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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 § 240.14a-12

iRobot Corporation

(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 all boxes that apply):

 

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.

 

 

 


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LOGO

September 7, 2022

Dear Fellow Stockholders:

You are cordially invited to attend a special meeting of the stockholders of iRobot Corporation (“iRobot” or the “Company”), which we will hold virtually on October 17, 2022, at 8:30 a.m. Eastern Time via live audio webcast on the Internet at www.virtualshareholdermeeting.com/IRBT2022SM (the “special meeting”).

At the special meeting, you will be asked to consider and vote on (i) a proposal to approve and adopt the Agreement and Plan of Merger, dated August 4, 2022 (such agreement, as it may be amended, modified or supplemented from time to time, the “merger agreement”), by and among iRobot, Amazon.com, Inc., a Delaware corporation (“Amazon.com”), and Martin Merger Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Amazon.com (“Merger Sub”) providing for the acquisition of iRobot by Amazon.com, (ii) a proposal to approve, on an advisory (non-binding) basis, certain compensation that may be paid or become payable to iRobot’s named executive officers in connection with the merger (the “compensation proposal”), and (iii) a proposal to approve the adjournment from time to time of the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the proposal to approve and adopt the merger agreement if there are insufficient votes to approve and adopt the merger agreement at the time of the special meeting (the “adjournment proposal”). Upon the terms and subject to the conditions of the merger agreement, Amazon.com will acquire iRobot via the merger of Merger Sub with and into iRobot, with iRobot continuing as the surviving corporation and a wholly-owned subsidiary of Amazon.com (the “merger”).

If the merger is completed, you will be entitled to receive $61.00 in cash, without interest thereon, for each share of iRobot’s common stock, par value $0.01 per share (“common stock,” “Company common stock” or “iRobot common stock”) that you own immediately prior to the time at which the merger will become effective (other than certain shares specified in the merger agreement), which represents a premium of approximately 22% to the closing price of iRobot’s common stock on August 4, 2022, the date of the entry into the merger agreement.

The iRobot Board of Directors (the “iRobot board of directors”), after considering the factors more fully described in the enclosed proxy statement, has unanimously: (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement (together with the merger, the “transactions”) are advisable and in the best interests of iRobot and its stockholders, (ii) approved and declared advisable the execution, delivery and performance of the merger agreement and the consummation of the transactions, (iii) resolved to recommend approval and adoption of the merger agreement and approval of the transactions by the stockholders of iRobot and (iv) directed that the approval and adoption of the merger agreement be submitted to a vote of the stockholders of iRobot.

The iRobot board of directors unanimously recommends, on behalf of iRobot, that you vote: (1) “FOR” the proposal to approve and adopt the merger agreement; (2) “FOR” the approval, on an advisory (non-binding) basis, of the compensation proposal; and (3) “FOR” the adjournment proposal.

The enclosed proxy statement provides detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to the proxy statement. We urge you to read both the proxy statement and merger agreement carefully in their entirety.


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The proxy statement also describes the actions and determinations of the iRobot board of directors in connection with its evaluation of the merger agreement and the merger. You should carefully read and consider the entire enclosed proxy statement and its annexes, including, but not limited to, the merger agreement, as they contain important information about, among other things, the merger and how it affects you.

Whether or not you plan to attend the special meeting virtually, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the special meeting and vote at the meeting your vote will revoke any proxy that you have previously submitted.

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to approve and adopt the merger agreement, without your instructions.

Your vote is very important, regardless of the number of shares that you own. We cannot complete the merger unless the proposal to approve and adopt the merger agreement is approved by the affirmative vote of the holders of a majority of all outstanding shares of iRobot common stock entitled to vote at the special meeting as of the close of business on September 2, 2022 which is the record date for the special meeting.

Stockholders who continuously hold their shares of iRobot common stock through the effective date of the merger, who do not vote in favor of the proposal to approve and adopt the merger agreement, who properly demand in writing an appraisal of their shares delivered to the Company prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not validly withdraw their demands or otherwise lose their appraisal rights under, the applicable provisions of Delaware law, which are summarized in the section entitled “Appraisal Rights of iRobot Stockholders” in the accompanying proxy statement and which may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262), will be entitled to appraisal rights to receive, in cash, the fair value of their shares of iRobot as determined by the Delaware Court of Chancery.

If you have any questions concerning the merger agreement, the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-8332 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

On behalf of the iRobot board of directors, I thank you for your support and appreciate your consideration of this matter.

Sincerely,

 

LOGO

Colin M. Angle

Chairman of the iRobot Board of Directors and

Chief Executive Officer


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Neither the U.S. Securities and Exchange Commission 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, including the proposed merger, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement is dated September 7, 2022 and is first being mailed to stockholders on or about September 7, 2022, and the mailing is expected to be completed on or about September 14, 2022.


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IROBOT CORPORATION

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Notice is hereby given that a virtual special meeting of stockholders (including any adjournments or postponements thereof, the “special meeting”) of iRobot, a Delaware corporation (“iRobot” or the “Company”), to be held virtually on October 17, 2022, at 8:30 a.m. Eastern Time via live audio webcast on the Internet at www.virtualshareholdermeeting.com/IRBT2022SM, for the following purposes:

1. To consider and vote on the proposal to approve and adopt the Agreement and Plan of Merger, dated as of August 4, 2022 (as it may be amended from time to time, the “merger agreement”), by and among Amazon.com, Inc., a Delaware corporation (“Amazon.com”), Martin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Amazon.com (“Merger Sub”), and iRobot, pursuant to which Merger Sub will be merged with and into the Company (the “merger”), with the Company surviving the merger;

2. To consider and vote on the proposal to approve, on an advisory (non-binding) basis, certain compensation that may be paid or become payable to the Company’s named executive officers in connection with the merger (the “compensation proposal”); and

3. To consider and vote on the proposal to approve the adjournment from time to time of the special meeting, if necessary or appropriate, including 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 (the “adjournment proposal”).

Only stockholders of record as of the close of business on September 2, 2022, are entitled to notice of the special meeting and to vote at the special meeting or any adjournment, postponement or other delay thereof.

Please Vote Your Shares:

Even if you currently plan to attend the special meeting virtually, we encourage stockholders to vote promptly by proxy, to ensure that your shares are represented. If you later attend and vote at the special meeting virtually, such vote will revoke any proxy previously submitted. If you fail to vote or abstain from voting, the effect will be the same as a vote AGAINST the approval and adoption of the merger agreement.

You may vote in the following ways:

 

By Telephone    By Internet    By Mail    During the Special Meeting
You can vote by telephone by calling the telephone number indicated on your proxy card or voting instruction form and follow the easy prompts.    You can access the voting site indicated on the enclosed proxy card or voting instruction form and follow the simple instructions. If you had earlier consented to receiving proxy materials by email, you may simply click the “VOTE NOW” button in the accompanying email.    You can vote by mail by marking, dating and signing your proxy card or voting instruction form and returning it in the postage-paid envelope.    You can vote by attending the special meeting virtually by going to www.virtualshareholder meeting.com/IRBT2022SM. Please refer to the section entitled “The Special Meeting — Date, Time and Place of the Special Meeting” for further information regarding attending the special meeting virtually.

If you hold your shares in “street name,” you may not vote your shares virtually at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee.


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The iRobot Board of Directors (the “iRobot board of directors”) has unanimously determined that the merger is advisable and in the best interests of, the Company and its stockholders, and unanimously approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement. The iRobot board of directors unanimously recommends that the stockholders of iRobot vote (1) “FOR” the proposal to approve and adopt the merger agreement, (2) “FOR” the compensation proposal, and (3) “FOR” the adjournment proposal. If you sign, date and return your proxy card without indicating how you wish to vote on a proposal, your proxy will be voted “FOR” each of the foregoing proposals in accordance with the recommendation of the iRobot board of directors.

Your vote is important, regardless of the number of shares of common stock you own. Please make sure your voice is heard in this important matter related to your investment. The approval and adoption of the merger agreement requires the affirmative vote of holders of a majority of all outstanding shares of common stock entitled to vote thereon and is a condition to the completion of the merger. Assuming a quorum is present at the special meeting, each of the compensation proposal and the adjournment proposal requires the affirmative vote of a majority of the votes properly cast for and against that proposal, but is not a condition to the completion of the merger.

Stockholders who continuously hold their shares of common stock of iRobot through the effective date of the merger, who do not vote in favor of the proposal to approve and adopt the merger agreement, who properly demand in writing an appraisal of their shares delivered to the Company prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not validly withdraw their demands or otherwise lose their appraisal rights under, the applicable provisions of Delaware law, which are summarized in the section entitled “Appraisal Rights of iRobot Stockholders” in the accompanying proxy statement and which may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262), will be entitled to appraisal rights to receive, in cash, the fair value of their shares of common stock of iRobot as determined by the Delaware Court of Chancery.

You may revoke your proxy at any time before the vote is taken at the special meeting. You may revoke your proxy by notifying the Company at iRobot Corporation, 8 Crosby Drive, Bedford, Massachusetts 01730, Attention: Secretary, or by submitting a new proxy by telephone, the Internet or mail, in each case, in accordance with the instructions on the enclosed proxy card and dated after the date of the proxy being revoked. In addition, you may revoke your proxy by attending the special meeting and voting virtually; however, simply attending the special meeting will not cause your proxy to be revoked.

Before voting your shares, you should read the entire proxy statement carefully, including its annexes and the documents incorporated by reference in the proxy statement.

 

By Order of the Board of Directors,

LOGO

Glen D. Weinstein
Executive Vice President,
Chief Legal Officer and Secretary
Bedford, Massachusetts
September 7, 2022


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     Page  

SUMMARY

     1  

The Special Meeting

     1  

Date, Time and Place of the Special Meeting

     1  

Purposes of the Special Meeting

     1  

Record Date and Quorum

     2  

Required Vote

     2  

Voting by the Company’s Directors and Executive Officers

     2  

Voting; Proxies; Revocation

     3  

Abstentions

     5  

The Companies

     5  

The Merger

     6  

Effect on iRobot if the Merger is Not Completed

     6  

Treatment of Company Equity Awards

     6  

Conditions to Completion of the Merger

     7  

When the Merger Becomes Effective

     8  

Recommendation of the iRobot Board of Directors

     8  

Reasons for the Merger

     9  

Opinion of Qatalyst Partners LP

     9  

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

     9  

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

     10  

Regulatory Clearances

     10  

Litigation Related to the Merger

     11  

Appraisal Rights of iRobot Stockholders

     11  

Delisting and Deregistration of Company Common Stock

     12  

Acquisition Proposals; No Solicitation

     12  

Change of Board Recommendation; Alternative Acquisition Agreement

     13  

Termination

     14  

Termination Fees; Expense Reimbursement

     15  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

     17  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     26  

THE COMPANIES

     28  

iRobot Corporation

     28  

Amazon.com, Inc.

     28  

Martin Merger Sub, Inc.

     28  

THE SPECIAL MEETING

     29  

Date, Time and Place of the Special Meeting

     29  

Purposes of the Special Meeting

     29  

Record Date and Quorum

     29  

Required Vote

     30  

Voting by the Company’s Directors and Executive Officers

     30  

Voting; Proxies; Revocation

     30  

Abstentions

     32  

Solicitation of Proxies

     32  

Other Information

     33  

THE MERGER (PROPOSAL 1)

     34  

Certain Effects of the Merger

     34  

Effect on iRobot if the Merger is Not Completed

     34  

Background of the Merger

     35  

Reasons for the Merger; Recommendation of the iRobot Board of Directors

     45  

Certain iRobot Unaudited Prospective Financial Information

     49  

 

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(continued)

 

     Page  

Opinion of Qatalyst Partners LP

     53  

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

     59  

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

     65  

Accounting Treatment

     67  

Regulatory Clearances

     67  

Litigation Related to the Merger

     68  

Delisting and Deregistration of Company Common Stock

     69  

THE MERGER AGREEMENT

     70  

Explanatory Note Regarding the Merger Agreement

     70  

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

     70  

When the Merger Becomes Effective

     71  

Effect of the Merger on the Common Stock

     71  

Withholding Rights

     71  

Treatment of Company Equity Awards

     72  

Payment for Common Stock in the Merger

     72  

Representations and Warranties

     73  

Conduct of Business Pending the Merger

     75  

Access

     79  

Acquisition Proposals; No Solicitation

     80  

Change of Board Recommendation; Alternative Acquisition Agreement

     82  

iRobot Stockholders’ Meeting

     84  

Debt Payoff

     85  

Employee Matters

     85  

Efforts to Complete the Merger

     86  

Indemnification and Insurance

     88  

Coordination on Litigation

     89  

Other Covenants and Agreements

     90  

Conditions to Completion of the Merger

     90  

Termination

     91  

Termination Fees; Expense Reimbursement

     92  

Limitation on Remedies

     93  

Expenses

     94  

Amendment and Modification

     94  

Jurisdiction; Specific Enforcement

     94  

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

     96  

VOTE ON ADJOURNMENT (PROPOSAL 3)

     97  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     98  

APPRAISAL RIGHTS OF IROBOT STOCKHOLDERS

     100  

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

     106  

SUBMISSION OF STOCKHOLDER PROPOSALS

     107  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     108  

ANNEX A

Agreement and Plan of Merger by and among Amazon.com, Inc., Martin Merger Sub, Inc. and iRobot Corporation, dated as of August 4, 2022

ANNEX B

Opinion of Qatalyst Partners

 

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SUMMARY

This summary highlights selected 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 in determining how to vote. We have included page references to direct you to a more complete description of the topics presented in this summary. You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions under the section entitled “Where You Can Find Additional Information.”

The Special Meeting (page 29)

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 iRobot Corporation (“iRobot” or the “Company”) Board of Directors (the “iRobot board of directors”) for use at the special meeting to be held virtually on October 17, 2022, at 8:30 a.m. Eastern Time, or at any adjournment or postponement thereof (the “special meeting”). The Company will hold the special meeting virtually via the Internet at www.virtualshareholdermeeting.com/IRBT2022SM (the “virtual meeting website”). You will not be able to attend the special meeting physically in person.

For information regarding attending the meeting, please see “The Special MeetingVoting; Proxies; RevocationAttendance.”

Purposes of the Special Meeting

At the special meeting, iRobot stockholders will be asked to consider and vote on the following proposals:

 

   

to approve and adopt the Agreement and Plan of Merger, dated as of August 4, 2022, by and among Amazon.com, Inc. (“Amazon.com”), Martin Merger Sub, Inc. (“Merger Sub”) and the Company, as it may be amended from time to time (the “merger agreement”);

 

   

to approve, on an advisory (non-binding) basis, certain compensation that may be paid or become payable to the Company’s 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 (Proposal 1)Interests of the Company’s Directors and Executive Officers in the Merger” (the “compensation proposal”); and

 

   

to approve the adjournment from time to time of the special meeting, if necessary or appropriate, including 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 (the “adjournment proposal”).

Our stockholders must approve and adopt the merger agreement for the merger to occur. If our stockholders fail to approve and adopt the merger agreement, 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 in the section entitled “The Merger Agreement.”

The vote on the compensation proposal is a vote separate and apart from the vote to approve and adopt the merger agreement. Accordingly, a stockholder may vote to approve the compensation proposal and vote not to approve and adopt the merger agreement and vice versa. Because the vote on the compensation proposal is advisory in nature only, it will not be binding on either the Company or Amazon.com. Accordingly, if the merger agreement is approved by the Company’s stockholders and the merger is completed, the merger-related compensation may be paid to the Company’s executive officers even if the stockholders fail to approve the compensation proposal.

 

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iRobot does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof, and only the matters specified in the notice of the special meeting may be considered or acted upon at the special meeting.

This proxy statement and the enclosed form of proxy are first being mailed to our stockholders on or about September 7, 2022, and the mailing is expected to be completed on or about September 14, 2022.

Record Date and Quorum

The holders of record of common stock, par value $0.01 per share, of the Company (referred to in this proxy statement as “common stock,” “Company common stock” or “iRobot common stock”) as of the close of business on September 2, 2022, the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. At the close of business on the record date, 27,233,499 shares of common stock were outstanding.

A majority of the shares entitled to vote, present virtually or represented by proxy, will constitute a quorum 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 will be included in the calculation of the number of shares considered to be present at the special meeting. If you hold your shares in “street name” and do not give any instruction to your broker, bank or other nominee as to how your shares should be voted at the special meeting, those shares will not be entitled to vote on any proposal at the special meeting and will not be counted for purposes of establishing a quorum.

Required Vote

Each share of iRobot common stock outstanding at the close of business on the record date is entitled to one vote on each of the proposals to be considered at the special meeting.

For the Company to complete the merger, iRobot stockholders holding a majority of the shares of iRobot common stock outstanding at the close of business on the record date must vote “FOR” the proposal to approve and adopt the merger agreement. A failure to vote your shares of 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.

Approval of each of the compensation proposal and the adjournment proposal requires the affirmative vote of a majority of the votes properly cast for and against such proposal, assuming a quorum is present at the special meeting. An abstention with respect to either proposal, or a failure to vote your shares of common stock (including a failure of your broker, bank or other nominee to vote shares held on your behalf) will have no effect on these proposals (assuming that a quorum is present).

Voting by the Company’s Directors and Executive Officers

At the close of business on the record date, directors and executive officers of the Company were entitled to vote approximately 398,481 shares of iRobot common stock, or approximately 1.46% of the shares of iRobot 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 other proposals to be considered at the special meeting, although they have no obligation to do so.

 

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Voting; Proxies; Revocation

Attendance

All holders of shares of iRobot common stock as of the close of business on September 2, 2022, the record date, including stockholders of record and beneficial owners of common stock registered in the “street name” of a broker, bank or other nominee, are invited virtually to attend the special meeting.

To attend the special meeting virtually, you must provide proof of ownership of iRobot common stock as of the close of business on the record date. If you hold your shares in “street name,” and you also wish to be able to vote virtually at the meeting, you must obtain a legal proxy, executed in your favor, from your bank, broker or other nominee.

Voting Virtually

If you plan to virtually attend the special meeting and wish to vote virtually, you will be given a virtual ballot at the special meeting. If you are not a stockholder of record, but instead hold your shares of iRobot common stock in “street name” through a broker, bank or other nominee, you are encouraged to vote by proxy even if you plan to virtually attend the special meeting. If you virtually attend the special meeting and vote by virtual ballot, your vote will revoke any previously submitted proxy.

Providing Voting Instructions by Proxy

To ensure that your shares of iRobot common stock are voted at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to virtually attend the special meeting.

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 specified on the enclosed proxy card. Your shares of iRobot 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. 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 iRobot common stock will be voted in the manner directed by you on your proxy card.

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, the compensation proposal and the adjournment proposal. If you fail to return your proxy card and you are a holder of record on the record date, unless you virtually attend the special meeting and vote virtually, the effect will be that your shares of iRobot 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, assuming a quorum is present, will not affect the compensation proposal or the adjournment proposal.

 

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Shares of iRobot Common Stock Held in “Street Name”

If your shares of iRobot common stock are held by a broker, bank or other nominee on your behalf in “street name,” your broker, bank or other nominee will send you instructions as to how to provide voting instructions for your shares. Many brokerage firms and banks 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 Nasdaq Global Select Market (“NASDAQ”), brokers, banks and other nominees that hold shares of 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, the compensation proposal or the adjournment proposal. Accordingly, if brokers, banks or other nominees do not receive specific voting instructions with respect to these proposals from the beneficial owner of such shares, they may not vote such shares with respect to these proposals. Therefore, unless you virtually attend the special meeting with a properly executed legal proxy from your broker, bank or other nominee, your failure to provide instructions to your broker, bank or other nominee will result in your shares of iRobot common stock not being deemed present for purposes of determining whether a quorum is present at the special meeting and not being voted on any of the proposal to approve and adopt the merger agreement, the compensation proposal or the adjournment proposal. However, if a beneficial owner of shares held in street name gives voting instructions to the broker, bank or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those shares will be deemed present at the special meeting for purposes of establishing a quorum at the special meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. Therefore, it is important that you instruct your broker, bank or other nominee on how you wish to vote your shares.

Revocation of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it at 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 dated after the date of the proxy being revoked, 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, in each case, in accordance with the instructions on the enclosed proxy card;

 

   

virtually attending the special meeting and voting by virtual ballot; or

 

   

delivering a written notice of revocation dated after the date of the proxy being revoked by mail to the Company at iRobot Corporation, 8 Crosby Drive, Bedford, MA 01730, Attention: Secretary in accordance with the instructions on the enclosed proxy card.

Please note, however, that only your last-dated proxy will count. Virtually 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 broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your proxy or submit new voting instructions. If you hold your shares in “street name,” you may also revoke a prior proxy by voting virtually at the special meeting if you obtain a proxy executed in your favor from your broker, bank or other nominee in order to be able to vote virtually at the special meeting.

 

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Abstentions

An abstention occurs when a stockholder attends a meeting, either virtually or represented by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares of iRobot common stock present or 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. Assuming a quorum is present at the special meeting, the requisite number of shares to approve the other two proposals is based on the total number of votes properly cast for and against those proposals. If you abstain from voting and a quorum is present at the special meeting, it will have no effect on the compensation proposal or the adjournment proposal.

The Companies (page 28)

iRobot Corporation

iRobot Corporation, referred to as “iRobot,” the “Company,” “we,” “our” or “us,” is a Delaware corporation incorporated in 2000 and based in Bedford, Massachusetts. We completed our initial public offering in November 2005, and our common stock trades on NASDAQ under the symbol “IRBT.”

iRobot has one operating segment, consumer robots. In fiscal year 2021, iRobot generated $1.565 billion in revenue. iRobot employed approximately 1,372 full-time employees as of January 1, 2022.

Additional information about iRobot is contained in its public filings, which are incorporated by reference herein. See the sections entitled “Where You Can Find Additional Information” and “The Companies  iRobot Corporation.”

The principal executive offices of iRobot are located at 8 Crosby Drive, Bedford, MA 01730, and its telephone number is (781) 430-3000.

Amazon.com, Inc.

Amazon.com was incorporated in 1994 in the state of Washington and reincorporated in 1996 in the state of Delaware. Its principal corporate offices are located in Seattle, Washington. It completed its initial public offering in May 1997 and its common stock is listed on NASDAQ under the symbol “AMZN.”

Amazon.com seeks to be Earth’s most customer-centric company. Amazon.com is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. In each of its segments, it serves its primary customer sets, consisting of consumers, sellers, developers, enterprises, content creators, advertisers, and employees.

Amazon.com has organized its operations into three segments: North America, International and Amazon Web Services.

Amazon.com’s principal executive offices are located at 410 Terry Avenue North, Seattle, Washington 98109, and its telephone number is (206) 266-1000.

See the section entitled “The Companies  Amazon.com, Inc.”

 

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Martin Merger Sub, Inc.

Merger Sub is a Delaware corporation and an indirect wholly owned subsidiary of Amazon.com and was formed on July 28, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement (including the merger) (the “transactions”). Merger Sub has not engaged in any business activities other than in connection with the transactions. Upon the completion of the merger, the separate corporate existence of Merger Sub will cease and iRobot will continue as the surviving corporation and an indirect wholly-owned subsidiary of Amazon.com (the “surviving corporation”). Merger Sub’s principal executive offices are located at 410 Terry Avenue North, Seattle, Washington 98109-5210, and its telephone number is (206) 266-1000.

See the section entitled “The Companies  Martin Merger Sub, Inc.

The Merger (page 34)

You will be asked to consider and vote upon the proposal to approve and adopt the merger agreement. A copy of the merger agreement is attached as Annex A. The merger agreement provides, among other things, that at the effective time of the merger (the “effective time”), Merger Sub will be merged with and into the Company, with the Company surviving the merger. In the merger, each share of iRobot common stock issued and outstanding immediately before the effective time (other than certain shares specified in the merger agreement) will be converted into the right to receive the merger consideration of  $61.00 per share in cash (the “merger consideration”), without interest. Amazon.com, iRobot, Merger Sub, the surviving corporation and the paying agent for the merger consideration will each be entitled to deduct and withhold any amounts due under applicable tax laws from the amounts that would otherwise be payable under the terms of the merger agreement. Upon completion of the merger, the Company will be a wholly owned subsidiary of Amazon.com, 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.

Effect on iRobot if the Merger is Not Completed

If the merger agreement is not adopted by stockholders, or if the merger is not completed for any other reason:

 

  (i)

the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of iRobot common stock pursuant to the merger agreement;

 

  (ii)

(A) iRobot will remain an independent public company, (B) iRobot common stock will continue to be listed and traded on NASDAQ and registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (C) iRobot will continue to file periodic reports under the Exchange Act with the Securities and Exchange Commission (the “SEC”);

 

  (iii)

under certain specified circumstances, iRobot will be required to pay Amazon.com a termination fee in an amount not to exceed $56 million (net of any expense reimbursement previously paid) upon or following the termination of the merger agreement; and

 

  (iv)

under certain other specified circumstances, Amazon.com will be required to pay iRobot a termination fee in an amount equal to $94 million following the termination of the merger agreement.

For more information, please see the section entitled “The Merger (Proposal 1) — Effect on iRobot if the Merger is Not Completed.

Treatment of Company Equity Awards (page 72)

Stock Options. At the effective time, each outstanding option to purchase shares of Company common stock (“Company option”), whether vested or unvested, will, automatically and without any required action on the part

 

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of the holder thereof, fully vest and be converted into the right to receive, as soon as reasonably practicable (but not more than 30 calendar days) following the effective time, an amount in cash equal to the product of (i) the number of shares of Company common stock subject to the Company option immediately prior to the effective time multiplied by (ii) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company option. Any Company option that has an exercise price per share that is greater than or equal to the merger consideration will be cancelled at the effective time for no consideration or payment.

Restricted Stock Unit Awards. At the effective time, each outstanding time-based restricted stock unit award in respect of Company common stock (“Company RSU award”), will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive an amount in cash equal to (i) the number of shares of Company common stock subject to such Company RSU award multiplied by (ii) the merger consideration (the “RSU payment”). The RSU payment will be subject to the same time-based vesting and forfeiture provisions as were applicable to the corresponding Company RSU award immediately prior to the effective time.

Performance Stock Unit Awards. At the effective time, each outstanding performance-based restricted stock unit award in respect of Company common stock (“Company PSU award”), will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive an amount in cash equal to (i) the number of shares of Company common stock subject to such Company PSU award (with performance-based criteria determined based on the actual level of achievement through the effective time or, for PSU awards granted in 2022, the target level of achievement), multiplied by (ii) the merger consideration (the “PSU payment”). The PSU payment will be subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company PSU award immediately prior to the effective time.

Deferred Stock Unit Awards. At the effective time, each outstanding director deferred stock unit award in respect of Company common stock (“Company DSU award”), will, automatically and without any required action on the part of the holder thereof, be cancelled and converted into the right to receive (without interest), as soon as reasonably practicable (but not more than 30 calendar days) following the effective time, an amount in cash equal to (i) the number of shares of Company common stock subject to such Company DSU award multiplied by (ii) the merger consideration.

Employee Stock Purchase Plan. The merger agreement provides that the offering period under the Company’s 2017 Employee Stock Purchase Plan (“ESPP”) in effect on the date of the merger agreement will end on the earlier of (x) the next scheduled purchase date, which is November 14, 2022, or (y) no later than the business day preceding the closing date, and no additional offering periods will commence thereafter.

Conditions to Completion of the Merger (page 90)

Each party’s obligation to complete the merger is subject to the satisfaction or waiver at or prior to the closing of the following conditions:

 

   

the adoption of the merger agreement by holders of a majority of all outstanding shares of iRobot common stock entitled to vote on such matter at the special meeting (the “requisite company vote”);

 

   

(1) the waiting period (and any extensions thereof) applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), or any voluntary agreement with the Department of Justice Antitrust Division or the Federal Trade Commission not to consummate the merger will have expired or been terminated and (2) the applicable waiting periods (or any extensions thereof) or clearances, as applicable, under certain foreign antitrust laws and foreign investment laws will have expired, been earlier terminated or obtained; and

 

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No court or other governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law that is in effect that restrains, enjoins, renders illegal or otherwise prohibits the completion of the merger.

The respective obligations of Amazon.com and Merger Sub to complete the merger are subject to the satisfaction or waiver by Amazon.com at or prior to the closing of the following additional conditions:

 

   

the accuracy of the representations and warranties of iRobot as of August 4, 2022 and as of the closing date (except for any representations and warranties made as of a particular date or period, which representations and warranties must be true and correct only as of that date or period), generally subject to a “material adverse effect” or other qualification provided in the merger agreement;

 

   

the performance by iRobot in all material respects of all obligations required to be performed by it under the merger agreement at or prior to the closing date;

 

   

there not having occurred and there not being continuing any change, effect, event, occurrence or development that has had a material adverse effect; and

 

   

the receipt by Amazon.com and Merger Sub at closing of a certificate signed on behalf of iRobot by the Chief Executive Officer or Chief Financial Officer of iRobot certifying that the conditions set forth in the three preceding bullet points are satisfied.

The obligation of iRobot to complete the merger is subject to the satisfaction or waiver by iRobot at or prior to the closing of the following additional conditions:

 

   

the accuracy of the representations and warranties of Amazon.com and Merger Sub as of August 4, 2022 and as of the closing date (except for any representations and warranties made as of a particular date or period, which representations and warranties must be true and correct in all material respects only as of that date or period) in all material respects;

 

   

the performance by each of Amazon.com and Merger Sub in all material respects of all obligations required to be performed by it under the merger agreement at or prior to the closing date; and

 

   

the receipt by iRobot at closing of a certificate signed on behalf of Amazon.com and Merger Sub by an authorized officer of Amazon.com certifying that the conditions set forth in the two preceding bullet points are satisfied.

When the Merger Becomes Effective (page 71)

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 Amazon.com, Merger Sub and the Company’s respective obligations to consummate the merger, some of which are not within the parties’ control. There may be a substantial amount of time between the special meeting and the completion of the merger, and it is possible that the merger will not be completed at all. After the requisite company vote is obtained, the iRobot board of directors will not have the right to terminate the merger agreement in order to accept any alternative acquisition proposal. We expect to complete the merger promptly after the requisite company vote is obtained and all required regulatory clearances have been received.

Recommendation of the iRobot Board of Directors (page 45)

After careful consideration, the iRobot board of directors unanimously determined that the merger is advisable and in the best interests of, the Company and its stockholders, and unanimously approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement (the “company recommendation”). The iRobot board of directors unanimously recommends that iRobot stockholders vote “FOR” the proposal to approve and adopt the merger agreement at the special meeting.

 

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Reasons for the Merger (page 45)

For a description of the reasons considered by the iRobot board of directors in resolving to recommend approval and adoption of the merger agreement, see the section entitled “The Merger (Proposal 1)Reasons for the Merger; Recommendation of the iRobot Board of Directors.”

Opinion of Qatalyst Partners LP (page 53 and Annex B)

The Company engaged Qatalyst Partners LP (“Qatalyst Partners”) to provide financial advice in connection with the proposed transaction (as defined herein) based on Qatalyst Partners’ extensive expertise, knowledge of the industry in which the Company operates and experience advising technology companies in connection with potential strategic transactions. At the meeting of the iRobot board of directors on August 4, 2022, Qatalyst Partners rendered to the iRobot board of directors its oral opinion, subsequently confirmed in writing, to the effect that, as of August 4, 2022 and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), was fair, from a financial point of view, to such holders.

The full text of the opinion of Qatalyst Partners, dated as of August 4, 2022, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety.

Qatalyst Partners’ opinion was provided to the iRobot board of directors and addressed only, as of the date of the opinion, the fairness, from a financial point of view, of the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), to such holders. It does not address any other aspect of the merger. It does not constitute a recommendation to any Company stockholder as to how to vote with respect to the merger or any other matter and does not in any manner address the price at which the shares of Company common stock will trade at any time.

For a description of the opinion that the iRobot board of directors received from Qatalyst Partners, see the section of this proxy statement entitled “The Merger — Opinion of Qatalyst Partners LP.”

Interests of the Company’s Directors and Executive Officers in the Merger (page 59)

In considering the recommendation of the iRobot board of directors that Company stockholders vote to approve and adopt the merger agreement, Company stockholders should be aware that the directors and executive officers of iRobot have potential interests in the proposed merger that may be different from or in addition to the interests of Company stockholders generally. The iRobot board of directors was aware of these interests and considered them, among other matters, in making its recommendation that Company stockholders vote to approve and adopt the merger agreement. These interests include:

 

   

The merger agreement provides for the cash-out of all Company options, Company RSU awards, Company PSU awards, and Company DSU awards, with the cash payments for Company RSU awards and Company PSU awards remaining subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company RSU awards and Company PSU awards immediately prior to the effective time.

 

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Certain of the Company’s executive officers may receive a cash transaction bonus under a cash transaction bonus program providing for transaction bonuses in an aggregate amount not to exceed $12 million or a cash retention bonus under a cash retention bonus program providing for retention bonuses in an aggregate amount not to exceed $12 million.

 

   

The Company’s executive officers are party to executive agreements with iRobot that provide for severance payments and accelerated vesting of unvested equity awards in the event of certain qualifying terminations of employment during the period beginning 45 days prior to the date of the public announcement of the merger agreement and ending on the one-year anniversary of the effective time.

 

   

The Company’s directors and executive officers are entitled to continued indemnification and insurance coverage under indemnification agreements and the merger agreement.

For a more complete description of these interests, see “The Merger (Proposal 1)  Interests of the Company’s Directors and Executive Officers in the Merger.”

Material U.S. Federal Income Tax Consequences of the Merger (page 65)

The receipt of cash by U.S. Holders (as defined under “The Merger (Proposal 1) Material U.S. Federal Income Tax Consequences of the Merger”) in exchange for shares of iRobot common stock in the merger will be a taxable transaction to such stockholders for U.S. federal income tax purposes. Each such U.S. Holder generally will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash that such U.S. Holder receives in the merger and such U.S. Holder’s adjusted tax basis in the shares of iRobot common stock surrendered in the merger. Backup withholding taxes may also apply to the cash payments made pursuant to the merger, unless the U.S. Holder complies with certification procedures under the backup withholding rules.

A stockholder that is a Non-U.S. Holder (as defined under the caption, “as defined under “The Merger (Proposal 1)  Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of iRobot common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States (the “U.S.”), but may be subject to backup withholding tax unless the Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding tax.

Stockholders should read the section of this proxy statement captioned “as defined under “The Merger (Proposal 1)  Material U.S. Federal Income Tax Consequences of the Merger

This proxy statement contains a general discussion of U.S. federal income tax consequences of the merger. Stockholders should also consult their own tax advisors concerning the U.S. federal income tax consequences relating to the merger in light of their particular circumstances and any consequences arising under U.S. federal estate, gift and other income and other non-income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction.

Regulatory Clearances (page 67)

iRobot and Amazon.com have agreed to use their respective reasonable best efforts to consummate the transactions contemplated by the merger agreement (including the merger) no later than the outside date (as defined herein), including obtaining any applicable regulatory approvals and satisfying all statutory waiting period requirements, subject to certain specified limitations under the merger agreement. These approvals include approval under the HSR Act, clearance by the European Commission, and certain other merger filings or clearances that may be required or advisable in other jurisdictions. Although we expect that all applicable regulatory approvals will be obtained, the merger cannot be consummated until after expiration or termination of

 

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the applicable waiting period under the HSR Act, and after the mandatory approval requirements outside of the United States have been obtained under applicable antitrust and foreign investment laws.

Litigation Related to the Merger (page 68)

In connection with the merger agreement, a complaint has been filed as an individual action in the United States District Court for the Southern District of New York, captioned Reid v. iRobot Corp., et al., 22-cv-7498 (filed September 1, 2022). The Company believes that the foregoing complaint is without merit. Other potential plaintiffs may file additional lawsuits challenging the proposed transaction. See the section entitled “Litigation Related to the Merger.”

Appraisal Rights of iRobot Stockholders (page 100)

If the merger is consummated and certain conditions are met, iRobot stockholders who continuously hold their shares of iRobot common stock through the effective date of the merger, who do not vote in favor of the merger, who properly demand in writing an appraisal of their shares delivered to the Company prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not validly withdraw their demands or otherwise lose their appraisal rights under, the applicable provisions of Delaware law will be entitled to appraisal rights to receive, in cash, the fair value of their shares as determined by the Delaware Court of Chancery in connection with the merger under Section 262 of the Delaware General Corporation Law (the “DGCL”). This means that iRobot stockholders may be entitled to have their shares of iRobot common stock appraised by the Delaware Court of Chancery, and to receive payment in cash of the “fair value” of their shares of iRobot common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be “fair value” (or in certain circumstances described in further detail in the section of this proxy statement captioned “Appraisal Rights of iRobot Stockholders,” on the difference between the amount determined to be the “fair value” and the amount paid by the surviving corporation in the merger to each iRobot stockholder entitled to appraisal prior to the entry of judgment in any appraisal proceeding). Due to the complexity of the appraisal process, iRobot stockholders 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.

iRobot stockholders considering seeking appraisal should be aware that the “fair value” of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as, or less than the value of the merger consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares of iRobot common stock.

To exercise appraisal rights, iRobot stockholders must: (i) deliver a written demand for appraisal to iRobot before the vote is taken on the proposal to approve and adopt the merger agreement; (ii) not submit a proxy or otherwise vote in favor of the proposal to approve and adopt the merger agreement; (iii) continue to hold shares of iRobot common stock of record through the effective date of the merger; and (iv) comply with all other procedures for exercising and perfecting appraisal rights under the DGCL. Failure to follow the procedures specified under the DGCL will result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings as to all persons who otherwise would be entitled to appraisal rights unless certain stock ownership conditions are satisfied by the iRobot stockholders who properly and timely demand appraisal in accordance with Section 262 of the DGCL. The DGCL requirements for exercising and perfecting appraisal rights are described in further detail in this proxy statement, which is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights. Section 262 of the DGCL may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262). If you hold your shares of iRobot common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you may make a written demand for appraisal in your own name, but you must satisfy the conditions set forth above and your written

 

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demand must also reasonably identify the holder of record of the shares for which demand is made, be accompanied by documentary evidence of your beneficial ownership of stock (such as a brokerage or securities account statement containing such information or a letter from a broker or other record holder of such shares confirming such information) and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provide an address at which you consent to receive notices given by the surviving corporation under Section 262 of the DGCL and to be set forth on the verified listed required by Section 262(f) of the DGCL. For more information, please see the section of this proxy statement captioned “Appraisal Rights of iRobot Stockholders.”

Delisting and Deregistration of Company Common Stock (page 69)

If the merger is completed, iRobot common stock will be delisted from the NASDAQ Global Select Market (the “NASDAQ”) and deregistered under the Exchange Act.

Acquisition Proposals; No Solicitation (page 80)

Except as permitted by the merger agreement, the Company must not, and must cause its subsidiaries and its and its subsidiaries’ directors, officers and employees not to, and must instruct and use its reasonable best efforts to cause its and its subsidiaries’ investment bankers, attorneys, accountants and other advisors or representatives (collectively, “representatives”) not to, directly or indirectly:

 

   

initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry, proposal, indication of interest or offer that constitutes, or would reasonably be expected to lead to, an “acquisition proposal,” as defined in the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation”;

 

   

engage in, continue or otherwise participate in any discussions or negotiations relating to any acquisition proposal or any inquiry, proposal, indication of interest or offer that would reasonably be expected to lead to an acquisition proposal (other than to state the extent to which those discussions are prohibited by the terms of the merger agreement);

 

   

provide any non-public information to any person in connection with any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal;

 

   

other than as required by the directors’ fiduciary duties, waive, terminate, modify or fail to enforce any “standstill” or confidentiality obligation of any person (other than any party to the merger agreement) with respect to the Company or any of its subsidiaries entered into in connection with an acquisition proposal; or

 

   

otherwise knowingly facilitate any effort or attempt to make an acquisition proposal.

However, prior to the time the requisite company vote is obtained, if iRobot receives a bona fide written acquisition proposal not solicited in violation of the Company’s non-solicitation obligations under the merger agreement, and if the iRobot board of directors determines in good faith after consultation with outside legal counsel and an outside financial advisor that (1) based on the information then available and after consultation with its outside financial advisor, the acquisition proposal constitutes or would reasonably be expected to result in a “superior proposal,” as defined in the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation  Receipt of Acquisition Proposals” that did not result from a breach of the Company’s non-solicitation obligations under the merger agreement and (2) the failure to take the applicable action would be inconsistent with the directors’ fiduciary duties under applicable law, then iRobot may:

 

   

provide information (including non-public information) to the person making the acquisition proposal, subject to specified conditions described in the section entitled “The Merger Agreement- Acquisition Proposals; No Solicitation  Receipt of Acquisition Proposals”; and

 

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engage in or participate in discussions and/or negotiations with that person regarding the acquisition proposal.

Change of Board Recommendation; Alternative Acquisition Agreement (page 82)

The iRobot board of directors has unanimously recommended that iRobot stockholders vote “FOR” the proposal to approve and adopt the merger agreement. The merger agreement permits the iRobot board of directors to effect a “change of recommendation” (as described in the section entitled “The Merger AgreementAcquisition Proposals; No Solicitation  Change of Board Recommendation; Alternative Acquisition Agreement”) only in certain limited circumstances, as described below.

Before the requisite company vote is obtained, the iRobot board of directors may effect a change of recommendation and/or terminate the merger agreement in response to a superior proposal, in each case if the iRobot board of directors has determined in good faith, after consultation with its outside financial advisor and its outside legal counsel, that an acquisition proposal constitutes a superior proposal and the failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law. Before effecting a change of recommendation or terminating the merger agreement in response to a superior proposal, (1) iRobot must have given Amazon.com at least five business days’ prior written notice of its intention to do so, (2) iRobot must have afforded Amazon.com the opportunity to negotiate in good faith with iRobot to enable Amazon.com to propose in writing a binding offer to make revisions to the terms of the merger agreement and (3) at the end of the notice period, the iRobot board of directors must have considered in good faith the binding written offer and any other information it deems appropriate in good faith, and must have determined in good faith, after consultation with its outside legal counsel and its outside financial advisor, that the superior proposal continues to constitute a superior proposal if the changes proposed in the binding offer by Amazon.com were to be given effect.

See the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation  Change of Board Recommendation; Alternative Acquisition Agreement” and “The Merger Agreement  Termination.”

In addition, before the requisite company vote is obtained, the iRobot board of directors may effect a change of recommendation in response to an intervening event (as defined below) if the iRobot board of directors has determined in good faith, after consultation with its outside financial advisors and its outside legal counsel, that the failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law. Before effecting a change of recommendation in response to an intervening event, (1) iRobot must have given Amazon.com at least five business days’ prior written notice of its intention to do so, (2) iRobot must have afforded Amazon.com the opportunity to negotiate in good faith with iRobot to enable Amazon.com to propose in writing a binding offer to make revisions to the terms of the merger agreement and (3) at the end of the notice period, the iRobot board of directors must have considered in good faith the binding written offer and any other information it deems appropriate in good faith, and must have determined in good faith, after consultation with its outside legal counsel and its outside financial advisor, that the failure to effect a change of recommendation would still be inconsistent with its fiduciary duties under applicable law if the changes proposed in the binding offer by Amazon.com were to be given effect.

Under the merger agreement, an “intervening event” means a change, effect, event, circumstance, occurrence or development that (i) was neither known by nor reasonably foreseeable by iRobot or the iRobot board of directors as of August 4, 2022 (or, if known, the material consequences of which were not known or reasonably foreseeable) and (ii) becomes known by the iRobot board of directors prior to the receipt of the requisite company vote; provided, that in no event will any of the following constitute or be deemed to be an intervening event: (1) the receipt, existence or terms of an acquisition proposal or any matter relating thereto, (2) changes in the stock price of the Company, (3) any breach by the Company of the merger agreement or (4) the fact, in and of itself, that the Company exceeds internal or published projections (it being understood,

 

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however, that the facts or causes underlying or contributing to any of the matters described in the preceding clauses (2) or (4) may be taken into account for purposes of determining whether an intervening event has occurred); provided, further, that an acquisition proposal that resulted from a breach of the Company’s non-solicitation obligations under the merger agreement may not be the basis for an intervening event.

See the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation   Change of Board Recommendation; Alternative Acquisition Agreement.”

Termination (page 91)

The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time in the following circumstances:

 

   

by the mutual written consent of iRobot and Amazon.com;

 

   

by either iRobot or Amazon.com, if:

 

   

the merger has not been consummated by August 4, 2023, subject to extensions to February 4, 2024 and August 4, 2024 in specified circumstances (such date, the “outside date”); or

 

   

the requisite company vote has not been obtained and a vote has been taken on the matter at the iRobot stockholders’ meeting (as defined below) or any adjournment or postponement thereof (and such meeting, as may be so adjourned or postponed, will have concluded); or

 

   

an order has been enacted, issued, promulgated, enforced or entered after the date of the merger agreement by a court or other governmental authority of competent jurisdiction over any party to the merger agreement, which order permanently restrains, enjoins, renders illegal or otherwise prohibits the consummation of the merger becomes final and non-appealable (provided, that the right to terminate the merger agreement pursuant to this bullet will not be available to any party that has breached in any material respect its obligations under the merger agreement in any manner that will have been the principal cause of the failure of a condition to the consummation of the merger); or

 

   

by iRobot, if:

 

   

Amazon.com or Merger Sub has breached any of its representations, warranties, covenants or agreements, or there is any inaccuracy in any of its representations or warranties, in either case which (1) would result in a failure of a condition to the obligation of iRobot to complete the merger and (2) is either not curable prior to the outside date, as it may be extended, or is not cured within the earlier of  (x) thirty (30) days following the giving of notice thereof by iRobot to Amazon.com and (y) three (3) business days prior to the outside date as it may be extended; or

 

   

prior to the time the requisite company vote is obtained and for so long as iRobot is in compliance with its non-solicitation obligations under the merger agreement, iRobot terminates the merger agreement in connection with entering into an alternative acquisition agreement providing for a superior proposal in accordance with the terms described in the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation” and, prior to or concurrently with the termination, pays to Amazon.com the Company termination fee (as defined below); or

 

   

by Amazon.com, if:

 

   

iRobot has breached any of its representations, warranties, covenants or agreements, or there is any inaccuracy in any of its representations or warranties, in either case which (1) would result in a failure of a condition to the obligations of Amazon.com and Merger Sub to complete the merger and (2) is either not curable prior to the outside date, as it may be extended, or is not cured within

 

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the earlier of  (x) thirty (30) days following the giving of notice thereof by Amazon.com to iRobot and (y) three (3) business days prior to the outside date as it may be extended; or

 

   

prior to the time the requisite company vote is obtained, the iRobot board of directors (1) has made a change of recommendation or (2) at any time following receipt of an acquisition proposal that has not been publicly withdrawn, has failed to reaffirm its approval or recommendation of the merger agreement and the merger as promptly as reasonably practicable (but in any event by the earlier of (A) five (5) business days and (B) the close of business on the second (2nd) business say immediately preceding the scheduled date of the company stockholders’ meeting at the written request to do so by Amazon.com) after receipt of any written request to do so from Amazon.com (provided that Amazon.com may not provide such a written request more than once for each acquisition proposal (unless the terms of such acquisition proposal have been modified or amended, in which case Amazon.com may provide another written request with respect to such acquisition proposal as so amended or modified)).

Termination Fees; Expense Reimbursement (page 92)

iRobot will be required to pay Amazon.com a termination fee in an amount equal to $56 million (the “Company termination fee”) in the following circumstances:

 

   

if the merger agreement is terminated by Amazon.com under specified circumstances where the iRobot board of directors has made a change of recommendation;

 

   

if the merger agreement is terminated by iRobot in order to enter into an alternative acquisition agreement providing for a superior proposal in accordance with the terms described in the section entitled “The Merger Agreement  Acquisition Proposals; No Solicitation”; or

 

   

if any of the following three conditions is satisfied:

 

  (1)

the merger agreement is terminated by (A) either iRobot or Amazon.com because the requisite company vote has not been obtained or because the merger has not been consummated by the outside date (as it may be extended) (at a time when the requisite company vote has not been obtained or Amazon.com has the right to terminate as result of a material breach by iRobot of its covenants and agreements under the merger agreement), or (B) Amazon.com as a result of a material breach by iRobot of its covenants and agreements under the merger agreement;

 

  (2)

a bona fide acquisition proposal is made publicly to iRobot or any of its subsidiaries or otherwise becomes publicly known, or any person publicly announces an intention (whether or not conditional) to make an acquisition proposal that is not withdrawn publicly without qualification prior to, the earlier of  (x) five days prior to the iRobot’s stockholders meeting (as such meeting may have been adjourned or postponed in accordance with the merger agreement) or (y) termination of the merger agreement; and

 

  (3)

within twelve (12) months after the termination, iRobot or any of its subsidiaries enters into a definitive agreement providing for, or consummates or, in the case of an acquisition proposal that is a tender offer, approves or recommends to iRobot’s stockholders, or is otherwise not opposed to, an acquisition proposal, provided that, for purposes of the provision referred to in this bullet point, the references to “15%” in the definition of  “acquisition proposal” are deemed to be references to “50%” and, as to any acquisition proposal relating to a merger, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction involving the Company, any such acquisition proposal results in a change of control of at least 50% of the stock or consolidated assets of iRobot.

In no event will more than one Company termination fee be payable by the Company under the merger agreement.

 

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If the merger agreement is terminated by either iRobot or Amazon.com because the requisite company vote has not been obtained, or because the merger has not been consummated by the outside date (as it may be extended) (at such time when the requisite company vote has not been obtained), then, in certain circumstances, iRobot will be required to pay to Amazon.com all of the reasonable and documented out-of-pocket expenses incurred by Amazon.com and Merger Sub in connection with the merger agreement and the other transactions contemplated by the merger agreement, in an amount not to exceed $17 million. To the extent any portion of this expense reimbursement is paid by iRobot to Amazon.com, that amount paid will be deducted from the amount of any Company termination fee owed or payable.

Amazon.com will be required to pay iRobot a termination fee in an amount equal to $94 million (the “Parent termination fee”) in the following circumstances:

 

   

if (1) the merger agreement is terminated by either iRobot or Amazon.com because the merger has not been consummated by the outside date (as it may be extended), (2) at the time of such termination, all of the conditions required to be satisfied at or prior to the closing have been satisfied or duly waived by the parties entitled to the benefit thereof other than (A) the conditions relating to regulatory clearances or relating to the absence of a law, order or injunction prohibiting the merger (but only as it relates to the HSR Act or any other antitrust law) and (B) any other condition that by its nature is to be satisfied at the closing; and (3) no breach by iRobot of its obligations described in the section entitled “The Merger AgreementEfforts to Complete the Merger” has been the principal cause of the failure of conditions relating to regulatory clearances or the condition relating to the absence of a law, order or injunction prohibiting the merger (but only as it relates to the HSR Act or any other antitrust law); or

 

   

if the merger agreement is terminated by either iRobot or Amazon.com because an order enacted, issued, promulgated, enforced or entered after the date of the merger agreement by a court or other governmental authority of competent jurisdiction over any party to the merger agreement, permanently restrains, enjoins, renders illegal or otherwise prohibits the consummation of the merger and has become final and non-appealable (but only if the appealable order relates to the HSR Act or any other antitrust law), and no breach by iRobot of its obligations described in the section entitled “The Merger AgreementEfforts to Complete the Merger” has been the principal cause of the applicable enactment, issuance, promulgation, enforcement or entry of such order.

In no event will more than one Parent termination fee be payable under the merger agreement by Amazon.com.

 

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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 and the proposals to be voted on at the special meeting. 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, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions under the section entitled “Where You Can Find Additional Information.”

 

Q:

Why am I receiving this proxy statement?

 

A:

On August 4, 2022, the Company entered into a merger agreement providing for Amazon.com to acquire the Company in a merger for a price of $61.00 per share in cash, without interest. You are receiving this proxy statement in connection with the solicitation of proxies by the iRobot board of directors in favor of the proposal to approve and adopt the merger agreement and to approve the other related proposals to be voted on at the special meeting.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will be held via the Internet at the virtual meeting website on October 17, 2022, at 8:30 a.m. Eastern Time (including any adjournment or postponement thereof, the “special meeting”). You will not be able to attend the special meeting physically in person.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Only holders of record of iRobot common stock as of the close of business on September 2, 2022, the record date for the special meeting, are entitled to receive these proxy materials and to vote their shares at the special meeting. Each share of iRobot common stock issued and outstanding as of the close of business on the record date will be entitled to one vote on each matter submitted to a vote at the special meeting.

 

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;

 

   

to approve, on an advisory (non-binding) basis, the compensation proposal; and

 

   

to approve the adjournment proposal.

 

Q:

May I attend the special meeting virtually and vote at the special meeting?

 

A:

Yes. If you are a iRobot stockholder of record, you may attend the special meeting virtually via the Internet at the virtual meeting website on October 17, 2022, and complete a virtual ballot, whether or not you sign and return your proxy card. If you are a iRobot stockholder of record, you will need your assigned control number to vote shares electronically at the special meeting. The control number can be found on the proxy card, voting instruction form, or other applicable proxy notices.

Even if you plan to attend the special meeting virtually, to ensure that your shares will be represented at the special meeting, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the special meeting virtually and complete a virtual ballot, your vote will revoke any proxy previously submitted.

 

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If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the proposal to approve and adopt the merger agreement, without your instructions. If you hold your shares in “street name,” you may not vote your shares virtually at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee.

 

Q:

What will I receive if the merger is completed?

 

A:

Upon the terms and subject to the conditions of the merger agreement, at the effective time, each share of common stock issued and outstanding immediately before the effective time (other than (1) shares owned by Amazon.com, Merger Sub or any other wholly owned subsidiary of Amazon.com and shares owned by the Company or any wholly owned subsidiary of the Company, and in each case not held on behalf of third parties and (2) shares owned by stockholders of the Company who have complied with the applicable provisions of Section 262 of the DGCL prior to the effective time) will be converted into the right to receive the merger consideration of  $61.00 per share in cash, without interest.

 

Q:

What will holders of iRobot stock awards receive if the merger is consummated?

 

A:

At the effective time, each:

 

   

outstanding Company option will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive, as soon as reasonably practicable (but not more than 30 days) following the effective time, an amount in cash equal to the product of (i) the number of shares of Company common stock subject to the Company option immediately prior to the effective time multiplied by (ii) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company option;

 

   

outstanding Company RSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the RSU payment, which will be subject to the same time-vesting and forfeiture provisions as were applicable to such Company RSU award immediately prior to the effective time;

 

   

outstanding Company PSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the PSU payment, which will be subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company PSU award immediately prior to the effective time; and

 

   

outstanding Company DSU award will, automatically and without any required action on the part of the holder thereof, be cancelled and converted into the right to receive, as soon as reasonably practicable (but not more than 30 days) following the effective time, an amount in cash equal to (i) the number of shares of Company common stock subject to such Company DSU award multiplied by (ii) the merger consideration.

 

Q:

How many shares are needed to constitute a quorum?

 

A:

A majority of the shares entitled to vote, present virtually or represented by proxy, will constitute a quorum at the special meeting. If a quorum is not present at the special meeting, the special meeting may, and at the request of Amazon.com, will, be adjourned or postponed from time to time by the presiding officer (subject to the terms of the merger agreement and the Company’s Amended and Restated By-Laws) until a quorum is obtained.

As of the close of business on September 2, 2022, the record date for the special meeting, there were 27,233,499 shares of common stock outstanding.

 

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If 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 in “street name” and do not give any instruction to your broker, bank or other nominee as to how your shares should be voted at the special meeting, those shares will not be entitled to vote on any proposal at the special meeting and will not be counted for purposes of establishing a quorum.

 

Q:

What vote of iRobot stockholders is required to approve and adopt the merger agreement?

 

A:

Approval and adoption of the merger agreement requires the affirmative vote of a majority of the shares of common stock outstanding at the close of business on the record date for the special meeting. A failure to vote your shares of 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. If your shares are held in “street name” by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, the failure to instruct your nominee will have the same effect as a vote “AGAINST” the proposal to approve and adopt the merger agreement.

 

Q:

What vote of iRobot stockholders is required to approve the remaining proposals to be voted upon at the special meeting?

 

A:

Each of the compensation proposal and the adjournment proposal requires the affirmative vote of a majority of the votes properly cast for and against such proposal, assuming a quorum is present at the special meeting.

An abstention with respect to either proposal, or a failure to vote your shares of common stock (including a failure of your broker, bank or other nominee to vote shares held on your behalf), will have no effect on these proposals (assuming that a quorum is present).

The approval of the named executive officer merger-related compensation proposal and the adjournment proposal are not conditions to the completion of the merger.

 

Q:

How does the iRobot board of directors recommend that I vote?

 

A:

The iRobot board of directors unanimously recommends that iRobot stockholders vote:

 

   

FOR” the proposal to approve and adopt the merger agreement;

 

   

FOR” the compensation proposal; and

 

   

FOR” the adjournment proposal.

For a discussion of the factors that the iRobot board of directors considered in determining to recommend the approval and adoption of the merger agreement, please see the section entitled “The Merger (Proposal 1)  Reasons for the Merger; Recommendation of the iRobot Board of Directors.” In addition, in considering the recommendation of the iRobot board of directors with respect to the merger agreement, you should be aware that some of our directors and executive officers have interests that may be different from, or in addition to, the interests of Company stockholders generally. For a discussion of these interests, please see the section entitled “The Merger (Proposal 1)  Interests of the Company’s Directors and Executive Officers in the Merger.”

 

Q:

How do iRobot’s directors and officers intend to vote?

 

A:

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 other proposals to be considered at the special meeting, although they have no obligation to do so.

 

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Q:

When is the merger expected to be completed?

 

A:

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 Amazon.com, Merger Sub and the Company’s respective obligations to consummate the merger, some of which are not within the parties’ control. There may be a substantial amount of time between the special meeting and the completion of the merger, and it is possible that the merger will not be completed at all. After the requisite company vote is obtained, the iRobot board of directors will not have the right to terminate the merger agreement in order to accept any alternative acquisition proposal. We expect to complete the merger promptly after the requisite company vote is obtained and all required regulatory clearances have been received.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger agreement is not approved and adopted by the Company’s stockholders, or if the merger is not completed for any other reason, the Company’s stockholders will not receive any payment for their shares of common stock in connection with the merger. Instead, the Company will remain a public company, and shares of our common stock will continue to be registered under the Exchange Act, as well as listed and traded on NASDAQ. In the event that either iRobot or Amazon.com terminates the merger agreement, then, in certain specified circumstances, iRobot may be required to pay Amazon.com a termination fee in an amount equal to $56 million. Furthermore, if the merger agreement is terminated by either iRobot or Amazon.com because the requisite company vote has not been obtained or the outside date lapses without stockholders having approved the merger agreement, iRobot will be required to pay to Amazon.com all of the reasonable and documented out-of-pocket expenses incurred by Amazon.com and Merger Sub in connection with the merger agreement and the transactions in an amount not to exceed $17 million (which amount will be deducted from the amount of any termination fee owed or payable by the Company). See the section entitled “The Merger Agreement  Termination Fees; Expense Reimbursement.”

 

Q:

What do I need to do now? How do I vote my shares of common stock?

 

A:

We urge you to, and you should, read this entire 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, regardless of the number of shares of common stock you own.

Voting Virtually

Stockholders of record will be able to vote virtually at the special meeting. If you are not a stockholder of record, but instead hold your shares of common stock in “street name” through a broker, bank or other nominee, you must provide a legal proxy executed in your favor from your broker, bank or other nominee in order to be able to vote virtually at the special meeting.

It is not necessary to virtually attend the special meeting in order to vote your shares. To ensure that your shares of 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 virtually.

Attending the meeting virtually does not itself constitute a vote on any proposal.

Shares of Common Stock Held by Record Holder

You can also ensure that your shares are voted at the special meeting by submitting your proxy via:

 

   

mail, by completing, signing and dating the enclosed proxy card and returning it in the enclosed postage-paid envelope;

 

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telephone, by calling the telephone number indicated on your proxy card or voting instruction form and follow the easy prompts; or

 

   

the Internet, by accessing the voting site indicated on the enclosed proxy card or voting instruction form and follow the simple instructions. If you had earlier consented to receiving proxy materials by email, you may simply click the “VOTE NOW” button in the accompanying email.

If you sign, date and return your proxy card without indicating how you wish to vote with respect to a proposal, your proxy will be voted “FOR” (1) the proposal to approve and adopt the merger agreement, (2) the compensation proposal, and (3) the adjournment proposal.

We encourage you to vote by proxy even if you plan on virtually attending the special meeting.

A failure to vote or an abstention will have the same effect as voting “AGAINST” the proposal to approve and adopt the merger agreement. A failure to vote or an abstention will have no effect on the other two proposals (assuming that a quorum is present).

Shares of Common Stock Held in “Street Name”

If you hold your shares 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. Because brokers, banks and other nominees do not have discretionary voting authority with respect to any of the proposals to be voted on at the special meeting, without your instructions, your shares held in street name will not be present or represented by proxy at the special meeting, will not be counted for purposes of determining whether a quorum is present at the special meeting, and will not be voted on any of the proposals to be voted on at the special meeting. However, if a beneficial owner of shares held in street name gives voting instructions to the broker, bank or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those shares will be deemed present at the special meeting for purposes of establishing a quorum at the special meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. Therefore, it is important that you instruct your broker, bank or other nominee on how you wish to vote your shares.

 

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 at iRobot Corporation, 8 Crosby Drive, Bedford, MA 01730, Attention: Secretary, or by submitting a new proxy by telephone, the Internet or mail, in each case, in accordance with the instructions on the enclosed proxy card and dated after the date of the proxy being revoked. In addition, you may revoke your proxy by virtually attending the special meeting and voting virtually; however, simply attending the special meeting virtually 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, you should instead follow the instructions received from your broker, bank or other nominee to revoke your prior voting instructions. If you hold your shares in “street name,” you may also revoke a prior proxy by voting virtually at the special meeting if you obtain a proxy executed in your favor from your broker, bank or other nominee in order to be able to vote virtually at the special meeting.

 

Q:

What happens if I do not vote or if I abstain from voting on the proposals?

 

A:

The requisite number of shares to approve the proposal to approve and adopt the merger agreement is based on the total number of shares of common stock outstanding on the record date, not just the shares that are

 

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  voted. If you do not vote, or abstain from voting, on the proposal to approve and adopt the merger agreement, it will have the same effect as a vote “AGAINST” the proposal to approve and adopt the merger agreement. If your shares are held in “street name” by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, your nominee may not vote your shares on the proposal to approve and adopt the merger agreement.

The requisite number of shares to approve the other two proposals is based on the total number of votes properly cast for and against those proposals, assuming a quorum is present. If you do not vote or abstain from voting, it will have no effect on the compensation proposal and the adjournment proposal (assuming that a quorum is present).

 

Q:

What will happen if stockholders do not approve the compensation proposal?

 

A:

The inclusion of this proposal is required by the rules of the U.S. Securities and Exchange Commission (“SEC”); however, the approval of this proposal is not a condition to the completion of the merger. In addition, the vote on this proposal is an advisory vote by stockholders and will not be binding on the Company or Amazon.com. If the merger agreement is approved and adopted by the Company’s stockholders and the merger is completed, the merger-related compensation may be paid to the Company’s named executive officers in accordance with the terms of their compensation agreements and arrangements even if stockholders fail to approve this proposal.

 

Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares are registered directly in your name with our transfer agent, you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by iRobot.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. Because of the non-routine nature of the proposals to be voted on at the special meeting, your broker, bank or other nominee is not authorized to vote your shares on any proposal without instructions from you. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares at the special meeting unless you have obtained a legal proxy from your broker, bank or other nominee, as the stockholder of record, authorizing you to vote your shares.

 

Q:

If my broker holds my shares in “street name,” will my broker vote my shares for me?

 

A:

No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the special meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instructions, your shares will not be voted on such proposals, which will have the same effect as if you voted “AGAINST” the proposal to approve and adopt the merger agreement, but will have no effect on the other two proposals (assuming that a quorum is present).

 

Q:

Will my shares of 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 common stock you may hold in “street name” will be deemed to be held by a different stockholder (that is, your custodial bank, broker or other financial nominee) than any shares of

 

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  common stock you hold of record, any shares of common stock held in “street name” will not be combined for voting purposes with shares of common stock you hold of record. Similarly, if you own shares of 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 and return, a separate proxy card for those shares of common stock because they are held in a different form of record ownership. Shares of common stock held by a corporation or business entity must be voted by an authorized officer of the entity. Please indicate title or authority when completing and signing the proxy card. Shares of common stock held in an individual retirement account must be voted under the rules governing the account. This means that, to ensure all your shares are voted at the special meeting, you should read carefully any proxy materials received and follow the instructions included therewith.

 

Q:

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

 

A:

If your shares of 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 and voting instruction cards you receive (or submit each of your proxies by telephone or the Internet) to ensure that all of your shares of common stock are voted.

 

Q:

What happens if I sell my shares of common stock before completion of the merger?

 

A:

In order to receive the merger consideration, you must hold your shares of common stock through completion of the merger. Consequently, if you transfer your shares of common stock before completion of the merger, you will have transferred your right to receive the merger consideration in the merger.

The record date for stockholders entitled to vote at the special meeting is earlier than the completion of the merger. If you transfer your shares of common stock after the record date but before the closing of the merger, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies iRobot in writing of such special arrangements, you will have the right to vote at the special meeting but not the right to receive the merger consideration. You will also lose the ability to exercise appraisal rights in connection with the merger with respect to the transferred shares. Even if you sell or otherwise transfer your shares of common stock after the record date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically or by telephone using the instructions provided in the enclosed proxy card.

 

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 common stock evidenced by stock certificates for the merger consideration. If your shares of 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 stock certificates now.

 

Q:

May I exercise dissenters’ rights or rights of appraisal in connection with the merger?

 

A:

Yes. In order to exercise your appraisal rights, you must follow the requirements set forth in Section 262 of the DGCL. Under Delaware law, iRobot stockholders who do not vote in favor of the merger and otherwise comply with, and do not validly withdraw or otherwise lose their appraisal rights under, the applicable provisions of Delaware law will be entitled to appraisal rights to receive, in cash, the “fair value” of their shares as determined by the Delaware Court of Chancery if the merger is completed. Appraisal rights will only be available to iRobot stockholders who properly deliver, and do not properly withdraw, a written

 

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  demand for an appraisal to iRobot prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not otherwise lose their appraisal rights under, the other procedures and requirements set forth in Section 262 of the DGCL, which are summarized in this proxy statement. The appraisal amount could be more than, the same as or less than the amount a iRobot stockholder would be entitled to receive under the terms of the merger agreement. For additional information, see the section entitled “Appraisal Rights of iRobot Stockholders.” Section 262 of the DGCL may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262).

 

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 common stock held through brokerage firms. If your family has multiple accounts holding 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:

What is a proxy?

 

A:

A proxy is your legal designation of another person to vote your shares of common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of common stock is called a “proxy card.”

 

Q:

If a stockholder gives a proxy, how are the shares voted?

 

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

 

Q:

Where can I find the voting results of the Special Meeting?

 

A:

If available, iRobot may announce preliminary voting results at the conclusion of the special meeting. iRobot intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the special meeting. All reports that iRobot files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:

Where can I find more information about iRobot?

 

A:

You can find more information about the Company from various sources described in the section entitled “Where You Can Find Additional Information.”

 

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 Innisfree

 

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  M&A Incorporated (“Innisfree”), which is acting as the proxy solicitation agent and information agent for the Company in connection with the merger, at the telephone numbers or address below.

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-8332 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

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

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents incorporated by reference in this proxy statement, include forward-looking statements. Forward-looking statements include any statement that is not based on historical fact, including statements containing the words “believe,” “may,” “could,” “would,” “might,” “possible,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate” or “continue,” and similar expressions. All forward-looking statements are based on current expectations regarding important risk factors and should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. iRobot assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. In addition to other factors and matters contained in or incorporated by reference in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

 

   

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

 

   

the satisfaction (or waiver) of closing conditions to the consummation of the transaction, including with respect to the approval of iRobot’s stockholders;

 

   

potential delays in consummating the transaction;

 

   

the ability of iRobot to timely and successfully achieve the anticipated benefits of the transaction;

 

   

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

 

   

the impact of the COVID-19 pandemic and the current conflict between the Russian Federation and Ukraine on iRobot’s business and general economic conditions;

 

   

iRobot’s ability to implement its business strategy;

 

   

significant transaction costs associated with the transaction;

 

   

potential litigation relating to the transaction;

 

   

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

 

   

the ability of iRobot to retain and hire key personnel;

 

   

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

 

   

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

 

   

general economic and market developments and conditions;

 

   

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

 

   

potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect iRobot’s financial performance;

 

   

restrictions during the pendency of the transaction that may impact iRobot’s ability to pursue certain business opportunities or strategic transactions;

 

   

unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as iRobot’s response to any of the aforementioned factors; and

 

   

other risks detailed in our filings with the SEC, including the Company’s most recent Annual Report on Form 10-K for the fiscal year ended January 1, 2022, and in the Company’s Quarterly Reports on Form 10-Q and other documents filed by iRobot with the SEC after the date thereof. See the section entitled “Where You Can Find Additional Information.”

 

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Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We cannot guarantee any future results, levels of activity, performance or achievements. Except as required by law, iRobot assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements.

 

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THE COMPANIES

iRobot Corporation

iRobot is a Delaware corporation incorporated in 2000 and based in Bedford, Massachusetts. We completed our initial public offering in November 2005, and our common stock trades on NASDAQ under the symbol “IRBT.”

iRobot is a global consumer robot company that designs and builds thoughtful robots and intelligent home innovations that make life better. iRobot introduced the first Roomba robot vacuum in 2002. Today, iRobot is a global enterprise that has sold millions of robots worldwide. iRobot’s product portfolio features technologies and advanced concepts in cleaning, mapping and navigation. Working from this portfolio, iRobot engineers are building robots and smart home devices to help consumers make their homes easier to maintain and healthier places to live.

iRobot has one operating segment, consumer robots. In fiscal year 2021, iRobot generated $1.565 billion in revenue. iRobot employed approximately 1,372 full-time employees as of January 1, 2022.

The principal executive offices of iRobot are located at 8 Crosby Drive, Bedford, MA 01730, and its telephone number is 781-430-3000.

A detailed description of the Company’s business is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022, which is incorporated by reference into this proxy statement. See the section entitled “Where You Can Find Additional Information.

Amazon.com, Inc.

Amazon.com, Inc. was incorporated in 1994 in the state of Washington and reincorporated in 1996 in the state of Delaware. Its principal corporate offices are located in Seattle, Washington. It completed its initial public offering in May 1997 and its common stock is listed on NASDAQ under the symbol “AMZN.”

Amazon.com seeks to be Earth’s most customer-centric company. Amazon.com is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. In each of its segments, it serves its primary customer sets, consisting of consumers, sellers, developers, enterprises, content creators, advertisers, and employees.

Amazon.com has organized its operations into three segments: North America, International and Amazon Web Services.

Amazon.com’s principal executive offices are located at 410 Terry Avenue North, Seattle, Washington 98109, and its telephone number is (206) 266-1000.

Martin Merger Sub, Inc.

Merger Sub is a Delaware corporation and an indirect wholly owned subsidiary of Amazon.com and was formed on July 28, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the merger agreement. Upon the completion of the merger, the separate corporate existence of Merger Sub will cease and iRobot will continue as the surviving corporation and an indirect wholly-owned subsidiary of Amazon.com (the “surviving corporation”). Merger Sub’s principal executive offices are located at 410 Terry Avenue North, Seattle, Washington 98109-5210, and its telephone number is (206) 266-1000.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to the Companys stockholders as part of the solicitation of proxies by the iRobot board of directors for use at the special meeting or any adjournment or postponement thereof. This proxy statement provides the Companys stockholders with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting or any adjournment or postponement thereof.

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 iRobot board of directors for use at the special meeting to be held virtually on October 17, 2022, at 8:30 a.m. Eastern Time, via live audio webcast on the Internet at www.virtualshareholdermeeting.com/IRBT2022SM, or at any adjournment or postponement thereof. The Company will hold the special meeting virtually via the Internet at the virtual meeting website. You will not be able to attend the special meeting physically in person.

For information regarding attending the meeting, please see “The Special MeetingVoting; Proxies; RevocationAttendance.”

Purposes of the Special Meeting

At the special meeting, iRobot stockholders will be asked to consider and vote on the following proposals:

 

   

to approve and adopt the merger agreement;

 

   

to approve, on an advisory (non-binding) basis, the compensation proposal, the value of which is disclosed in the table in the section of this proxy statement entitled “The Merger (Proposal 1) — Interests of the Company’s Directors and Executive Officers in the Merger”; and

 

   

to approve the adjournment proposal.

Our stockholders must approve and adopt the merger agreement for the merger to occur. If our stockholders fail to approve and adopt the merger agreement, 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 in the section entitled “The Merger Agreement.”

The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve and adopt the merger agreement. Accordingly, a stockholder may vote to approve the executive compensation and vote not to approve and adopt the merger agreement and vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either the Company or Amazon.com. Accordingly, if the merger agreement is approved by the Company’s stockholders and the merger is completed, the merger-related compensation may be paid to the Company’s executive officers even if the stockholders fail to approve the proposal.

iRobot does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof, and only the matters specified in the notice of the special meeting may be considered or acted upon at the special meeting.

This proxy statement and the enclosed form of proxy are first being mailed to our stockholders on or about September 7, 2022, and the mailing is expected to be completed on or about September 14, 2022.

Record Date and Quorum

The holders of record of iRobot common stock as of the close of business on September 2, 2022, the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. At the close of business on the record date, 27,233,499 shares of common stock were outstanding.

 

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A majority of the shares entitled to vote, present virtually or represented by proxy, will constitute a quorum 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 will be included in the calculation of the number of shares considered to be present at the special meeting. If you hold your shares in “street name” and do not give any instruction to your broker, bank or other nominee as to how your shares should be voted at the special meeting, those shares will not be entitled to vote on any proposal at the special meeting and will not be counted for purposes of establishing a quorum.

Required Vote

Each share of common stock outstanding at the close of business on the record date is entitled to one vote on each of the proposals to be considered at the special meeting.

For the Company to complete the merger, iRobot stockholders holding a majority of the shares of common stock outstanding at the close of business on the record date must vote “FOR” the proposal to approve and adopt the merger agreement. A failure to vote your shares of 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.

Approval of each of the compensation proposal and the adjournment proposal requires the affirmative vote of a majority of the votes properly cast for and against such proposal, assuming a quorum is present at the special meeting. An abstention with respect to either proposal, or a failure to vote your shares of common stock (including a failure of your broker, bank or other nominee to vote shares held on your behalf) will have no effect on these proposals (assuming that a quorum is present).

Voting by the Company’s Directors and Executive Officers

At the close of business on the record date, directors and executive officers of the Company were entitled to vote approximately 398,481 shares of common stock, or approximately 1.46% of the shares of 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 other proposals to be considered at the special meeting, although they have no obligation to do so.

Voting; Proxies; Revocation

Attendance

All holders of shares of common stock as of the close of business on September 2, 2022, the record date, including stockholders of record and beneficial owners of common stock registered in the “street name” of a broker, bank or other nominee, are invited virtually to attend the special meeting.

To attend the special meeting virtually, you must provide proof of ownership of iRobot common stock as of the close of business on the record date. If you hold your shares in “street name,” and you also wish to be able to vote virtually at the meeting, you must obtain a legal proxy, executed in your favor, from your bank, broker or other nominee.

Voting Virtually

If you plan to virtually attend the special meeting and wish to vote virtually, you will be given a virtual ballot at the special meeting. If you are not a stockholder of record, but instead hold your shares of common stock in “street name” through a broker, bank or other nominee, you are encouraged to vote by proxy even if you plan to virtually attend the special meeting. If you virtually attend the special meeting and vote by virtual ballot, your vote will revoke any previously submitted proxy.

 

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Providing Voting Instructions by Proxy

To ensure that your shares of common stock are voted at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to virtually attend the special meeting.

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 specified on the enclosed proxy card. Your shares of 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. 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 common stock will be voted in the manner directed by you on your proxy card.

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, the compensation proposal to approve certain compensation that may be paid or become payable to the named executive officers of the Company in connection with the merger and the proposal to adjourn from time to time the special meeting, if necessary or appropriate, including 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. If you fail to return your proxy card and you are a holder of record on the record date, unless you virtually attend the special meeting and vote virtually, the effect will be that your shares of 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, assuming a quorum is present, will not affect the compensation proposal or the adjournment proposal.

Shares of Common Stock Held in “Street Name”

If your shares of common stock are held by a broker, bank or other nominee on your behalf in “street name,” your broker, bank or other nominee will send you instructions as to how to provide voting instructions for your shares. Many brokerage firms and banks 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 NASDAQ, brokers, banks and other nominees that hold shares of 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, the compensation proposal or the adjournment proposal, if necessary or appropriate, including to solicit additional proxies. Accordingly, if brokers, banks or other nominees do not receive specific voting instructions with respect to these proposals from the beneficial owner of such shares, they may not vote such shares with respect to these proposals. Therefore, unless you virtually attend the special meeting with a properly executed legal proxy from your broker, bank or other nominee, your failure to provide instructions to your broker, bank or other nominee will result in your shares of iRobot common stock not being deemed present for purposes of determining whether a quorum is present at the special meeting and not being voted on any of the proposal to approve and adopt the merger agreement, the compensation proposal or the adjournment proposal. However, if a beneficial owner of shares held in street name gives voting instructions to the broker, bank or other nominee with respect to at least one of the proposals, but

 

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gives no instruction as to one or more of the other proposals, then those shares will be deemed present at the special meeting for purposes of establishing a quorum at the special meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. Therefore, it is important that you instruct your broker, bank or other nominee on how you wish to vote your shares.

Revocation of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it at 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 dated after the date of the proxy being revoked, 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, in each case, in accordance with the instructions on the enclosed proxy card;

 

   

virtually attending the special meeting and voting by virtual ballot; or

 

   

delivering a written notice of revocation dated after the date of the proxy being revoked by mail to the Company at iRobot Corporation, 8 Crosby Drive, Bedford, MA 01730, Attention: Secretary in accordance with the instructions on the enclosed proxy card.

Please note, however, that only your last-dated proxy will count. Virtually 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 broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your proxy or submit new voting instructions. If you hold your shares in “street name,” you may also revoke a prior proxy by voting virtually at the special meeting if you obtain a proxy executed in your favor from your broker, bank or other nominee in order to be able to vote virtually at the special meeting.

Abstentions

An abstention occurs when a stockholder attends a meeting, either virtually or represented by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares of common stock present or 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. Assuming a quorum is present at the special meeting, the requisite number of shares to approve the other two proposals is based on the total number of votes properly cast for and against those proposals. If you abstain from voting and a quorum is present at the special meeting, it will have no effect on the compensation proposal or the adjournment proposal.

Solicitation of Proxies

The iRobot board of directors 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 the Company’s outstanding common stock. The Company has retained Innisfree M&A Incorporated, a proxy solicitation firm, to assist the iRobot board of directors in the

 

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solicitation of proxies for the special meeting, and we expect to pay Innisfree for a fee of up to $60,000, plus costs and expenses. Proxies may be solicited by mail, personal interview, e-mail, telephone, or via the Internet by Innisfree 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 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 common stock for the merger consideration.

 

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THE MERGER (PROPOSAL 1)

The description of the merger in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger that is important to you. You are encouraged to read the merger agreement carefully and in its entirety.

Certain Effects of the Merger

Pursuant to the terms of the merger agreement, if the merger agreement is approved and adopted by the Company’s stockholders and the other conditions to the closing of the merger are satisfied or waived, Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Amazon.com.

Upon the terms and subject to the conditions of the merger agreement, at the effective time, each share of common stock issued and outstanding immediately before the effective time (other than (1) shares owned by Amazon.com, Merger Sub or any other wholly owned subsidiary of Amazon.com and shares owned by the Company or any wholly owned subsidiary of the Company, and in each case not held on behalf of third parties and (2) shares owned by stockholders of the Company who have complied with the applicable provisions of Section 262 of the DGCL prior to the effective time) will be converted into the right to receive the merger consideration of  $61.00 per share in cash, without interest. Amazon.com, iRobot, Merger Sub, the surviving corporation and the paying agent for the merger consideration will each be entitled to deduct and withhold any amounts due under applicable tax laws from the amounts that would otherwise be payable under the terms of the merger agreement.

The Company’s common stock is currently registered under the Exchange Act and is listed on NASDAQ under the symbol “IRBT.” As a result of the merger, the Company will cease to be a publicly traded company and will be indirectly wholly owned by Amazon.com. Following the completion of the merger, the Company common stock will be delisted from NASDAQ and deregistered under the Exchange Act, and the Company will no longer be required to file periodic reports with the SEC with respect to its common stock in accordance with applicable law, rules and regulations.

Effect on iRobot if the Merger is Not Completed

If the merger agreement is not adopted by the stockholders, or if the merger is not completed for any other reason:

 

   

the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of common stock pursuant to the merger agreement

 

   

(A) iRobot will remain an independent public company, (B) iRobot’s common stock will continue to be listed and traded on NASDAQ and registered under the Exchange Act, and (C) iRobot will continue to file periodic reports under the Exchange Act with the SEC

 

   

iRobot anticipates that (A) management will operate the business in a manner similar to that in which it is being operated today and (B) stockholders will be subject to similar types of risks and uncertainties as those to which they are currently subject, including, but not limited to, risks and uncertainties with respect to iRobot’s business, prospects and results of operations, as such may be affected by, among other things, the highly competitive industry in which iRobot operates and economic conditions

 

   

the price of common stock may decline significantly, and if that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades as of the date of this proxy statement

 

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the iRobot board of directors will continue to evaluate and review iRobot’s business operations, strategic direction and capitalization, among other things, and will make such changes as are deemed appropriate (irrespective of these efforts, it is possible that no other transaction acceptable to the iRobot board of directors will be offered or that iRobot’s business, prospects and results of operations will be adversely impacted)

 

   

under certain specified circumstances, iRobot will be required to pay Amazon.com the Company termination fee upon or following the termination of the merger agreement and

 

   

under certain specified circumstances, Amazon.com will be required to pay iRobot the Parent termination fee following the termination of the merger agreement

Background of the Merger

As part of iRobot’s ongoing consideration and evaluation of its long-term strategic goals and plans, the iRobot board of directors and management of iRobot (“iRobot management” or “Company management”) periodically review, consider and assess iRobot’s operations and financial performance, as well as overall industry, macroeconomic and geopolitical conditions, as they may affect those strategic goals and plans, with the goal of enhancing shareholder value. This review at times includes, among other things, the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic alternatives.

During the first and second quarters of 2022, the iRobot board of directors and iRobot management actively assessed rapidly evolving industry, global and regional macroeconomic trends and geopolitical dynamics, intensifying competitive conditions and inflationary price pressures relevant to iRobot’s business, performance and long-term prospects.

Amazon.com had previously approached iRobot in November 2016 to propose an acquisition of iRobot at $60.50 per share. In response, iRobot had engaged an outside financial advisor to help the iRobot board of directors in its consideration of that offer. The iRobot board of directors’ work with its financial advisor at the time, combined with other relevant factors considered by the iRobot board of directors, resulted in iRobot informing Amazon.com that its offer undervalued iRobot. In the subsequent months, iRobot’s trading price increased materially, and Amazon.com discontinued its engagement with respect to a potential acquisition of iRobot. Since that time, iRobot management continued to engage approximately once per year with Amazon.com representatives on matters unrelated to a potential mergers and acquisitions (“M&A”) transaction.

As part of iRobot’s ordinary course business planning, at the direction of the iRobot board of directors, members of iRobot management in November and December 2021 had prepared a long-term business and strategy plan through fiscal year 2024 (the “December 2021 business plan”), which was presented to the iRobot board of directors. A portion of the December 2021 business plan was shared with investors on December 9, 2021 during iRobot’s investor day.

On May 16, 2022, a representative of Amazon.com called Mr. Colin Angle, Chief Executive Officer of iRobot. On the call, Amazon.com expressed interest in a potential transaction to acquire iRobot (such potential transaction involving iRobot and Amazon.com, the “proposed transaction”) and indicated that Amazon.com could move expeditiously in its due diligence and the negotiation of definitive documentation for the proposed transaction. On the call, Mr. Angle did not indicate whether iRobot was interested in the proposed transaction and made no commitment as to any next steps, including whether to permit Amazon.com to enter into a non-disclosure agreement and gain access to confidential due diligence information regarding iRobot. Following the call, Mr. Angle gave an update regarding the call to certain members of the iRobot board of directors.

On May 23, 2022, with the permission of the members of the iRobot board of directors with whom Mr. Angle spoke, iRobot entered into a supplement to its existing non-disclosure agreement with Amazon.com. This supplement contained customary “standstill” provisions binding on Amazon.com, and provided that such standstill provisions would automatically terminate in the event that certain change of control events relating to iRobot occurred.

 

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On May 25, 2022, members of iRobot management met with members of Amazon.com management to discuss high-level due diligence matters in connection with the proposed transaction. On the call, iRobot responded to questions that Amazon.com raised regarding iRobot’s publicly disclosed first-quarter 2022 financial results and full-year 2022 guidance range. iRobot conveyed to Amazon.com that the December 2021 business plan was produced as of December 2021 and had not been updated subsequently for changes in Company, industry and macroeconomic and geopolitical conditions. In addition, iRobot conveyed that given those changes and as a result of iRobot’s updated view of currently anticipated second-quarter 2022 financial performance, iRobot would likely be in the low end of the full-year 2022 guidance range provided to investors on May 4, 2022.

On May 26, 2022, the iRobot board of directors held a meeting, with members of iRobot management also in attendance. Representatives of Goodwin Procter LLP, iRobot’s outside counsel (“Goodwin”), attended portions of the meeting. Prior to the meeting, iRobot had shared with members of iRobot management certain management guidelines which, among other things, directed management not to have any discussions regarding post-closing employment with Amazon.com until and unless approved and authorized by the iRobot board of directors or a committee thereof. At the meeting, iRobot management presented to the iRobot board of directors a comprehensive status update regarding the proposed transaction including the recent interactions with Amazon.com. The iRobot board of directors also discussed interviews that members of iRobot management had conducted with representatives of five investment banks with the iRobot board of directors’ permission, including Qatalyst Partners LP (“Qatalyst Partners”), in connection with advising iRobot with respect to a potential strategic transaction. The iRobot board of directors then discussed the formal engagement of Qatalyst Partners as its financial advisor in connection with its review of potential strategic opportunities, including the proposed transaction, noting Qatalyst Partners’ experience opposite Amazon.com as well as Qatalyst Partners’ extensive expertise, knowledge of the industry in which iRobot operates and experience advising technology companies in connection with potential strategic transactions. On the basis of these considerations, and subject in all respects to the iRobot board of directors’ review of a customary relationships disclosure to be produced by Qatalyst Partners (which disclosure was produced by Qatalyst Partners on June 8, 2022 and was promptly shared with the transaction committee (as defined below) and the iRobot board of directors), the iRobot board of directors authorized iRobot management to negotiate terms of an engagement letter for the purpose of engaging Qatalyst Partners. Representatives of Goodwin also discussed the iRobot board of directors’ fiduciary duties in connection with the evaluation of a potential strategic transaction involving iRobot, whether with Amazon.com or any other counterparty. The iRobot board of directors also discussed that it would need to evaluate iRobot’s long-range plan and projections, the current value of iRobot and available strategic opportunities before determining how to respond to Amazon.com’s outreach. Accordingly, the iRobot board of directors authorized management to develop a set of long-range plans and projections (an “LRP”) for the period from fiscal year 2022 to fiscal year 2027. The directors were then invited to disclose any actual or potential conflicts of interest they may have in relation to Amazon.com and its affiliates. Ms. Eva Manolis disclosed a prior business relationship with Amazon.com in addition to ownership of Amazon.com stock that is material to her personal net worth; the iRobot board of directors determined that, as such business relationship was not recent and such business relationship and ownership of Amazon.com stock were disclosed to the iRobot board of directors, Ms. Manolis would not be required to recuse herself with respect to the proposed transaction. Certain other directors also disclosed ownership of Amazon.com stock that was not material to their respective personal net worth. The iRobot board of directors also discussed adopting resolutions forming a transaction committee of the iRobot board of directors (the “transaction committee”) to consider, review and evaluate any proposals made for a potential transaction with any counterparty as well as any alternatives to a potential strategic transaction, including, without limitation, iRobot continuing to operate as an independent, publicly traded company. The iRobot board of directors discussed that the transaction committee was being formed for expediency of process, and not in response to any actual or potential conflict of interest concerns in relation to Amazon.com and its affiliates. The iRobot board of directors also discussed its belief that it would be beneficial and in the best interests of stockholders for Mr. Angle to participate on the transaction committee due to, among other reasons, his transactional skill and experience and his extensive knowledge of iRobot and the industry in which it operates. The iRobot board of directors then adopted resolutions forming the transaction committee, and

 

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appointed Mr. Andrew Miller, an independent director, Ms. Michelle Stacy, an independent director, and Mr. Angle to the transaction committee. Promptly following this meeting, Mr. Miller, Ms. Stacy and Mr. Angle each answered written questions regarding their relationships, which confirmed that each was independent and disinterested in relation to Amazon.com and its affiliates. At the meeting, the iRobot board of directors also determined to revisit the composition of the transaction committee in the event that iRobot engaged with any other counterparty with respect to which any of the incumbent members of the transaction committee were not independent or disinterested. Finally, at the meeting, the iRobot board of directors authorized iRobot management to continue to engage in high-level due diligence with Amazon.com in relation to the proposed transaction.

On June 1, 2022, members of iRobot management again met with members of Amazon.com management to further discuss high-level due diligence matters in relation to the proposed transaction.

On June 6, 2022, Mr. Glen Weinstein, Chief Legal Officer of iRobot, spoke with a representative of Amazon.com, and during this discussion, the Amazon.com representative indicated that Amazon.com was leaning toward making a non-binding proposal based on the information they had received thus far in due diligence, and that Amazon.com would be able to provide an updated view by the end of that week.

On June 8, 2022, the transaction committee held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The transaction committee discussed strategy around its expectation that Amazon.com would make a non-binding proposal sometime that week, including the transaction committee’s desire for Amazon.com to propose a set of terms related to regulatory matters as part of that proposal. The transaction committee also discussed general market dynamics and the regulatory landscape in connection with the proposed transaction. The transaction committee then discussed a plan for the timing, scope and sequencing for a potential pre-signing market check. The transaction committee discussed with the representatives of Qatalyst Partners whether any potential acquirors other than Amazon.com would be likely to submit a proposal to acquire iRobot that would be superior to a proposal submitted by Amazon.com from a financial point of view, as well as execution and regulatory considerations, leak risk, competitive sensitivities and other relevant factors with respect to any such potential acquirors (including heightened national security-related execution risk with respect to certain potential non-U.S. acquirors that could make consummation of a transaction with such potential non-U.S. acquirors challenging). Following such discussion, and taking into account these factors and the input provided by Qatalyst Partners, the transaction committee determined to reach out to one additional potential acquiror, rather than conduct a broader outreach. The transaction committee also noted that the iRobot board of directors would have the ability to consider superior proposals to acquire iRobot post-signing of any definitive agreement with Amazon.com through a customary “fiduciary out.” Participants in the meeting also expressed their belief that, among possible bidders for iRobot, a transaction with Amazon.com would present the most compelling strategic rationale, and discussed Amazon.com’s strong indication that it was prepared to terminate engagement with iRobot if any leak were to occur with respect to the process. The transaction committee determined to reach out to the specific strategic counterparty (“Company A”) as part of a market check process, but in light of the expected imminency of Amazon.com’s initial proposal, the transaction committee determined not to make this outreach until after such initial proposal from Amazon.com was received.

On June 9, 2022, Mr. Weinstein spoke with a representative of Amazon.com. In accordance with the direction of the transaction committee, Mr. Weinstein conveyed the transaction committee’s desire that any non-binding proposal from Amazon.com should include a set of terms related to regulatory matters. Amazon.com also reaffirmed that satisfactory progress on due diligence was being made and that it was continuing to lean toward making a non-binding proposal in the near term.

On June 10, 2022, in accordance with the direction of the iRobot board of directors at its May 26, 2022 meeting, iRobot entered into an engagement letter with Qatalyst Partners formalizing the engagement of Qatalyst Partners to act as iRobot’s financial advisor to, among other things, assist iRobot in evaluating potential strategic opportunities, including the proposed transaction.

 

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On June 17, 2022, Mr. Weinstein spoke with a representative of Amazon.com, who indicated that a non-binding proposal for the acquisition of iRobot would be submitted to iRobot by Amazon.com the following week.

On June 23, 2022, Mr. Angle spoke with a representative of Amazon.com, who verbally communicated to Mr. Angle a non-binding proposal for Amazon.com to acquire iRobot for $64.00 per share in cash. Mr. Angle did not respond to this proposal during the call. Later on June 23, 2022, iRobot received a formal non-binding letter of intent from Amazon.com to acquire iRobot for $64.00 per share in cash (the “June 23 proposal”). The $64.00 per share offer price implied a premium to iRobot’s last closing price prior to June 23, 2022 of approximately 51%. The June 23 proposal did not propose any terms related to regulatory matters as had been requested by iRobot. The June 23 proposal stated that Amazon.com reserved the right to immediately terminate engagement with iRobot regarding a potential transaction if any leak occurred with respect to the process, and that the proposal was not subject to any financing condition. The June 23 proposal did not include any request for exclusivity. The June 23 proposal was promptly shared with the iRobot board of directors.

Later on June 23, 2022, the transaction committee held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The transaction committee directed management to finalize the LRP and, subject to iRobot board of directors or transaction committee review and approval, provide the finalized LRP to Qatalyst Partners for purposes of providing financial analyses in connection with the iRobot board of directors’ and the transaction committee’s evaluation of any potential strategic transaction, including the proposed transaction. The transaction committee also further discussed a potential pre-signing market check and determined and directed Qatalyst Partners, now that Amazon.com’s initial proposal had been received, to reach out to Company A as part of the market check. The transaction committee then discussed with the advisors its belief that Amazon.com’s proposal constituted at least a credible initial offer at a significant premium to iRobot’s current trading price. The transaction committee discussed the recent trading price of iRobot’s stock and factors that may be affecting its trading price, and the execution risk and headwinds that iRobot expected to face in executing its standalone plan moving forward.

Later on June 23, 2022, in accordance with the direction of the transaction committee, representatives of Qatalyst Partners reached out to a representative of Company A, and the representatives of Qatalyst Partners followed up with the same representative of Company A the next day on June 24, 2022.

On June 29, 2022, the iRobot board of directors held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The members of iRobot management presented their current draft of the LRP for the period from fiscal year 2022 to fiscal year 2027 as of June 27, 2022 (the “Company LRP”). The members of iRobot management underscored in their presentation that in the latter half of the second quarter of fiscal year 2022, recessionary pressures had escalated in EMEA and had begun to disrupt the U.S. market more than expected, and noted their expectation that iRobot’s actual financial performance for the second quarter of fiscal year 2022, once finalized, would fall significantly below the low end of the publicly announced guidance range for the second quarter of fiscal year 2022 and would cause full-year 2022 performance to fall significantly below the low end of the publicly announced guidance range for fiscal year 2022 (collectively, the “Q2 earnings miss”). The members of iRobot management stated that they remained cautious and uncertain about the speed and nature of market recovery and iRobot’s own performance in coming years in light of these conditions. As a result of these operational and macroeconomic uncertainties, in connection with the preparation of the Company LRP, iRobot management prepared certain sensitivity scenarios with respect to the Company LRP that reflected stronger and weaker Company performance for the projected period based on the assumed pace of market recovery from recent industry, macroeconomic and geopolitical volatility. In presenting the Company LRP to the iRobot board of directors on June 29, 2022, members of iRobot management indicated that these separate scenarios were being provided to the iRobot board of directors for informational purposes, that the iRobot board of directors was not being asked to, and would not be asked to, approve any of these separate scenarios and that these separate scenarios remained subject to change, as management was still actively finalizing its review and assessment of actual second-quarter 2022 financial performance. Following discussion, the iRobot board of directors approved the Company LRP and directed Qatalyst Partners to use and rely on the Company LRP for purposes of providing financial analyses in connection

 

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with the iRobot board of directors’ evaluation of any potential strategic transaction, including the proposed transaction. Qatalyst Partners then reviewed the June 23 proposal from a financial point of view in light of the Company LRP. The iRobot board of directors also asked management to update the market recovery scenarios based on management’s finalization of its assessment of actual second-quarter 2022 financial performance and, upon completion of any such updates, to share related financial information with Amazon.com in connection with Amazon.com’s business and financial due diligence. Goodwin also presented a proposed set of certain non-price terms with respect to which iRobot could potentially initiate negotiations over regulatory matters, which included (among other things) (a) a reverse termination fee, (b) an obligation to litigate on the merits in the event that a regulatory agency were to seek to enjoin the proposed transaction, (c) a “clear skies” covenant prohibiting Amazon.com from engaging in other M&A transactions that would reasonably be expected to prevent, delay or impede the obtaining of antitrust clearance for the proposed transaction and (d) an outside date of up to 18 months (on an as-extended basis). Finally, the iRobot board of directors discussed tactical considerations relating to iRobot’s potential response to Amazon.com’s June 23 proposal. The iRobot board of directors (a) directed Qatalyst Partners to respond to Amazon.com (i) with a specific price counterproposal of $70.00 per share, (ii) reiterating the iRobot board of directors’ expectation that the parties agree upon a set of terms related to regulatory matters prior to negotiating the details of definitive transaction documentation and (iii) previewing iRobot’s Q2 earnings miss and sharing certain financial information in that regard and (b) directed Goodwin to propose the set of certain non-price terms to Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”), Amazon.com’s outside counsel.

Later on June 29, 2022, in accordance with the direction of the iRobot board of directors, representatives of Qatalyst Partners reached out to representatives of Amazon.com and conveyed the counterproposal of $70.00 per share, and reiterated the iRobot board of directors’ expectation that the parties agree upon a set of terms related to regulatory matters prior to negotiating the details of definitive transaction documents. The representatives of Qatalyst Partners also previewed iRobot’s Q2 earnings miss to the representatives of Amazon.com and indicated that iRobot would likely not meet the low end of its full-year 2022 guidance range, and shared certain financial information in that regard. The representatives of Qatalyst Partners also discussed with representatives of Amazon.com the parties’ expectations with respect to transaction timing and Amazon.com’s ability to move forward expeditiously to negotiate and execute a definitive agreement in respect of the proposed transaction. The representatives of Amazon.com reiterated that Amazon.com was capable of moving expeditiously to a signing of a definitive agreement, but that it had little room to move on deal price, and that the Amazon.com representatives would require a call with representatives of iRobot to better understand the Q2 earnings miss prior to responding to the points conveyed by the representatives of Qatalyst Partners.

On June 30, 2022, representatives of iRobot spoke with representatives of Amazon.com to discuss the Q2 earnings miss. As a result of iRobot management’s continued review and assessment of actual second-quarter 2022 financial performance, on this call the representatives of iRobot presented information with respect to actual second-quarter 2022 financial performance. On the call, the representatives of Amazon.com conveyed that the Q2 earnings miss, as well as the expectation that iRobot would likely not meet the low end of its full-year 2022 guidance, had been a surprise to them and that they would require some time to evaluate.

Also on June 30, 2022, representatives of Qatalyst Partners spoke with a representative of Company A, who conveyed that Company A was evaluating a potential transaction with iRobot but had not yet gained sufficient internal support to pursue a potential transaction and would therefore be unlikely to proceed further in discussions of a potential acquisition of iRobot.

On July 1, 2022, representatives of Amazon.com asked members of iRobot management follow-up questions related to iRobot’s financial performance stemming from the financial information provided on June 29 and June 30, 2022, to which members of iRobot management responded.

On July 2, 2022, in accordance with the direction of the iRobot board of directors, representatives of Goodwin proposed to Paul Weiss and Amazon.com’s outside regulatory counsel the set of non-price terms related to regulatory matters that was previously presented to the iRobot board of directors at the June 29, 2022 meeting.

 

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On July 4, 2022, representatives of Amazon.com spoke with representatives of Qatalyst Partners, during which Amazon.com (i) reaffirmed its offer price of $64.00 per share notwithstanding the Q2 earnings miss, predicated on the parties’ entry into and announcement of a definitive agreement either prior to or concurrently with iRobot’s earnings announcement for the second quarter 2022, it being understood that, standing alone, the public announcement of the Q2 earnings miss would be expected to adversely impact iRobot’s trading price, and (ii) provided Amazon.com’s counterproposal with respect to the set of certain non-price terms previously provided by iRobot, which counterproposal included (among other things) (a) an “antitrust” (and not explicitly a foreign investment law) reverse termination fee equal to 5% of iRobot’s equity value, (b) an obligation to litigate on the merits in the event that a regulatory agency were to seek to enjoin the transaction, (c) a “clear skies” covenant prohibiting Amazon.com from acquiring a specific list of companies during the pendency of a transaction and (d) an outside date of up to 24 months (on an as-extended basis) (the “July 4 proposal”). The reaffirmed $64.00 per share offer price implied a premium to iRobot’s last closing price prior to July 4, 2022 of approximately 71%.

Also on July 4, 2022, in response to the July 4 proposal, Mr. Angle spoke with a representative of Amazon.com and during this call Mr. Angle expressed that he was personally not supportive of Amazon.com’s $64.00 per share price proposal but could potentially support a deal price of $65.00 per share, subject to input from the iRobot board of directors.

Later on July 4, 2022, the transaction committee held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The transaction committee and its advisors discussed the developments described above since the June 29, 2022 iRobot board of directors meeting, including the July 4 proposal. The transaction committee also discussed its view that the set of non-price terms related to regulatory matters proposed by Amazon.com as part of the July 4 proposal was favorable to iRobot and would be generally acceptable. The transaction committee resolved to recommend to the iRobot board of directors that iRobot continue to engage with Amazon.com and that, subject to continued evaluation by the iRobot board of directors in all respects, a transaction with Amazon.com entered into at a per share price of $64.00 or more, combined with terms related to regulatory matters that are as proposed by Amazon.com or better, would be expected to constitute a transaction that is in the best interests of iRobot and its stockholders.

Immediately following this transaction committee meeting on July 4, 2022, the iRobot board of directors held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The iRobot board of directors and its advisors discussed the developments described above since the June 29, 2022 meeting of the iRobot board of directors, including the July 4 proposal. The iRobot board of directors also discussed the transaction committee’s impression that the set of non-price terms related to regulatory matters proposed by Amazon.com as part of the July 4 proposal was favorable to iRobot and would be generally acceptable. Representatives of Qatalyst Partners then conveyed to the iRobot board of directors that Company A had indicated that it would be unlikely to proceed further in discussions of a potential acquisition of iRobot, and that it was accordingly Qatalyst Partners’ expectation that no proposal would be forthcoming from Company A. Following the transaction committee’s recommendation to the iRobot board of directors of the same, the iRobot board of directors approved that iRobot continue to engage with Amazon.com and that, subject to continued evaluation by the iRobot board of directors in all respects, a transaction with Amazon.com entered into at a per share price of $64.00 or more, combined with terms related to regulatory matters that are as proposed by Amazon.com or better, would be expected to constitute a transaction that is in the best interests of iRobot and its stockholders. The iRobot board of directors and its advisors then discussed with management the specific terms of a counterproposal that iRobot would make to Amazon.com as part of such continuing negotiations, which the iRobot board of directors determined would consist of (i) a deal price of $65.00 per share, (ii) a reverse termination fee equal to 8% of iRobot’s equity value and (iii) a more expansive “clear skies” covenant that was not limited to a list of specific companies.

On July 5, 2022, in accordance with the direction of the iRobot board of directors, representatives of Goodwin reaffirmed to representatives of Paul Weiss that iRobot’s counterproposal consisted of the three points described above.

 

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On July 6, 2022, members of iRobot management spoke with representatives of Amazon.com. During such discussion, Amazon.com (i) raised its offer price to $64.50 per share but characterized this price as its best and final offer, (ii) proposed a $100 million reverse termination fee, which was equivalent to approximately 5.4% of iRobot’s equity value, and (iii) rejected iRobot’s proposed expansion of the “clear skies” covenant, reverting to the construct of a list of specific companies (the “July 6 proposal”). The $64.50 per share offer price implied a premium to iRobot’s last closing price prior to July 6, 2022 of approximately 63%. As the terms of the July 6 proposal were more favorable to iRobot than the terms that the iRobot board of directors found acceptable at the July 4, 2022 iRobot board of directors meeting, later on July 6, 2022, Mr. Angle had a phone conversation with a representative of Amazon.com and conveyed iRobot’s willingness to move forward with the proposed transaction on the basis of the July 6 proposal (including as to the $64.50 per share deal price), subject to final iRobot board of directors approval.

Later on July 6, 2022, the transaction committee held a meeting, with other of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The members of the transaction committee discussed the July 6 proposal. Following discussion with Qatalyst Partners and Goodwin, the members of the transaction committee noted that its view that iRobot had likely obtained the most favorable package of material deal terms that could reasonably be obtained from Amazon.com. under the circumstances. The transaction committee approved that iRobot continue to engage with Amazon.com on the basis of the July 6 proposal, including with respect to due diligence and the negotiation of a definitive agreement.

In accordance with this direction of the transaction committee, iRobot management and representatives of Qatalyst Partners and Goodwin proceeded to conduct multiple due diligence management sessions with representatives of Amazon.com from July 6, 2022 through July 18, 2022. iRobot management and representatives of Qatalyst Partners and Goodwin also continued to respond to Amazon.com’s documentary due diligence requests until the parties’ entry into the merger agreement on August 4, 2022.

On July 9, 2022, Paul Weiss sent to Goodwin Amazon.com’s initial draft of a proposed merger agreement for the proposed transaction. Paul Weiss and Goodwin continued to negotiate and revise the merger agreement until the parties’ entry into the merger agreement on August 4, 2022.

On July 13, 2022, the transaction committee held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The transaction committee discussed key legal issues reflected in Amazon.com’s initial draft of the merger agreement received on July 9, 2022. The transaction committee also took note that the draft merger agreement indicated that Amazon.com would seek to have discussions with key executives of iRobot regarding post-closing employment with Amazon.com.

Also on July 13, 2022, in connection with the continued due diligence approved by the transaction committee on July 6, 2022, iRobot provided Amazon.com with a portion of the sensitivity scenario based on the Updated Company LRP (as defined and discussed below) that had been prepared by iRobot management in early July 2022 and that reflected stronger Company performance assuming an accelerated pace of market recovery from recent industry, macroeconomic and geopolitical volatility (the “accelerated market recovery scenario”), as compared to the assumptions reflected in the Updated Company LRP.

On July 14, 2022, a representative of Amazon.com spoke with a representative of Qatalyst Partners. The call primarily covered due diligence logistics, but the representative of Amazon.com also conveyed Amazon.com’s view that the information presented in the accelerated market recovery scenario was below its expectations and that Amazon.com was still considering such information.

On July 18, 2022, Mr. Angle spoke with a representative of Amazon.com in connection with Amazon.com’s due diligence of the senior executive team at iRobot. The call did not involve any discussion about post-closing compensatory or other employment arrangements.

On July 20, 2022, Ms. Julie Zeiler, Chief Financial Officer of iRobot, exchanged emails with a representative of Amazon.com. Ms. Zeiler reported that, as a result of iRobot management’s continued review

 

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and assessment of actual second-quarter 2022 financial performance, iRobot was projecting an additional shortfall in revenue and non-GAAP operating income (as defined in the section entitled “The Merger —Certain iRobot Unaudited Prospective Financial Information”) for the second quarter 2022 relative to what was previously presented to Amazon.com.

On July 22, 2022, representatives of Goldman Sachs, Amazon.com’s financial advisor, spoke with representatives of Qatalyst Partners to express concern about iRobot’s financial performance and previewing that Amazon.com was evaluating a potential reduction in its offer price. Representatives of Qatalyst Partners responded on these communications that a price reduction would be received very poorly by the iRobot board of directors.

Also on July 22, 2022, Mr. Angle spoke with a representative of Amazon.com, who conveyed that Amazon.com was reducing its offer price from $64.50 to $60.00 per share (the “July 22 proposal”). The $60.00 per share offer price implied a premium to iRobot’s last closing price prior to July 22, 2022 of approximately 34%. The representative of Amazon.com also conveyed strongly that Amazon.com would not have any significant additional headroom on the deal price.

On July 23, 2022, the transaction committee held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The transaction committee discussed the July 22 proposal. The transaction committee further discussed with Qatalyst Partners whether Amazon.com was genuinely prepared to terminate engagement with respect to the proposed transaction entirely or whether Amazon.com was simply seeking added leverage in negotiations with iRobot. The transaction committee reviewed with Qatalyst Partners potential implications of another public M&A transaction recently announced by Amazon.com, as well as iRobot’s revised second-quarter 2022 financial performance. The transaction committee members generally opined that, while such recent developments were disappointing, the July 22 proposal would result in a transaction that was still in the best interests of iRobot stockholders, especially in light of, among other things, iRobot’s recent financial underperformance and the market and execution risks associated with its standalone plan. The transaction committee members cited the highly uncertain industry, macroeconomic and geopolitical landscapes over the coming years, and the uncertainty related to the timing of any market recovery. The transaction committee determined to present this feedback to the iRobot board of directors at the meeting immediately following the July 23 transaction committee meeting.

On July 23, 2022, the iRobot board of directors held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. The iRobot board of directors discussed the July 22 proposal. The iRobot board of directors further discussed with Qatalyst Partners whether Amazon.com was genuinely prepared to terminate engagement with respect to the proposed transaction entirely or whether Amazon.com was simply seeking added leverage in negotiations with iRobot. The iRobot board of directors reviewed with Qatalyst Partners potential implications of another public M&A transaction recently announced by Amazon.com, as well as iRobot’s revised second-quarter 2022 financial performance. The transaction committee members provided their opinion that, while such recent developments were disappointing, the July 22 proposal would result in a transaction that was still in the best interests of iRobot stockholders, especially in light of, among other things, iRobot’s recent financial underperformance and the execution risks associated with its standalone plan. The transaction committee members cited the highly uncertain industry, macroeconomic and geopolitical landscapes over the coming years, and the uncertainty related to the timing of any market recovery. The iRobot board of directors generally agreed with the transaction committee’s feedback on the July 22 proposal. As a result, the iRobot board of directors authorized management to revert to (i) Amazon.com with a counterproposal of $61.00 per share and (ii) ultimately continue engagement with Amazon.com at a deal price of at least $60.50 per share.

Later on July 23, 2022, Mr. Angle spoke with a representative of Amazon.com and relayed the counterproposal of $61.00 per share, and the representative of Amazon.com conveyed that Amazon.com would agree to $61.00 per share as its best and final offer price. In accordance with the direction of the iRobot board of

 

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directors, Mr. Angle expressed iRobot’s willingness to move forward at $61.00 per share as the final deal price for the proposed transaction and as a basis for considering negotiation of the other material terms of the proposed transaction.

Over the course of the ensuing period of time until the parties entered into the merger agreement on August 4, 2022, the parties finalized their negotiation of the terms of the merger agreement and related ancillary documents pertaining to the proposed transaction, with the representatives of Goodwin and Paul Weiss continuing to exchange drafts of such documents, and Amazon.com concluded its due diligence process.

Subsequent to the parties agreeing on valuation as a basis for moving forward, on July 25, 2022, a representative of Amazon.com requested that Amazon.com be permitted to initiate discussions with Mr. Angle regarding Mr. Angle’s potential post-closing employment with Amazon.com and the terms thereof. Amazon.com stated that such discussions and agreement with respect to post-closing employment terms for Mr. Angle would be a condition to signing a definitive agreement with respect to the proposed transaction. Representatives of Goodwin discussed this request with the members of the transaction committee other than Mr. Angle, and following such discussion, and in light of the parties having agreed on valuation and the non-financial transaction terms as a basis for moving forward, these other members unanimously authorized Mr. Angle to have such discussions with Amazon.com, subject to Goodwin supervising such discussions on behalf of iRobot and Mr. Angle retaining his own legal counsel. Mr. Angle retained his own legal counsel later on July 25, 2022, and over the course of the ensuing several days, Mr. Angle negotiated his post-closing compensatory arrangements independently with Amazon.com and arrived at an agreement on such terms (see the section of this proxy statement captioned “Interests of the Company’s Directors and Executive Officers in the Merger – New Arrangements with iRobot Executive Officers”). Prior to these developments and negotiations commencing on July 25, 2022, under no circumstance did Mr. Angle discuss his potential post-closing employment with Amazon.com or the terms thereof with any representatives of Amazon.com.

On July 26, 2022, the transaction committee held a meeting, with representatives of Goodwin also in attendance. The transaction committee discussed general status updates relating to the proposed transaction. Immediately after this transaction committee meeting, Mr. Miller and Ms. Stacy held an executive session with representatives of Goodwin and discussed matters relating to Mr. Angle’s post-closing employment with Amazon.com.

On July 28, 2022, members of iRobot management spoke with representatives of Amazon.com to discuss communications planning related to the proposed transaction. The parties agreed to target the public announcement of the proposed transaction on August 5, 2022, assuming that a definitive agreement was entered into on or prior to such date.

On July 31, 2022, the iRobot board of directors held a meeting, with members of iRobot management and representatives of Qatalyst Partners and Goodwin also in attendance. Representatives of Goodwin again informed the iRobot board of directors about the history of Amazon.com’s discussions and eventual agreement with Mr. Angle regarding his post-closing compensatory arrangements. Representatives of Goodwin then presented the proposed final material legal terms in the definitive agreement and ancillary documents to be entered into with Amazon.com and reviewed with the directors their fiduciary duties. Members of iRobot management then presented an update to the Company LRP (the “Updated Company LRP”) and the related sensitivity scenarios to the iRobot board of directors, which Updated Company LRP and related sensitivity scenarios had been updated following the closing of iRobot’s second fiscal quarter as a result of iRobot management’s continued review and assessment of actual second-quarter 2022 financial performance, based on additional information that first became available to iRobot management following the closing of the second quarter, and which update was explained to the iRobot board of directors. The Updated Company LRP principally reflected changes to iRobot’s projected performance for the second half of fiscal year 2022, and for fiscal years 2023 to 2027, iRobot’s projected revenue, non-GAAP gross profit (as defined in the section entitled “The Merger — Certain iRobot Unaudited Prospective Financial Information”) and non-GAAP operating income remained unchanged, except

 

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that iRobot’s projected adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) and unlevered free cash flow were modified slightly to reflect the most recent and updated view of iRobot management with respect to iRobot’s long-term working capital and capital spend. Members of iRobot management reiterated that, other than the Updated Company LRP, the updated sensitivity scenarios were being provided to the iRobot board of directors for informational purposes, that the iRobot board of directors was not being asked to, and would not be asked to, approve any of these separate sensitivity scenarios. Following discussion by the iRobot board of directors, including regarding the execution risks associated with iRobot’s standalone plan and the uncertainty associated with the timing of the market recovery, the iRobot board of directors directed that Qatalyst Partners use and rely on the Updated Company LRP for purposes of Qatalyst Partners’ financial analyses in rendering its opinion with respect to the proposed transaction.

On August 4, 2022, the parties finalized the negotiation and drafting of the terms of the merger agreement and related ancillary documents pertaining to the proposed transaction as well as Amazon.com’s due diligence process, and the transaction committee held a meeting to review the final terms of the proposed definitive agreement between iRobot and Amazon.com and related ancillary documents and to vote on whether to recommend entry into such definitive agreement to the iRobot board of directors. Members of iRobot management and representatives of Goodwin and Qatalyst Partners also attended the meeting. The transaction committee discussed its reasons in favor of recommending the proposed transaction to the iRobot board of directors, as well as considerations of risk pertaining to the proposed transaction. Representatives of Qatalyst Partners then reviewed with the transaction committee a summary form of Qatalyst Partners’ financial analyses with respect to the proposed transaction on the basis of the $61.00 deal price and the Updated Company LRP, and noted that a more detailed summary would be provided to the full iRobot board of directors at the upcoming iRobot board of directors meeting, and stated that Qatalyst Partners would be prepared to deliver its fairness opinion (on the basis of the $61.00 deal price and the Updated Company LRP) at such upcoming iRobot board of directors meeting. Representatives of Goodwin then reviewed with the transaction committee the employment discussions and agreement between Mr. Angle and Amazon.com, as well as the ownership of Amazon.com stock by certain members of the iRobot board of directors, as had previously been previewed with the iRobot board of directors. The transaction committee then adopted resolutions favorably recommending the proposed transaction with Amazon.com to the iRobot board of directors, except that Mr. Angle voluntarily recused himself from this vote in light of his employment discussions with Amazon.com, in order to avoid any appearance of a conflict of interest of the transaction committee.

Immediately following this transaction committee meeting on August 4, 2022, the iRobot board of directors met to review the final terms of the proposed definitive agreement between iRobot and Amazon.com and related ancillary documents and to vote on whether to approve entry into the proposed definitive agreement with Amazon.com. Members of iRobot management and representatives of Qatalyst Partners and Goodwin also attended the meeting. Representatives of Qatalyst Partners reviewed with the iRobot board of directors its financial analyses with respect to the proposed transaction on the basis of the $61.00 deal price and the Updated Company LRP. Representatives of Goodwin then reminded the iRobot board of directors of the employment discussions and agreement between Mr. Angle and Amazon.com, as well as certain ownership of Amazon.com stock by certain members of the iRobot board of directors, as had previously been previewed with the iRobot board of directors. The iRobot board of directors (other than Mr. Angle) unanimously approved participation by Mr. Angle and such other members of the iRobot board of directors in their discussions regarding, and their voting upon, the proposed transaction. Members of the transaction committee then presented the formal recommendation of the transaction committee with respect to the proposed transaction, including that it was the transaction committee’s determination to favorably recommend that the iRobot board of directors approve the proposed transaction. Representatives of Qatalyst Partners reviewed with the iRobot board of directors its financial analyses of the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon. At the conclusion of its presentation, Qatalyst Partners rendered to the iRobot board of directors its oral opinion, subsequently confirmed in writing, to the effect that, as of August 4, 2022 and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received

 

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pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), was fair, from a financial point of view, to such holders. For a detailed discussion of Qatalyst Partners’ opinion, please see the section of this proxy statement captioned “The Merger (Proposal 1)Opinion of Qatalyst Partners LP”. After extensive discussions of the proposed transaction with Amazon.com and the matters summarized for the iRobot board of directors at the meeting, the iRobot board of directors then unanimously (i) determined that it was in the best interests of iRobot and its stockholders, and declared it advisable, to enter into the merger agreement with Amazon.com, (ii) approved the execution, delivery and performance of the merger agreement with Amazon.com and the consummation of the transactions contemplated thereby, and (iii) recommended that iRobot stockholders adopt the merger agreement with Amazon.com and directed that such matter be submitted for consideration of iRobot stockholders at a special meeting of iRobot stockholders.

Later in the evening on August 4, 2022, iRobot and Amazon.com executed and delivered the merger agreement.

Early in the morning on August 5, 2022, the parties issued a press release publicly announcing the proposed transaction.

Reasons for the Merger; Recommendation of the iRobot Board of Directors

The iRobot board of directors unanimously recommends that iRobot stockholders vote “FOR” the proposal to approve and adopt the merger agreement with Amazon.com at the special meeting.

The iRobot board of directors, with the assistance of its independent financial and legal advisors, evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement, unanimously determined that the merger is advisable and in the best interests of, the Company and its stockholders, unanimously approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement and authorized the Company to enter into the merger agreement. Accordingly, on August 4, 2022, the iRobot board of directors unanimously resolved to recommend that the stockholders of iRobot approve and adopt the merger agreement.

In the course of reaching its recommendation, the iRobot board of directors met six times between May 26, 2022 and August 4, 2022, including, as needed, with iRobot’s independent legal and financial advisors, and considered the following material factors relating to the merger agreement and the merger, each of which the iRobot board of directors believes supported its decision:

 

   

the fact that the $61.00 per share cash price provides stockholders with attractive value and liquidity and relative certainty for their shares of Company common stock;

 

   

the current and historical market prices of Company common stock, including the market performance of the common stock in light of current industry, market and macroeconomic conditions, and the fact that the $61.00 per share cash price represents a premium of 48% to the 30-day volume weighted average closing price as of August 4, 2022, and strong transaction multiple of 18.5x iRobot’s estimated EBITDA for CY2023E based on the Updated Company LRP described in more detail in the section entitled “The Merger (Proposal 1) — Certain iRobot Unaudited Prospective Financial Information;”

 

   

the belief that entering into the merger agreement with Amazon.com would be more favorable to Company stockholders on a risk-adjusted, time-adjusted basis than the other alternatives reasonably available to the Company, including:

 

   

the continued operation of the Company on a standalone basis and the pursuit of other potential actionable strategic or financial transactions, in light of the iRobot board of directors’ assessment of the Company’s business, assets and prospects, its competitive position and historical and projected financial performance (as adjusted for the Company’s actual performance in the second quarter 2022). To this end, the iRobot board of directors considered, among other things:

 

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the nature of iRobot’s industry, including aggressive competition from current overseas and domestic industry participants;

 

   

the categories in which iRobot operates, the potentially growing and intensifying challenges faced by the Company and the attendant risks attributable to continuing as an independent public company;

 

   

the potential recessionary pressures in the U.S. and EMEA and the Company’s cautiousness about the pace of the market recovery and the Company’s own performance; and

 

   

the potential rewards of the Company’s standalone long-term plan, analyzing the value enhancement that could be achieved if the risks described above were to be overcome, but also recognizing that substantial investments, expenditures and assumptions of risk would be required in connection with the long-term plan.

 

   

possible strategic transactions with third parties other than Amazon.com, taking into account the financial capacity, risk of leaks, regulatory considerations and other execution risks associated with potential alternative bidders and the evaluation provided by the Company’s financial advisor;

 

   

the iRobot board of directors’ belief that the stated positions of Amazon.com that the $61.00 per share merger consideration was the maximum amount that Amazon.com would offer to pay to acquire the Company, including by factoring in Amazon.com’s reasons for reducing its prior proposal of $64.50 per share, and that Amazon.com would disengage from its efforts to acquire the Company if the $61.00 per share price were not accepted.

 

   

the iRobot board of directors’ assessment of the terms of the merger agreement relating to the Company’s ability to respond to unsolicited acquisition proposals, including:

 

   

the Company’s right to provide non-public information in response to, and to discuss and negotiate, certain unsolicited acquisition proposals made before Company stockholder approval of the transaction is obtained; and

 

   

the Company’s ability to terminate the merger agreement prior to obtaining Company stockholder approval of the transaction in specified circumstances relating to a superior proposal, subject to payment of a termination fee which the iRobot board of directors believes to be reasonable under the circumstances and not an impediment to a competing transaction. For more information, please see the section of this proxy captioned “The Merger Agreement  Acquisition Proposals; No Solicitation  Change of Board Recommendation; Alternative Acquisition Agreement.

 

   

the iRobot board of directors’ assessment of additional terms of the merger agreement, including:

 

   

the fact that, in the event the merger agreement is terminated prior to the consummation of the merger in certain circumstances relating to the failure of antitrust clearances to be obtained, Amazon.com will be required to pay the Company a termination fee of $94,000,000, subject to and in accordance with the terms of the merger agreement;

 

   

iRobot’s right to specific performance to prevent breaches of the merger agreement;

 

   

the fact that the consummation of the merger is subject to the approval of Company stockholders, who will have the opportunity to adopt or reject the merger agreement;

 

   

the availability of appraisal rights under Section 262 of the DGCL to Company stockholders who continuously hold their shares of Company common stock through the effective date of the merger, who do not vote in favor of the merger, who properly demand in writing an appraisal of their shares delivered to the Company prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not validly withdraw their demands or otherwise lose their appraisal rights under, Section 262 of the DGCL, which provides those eligible stockholders with an opportunity to seek an appraisal by the Delaware Court of Chancery of the “fair value” of their shares of Company common stock (exclusive of any elements of value

 

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arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be fair value), which may be determined by the court to be more than, less than, or the same as the merger consideration;

 

   

the initial outside date of August 4, 2023 with two six-month automatic extensions in certain circumstances as set forth in the merger agreement in the event that antitrust clearances have not been received as of such date, allowing for time that the iRobot board of directors believed to be sufficient to complete the merger;

 

   

the fact that, taken as a whole, the comprehensive terms of the merger agreement, including the respective representations, warranties, covenants and termination rights and fees of the parties, as finally negotiated are reasonable and customary; and

 

   

the fact that the iRobot board of directors and iRobot management, in coordination with iRobot’s independent legal and financial advisors, negotiated with Amazon.com on an arms-length basis, including with respect to price and other terms and conditions of the merger agreement.

 

   

the fact that the proposed merger consideration is all cash, thereby providing Company stockholders with certainty of value and liquidity for their shares, especially when viewed against the above-noted risks and uncertainties inherent in the Company’s business and current and foreseeable industry, market and macroeconomic conditions;

 

   

the iRobot board of directors’ assessment that the likelihood of completion of the transaction and the protections provided by the merger agreement in the event of regulatory challenges to the transaction are significant factors in support of the transaction, in light of, among other things:

 

   

the complementary nature of the businesses of the Company and Amazon.com;

 

   

the obligations of Amazon.com and the Company under the merger agreement to use reasonable best efforts to defend against and eliminate all regulatory challenges to the transaction, including Amazon.com’s duty to litigate against government authorities or any other person under antitrust laws and the obligation of Amazon.com to refrain from certain acquisition activity that would reasonably be expected to exacerbate such challenges, in order to avoid entry of, or to have vacated or terminated, any order by a governmental authority that would prevent the closing prior to the outside date;

 

   

Amazon.com’s obligation to pay a reverse termination fee in specified circumstances relating to termination of the merger agreement on account of antitrust challenges;

 

   

the absence of a financing condition in the merger agreement and the fact that Amazon.com has a substantial amount of cash on its balance sheet;

 

   

the business reputation and capabilities of Amazon.com, including Amazon.com’s track record of successfully completing merger and acquisition transactions and the iRobot board of directors’ belief that Amazon.com was highly likely to complete the proposed transaction; and

 

   

the conditions to closing contained in the merger agreement, which the iRobot board of directors believes are reasonable and customary, and which, in the case of the conditions related to the accuracy of the Company’s representations and warranties, are generally qualified by a traditional public company “material adverse effect” standard.

 

   

Receipt of Fairness Opinion and Presentation from Qatalyst Partners. The iRobot board of directors considered the oral opinion of Qatalyst Partners, subsequently confirmed in writing, to the effect that, as of August 4, 2022 and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in such written opinion, the merger consideration of  $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), was fair, from a financial point of view, to such holders. See “The Merger (Proposal 1)Opinion of Qatalyst Partners LP.”

 

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In the course of reaching its recommendation, the iRobot board of directors also considered the risks and potentially negative factors relating to the merger agreement and the merger, including:

 

   

the fact that Company stockholders will have no ongoing equity participation in the Company following the merger, and therefore will cease to participate in the future earnings of growth that the Company may achieve, or to benefit from increases, if any, in the value of the Company’s common stock as a result of the merger;

 

   

the fact that the transaction has a potential outside date as late as two years from the signing date, that stockholders could be asked to vote on approval and adoption of the merger agreement well in advance of the completion of the transaction and that there is no interest payable on the merger consideration or adjustment for inflation, and the purchase price is fixed regardless of any macroeconomic and/or tech sector recovery during the pendency of the transaction;

 

   

the fact that, in light of the iRobot board of directors’ determinations as to other strategic alternatives reasonably available to the Company, the Company performed a “market check” prior to entry into the merger agreement with Amazon.com, which involved outreach to a strategic party which did not result in any expression of interest, and that the merger agreement does not provide the Company with an opportunity to actively solicit alternative bids after entry into the merger agreement in accordance with a “go-shop” mechanism;

 

   

the possibility that the merger is not completed as a result of failure to obtain required regulatory clearances or the institution of regulatory injunctions in the United States or foreign jurisdictions, or other reasons;

 

   

the fact that the reverse termination fee may be inadequate to compensate the Company for the damage caused by a termination of the merger agreement and that, if available, other rights and remedies may be expensive and difficult to enforce and the success of which may be uncertain;

 

   

the risk and costs of stockholder or third-party litigation relating to the merger;

 

   

the risks and costs to the Company if the merger is not completed;

 

   

the potential uncertainty about the likelihood, timing or effects of completion of the merger, including on the Company’s stockholders, employees, potential and existing customers and suppliers and other parties, and the risk that such uncertainty may impair the Company’s ability to attract, retain and motivate key personnel and could cause third parties to seek to change or not enter into business relationships with the Company;

 

   

the risk of management distraction as a result of the merger;

 

   

the restrictions on the conduct of the Company’s business before completion of the merger, generally requiring the Company to use reasonable best efforts to conduct its business in the ordinary course and prohibiting the Company from taking specified actions, which may delay or prevent the Company from undertaking business opportunities, anticipated or not, that may arise;

 

   

the possibility that the Company may be required to pay a termination fee of  $56 million under certain circumstances or, if the merger agreement is terminated by either the Company or Amazon.com because Company stockholders do not approve the merger agreement or the outside date lapses without stockholders having approved the merger agreement, to pay expenses incurred by Amazon.com and Merger Sub in an amount not to exceed $17 million (which amount would be deducted from the amount of any termination fee owed or payable by the Company);

 

   

the fact that the receipt of cash by Company stockholders in exchange for their shares of common stock will generally be a taxable transaction to Company stockholders for U.S. federal income tax purposes; and

 

   

other risks and uncertainties of the nature identified in the section of this proxy statement captioned “Forward-Looking Statements” and in iRobot’s filings with the SEC, including the risks set forth in

 

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“Item 1A. Risk Factors” in iRobot’s Annual Report on Form 10-K for the year ended January 1, 2022 and iRobot’s Quarterly Reports on Form 10-Q for the quarterly periods ended April 2, 2022 and July 2, 2022. For more information, see section of this proxy statement captioned “Where You Can Find More Information.”

After taking into account all of the factors set forth above, as well as others, the iRobot board of directors concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the merger agreement and transactions contemplated thereby were outweighed by the positive factors and potential benefits associated with the merger agreement and the transactions contemplated thereby that supported its determination and recommendation. Accordingly, the iRobot board of directors determined that the merger agreement and the transactions contemplated thereby are advisable and in the best interests of, iRobot and its stockholders.

The foregoing discussion of the information and factors considered by the iRobot board of directors includes the material factors considered by the iRobot board of directors but does not necessarily include all of the factors considered by the iRobot board of directors. The members of the iRobot board of directors evaluated the various factors listed above, among other things, in light of their knowledge of the business, financial condition and prospects of iRobot and considered the advice of iRobot’s independent financial and legal advisors. In view of the complexity and variety of factors considered in connection with its evaluation of the merger agreement and the merger, the iRobot board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. Rather, in considering the information and reasons described above, individual members of the iRobot board of directors each applied his or her own personal business judgment to the process and may have given different weights to different factors. The iRobot board of directors did not undertake to make any specific determinations as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determinations. The iRobot board of directors unanimously resolved to recommend that the stockholders of iRobot approve the merger and the merger agreement based upon the totality of information it considered.

When considering the foregoing recommendation of the iRobot board of directors that you vote to approve the proposal to adopt the merger agreement, stockholders should be aware that some of iRobot’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of stockholders more generally. The iRobot board of directors was aware of and considered these interests, among other matters, to the extent that they existed at the time, in reaching the determination that the merger agreement and the transactions were advisable and in the best interests of iRobot and its stockholders, in reaching its decision to approve and declare advisable the execution, delivery and performance of the merger agreement and the consummation of the transactions, in making its recommendation that the stockholders vote in favor of the adoption of the merger agreement and approval of the transactions and in directing that the adoption of the merger agreement be submitted to a vote of the stockholders. For more information, please see the section of this proxy statement captioned “— Interests of the Company’s Directors and Executive Officers in the Merger.”

The explanation of the reasons and reasoning set forth above contain forward-looking statements that should be read in conjunction with the section of this proxy statement captioned “Cautionary Statement Concerning Forward-Looking Statements.”

Certain iRobot Unaudited Prospective Financial Information

iRobot does not, in the ordinary course, make long-term projections as to future performance available to the public other than generally providing, on a quarterly basis, estimated ranges of certain expected financial results and operational metrics for the current or pending fiscal year in its regular earnings press releases and other investor materials. However, in connection with evaluating a potential strategic transaction in June 2022, iRobot management created the Company LRP, referred to in the section of this proxy statement captioned “Background of the Merger” (the “background section”). As a result of various operational and macroeconomic

 

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uncertainties as more fully described in the background section, in connection with the preparation of the Company LRP, iRobot management prepared certain sensitivity scenarios with respect to the Company LRP that reflected stronger and weaker Company performance for the projected period based on the assumed pace of market recovery from recent industry, macroeconomic and geopolitical volatility. In presenting the Company LRP to the iRobot board of directors in June 2022, members of iRobot management noted that the Company LRP and related sensitivity scenarios remained subject to change, since, at the time of such presentation, management was still actively finalizing its review and assessment of actual second-quarter 2022 financial performance.

As more fully described in the background section, following the closing of iRobot’s second fiscal quarter, iRobot management presented the Updated Company LRP to reflect its assessment of actual second-quarter 2022 financial performance based on additional information that first became available to iRobot management following the closing of the second quarter. The Updated Company LRP principally reflected changes to iRobot’s projected performance for second half of fiscal year 2022, and for fiscal years 2023 to 2027 iRobot’s projected revenue, non-GAAP gross profit and non-GAAP operating income remained unchanged except iRobot’s projected adjusted EBITDA and unlevered free cash flow were modified slightly to reflect the most recent and updated view of iRobot management with respect to long term working capital and capital spend.

A portion of the sensitivity scenario based on the Updated Company LRP that reflected stronger Company performance assuming an accelerated market recovery scenario, as compared to the assumptions reflected in the Updated Company LRP, was provided to Amazon.com in response to its request during the due diligence process for certain forward-looking financial information related to an illustrative consumer market recovery scenario.

As more fully described in the background section, the iRobot board of directors directed Qatalyst Partners to use and rely on the Updated Company LRP for purposes of Qatalyst Partners’ financial analyses and fairness opinion as described in the section of this proxy statement captioned “The Merger—Opinion of Qatalyst Partners LP”.

The Company LRP, the Updated Company LRP and the accelerated market recovery scenario are collectively referred to herein as the “prospective financial information”.

The prospective financial information reflects estimates and assumptions made by iRobot management with respect to general business, economic, competitive, regulatory and other market and financial conditions and other future events, all of which are difficult to predict and many of which are beyond iRobot’s control. In particular, the prospective financial information, while presented with numerical specificity, necessarily was based on numerous variables and assumptions that are inherently uncertain. Because the prospective financial information covers multiple years, it becomes subject to greater uncertainty with each successive year and is unlikely to anticipate each and every circumstance that could have an effect on iRobot’s business and its results of operations. The prospective financial information was developed solely using the information available to iRobot management at the time it was created and reflects assumptions as to certain business decisions that are subject to change. The prospective financial information further reflects subjective judgment in many respects and, therefore, is susceptible to multiple interpretations and periodic revisions based on actual results and business developments. Important factors that may affect actual results or that may result in the prospective financial information not being achieved include, but are not limited to, iRobot’s pending acquisition by Amazon.com, expectations regarding the timing of the merger, new product sales, product development and offerings, ability to address consumer needs, the expansion of iRobot’s addressable market, factors for differentiation of iRobot’s products, product integration plans, iRobot’s consumer robots, iRobot’s competition, iRobot’s strategy, iRobot’s market position, market acceptance of iRobot’s products, seasonal factors, revenue recognition, iRobot’s profits, growth of iRobot’s revenues, composition of iRobot’s revenues, iRobot’s cost of revenues, units shipped, average selling prices, the impact of promotional activity and tariffs, the ability to recover tariff refund claims, operating expenses, selling and marketing expenses, general and administrative expenses, research and development expenses, and compensation costs, iRobot’s projected income tax rate, iRobot’s credit and letter of credit facilities, efforts to mitigate supply chain challenges, availability of

 

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semiconductor chips, liquidity and the impact of cost-control measures and the amount of restructuring charges related to such activities, and other factors described in the section of this proxy statement captioned “Cautionary Statement Concerning Forward-Looking Statements” and the risk factors described in iRobot’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The prospective financial information was not prepared with a view toward public disclosure or with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The prospective financial information cannot, therefore, be considered a guarantee of future operating results and should not be relied upon as such.

None of iRobot, the iRobot board of directors, Qatalyst Partners, Amazon.com or any of their respective affiliates, advisors or other representatives makes any representation or warranty to any stockholder regarding the validity, reasonableness, accuracy or completeness of the prospective financial information or the ultimate performance of iRobot relative to the prospective financial information. The inclusion of the summary of the prospective financial information in this proxy statement does not constitute an admission or representation or warranty of iRobot, the iRobot board of directors, Qatalyst Partners, Amazon.com or any of their respective affiliates, advisors or other representatives that the prospective financial information or the information contained therein are material. The inclusion of the summary of the prospective financial information in this proxy statement should not be regarded as an indication that iRobot or anyone who receives the prospective financial information then considered, or now considers, the prospective financial information to be necessarily predictive of actual future events, and this information should not be relied upon as such. In the view of iRobot management, the prospective financial information was prepared on a reasonable basis, reflected the best currently available estimates and judgments of iRobot management at the time and presented, to the best of iRobot management’s knowledge and belief, the expected course of action and iRobot’s expected future financial performance as of the date such information was prepared. Except as required by applicable law, neither iRobot, the iRobot board of directors, Qatalyst Partners, Amazon.com, nor any of their respective affiliates, advisors or other representatives intends to, and each of them disclaims any obligation to, update, correct or otherwise revise the prospective financial information if any or all of it has changed or changes. Since the prospective financial information was created, iRobot has made publicly available its actual results of operations for the fiscal quarter ended July 2, 2022. You should review iRobot’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2022 for this information.

In light of the foregoing, and the uncertainties inherent in the prospective financial information, stockholders are cautioned not to place undue, if any, reliance on the prospective financial information. The prospective financial information should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding iRobot in its public filings with the SEC. The prospective financial information does not take into account any circumstances, transactions or events occurring after the date on which the prospective financial information was prepared. The prospective financial information was developed by iRobot management on a standalone basis without giving effect to the merger and the other transactions contemplated by the merger agreement, and therefore the prospective financial information does not give effect to the proposed merger or any changes to iRobot’s operations or strategy that may be implemented after the consummation of the merger, including any costs incurred in connection with the proposed merger. Furthermore, the prospective financial information does not take into account the effect of any failure of the proposed merger to be completed and should not be viewed as accurate or continuing in that context.

Adjusted EBITDA, non-GAAP operating income and unlevered free cash flow (each as defined below) contained in the summary of the prospective financial information set forth below are each “non-GAAP financial measures,” which are financial performance or operating measures that are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures and may be calculated differently than similarly titled non-GAAP financial measures published by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a

 

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GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as alternatives to, financial measures prepared in accordance with GAAP. The non-GAAP financial measures used in the prospective financial information were relied on by Qatalyst Partners for the purposes of its fairness opinion and by the iRobot board of directors in connection with its consideration of a potential strategic transaction. The SEC rules, which otherwise would require a reconciliation of a non-GAAP financial measure to the most closely comparable GAAP financial measure, do not apply to non-GAAP financial measures provided to a board of directors or financial advisors in connection with a proposed business combination transaction, such as the merger, if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of the non-GAAP financial measures to the most closely comparable GAAP financial measures were not provided to or relied upon by the iRobot board of directors or Qatalyst Partners in connection with the merger. Accordingly, iRobot has not provided reconciliations of the non-GAAP financial measures included in the prospective financial information to the relevant GAAP financial measures.

The information and tables set forth below are included solely to give iRobot stockholders access to certain of the financial and operating financial information that were made available, as applicable, to the iRobot board of directors, Qatalyst Partners and Amazon.com, and are not included in this proxy statement in order to influence any stockholder’s decision to vote with respect to the adoption of the merger agreement or for any other purpose.

The prospective financial information included in this proxy statement has been prepared by, and is the responsibility of, iRobot management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this document relates to iRobot’s previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so.

The following tables present a summary of the prospective financial information:

Company LRP

 

     CY22E     CY23E     CY24E     CY25E     CY26E     Terminal
CY27E
 

Revenue ($mm)

   $ 1,450     $ 1,595     $ 1,755     $ 1,965     $ 2,201     $ 2,465  

Non-GAAP Gross Profit ($mm)(1)

   $ 510     $ 614     $ 737     $ 845     $ 946     $ 1,060  

Adjusted EBITDA ($mm)(2)

   $ 20     $ 99     $ 189     $ 252     $ 300     $ 355  

Non-GAAP Operating Income ($mm)(3)

   $ (17   $ 63     $ 152     $ 213     $ 258     $ 311  

Less: Non-GAAP Tax Adjustment(4)

     —       $ (5   $ (23   $ (34   $ (44   $ (56

Less: Capital Expenditures

   $ (28   $ (31   $ (34   $ (38   $ (42   $ (47

Plus: Depreciation

   $ 37     $ 37     $ 37     $ 39     $ 41     $ 44  

Less: Investment in Working Capital

   $ (43   $ (13   $ (14   $ (18   $ (21   $ (23

Unlevered Free Cash Flow ($mm)(5)(6)

   $ (51   $ 51     $ 118     $ 162     $ 193     $ 228  

 

(1)

Non-GAAP gross profit is calculated by starting with GAAP gross profit and removing expenses related to the amortization of acquired intangible assets and stock-based compensation. The CY2022 non-GAAP gross profit also excludes the benefits from refunds benefit for tariffs paid in 2021.

(2)

Adjusted EBITDA is a non-GAAP financial measure calculated by starting with non-GAAP operating income and adding back depreciation expense.

(3)

Non-GAAP operating income is calculated by starting with operating income and adding back amortization of acquired intangible assets, stock-based compensation expense, net merger, acquisition, and divestiture expense, intellectual property litigation expense, restructuring and other expenses and tariff refunds.

(4)

Non-GAAP tax adjustment excludes tax benefits from operating losses.

 

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(5)

Unlevered free cash flow is a non-GAAP financial measure calculated by starting from non-GAAP operating income, subtracting the impact of non-GAAP taxes, and adding or subtracting (as applicable) the net impact of depreciation and amortization, capital expenditures, and changes in net working capital. The unlevered free cash flow excludes cash flow impact from restructuring activities.

(6)

Certain total amounts do not sum due to rounding.

Updated Company LRP

 

     CY22E     CY23E     CY24E     CY25E     CY26E     Terminal
CY27E
 

Revenue ($mm)

   $ 1,415     $ 1,595     $ 1,755     $ 1,965     $ 2,201     $ 2,465  

Non-GAAP Gross Profit ($mm)(1)

   $ 498     $ 614     $ 737     $ 845     $ 946     $ 1,060  

Adjusted EBITDA ($mm)(2)

   $ 6     $ 94     $ 183     $ 247     $ 294     $ 348  

Non-GAAP Operating Income ($mm)(3)

   $ (24   $ 63     $ 152     $ 213     $ 258     $ 311  

Less: Non-GAAP Tax Adjustment(4)

     —       $ (5   $ (23   $ (34   $ (44   $ (62

Less: Capital Expenditures

   $ (9   $ (31   $ (34   $ (39   $ (43   $ (48

Plus: Depreciation

   $ 31     $ 31     $ 32     $ 34     $ 35     $ 38  

Less: Investment in Working Capital

   $ 19     $ (30   $ (16   $ (25   $ (28   $ (32

Unlevered Free Cash Flow ($mm)(5)(6)

   $ 18     $ 27     $ 110     $ 149     $ 178     $ 206  

 

(1)

Non-GAAP gross profit is calculated by starting with GAAP gross profit and removing expenses related to the amortization of acquired intangible assets and stock-based compensation. The CY2022 non-GAAP gross profit also excludes refunds benefit for tariffs paid in 2021.

(2)

Adjusted EBITDA is a non-GAAP financial measure calculated by starting with non-GAAP operating income and adding back depreciation expense.

(3)

Non-GAAP operating income is calculated by starting with operating income and adding back amortization of acquired intangible assets, stock-based compensation expense, net merger, acquisition, and divestiture expense, intellectual property litigation expense, restructuring and other expenses and tariff refunds.

(4)

Non-GAAP tax adjustment excludes tax benefits from operating losses.

(5)

Unlevered free cash flow is a non-GAAP financial measure calculated by starting from non-GAAP operating income, subtracting the impact of non-GAAP taxes, and adding or subtracting (as applicable) the net impact of depreciation and amortization, capital expenditures, and changes in net working capital. The unlevered free cash flow excludes cash flow impact from restructuring activities.

(6)

Certain total amounts do not sum due to rounding.

Accelerated Market Recovery Scenario

 

     CY22E     CY23E      CY24E      CY25E  

Revenue ($mm)

   $ 1,415     $ 1,619      $ 1,959      $ 2,331  

Non-GAAP Operating Income ($mm)(1)

   $ (24   $ 58      $ 184      $ 317  

Non-GAAP Gross Profit ($mm)(2)

   $ 498     $ 623      $ 829      $ 1,032  

 

(1)

Non-GAAP operating income is calculated by starting with operating income and adding back amortization of acquired intangible assets, stock-based compensation expense, net merger, acquisition, and divestiture expense, intellectual property litigation expense, restructuring and other expenses and tariff refunds.

(2)

Non-GAAP gross profit is calculated by starting with GAAP gross profit and removing expenses related to the amortization of acquired intangible assets and stock-based compensation. The CY2022 non-GAAP gross profit also excludes benefits from refunds for tariffs paid in 2021.

Opinion of Qatalyst Partners LP

The Company retained Qatalyst Partners to act as financial advisor to the iRobot board of directors in connection with the proposed transaction and to evaluate whether the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the

 

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terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), was fair, from a financial point of view, to such holders. The Company selected Qatalyst Partners to act as the Company’s financial advisor based on Qatalyst Partners’ extensive expertise, knowledge of the industry in which the Company operates and experience advising technology companies in connection with potential strategic transactions. Qatalyst Partners has provided its written consent to the reproduction of its opinion in this proxy statement. At the meeting of the iRobot board of directors on August 4, 2022, Qatalyst Partners rendered to the iRobot board of directors its oral opinion, subsequently confirmed in writing, to the effect that, as of August 4, 2022 and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), was fair, from a financial point of view, to such holders. Following the meeting, Qatalyst Partners delivered its written opinion, dated August 4, 2022, to the iRobot board of directors.

The full text of Qatalyst Partners’ written opinion, dated as of August 4, 2022, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the iRobot board of directors and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), to such holders, and it does not address any other aspect of the transaction contemplated by the merger agreement, including the merger. It does not constitute a recommendation to any Company stockholder as to how to vote with respect to the merger or any other matter and does not in any manner address the price at which the shares of Company common stock will trade at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement as Annex B.

For purposes of its opinion, Qatalyst Partners reviewed a draft, dated as of August 3, 2022, of the merger agreement (the “draft merger agreement”), certain related documents and certain publicly available financial statements and other business and financial information of the Company. Qatalyst Partners also reviewed certain forward-looking information relating to the Company prepared by the management of the Company, including the Updated Company LRP, described more fully in the section entitled “The Merger (Proposal 1) — Certain iRobot Unaudited Prospective Financial Information.” Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of the Company with senior management of the Company. Qatalyst Partners also reviewed the historical market prices and trading activity for Company common stock and compared the financial performance of the Company and the prices and trading activity of Company common stock with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst Partners performed such other analyses, reviewed such other information and considered such other factors as it deemed appropriate.

In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, Qatalyst Partners by the Company. With respect to the Updated Company LRP, Qatalyst Partners was advised by Company management, and Qatalyst Partners assumed, that the Updated Company LRP had been reasonably prepared on bases reflecting the best currently available estimates and judgments of Company management of the future financial performance of the Company and other matters covered thereby. Qatalyst Partners expressed no view as to such Updated Company LRP or the assumptions on which they were based. Qatalyst Partners assumed that the terms of the draft merger agreement would not differ materially from the final executed merger agreement and that the merger would be consummated in accordance

 

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with the terms set forth in the draft merger agreement, without any modification, waiver or delay of any terms or conditions. In addition, Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the proposed transaction, no delays, limitations, conditions or restrictions would be imposed that could have an adverse effect on the Company or the contemplated benefits expected to be derived in the proposed transaction. Qatalyst Partners relied upon, without independent verification, the assessment of the Company and its legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or its affiliates, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of the management of the Company as to the existing and future technology and products of the Company and the risks associated with such technology and products.

Qatalyst Partners’ opinion has been approved by Qatalyst Partners’ opinion committee in accordance with its customary practice.

Qatalyst Partners’ opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after the date of the opinion may affect Qatalyst Partners’ opinion and the assumptions used in preparing it, and Qatalyst Partners did not assume any obligation to update, revise or reaffirm its opinion. In addition, Qatalyst Partners’ opinion did not address the underlying business decision of the Company to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to the Company. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), and Qatalyst Partners expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of the officers, directors or employees of the Company or any of its affiliates, or any class of such persons, relative to such consideration.

The following is a summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated August 4, 2022. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized both the consensus of third-party research analysts’ projections of the future financial performance of the Company as of August 3, 2022 (the “analyst projections”) and the Updated Company LRP described more fully in the section entitled “The Merger (Proposal 1) — Certain iRobot Unaudited Prospective Financial Information.” Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.

Illustrative Discounted Cash Flow Analysis

Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a range of potential, present values of a share of Company common stock as of July 2, 2022 (which was the end of the Company’s most recent completed fiscal quarter and most recent balance sheet date) by:

 

   

adding:

 

  (a)

the implied net present value of the Company’s corresponding estimated future unlevered free cash flows, based on the Updated Company LRP, for the third quarter of calendar year 2022 through calendar year 2026 (which implied present value was calculated by using a range of discount rates of 11.5% to 15.5%, based on the Company’s estimated weighted average cost of capital;

 

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  (b)

the implied net present value of the Company’s terminal value, calculated by multiplying its estimated Adjusted EBITDA in calendar year 2027 based on the Updated Company LRP by a range of fully diluted enterprise value to next-twelve-months estimated EBITDA of 6.0x to 12.0x (which was chosen based on Qatalyst Partners’ professional judgment), and discounted to present value using the same range of discount rates used in item (a) above; and

 

  (c)

the Company’s cash and cash equivalents of $63,000,000 as of July 2, 2022, as provided by Company management; and

 

   

subtracting the $35,000,000 principal amount of the Company’s outstanding debt as of July 2, 2022, as provided by Company management; and

 

   

dividing the resulting amount by: the number of fully-diluted shares of Company common stock (calculated utilizing the treasury stock method), adjusted, as applicable, for Company options, Company RSU awards, Company PSU awards and Company DSU awards, each outstanding as of the close of business on August 3, 2022, all of which amounts were provided by Company management, with each of the above-referenced estimated future unlevered free cash flows and terminal value having also been adjusted for the degree of estimated dilution to current stockholders through each respective applicable period due to the estimated net effects of equity issuances and cancellations related to future equity compensation, based on estimates of future dilution provided by Company management.

Based on the calculations set forth above, this analysis implied a range of per share values for Company common stock of approximately $49.84 to $94.59.

Selected Companies Analysis

Qatalyst Partners compared selected financial information and public market multiples for the Company with publicly available information and public market multiples for certain selected companies, which were selected by Qatalyst Partners in its professional judgment, based on factors including that they are publicly traded companies in similar lines of business to the Company, have a similar business model, have similar financial performance or have other relevant or similar characteristics. The companies used in this comparison are listed below.

 

Selected Companies    CY2023E Revenue
Multiples
     CY2023E EBITDA
Multiples
 

Selected Hardware Companies

 

  

Arlo Technologies, Inc.

     0.95x        28.4x  

Bang & Olufsen A/S

     0.60x        7.1x  

Beijing Roborock Technology Co. Ltd.

     2.67x        9.9x  

Ecovacs Robotics Co. Ltd.

     2.15x        11.6x  

Garmin Ltd.

     3.08x        11.5x  

GoPro Inc.

     0.65x        4.1x  

Logitech International SA

     1.57x        8.6x  

Peloton Interactive Inc.

     1.14x        NM (1) 

Somfy SA

     2.25x        9.7x  

Sonos, Inc.

     1.24x        7.7x  

Technogym SpA

     1.65x        8.1x  

Vizio Holding Corp.

     0.79x        16.0x  

Selected Diversified Consumer Electronics

 

  

LG Electronics Inc.

     0.23x        3.3x  

Panasonic Holdings Corporation

     0.33x        3.5x  

Samsung Electronics Co., Ltd.

     0.89x        3.0x  

Sharp Corporation

     0.32x        6.1x  

Sony Group Corp.(2)

     1.40x        9.6x  

Whirlpool Corporation

     0.64x        5.9x  

 

(1)

All multiples negative or greater than 75.0x marked as “NM.”

 

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(2)

Sony Group Corp. consensus estimates and balance sheet metrics adjusted to exclude impact of financial services segment based on public filings.

Based upon the analyst projections for calendar year 2023, and using the closing prices as of August 3, 2022 for shares of the selected companies, Qatalyst Partners calculated, among other things, the implied fully-diluted enterprise value divided by the estimated consensus revenue for calendar year 2023 (the “CY2023E Revenue Multiples”) and the implied fully-diluted enterprise value divided by the estimated consensus EBITDA for calendar year 2023 (the “CY2023E EBITDA Multiples”) for each of the selected companies. For purposes of this analysis, Qatalyst Partners calculated the Company’s enterprise value assuming the Company’s net cash as of July 2, 2022, which was approximately $28,000,000, as provided by Company’s management.

Estimated Revenue Multiples

Based upon the analyst projections and the Company’s closing price as of August 3, 2022, Qatalyst Partners calculated a CY2023E Revenue Multiple for the Company of 0.79x.

Based on an analysis of the CY2023E Revenue Multiples for each of the selected companies, Qatalyst Partners selected a representative range of 0.60x to 0.85x and applied this range to the Company’s estimated calendar year 2023 revenue of $1.595 billion based on the Updated Company LRP.

Based on the calculations set forth above and the number of fully-diluted shares of Company common stock (calculated utilizing the treasury stock method), adjusted, as applicable, for Company options, Company RSU awards, Company PSU awards and Company DSU awards, outstanding as of the close of business on August 3, 2022, all of which amounts were provided by Company management, this analysis implied a range of per share values for Company common stock of approximately $34.29 to $48.13 based on the Updated Company LRP.

Estimated EBITDA Multiples

Based upon the analyst projections and the Company’s closing price as of August 3, 2022, Qatalyst Partners calculated a CY2023E EBITDA Multiple for the Company of 12.4x.

Based on an analysis of the CY2023E EBITDA Multiples for each of the selected companies, Qatalyst Partners selected a representative range of 7.0x to 13.0x and applied this range to the Company’s estimated calendar year 2023 EBITDA of $94,000,000 based on the Updated Company LRP.

Based on the calculations set forth above and the number of fully-diluted shares of Company common stock (calculated utilizing the treasury stock method), adjusted, as applicable, for Company options, Company RSU awards, Company PSU awards and Company DSU awards, outstanding as of the close of business on August 3, 2022, all of which amounts were provided by Company management, this analysis implied a range of per share values for Company common stock of approximately $23.78 to $43.29 based on the Updated Company LRP.

No company included in the selected companies analysis is identical to the Company. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the Company’s control, such as the impact of competition on the Company’s business and the industry in general, industry growth and the absence of any material adverse change in the Company’s financial condition and prospects or the industry or in the financial markets in general. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.

 

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Miscellaneous

In connection with the review of the merger by the iRobot board of directors, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of the Company. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Company’s control. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), to such holders. This analysis does not purport to be an appraisal or to reflect the price at which Company common stock might actually trade at any time.

Qatalyst Partners’ opinion and its presentation to the iRobot board of directors was one of many factors considered by the iRobot board of directors in deciding to approve the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the iRobot board of directors with respect to the merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of Company common stock (other than Amazon.com or any affiliate of Amazon.com), or of whether the iRobot board of directors would have been willing to agree to different consideration. The merger consideration of $61.00 per share of Company common stock in cash, without interest thereon, payable in the merger was determined through arm’s-length negotiations between the Company and Amazon.com and was unanimously approved by the iRobot board of directors. Qatalyst Partners provided advice to the Company during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to the Company or that any specific consideration constituted the only appropriate consideration for the merger.

Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of the Company, Amazon.com or certain of their respective affiliates. During the two-year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and the Company or Amazon.com pursuant to which compensation was received by Qatalyst Partners or its affiliates. Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to the Company or Amazon.com and their respective affiliates for which Qatalyst Partners would expect to receive compensation.

Qatalyst Partners provided financial advisory services to the Company in connection with the proposed transaction for which it will be paid approximately $31 million, $4 million of which was payable upon the delivery of its opinion (regardless of the conclusion reached in the opinion), and the remaining portion of which will be paid upon, and subject to, the consummation of the merger. The Company has

 

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also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. The Company has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under federal securities law, and certain expenses related to or arising out of Qatalyst Partners’ engagement.

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

In considering the recommendations of the iRobot board of directors with respect to the merger, Company stockholders should be aware that the directors and executive officers of iRobot have certain interests, including financial interests, in the merger that may be different from, or in addition to, the interests of Company stockholders generally. The iRobot board of directors was aware of these interests and considered them, among other matters, in adopting the merger agreement, and in making its recommendation that Company stockholders approve and adopt the merger agreement. See the section entitled “The Merger (Proposal 1)Background of the Merger” and the section entitled “The Merger (Proposal 1)Reasons for the Merger; Recommendation of the iRobot Board of Directors.” These interests are described in more detail below, and certain of them are quantified in the narrative and the table below.

Treatment of Company Equity Awards

Stock Options. At the effective time, each outstanding Company option, whether vested or unvested, will, automatically and without any required action on the part of the holder thereof, fully vest and be converted into the right to receive, as soon as reasonably practicable (but not more than 30 days) following the effective time, an amount in cash equal to the product of (i) the number of shares of Company common stock subject to the Company option immediately prior to the effective time multiplied by (ii) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company option. Any Company option that has an exercise price per share that is greater than or equal to the merger consideration will be cancelled at the effective time for no consideration or payment.

Restricted Stock Unit Awards. At the effective time, each outstanding Company RSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the RSU payment. The RSU payment will be subject to the same time-based vesting and forfeiture provisions as were applicable to the corresponding Company RSU award immediately prior to the effective time.

Performance Stock Unit Awards. At the effective time, each outstanding Company PSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the PSU payment. The PSU payment will be subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company PSU award immediately prior to the effective time.

Deferred Stock Unit Awards. At the effective time, each outstanding Company DSU award will, automatically and without any required action on the part of the holder thereof, be cancelled and converted into the right to receive, as soon as reasonably practicable (but not more than 30 calendar days) following the effective time, an amount in cash equal to (i) the number of shares of Company common stock subject to such Company DSU award multiplied by (ii) the merger consideration.

Treatment of ESPP. The merger agreement provides that the offering period under the ESPP in effect on the date of the merger agreement will end on the earlier of (x) the next scheduled purchase date, which is November 14, 2022, or (y) no later than the business day preceding the closing date, and no additional offering periods will commence thereafter.

Quantification of Payments for Executive Officers. For an estimate of the amounts that would be payable to each of the Company’s named executive officers on settlement of their unvested Company equity awards, see

 

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“—  Quantification of Payments and Benefits to the Company’s Named Executive Officers” below. The estimated aggregate amount that would be payable to iRobot’s two executive officers who are not named executive officers in settlement of their unvested equity-based awards if the effective time occurred on July 31, 2022 is $4,303,245. Vested Company Options are included in the table under “Security Ownership of Certain Beneficial Owners and Management” below.

Quantification of Payments for Non-Employee Directors. As of July 31, 2022, each non-employee director held 4,937 unvested restricted stock units other than Ms. Golz, who held 6,285 unvested restricted stock units. All such restricted stock units held by non-employee directors will accelerate and fully vest on the closing date. As a result, we estimate that the aggregate amount that would be payable to the Company’s seven non-employee directors for their unvested Company equity-based awards if the effective time occurred on July 31, 2022 is $2,190,327. In addition, Mr. Ali held approximately 6,314.19 Company DSU Awards under our Non-Employee Directors’ Deferred Compensation Program as of July 31, 2022, with an estimated value of $385,166. As of July 31, 2022, none of our non-employee directors held any Company options.

Transaction Bonus Program and Retention Bonus Program

Pursuant to the merger agreement, iRobot may establish a cash transaction bonus program providing for transaction bonuses in an aggregate amount not to exceed $12 million (the “Transaction Bonus Program”). Awards under the Transaction Bonus Program vest and become payable as follows: (i) 25% on the six-month anniversary of the date of the merger agreement, (ii) 25% on the closing of the merger and (iii) 50% on the three-month anniversary of the closing of the merger, subject to the employee’s continued employment through the applicable payment date; provided, however, if an employee’s employment is terminated by iRobot without cause on or after the closing of the merger and prior to the date that the full amount of the bonus payable to such employee under the Transaction Bonus Program has been paid, the unpaid portion of the bonus shall, subject to the employee’s execution and non-revocation of a general release of claims, become payable to such employee.

In addition, pursuant to the merger agreement, iRobot may establish a cash retention bonus program providing for retention bonuses in an aggregate amount not to exceed $12 million (the “Retention Bonus Program”). Awards under the Retention Bonus Program will vest and become payable on the six-month anniversary of the closing of the merger, subject to the employee’s continued employment through such date; provided, however, if an employee’s employment is terminated by iRobot without cause on or after the closing of the merger and prior to the date that the bonus payable to such employee under the Retention Bonus Program has been paid, the bonus shall, subject to the employee’s execution and non-revocation of a general release of claims, become payable to such employee.

Awards under the Transaction Bonus Program and the Retention Bonus Program will be determined by iRobot’s Chief Executive Officer and Executive Vice President, Human Resources and Corporate Communications, after reasonable consultation with Amazon.com. No employee is eligible to receive a bonus under both the Transaction Bous Program and the Retention Bonus Program. No bonus under either the Transaction Bonus Program or the Retention Bonus Program may exceed 100% of the applicable employee’s base salary. iRobot’s Chief Executive Officer is not eligible to receive a bonus under either the Transaction Bonus Program or the Retention Bonus Program. iRobot’s other executive officers are eligible to receive bonuses under the Transaction Bonus Program and the Retention Bonus Program and the aggregate amount of the bonuses the executive officers are eligible to receive under the Transaction Bonus Program and the Retention Bonus Program is $2,240,000, including bonuses to the named executive officers as described in the Golden Parachute Compensation Table below.

Executive Agreements

Each of iRobot’s executive officers is party to an executive agreement with iRobot that provides for severance benefits upon a termination of employment by iRobot other than for cause within the period beginning

 

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on the date that is 45 days prior to the date of the public announcement of the execution of a definitive agreement for a change in control and ending on the first anniversary of the effective date of a change in control, or if such executive officer resigns for good reason during the one-year period following the effective date of a change in control (collectively, a “qualifying termination”). The merger will qualify as a “change in control” within the meaning of each executive agreement, and each executive officer is eligible to receive the following severance payments and benefits upon a qualifying termination:

 

   

accelerated vesting of all unvested equity awards held by such executive officer as of the date of the termination of employment or, if later, the date of announcement of the change in control;

 

   

an amount equal to 200% of the executive officer’s annual base salary at the highest annualized rate in effect during the period between immediately prior to the effective date of the change in control and the date of termination of employment;

 

   

an amount equal to 200% of the executive officer’s highest target cash incentive compensation with respect to the period beginning in the year prior to the year in which the effective date of the change in control occurs and ending in the year in which the executive officer’s employment terminates; and

 

   

in the event that the executive officer elects continued health, vision and/or dental coverage under COBRA, payment of the portion of monthly premium payments that iRobot pays for active employees for continued health, dental and vision benefits until the earliest of (a) the second anniversary of the termination date, (b) the date on which the executive officer becomes covered under a comparable group plan for such coverage, and (c) the date on which the executive officer ceases to be eligible for COBRA continuation for such coverage.

These severance payments and benefits under the executive agreements are subject to, among other things, the executive officer’s execution of a separation agreement, including a general release of claims, in a form and of a scope reasonably acceptable to iRobot and the executive officer’s continued compliance with any noncompetition, inventions and/or nondisclosure obligations owed to iRobot. The executive agreements also provide that payments and benefits payable to each executive officer will be reduced so that no portion of such payments and benefits are subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), unless the executive officer would be better off on an after-tax basis receiving all such payments and benefits.

For an estimate of the value of the payments and benefits described above that would be payable to iRobot’s named executive officers upon a qualifying termination in connection with the merger, see “— Quantification of Payments and Benefits to the Company’s Named Executive Officers” below. The estimated aggregate amount (excluding the value of accelerated vesting of unvested equity awards, which is described in “— Treatment of Company Equity Awards” above) that would be payable to the Company’s two executive officers who are not named executive officers under the executive agreements if they were to experience a qualifying termination on July 31, 2022 is $2,890,520.

New Arrangements with iRobot Executive Officers

On August 4, 2022, Mr. Angle entered into a letter agreement with Amazon.com Services LLC (“Amazon.com Services”) pursuant to which Mr. Angle will serve as CEO, iRobot Corporation, effective as of the closing date of the transaction (the “Start Date”). The letter agreement amends the executive agreement by and between Mr. Angle and the Company described under “Executive Agreements” above (the “Angle Executive Agreement”). Under the letter agreement, Mr. Angle’s employment will be at-will and he will be entitled to an annual base salary of $350,000. Additionally, Mr. Angle is eligible for a sign-on payment in the aggregate amount of $2,795,000, of which (i) $2,150,000 will be payable in equal pay period installments during the one-year period following the Start Date, and (ii) the remaining $645,000 will be payable in equal pay period installments during the one-year period following the first anniversary of the Start Date, in each case, subject to continued employment with Amazon.com Services through each such payment date. If Mr. Angle’s employment with Amazon.com Services is terminated for any reason prior to any applicable payment date, he will receive one final payment based on the days he worked in his final pay period.

 

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Subject to approval by the board of directors of Amazon.com, Mr. Angle will be granted a restricted stock unit award with respect to shares of Amazon.com common stock valued at $5,810,500 (the “New Hire RSU Award”). The number of restricted stock units subject to the New Hire RSU Award will be calculated based on the 30-trading-day trailing average closing price of Amazon.com common stock on the last trading day of the week prior to the closing date and rounded to the nearest whole number. The New Hire RSU Award will vest and convert into shares of Amazon.com common stock over the following vesting schedule, subject to Mr. Angle’s continued employment with Amazon.com Services through each applicable vesting date:

 

   

13% on the 15th day of the month in which the 18-month anniversary of the Start Date occurs,

 

   

13% on the 15th day of the month in which the 24-month anniversary of the Start Date occurs, and

 

   

9.25% on the 15th day of the month in which each of the 27-month, 30-month, 33-month, 36-month, 39-month, 42-month, 45-month and 48-month anniversaries of the Start Date occur.

Additionally, following the closing date and subject to the approval of the board of directors of Amazon.com, Mr. Angle will be granted a restricted stock unit award with respect to shares of Amazon.com common stock valued at $20,000,000 (the “Deal RSU Award”). The number of restricted stock units subject to Mr. Angle’s Deal RSU Award will be calculated based on the 30-trading-day trailing average closing price of Amazon.com common stock on the last trading day of the week prior to the closing date and rounded to the nearest whole number. The Deal RSU Award will vest and convert into shares of Amazon.com common stock over the following vesting schedule, subject to your continued employment with Amazon.com Services through each applicable vesting date:

 

   

15% on the 15th day of the month in which the first anniversary of the Start Date occurs,

 

   

5% on the 15th day of the month in which the second anniversary of the Start Date occurs,

 

   

55% on the 15th day of the month in which the third anniversary of the Start Date occurs, and

 

   

25% on the 15th day of the month in which the fourth anniversary of the Start Date occurs.

The letter agreement also provides that, effective as of the closing date, the Angle Executive Agreement is amended such that (i) Mr. Angle waives any right he may have to terminate his employment on or following the Start Date for a Resignation for Good Reason Upon a Change in Control (as defined in the Angle Executive Agreement) solely as a result of any changes occurring as a result of the closing of the merger agreement or any changes set forth in the letter agreement (including without limitation Mr. Angle’s new compensation package, benefits, title, and associated responsibilities, authority or duties) and such definition of Good Reason Upon a Change of Control is amended to reflect the foregoing, (ii) the New Hire RSU Award, the Deal RSU Award and any other equity-based awards granted to Mr. Angle by Amazon.com following the Start Date shall not be subject to accelerated vesting or continuing vesting upon termination of Mr. Angle’s employment for any reason, and (iii) any equity-based awards granted to Mr. Angle by the Company or any of its subsidiaries between the date of the merger agreement and the closing date that remain unvested as of the closing date shall be forfeited for no consideration, effective as of the closing date. In the event of an Involuntary Termination Upon a Change in Control (as defined in the Angle Executive Agreement) or a Resignation for Good Reason Upon a Change in Control (as such definition in the Angle Executive Agreement is modified by the letter agreement), Mr. Angle shall remain eligible to receive the severance and other termination benefits under the Angle Executive Agreement (as modified by the letter agreement). Upon the first anniversary of the closing date, the Angle Executive Agreement’s Term (as defined in such agreement) shall end pursuant to the Angle Executive Agreement without having any impact on Mr. Angle’s employment with Amazon.com Services.

The letter agreement also provides that Mr. Angle’s employment is conditioned on him executing a Confidentiality and Invention Assignment Agreement, which Mr. Angle executed on August 4, 2022.

 

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Indemnification; Directors’ and Officers’ Insurance

The merger agreement provides that after the effective time, Amazon.com will cause the surviving corporation to indemnify and hold harmless the individuals who on or prior to the effective time were officers or directors of iRobot or its subsidiaries or were serving at the request of iRobot as an officer, director, member, trustee or fiduciary of any other corporation, partnership or joint venture, trust, employee benefit plan or other enterprise with respect to all acts or omissions by them in their capacities as such or taken at the request of iRobot or any of its subsidiaries at any time prior to the effective time to the fullest extent permitted by applicable law (including with respect to advancement of expenses and attorneys’ fees and advancing such expenses and fees without requiring any preliminary determination of entitlement subject to such individual’s affirmation or undertaking if required under the DGCL).

Amazon.com and Merger Sub have agreed that all rights to exculpation or indemnification for acts or omissions occurring prior to the effective time existing as of August 4, 2022 in favor of the current and former directors and officers of iRobot or any of its subsidiaries or any of their predecessors and the heirs, executors, trustees, fiduciaries and administrators of such officer or director, as provided in iRobot’s or each of its subsidiaries’ respective certificates of incorporation or bylaws (or similar organizational documents) or in any agreement, will survive the merger and the transactions contemplated by the merger agreement and will continue in full force and effect in accordance with their terms. The merger agreement provides that after the effective time, Amazon.com and the surviving corporation will (and Amazon.com will cause the surviving corporation to) fulfill and honor such obligations to the maximum extent that iRobot or the applicable subsidiary would have been permitted to fulfill and honor them by applicable law.

In addition, for a period of six years following the effective time, the merger agreement provides that Amazon.com will, and will cause the surviving corporation and its subsidiaries to, cause the certificates of incorporation and bylaws (and other similar organizational documents) of the surviving corporation and its subsidiaries to contain provisions with respect to indemnification and exculpation that are at least as favorable as the indemnification and exculpation provisions contained in the certificates of incorporation and bylaws (or similar organizational documents) of iRobot and its subsidiaries immediately prior to the effective time, and during such six-year period, such provisions may not be amended, repealed or otherwise modified in any respect, except as required by applicable law.

In addition, iRobot will obtain, or Amazon.com will cause the surviving corporation to obtain, for a period of six years from and after the effective time, “tail” insurance policies for the extension of  (1) the directors’ and officers’ liability coverage of iRobot’s existing directors’ and officers’ insurance policies and (2) iRobot’s existing fiduciary liability insurance policies, with terms, conditions, retentions and limits of liability that are at least as favorable to the insured parties as iRobot’s existing policies with respect to matters existing or occurring at or prior to the effective time, subject to certain qualifications and provided that in no event will the annual cost of such insurance coverage exceed during such period 300% of the current aggregate annual premium paid by iRobot for such purpose and, if the cost of the insurance coverage exceeds such amount, the surviving corporation will obtain a policy with the greatest coverage available for a cost not exceeding such amount.

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

The Golden Parachute Compensation table below sets forth the amount of payments and benefits that each of the Company’s named executive officers would receive in connection with the merger, assuming that the merger were consummated and each such executive officer experienced a qualifying termination on July 31, 2022 . The amounts below are determined using the merger consideration per share of Company common stock of  $61.00, and are based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table. As a result of the foregoing assumptions, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below. The table below does not include compensation that is contingent upon services provided to Amazon.com following the effective time, including under any employment arrangements that will become effective as of the closing of the merger.

 

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Golden Parachute Compensation

 

Name

   Cash ($)(1)      Equity ($)(2)      Perquisites/
Benefits ($)(3)
     Total ($)  

Colin Angle

     3,655,000        7,795,312        71,108        11,521,420  

Julie Zeiler

     2,250,000        2,258,647        48,918        4,557,565  

Glen Weinstein

     1,935,000        1,957,429        53,951        3,946,380  

Jean Jacques Blanc

     1,787,500        1,938,031        48,918        3,774,449  

Faris Habbaba

     1,628,000        2,519,666        18,221        4,165,887  

 

(1)

The cash payments payable to each named executive officer consist of (i) cash severance payments under the executive agreements described under “Executive Agreements” above equal to the sum of (a) 200% of the named executive officer’s annual base salary as of July 31, 2022, and (b) 200% of the named executive officer’s target cash incentive compensation as of July 31, 2022, and (ii) for named executive officers other than Mr. Angle, the cash bonuses the named executive officer are eligible to receive pursuant to the Transaction Bonus Program and the Retention Bonus Program on the terms described under “Transaction Bonus Program and Retention Bonus Program” above. The severance payments are “double-trigger” (i.e., payable upon a qualifying termination, in connection with a change of control) and the cash transaction bonuses and retention bonuses are “single-trigger” (i.e., will become payable solely by reason of the merger subject to each executive’s continued employment). Set forth below are the separate values of each of the payments described above.

 

Name

   Cash
Severance
Payments ($)
     Transaction or
Retention Bonus
Payments ($)
 

Colin Angle

     3,655,000        —    

Julie Zeiler

     1,750,000        500,000  

Glen Weinstein

     1,505,000        430,000  

Jean Jacques Blanc

     1,487,500        300,000  

Faris Habbaba

     1,328,000        300,000  

 

(2)

As described above, all outstanding RSUs and PSUs will be converted into cash awards payable in installments subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such RSU or PSU award immediately prior to the effective time, subject to “double-trigger” acceleration pursuant to the executive agreements upon a qualifying termination. Set forth below are the values of each type of unvested equity-based award outstanding as of July 31, 2022 that would be payable upon the effective time, based on the merger consideration per share of Company common stock of  $61.00, if a qualifying termination occurred. This does not include additional equity grants that could be granted after the date of the merger agreement and does not include shares that may be purchased under the ESPP, which are fully vested at purchase. None of the named executive officers held any unvested Company options as of July 31, 2022. Vested Company options are included in the table under “Security Ownership of Certain Beneficial Owners and Management” below.

 

Name

   Unvested Company
RSUs ($)
     Unvested Company
PSUs ($)
 

Colin Angle

     4,578,172        3,217,140  

Julie Zeiler

     1,527,501        731,146  

Glen Weinstein

     1,323,761        633,668  

Jean Jacques Blanc

     1,328,763        609,268  

Faris Habbaba

     1,788,520        731,146  

 

(3)

The amount in the table equals the estimated value of medical, dental, and vision premium reimbursement for each named executive officer for 24 months following a qualifying termination, based on the named

 

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  executive officer’s benefit elections and level of coverage in effect on July 31, 2022 and assuming that the named executive officer timely elects continuation coverage under COBRA. All such benefits are “double-trigger” and will only become payable in the event of a qualifying termination under the executive agreements described under “Executive Agreements” above.

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

The following discussion is a summary of material U.S. federal income tax consequences of the merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below). This summary is general in nature and does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Department regulations promulgated under the Code (the “Treasury Regulations”), court decisions, published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, the alternative minimum tax, the rules pertaining to “qualified small business stock” or “Section 1244 stock”, nor does it address any tax consequences arising under state, local or non-U.S. tax laws or U.S. federal tax laws other than those pertaining to the U.S. federal income tax.

This discussion is limited to stockholders who hold their shares of common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes). Further, this discussion is for general information only and does not address all of the tax consequences that may be relevant to stockholders in light of their particular circumstances. For example, this discussion does not address the tax consequences that may be relevant to stockholders who may be subject to special treatment under U.S. federal income tax laws, such as insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, U.S. Holders that have a functional currency other than the U.S. dollar, stockholders who hold shares of common stock through an individual retirement or other tax-deferred account, tax-exempt organizations, governmental agencies or instrumentalities, tax-qualified retirement plans, banks and other financial institutions, mutual funds, certain former citizens or former long-term residents of the United States, partnerships (or other entities or arrangements treated as partnerships for U.S. federal income tax purposes), S corporations or other pass-through entities and investors in such pass-through entities, real estate investment trusts, regulated investment companies, stockholders who hold shares of common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction, stockholders who will hold (actually or constructively) an equity interest in Amazon.com immediately after the merger, stockholders who own or have owned (directly, indirectly or constructively) five percent (5%) or more of Company’s common stock (by vote or value); stockholders who hold their common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the U.S.; stockholders subject to special tax accounting rules as a result of any item of gross income with respect to the shares of common stock being taken into account in a “applicable financial statement” (as defined in the Code); stockholders who are controlled foreign corporations, passive foreign investment companies or corporations that accumulate earnings to avoid U.S. federal income tax; and stockholders who acquired their shares of common stock through the exercise of employee stock options or other compensation arrangements). This discussion also does not address the U.S. federal income tax consequences to (i) holders of options, restricted stock units or other equity securities or (ii) holders of shares of common stock who exercise appraisal rights in connection with the merger under the DGCL.

If a partnership (including an entity or arrangement, domestic or non-U.S., treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of common stock and partners therein should consult their tax advisors regarding the consequences of the merger.

 

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We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

THE FOLLOWING SUMMARY IS FOR GENERAL INFORMATIONAL PURPOSES ONLY AND IS NOT TAX PLANNING. WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO YOU IN CONNECTION WITH THE MERGER IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, THE UNEARNED INCOME MEDICARE CONTRIBUTION TAX, QUALIFIED SMALL BUSINESS STOCK, AND FEDERAL ESTATE, GIFT AND OTHER NON-INCOME TAX CONSEQUENCES, AND TAX CONSEQUENCES UNDER STATE, LOCAL OR NON-U.S. TAX LAWS.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of common stock that is for U.S. federal income tax purposes:

 

   

an individual who is (or is treated as) a citizen or resident of the U.S.;

 

   

a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the U.S. or any state thereof or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust (1) that is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons as defined in Section 7701(a)(30) of the Code; or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of common stock that is, for U.S. federal income tax purposes, (i) a foreign corporation, (ii) a nonresident alien individual, or (iii) a foreign estate or trust that in each case is not subject to U.S. federal income tax on a net-income basis on income or gain from common stock.

U.S. Holders

The receipt of cash by a U.S. Holder in exchange for shares of common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received by such U.S. Holder and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the merger. Any such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the completion of the merger. Long-term capital gains of non-corporate taxpayers, including individuals, are generally taxed at preferential U.S. federal income tax rates. The deductibility of capital losses is subject to limitations. If a U.S. holder acquired different blocks of common stock at different times or different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of common stock.

Non-U.S. Holders

Any gain realized by a Non-U.S. Holder pursuant to the merger generally will not be subject to U.S. federal income tax unless:

 

   

the gain is effectively connected with a trade or business of such Non-U.S. Holder in the U.S. (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder in the U.S.), in which case such gain generally will be subject to

 

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U.S. federal income tax at rates generally applicable to U.S. Holders, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of thirty percent (30%) (or a lower rate under an applicable income tax treaty); or

 

   

such Non-U.S. Holder is an individual who is present in the U.S. for 183 days or more in the taxable year of the merger, and certain other requirements are met, in which case such gain will be subject to U.S. federal income tax at a rate of thirty percent (30%), which gain may be offset by certain U.S. source capital losses of such Non-U.S. Holder if the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

Information Reporting and Backup Withholding

Information reporting and backup withholding (currently, at a rate of twenty-four percent (24%)) may apply to the proceeds received by a stockholder pursuant to the merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that the taxpayer identification number provided is correct and that such stockholder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form) or (2) a Non-U.S. Holder that (i) provides a certification of such stockholder’s foreign status on the appropriate series of IRS Form W-8 (or a substitute or successor form) or (ii) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the stockholder’s U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

Withholding on Foreign Entities

Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly known as “FATCA”), impose a U.S. federal withholding tax of thirty percent (30%) on certain payments made to a “foreign financial institution” (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding certain U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or an exemption applies. FATCA also generally will impose a U.S. federal withholding tax of thirty percent (30%) on certain payments made to a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding substantial direct and indirect U.S. owners of the entity. An intergovernmental agreement between the U.S. and an applicable foreign country may modify these requirements. FATCA withholding currently applies to payments of dividends. The Treasury Department has released proposed regulations which, if finalized in their present form, would eliminate the federal withholding tax of thirty percent (30%) applicable to the gross proceeds of a sale or other disposition of our common stock. In its preamble to such proposed regulations, the Treasury Department stated that taxpayers may generally rely on the proposed regulations until final regulations are issued.

Stockholders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on the disposition of common stock pursuant to the merger.

Accounting Treatment

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

Regulatory Clearances

HSR Clearance. Under the HSR Act and the rules promulgated thereunder, certain transactions, including the merger, may not be completed until notifications have been given and information furnished to the Antitrust

 

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Division (the “Antitrust Division”) of the United States Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”) and all statutory waiting period requirements have been satisfied. Completion of the merger is subject to the expiration or earlier termination of the applicable waiting period under the HSR Act. The merger may not be completed until the expiration of a 30 calendar day waiting period, which begins when Amazon.com and iRobot file Premerger Notification and Report Forms under the HSR Act with the Antitrust Division and the FTC, unless such waiting period is earlier terminated by the Antitrust Division and the FTC. If prior to the expiration or termination of the waiting period either the Antitrust Division or FTC issues a request for additional information or documentary material (a “Second Request”) from Amazon.com and iRobot, the waiting period with respect to the merger would be extended until the 30th calendar day following the date of the parties’ substantial compliance with the second request. After that time, absent the agreement of Amazon.com and iRobot, the acquisition can be blocked only by court order. The Antitrust Division and the FTC may terminate the applicable waiting period at any time before its expiration and the parties may agree with the DOJ or FTC to delay consummation of the Merger for a specified period of time.

At any time before or after the expiration of the statutory waiting periods under the HSR Act, the Antitrust Division or the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the merger or to require one or both of the parties to divest assets, license or hold separate assets or terminate existing relationships and contractual rights, or to agree to 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 seeking to enjoin the completion of the merger or to require one or both of the parties to divest assets, license or hold separate assets or terminate existing relationships and contractual rights, or to agree to other remedies. Private parties may also seek to take legal action under the antitrust laws under some circumstances.

Other Regulatory Clearances. Merger control filings or clearances are required or advisable in other jurisdictions, including clearance by the European Commission. The merger cannot be consummated until after the mandatory approval requirements outside of the United States have been obtained under applicable antitrust and foreign investment laws. The relevant authorities could take such actions under the applicable antitrust and foreign investment laws as they deem necessary or desirable, including seeking to enjoin the completion of the merger, seeking divestiture of substantial assets of one or both of the parties, requiring the parties to license or hold separate assets or terminate existing relationships and contractual rights, or requiring the parties to agree to other remedies. Any one of these requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the completion, or reduce the anticipated benefits, of the merger.

Although Amazon.com and iRobot believe that the merger will not violate the antitrust or foreign investment laws and expect that all required regulatory clearances and approvals will be obtained, Amazon.com and iRobot cannot assure that these regulatory clearances and approvals will be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions, restrictions, qualifications, requirements or limitations on the completion of the merger, including the requirement to divest assets, license or hold separate assets or terminate existing relationships and contractual rights, or agree to other remedies, or require changes to the terms of the Merger Agreement, or that a challenge to the merger on antitrust or foreign investment grounds will not be made, or if such challenge is made, what the result will be. These conditions or changes could result in the conditions to the merger not being satisfied. There is currently no way to predict how long it will take to obtain all of the required regulatory approvals or whether such approvals will ultimately be obtained and there may be a substantial period of time between the approval of the proposal to approve and adopt the merger agreement by stockholders and the completion of the merger.

Litigation Related to the Merger

In connection with the merger agreement, a complaint has been filed as an individual action in the United States District Court for the Southern District of New York, captioned Reid v. iRobot Corp., et al., 22-cv-7498 (filed September 1, 2022). The foregoing complaint is referred to as the “Merger Action”.

 

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The Merger Action generally alleges that the preliminary proxy statement filed by the Company with the SEC on August 25, 2022 misrepresents and/or omits certain purportedly material information relating to the Company’s financial projections, the analyses performed by the financial advisor to the iRobot board of directors in connection with the merger, potential conflicts of interest of the Company’s officers and directors, and the events that led to the signing of the merger agreement. The Merger Action asserts violations of Section 14(a) of the Exchange Act, and Rule 14a-9 promulgated thereunder against all defendants (the Company and its board of directors) and violations of Section 20(a) of the Exchange Act against the Company’s directors. The Merger Action seeks, among other things, an injunction enjoining the stockholder vote on the merger and the consummation of the merger unless and until certain additional information is disclosed to iRobot stockholders, costs of the action, including plaintiffs’ attorneys’ fees and experts’ fees, and other relief the court may deem just and proper.

The Company cannot predict the outcome of the Merger Action. The Company believes that the Merger Action is without merit and the Company and the individual defendants intend to vigorously defend against the Merger Action and any subsequently filed similar actions. If additional similar complaints are filed, absent new or different allegations that are material, the Company will not necessarily disclose such additional filings, unless such disclosure is required by law.

Delisting and Deregistration of Company Common Stock

If the merger is completed, the Company common stock will be delisted from NASDAQ and deregistered under the Exchange Act.

 

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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 does not purport to be complete and 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 representations, warranties, covenants and agreements described below and included in the merger agreement (i) were made only for purposes of the merger agreement and as of specific dates; (ii) were made solely for the benefit of the parties to the merger agreement; and (iii) may be subject to important qualifications, limitations and supplemental information agreed to by iRobot, Amazon.com and Merger Sub in connection with negotiating the terms of the merger agreement and contained in the confidential disclosure schedules. In addition, the representations and warranties have been included in the merger agreement for the purpose of allocating contractual risk between iRobot, Amazon.com and Merger Sub rather than to establish matters as facts, and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors. Stockholders are not third-party beneficiaries under the merger agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of iRobot, Amazon.com or Merger Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement. In addition, you should not rely on the covenants in the merger agreement as actual limitations on the respective businesses of iRobot, Amazon.com and Merger Sub, because the parties may take certain actions that are either expressly permitted in the confidential disclosure schedule to the merger agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The merger agreement is described below, and included as Annex A, only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding iRobot, Amazon.com, Merger Sub or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the merger agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding iRobot and its business.

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

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

At the effective time, Merger Sub will merge with and into iRobot, and the separate corporate existence of Merger Sub will cease. iRobot will be the surviving corporation in the merger and will continue its corporate existence as a Delaware corporation and a wholly owned subsidiary of Amazon.com. The certificate of incorporation of iRobot that is in effect immediately before the effective time will be amended and restated as of the effective time to be in the form attached as Exhibit A to the merger agreement, and as so amended will become the certificate of incorporation of the surviving corporation. Except as provided in the merger agreement, the bylaws of Merger Sub that are in effect immediately before the effective time will become the bylaws of the surviving corporation.

Amazon.com and iRobot will take all actions necessary for the individuals holding positions as directors of Merger Sub at the effective time to be appointed as the initial directors of the surviving corporation and for the individuals specified by Amazon.com prior to the effective time to be appointed as the initial officers of the surviving corporation.

 

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When the Merger Becomes Effective

The closing of the merger will take place at 9:00 a.m., New York time, on the third business day following the day on which the last to be satisfied or waived of the conditions set forth in the merger agreement (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions) is satisfied or waived in accordance with the merger agreement, unless otherwise mutually agreed in writing between iRobot and Amazon.com. For purposes of the merger agreement, “business day” refers to any day ending at 11:59 p.m., New York time, other than a Saturday or Sunday, on which the Department of State of the State of Delaware and banks in the County of New York, New York are open for general business.

On the closing date, iRobot and Amazon.com will file the certificate of merger with the Secretary of State of the State of Delaware. The merger will become effective at the time when the certificate of merger has been duly filed with and accepted by the Secretary of State of the State of Delaware, or at such later time as may be agreed by the parties in writing and specified in the certificate of merger.

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 Amazon.com, Merger Sub and the Company’s respective obligations to consummate the merger, some of which are not within the parties’ control. There may be a substantial amount of time between the special meeting and the completion of the merger, and it is possible that the merger will not be completed at all. After the requisite company vote is obtained, the iRobot board of directors will not have the right to terminate the merger agreement in order to accept any alternative acquisition proposal. We expect to complete the merger promptly after the requisite company vote is obtained and all required regulatory clearances have been received.

Effect of the Merger on the Common Stock

At the effective time, each share of Company common stock issued and outstanding immediately before the effective time (other than (1) shares owned by Amazon.com, Merger Sub or any other wholly owned subsidiary of Amazon.com and shares owned by the Company or any wholly owned subsidiary of the Company, and in each case not held on behalf of third parties (the shares referred to in clause (1), the “cancelled shares”) and (2) shares owned by stockholders of the Company who have validly demanded and not withdrawn appraisal rights in accordance with the applicable provisions of Section 262 of the DGCL prior to the effective time (the shares referred to in clause (2), “dissenting shares,” and, together with the cancelled shares, the “excluded shares”)) will be converted into the right to receive the merger consideration. The merger consideration will be $61.00 per share in cash, without interest. Amazon.com, iRobot, Merger Sub, the surviving corporation and the paying agent for the merger consideration will each be entitled to deduct and withhold any amounts due under applicable tax laws from the amounts that would otherwise be payable under the terms of the merger agreement.

At the effective time, each holder of dissenting shares will be entitled to only such rights as are granted to a holder of dissenting shares pursuant to Section 262 of the DGCL. If any such holder fails to comply with the provisions of Section 262 of the DGCL or effectively withdraws or loses such right, such dissenting shares will be treated as if they had never been dissenting shares and instead had been converted at the effective time into the right to receive the merger consideration.

At the effective time, each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one share of common stock, par value $0.01 per share, of the surviving corporation.

Withholding Rights

Amazon.com, iRobot, Merger Sub, the surviving corporation and the paying agent for the merger consideration will each be entitled to deduct and withhold any amounts due under applicable tax laws from the

 

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amounts that would otherwise be payable under the terms of the merger agreement, and any such withheld amounts that are timely paid to the appropriate taxing authorities will be treated as having been paid to the person from whom such amounts were originally deducted and withheld. None of Amazon.com, iRobot, Merger Sub, the surviving corporation and the paying agent will be required to pay any additional amounts with respect to such deducted and withheld amounts.

Treatment of Company Equity Awards

Stock Options. At the effective time, each outstanding Company option, whether vested or unvested, will, automatically and without any required action on the part of the holder thereof, fully vest and be converted into the right to receive, as soon as reasonably practicable (but not more than 30 calendar days) following the effective time, an amount in cash equal to the product of (i) the number of shares of Company common stock subject to the Company option immediately prior to the effective time multiplied by (ii) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company option. Any Company option that has an exercise price per share that is greater than or equal to the merger consideration will be cancelled at the effective time for no consideration or payment.

Restricted Stock Unit Awards. At the effective time, each outstanding Company RSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the RSU payment. The RSU payment will be subject to the same time-based vesting and forfeiture provisions as were applicable to the corresponding Company RSU award immediately prior to the effective time.

Performance Stock Unit Awards. At the effective time, each outstanding Company PSU award, will, automatically and without any required action on the part of the holder thereof, be converted into the right to receive the PSU payment. The PSU payment will be subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company PSU award immediately prior to the effective time.

Deferred Stock Unit Awards. At the effective time, each Company DSU award, will, automatically and without any required action on the part of the holder thereof, be cancelled and converted into the right to receive (without interest), as soon as reasonably practicable (but not more than 30 calendar days) following the effective time, an amount in cash equal to (i) the number of shares of Company common stock subject to such Company DSU award multiplied by (ii) the merger consideration.

Employee Stock Purchase Plan. The merger agreement provides that the offering period under the ESPP in effect on the date of the merger agreement will end on the earlier of (x) the next scheduled purchase date, which is November 14, 2022, or (y) no later than the business day preceding the closing date, and no additional offering periods will commence thereafter.

Payment for Common Stock in the Merger

At or prior to the effective time, Amazon.com or Merger Sub will deposit, or cause to be deposited, with a paying agent cash sufficient to pay the aggregate merger consideration (other than in respect of excluded shares). Promptly (and no later than the fifth business day) after the effective time, the surviving corporation will cause the paying agent to mail to each holder of record of shares of Company common stock (other than excluded shares) (1) a notice of the effectiveness of the merger, (2) a letter of transmittal and (3) instructions for effecting the surrender of certificates or book-entry shares to the paying agent in exchange for payment of the merger consideration. Upon surrender to the paying agent of certificates or book-entry shares, as applicable, together with, in the case of share certificates, the letter of transmittal, duly completed and validly executed, or, in the case of book-entry shares, receipt of an “agent’s message” by the paying agent, and such other documents as may be reasonably required, the holder of such certificates or book-entry shares will be entitled to receive payment of the merger consideration which the holder is entitled to pursuant to the merger agreement (after giving effect to any required tax withholding).

 

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Representations and Warranties

The merger agreement contains representations and warranties of iRobot, subject to certain exceptions in the merger agreement, in the Company disclosure schedule delivered in connection with the merger agreement (the “Company disclosure schedule”) and in certain of iRobot’s public filings, as to, among other things:

 

   

organization, good standing and qualification to do business;

 

   

capital structure;

 

   

corporate authority and approvals relating to the execution, delivery and performance of the merger agreement;

 

   

governmental filings and the absence of certain violations;

 

   

the reports, forms, documents and financial statements required to be filed with the SEC, the establishment and maintenance of certain disclosure controls and procedures and internal control over financial reporting, and the maintenance of corporate records;

 

   

the absence of certain changes, including that there has not been a material adverse effect with respect to iRobot, from and after January 1, 2022;

 

   

the absence of certain actions, including civil, criminal or administrative actions, claims, arbitrations, investigations or other proceedings;

 

   

the absence of undisclosed liabilities;

 

   

employee benefit plans and other agreements, plans and policies with or concerning employees;

 

   

compliance with applicable laws and permits;

 

   

material contracts;

 

   

distributors and suppliers;

 

   

real property matters;

 

   

takeover statutes;

 

   

environmental matters;

 

   

tax returns, filings and other tax matters;

 

   

employee relations, labor matters and compliance with labor, employment and occupational safety and laws;

 

   

intellectual property, information technology assets and data security and privacy;

 

   

insurance policies;

 

   

compliance with the provisions of anti-bribery, anti-corruption and anti-money laundering laws;

 

   

compliance with international trade laws;

 

   

compliance with anti-slavery and human trafficking laws;

 

   

quality and safety of products;

 

   

broker’s and finder’s fees; and

 

   

the opinion of iRobot’s financial advisor.

The merger agreement also contains representations and warranties of Amazon.com and Merger Sub, subject to certain exceptions in the merger agreement, as to, among other things:

 

   

organization, good standing and qualification to do business;

 

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corporate authority and approvals relating to the execution, delivery and performance of the merger agreement;

 

   

governmental filings and the absence of certain violations;

 

   

the absence of certain actions, including civil, criminal or administrative actions, claims, arbitrations, investigations or other proceedings;

 

   

the sufficiency of the funds available to Amazon.com and Merger Sub to pay the merger consideration and the other amounts payable under the merger agreement;

 

   

the ownership and operations of Merger Sub;

 

   

the lack of ownership of shares of Company common stock and the lack of  “interested stockholder ” status with respect to the Company under the DGCL; and

 

   

broker’s and finder’s fees.

Some of the representations and warranties in the merger agreement are qualified by materiality qualifications or a “material adverse effect” qualification, as discussed below.

For purposes of the merger agreement, a “material adverse effect” means any change, effect, event, occurrence or development that is materially adverse to the financial condition, assets, business or results of operations of iRobot and its subsidiaries, taken as a whole. However, no change, effect, event, occurrence or development to the extent resulting from the following will constitute or be taken into account in determining whether there is a material adverse effect:

 

   

changes in the economy or financial, debt, credit or securities markets or capital market conditions generally, including changes in interest or exchange rates, in the United States or any other country or region in the world in which the iRobot or any of its subsidiaries conducts business;

 

   

changes generally affecting the industries in which the iRobot and its subsidiaries conduct business;

 

   

changes or proposed changes in GAAP or other accounting standards or interpretations thereof or in any law, or enforcement or interpretations thereof;

 

   

changes in any political conditions, acts of war (whether or not declared, and including the current conflict between the Russian Federation and Ukraine), hostilities, military actions or acts of terrorism, or any escalation or worsening of the foregoing;

 

   

any acts of God, including storms, earthquakes, tsunamis, tornados, hurricanes, weather conditions, natural disasters, epidemics, pandemics, or disease outbreaks (including, for the avoidance of doubt, SARS-CoV-2 and its disease known as COVID-19 and any evolutions or additional strains, variations or mutations thereof or any related or associated epidemics, pandemic or disease outbreaks (“COVID-19”) and any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar law, directive, guidelines or recommendations promulgated by any governmental authority, including the Centers for Disease Control and Prevention and the World Health Organization (“COVID-19 Measures”), in each case, in connection with or in response to COVID-19, or the effects thereof), or any escalation or worsening of any of the foregoing;

 

   

a decline in the price or trading volume of iRobot’s common stock on NASDAQ or any other securities market or in the trading price of any other securities of iRobot or any of its subsidiaries or any change in the ratings or ratings outlook for iRobot or any of its subsidiaries (provided that this exception will not prevent or otherwise affect a determination that any change, effect, event, occurrence or development underlying such decline, if not otherwise excluded, has resulted in a material adverse effect);

 

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any failure by iRobot to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings, cash flow or cash position or other financial, accounting or operating measures or metrics for any period (provided that this exception will not prevent or otherwise affect a determination that any change, effect, event, occurrence or development underlying such failure, if not otherwise excluded, has resulted in a material adverse effect);

 

   

the effect of seasonal changes on the results of operations, business or financial condition of iRobot;

 

   

the announcement or existence of the merger agreement or the merger, including any impact on relationships with employees, customers, suppliers and distributors or other persons to the extent resulting from such announcement or existence (provided that this exception will not apply to references to “material adverse effect” in the representations and warranties as to governmental filings and the absence of certain violations or to any other representation or warranty to the extent such representation or warranty addresses the consequences resulting from the execution and delivery of the merger agreement, the performance of a party’s obligations thereunder or the consummation of the transactions contemplated thereby);

 

   

any transaction litigation or any demand or action for appraisal or the fair value of any Company common stock pursuant to the DGCL in connection herewith; provided that the underlying facts or causes relating to such transaction litigation or demand or action for appraisal or fair value may be considered in determining whether there has been a material adverse effect; the term “transaction litigation” means any claim, demand or action (including any class action or derivative litigation) asserted, commenced or threatened by, on behalf of or in the name of, against or otherwise involving iRobot, the iRobot board of directors, any committee thereof and/or any of iRobot’s directors or officers relating directly or indirectly to the merger agreement, the merger or any related transaction (including any such claim, demand or action based on allegations that the iRobot’s entry into the merger agreement or the terms and conditions of the merger agreement or any related transaction constituted a breach of the fiduciary duties of any member of the iRobot board of directors, any member of the iRobot board of directors of any of iRobot’s subsidiaries or any officer of iRobot or any of its subsidiaries);

 

   

the failure on the part of iRobot to take any action as a result of the restrictions on interim operations set forth in the merger agreement if iRobot in good faith seeks prior written approval from Amazon.com for iRobot to take such action, and Amazon.com unreasonably denies such approval after iRobot informed Amazon.com in writing that it believed Amazon.com’s withholding of its consent to be unreasonable; and

 

   

certain other exceptions set forth in the Company disclosure schedule.

However, with respect to the matters described in the foregoing first, second, third, fourth, fifth and eighth bullet points above, such change, effect, occurrence or development may be taken into account to the extent that it has a disproportionate adverse effect on iRobot and its subsidiaries, taken as a whole, as compared to other companies operating in the industries in which iRobot and its subsidiaries conduct business, in which case only the incremental disproportionate adverse effect may be taken into account in determining whether or not there has been a material adverse effect.

Conduct of Business Pending the Merger

The merger agreement provides that, after August 4, 2022 and prior to the effective time, except as expressly permitted or required by the merger agreement, as required by applicable law or the rules or regulations of NASDAQ, with the express prior written approval of Amazon.com (which may not be unreasonably withheld, delayed or conditioned) or as expressly set forth in the Company disclosure schedule to the merger agreement, iRobot will, and will cause its subsidiaries to, use its and their reasonable efforts to conduct their businesses in all material respects in the ordinary course of business consistent with past practice and, to the extent consistent

 

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therewith, use its and their reasonable efforts to preserve their business organizations substantially intact (including the service of key employees) and maintain existing relations in all material respects with key customers, suppliers and other persons with whom iRobot and its subsidiaries have significant relationships, and will not and will cause its subsidiaries not to, take any of the following actions:

 

   

(1) adopt or submit to stockholder approval any change in the certificate of incorporation or bylaws of iRobot or (2) adopt any change in the comparable organizational document of any subsidiary of iRobot;

 

   

(1) merge or consolidate iRobot or any of its subsidiaries with any other person, except for any such transaction between or among any of its wholly owned subsidiaries that would not impose, individually or in the aggregate, any changes or restrictions on its assets, operations or businesses or on the assets, operations and business of iRobot and its subsidiaries taken as a whole that would be adverse to Amazon.com or any of its subsidiaries, or (2) restructure, reorganize or completely or partially liquidate or otherwise enter into any agreement or arrangement imposing, individually or in the aggregate, any changes or restrictions on the assets, operations or business of iRobot or any of its subsidiaries that would be adverse to Amazon.com or any of its subsidiaries;

 

   

acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses, other than (1) acquisitions of inventory, supplies, raw materials, equipment and similar assets in the ordinary course of business consistent with past practice, (2) acquisitions pursuant to contracts in effect on August 4, 2022 disclosed in unredacted form to Amazon.com prior to August 4, 2022, (3) in accordance with iRobot’s capital and research and development expenditure budget made available to Amazon.com on or prior to August 4, 2022 or (4) any other acquisitions for consideration not in excess of  $5 million in the aggregate; provided, that such aggregate cap will be deemed to be increased to $10 million effective upon February 4, 2024 (the “first outside date extension”);

 

   

issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or lien against, or otherwise enter into any contract or understanding with respect to the voting of, any shares of capital stock of iRobot or any of its subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, restricted shares, restricted share units, performance share units, stock appreciation rights, phantom stock or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, in each case, other than (1) any such transaction solely among iRobot and its wholly owned subsidiaries or among iRobot’s wholly owned subsidiaries that would not be adverse to Amazon.com or any of its subsidiaries, (2) any issuance, sale, grant or transfer of shares of Company common stock pursuant to the exercise or settlement of Company options, Company RSU awards, Company PSU awards or Company DSU awards outstanding as of August 4, 2022 or granted after such date in accordance with the merger agreement, or (3) the issuance of Company common stock for the six-month offering period under the ESPP that commenced on May 15, 2022 in accordance with the terms of the ESPP;

 

   

make any loans, advances or capital contributions to, or investments in, any person (other than (1) to iRobot or any of its wholly owned subsidiaries or (2) extensions of refunds, credit terms, rebates or other allowances to customers or vendors in the ordinary course of business consistent with past practice);

 

   

declare, set aside, make or pay any dividend or other distribution with respect to any of its capital stock, except for dividends or other distributions paid by any wholly owned subsidiary of iRobot to iRobot or to any other wholly owned subsidiary of iRobot;

 

   

reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock, except for (1) any such transaction by a wholly owned subsidiary of iRobot that would not be adverse to Amazon.com or any of its subsidiaries and (2) acquisitions of shares of Company

 

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common stock in satisfaction of withholding obligations in respect of Company options, Company RSU awards or Company PSU awards or payment of the exercise price in respect of Company options, in each case, outstanding as of August 4, 2022 pursuant to its terms or granted after such date not in violation of the merger agreement;

 

   

create, incur, assume, guarantee, endorse, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire any debt security of iRobot or any of its subsidiaries, except (1) guarantees of indebtedness of iRobot or any of its wholly owned subsidiaries, (2) intercompany indebtedness between or among iRobot and/or any of its wholly owned subsidiaries, (3) in connection with the financing of accounts payable in the ordinary course of business consistent with past practice, (4) indebtedness for borrowed money incurred in the ordinary course of business in accordance with contracts (x) in effect prior to August 4, 2022, including the Amended and Restated Credit Agreement, dated as of December 20, 2013, by and between iRobot, Bank of America, N.A., as administrative agent, and the other parties thereto, as amended (the “Existing Credit Agreement”), that have been disclosed in unredacted form to Amazon.com prior to August 4, 2022 or (y) entered into after August 4, 2022 as set forth in the Company disclosure schedule and (5) other indebtedness for borrowed money in an amount not to exceed $7.5 in the aggregate; provided, that such aggregate cap will be deemed to be increased to $15 million effective upon the first outside date extension;

 

   

other than in accordance with iRobot’s capital and research and development expenditure budget made available to Amazon.com prior to August 4, 2022 (the “Company budget”), (1) incur or commit to any capital or research and development expenditure, that, in the aggregate, exceeds the amount of the capital or research and development expenditures contemplated by the Company budget, except iRobot may make capital or research and development expenditures of less than $1 million individually or $2 million in the aggregate; provided, that such aggregate cap will be deemed to be increased to $4 million effective upon the first outside date extension, or (2) fail to incur or commit to any capital or research and development expenditures in the amounts and on the time frames set forth in the Company budget in all material respects;

 

   

except as set forth in the Company disclosure schedule, enter into, amend or modify in any material respect or terminate any material contract or any contract that would have been a material contract had it been entered into prior to August 4, 2022, or otherwise waive, release or assign (other than assignments between or among iRobot and/or any of its wholly owned subsidiaries) any material rights, claims or benefits of iRobot or any of its subsidiaries thereunder, other than the expiration of any such contract in accordance with its terms;

 

   

make any material changes with respect to financial accounting policies or procedures, except as required by law, proposed law or GAAP or statutory or regulatory accounting rules or interpretations or by any governmental authority or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);

 

   

settle any action, suit, claim, hearing, arbitration, investigation or other proceedings (other than any audit or other proceeding in respect of taxes), for an amount in excess of  $1.5 million individually or $3 million in the aggregate or any obligation or liability of it in excess of such amount or on a basis that would result in the imposition of any writ, judgment, decree, settlement, award, injunction or similar order of any governmental authority that would restrict the future activity or conduct of Amazon.com, iRobot or any of their respective subsidiaries or a finding or admission of a violation of law or violation of the rights of any person other than with respect to monetary settlements only, settlements or compromises of any action, suit, claim, hearing, arbitration, investigation or other proceedings to the extent reflected or reserved against in the balance sheet (or the notes thereto) of iRobot included iRobot’s SEC reports filed since December 28, 2019 and prior to August 4, 2022 for an amount not in excess of the amount so reflected or reserved;

 

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make (other than consistent with past practice) or change any material tax election, (2) change any entity classification for federal income tax purposes of any subsidiary, (3) create an entity outside of the United States that is (x) a direct subsidiary of the Company or any of its domestic subsidiaries and (y) treated as a “disregarded entity” or partnership for U.S. federal income tax purposes, (4) knowingly create a permanent establishment outside of the Company or any subsidiary’s place of incorporation or formation, (5) file any amended income tax return or other material amended tax return, (6) adopt or change any material accounting method for taxes, (7) settle or compromise any material tax claim, other than with respect to settlements or compromises of any tax claim for an amount that does not exceed the amount disclosed, reflected or reserved in accordance with GAAP in iRobot’s SEC reports (including amendments thereto) filed since December 28, 2019 and prior to August 4, 2022, (8) surrender any material claim for a refund of taxes, (9) enter into any closing agreement relating to a material amount of taxes, (10) file any income tax return or other material tax return that is materially inconsistent with past practice, (11) other than in the ordinary course of business, consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment or (12) transfer (including any controlled transaction or controlled transfer as described in Treasury Regulation Section 1.482-7 related to a cost sharing arrangement), sell, assign, pledge, convey, or otherwise dispose of, for legal or tax purposes, any intellectual property rights currently owned by iRobot or any of its subsidiaries out of the United States including through any such transaction that is intended to or could reasonably be expected to be considered as a transfer (including any controlled transaction or controlled transfer as described in Treasury Regulation Section 1.482-7 related to a cost sharing arrangement), sale, assignment, pledge, conveyance or disposition for U.S. federal income tax purposes;

 

   

(1) transfer, sell, lease, license, divest, pledge, cancel or otherwise dispose of, abandon or permit to lapse, or permit or suffer to exist the creation of any lien upon, any assets of iRobot or any of its subsidiaries (including any intellectual property rights or technology), including capital stock of any of its subsidiaries, except (A) for sales of iRobot products to customers in the ordinary course of business consistent with past practice, (B) for sales of obsolete tangible assets, (C) for sales, leases, licenses or other dispositions of tangible assets having a value not in excess of $1.25 million individually or $2.5 million in the aggregate (provided, that such aggregate cap will be deemed to be increased to $5 million effective upon the first outside date extension), (D) pursuant to contracts or written commitments existing as of August 4, 2022, in each case, which have been disclosed in unredacted form to Amazon.com prior to the August 4, 2022, (E) for non-exclusive licenses of intellectual property rights to customers, vendors or service providers of iRobot or its subsidiaries in the ordinary course of business consistent with past practice, and (F) for sales of tangible inventory or used tangible equipment in the ordinary course of business consistent with past practice, (2) abandon or permit to lapse any trademarks included in the intellectual property owned or purported to be owned by iRobot or any of its subsidiaries (“owned intellectual property”), or (3) disclose any trade secret of iRobot or any of its subsidiaries, except in the ordinary course of business consistent with past practice and pursuant to a written confidentiality agreement;

 

   

except as required by any benefit and compensation plans, contracts, policies or arrangements covering current or former employees of iRobot and its subsidiaries and current and former directors of iRobot and its subsidiaries (“benefit plans”) in effect as of August 4, 2022 and set forth in the Company disclosure schedule or adopted or entered into in accordance with the merger agreement, (1) terminate, adopt, establish, enter into, amend or renew (or communicate any intention to take such action) any benefit plan, other than amendments that do not increase benefits or result in increased administrative costs; (2) increase in any manner the compensation, benefits, severance or termination pay of any of the current or former directors, executive officers or employees or consultants who are natural persons of iRobot or its subsidiaries, other than in the ordinary course of business consistent with past practice as contemplated under the Company disclosure schedule; (3) pay any bonus or incentive compensation under any benefit plan, other than payments based on actual performance for completed performance periods in the ordinary course of business as contemplated under the Company disclosure schedule;

 

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(4) accelerate the vesting of or lapsing of restrictions, or amend the vesting requirements, with respect to any equity-based compensation or other long-term incentive compensation under any benefit plan; (5) grant any new severance, change in control, retention benefit or any other award that could be triggered by the transactions contemplated by the merger agreement (whether accompanied by a termination of employment or not) (other than pursuant to arrangements entered into with newly hired and promoted employees in the ordinary course of business consistent with past practice as contemplated under the Company disclosure schedule) or amend the terms of outstanding awards under any benefit plan; (6) grant any Company options; (7) grant any Company RSU awards, Company PSU awards, Company DSU awards or other equity-based awards other than in the ordinary course of business as contemplated under the Company disclosure schedule; (8) take any action to accelerate the payment of, or to fund or secure the payment of, any amounts under any benefit plan; (9) hire any (x) executive officer, (y) employee or consultant who is a natural person with target total annual cash compensation opportunities at or above $350,000 or (z) employee or consultant who is a natural person who, in either case, resides in a non-U.S. jurisdiction in which iRobot and its subsidiaries do not conduct operations as of August 4, 2022; (10) promote any executive officer of iRobot or promote any employee to an executive officer position; (11) become a party to, establish, adopt, materially amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization; or (12) terminate without cause the employment of any executive officer of iRobot or other key employee outside of the ordinary course of business;

 

   

commence any action with respect to any material owned intellectual property against any third party;

 

   

commence operations in a non-U.S. jurisdiction in which iRobot and its subsidiaries do not conduct operations as of August 4, 2022; or

 

   

agree, authorize or commit to take any of the foregoing actions.

iRobot also has agreed that, no later than five business days prior to making any broad-based written (or prepared oral) communications to the officers or employees of iRobot or any of its subsidiaries pertaining to compensation or benefit entitlements to be provided following the closing date, iRobot will provide Amazon.com with a copy of the intended communication (including, in the case of any such oral communications, copies of scripts, talking points or other similar materials). Any such communication will be subject to Amazon.com’s consent (which will not be unreasonably withheld, conditioned or delayed), and Amazon.com and iRobot will cooperate in providing any such communication.

In addition, Amazon.com has agreed that, after August 4, 2022 and until the effective time, neither it nor any of its subsidiaries will acquire Control of, or enter into any agreement, arrangement or understanding to acquire Control of, (i) any of certain specified companies or any of their respective subsidiaries as set forth in the Company disclosure schedule or (ii) the vacuum or robotic vacuum business (or any part thereof) of certain specified companies or any of certain of their respective subsidiaries as set forth in the Company disclosure schedule. Solely for purposes of the comment described in the preceding sentence, “Control” means owning or controlling, directly or indirectly, securities or other ownership interests representing more than 50% of the voting power of all outstanding stock or ownership interests of any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental authority or other entity of any kind or nature.

Access

Subject to certain exceptions and limitations and solely for purposes of furthering the merger and the other transactions contemplated by the merger agreement or integration planning relating thereto, iRobot and Amazon.com are required to, and required to cause their respective subsidiaries to, furnish the other with reasonable information in its possession concerning itself, its subsidiaries, directors, officers and stockholders and other matters as may be reasonably necessary or advisable in connection with this proxy statement or any

 

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other statement, filing, notice or application made by or on behalf of iRobot, Amazon.com or any of their respective subsidiaries to any third party and/or any governmental authority in connection with the merger and the transactions contemplated by the merger agreement. In addition, subject to certain exceptions and limitations, iRobot is required to, and is required to cause its subsidiaries to, afford officers and other authorized representatives of Amazon.com reasonable access to iRobot’s and its subsidiaries’ officers, employees, agents, contracts, tangible or electronic books and records, stores, offices, systems, software, distribution facilities and other facilities, and other reasonable information concerning its businesses, properties and personnel as may reasonably be requested by Amazon.com. However, iRobot and Amazon.com are not required to permit access, or to disclose or otherwise make available information, that would (1) unreasonably disrupt its or its subsidiaries’ operations, (2) result in the disclosure of trade secrets of third parties or violate the terms of confidentiality provisions in any agreement with a third party entered into prior to August 4, 2022 or any applicable law or duty, (3) result in the disclosure of any information referencing the valuation of iRobot and its subsidiaries conducted in connection with the approval and adoption of the merger agreement, (4) reasonably be expected to cause the loss or waiver of the protection of any attorney-client privilege, attorney work product or other relevant legal privilege, provided, that to the extent requested by Amazon.com and if applicable, iRobot and Amazon.com must enter into a customary joint defense agreement that would alleviate such loss of privilege, or jeopardize the health or safety of any officer, employee or agent of iRobot or any of its subsidiaries in light of COVID-19 (taking into account any COVID-19 Measures).

Acquisition Proposals; No Solicitation

Except as permitted by the merger agreement, iRobot must not, and must cause its subsidiaries and its and its subsidiaries’ directors, officers and employees not to, and must instruct and use its reasonable best efforts to cause its and its subsidiaries’ investment bankers, attorneys, accountants and other advisors or representatives not to, directly or indirectly:

 

   

initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry, proposal, indication of interest or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined below);

 

   

engage in, continue or otherwise participate in any discussions or negotiations relating to any acquisition proposal or any inquiry, proposal, indication of interest or offer that would reasonably be expected to lead to an acquisition proposal (other than to state the extent to which those discussions are prohibited by the terms of the merger agreement);

 

   

provide any non-public information to any person in connection with any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal;

 

   

other than as required by the directors’ fiduciary duties, waive, terminate, modify or fail to enforce any “standstill” or confidentiality obligation of any person (other than any party to the merger agreement) with respect to iRobot or any of its subsidiaries entered into in connection with an acquisition proposal; or

 

   

otherwise knowingly facilitate any effort or attempt to make an acquisition proposal.

Pursuant to the merger agreement, an “acquisition proposal” means any inquiry, proposal, indication of interest or offer involving any person or group (other than Amazon.com or its subsidiaries) relating to:

 

   

a merger, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction involving iRobot or any of its subsidiaries;

 

   

any acquisition by any person or group resulting in, or any inquiry, proposal, indication of interest or offer that, if consummated, would result in any person or group becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 15% or more of the total voting power or of any class of equity securities of iRobot or assets representing 15% or more of the consolidated net

 

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revenues, net income or total assets (including equity securities of any of iRobot’s subsidiaries and equity securities of any other entity) of iRobot; or

 

   

any combination of the foregoing.

Existing Discussions or Negotiations

Pursuant to the merger agreement, iRobot has agreed to, and to cause its subsidiaries, directors, officers, employees and financial advisors to, and to use its reasonable best efforts to cause its other representatives to, immediately cease and cause to be terminated any discussions and negotiations with any person conducted before August 4, 2022 with respect to any acquisition proposal or proposal or transaction that could reasonably be expected to lead to an acquisition proposal. iRobot has agreed to, within 24 hours after execution of the merger agreement, deliver a written notice to each such person providing only that iRobot is ending all discussions and negotiations with such person with respect to any acquisition proposal or proposal or transaction that could reasonably be expected to lead to an acquisition proposal, which notice also will request the prompt return or destruction of all confidential information concerning iRobot and any of its subsidiaries. iRobot has also agreed to terminate, within 24 hours of the execution of the merger agreement, all physical and electronic data access previously granted to such persons.

During the period commencing on August 4, 2022 and continuing until the earlier to occur of the termination of the merger agreement and the effective time, iRobot must not terminate, amend, modify or waive any provision of any confidentiality, “standstill” or similar agreement entered into in connection with any acquisition proposal proposed, discussed or negotiated on or prior to August 4, 2022 to which iRobot or any of its subsidiaries is a party and will enforce, to the fullest extent permitted under applicable laws, the provisions of any such agreement, including by obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof. Notwithstanding anything to the contrary contained in the merger agreement, iRobot will be permitted to terminate, amend, modify, waive or fail to enforce any provision of any confidentiality, “standstill” or similar obligation of any person if the iRobot board of directors determines in good faith, after consultation with its outside legal counsel, that the failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law.

Receipt of Acquisition Proposals

Notwithstanding certain provisions of the merger agreement described above, prior to the time the requisite company vote is obtained, if iRobot receives a bona fide written acquisition proposal not solicited in violation of the iRobot’s non-solicitation obligations under the merger agreement, and if the iRobot board of directors determines in good faith after consultation with outside legal counsel and an outside financial advisor that (1) based on the information then available and after consultation with its outside financial advisor, the acquisition proposal constitutes or would reasonably be expected to result in a superior proposal (as defined below) and that did not result from a breach of the Company’s non-solicitation obligations under the merger agreement (2) the failure to take the applicable action would be inconsistent with the directors’ fiduciary duties under applicable law, then iRobot may:

 

   

provide information (including non-public information) to the person making the acquisition proposal; provided, that in the event the information has not previously been made available to Amazon.com, iRobot must promptly (and, in any event, within 24 hours) provide the information to Amazon.com, and that, prior to furnishing the information, iRobot must receive from the person making the acquisition proposal an executed confidentiality agreement with confidentiality and use terms not less restrictive in the aggregate to the other party than the terms in the confidentiality agreement between iRobot and Amazon.com are on Amazon.com (it being understood that such confidentiality agreement with such other party need not contain “standstill” or similar provisions or otherwise prohibit the making of any acquisition proposal); provided that iRobot will not enter into any confidentiality agreement with any person subsequent to August 4, 2022 that prohibits iRobot from providing any

 

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information to Amazon.com in accordance with the merger agreement or otherwise prohibits iRobot from complying with its obligations under the merger agreement; provided, further, that iRobot will not provide information to any person pursuant to any confidentiality agreement entered into prior to August 4, 2022 unless such person agrees prior to receipt of the information to waive any provision that would prohibit iRobot from providing any information to Amazon.com in accordance with the merger agreement or otherwise would prohibit iRobot from complying with its obligations under the merger agreement; and

 

   

engage in or participate in discussions and/or negotiations with that person regarding the acquisition proposal.

Pursuant to the merger agreement, a “superior proposal” means an unsolicited, bona fide written acquisition proposal first made after August 4, 2022 that did not result from a breach of iRobot’s non-solicitation obligations under the merger agreement and that would result in any person or group becoming the beneficial owner of, directly or indirectly, more than 50% of the total voting power or of any class of equity securities of iRobot or assets representing more than 50% of the consolidated net revenues, net income or total assets (including equity securities of iRobot’s subsidiaries and equity securities of any other entity) of iRobot, that the iRobot board of directors has determined in good faith, after consultation with its outside legal counsel and its outside financial advisor, taking into account all legal, financial, financing and regulatory aspects of the acquisition proposal, the identity of the person(s) making the proposal and the likelihood of the proposal being completed in accordance with its terms and all other matters that iRobot board of directors considers appropriate in good faith, that, if completed, would result in a transaction (1) more favorable to iRobot’s stockholders from a financial point of view than the merger and (2) that is reasonably likely to be completed, taking into account any regulatory, financing or approval requirements and any other aspects considered relevant by the iRobot board of directors (after taking into account any binding revisions to the terms of the merger agreement proposed by Amazon.com as described in the section entitled “— Change of Board Recommendation; Alternative Acquisition Agreement”).

iRobot must promptly (and, in any event, within 24 hours) give written notice to Amazon.com if iRobot or any of its subsidiaries receives (1) any inquiry, proposal, indication of interest or offer with respect to an acquisition proposal, (2) any request by any person or group for information in connection with or with respect to any acquisition proposal or (3) any request by any person or group for discussions or negotiations, or to initiate or continue discussions or negotiations, with respect to an acquisition proposal, setting forth in the notice the name of the person or group and the material terms and conditions of any such acquisition proposal (including, if applicable, complete copies of any written request, inquiry, proposal, indication of interest or offer, including proposed agreements and any other written communications) and thereafter must keep Amazon.com reasonably informed, on a reasonably current basis (and, in any event, within 24 hours), of changes in the status and terms of any such proposal or offer (including any amendments thereto) and any changes to the status of any such discussions or negotiations.

Change of Board Recommendation; Alternative Acquisition Agreement

The iRobot board of directors has unanimously recommended that iRobot stockholders vote “FOR” the proposal to approve and adopt the merger agreement. The merger agreement permits the iRobot board of directors to effect a change of recommendation (as defined below) only in certain limited circumstances, as described below.

Except as expressly permitted by the merger agreement, neither the iRobot board of directors nor any committee thereof may:

 

   

withhold or withdraw or fail to make when required by the merger agreement (or publicly propose or publicly resolve to withhold or withdraw or fail to make when required by the merger agreement) the company recommendation with respect to the merger;

 

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qualify or modify (or publicly propose or publicly resolve to qualify or modify) the company recommendation with respect to the merger in a manner adverse to Amazon.com;

 

   

approve or recommend, or publicly declare advisable, any acquisition proposal;

 

   

fail to include the company recommendation in this proxy statement;

 

   

if any acquisition proposal that is structured as a tender offer or exchange offer for outstanding shares of Company common stock is commenced pursuant to Rule 14d-2 of the Exchange Act, fail to recommend against acceptance of the offer by iRobot’s stockholders prior to the earlier of  (1) the date of the meeting of the holders of Company common stock to consider and vote upon the approval and adoption of the merger agreement and (2) 11 business days (which for this purpose will be used as the term is used in Rule 14d-9 of the Exchange Act) after commencement of the tender offer or exchange offer;

 

   

approve or recommend, or publicly declare advisable or publicly propose to enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement, collaboration agreement or other agreement with respect to, or that is intended or would reasonably be expected to lead to, any acquisition proposal (other than a confidentiality agreement as described in the section entitled “— Acquisition Proposals; No Solicitation — Receipt of Acquisition Proposals” relating to any acquisition proposal) (referred to in this proxy statement as an “alternative acquisition agreement”); or

 

   

cause or permit iRobot to enter into an alternative acquisition agreement.

The actions described in all of the bullet points above other than the last bullet point are referred to in this proxy statement as a “change of recommendation.”

However, before the requisite company vote is obtained, the iRobot board of directors may effect a change of recommendation and/or terminate the merger agreement in response to a superior proposal, in each case if the iRobot board of directors has determined in good faith, after consultation with its outside financial advisor and its outside legal counsel, that an acquisition proposal constitutes or would reasonably be expected to lead to a superior proposal and the failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law. Before effecting a change of recommendation or terminating the merger agreement in response to a superior proposal, (1) iRobot must have given Amazon.com at least five business days’ prior written notice of its intention to do so, (2) iRobot must have afforded Amazon.com the opportunity to negotiate in good faith with iRobot to enable Amazon.com to propose in writing a binding offer to make revisions to the terms of the merger agreement and (3) at the end of the notice period, the iRobot board of directors must have considered in good faith the binding written offer and any other information it deems appropriate in good faith, and must have determined in good faith, after consultation with its outside legal counsel and its outside financial advisor, that the superior proposal continues to constitute a superior proposal if the changes proposed in the binding offer by Amazon.com were to be given effect.

In addition, before the requisite company vote is obtained, the iRobot board of directors may effect a change of recommendation in response to an intervening event (as defined below) if the iRobot board of directors has determined in good faith, after consultation with its outside financial advisor and its outside legal counsel, that the failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law. Before effecting a change of recommendation in response to an intervening event, (1) iRobot must have given Amazon.com at least five business days’ prior written notice of its intention to do so, (2) iRobot must have afforded Amazon.com the opportunity to negotiate in good faith with iRobot to enable Amazon.com to propose in writing a binding offer to make revisions to the terms of the merger agreement and (3) at the end of the notice period, the iRobot board of directors must have considered in good faith the binding written offer and any other information it deems appropriate in good faith, and must have determined in good faith, after consultation with its outside legal counsel and its outside financial advisor, that the failure to effect a change of recommendation

 

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would still be inconsistent with its fiduciary duties under applicable law if the changes proposed in the binding offer by Amazon.com were to be given effect. Under the merger agreement, an “intervening event” means a change, effect, event, circumstance, occurrence or development that (i) was neither known by nor reasonably foreseeable by iRobot or the iRobot board of directors as of August 4, 2022 (or, if known, the material consequences of which were not known or reasonably foreseeable) and (ii) becomes known by the iRobot board of directors prior to the receipt of the requisite company vote; provided, that in no event will any of the following constitute or be deemed to be an intervening event: (1) the receipt, existence or terms of an acquisition proposal or any matter relating thereto, (2) changes in the stock price of iRobot, (3) any breach by iRobot of the merger agreement or (4) the fact, in and of itself, that iRobot exceeds internal or published projections (it being understood, however, that the facts or causes underlying or contributing to any of the matters described in the preceding clauses (2) or (4) may be taken into account for purposes of determining whether an intervening event has occurred); provided, further, that an acquisition proposal that resulted from a breach of iRobot’s non-solicitation obligations under the merger agreement may not be the basis for an intervening event.

In the event of any modification to the financial terms or any other material terms of any acquisition proposal, iRobot must satisfy the notice requirement described above with a new written notice to Amazon.com, and comply with the negotiation requirements described above, provided that the subsequent notice period (and any subsequent notice period thereafter) will be three business days instead of five business days.

The merger agreement does not prohibit iRobot or the iRobot board of directors from taking and disclosing to the stockholders of iRobot a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act or making any disclosure to the stockholders of iRobot that is required by applicable law; provided, however, that if such disclosure has the effect of withholding or withdrawing, adversely qualifying, modifying or failing to make when required by the merger agreement the company recommendation, such disclosure will be deemed to be a change of recommendation and Amazon.com will have the right to terminate the merger agreement. Any “stop, look and listen” or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act will not be deemed to be a change of recommendation; provided that any such disclosure that has the effect of withholding, withdrawing, modifying or qualifying in any manner adverse to, or failing to make when required by the merger agreement, the company recommendation will be deemed to be a change of recommendation unless the iRobot board of directors expressly publicly reaffirms the company recommendation in such communication without any qualification.

iRobot Stockholders’ Meeting

iRobot has, in accordance with applicable law and its certificate of incorporation and bylaws, established a record date for, duly called and given notice of, and will convene and hold a meeting of the holders of shares (the “iRobot stockholders’ meeting”) (which will be held as promptly as reasonably practicable after the date that is either (A) the third business day after the day that is ten days after filing the preliminary proxy statement if, prior to such date, the SEC does not provide comments or indicates that it does not plan to provide comments or (B) within three business days after the date of being informed by the SEC staff that it has no further comments on the preliminary proxy statement) to consider and vote upon the approval and adoption of the merger agreement and to cause such vote to be taken, and will not postpone or adjourn such meeting, except to the extent advised by counsel to be necessary to comply with law or pursuant to the following sentence. iRobot will schedule the iRobot stockholders’ meeting to be held within thirty (30) days of the initial mailing of the proxy statement (or if iRobot’s nationally recognized proxy solicitor advises that thirty (30) days from the date of mailing the proxy statement is insufficient time to submit and obtain the requisite company vote, such later date as advised by such proxy solicitor and to which Amazon.com consents, such consent not to be unreasonably withheld, conditioned or delayed). Notwithstanding anything to the contrary in the merger agreement, (i) iRobot may adjourn, recess or postpone, and at the request of Amazon.com, it must adjourn, recess or postpone, the iRobot stockholders’ meeting for a reasonable period to solicit additional proxies, if iRobot or Amazon.com, respectively, reasonably believes there will be insufficient shares represented (either virtually or by proxy) to constitute a quorum necessary to conduct the business of the iRobot stockholders’ meeting or to obtain the

 

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requisite company vote (provided, that, (x) unless agreed in writing by iRobot and Amazon.com, all such adjournments, recesses or postponements will be for periods of no more than ten (10) business days each and (y) in no event will the record date of the iRobot stockholders’ meeting be changed without Amazon.com’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed)) and (ii) iRobot may adjourn, recess or postpone the iRobot stockholders’ meeting to the extent necessary to ensure that any supplement or amendment to the proxy statement that is required by applicable law is provided to the stockholders of iRobot for the amount of time required by law in advance of the iRobot stockholders’ meeting. Subject to iRobot’s rights to effect a change of recommendation in response to an intervening event or a superior proposal and to terminate the merger agreement in response to a superior proposal, as described in the section entitled “— Change of Board Recommendation; Alternative Acquisition Agreement”, the iRobot board will include the company recommendation in the proxy statement and will take all lawful action to obtain the requisite company vote. Without the prior written consent of Amazon.com, the adoption of the merger agreement will be the only matter (other than matters of procedure and matters required by law to be voted on by the iRobot stockholders in connection with the adoption of the merger agreement) that iRobot will propose to be acted on by the iRobot stockholders at the iRobot stockholders’ meeting. Without limiting the generality of the foregoing, but subject to iRobot’s rights to terminate the merger agreement as described in the section entitled “— Termination”, iRobot has agreed that its obligations described in this section will not be affected by the occurrence of a change of recommendation, the commencement, public proposal, public disclosure or communication to iRobot or any other person of any acquisition proposal or any event constituting or that could constitute an intervening event.

iRobot has agreed (1) to provide Amazon.com periodic updates concerning proxy solicitation results on a timely basis (including, if requested, promptly providing daily voting reports to the extent received from iRobot’s proxy solicitor) and (2) to give written notice to Amazon.com one business day prior to the iRobot stockholders’ meeting and on the day of, but prior to, the iRobot stockholders’ meeting of the status of the requisite company vote.

Debt Payoff

iRobot has agreed to use its reasonable best efforts to take any actions reasonably requested by Amazon.com that are necessary to facilitate the payoff by Amazon.com (or, in the case of letters of credit, facilitate the cash collateralization thereof) on the closing date and termination on the closing date (to the extent provided therein and pursuant to the terms thereof), or to facilitate negotiations with the lender party thereto and the continuation on and after the closing date of (i) the Existing Credit Agreement, (ii) the Amended and Restated Reimbursement Agreement, dated as of December 20, 2013 (as amended by Amendment No. 1 thereto, dated as of June 29, 2018 and Amendment No. 2 thereto, dated as of May 4, 2022), between iRobot, Bank of America, N.A., as administrative agent, and the other parties thereto, (iii) the Mizuho Bank Ltd. line of credit and (iv) any other indebtedness for borrowed money, including, in each case, using reasonable best efforts to obtain a payoff letter in connection therewith, provided that any such action described above will not be required unless it can be and is conditioned on the occurrence of the closing, and, at the closing, Amazon.com will provide all funds required to actually effect such payoff and termination. Notwithstanding the conditions to obligations of Amazon.com and Merger Sub to effect the merger described in the merger agreement, in no event will the receipt of such payoff letter or the consummation of any payoff or termination as described herein be a condition to any of the obligations of Amazon.com or Merger Sub under the merger agreement.

Employee Matters

The merger agreement provides that Amazon.com will provide or cause to be provided to each employee of iRobot who continues to be employed after the effective time compensation and benefits for a period of one year following the effective time on the following terms:

 

   

Cash Compensation: cash payments and target annual cash incentive compensation opportunities that are no less favorable in the aggregate than the base salary or wages and annual target cash incentive

 

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compensation opportunities provided by the iRobot and its subsidiaries to each such continuing employee immediately prior to the effective time; and

 

   

Other Compensation and Benefits: other compensation and employee benefits that are substantially comparable in the aggregate to other compensation and employee benefits (excluding any equity and long-term cash incentive compensation and any defined benefit pension and post-employment health and welfare benefits) provided by the iRobot and its subsidiaries to such continuing employees immediately prior to the effective time.

The merger agreement provides that Amazon.com will cause (or, with respect to employees outside of the United States, use commercially reasonable efforts to cause) (1) any pre-existing conditions or limitations and eligibility waiting periods under any of its group health plans to be waived with respect to the continuing iRobot employees and their eligible dependents, (2) the amount of eligible expenses incurred by each continuing iRobot employee and his or her eligible dependents that were credited to deductible and maximum out-of-pocket co-insurance requirements under the iRobot benefit plans to be credited for purposes of satisfying the deductible and maximum out-of-pocket co-insurance requirements under the corresponding benefit plans of Amazon.com and its affiliates and (3) any of the employee benefit plans of Amazon.com or its affiliates (including disability pay continuation plans) in which the continuing iRobot employees are entitled to participate to take into account for purposes of eligibility, vesting and benefit accrual thereunder (except for benefit accrual under defined benefit pension plans, for purposes of qualifying for subsidized early retirement benefits or retiree medical benefits or to the extent that its application would result in a duplication of benefits) and each continuing iRobot employee’s years of service with iRobot and its affiliates or predecessors before the effective time, to the same extent such service was credited under a comparable iRobot benefit plan.

Efforts to Complete the Merger

General

Subject to the terms of the merger agreement, iRobot, Amazon.com and Merger Sub have agreed to use reasonable best efforts to:

 

   

consummate and make effective the transactions contemplated by the merger agreement as promptly as reasonably practicable (and in any event no later than the outside date);

 

   

obtain from any governmental authority any consents, licenses, permits, waivers, approvals, authorizations, clearances or orders that are required or, in the reasonable judgment of Amazon.com after reasonable consultation with iRobot, advisable to be obtained by Amazon.com, Merger Sub or iRobot or any of their respective subsidiaries in order to consummate the transactions contemplated by the merger agreement;

 

   

resolve any objections and avoid any proceeding by any governmental authority, in connection with the authorization, execution and delivery of the merger agreement and the consummation of the transactions contemplated by the merger agreement, including the merger;

 

   

contest and defend any lawsuits or other proceedings, whether judicial or administrative, challenging the merger agreement or the consummation of the transactions contemplated by the merger agreement in accordance with the terms of the merger agreement, including seeking to have any stay, temporary restraining order, injunction or judgment entered by any court or other governmental authority vacated, lifted, overturned or reversed;

 

   

as promptly as reasonably practicable, and in any event within ten business days after August 4, 2022 (unless otherwise agreed by the parties to the merger agreement), make all necessary filings and submissions under the HSR Act, and thereafter supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to any law;

 

   

as promptly as reasonably practicable after August 4, 2022, make all necessary filings and submissions under other applicable antitrust laws or foreign investment laws that are, in the reasonable judgment of

 

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Amazon.com after reasonable consultation with iRobot, required or advisable in connection with the merger, and thereafter supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to any law; and

 

   

as promptly as reasonably practicable make any other required registrations, declarations, submissions and filings with respect to the transactions contemplated by the merger agreement required under the Exchange Act, any other applicable federal or state securities laws and any other applicable law.

Exchange of Information, Participation and Strategy

The parties have agreed to give (and to cause their respective subsidiaries to give) any notices to third parties, and to use, and to cause their respective subsidiaries to use, reasonable best efforts to obtain any third-party consents (not including for such purposes those consents required or advisable under antitrust laws or foreign investment laws) that are necessary, proper or advisable to consummate the transactions contemplated by the merger agreement; provided, however, that the parties will coordinate and cooperate in determining whether any actions, consents, approvals or waivers are required to be obtained from parties to any contracts of iRobot or any of its subsidiaries in connection with the consummation of the transactions contemplated by the merger agreement and seeking any such actions, consents, approvals or waivers, and following such coordination and cooperation, iRobot will, and will cause its subsidiaries to, use reasonable best efforts to seek any such required actions, consents, approvals or waivers as Amazon.com directs; provided, however, that iRobot will not be obligated to make any payment or commercial concession to any third party, or incur any liability, as a condition to (or in connection with) the seeking of such actions, consents, approvals or waivers, unless such payment, concession or liability is conditioned and effective only upon the closing and is consented to in writing by Amazon.com.

Without limiting the generality of the foregoing, each party to the merger agreement has agreed to:

 

   

give the other parties prompt notice of the making or commencement of any request or proceeding by or before any governmental authority with respect to the transactions contemplated by the merger agreement;

 

   

keep the other parties informed as to the status of any such request or proceeding;

 

   

to the extent practicable, give the other parties notice and an opportunity to participate in any communication made to the FTC, the DOJ, or any other competition authority or other domestic or foreign governmental authority regarding the transactions contemplated by the merger agreement; and

 

   

promptly notify the other parties of the substance of any communication from the FTC, the DOJ, or any other domestic or foreign governmental authority regarding the transactions contemplated by the merger agreement.

Amazon.com will have the right to devise and implement the strategy and timing for obtaining any clearances required or sought under any antitrust law or foreign investment law in connection with the merger (including, without limitation, the right to determine whether to commit to or agree with any governmental authority to stay, toll or extend any applicable waiting period under the HSR Act or any other antitrust law or foreign investment law, and whether to withdraw and refile any notification and report forms pursuant to the HSR Act (i.e., “pull and refile”)), provided that the strategy will be designed to obtain clearances as promptly as reasonably practicable and in no event later than four business days prior to the outside date.

In addition, subject to applicable laws relating to the exchange of information, Amazon.com and iRobot will have the right to review in advance and, to the extent reasonably practicable, each will consult with the other on and consider in good faith the views of the other in connection with all of the information relating to Amazon.com or iRobot and any of their respective subsidiaries, that appears in any filing made with, or written materials submitted or communications made to, any third party and/or any governmental authority in connection

 

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with the transactions contemplated by the merger agreement, provided, however, that such materials may be redacted as necessary to comply with contractual arrangements or as necessary to address reasonable privilege or confidentiality concerns.

Except as may be prohibited by any governmental authority or by any applicable law, to the extent reasonably practicable, each party will permit authorized representatives of the other parties to be present at each meeting, conference or telephone call and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to any governmental authority in connection with such request or proceeding.

Other Commitments

The merger agreement provides that nothing contained in the merger agreement will require, or be construed to require:

 

   

Amazon.com or any of its subsidiaries to take or refrain from taking any action (including any divestiture, holding separate any business or assets or other similar action) or to agree to any restriction or condition, in each case, with respect to any assets, operations, business or the conduct of business of Amazon.com or any of its subsidiaries (not including for this purpose the surviving corporation and its subsidiaries);

 

   

Amazon.com, iRobot or any of their respective subsidiaries to take or refrain from taking any action (including any divestiture, holding separate any business or assets or other similar action) or to agree to any restriction or condition with respect to any assets, operations, business or the conduct of business of iRobot and its subsidiaries; or

 

   

Amazon.com to commit to provide prior notice or seek prior approval from any governmental authority of any future transaction (not including the transactions contemplated by the merger agreement).

In addition, iRobot and its subsidiaries have agreed to take, and must take any of the actions described in the first, second and third bullet points above if iRobot is requested in writing to do so by Amazon.com and such action is only binding on or otherwise applicable to iRobot from and after the effective time and in the event that the closing occurs. iRobot and its subsidiaries must not communicate to any governmental authority its or their willingness to consider, offer to take, or to agree to any actions, restrictions or conditions with respect to obtaining any consents, registrations, approvals, permits, expirations of waiting periods or authorizations in connection with the merger and the other transactions contemplated by the merger agreement without the prior written consent of Amazon.com (which may be withheld in the sole discretion of Amazon.com).

In the event that any action set forth in the first or second bullet point above is proposed by or acceptable to a governmental authority, Amazon.com will have the sole right to determine the manner in which to implement the requirement of such governmental authority.

Amazon.com will defend through litigation on the merits and, if necessary, appeal any claim asserted in court or through administrative tribunal by any person or governmental authority in order to avoid entry of, or to have vacated or terminated, any order (whether temporary, preliminary or permanent) that would prevent the closing from occurring as promptly as practicable (and in any event, no later than the outside date).

Indemnification and Insurance

Indemnification

The merger agreement provides that after the effective time, Amazon.com will cause the surviving corporation to indemnify and hold harmless the individuals who on or prior to the effective time were officers or directors of iRobot or its subsidiaries or were serving at the request of iRobot as an officer, director, member,

 

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trustee or fiduciary of any other corporation, partnership or joint venture, trust, employee benefit plan or other enterprise with respect to all acts or omissions by them in their capacities as such or taken at the request of iRobot or any of its subsidiaries at any time prior to the effective time to the fullest extent permitted by applicable law (including with respect to advancement of expenses and attorneys’ fees and advancing such expenses and fees without requiring any preliminary determination of entitlement subject to such individual’s affirmation or undertaking if required under the DGCL).

Amazon.com and Merger Sub have agreed that all rights to exculpation or indemnification for acts or omissions occurring prior to the effective time existing as of August 4, 2022 in favor of the current and former directors and officers of iRobot or any of its subsidiaries or any of their predecessors and the heirs, executors, trustees, fiduciaries and administrators of such officer or director, as provided in iRobot’s or each of its subsidiaries’ respective certificates of incorporation or bylaws (or similar organizational documents) or in any agreement, will survive the merger and the transactions contemplated by the merger agreement and will continue in full force and effect in accordance with their terms. The merger agreement provides that after the effective time, Amazon.com and the surviving corporation will (and Amazon.com will cause the surviving corporation to) fulfill and honor such obligations to the maximum extent that iRobot or the applicable subsidiary would have been permitted to fulfill and honor them by applicable law.

In addition, for a period of six years following the effective time, the merger agreement provides that Amazon.com will, and will cause the surviving corporation and its subsidiaries to, cause the certificates of incorporation and bylaws (and other similar organizational documents) of the surviving corporation and its subsidiaries to contain provisions with respect to indemnification and exculpation that are at least as favorable as the indemnification and exculpation provisions contained in the certificates of incorporation and bylaws (or similar organizational documents) of iRobot and its subsidiaries immediately prior to the effective time, and during such six-year period, such provisions may not be amended, repealed or otherwise modified in any respect, except as required by applicable law.

Insurance

In addition, iRobot will obtain, or Amazon.com will cause the surviving corporation to obtain, for a period of six years from and after the effective time, “tail” insurance policies for the extension of  (1) the directors’ and officers’ liability coverage of iRobot’s existing directors’ and officers’ insurance policies and (2) iRobot’s existing fiduciary liability insurance policies, with terms, conditions, retentions and limits of liability that are at least as favorable to the insured parties as iRobot’s existing policies with respect to matters existing or occurring at or prior to the effective time, subject to certain qualifications and provided that in no event will the annual cost of such insurance coverage exceed during such period 300% of the current aggregate annual premium paid by iRobot for such purpose and, if the cost of the insurance coverage exceeds such amount, the surviving corporation will obtain a policy with the greatest coverage available for a cost not exceeding such amount.

Coordination on Litigation

Each of Amazon.com and iRobot have agreed to promptly notify the other of any transaction litigation (including stockholder litigation) against it or any of its representatives arising out of or relating to the merger agreement, the merger or the other transactions contemplated by the merger agreement and will keep the other reasonably informed regarding any such transaction litigation (including stockholder litigation). Until the termination of the merger agreement in accordance with its terms, iRobot will provide Amazon.com an opportunity to review and to propose comments to all filings or written responses to be made by iRobot in connection with any transaction litigation (including stockholder litigation) against iRobot and its directors relating to any transaction contemplated by the merger agreement, and iRobot will give reasonable and good faith consideration to any comments proposed by Amazon.com. In no event will iRobot enter into, agree to or disclose any settlement or mooting action with respect to such transaction litigation (including stockholder litigation) without the consent of Amazon.com, which, except in the case of a settlement or mooting action that

 

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includes an admission of fault, must not be unreasonably withheld, delayed or conditioned. Amazon.com and iRobot will notify each other promptly of the commencement of any transaction litigation (including stockholder litigation) of which it has received notice.

Other Covenants and Agreements

The merger agreement also contains additional covenants, including covenants relating to (1) the filing of this proxy statement, (2) the delisting and deregistration of the iRobot common stock, (3) public announcements with respect to the transactions contemplated by the merger agreement, (4) other actions related to takeover statutes and reporting requirements under Section 16 of the Exchange Act, (5) resignations, effective as of the effective time, of the directors of iRobot and/or the officers and directors of any of its subsidiaries (to the extent requested by Amazon.com), (6) acquisition by Amazon.com and Merger Sub of shares of iRobot common stock and (7)  further actions set forth in the Company disclosure schedule.

Conditions to Completion of the Merger

Each party’s obligation to complete the merger is subject to the satisfaction or waiver at or prior to the closing of the following conditions:

 

   

the adoption of the merger agreement by holders of a majority of all outstanding shares of iRobot common stock entitled to vote at the close of business on the record date for the special meeting;

 

   

(1) the waiting period (and any extensions thereof) applicable to the consummation of the merger under the HSR Act or any voluntary agreement with the DOJ Antitrust Division or the FTC not to consummate the merger will have expired or been terminated and (2) the applicable waiting periods (or any extensions thereof) or clearances, as applicable, under the antitrust laws and foreign investment laws will have expired, been earlier terminated or obtained; and

 

   

No court or other governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law that is in effect that restrains, enjoins, renders illegal or otherwise prohibits the completion of the merger.

The respective obligations of Amazon.com and Merger Sub to complete the merger are subject to the satisfaction or waiver by Amazon.com at or prior to the closing of the following additional conditions:

 

   

the accuracy of the representations and warranties of iRobot as of August 4, 2022 and as of the closing date (except for any representations and warranties made as of a particular date or period, which representations and warranties must be true and correct in all material respects only as of that date or period), generally subject to a “material adverse effect” or other qualification provided in the merger agreement;

 

   

the performance by iRobot in all material respects of all obligations required to be performed by it under the merger agreement at or prior to the closing date;

 

   

there not having occurred and there not being continuing any change, effect, event, occurrence or development that has had a material adverse effect; and

 

   

the receipt by Amazon.com and Merger Sub at closing of a certificate signed on behalf of iRobot by the Chief Executive Officer or Chief Financial Officer of iRobot certifying that the conditions set forth in the three preceding bullet points are satisfied.

The obligation of iRobot to complete the merger is subject to the satisfaction or waiver by iRobot at or prior to the closing of the following additional conditions:

 

   

the accuracy of the representations and warranties of Amazon.com and Merger Sub as of August 4, 2022 and as of the closing date (except for any representations and warranties made as of a particular date or period, which representations and warranties must be true and correct only as of that date or period) in all material respects;

 

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the performance by each of Amazon.com and Merger Sub in all material respects of all obligations required to be performed by it under the merger agreement at or prior to the closing date; and

 

   

the receipt by iRobot at closing of a certificate signed on behalf of Amazon.com and Merger Sub by an authorized officer of Amazon.com certifying that the conditions set forth in the two preceding bullet points are satisfied.

Termination

The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time in the following circumstances:

 

   

by the mutual written consent of iRobot and Amazon.com;

 

   

by either iRobot or Amazon.com, if:

 

   

the merger has not been consummated by August 4, 2023 (the “outside date,” as it may be extended as described below), provided that if the closing has not occurred prior to August 4, 2023 and all of the conditions to closing, other than the condition relating to antitrust law and foreign investment law approvals or the condition relating to the absence of a law, order or injunction prohibiting the merger (as it relates to the HSR Act or any other antitrust law or any foreign investment law), have been satisfied or are capable of being satisfied on August 4, 2023, then the outside date will be automatically extended to February 4, 2024, and the date, as so extended, will be the outside date, and provided further that if the closing has not occurred prior to February 4, 2024 and all of the conditions to closing, other than the conditions relating to antitrust law and foreign investment law approvals or the condition relating to the absence of a law, order or injunction prohibiting the merger (as it relates to the HSR Act or any other antitrust law or any foreign investment law), have been satisfied or are capable of being satisfied on February 4, 2024, then the outside date will be automatically extended to August 4, 2024, and the date, as so extended, will be the outside date (provided that the right to terminate the merger agreement described in this bullet point will not be available to any party that has breached in any material respect its obligations under the merger agreement in any manner that has been the principal cause of the failure of a condition to the completion of the merger); or

 

   

the requisite company vote has not been obtained and a vote has been taken on the matter at the iRobot stockholders’ meeting or any adjournment or postponement thereof (and such meeting, as may be so adjourned or postponed, will have concluded); or

 

   

an order has been enacted, issued, promulgated, enforced or entered after the date of the merger agreement by a court or other governmental authority of competent jurisdiction over any party to the merger agreement, which order permanently restrains, enjoins, renders illegal or otherwise prohibits the consummation of the merger becomes final and non-appealable; provided, that the right to terminate the merger agreement pursuant to this bullet will not be available to any party that has breached in any material respect its obligations under the merger agreement in any manner that will have been the principal cause of the failure of a condition to the consummation of the merger; or

 

   

by iRobot, if:

 

   

Amazon.com or Merger Sub has breached any of its representations, warranties, covenants or agreements, or there is any inaccuracy in any of its representations or warranties, in either case which (1) would result in a failure of a condition to the obligation of iRobot to complete the merger and (2) is either not curable prior to the outside date, as it may be extended, or is not cured within the earlier of  (x) thirty (30) days following the giving of notice thereof by iRobot to Amazon.com and (y) three (3) business days prior to the outside date as it may be extended; or

 

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prior to the time the requisite company vote is obtained and for so long as iRobot is in compliance with its non-solicitation obligations under the merger agreement, iRobot terminates the merger agreement in connection with entering into an alternative acquisition agreement providing for a superior proposal in accordance with the terms described in the section entitled “— Acquisition Proposals; No Solicitation” and, prior to or concurrently with the termination, pays to Amazon.com the Company termination fee (as defined below); or

 

   

by Amazon.com, if:

 

   

iRobot has breached any of its representations, warranties, covenants or agreements, or there is any inaccuracy in any of its representations or warranties, in either case which (1) would result in a failure of a condition to the obligations of Amazon.com and Merger Sub to complete the merger and (2) is either not curable prior to the outside date, as it may be extended, or is not cured within the earlier of  (x) thirty (30) days following the giving of notice thereof by Amazon.com to iRobot and (y) three (3) business days prior to the outside date as it may be extended; or

 

   

prior to the time the requisite company vote is obtained, the iRobot board of directors (1) has made a change of recommendation or (2) at any time following receipt of an acquisition proposal that has not been publicly withdrawn, has failed to reaffirm its approval or recommendation of the merger agreement and the merger as promptly as reasonably practicable (but in any event by the earlier of (A) five (5) business days and (B) the close of business on the second (2nd) business say immediately preceding the scheduled date of the company stockholders’ meeting at the written request to do so by Amazon.com) after receipt of any written request to do so from Amazon.com (provided that Amazon.com may not provide such a written request more than once for each acquisition proposal (unless the terms of such acquisition proposal have been modified or amended, in which case Amazon.com may provide another written request with respect to such acquisition proposal as so amended or modified)).

Termination Fees; Expense Reimbursement

iRobot will be required to pay Amazon.com a termination fee in an amount equal to $56 million (the “Company termination fee”) in the following circumstances:

 

   

if the merger agreement is terminated by Amazon.com under specified circumstances where the iRobot board of directors has made a change of recommendation;

 

   

if the merger agreement is terminated by iRobot in order to enter into an alternative acquisition agreement providing for a superior proposal in accordance with the terms described in the section entitled “— Acquisition Proposals; No Solicitation”; or

 

   

if any of the following three conditions is satisfied:

 

(1)

the merger agreement is terminated by (A) either iRobot or Amazon.com because the requisite company vote has not been obtained or because the merger has not been consummated by the outside date (as it may be extended) (at a time when the requisite company vote has not been obtained or Amazon.com has the right to terminate as result of a material breach by iRobot of its covenants and agreements under the merger agreement), or (B) Amazon.com as a result of a material breach by iRobot of its covenants and agreements under the merger agreement;

 

(2)

a bona fide acquisition proposal is made publicly to iRobot or any of its subsidiaries or otherwise becomes publicly known, or any person publicly announces an intention (whether or not conditional) to make an acquisition proposal that is not withdrawn publicly without qualification prior to the earlier of  (x) five days prior to the iRobot’s stockholders’ meeting (as such meeting may have been adjourned or postponed in accordance with the merger agreement) or (y) termination of the merger agreement; and

 

(3)

within twelve (12) months after the termination, iRobot or any of its subsidiaries enters into a definitive agreement providing for, or consummates or, in the case of an acquisition proposal that is a tender offer,

 

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  approves or recommends to iRobot’s stockholders, or is otherwise not opposed to, an acquisition proposal, provided that, for purposes of the provision referred to in this bullet point, the references to “15%” in the definition of  “acquisition proposal” are deemed to be references to “50%” and, as to any acquisition proposal relating to a merger, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction involving the Company, any such acquisition proposal results in a change of control of at least 50% of the stock or consolidated assets of iRobot.

In no event will more than one Company termination fee be payable under the merger agreement.

If the merger agreement is terminated by either iRobot or Amazon.com because the requisite company vote has not been obtained or because the merger has not been consummated by the outside date (as it may be extended) (at such time when the requisite company vote has not been obtained), then, in certain circumstances, iRobot will be required to pay to Amazon.com all of the reasonable and documented out-of-pocket expenses incurred by Amazon.com and Merger Sub in connection with the merger agreement and the other transactions contemplated by the merger agreement, in an amount not to exceed $17 million (the “expense reimbursement”). To the extent any portion of the expense reimbursement is paid by iRobot to Amazon.com, that amount paid will be deducted from the amount of any Company termination fee owed or payable.

Amazon.com will be required to pay iRobot a termination fee in an amount equal to $94 million in the following circumstances:

 

   

if (1) the merger agreement is terminated by either iRobot or Amazon.com because the merger has not been consummated by the outside date (as it may be extended), (2) at the time of such termination, all of the conditions required to be satisfied at or prior to the closing have been satisfied or duly waived by the parties entitled to the benefit thereof other than (A) the conditions relating to regulatory clearances or relating to the absence of a law, order or injunction prohibiting the merger (but only as it relates to the HSR Act or any other antitrust law) and (B) any other condition that by its nature is to be satisfied at the closing; and (3) no breach by iRobot of its obligations described in the section entitled “— Efforts to Complete the Merger” has been the principal cause of the failure of conditions relating to regulatory clearances or the condition relating to the absence of a law, order or injunction prohibiting the merger (but only as it relates to the HSR Act or any other antitrust law); or

 

   

if the merger agreement is terminated by either iRobot or Amazon.com because an order enacted, issued, promulgated, enforced or entered after the date of the merger agreement by a court or other governmental authority of competent jurisdiction over any party to the merger agreement, permanently restrains, enjoins, renders illegal or otherwise prohibits the consummation of the merger and has become final and non-appealable (but only if the appealable order relates to the HSR Act or any other antitrust law), and no breach by iRobot of its obligations described in the section entitled “— Efforts to Complete the Merger” has been the principal cause of the applicable enactment, issuance, promulgation, enforcement or entry of such order.

In no event will more than one Parent termination fee be payable under the merger agreement.

Limitation on Remedies

In the event of termination of the merger agreement and the abandonment of the merger in accordance with the provisions described in the section entitled “— Termination,” the merger agreement will become void and of no effect with no liability to any person on the part of iRobot, Amazon.com or Merger Sub (or of any of its representatives or affiliates), except that the confidentiality agreement between iRobot and Amazon.com and certain sections of the merger agreement, including sections relating to termination fees and expenses, will survive termination. However, termination of the merger agreement will not relieve any party of any liability or damages to the other party resulting from any willful and material breach (as that term is defined in the merger agreement) of its obligations set forth in the merger agreement.

 

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The parties have agreed that the payment of the Company termination fee will be the sole and exclusive remedy available to Amazon.com and Merger Sub with respect to the merger agreement in the event any such payment becomes due and payable and is paid, and, upon payment of the Company termination fee, iRobot (and its affiliates and its and their respective directors, officers, employees, stockholders and representatives) will have no further liability to Amazon.com and Merger Sub under the merger agreement, in law, equity or otherwise, and neither Amazon.com nor Merger Sub will seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against iRobot or any of iRobot’s subsidiaries or any of its or their respective directors, officers, employees, partners, managers, members, stockholders or affiliates or its or their respective representatives in connection with the merger agreement or the transactions contemplated thereby.

The parties have agreed that the payment of the Parent termination fee will be the sole and exclusive remedy available to iRobot with respect to the merger agreement in the event any such payment becomes due and payable and is paid, and, upon payment of the Parent termination fee, Amazon.com and Merger Sub (and their affiliates and their respective directors, officers, employees, stockholders and representatives) will have no further liability to iRobot under the merger agreement, in law, equity or otherwise, and neither Amazon.com nor Merger Sub will seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against iRobot or any of iRobot’s subsidiaries or any of its or their respective directors, officers, employees, partners, managers, members, stockholders or affiliates or its or their respective representatives in connection with the merger agreement or the transactions contemplated thereby.

Expenses

Except as otherwise provided in the merger agreement, including as described in the sections entitled “— Termination Fees; Expense Reimbursement,” whether or not the merger is completed, all costs and expenses incurred in connection with the preparation, negotiation, execution and performance of the merger agreement and the merger and the other transactions contemplated by the merger agreement, including all fees and expenses of representatives, will be paid by the party incurring such expense.

Amendment and Modification

Subject to the provisions of applicable law, at any time prior to the effective time, the merger agreement may be amended, modified or waived if the amendment, modification or waiver is in writing and signed, in the case of an amendment or modification by Amazon.com, Merger Sub and iRobot, or in the case of a waiver, by the party against whom the waiver is to be effective, provided, that after the receipt of the requisite stockholder vote, no amendment may be made which by applicable law requires further approval by the holders of iRobot common stock without obtaining that further approval.

Jurisdiction; Specific Enforcement

Under the merger agreement, each of the parties has agreed that it will not bring any claim, action or proceeding against any other parties relating to the merger agreement or the transactions contemplated by the merger agreement in any court other than (1) the Delaware Court of Chancery in and for New Castle County, (2) in the event (but only in the event) that such court does not have subject matter jurisdiction over such suit, action or other proceeding, the Delaware Superior Court, (3) in the event (but only in the event) such courts identified in clauses (1) or (2) do not have subject matter jurisdiction over such suit, action or other proceeding, the United States District Court for the District of Delaware or (4) in the event (but only in the event) such courts identified in clauses (1), (2) and (3) do not have subject matter jurisdiction over such suit, action or other proceeding, any other Delaware state court, in the event any dispute between the parties (whether in contract, tort or otherwise) arises out of the merger agreement or the transactions contemplated by the merger agreement.

 

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Each of the parties has agreed that if for any reason any of the provisions of the merger agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or damage would be caused for which money damages would not be an adequate remedy.

Accordingly, in addition to any other available remedies a party may have in equity or at law, each party will be entitled to enforce specifically the terms and provisions of the merger agreement and to obtain an injunction restraining any breach or violation or threatened breach or violation of the provisions of the merger agreement, including in each case Amazon.com’s and Merger Sub’s obligation to effect the closing, on the terms of, and subject to the conditions set forth in, the merger agreement and in each case without necessity of posting a bond or other form of security. Pursuant to the merger agreement, in the event that any action or proceeding is brought in equity to enforce the provisions of the merger agreement, no party will allege or assert, and each party has waived the defense, that there is an adequate remedy at law.

 

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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, iRobot is providing its stockholders with a separate advisory (non-binding) vote to approve certain compensation that may be paid or become payable to its named executive officers in connection with the merger, as described in the table entitled “Quantification of Payments and Benefits to the Company’s Named Executive Officers” under “The Merger (Proposal 1)  Interests of the Companys Directors and Executive Officers in the Merger.”

The iRobot board of directors unanimously recommends that the stockholders of iRobot approve the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to iRobot’s named executive officers in connection with the merger, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in the table in the section entitled “The Merger (Proposal 1) — Interests of the Company’s Directors and Executive Officers in the Merger — Quantification of Payments and Benefits to the Company’s Named Executive Officers,” including the footnotes to the table and the related narrative discussion, is hereby APPROVED.”

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. Accordingly, you may vote to approve and adopt the merger agreement 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 iRobot or Amazon.com. Accordingly, if the merger agreement is approved and adopted and the merger is completed, the compensation will be payable, subject only to the conditions applicable thereto under the applicable compensation agreements and arrangements, regardless of the outcome of the non-binding, advisory vote of iRobot stockholders.

The above resolution approving the merger-related compensation of iRobot’s named executive officers on an advisory basis requires the affirmative vote of a majority of the votes properly cast for and against with respect to this proposal.

The iRobot board of directors unanimously recommends that the stockholders of iRobot vote “FOR” the named executive officer merger-related compensation proposal.

 

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VOTE ON ADJOURNMENT

(PROPOSAL 3)

The Company’s stockholders are being asked to approve a proposal that will give the iRobot board of directors authority to adjourn from time to time the special meeting, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement, if there are insufficient votes at the time of the special meeting to approve the proposal to approve and adopt the merger agreement. If this adjournment proposal is approved, the special meeting could be adjourned on one or more occasions by the iRobot board of directors to any date or dates. In addition, the iRobot board of directors could postpone the special meeting before it commences. Pursuant to the merger agreement, iRobot is not permitted to postpone or adjourn the iRobot stockholders’ meeting, except to the extent advised by counsel to be necessary to comply with law, and except that iRobot may adjourn, recess or postpone, and at the request of Amazon.com, it will adjourn, recess or postpone, the iRobot stockholders’ meeting for a reasonable period to solicit additional proxies, if iRobot or Amazon.com, respectively, reasonably believes there will be insufficient shares of iRobot common stock represented to constitute a quorum necessary to conduct the business of the iRobot stockholders’ meeting or to obtain the requisite company vote. Any other postponement or adjournment would require the consent of the Company and Amazon.com. However, unless agreed in writing by iRobot and Amazon.com, any adjournments, recesses or postponements will be for periods of no more than ten business days each. iRobot may also adjourn, recess or postpone the iRobot stockholders’ meeting to the extent necessary to ensure that any required supplement or amendment to this proxy statement is provided to iRobot stockholders for the amount of time required by law in advance of the iRobot stockholders’ meeting. 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 before their use. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, or if you sign and return a proxy and you indicate that you wish to vote in favor of the proposal to approve and adopt the merger agreement but do not indicate a choice on the adjournment proposal, your shares of common stock will be voted in favor of the adjournment proposal.

The Company does not anticipate calling a vote on this proposal if Proposal 1 is approved by the requisite number of shares of iRobot common stock at the special meeting.

The vote on the adjournment proposal is a vote separate and apart from the vote on the proposal to approve and adopt the merger agreement. Accordingly, you may vote to approve the proposal to approve and adopt the merger agreement and vote not to approve the adjournment proposal and vice versa.

Assuming a quorum is present at the special meeting, approval of the adjournment proposal requires the affirmative vote of holders of a majority of the votes properly cast for and against with respect to this proposal.

The iRobot board of directors unanimously recommends that the stockholders of the Company vote “FOR” the adjournment proposal, if a vote on the adjournment proposal is called.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents the beneficial ownership of our voting securities for (1) each person beneficially owning more than five percent (5%) of the outstanding shares of any class of our voting securities, (2) each director of the Company, (3) our named executive officers and (4) all of our current directors and executive officers as a group.

Percentage ownership of our common stock is based on 27,231,543 shares of our common stock outstanding on August 18, 2022. Information given below regarding beneficial owners of more than five percent (5%) of the outstanding shares of any class of our voting securities is based solely on information provided by such persons in filings with the SEC on Schedules 13D, 13G and other filing made with the SEC on or before August 18, 2022. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have deemed shares of our common stock subject to options that are currently exercisable or exercisable within sixty (60) days of August 18, 2022, and the shares subject to restricted stock unit awards that will be released within sixty (60) days of August 18, 2022, to be outstanding and to be beneficially owned by the person holding the option and the restricted stock unit award for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise noted below, the address of each of the individuals and entities named in the table below is in care of iRobot Corporation, 8 Crosby Drive, Bedford, Massachusetts 01730. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.

 

     Common Stock  
     Number of Shares
Beneficially Owned
     Percent of Class  

Greater than 5% Stockholders

     

BlackRock, Inc.(1)

     5,016,703        18.42

The Vanguard Group(2)

     2,887,597        10.60

PRIMECAP Management Company(3)

     2,421,043        8.89

Pictet Asset Management SA(4)

     1,581,077        5.81

Directors and Named Executive Officers:

     

Colin Angle(5)

     311,233        1.14

Mohamad Ali

     20,441        *  

Deborah Ellinger

     21,016        *  

Karen Golz

     —          *  

Ruey-Bin Kao

     7,068        *  

Andrew Miller

     7,165        *  

Eva Manolis

     6,776        *  

Michelle Stacy(6)

     15,520        *  

Jean Jacques Blanc(7)

     8,576        *  

Faris Habbaba

     4,371        *  

Glen Weinstein

     29,341        *  

Julie Zeiler(8)

     17,055        *  

All executive officers and directors as a group (14 individuals)(9)

     486,265        1.79

 

*

Indicates ownership of less than 1% of the outstanding shares of the Company’s common stock.

 

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(1)

BlackRock, Inc. has sole voting power with respect to 4,875,515 shares and sole dispositive power with respect to 5,016,703 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. This information has been obtained from a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 28, 2022.

(2)

The Vanguard Group has sole voting power with respect to 0 shares, shared voting power with respect to 48,985 shares, sole dispositive power with respect to 2,813,726 shares and shared dispositive power with respect to 73,871 shares. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. This information has been obtained from a Schedule 13G/A filed by The Vanguard Group, Inc. with the SEC on February 10, 2022.

(3)

PRIMECAP Management Company has sole voting power with respect to 2,421,043 shares and sole dispositive power with respect to 2,421,043 shares. The address of PRIMECAP Management Company is 177 E. Colorado Blvd, 11th Floor, Pasadena, CA 91105. This information has been obtained from a Schedule 13G/A filed by PRIMECAP Management Company with the SEC on February 10, 2022.

(4)

Pictet Asset Management SA has sole voting power with respect to 1,581,077 shares and sole dispositive power with respect to 1,581,077 shares. Pictet Asset Management SA disclaims beneficial ownership of these shares, which are owned of record and beneficially by two U.S. funds and one non-U.S. mutual fund, both managed by Pictet Asset Management SA. The address of Pictet Asset Management SA is 60 Route des Acacias, 1211 Geneva 73, Switzerland. This information has been obtained from a Schedule 13G filed by Pictet Asset Management SA with the SEC on February 10, 2022.

(5)

Includes 66,963 shares issuable upon exercise of stock options.

(6)

Includes 9,000 shares held in a grantor-retained annuity trust for the benefit of Ms. Stacy during the annuity term of the trust and for the benefit of her children thereafter.

(7)

Includes 636 shares issuable upon exercise of stock options.

(8)

Includes 5,950 shares issuable upon exercise of stock options.

(9)

Includes 73,549 shares issuable upon exercise of stock options and 7,921 shares issuable upon vesting of restricted stock units.

 

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APPRAISAL RIGHTS OF IROBOT STOCKHOLDERS

If the merger is consummated, iRobot stockholders or beneficial owners who continuously hold their shares of iRobot common stock through the effective date of the merger, who do not vote in favor of the merger, who properly demand in writing an appraisal of their shares delivered to the Company prior to the taking of the vote on the proposal to approve and adopt the merger agreement and who comply with, and do not validly withdraw their demands or otherwise lose their appraisal rights under, the applicable provisions of Delaware law will be entitled to appraisal rights to receive, in cash, the fair value of their shares as determined by the Delaware Court of Chancery in connection with the Merger under Section 262 the DGCL (“Section 262”). The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262) and is incorporated herein by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that iRobot stockholders exercise their appraisal rights under Section 262. All references in Section 262 and in this summary to a “stockholder” are to the record holder of shares of iRobot common stock unless otherwise expressly noted herein, and all such references to a “beneficial owner” mean a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person unless otherwise expressly noted herein.

Under Section 262, if the merger is completed, iRobot stockholders and beneficial owners who: (i) deliver a written demand for appraisal of their shares to iRobot prior to the taking of the vote on the proposal to approve and adopt the merger agreement; (ii) do not vote in favor of the merger; (iii) continuously hold of record or beneficially own, as applicable, such shares through the effective date of the merger; and (iv) otherwise comply with, and do not withdraw their demands or otherwise lose their appraisal rights under, the applicable provisions set forth in Section 262, may be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of iRobot common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be “fair value.” However, assuming shares of iRobot common stock remain listed on a national securities exchange immediately before the merger (which we expect to be the case), after an appraisal petition has been filed, the Delaware Court of Chancery will dismiss appraisal proceedings as to all iRobot stockholders and beneficial owners otherwise entitled to appraisal rights unless (a) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of iRobot common stock (as measured in accordance with subsection (g) of Section 262) or (b) the value of the consideration provided in the merger for such total number of shares exceeds $1 million (conditions (a) and (b), and the assumption that shares of iRobot common stock remain listed on a national securities exchange immediately before the merger, are referred to in this summary as the “ownership thresholds”).

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than twenty (20) days prior to the meeting, must notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available that appraisal rights are available and include in the notice either a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This proxy statement constitutes iRobot’s notice to iRobot stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262). In connection with the merger, any iRobot stockholder or beneficial owner who wishes to exercise appraisal rights, or who wishes to preserve his, her or its right to do so, should review Section 262 carefully. Failure to comply with the requirements of Section 262 in a timely and proper manner will result in the loss of appraisal rights under the DGCL. A iRobot stockholder or beneficial owner who loses his, her or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of iRobot common stock, iRobot believes that if a iRobot stockholder or beneficial owner considers exercising such rights, that person should seek the advice of legal counsel.

 

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iRobot stockholders and beneficial owners wishing to exercise the right to seek an appraisal of their shares of iRobot common stock must do ALL of the following:

 

   

the person must not vote in favor of the merger;

 

   

the person must deliver to iRobot a written demand for appraisal before the vote is taken on the proposal to approve and adopt the merger agreement;

 

   

the person must continuously hold or beneficially own, as applicable, the shares from the date of making the demand through the effective date of the merger (if a stockholder or beneficial owner transfers the shares before the effective time, such person will lose appraisal rights with respect to the shares so transferred);

 

   

the person, another stockholder or beneficial owner who has properly demanded appraisal or the surviving corporation must file a petition in the Delaware Court of Chancery requesting a determination of the “fair value” of the shares within one hundred twenty (120) days after the effective date of the merger. The surviving corporation is under no obligation to file any petition and has no intention of doing so; and

 

   

the person must otherwise comply with Section 262 of the DGCL.

In addition, one of the ownership thresholds must be met.

Making a Written Demand

Any iRobot stockholder or beneficial owner wishing to exercise appraisal rights must deliver to iRobot, before the vote is taken on the proposal to approve and adopt the merger agreement, a written demand for the appraisal of the iRobot stockholder’s or beneficial owner’s shares. The person making the written demand must be a stockholder of record or a beneficial owner, as applicable, on the date the written demand for appraisal is made, and such person must continue to hold or beneficially own, respectively, the shares as to which such demand relates through the effective date of the merger.

A person wishing to exercise appraisal rights must not vote or submit a proxy in favor of the approval and adoption of the merger agreement. In the case of a holder of record of iRobot common stock, a proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the approval and adoption of the merger agreement, and it will constitute a waiver of the iRobot stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a iRobot stockholder who submits a proxy and who wishes to exercise appraisal rights must ensure that the proxy submitted contains instructions to vote against the approval and adoption of the merger agreement or abstain from voting. In the case of a beneficial owner, brokers, banks and other nominees that hold shares of common stock in “street name” for their customers do not have discretionary authority to vote those shares on the proposal to approve and adopt the merger agreement without specific voting instructions from the beneficial owner on such proposal, but such brokers, banks or other nominees will vote such shares as instructed if the beneficial owner provides such instructions. If a beneficial owner of shares held in “street name” instructs such person’s broker, bank or other nominee to vote such person’s shares in favor of the proposal to approve and adopt the merger agreement, and does not revoke such instruction prior to the vote on the proposal to approve and adopt the merger agreement, then such shares will be voted in favor of the approval and adoption of the merger agreement, and it will constitute a waiver of such beneficial owner’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a beneficial owner who wishes to exercise appraisal rights must either not provide any instructions to such person’s broker, bank or other nominee how to vote on the proposal to approve and adopt the merger agreement or must instruct such broker, bank or other nominee to vote against the approval and adoption of the merger agreement or abstain from voting on such proposal.

Neither voting against the proposal to approve and adopt the merger agreement nor abstaining from voting on such proposal will, in and of itself, constitute a written demand for appraisal satisfying the requirements of

 

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Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal to approve and adopt the merger agreement. A iRobot stockholder’s or beneficial owner’s failure to make the written demand prior to the taking of the vote on the proposal to approve and adopt the merger agreement will constitute a waiver of appraisal rights.

A demand for appraisal made by a iRobot stockholder or beneficial owner must be executed by or on behalf of the holder of record or beneficial owner, as applicable, and must reasonably inform iRobot of the identity of such stockholder or beneficial owner. In addition, in the case of a demand for appraisal made by a iRobot beneficial owner, the demand must also reasonably identify the holder of record of the shares for which the demand is made, be accompanied by documentary evidence of the beneficial owner’s ownership of stock (such as a brokerage or securities account statement containing such information or a letter from the broker or other record holder of such shares confirming such information) and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provide an address at which such beneficial owner consents to receive notices given by the surviving corporation under Section 262 and to be set forth on the verified list required by subsection (f) of Section 262 (discussed further below).

Whether made by an iRobot stockholder or a beneficial owner, a written demand for appraisal must state that the person intends thereby to demand appraisal of the holder’s shares in connection with the merger. If the shares are held of record or beneficially owned in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand should be executed by or on behalf of such holder of record or beneficial owner, and if the shares are held of record or beneficially owned by more than one (1) person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all such joint holders of record or beneficial owners. An authorized agent, including an authorized agent for two (2) or more joint stockholders or beneficial owners, as applicable, may execute a demand for appraisal on behalf of a holder of record or beneficial owner; however, the agent must identify the record holder or holders or beneficial owner or owners, respectively, and should expressly disclose that, in executing the demand, the agent is acting as agent for such record holder or holders or beneficial owner or owners, as applicable.

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

iRobot Corporation

8 Crosby Drive

Bedford, MA 01730

Attention: Secretary

Any iRobot stockholder or beneficial owner who has delivered a written demand to iRobot and who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal in respect of some or all of such person’s shares and accept the merger consideration offered pursuant to the merger agreement with respect to the shares subject to the withdrawal by delivering to iRobot a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than sixty (60) days after the effective date of the merger will require written approval of the surviving corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any person without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal in respect of some or all of such person’s shares and to accept the merger consideration with respect to the shares subject to the withdrawal within sixty (60) days after the effective date of the merger.

Notice by the Surviving Corporation

If the merger is completed, within ten (10) days after the effective date of the merger, the surviving corporation will notify each iRobot stockholder who has properly made a written demand for appraisal pursuant

 

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to Section 262 and has not voted in favor of the merger, and any beneficial owner who has demanded appraisal in such person’s name pursuant to Section 262, that the merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within one hundred twenty (120) days after the effective date of the merger, the surviving corporation or any iRobot stockholder or beneficial owner who has demanded appraisal of such person’s shares and otherwise complied with Section 262 and is otherwise entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a iRobot stockholder or beneficial owner, demanding a determination of the “fair value” of the shares held by all persons entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and iRobot stockholders and beneficial owners should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the “fair value” of the shares of iRobot common stock. Accordingly, any iRobot stockholder or beneficial owner who desires to have their shares appraised by the Delaware Court of Chancery should initiate all necessary action to perfect their appraisal rights in respect of their shares of iRobot common stock within the time and in the manner prescribed in Section 262. The failure of a iRobot stockholder or beneficial owner to file such a petition within the period specified in Section 262 could nullify the person’s previous written demand for appraisal.

Within one hundred twenty (120) days after the effective date of the merger, any person who has complied with the requirements of Section 262 and who is entitled to appraisal rights thereunder will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the merger and with respect to which iRobot has received demands for appraisal, and the aggregate number of stockholders or beneficial owners holding or owning such shares (provided that, in the case of a demand made by a beneficial owner in such person’s name, the record holder of such shares shall not be considered a separate stockholder holding such shares for purposes of such aggregate number). Such statement must be given by the surviving corporation to the requesting person within ten (10) days after receipt by the surviving corporation of the written request for such a statement or within ten (10) days after the expiration of the period for delivery of demands for appraisal, whichever is later.

If a petition for an appraisal is duly filed by any person other than the surviving corporation, service of a copy thereof must be made upon the surviving corporation, which will then be obligated within twenty (20) days after such service to file with the Delaware Register in Chancery a duly verified list (which we refer to in this summary as the “verified list”) containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order that notice of the time and place fixed for the hearing on the petition be mailed to the surviving corporation and all persons shown on the verified list at the addresses stated therein. The costs of these notices are borne by the surviving corporation. After notice to iRobot stockholders and beneficial owners as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those persons who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the persons who demanded an appraisal for their shares to submit their stock certificates (if any) to the Delaware Register in Chancery for notation thereon of the pendency of the appraisal proceedings and, if any person fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such person. The Delaware Court of Chancery will dismiss appraisal proceedings as to all iRobot stockholders and beneficial owners who are otherwise entitled to appraisal rights if neither of the ownership thresholds is met. If a petition for appraisal is not timely filed, then all iRobot stockholders’ and beneficial owners’ right to an appraisal will cease.

Determination of “Fair Value”

After determining the persons entitled to an appraisal, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing

 

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appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of iRobot common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the “fair value.” Unless the court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will compound quarterly and accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date the judgment is paid. However, at any time before the Delaware Court of Chancery enters judgment in the appraisal proceedings, the surviving corporation may pay to each person entitled to appraisal an amount in cash, in which case such interest will accrue after the time of such payment only on an amount that equals the sum of (1) the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery, and (2) any interest accrued prior to the time of such voluntary payment, unless paid at such time. The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware 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 which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Supreme Court of Delaware 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 merged corporation. The Delaware Supreme Court has recently indicated that transaction price is one of the relevant factors the Delaware Court of Chancery may consider in determining fair value and that absent deficiencies in the sale process the transaction price should be given “considerable weight.” 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 Supreme Court of Delaware 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 Supreme Court of Delaware 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.”

iRobot stockholders and beneficial owners considering seeking appraisal should be aware that the “fair value” of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the merger consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the merger consideration payable in a merger is not an opinion as to, and does not in any manner address, “fair value” under Section 262. No representation is made as to the outcome of the appraisal of “fair value” as determined by the Delaware Court of Chancery, and iRobot stockholders and beneficial owners should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither iRobot nor Amazon.com anticipates offering more than the merger consideration to any person exercising appraisal rights, and each of iRobot and Amazon.com reserves the rights to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of iRobot common stock is less than the merger consideration.

Upon application by the surviving corporation or by any person entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the verified list may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights. When the fair value of the shares is determined, the Delaware Court of Chancery will direct the payment

 

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of such value, with interest thereon, if any, to the persons entitled thereto and upon such terms and conditions as the Delaware Court of Chancery may order. The Delaware Court of Chancery’s decree may be enforced as other decrees in the Delaware Court of Chancery may be enforced. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and charged upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a person whose name appears on the verified list who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may also order that all or a portion of such expenses, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal not dismissed by the Delaware Court of Chancery pursuant to Section 262(k). In the absence of such determination or assessment, each party bears its own expenses.

From and after the effective date of the merger, no person who has demanded appraisal rights with respect to some or all of such person’s shares will be entitled to vote such shares of iRobot common stock for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions on the holder’s shares of iRobot common stock, if any, payable to iRobot stockholders as of a time prior to the effective time. If any iRobot stockholder or beneficial owner who demands appraisal of his, her or its shares of iRobot common stock under Section 262 validly withdraws, fails to perfect, or otherwise loses, such holder’s or beneficial owner’s right to appraisal, such person’s shares of iRobot common stock will be deemed to have been converted at the effective time into the right to receive the merger consideration. A person will fail to perfect, or effectively lose, his, her or its right to appraisal if no petition for appraisal is filed within one hundred twenty (120) days after the effective date of the merger or if neither of the ownership thresholds is met. As described above, a person may validly withdraw such person’s demand for appraisal if the person delivers to the surviving corporation a written withdrawal of the holder’s demand for appraisal in respect of some or all of such person’s shares in accordance with Section 262.

Failure to comply with all of the procedures set forth in Section 262 will result in the loss of statutory appraisal rights. Consequently, any iRobot stockholder or beneficial owner wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

STOCKHOLDERS WHO VOTE SHARES IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT WILL NOT BE ENTITLED TO EXERCISE APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER, WILL RECEIVE THE MERGER CONSIDERATION.

The foregoing summary of the rights of the iRobot stockholders and beneficial owners to seek appraisal rights under Delaware law does not purport to be a complete statement of the procedures to be followed by such persons to exercise any appraisal rights available thereunder and is qualified in its entirety by reference to Section 262 of the DGCL, which may be accessed without subscription or cost at the Delaware Code Online (available at https://delcode.delaware.gov/title8/c001/sc09/index.html#262). The proper exercise of appraisal rights requires adherence to the applicable provisions of the DGCL.

 

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MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

In accordance with Rule 14a-3(e)(1) under the Exchange Act, one proxy statement will be delivered to two or more stockholders who share an address, unless the Company has received contrary instructions from one or more of the stockholders. Each stockholder will receive a separate proxy card. The Company will deliver promptly upon written or oral request a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the proxy statement was delivered. Requests for additional copies of the proxy statement should be directed to the Company at iRobot Corporation, 8 Crosby Drive, Bedford, MA 01730, Attention: Secretary or by calling (781) 430-3003. In addition, stockholders who share a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by contacting the Company at the address and phone number set forth in the prior sentence.

 

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SUBMISSION OF STOCKHOLDER PROPOSALS

The Company held its annual meeting of iRobot stockholders (the “2022 annual meeting”) on May 27, 2022. In light of the special meeting, the Company will hold an annual meeting of iRobot stockholders in the year 2023 only if the merger is not completed and iRobot stockholders will continue to be entitled to attend and participate in such meeting.

Generally, iRobot stockholders have the opportunity to submit proper proposals for inclusion in our proxy statement and for consideration at the annual meeting of iRobot stockholders by submitting their proposals in writing to our Secretary at least 120 days before the date of our proxy statement for the previous year’s annual meeting, and otherwise complying with the requirements of Rule 14a-8 of the Exchange Act. As described in our annual proxy statement for the 2022 annual meeting filed on April 11, 2022, iRobot stockholders have the opportunity to submit proper proposals for inclusion in our proxy statement and for consideration at the annual meeting of iRobot stockholders to be held in 2023 (if such meeting is held) by submitting their proposals in writing to our Secretary at the Company’s principal executive offices no later than the close of business on December 12, 2022 and otherwise complying with the requirements of Rule 14a-8 of the Exchange Act. In addition, iRobot stockholders who meet the applicable eligibility requirements under the proxy access provision of our bylaws and wish to include nominees for our board of directors in our annual proxy statement for the 2023 annual meeting, or stockholders who wish to make a proposal at the 2023 annual meeting (other than a proposal made pursuant to Rule 14a-8 or pursuant to the proxy access provision of our bylaws), must in each case notify us between January 27, 2023 and February 26, 2023. If a stockholder who wishes to present a proposal fails to notify us by February 26, 2023 and such proposal is brought before the 2023 annual meeting, then under the SEC’s proxy rules, the proxies solicited by iRobot management with respect to the 2023 annual meeting will confer discretionary voting authority with respect to the stockholder’s proposal on the persons selected by iRobot management to vote the proxies. If a stockholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC’s proxy rules. To comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the iRobot’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 28, 2023.

A copy of the full text of the bylaws provisions governing the notice requirements set forth above may be obtained by writing to our Secretary. In order to curtail controversy as to the date on which we received a proposal, it is suggested that proponents submit stockholders’ proposals by Certified Mail, Return Receipt Requested, to iRobot Corporation, 8 Crosby Drive, Bedford, Massachusetts 01730, Attention: Secretary.

 

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information in this proxy statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates herein by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our financial condition and are incorporated herein by reference.

The following iRobot filings with the SEC are incorporated herein by reference:

 

   

iRobot’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022, filed on February 15, 2022;

 

   

iRobot’s Quarterly Reports on Form 10-Q, filed on August 10, 2022 and May 5, 2022;

 

   

iRobot’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 11, 2022; and

 

   

iRobot’s Current Reports on Form 8-K, filed on August 5, 2022 and June 1, 2022.

We also incorporate by reference into this proxy statement additional documents that we may file with the SEC between the date of this proxy statement and the earlier of the date of the special meeting or the termination of the merger agreement. These documents include periodic reports, such as Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as well as Current Reports on Form 8-K and proxy soliciting materials. The information provided on our website is not part of this proxy statement, and therefore is not incorporated herein by reference.

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 herein by reference.

You may obtain any of the documents we file with the SEC through the SEC’s website at www.sec.gov, or from our website at https://investor.irobot.com/. The information included on our website is not incorporated herein by reference.

You may also request copies of any of the documents we file with the SEC by requesting in writing or by telephone from us at the following address:

iRobot Corporation

Attn: Secretary

8 Crosby Drive

Bedford, MA 01730

(781) 430-3607

If you would like to request documents from us, please do so as soon as possible, to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt method, within one (1) business day after we receive your request.

 

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If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of iRobot common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-8332 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. 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 SEPTEMBER 7, 2022. 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

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

AMAZON.COM, INC.,

MARTIN MERGER SUB, INC.

and

IROBOT CORPORATION

Dated as of August 4, 2022

 

 

 


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TABLE OF CONTENTS

 

          PAGE  

ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME

     A-1  

Section 1.1

   The Merger      A-1  

Section 1.2

   Closing      A-1  

Section 1.3

   Effective Time      A-2  

ARTICLE II CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION

     A-2  

Section 2.1

   Certificate of Incorporation of the Surviving Corporation      A-2  

Section 2.2

   Bylaws of the Surviving Corporation      A-2  
ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION      A-2  

Section 3.1

   Directors of the Surviving Corporation      A-2  

Section 3.2

   Officers of the Surviving Corporation      A-2  

ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF SHARE CERTIFICATES

     A-2  

Section 4.1

   Effect on Capital Stock      A-2  

Section 4.2

   Exchange of Share Certificates and Book-Entry Shares      A-3  

Section 4.3

   Treatment of Stock-Based Awards; ESPP      A-5  

Section 4.4

   Adjustments to Prevent Dilution      A-7  
ARTICLE V REPRESENTATIONS AND WARRANTIES      A-7  

Section 5.1

   Representations and Warranties of the Company      A-7  

Section 5.2

   Representations and Warranties of Parent and Merger Sub      A-33  
ARTICLE VI COVENANTS      A-35  

Section 6.1

   Interim Operations      A-35  

Section 6.2

   Acquisition Proposals; Change of Recommendation      A-39  

Section 6.3

   Proxy Statement Filing; Information Supplied      A-43  

Section 6.4

   Company Stockholders Meeting      A-44  

Section 6.5

   Cooperation; Antitrust and Foreign Investment Law Matters; Status      A-45  

Section 6.6

   Information; Access and Reports      A-47  

Section 6.7

   Stock Exchange Delisting      A-48  

Section 6.8

   Publicity      A-48  

Section 6.9

   Employee Benefits      A-49  

Section 6.10

   Expenses      A-50  

Section 6.11

   Indemnification; Directors’ and Officers’ Insurance      A-50  

Section 6.12

   Resignations      A-52  

Section 6.13

   Transaction Litigation      A-52  

Section 6.14

   Other Actions by the Company      A-52  

Section 6.15

   Approval of Sole Stockholder of Merger Sub; No Acquisition of Shares      A-52  

Section 6.16

   Debt Payoff      A-53  
ARTICLE VII CONDITIONS      A-53  

Section 7.1

   Conditions to Each Party’s Obligation to Effect the Merger      A-53  

Section 7.2

   Conditions to Obligations of Parent and Merger Sub      A-53  

Section 7.3

   Conditions to Obligation of the Company      A-54  

 

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ARTICLE VIII TERMINATION      A-55  

Section 8.1

   Termination      A-55  

Section 8.2

   Effect of Termination and Abandonment      A-56  
ARTICLE IX MISCELLANEOUS AND GENERAL      A-58  

Section 9.1

   Survival      A-58  

Section 9.2

   Modification or Amendment      A-58  

Section 9.3

   Waiver      A-59  

Section 9.4

   Counterparts      A-59  

Section 9.5

   Governing Law and Venue; Waiver of Jury Trial; Specific Performance      A-59  

Section 9.6

   Notices      A-60  

Section 9.7

   Entire Agreement      A-61  

Section 9.8

   No Third Party Beneficiaries      A-61  

Section 9.9

   Obligations of Parent and of the Company      A-61  

Section 9.10

   Transfer Taxes      A-61  

Section 9.11

   Definitions      A-61  

Section 9.12

   Severability      A-61  

Section 9.13

   Interpretation; Construction      A-61  

Section 9.14

   Successors and Assigns      A-62  

Annex A – Defined Terms

Exhibit A – Amended and Restated Certificate of Incorporation of the Surviving Corporation

 

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 4, 2022, is by and among Amazon.com, Inc., a Delaware corporation (“Parent”), Martin Merger Sub, Inc., a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), and iRobot Corporation, a Delaware corporation (the “Company”, with the Company and Merger Sub sometimes being hereinafter collectively referred to as the “Constituent Corporations”).

RECITALS

WHEREAS, the parties intend that, on the terms and subject to the conditions set forth in this Agreement, Merger Sub shall merge with and into the Company (the “Merger”), with the Company surviving the Merger, pursuant to and in accordance with the provisions of the Delaware General Corporation Law (the “DGCL”);

WHEREAS, the board of directors of Parent has unanimously approved and declared advisable this Agreement and the transactions contemplated hereby;

WHEREAS, the board of directors of Merger Sub has unanimously approved and declared advisable this Agreement in accordance with the DGCL and unanimously recommended that this Agreement be approved and adopted by the sole stockholder of Merger Sub;

WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously approved and declared advisable this Agreement in accordance with the DGCL and unanimously recommended that this Agreement be approved and adopted by the holders of shares of common stock, par value $0.01 per share, of the Company (the “Shares”); and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement and to set forth certain conditions to the Merger.

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth in this Agreement, the parties agree as follows:

ARTICLE I

THE MERGER; CLOSING; EFFECTIVE TIME

Section 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company in accordance with the provisions of the DGCL. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue in its existence under the laws of the State of Delaware as the surviving corporation (in such capacity, the Company is sometimes hereinafter referred to as the “Surviving Corporation”) and, following the Merger, shall be a wholly owned Subsidiary of Parent. The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

Section 1.2 Closing. Unless otherwise mutually agreed in writing between the Company and Parent, the closing of the Merger (the “Closing”) shall take place by means of a virtual closing through electronic exchange of signatures at 9:00 a.m. (New York time) on the third Business Day (the “Closing Date”) following the day on which the last to be satisfied or waived of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement. For purposes of this Agreement, the term “Business Day” means any day ending at 11:59 p.m. (New York time) (other than a Saturday or Sunday) on which the

 

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Department of State of the State of Delaware and banks in the County of New York, New York are open for general business.

Section 1.3 Effective Time. As soon as practicable following, and on the date of, the Closing, the Company and Parent will cause the Merger to be consummated by filing all necessary documentation, including a Certificate of Merger (the “Certificate of Merger”), with the Secretary of State of the State of Delaware as provided in the relevant provisions of the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later time as may be agreed by the parties in writing and specified in the Certificate of Merger (the “Effective Time”).

ARTICLE II

CERTIFICATE OF INCORPORATION AND BYLAWS

OF THE SURVIVING CORPORATION

Section 2.1 Certificate of Incorporation of the Surviving Corporation. At the Effective Time, the certificate of incorporation of the Company as in effect immediately prior to the Effective Time shall be amended and restated in its entirety to be in the form set forth in Exhibit A to this Agreement, and as so amended shall be the certificate of incorporation of the Surviving Corporation (the “Charter”) until thereafter amended as provided therein or as provided by applicable Law.

Section 2.2 Bylaws of the Surviving Corporation. The parties hereto shall take all actions necessary so that the bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation (the “Bylaws”) (except that any references therein to Merger Sub or its date of incorporation, certificate of incorporation or registered agent and office in the State of Delaware shall instead refer to the Company, its date of incorporation, the Charter and its registered agent and office in the State of Delaware, respectively) until thereafter amended as provided therein or as provided by applicable Law.

ARTICLE III

DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION

Section 3.1 Directors of the Surviving Corporation. The parties hereto shall take all actions necessary so that the directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be appointed as the only directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DGCL, the Charter and the Bylaws.

Section 3.2 Officers of the Surviving Corporation. The parties hereto shall take all actions necessary to cause the individuals specified by Parent prior to the Effective Time to be appointed as the only officers of the Surviving Corporation as of immediately following the Effective Time until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DGCL, the Charter and the Bylaws.

ARTICLE IV

EFFECT OF THE MERGER ON CAPITAL STOCK;

EXCHANGE OF SHARE CERTIFICATES

Section 4.1 Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of the holder of any capital stock of the Company:

(a) Merger Consideration. Each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares owned by Parent or Merger Sub or any other direct or indirect wholly-owned Subsidiary of

 

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Parent and Shares owned by the Company or any direct or indirect wholly-owned Subsidiary of the Company, and in each case not held on behalf of third parties (the Shares referred to in clause (i), the “Cancelled Shares”) and (ii) Shares that are owned by stockholders of the Company who have validly demanded and not withdrawn appraisal rights in accordance with the applicable provisions of Section 262 of the DGCL prior to the Effective Time (the Shares referred to in clause (ii), the “Dissenting Shares”, and, together with the Cancelled Shares, the “Excluded Shares”)) shall be converted into the right to receive $61.00 per Share in cash, without interest (the “Merger Consideration”). At the Effective Time, all of the Shares converted into the right to receive the Merger Consideration pursuant to this Section 4.1(a) shall cease to be outstanding and shall cease to exist as of the Effective Time, and each certificate formerly representing any of the Shares (other than Excluded Shares) (each, a “Share Certificate”) and each book-entry account formerly representing any non-certificated Shares (other than Excluded Shares) (each, a “Book-Entry Share”) shall thereafter represent only the right to receive the Merger Consideration, without interest.

(b) Cancellation of Cancelled Shares. Each Cancelled Share shall, as a result of the Merger and without any action on the part of the holder of such Cancelled Share, cease to be outstanding, be cancelled without payment of any consideration therefor and cease to exist.

(c) Merger Sub. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation.

Section 4.2 Exchange of Share Certificates and Book-Entry Shares.

(a) Appointment of Paying Agent. Prior to the Effective Time, Parent and Merger Sub shall appoint a bank or trust company reasonably acceptable to the Company to serve as the paying agent (the “Paying Agent”) and shall enter into an agreement reasonably acceptable to the Company relating to the Paying Agent’s responsibilities with respect to this Agreement.

(b) Deposit of Merger Consideration. At or prior to the Effective Time, Parent or Merger Sub shall deposit, or cause to be deposited, with the Paying Agent, cash in U.S. Dollars sufficient to pay the aggregate Merger Consideration (other than in respect of Excluded Shares) under Section 4.1(a) (such cash being hereinafter referred to as the “Payment Fund”). The Payment Fund shall not be used for any purpose other than a purpose expressly provided for in this Agreement. Pending its disbursement in accordance with this Section 4.2, the Payment Fund shall be invested by the Paying Agent, if so directed by Parent or Merger Sub. Any such investment, if made, must be made in (i) short-term direct obligations of the United States of America, (ii) short-term obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii) short-term commercial paper rated the highest quality by either Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Services or (iv) certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion. Parent shall or shall cause the Surviving Corporation to promptly replace or restore the cash in the Payment Fund so as to ensure that the Payment Fund is at all times maintained at a level sufficient for the Paying Agent to make all payments of Merger Consideration in accordance herewith. No investment losses resulting from investment of the funds deposited with the Paying Agent shall diminish the rights of any holder of Shares to receive the Merger Consideration as provided herein. Payments to holders in respect of Company Options, Company RSU Awards, Company PSU Awards and Company DSU Awards shall be paid through the Company’s or the Surviving Corporation’s applicable payroll procedures following the Effective Time at such time as such awards are payable.

(c) Procedures for Surrender.

(i) Promptly after the Effective Time (and in any event within five (5) Business Days thereafter), the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of Shares (other than

 

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Excluded Shares) (A) a notice advising such holders of the effectiveness of the Merger, (B) a letter of transmittal specifying that delivery shall be effected, and risk of loss and title shall pass, only upon delivery of the Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(f)) or transfer of the Book-Entry Shares to the Paying Agent (including customary provisions with respect to delivery of an “agent’s message” with respect to Book-Entry Shares), such materials to be in such form and have such other provisions as Parent desires with approval of the Company (such approval not to be unreasonably withheld, conditioned or delayed) (the “Letter of Transmittal”), and (C) instructions for effecting the surrender of the Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(f)) or the Book-Entry Shares to the Paying Agent in exchange for payment of the aggregate Merger Consideration to which such holders are entitled pursuant to the terms of this Agreement.

(ii) Upon surrender to the Paying Agent of Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(f)) or Book-Entry Shares, together with, in the case of Share Certificates, the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, or, in the case of Book-Entry Shares, receipt of an “agent’s message” by the Paying Agent, and such other documents as may be reasonably required, the holder of such Share Certificates or Book-Entry Shares shall be entitled to receive in exchange therefor, and the Paying Agent shall be required to deliver to each such holder, the amount (after giving effect to any required Tax withholdings as provided in Section 4.2(h)) of cash that such holder has the right to receive pursuant to Section 4.1(a).

(iii) No interest will be paid or accrued on any amount payable upon surrender of any Shares.

(iv) In the event of a transfer of ownership of certificated Shares (other than Excluded Shares) that is not registered in the transfer records of the Company, the cash to be paid upon due surrender of the Share Certificates may be so paid to such transferee if the Share Certificates formerly representing such Shares are presented to the Paying Agent, accompanied by all documents reasonably required to evidence and effect such transfer and to evidence that any applicable stock transfer Taxes have been paid or are not applicable, in each case, in form and substance reasonably satisfactory to the Paying Agent. Payment of the Merger Consideration with respect to Book-Entry Shares shall only be made to the Person in whose name such Book-Entry Shares are registered in the stock transfer books of the Company.

(d) Transfers. From and after the Effective Time, there shall be no transfers on the stock transfer books of the Company of the Shares that were outstanding immediately prior to the Effective Time.

(e) Termination of Payment Fund. Any portion of the Payment Fund (including the proceeds of any investments of the Payment Fund) that remains unclaimed by, or otherwise undistributed to, the holders of Share Certificates and Book-Entry Shares by the one-year anniversary of the Effective Time shall be delivered to the Surviving Corporation. Any holder of Shares (other than Excluded Shares) who has not theretofore complied with this Article IV shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration (after giving effect to any required Tax withholdings as provided in Section 4.2(h)) upon delivery of the Share Certificates (or affidavits of loss in lieu of the Share Certificates as provided in Section 4.2(f)) or transfer of the Book-Entry Shares, without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the Paying Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws. To the fullest extent permitted by Law, immediately prior to the date any Merger Consideration would otherwise escheat to or become the property of any Governmental Authority, such Merger Consideration shall become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto. For the purposes of this Agreement, the term “Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Authority or other entity of any kind or nature.

(f) Lost, Stolen or Destroyed Share Certificates. In the event any Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Share Certificate to

 

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be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond sufficient to indemnify Parent and the Surviving Corporation against any claim that may be made against Parent or the Surviving Corporation with respect to such Share Certificate, the Paying Agent will deliver in exchange for such lost, stolen or destroyed Share Certificate cash in the amount (after giving effect to any required Tax withholdings as provided in Section 4.2(h)) equal to the number of Shares (other than Excluded Shares) represented by such lost, stolen or destroyed Share Certificate multiplied by the Merger Consideration.

(g) Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary, Dissenting Shares shall not be converted into the right to receive the Merger Consideration and holders of such Dissenting Shares shall be entitled to only such rights as are granted to a holder of Dissenting Shares pursuant to Section 262 of the DGCL. If any such Person fails to comply with the provisions of Section 262 of the DGCL or effectively withdraws or loses such right, such Dissenting Shares shall thereupon be treated as if they had never been Dissenting Shares and instead had been converted at the Effective Time into the right to receive the Merger Consideration. The Company shall give Parent notice of any written demands for appraisal of Shares promptly after receipt by the Company, and shall give Parent the opportunity to devise and implement strategy for, and participate in, all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, schedule any meeting or make any payment with respect to any such demands for appraisal or offer to settle or settle any such demands.

(h) Withholding Rights. Each of Parent, the Company, Merger Sub, the Surviving Corporation and the Paying Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”), or any other applicable federal, state, local or foreign Tax Law. To the extent that amounts are so withheld and timely remitted by Parent, the Company, Merger Sub, the Surviving Corporation or the Paying Agent, as applicable, to the applicable Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made, and none of Parent, the Company, Merger Sub, the Surviving Corporation or the Paying Agent, as the case may be, shall be required to pay any additional amounts with respect to such deducted and withheld amounts.

Section 4.3 Treatment of Stock-Based Awards; ESPP.

(a) Treatment of Company Options. At the Effective Time, each outstanding option to purchase Shares (a “Company Option”) granted under the Stock Plans, whether vested or unvested, shall, automatically and without any action on the part of the holder thereof, fully vest and shall be cancelled and converted into the right to receive (without interest), as soon as reasonably practicable (but not more than thirty (30) calendar days) following the Effective Time, an amount in cash equal to the product of (i) the number of Shares subject to the Company Option immediately prior to the Effective Time multiplied by (ii) the excess, if any, of (A) the Merger Consideration over (B) the exercise price per Share of such Company Option. Any Company Option that has an exercise price per Share that is greater than or equal to the Merger Consideration shall be cancelled at the Effective Time for no consideration or payment.

(b) Treatment of Outstanding Company Restricted Stock Unit Awards. At the Effective Time, each outstanding time-based restricted stock unit award (a “Company RSU Award”) granted under the Stock Plans, shall, automatically and without any required action on the part of the holder thereof, be converted into the right to receive an amount in cash equal to (i) the number of Shares subject to such Company RSU Award multiplied by (ii) the Merger Consideration (the product of (i) and (ii), the “RSU Payment”); provided that such RSU Payment (A) shall be subject to the same vesting and forfeiture provisions as were applicable to such Company RSU Award immediately prior to the Effective Time, (B) shall vest in installments over the remainder of the vesting schedule of such Company RSU Award based on the same percentage of the Company RSU Award that would have vested on each applicable vesting date, with each such installment to be paid as soon as reasonably practicable (but no more than thirty (30) calendar days) following such vesting date, and (C) shall be subject to

 

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forfeiture on the same terms and conditions as were applicable to such Company RSU Award. The Surviving Corporation shall, subject to Section 4.2(h), pay the RSU Payments through its payroll systems on the applicable payment date that occurs within thirty (30) calendar days following each applicable vesting date.

(c) Treatment of Company Performance Stock Unit Awards. At the Effective Time, each outstanding performance-based restricted stock unit award (a “Company PSU Award”) granted under the Stock Plans, shall, automatically and without any required action on the part of the holder thereof, be converted into the right to receive an amount in cash equal to (i) the number of Shares subject to such Company PSU Award based on (x) the actual level of achievement through the Effective Time for Company PSU Awards granted in the fiscal year ended January 2, 2021 and Fiscal Year 2021 or (y) the target level of achievement for Company PSU Awards granted in Fiscal Year 2022, as determined by the administrator of the applicable Stock Plan in good faith and in accordance with the terms of such Stock Plan, multiplied by (ii) the Merger Consideration (the product of (i) and (ii), the “PSU Payment”); provided that such PSU Payment (A) shall be subject to the same time-vesting and forfeiture provisions, but not performance-vesting provisions, as were applicable to such Company PSU Award immediately prior to the Effective Time, (B) shall vest in installments over the remainder of the vesting schedule of such Company PSU Award based on the same percentage of the Company PSU Award that would have vested on each applicable vesting date, with each such installment to be paid as soon as reasonably practicable (but no more than thirty (30) calendar days) following such vesting date, and (C) shall be subject to forfeiture on the same terms and conditions as were applicable to such Company PSU Award (other than with respect to any performance-vesting terms and conditions). The Surviving Corporation shall, subject to Section 4.2(h), pay the PSU Payments through its payroll systems on the applicable payment date that occurs within thirty (30) calendar days following each applicable vesting date.

(d) Treatment of Company Deferred Stock Unit Awards. At the Effective Time, each outstanding director deferred stock unit award (a “Company DSU Award”) granted under the Stock Plans, shall, automatically and without any required action on the part of the holder thereof, be cancelled and converted into the right to receive (without interest), as soon as reasonably practicable (but not more than thirty (30) calendar days) following the Effective Time, an amount in cash equal to (i) the number of Shares subject to such Company DSU Award multiplied by (ii) the Merger Consideration.

(e) Employee Stock Purchase Plan. As soon as reasonably practicable following the date of this Agreement and in any event prior to the Effective Time, the Company shall take all actions (including obtaining any necessary determinations and/or resolutions of the Company Board or a duly authorized committee thereof and, if appropriate, amending the terms of the Company’s 2017 Employee Stock Purchase Plan (the “ESPP”)) that may be necessary or required under the ESPP and applicable Laws to ensure that (A) except for the six-month offering period under the ESPP that commenced on May 15, 2022 (the “Final Offering”), no offering period shall be authorized or commenced on or after the date of this Agreement, (B) the Final Offering shall end on a date no later than the Business Day immediately preceding the Closing Date (the later of the date the Final Offering ends and the Business Day immediately preceding the Closing Date, the “ESPP Termination Date”), (C) each ESPP participant’s accumulated contributions under the ESPP shall be used to purchase Shares in accordance with the ESPP as of the end of the Final Offering, with any remaining contributions returned to the participant (without interest) as soon as administratively practicable thereafter, (D) the applicable purchase price for Shares shall not be decreased below the levels set forth in the ESPP as of the date of this Agreement and (E) the ESPP shall terminate in its entirety upon the ESPP Termination Date and no further rights shall be granted or exercised under the ESPP thereafter other than in accordance with the preceding clause (C).

(f) Nonqualified Deferred Compensation. With respect to any amount payable under this Section 4.3 that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that is not permitted to be paid at the Effective Time without triggering a Tax or penalty under Section 409A of the Code, such payment shall be made at the earliest time permitted under the Stock Plans and the applicable award agreement that will not trigger a Tax or penalty under Section 409A of the Code.

 

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(g) Corporate Actions. At or prior to the Effective Time, the Company, the Company Board and the compensation committee of the Company Board, as applicable, shall adopt any resolutions and take any actions that are necessary to (i) effectuate the treatment of the Company Options, Company RSU Awards, Company PSU Awards, Company DSU Awards and the ESPP pursuant to Section 4.3(a), Section 4.3(b), Section 4.3(c), Section 4.3(d) and Section 4.3(e) and (ii) cause the Stock Plans to terminate at or prior to the Effective Time, subject to Parent’s obligations under this Section 4.3. The Company shall take all actions necessary to ensure that, from and after the Effective Time, neither Parent nor the Surviving Corporation will be required to deliver Shares or other capital stock of the Company to any Person pursuant to or in settlement of Company Options, Company RSU Awards, Company PSU Awards or Company DSU Awards. As soon as reasonably practicable after the Effective Time (but no later than thirty (30) calendar days after the Effective Time), the Surviving Corporation shall, subject to Section 4.2(h), pay through its payroll systems the amounts due pursuant to Section 4.3(a) and Section 4.3(d).

Section 4.4 Adjustments to Prevent Dilution. Notwithstanding anything in this Agreement to the contrary, if, from the date of this Agreement to the earlier of the Effective Time and termination of this Agreement in accordance with Article VIII, the number of Shares or securities convertible or exchangeable into or exercisable for Shares shall have been changed into a different number of Shares or securities, or a different class, by reason of any reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization or other similar transaction, the Merger Consideration shall be equitably adjusted to provide the holders of Shares, Company Options, Company RSU Awards, Company PSU Awards and Company DSU Awards the same economic effect as contemplated by this Agreement prior to such event; provided, that nothing in this Section 4.4 shall be construed to permit the Company or any Subsidiary of the Company to take any action otherwise prohibited by the terms of this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.1 Representations and Warranties of the Company. Except as set forth (i) in the Company Reports filed by the Company with the SEC since the Applicable Date and publicly available prior to the date of this Agreement (excluding, in each case, any disclosures set forth in any risk factor section or in any other section to the extent they are forward-looking statements or cautionary, predictive or forward-looking in nature) (it being understood that this clause (i) will not apply to the representations and warranties set forth in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d) and 5.1(f)) or (ii) in the correspondingly numbered sections or subsections of the disclosure schedule delivered to Parent and Merger Sub by the Company immediately prior to the execution of this Agreement (the “Company Disclosure Schedule”) (it being agreed that, except for the disclosures made in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d) and 5.1(f) of the Company Disclosure Schedule, disclosure of any item in any section or subsection of the Company Disclosure Schedule shall be deemed disclosure with respect to any other section or subsection to the extent (and only to the extent) that the relevance of such item is reasonably apparent on the face of such disclosure), the Company hereby represents and warrants to Parent and Merger Sub that:

(a) Organization, Good Standing and Qualification. The Company is a legal entity duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted. The Company is qualified to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect or prevent or materially delay the ability of the Company to consummate the Merger by the Outside Date. Each of the Company’s Subsidiaries is a legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept or a similar concept) under the Laws of its respective jurisdiction of organization and has all requisite corporate or

 

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similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation or other legal entity (with respect to jurisdictions that recognize such concept or a similar concept) in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, existing, qualified or in good standing, or to have such power or authority, would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect or prevent or materially delay the ability of the Company to consummate the Merger by the Outside Date. The Company has made available to Parent prior to the date of this Agreement true, correct and complete copies of the Company’s and its Subsidiaries’ certificate of incorporation and bylaws or comparable governing documents, each as amended to the date of this Agreement, and each as so disclosed is in full force and effect.

As used in this Agreement: (i) the term “Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries, (ii) the term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person; as used in this clause (ii), the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and (iii) the term “Material Adverse Effect means any change, effect, event, occurrence or development that is materially adverse to the financial condition, assets, business or results of operations of the Company and its Subsidiaries, taken as a whole; provided, that no change, effect, event, occurrence or development to the extent resulting from the following shall constitute or be taken into account in determining whether there is a Material Adverse Effect:

(A) changes in the economy or financial, debt, credit or securities markets or capital market conditions generally, including changes in interest or exchange rates, in the United States or any other country or region in the world in which the Company or any of its Subsidiaries conducts business;

(B) changes generally affecting the industries in which the Company and its Subsidiaries conduct business;

(C) changes or proposed changes in United States generally accepted accounting principles (“U.S. GAAP”) or other accounting standards or interpretations thereof or in any Law, or enforcement or interpretations thereof;

(D) changes in any political conditions, acts of war (whether or not declared, and including the current conflict between the Russian Federation and Ukraine), hostilities, military actions or acts of terrorism, or any escalation or worsening of the foregoing;

(E) any acts of God, including storms, earthquakes, tsunamis, tornados, hurricanes, weather conditions, natural disasters, epidemics, pandemics, or disease outbreaks (including, for the avoidance of doubt, SARS-CoV-2 and its disease known as COVID-19 and any evolutions or additional strains, variations or mutations thereof or any related or associated epidemics, pandemic or disease outbreaks (“COVID-19”) and any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar Law, directive, guidelines or recommendations promulgated by any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization (“COVID-19 Measures”), in each case, in connection with or in response to COVID-19, or the effects thereof), or any escalation or worsening of any of the foregoing;

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of its Subsidiaries or any change in the ratings or ratings outlook for the Company or any of its Subsidiaries; provided, that the exception in this clause (F) shall not prevent or otherwise affect a determination that any change, effect, event, occurrence or development underlying such decline, if not otherwise excluded hereby, has resulted in a Material Adverse Effect;

(G) any failure by the Company to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings, cash flow or cash position or other financial, accounting or operating measures or metrics (whether such projections, forecasts, estimates or predictions were made by the Company or independent third parties) for any period; provided, that the exception in this clause (G) shall not prevent or otherwise affect a determination that any change, effect, event, occurrence or development underlying such failure, if not otherwise excluded hereby, has resulted in a Material Adverse Effect;

(H) the effect of seasonal changes on the results of operations, business or financial condition of the Company;

(I) the announcement or existence of this Agreement or the Merger, including the impact thereof on relationships with employees, customers, suppliers and distributors or other Persons to the extent resulting from such announcement or existence; provided, that the exception in this clause (I) shall not apply to references to “Material Adverse Effect” in the representations and warranties set forth in Section 5.1(d) (Governmental Filings, No Violations) or to any other representation or warranty to the extent such representation or warranty addresses the consequences resulting from the execution and delivery of this Agreement, the performance of a party’s obligations hereunder or the consummation of the transactions contemplated hereby;

(J) any Transaction Litigation or any demand or Action for appraisal or the fair value of any Shares pursuant to the DGCL in connection herewith; provided that the underlying facts or causes relating to such Transaction Litigation or demand or Action for appraisal or fair value may be considered in determining whether there has been a Material Adverse Effect; for purposes of this Agreement, the term “Transaction Litigation” means any claim, demand or Action (including any class action or derivative litigation) asserted, commenced or threatened by, on behalf of or in the name of, against or otherwise involving the Company, the Company Board, any committee thereof and/or any of the Company’s directors or officers relating directly or indirectly to this Agreement, the Merger or any related transaction (including any such claim, demand or Ac