Item 1.01 Entry into a Material Definitive Agreement.
On September 19, 2016, DTS, Inc., a Delaware corporation (DTS), entered into an Agreement and Plan of Merger (the Merger
Agreement) with Tessera Technologies, Inc., a Delaware corporation (Tessera), Tempe Holdco Corporation, a Delaware corporation and wholly owned subsidiary of Tessera (Holdco), Tempe Merger Sub Corporation, a Delaware
corporation and a wholly owned subsidiary of Holdco (Parent Merger Sub) and Arizona Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Holdco (Company Merger Sub). The Merger Agreement provides
that, upon the terms and subject to the conditions set forth therein, Parent Merger Sub will merge with and into Tessera (the Parent Merger), with Tessera as the surviving corporation, and immediately thereafter Company Merger Sub will
merge with and into DTS (the DTS Merger and, collectively with the Parent Merger, the Mergers), with DTS as the surviving corporation. As a result of the Mergers, both DTS and Tessera will become wholly owned subsidiaries of
Holdco, and their equity securities will cease to be publicly traded. Holdco, which will be renamed upon the closing of the Mergers, intends to apply to have its common stock listed on NASDAQ, as is the case today with DTS and Tessera common stock.
At the effective time of the Parent Merger (the Parent Effective Time), each share of common stock of Tessera will be
converted into one share of common stock of Holdco. At the effective time of the DTS Merger (the DTS Effective Time), each share of common stock of DTS (other than each share of DTS common stock that is owned by Tessera, Holdco or any of
their respective subsidiaries or by DTS or any wholly owned subsidiary of DTS, or held by a holder who has properly made a demand for appraisal of such shares in accordance with Section 262 of the Delaware General Corporation Law) will be
automatically converted into the right to receive $42.50 in cash. DTS has agreed to convene a meeting of its stockholders to consider and vote upon approval of the Merger Agreement and the DTS Merger.
At the effective time of the Company Merger, (i) each then outstanding, in-the-money, vested option to purchase shares of DTS common
stock will be canceled, and the holder of such option will be entitled to receive cash as set forth in the Merger Agreement; (ii) each then outstanding, out-of-the-money, vested or unvested option and each then outstanding, in-the-money,
unvested option to purchase shares of DTS common stock will be assumed by Holdco and converted into an option to purchase shares of Holdco common stock pursuant to the exchange ratio set forth in the Merger Agreement; (iii) each vested DTS
restricted stock unit award will be canceled, and the holder of such restricted stock unit award will be entitled to receive cash as set forth in the Merger Agreement; (iv) each unvested DTS restricted stock unit award will be assumed by Holdco
and converted into a Holdco restricted stock unit award pursuant to the exchange ratio set forth in the Merger Agreement; and (v) each then outstanding DTS performance-based restricted stock unit award (treating for this purpose any
performance-based vesting condition to which such Company PRSU is subject as of the DTS Effective Time or was as of the date of the Merger Agreement as having been attained at the target level) will become fully vested and canceled, and
the holder of such performance-based restricted stock unit award will be entitled to receive cash as set forth in the Merger Agreement.
At the effective time of the Parent Merger, (i) each then outstanding option to purchase shares of Tessera common stock will be assumed
by Holdco and converted into an option to purchase shares of Holdco common stock, (ii) each then outstanding share of Tessera restricted stock will be assumed by Holdco and converted into an award of Holdco restricted stock, and (iii) each
then outstanding Tessera restricted stock unit award will be assumed by Holdco and converted into a Holdco restricted stock unit award, in each case with substantially the same terms and conditions as applied to such Tessera equity award immediately
prior to the effective time of the Parent Merger.
The respective boards of directors of DTS and Tessera have unanimously approved the
Merger Agreement and the Mergers. DTS board of directors has resolved to recommend that DTS stockholders adopt and approve the Merger Agreement and the DTS Merger.
Consummation of the Mergers is subject to customary closing conditions, including (i) the expiration or termination of the waiting period
under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976; (ii) approval of the Merger Agreement by DTS stockholders; (iii) the absence of any injunctions or any other legal order prohibiting or restraining the
Mergers; (iv) subject to certain exceptions, the accuracy of DTS and Tesseras representations and warranties in the Merger Agreement; (v) performance by DTS and Tessera of their respective obligations, covenants and agreements
contained in the Merger Agreement; and (vi) the absence of any material adverse effect on DTS.
The Merger Agreement contains customary representations and warranties made by each of DTS and
Tessera, and also contains customary pre-closing covenants, including covenants, among others, (i) for each of the parties to use its reasonable best efforts to cause the Merger to be consummated; (ii) for DTS to operate its businesses in
the ordinary course consistent with past practice and to refrain from taking certain actions without Tesseras consent; (iii) for DTS not to declare or pay any dividend (whether in cash, stock, property or otherwise) in respect of any
shares of DTS common stock and (iv) for DTS not to solicit, initiate or knowingly take any action to facilitate or encourage any alternative acquisition proposal or proposal or inquiry that constitutes, or would reasonably be expected to lead
to, an alternative acquisition proposal.
Tesseras obligations under the Merger Agreement are not subject to any financing
condition. In connection with the Merger Agreement, Tessera has entered into a commitment letter, dated as of September 19, 2016, with Royal Bank of Canada (RBC), pursuant to which, among other things, RBC has committed to provide a
$600,000,000 senior secured term loan facility, subject to satisfaction of customary closing conditions
The Merger Agreement contains
certain termination rights for each of DTS and Tessera, including in the event that (i) the Mergers are not consummated on or before February 28, 2017; (ii) the approval of the stockholders of DTS is not obtained at a stockholder
meeting; or (iii) DTS terminates the Merger Agreement to enter into a binding agreement providing for a superior alternative transaction. The Merger Agreement further provides that, upon termination of the Merger Agreement under specified
circumstances, including a termination of the Merger Agreement by DTS to enter into a binding agreement providing for a superior alternative transaction, DTS will pay to Tessera a termination fee equal to $25.5 million in cash.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
The foregoing description of the
Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, the full text of which is attached as Exhibit 2.1 to this Current Report on Form 8-K
and is incorporated herein by reference. The Merger Agreement and this summary are not intended to modify or supplement any factual disclosures about Tessera or DTS or their respective subsidiaries, affiliates, businesses or equityholders, and
should not be relied upon as disclosure about Tessera or DTS without consideration of the periodic and current reports and statements that Tessera or DTS file with the United States Securities and Exchange Commission (SEC). The terms of
the Merger Agreement govern the contractual rights and relationships, and allocate risks, among the parties in relation to the transactions contemplated by the Merger Agreement. In particular, the representations and warranties made by the parties
to each other in the Merger Agreement reflect negotiations between, and are solely for the benefit of, the parties thereto and may be limited or modified by a variety of factors, including: subsequent events, information included in public filings,
disclosures made during negotiations, correspondence between the parties and disclosure schedules to the Merger Agreement. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at
any other time and you should not rely on them as statements of fact. DTS acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material
information regarding material contractual provisions are required to make the statements in this Form 8-K not misleading in any material respect.