Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On December 19, 2019,
The Rubicon Project, Inc., a Delaware corporation (“Rubicon Project”), Madison Merger Corp., a Delaware corporation
and direct wholly owned subsidiary of Rubicon Project (“Merger Sub”), and Telaria, Inc., a Delaware corporation
(“Telaria”), entered into an Agreement and Plan of Merger (the “Merger Agreement”).
The Merger Agreement provides for, among other things and subject to the satisfaction or waiver of specified conditions, the merger
of Merger Sub with and into Telaria (the “Merger”), with Telaria surviving the Merger as a wholly owned subsidiary
of Rubicon Project.
Each share of Telaria
common stock issued and outstanding as of the effective time of the Merger (the “Effective Time”) (except for
shares held by Telaria as treasury stock and shares owned directly or indirectly by Rubicon Project or Merger Sub) will be converted
into the right to receive 1.082 (the “Exchange Ratio”) fully paid and nonassessable shares of Rubicon Project common
stock (and, if applicable, cash in lieu of fractional shares) (the “Merger Consideration”), less any applicable
withholding taxes.
Each Telaria
equity award granted under Telaria’s equity compensation plans (other than vested Telaria restricted stock unit awards)
outstanding as of the Effective Time will be converted into a corresponding award with respect to Rubicon Project common
stock, with the number of shares underlying such award (and, in the case of stock options, the applicable exercise price)
adjusted based on the Exchange Ratio. In addition, each vested Telaria restricted stock unit award outstanding as of the
Effective Time, will be cancelled and the holder shall be entitled to receive the Merger Consideration in respect of each
share underlying such award.
The Merger Agreement,
among other matters, addresses certain post-closing governance matters, including: (1) that the executive chairman of
Telaria as of the date of the Merger Agreement will be appointed as non-executive Chairman of the Board of Rubicon Project; (2) that
the Chief Executive Officer (“CEO”) of Rubicon Project as of immediately prior to the Effective Time will continue
to serve as the CEO of Rubicon Project; (3) that the CEO of Telaria as of the date of the Merger Agreement will be appointed
to serve as President and Chief Operating Officer of Rubicon Project with certain responsibilities; and (4) the roles of certain
other executives and employees of Telaria. In addition, effective as of the Effective time and until the second anniversary of
the Effective Time, the board of directors of Rubicon Project will have nine directors, of which four will be current members of
the board of directors of Rubicon Project (or successors nominated by such Rubicon Project directors), four will be former members
of the board of directors of Telaria (or successors nominated by such former Telaria directors), and the remaining director will
be the then serving CEO of Rubicon Project. If the initial non-executive Chairman of the Board of Rubicon Project ceases to serve
as such, the non-executive Chairman of the Board of Rubicon Project will then be designated by the board of directors of Rubicon
Project (by both a majority of the Rubicon Project designees and a majority of the Telaria designees) from among its members. Effective
as of the Effective Time, the bylaws of Rubicon Project will be amended and restated to reflect the foregoing governance arrangements
and certain related matters.
The completion of the
Merger is subject to customary conditions, including: (1) the adoption of the Merger Agreement by Telaria stockholders and
the approval of the issuance of shares of Rubicon Project common stock in connection with the Merger by Rubicon Project stockholders;
(2) the expiration or termination of the applicable waiting period (or any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; (3) the receipt of any authorization or consent from a governmental entity required to be
obtained with respect to the Merger under certain antitrust laws; (4) the absence of any order or law that has the effect of enjoining
or otherwise prohibiting the consummation of the Merger; (5) the approval for listing of the shares of common stock of Rubicon
Project forming part of the Merger Consideration on the New York Stock Exchange and the effectiveness of a registration statement
with respect to such common stock; (6) subject to certain exceptions, the accuracy of the representations and warranties of
the other party; (7) performance by the other party in all material respects of its obligations under the Merger Agreement; (8)
the receipt of an officer’s certificate executed by an executive officer of the other party certifying the party’s
accuracy of its representations and warranties and material performance of its obligations; and (9) receipt by each of Telaria
and Rubicon Project of an opinion of its respective outside counsel to the effect that the Merger will qualify as a “reorganization”
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement
includes customary representations and warranties of Telaria and Rubicon Project and each party has agreed to customary
covenants, including, among others, covenants relating to (1) the conduct of its business during the interim period between execution
of the Merger Agreement and the Effective Time, (2) its obligation to call a meeting of its stockholders to adopt the Merger Agreement
(in the case of Telaria) or approve the issuance of shares of Rubicon Project common stock in connection with the merger (in the
case of Rubicon Project), and (3) and its non-solicitation obligations in connection with alternative acquisition proposals (however,
under certain circumstances, a party may change its recommendation to its stockholders in response to a superior proposal or an
intervening if such party’s board of directors determines in good faith that the failure to take such action would be inconsistent
with the directors’ fiduciary duties under Delaware law).
The Merger Agreement
provides for certain termination rights for both Rubicon Project and Telaria and provides that, in connection with a termination
of the Merger Agreement under certain specified circumstances, Telaria will be required to pay Rubicon Project a termination fee
of $13.7 million or Rubicon Project will be required to pay Telaria a termination fee of $16 million.
A copy of the Merger
Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing
description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement.
The representations,
warranties and covenants set forth in the Merger Agreement have been made only for the purposes of that agreement and solely for
the benefit of the parties to the Merger Agreement, may be subject to 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, as well as by information contained in each party’s Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q, and may be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors. In addition, such representations and warranties (1) will not survive completion
of the Merger and cannot be the basis for any claims under the Merger Agreement by the other party after termination of the Merger
Agreement, except as a result of fraud or a willful breach, and (2) were made only as of the dates specified in the Merger Agreement.
Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of
the Merger Agreement and not to provide investors with any other factual information regarding the parties or their respective
businesses.
Voting Agreements
In connection with
entering into the Merger Agreement, each of the named executive officers and directors of Telaria, in their respective capacities
as stockholders of Telaria, have entered into a voting agreement with Rubicon Project (the “Telaria Voting Agreement”),
pursuant to which such individuals have agreed, among other things, to vote their respective shares of Telaria common stock in
favor of the adoption of the Merger Agreement and against any alternative proposal.
The foregoing description
of the Telaria Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Telaria
Voting Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In connection
with entering into the Merger Agreement, each of the named executive officers and directors of Rubicon Project, in
their respective capacities as stockholders of Rubicon, have entered into a voting agreement with Telaria (the “Rubicon
Project Voting Agreement”), pursuant to which such individuals have agreed, among other things, to vote their
respective shares of Rubicon Project common stock in favor of the approval of the issuance of shares of Rubicon Project
common stock pursuant to the Merger Agreement and against any alternative proposal.
The foregoing
description of the Rubicon Project Voting Agreement does not purport to be complete and is qualified in its entirety by
reference to the form of Rubicon Project Voting Agreement, which is attached as Exhibit 10.2 to this Current Report on Form
8-K and is incorporated herein by reference.