demanding a determination of the value of the Company Common Stock held by all such stockholders. The Surviving Corporation is under no obligation to and has no present intention to file a petition and holders should not assume that the Surviving Corporation will file a petition. Accordingly, it is the obligation of the holders of Company Common Stock to initiate all necessary action to perfect their appraisal rights within the time prescribed in Section 262. If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the Surviving Corporation, the Surviving Corporation will then be obligated, within 20 days after receiving service of a copy of the petition, to file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares of Company Common Stock and with whom agreements as to the value of their shares of Company Common Stock have not been reached by the Surviving Corporation. After notice to the

 

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Surviving Corporation and dissenting stockholders who demanded payment of their shares of Company Common Stock, the Court is empowered to conduct a hearing upon the petition, and to determine those stockholders who have complied with Section 262 of the DGCL and who have become entitled to the appraisal rights provided thereby. The Court may require the stockholders who have demanded appraisal for their shares of Company Common Stock to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with that direction, the Court may dismiss the proceedings as to that stockholder.

After the Court determines the holders of Company Common Stock entitled to appraisal, the appraisal proceeding will be conducted in accordance with the rules of the Court, including any rules specifically governing appraisal proceedings. Through this proceeding, the Court will determine the fair value of the shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid, if any, upon the amount determined to be “fair value” in an appraisal proceeding. In determining the fair value of the shares the Court will take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods that are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “fair price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the Merger that throw any light on future prospects of the corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.” Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharges) as established from time to time during the period between the effective time and the date of payment of the judgment.

Stockholders who consider seeking appraisal should consider that the fair value of their shares under Section 262 could be more than, the same as, or less than, the value of the consideration provided for in the Merger Agreement without the exercise of appraisal rights. No representation is made as to the outcome of the appraisal of fair value as determined by the Court. Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenter’s exclusive remedy. The Court may determine the cost of the appraisal proceeding and assess it against the parties as the Court deems equitable. Upon application of a dissenting stockholder, the Court may order that all or a portion of the expenses incurred by any dissenting stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all shares of Company Common Stock entitled to appraisal. In the absence of a court determination or assessment, each party will bear its own expenses.

Any stockholder who has demanded appraisal in compliance with Section 262 will not, after the effective time, be entitled to vote such stock for any purpose or receive payment of dividends or other distributions, if any, on the Company Common Stock, except for dividends or distributions, if any, payable to stockholders of record at a date before the Merger.

Request for Appraisal Data

If you submit a written demand for appraisal of your shares of Company Common Stock and otherwise properly perfect your appraisal rights, you may, upon written request mailed to the Surviving Corporation within

 

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120 days after the effective date of the Merger, receive a written statement identifying (i) the aggregate number of shares of Company Common Stock that were not voted in favor of the adoption and approval of the Merger Agreement and the Merger and with respect to which the Company has received written demands for appraisal; and (ii) the aggregate number of holders of such shares. The Surviving Corporation will mail this statement to you within 10 days after receiving your written request. If no petition is filed by either the Surviving Corporation or any dissenting stockholder within the 120-day period after the effective date of the Merger, the rights of all dissenting stockholders to appraisal will cease. Stockholders seeking to exercise appraisal rights should not assume that the Surviving Corporation will file a petition with respect to the appraisal of the fair value of their shares or that the Surviving Corporation will initiate any negotiations with respect to the fair value of those shares. The Surviving Corporation will be under no obligation to take any action in this regard and the Company and Tata Communications have no present intention to do so. Accordingly, it is the obligation of stockholders who wish to seek appraisal of their shares of Company Common Stock to initiate all necessary action with respect to the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262. Failure to file the petition on a timely basis will cause the stockholder’s right to an appraisal to cease.

Withdrawal

Even if you submit a written demand for appraisal of your shares of Company Common Stock and otherwise properly perfect your appraisal rights, you may withdraw your demand at any time after the effective date of the Merger, except that any such attempt to withdraw made more than 60 days after the effective date of the Merger will require the written approval of the Surviving Corporation and, once a petition for appraisal is filed, the appraisal proceeding may not be dismissed as to any holder absent court approval. The foregoing, however, will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered under the Merger Agreement within 60 days after the effective date of the Merger. If you withdraw your demand, you will be deemed to have accepted the terms of the Merger Agreement, which terms are summarized in this proxy statement and which agreement is attached in its entirety as Annex A to this proxy statement.

The foregoing summary is not intended to be a complete statement of the procedures for exercising appraisal rights under Section 262 and is qualified in its entirety by reference to the full text of Section 262, which may be accessed without subscription or cost at the following publicly available website https://delcode.delaware.gov/title8/c001/sc09/#262. The Company urges any stockholder wishing to exercise appraisal rights, if any, to read this summary and Section 262 carefully, and to consult legal counsel before attempting to exercise appraisal rights. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of your statutory appraisal rights.

 

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MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding Kaleyra stock but sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one copy of our proxy materials and, as applicable, any additional proxy materials that are delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.

If you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of our proxy materials mailed to you, please submit a request to our Corporate Secretary, or call ICR, Inc. at (203-682-8299), and we will promptly send you what you have requested. You can also contact ICR, Inc. at the phone number above if you received multiple copies of the Special Meeting materials and would prefer to receive a single copy in the future, or if you would like to opt out of householding for future mailings.

STOCKHOLDER PROPOSALS OR NOMINATIONS

TO BE PRESENTED AT NEXT ANNUAL MEETING

Depending on the date of the consummation of the Merger, the Company may not hold an annual meeting of stockholders in 2023. If the Merger is not consummated, you will continue to be entitled to attend and participate in the Company’s annual meetings of stockholders, and the Company would expect in such circumstance to hold a 2023 annual meeting of stockholders, in which case the Company would provide notice of or otherwise publicly disclose the date on which such 2023 annual meeting will be held.

If the 2023 annual meeting of stockholders is held, pursuant to Rule 14a-8 under the Exchange Act, some stockholder proposals may be eligible for inclusion in our proxy statement for the 2023 annual meeting. These stockholder proposals must be submitted, along with proof of ownership of our stock in accordance with Rule 14a-8(b)(2), to the Secretary at our principal executive offices no later than the close of business on June 27, 2023 (120 days prior to the anniversary of last year’s mailing date). Failure to deliver a proposal in accordance with these procedures may result in it not being deemed timely received.

Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement for the 2023 annual meeting. Our Nominating and Corporate Governance Committee reviews all stockholder proposals and makes recommendations to the Board for actions on such proposals. For information on qualifications of director nominees considered by our Nominating and Corporate Governance committee, see the “Corporate Governance” section of our proxy statement for our 2022 annual meeting filed with the SEC on October 21, 2022.

In addition, our Bylaws provide that any stockholder intending to nominate a candidate for election to the board or to propose any business at our 2023 annual meeting, other than non-binding proposals presented pursuant to Rule 14a-8 under the Exchange Act, must give notice to the Secretary at our principal executive offices, not earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the first anniversary of the date of the preceding year’s annual meeting as first specified in the notice of meeting (without regard to any postponements or adjournments of such meeting after the notice was first given). The notice must include the information specified in our Bylaws, including information concerning the nominee or proposal, as the case may be, and information concerning the proposing or nominating stockholder’s ownership of and agreements related to our stock. If the 2023 annual meeting is held more than 30 days before or after the first anniversary of the date of the 2022 annual meeting, the stockholder must submit notice of any such nomination and of any such proposal that is not made pursuant to Rule 14a-8 by the later of the 90th day prior to

 

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the 2023 annual meeting or the 10th day following the date on which public announcement of the date of such meeting is first made. We will not entertain any proposals or nominations at the meeting that do not meet the requirements set forth in our Bylaws. If the stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, we may exercise discretionary voting under proxies that we solicit to vote in accordance with our best judgment on any stockholder proposal or nomination. To make a submission or request a copy of our Bylaws, stockholders should contact our Secretary. We strongly encourage stockholders to seek advice from knowledgeable counsel before submitting a proposal or a nomination.

 

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

The SEC maintains a website that contains reports, proxies and information statements and other information regarding us and other issuers that file electronically with the SEC at www.sec.gov. Our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports, are available free of charge through the SEC’s website.

The Company will make available a copy of its public reports, without charge, on its website at www.investors.kaleyra.com/sec-filings as soon as reasonably practicable after the Company files the reports electronically with the SEC. In addition, you may obtain a copy of the reports, without charge, by contacting the Company at the address and phone number set forth below. Each such request must set forth a good faith representation that, as of the record date, the person making the request was a beneficial owner of Company Common Stock entitled to vote at the Special Meeting. In order to ensure timely delivery of such documents prior to the Special Meeting, any such request should be made promptly to the Company. A copy of any exhibit to a filing may be obtained upon request by a stockholder (for a fee limited to the Company’s reasonable expenses in furnishing the exhibit).

Kaleyra, Inc.

Via Marco D’Aviano 2

2031, Milan, Italy

Attention: Investor Relations

(203) 741-8811

E-mail: investors@kaleyra.com

The SEC allows us to “incorporate by reference” into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information. Information in documents that is deemed, in accordance with SEC rules, to be furnished and not filed will not be deemed to be incorporated by reference into this proxy statement. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement, and prior to the date of the Special Meeting:

 

•

Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2022, filed with the SEC on March 16, 2023;

 

•

Quarterly Report on Form 10-Q for the Fiscal Quarter Ended March  31, 2023, filed with the SEC on May 10, 2023, and for the Fiscal Quarter Ended June 30, 2023, filed with the SEC on August 7, 2023;

 

•

Definitive Proxy Statement for the Company’s 2022 Annual Meeting, filed with the SEC on October 21, 2022; and

 

•

Current Reports on Form 8-K, filed with the SEC on May 12, 2023, June  28, 2023, June  30, 2023, and August 14, 2023.

Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.

No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement, and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated August 17, 2023. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders does not and will not create any implication to the contrary.

 

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Annex A

Execution Version

AGREEMENT AND PLAN OF MERGER

by and among

TATA COMMUNICATIONS LIMITED

and

KALEYRA, INC.

Dated as of June 28, 2023

TABLE OF CONTENTS

 

				Page
ARTICLE I DEFINITIONS & INTERPRETATIONS					A-6
1.1		Certain Definitions			A-6
1.2		Index of Defined Terms			A-18
1.3		Certain Interpretations			A-19
ARTICLE II THE MERGER					A-21
2.1		The Merger			A-21
2.2		The Effective Time			A-21
2.3		The Closing			A-21
2.4		Effect of the Merger			A-21
2.5		Certificate of Incorporation and Bylaws			A-21
2.6		Directors and Officers			A-21
2.7		Effect on Capital Stock			A-22
2.8		Company RSUs			A-23
2.9		Company Warrants			A-24
2.10		Exchange of Certificates			A-24
2.11		No Further Ownership Rights in Company Common Stock			A-26
2.12		Lost, Stolen or Destroyed Certificates			A-26
2.13		Required Withholding			A-26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY					A-27
3.1		Organization; Good Standing			A-27
3.2		Corporate Power; Enforceability			A-27
3.3		Company Board Approval; Fairness Opinion; Anti-Takeover Laws.			A-27
3.4		Requisite Stockholder Approval			A-28
3.5		Non-Contravention			A-28
3.6		Requisite Governmental Approvals			A-28
3.7		Company Capitalization			A-28
3.8		Subsidiaries			A-30
3.9		Company SEC Documents			A-30
3.10		Company Financial Statements; Internal Controls; Indebtedness			A-30
3.11		No Undisclosed Liabilities			A-31
3.12		Absence of Certain Changes			A-31
3.13		Material Contracts			A-31
3.14		Real Property			A-32
3.15		Environmental Matters			A-32
3.16		Intellectual Property			A-32
3.17		Tax Matters			A-34
3.18		Employee Benefits			A-35
3.19		Labor Matters			A-37
3.20		Compliance with Laws			A-37
3.21		Privacy and Data Security			A-38
3.22		Health Care Matters			A-40
3.23		Legal Proceedings; Orders			A-40
3.24		Insurance			A-40
3.25		Anti-Corruption Compliance			A-40
3.26		Trade Control Laws			A-41

 

A-ii

				Page
3.27		Money Laundering			A-42
3.28		Brokers			A-42
3.29		Related Party Transactions			A-42
3.30		Company Information			A-42
3.31		No Other Representations or Warranties			A-42
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB					A-43
4.1		Organization; Good Standing			A-43
4.2		Corporate Power; Enforceability			A-43
4.3		Non-Contravention			A-43
4.4		Requisite Governmental Approvals			A-43
4.5		Legal Proceedings; Orders			A-44
4.6		Ownership of Company Common Stock			A-44
4.7		Brokers			A-44
4.8		Operations of Merger Sub			A-44
4.9		No Parent Vote or Approval Required			A-44
4.10		Sufficiency of Funds			A-44
4.11		Parent and Merger Sub Information			A-44
4.12		No Other Representations or Warranties			A-44
4.13		Stockholder and Management Arrangements			A-45
4.14		Non-Reliance on Company Estimates, Projections, Forecasts, Forward- Looking Statements and Business Plans			A-45
ARTICLE V INTERIM OPERATIONS OF THE COMPANY					A-45
5.1		Affirmative Obligations			A-45
5.2		Forbearance Covenants			A-46
5.3		No Solicitation.			A-48
5.4		No Control of the Other Party’s Business			A-51
ARTICLE VI ADDITIONAL COVENANTS					A-52
6.1		Required Action and Forbearance; Efforts			A-52
6.2		Antitrust and Regulatory Matters			A-52
6.3		CFIUS Filing			A-54
6.4		Proxy Statement and Other Required SEC Filings			A-55
6.5		Company Stockholder Meeting			A-56
6.6		Convertible Notes			A-56
6.7		Anti-Takeover Laws			A-57
6.8		Access			A-57
6.9		Section 16(b) Exemption			A-57
6.10		Directors’ and Officers’ Exculpation, Indemnification and Insurance			A-57
6.11		Employee Matters			A-59
6.12		Obligations of Merger Sub			A-60
6.13		Public Statements and Disclosure			A-60
6.14		Transaction Litigation			A-61
6.15		Stock Exchange Delisting; Deregistration			A-61
6.16		Additional Agreements			A-61
6.17		Parent Vote			A-61
6.18		Certain Arrangements			A-61
6.19		Notification of Certain Matters			A-61
6.20		Pre-Closing Restructuring			A-62
6.21		Formation; Joinder			A-62

 

A-iii

				Page
ARTICLE VII CONDITIONS TO THE MERGER					A-62
7.1		Conditions to Each Party’s Obligations to Effect the Merger			A-62
7.2		Conditions to the Obligations of Parent and Merger Sub			A-63
7.3		Conditions to the Company’s Obligations to Effect the Merger			A-63
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER					A-64
8.1		Termination			A-64
8.2		Manner and Notice of Termination; Effect of Termination			A-65
8.3		Fees and Expenses			A-66
8.4		Amendment			A-68
8.5		Extension; Waiver			A-68
ARTICLE IX GENERAL PROVISIONS					A-68
9.1		Survival of Representations, Warranties and Covenants			A-68
9.2		Notices			A-68
9.3		Assignment			A-69
9.4		Confidentiality			A-69
9.5		Entire Agreement			A-70
9.6		Third Party Beneficiaries			A-70
9.7		Severability			A-70
9.8		Remedies			A-70
9.9		Governing Law			A-71
9.10		Consent to Jurisdiction			A-71
9.11		WAIVER OF JURY TRIAL			A-71
9.12		No Recourse			A-72
9.13		Company Disclosure Letter References			A-72
9.14		Counterparts			A-72

EXHIBITS

Exhibit A     Voting Agreement

Exhibit B     Certificate of Incorporation of the Company

Exhibit C     Form of Joinder

 

A-iv

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of June 28, 2023, by and among Tata Communications Limited, a company listed on BSE Limited and National Stock Exchange of India Limited (“Parent”), and Kaleyra, Inc., a Delaware corporation (the “Company”). Each of Parent, Merger Sub (as defined below) and the Company are sometimes referred to herein as a “Party.” All capitalized terms that are used in this Agreement have the respective meanings given to them in this Agreement.

RECITALS

A. The Company Board has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company being the surviving corporation in the Merger, in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) upon the terms and subject to the conditions set forth herein; (ii) approved the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and other obligations hereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth herein; (iii) resolved to recommend that the Company Stockholders adopt this Agreement in accordance with the DGCL; and (iv) directed that the adoption of this Agreement be submitted for consideration by the Company Stockholders at a meeting thereof.

B. The board of directors of Parent has (i) declared it advisable to enter into this Agreement; and (ii) approved the execution and delivery of this Agreement, the performance of its covenants and other obligations hereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth herein.

C. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, certain stockholders are entering into Voting Agreements with Parent, in the form attached hereto as Exhibit A (the “Voting Agreements”).

D. Parent, Merger Sub and the Company desire to (i) make certain representations, warranties, covenants and agreements in connection with this Agreement and the Merger; and (ii) prescribe certain conditions with respect to the consummation of the Merger.

E. As promptly as practicable following receipt of RBI Approval, Parent shall form Merger Sub as a Delaware corporation and a wholly owned subsidiary of Parent, and following the formation of Merger Sub, Parent shall cause Merger Sub to enter into the Joinder.

 

A-5

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Parent, Merger Sub and the Company agree as follows:

ARTICLE I

DEFINITIONS & INTERPRETATIONS

1.1 Certain Definitions. For all purposes of and pursuant to this Agreement, the following capitalized terms have the following respective meanings:

(a) “Acceptable Confidentiality Agreement” means any confidentiality agreement (x) in effect as of the date hereof or (y) executed, delivered and effective after the date hereof and, in either case, containing terms that (1) are not materially less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement, except that such confidentiality agreement need not contain any “standstill” or similar provision or otherwise prohibit the making of any Acquisition Proposal, and (2) do not prohibit the Company from providing any information to Parent in accordance with Section 5.3 or from otherwise complying with the provisions of Section 5.3.

(b) “Acquisition Proposal” means any bona fide written offer or proposal (other than an offer or proposal by Parent or Merger Sub) to engage in an Acquisition Transaction.

(c) “Acquisition Transaction” means any transaction or series of related transactions (other than the Merger) involving:

(i) any direct or indirect purchase or other acquisition by any Person or Group, whether from the Company or any other Person(s), of shares of Company Common Stock representing more than 15% of the Company Common Stock outstanding after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person or Group that, if consummated in accordance with its terms, would result in such Person or Group beneficially owning more than 15% of the Company Common Stock outstanding after giving effect to the consummation of such tender or exchange offer;

(ii) any direct or indirect purchase or other acquisition by any Person or Group, or stockholders of any such Person or Group, of more than 15% of the consolidated assets, net revenue or net income, or gross profit of the Company and its Subsidiaries taken as a whole (measured by the fair market value thereof as determined in good faith by the Company Board);

(iii) any merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving the Company or any of its Subsidiaries pursuant to which any Person or Group, or stockholders of any such Person or Group, would hold, directly or indirectly, shares of Company Common Stock representing more than 15% of the equity interests of the surviving or resulting entity of such transaction after giving effect to the consummation of such transaction; or

(iv) any combination of the foregoing.

(d) “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of that Person, whether through the ownership of voting securities or partnership or other ownership interests, by contract or otherwise.

 

A-6

(e) “Affordable Care Act” means the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), and the regulations promulgated pursuant to each of the foregoing laws.

(f) “Antitrust Law” means the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act of 1914, the (Indian) Prevention of Corruption Act, 1988 and all other Laws, in any jurisdiction, whether domestic or foreign, in each case that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or the creation or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the Merger.

(g) “Audited Company Balance Sheet” means the consolidated balance sheet (and the notes thereto) of the Company and its consolidated Subsidiaries as of December 31, 2022 set forth in the Company’s Form 10-K filed by the Company with the SEC on March 16, 2023.

(h) “Burdensome Condition” means (i) any prohibition or limitation on the ownership, management or operation by Parent or any of its Subsidiaries of any portion of the Company or any portion of the business, properties or assets of the Company or Parent or any of its Subsidiaries, (ii) any requirement that Parent or any of its Subsidiaries dispose of or hold separate, or enter into any licensing or similar arrangement with respect to, the Company or any portion of the businesses, properties or assets of the Company or Parent or any of its Subsidiaries, in each case as a result of the transactions contemplated by this Agreement, (iii) any prohibition or limitation on the ability of Parent or any of its Subsidiaries to acquire or hold, or exercise any right of ownership of and freedom of action with respect to, the Company or (iv) any prohibition or limitation on Parent or any of its Subsidiaries effectively controlling any portion of the business, properties or assets of the Company, in each of clauses (i) through (iv), that would have, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, operations, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, that, for purposes of determining whether any requirement, prohibition or limitation would have, or would reasonably be expected to have individually or in the aggregate, a Burdensome Condition, impacts on Parent and/or the Company and their respective Subsidiaries will be aggregated.

(i) “Business Day” means any day other than Saturday or Sunday or a day on which commercial banks are authorized or required by Law to be closed in New York, New York or Mumbai, India.

(j) “Bylaws” means the Amended and Restated Bylaws of the Company.

(k) “CFIUS Approval” means (i) Parent and the Company have received written notice from CFIUS that CFIUS has determined that the transaction contemplated by this Agreement is not a “covered transaction” and is not subject to review under the DPA, (ii) Parent and the Company have received a written notice issued by CFIUS that it has concluded an assessment, review or investigation of the CFIUS Declaration or CFIUS Notice provided pursuant to the DPA with respect to the transaction contemplated by this Agreement, determined that there are no unresolved national security concerns, and has therefore terminated all action under the DPA, (iii) if CFIUS has sent a report (the “CFIUS Report”) to the President of the United States (“POTUS”) requesting POTUS’s decision, then POTUS has (A) announced a decision not to take any action to suspend or prohibit the transaction contemplated by this Agreement or (B) not taken any action to suspend or prohibit the transaction contemplated by this Agreement after 15 days from the date of receipt of the CFIUS Report, or (iv) if the parties submitted a CFIUS Declaration, the parties have received a written notice from CFIUS that it has determined, pursuant to 31 C.F.R. § 800.407(a)(2), that it is not able to conclude action pursuant to the CFIUS Declaration but has not requested the submission of a CFIUS Notice.

(l) “CFIUS Declaration” means a declaration with respect to the transaction contemplated by this Agreement submitted to CFIUS in accordance with 31 C.F.R. Part 800 Subpart D.

 

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(m) “CFIUS Notice” means a notice with respect to the transaction contemplated by this Agreement submitted to CFIUS in accordance with 31 C.F.R. Part 800 Subpart E.

(n) “Charter” means the Second Amended and Restated Certificate of Incorporation of the Company.

(o) “Code” means the Internal Revenue Code of 1986.

(p) “Communications Authorization” means any Governmental Authorization required under any Communications Law, including, for the avoidance of doubt, any Governmental Authorization issued by, obtained from, or made with the Indian Department of Telecommunications, the Telecom Regulatory Authority of India, the Ministry of Electronics and Information Technology, and/or the Italian Autorità per le Garanzie nelle Comunicazioni or the Ministero delle Imprese e del made in Italy (MIMIT).

(q) “Communications Law” means any Law governing the offering or provision of telecommunications, electronic communications, or other communications services, platforms, or solutions, and any activities related thereto, including, for the avoidance of doubt, any Law issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of the Indian Department of Telecommunications, the Telecom Regulatory Authority of India, Ministry of Electronics and Information Technology, and/or the Italian Autorità per le Garanzie nelle Comunicazioni or the Ministero delle Imprese e del made in Italy (MIMIT).

(r) “Company Board” means the Board of Directors of the Company.

(s) “Company Common Stock” means the common stock, par value $0.0001 per share, of the Company.

(t) “Company Indebtedness” means, collectively, debt outstanding under the Contracts set forth on Section 1.1(t) of the Company Disclosure Letter.

(u) “Company Intellectual Property” means any Intellectual Property that is owned or purported to be owned by the Company or any of its Subsidiaries, or used or held for use by the Company or any of its Subsidiaries in the business of the Company and its Subsidiaries.

(v) “Company Material Adverse Effect” means any change, event, effect or development that, individually or in the aggregate, (x) has a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or (y) would prevent, materially impair or materially delay the consummation by the Company of the Merger prior to the Termination Date; provided, that, in the case of clause (x) only, none of the following, and no conditions, changes, events, effects or developments arising out of, relating to or resulting from the following (in each case, by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred (subject to the limitations set forth below):

(i) general economic conditions, or conditions in the global, international or regional economy generally, including changes in inflation, supply chain disruptions, and labor shortages;

(ii) conditions in the equity, credit, debt, financial, currency or capital markets, including (A) changes in interest rates or credit ratings; (B) changes in exchange rates for the currencies of any country; or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;

(iii) conditions in the industries in which the Company and its Subsidiaries conduct business or in any specific jurisdiction or geographical area in which the Company conducts business, or changes therein;

 

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(iv) any political or geopolitical conditions, outbreak of hostilities, armed conflicts, acts of war (whether or not declared), rebellion, insurrection, sabotage, cyber-attacks by or sponsored by a Governmental Authority, terrorism or military actions, including any escalation or worsening of the foregoing or any threats thereof, in each case, in the United States or any other country or region in the world;

(v) earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, nuclear incidents, foreign or domestic social protest or social unrest (whether or not violent) or other natural or man-made disasters, weather conditions, power outages or electrical black-outs, and other force majeure events, including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world;

(vi) the negotiation, execution, delivery or performance of this Agreement or the announcement of this Agreement or the pendency of the Merger, including the impact thereof on the relationships, contractual or otherwise, of the Company and its Subsidiaries with customers, suppliers, lenders, lessors, business partners, employees, Governmental Authorities, vendors or any other third Person (other than for purposes of the representations and warranties contained in Section 3.5 or 3.6);

(vii) the compliance by any Party with the express terms of this Agreement, including any action taken or refrained from being taken pursuant to the express terms of this Agreement;

(viii) any action taken or refrained from being taken, in each case to which Parent has, in writing, approved or consented to following the date of this Agreement;

(ix) changes or proposed changes in GAAP or other accounting standards, in any applicable Laws (or the enforcement or interpretation of any of the foregoing) or in any regulatory or legislative conditions, including the adoption, implementation, repeal, modification, reinterpretation or proposal of any law, regulation or policy (or the enforcement thereof) by any Governmental Authority, or any panel or advisory body empowered or appointed thereby;

(x) any epidemics, pandemics (including COVID-19 and any evolutions or mutations thereof), plagues, other outbreaks of illness or public health events (including quarantine restrictions mandated by any Governmental Authority), including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world;

(xi) any anti-dumping actions, international tariffs, sanctions, trade policies or disputes or any “trade war” or similar actions (including in connection with any dispute involving the Russian Federation and Ukraine);

(xii) any changes in the price or trading volume of the Company Common Stock, in and of itself (it being understood that the underlying cause of such change may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder); and

(xiii) any failure by the Company and its Subsidiaries to meet (A) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period; or (B) any budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the underlying cause of any such failure in clauses (xiii)(A) or (xiii)(B) may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder);

(xiv) the availability or cost of equity, debt or other financing to Parent or Merger Sub;

(xv) any Transaction Litigation or any demand or Legal Proceeding for appraisal of the fair value of any shares of Company Common Stock pursuant to the DGCL in connection herewith;

 

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(xvi) the identity of, or any facts or circumstances relating to Parent, Merger Sub, or the respective Affiliates of the foregoing, the respective financing sources of or investors in the foregoing, with respect to the Company or its business;

(xvii) any breach by Parent or Merger Sub of this Agreement;

(xviii) the matters set forth in Section 3.12 the Company Disclosure Letter;

except, in each case of clauses (i), (ii), (iii), (iv), (v), (ix), (x), and (xi), to the extent that such conditions, changes, events, effects or developments have had a materially disproportionate adverse effect on the Company relative to other companies, of a similar size operating in the industries in which the Company and its Subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred.

(w) “Company Preferred Stock” means the preferred stock, par value $0.0001 per share, of the Company.

(x) “Company Private Warrant” means each Company Warrant that is not redeemable by the Company.

(y) “Company Registered Intellectual Property” means all of the Registered Intellectual Property owned or purported to be owned by, or filed in the name of, the Company or any of its Subsidiaries.

(z) “Company RSUs” means awards of restricted stock units of the Company, whether granted pursuant to any of the Company Stock Plans or otherwise.

(aa) “Company Stock Plans” means the Kaleyra 2019 Equity Incentive Plan, as may be amended or amended and restated, and each other Employee Plan that provides for or has provided for the award of incentive equity underlying Company Common Stock, under which there are outstanding options or such incentive equity awards.

(bb) “Company Stockholders” means the holders of shares of Company Common Stock.

(cc) “Company Termination Fee” means an amount equal to $5,000,000.

(dd) “Company Warrants” means the issued and outstanding warrants to purchase shares of Company Common Stock, whether listed on NYSE or otherwise.

(ee) “Computer Systems” means all information technology and computer systems (including Software, information technology and telecommunication hardware and other hardware and equipment) used for or relating to the transmission, storage, maintenance, organization, presentation, generation, processing or analysis of data and information whether or not in electronic format, that are owned, leased or licensed by the Company or a Subsidiary.

(ff) “Confidentiality Agreement” means the agreement listed in Section 9.4 of the Company Disclosure Letter.

(gg) “Continuing Employees” means each individual who is an employee of the Company or any of its Subsidiaries immediately prior to the Effective Time (including those on vacation, sick leave, maternity leave, military service, lay-off, disability or other paid time off or leave of absence) and continues to be an employee of Parent or one of its Subsidiaries (including the Surviving Corporation) immediately following the Effective Time.

 

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(hh) “Contract” means any binding written contract, subcontract, note, bond, mortgage, indenture, lease, license, sublicense or other binding agreement.

(ii) “Convertible Notes” means the Company’s 6.125% Convertible Senior Notes due June 1, 2026 issued pursuant to the Convertible Notes Indenture.

(jj) “Convertible Notes Indenture” mean the Indenture, dated as of June 1, 2021, between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”).

(kk) “COVID-19” means the coronavirus (COVID-19) pandemic, including any evolutions, mutations or variants of the coronavirus (COVID-19) disease, and any further epidemics or pandemics arising therefrom.

(ll) “Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction, including without limitation, the Crimea region of Ukraine, Cuba, Iran, North Korea, Syria, and the so-called Donetsk and Luhansk People’s Republics.

(mm) “DOJ” means the United States Department of Justice or any successor thereto.

(nn) “DPA” means Section 721 of Title VII of the Defense Production Act of 1950, as amended and as may be amended from time to time, including the regulations promulgated thereunder, codified at 31 C.F.R. Part 800, et seq.

(oo) “Employee Plan” means each “employee benefit plan” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA, and each other material bonus, commission, stock option, stock appreciation right, restricted stock, restricted stock unit, performance stock unit, stock purchase or other equity based, incentive compensation, profit sharing, savings, retirement, pension, disability, insurance, vacation, deferred compensation, severance, separation, termination, retention, change of control, stay bonus, and other similar material plan, program, agreement or arrangement (whether or not in writing) that is sponsored, maintained or contributed to by the Company or any of its Subsidiaries for the benefit of any current or former employee or other individual service provider of the Company or any of its Subsidiaries or otherwise with respect to which the Company or any of its Subsidiaries has any current or potential liability, and, for the avoidance of doubt, includes any legacy plan acquired by the Company or any of its Subsidiaries under which there are outstanding options and/or incentive equity awards, other than any such plan, scheme or arrangement that is sponsored or provided by a Governmental Authority.

(pp) “Environmental Law” means any applicable Law in effect on or prior to the Closing Date relating to the protection of the environment (including ambient air, surface water, groundwater or land), pollution, or the release, management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of, or exposure to, any Hazardous Substance.

(qq) “Environmental Permits” means Governmental Authorizations required under Environmental Laws.

(rr) “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

(ss) “ERISA Affiliate” means any entity, trade or business that is, or at any applicable time was, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the Company.

(tt) “Exchange Act” means the Securities Exchange Act of 1934.

 

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(uu) “Foreign Regulatory Law” means any applicable requirements of the competition, merger control, antitrust, foreign direct investment or similar applicable law of any jurisdiction outside of the United States, including the Communication Laws.

(vv) “FTC” means the United States Federal Trade Commission or any successor thereto.

(ww) “GAAP” means generally accepted accounting principles in the United States, consistently applied and as in effect from time to time.

(xx) “Governmental Authority” means any government, political subdivision, governmental, administrative, self-regulatory or regulatory entity or body, department, ministry, commission, board, agency or instrumentality, or other legislative, executive or judicial governmental entity, and any court, tribunal, judicial or arbitral body, in each case whether federal, national, state, county, municipal, provincial, local, foreign or multinational.

(yy) “Governmental Authorization” means any authorizations, approvals, licenses, registrations, franchises, clearances, permits, certificates, waivers, consents, exemptions, variances, expirations and terminations of any waiting period requirements issued by or obtained from, and any notices, filings, registrations, qualifications, declarations and designations with, a Governmental Authority.

(zz) “Group” has the meaning as used in Section 13(d) of the Exchange Act.

(aaa) “Hazardous Substance” means any toxic or hazardous material, substance or waste, or pollutant or contaminant, defined or regulated under Environmental Laws.

(bbb) “Health Care Laws” means all Laws relating to the Company’s business, including (a) all Laws related to health care fraud and abuse, including the federal Anti- Kickback Statute (42 U.S.C. § 1320a-7b(b)), the federal Physician Self-Referral Prohibition (commonly referred to as the “Stark Law”) (42 U.S.C. § 1395nn), the federal False Claims Act (31 U.S.C. § 3729 et seq.), the federal Civil Monetary Penalties Law (42 U.S.C. § 1320a- 7a), the federal Exclusion Laws (42 U.S.C.§ 1320a-7), the Program Fraud Civil Remedies Act (31 U.S.C. §§ 3801-3812), the regulations promulgated pursuant to each of the foregoing statutes, and all other federal statutes or regulations governing the submission of claims and the relationships between health care providers, payors and patients, and any comparable self-referral or fraud and abuse Laws promulgated by any state including, without limitation, so-called all payor self-referral or fraud and abuse Laws; (b) the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), and the regulations promulgated pursuant to each of the foregoing Laws; (c) Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395lll (the Medicare statute); (d) Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396w-5 (the Medicaid statute); and (e) all applicable implementing regulations, rules, ordinances and Governmental Authorization related to any of the foregoing; and (f) any other requirements of Law relating to the business.

(ccc) “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations.

(ddd) “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

(eee) “Intellectual Property” means any and all of the following, as they exist in any jurisdiction throughout the world and under any international treaties or conventions: (i) patents, patent applications of any kind, and patent rights (collectively, “Patents”); (ii) registered and unregistered trademarks, service marks, trade names, trade dress, corporate names, logos, packaging design, slogans, and other indicia of source, origin or quality, together with all goodwill associated with any of the foregoing, and registrations and applications for registration of any of the foregoing (collectively, “Marks”); (iii) copyrights in both published and unpublished

 

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