UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

 

 

Check the appropriate box:

 

☐	Preliminary information statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))

 

☒	Definitive information statement

Agiliti, Inc.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

 

☐	No fee required.

 

☒	Fee paid previously with preliminary materials.

 

☐	Fee computed on table in exhibit required by Item 25(b) of Schedule 14A (17 CFR 240.14a-101) per Item 1 of this Schedule and Exchange Act Rules 14c-5(g) and 0-11.

 

 

 

Agiliti, Inc.

11095 Viking Drive, Suite 300

Eden Prairie, MN 55344

NOTICE OF WRITTEN CONSENT AND APPRAISAL RIGHTS

AND

INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY

To our Stockholders:

This notice of written consent, pursuant to Section 228(e) of the General Corporation Law of the State of Delaware (the “DGCL”), and appraisal rights, pursuant to Section 262 of the DGCL (“Section 262”), and information statement (this “Information Statement”) is being furnished to the holders of common stock, par value $0.0001 per share (the “Common Stock”), of Agiliti, Inc., a Delaware corporation (the “Company”), in connection with the Agreement and Plan of Merger (as amended or otherwise modified in accordance with its terms, the “Merger Agreement”), dated as of February 26, 2024, by and among Apex Intermediate Holdco, Inc., a Delaware corporation (“Parent”), Apex Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and the Company. A summary of the Merger Agreement is provided in this Information Statement and a copy of the Merger Agreement is attached as Annex A to this Information Statement and each are incorporated by reference in this notice. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”) with the Company surviving the Merger (the “Surviving Corporation”). Upon consummation of the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, each share of Common Stock issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than (i) shares of Common Stock owned directly or indirectly by THL Agiliti LLC (the “THL Agiliti Stockholder”), Parent or Merger Sub or any of their respective subsidiaries (each such share of Common Stock referred to in clause (i), a “THL Agiliti Stockholder Share” and, collectively, the “THL Agiliti Stockholder Shares”), (ii) certain shares of Common Stock held by Thomas J. Leonard (the “Rollover Stockholder”) who agreed with Parent to receive an equity interest in Parent (or its direct or indirect holding company) as consideration for the contribution to Parent (or its direct or indirect holding company) of the shares of Common Stock held by such stockholder prior to the Effective Time (the “Rollover Shares”), (iii) shares of Common Stock owned by the Company as treasury stock (each such share of Common Stock referred to in clause (iii), a “Treasury Share” and, collectively, the “Treasury Shares”) and (iv) shares of Common Stock that are owned by stockholders who have perfected and not withdrawn a demand for appraisal rights in accordance with Section 262 (“Dissenting Stockholders”)), will be converted into the right to receive $10.00 per share in cash, without interest thereon (the “Merger Consideration”). Each THL Agiliti Stockholder Share that is issued and outstanding immediately prior to the Effective Time, as of the Effective Time, will be converted into an equal number of shares of common stock of the Surviving Corporation and remain outstanding.

The board of directors of the Company (the “Board”) (acting in reliance upon the unanimous recommendation of a special committee of the Board, consisting solely of members on the Board who are not associated or affiliated with Thomas H. Lee Partners, L.P. (“THL”) or the StepStone Group LP (“StepStone”, and such committee, the “Special Committee”)) (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby (together with the Merger, the “Transactions”), are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declared the Merger Agreement and the Transactions advisable, (iii) approved the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the Transactions upon the terms and subject to the conditions contained therein and (iv) subject to the terms of the Merger Agreement, resolved to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions in accordance with the DGCL.

The Board, on behalf of the Company, believes that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The adoption of the Merger Agreement and the approval of the Merger and the other Transactions required the affirmative vote or written consent, in accordance with Section 228 and Section 251 of the DGCL, the Company’s Second Amended and Restated Certificate of Incorporation (the “Company Certificate of Incorporation”), dated April 26, 2021, and the Company’s Third Amended and Restated Bylaws (the “Company Bylaws”), dated April 26, 2021, by stockholders of the Company holding a majority of the shares of Common Stock outstanding (the “Company Requisite Approval”). Following the execution of the Merger Agreement, the THL Agiliti Stockholder, on February 26, 2024 and again on March 11, 2024, which on such dates beneficially held a majority of the shares of Common Stock outstanding, executed and delivered to the Company a written consent adopting the Merger Agreement and approving the Merger (collectively, the “Written Consent”), thereby providing the Company Requisite Approval for the Merger. A copy of each Written Consent is attached as Annex C and Annex G, respectively, to this Information Statement, and is incorporated by reference in this notice. As a result, no further action by the stockholders of the Company is required under applicable law or the Merger Agreement (or otherwise) to adopt the Merger Agreement, and the Company will not be soliciting your vote for or consent to the adoption of the Merger Agreement and the approval of the Transactions, and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement and the approval of the Transactions.

This Information Statement is being mailed to the persons, other than the THL Agiliti Stockholder and its affiliates, who were the holders of record of shares of Common Stock as of the close of business of March 11, 2024, the date that the Written Consent was re-delivered to the Company. Under Section 228(e) of the DGCL, where stockholder action is taken without a meeting by less than unanimous written consent, prompt notice of taking such corporate action must be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation as provided in subsection (c) of Section 228. This Information Statement shall constitute such Section 228(e) notice of stockholder action without a meeting.

Under Section 262, if the Merger is completed, subject to compliance with the requirements of Section 262, holders of shares of Common Stock, other than the THL Agiliti Stockholder, will have the right to seek an appraisal for, and be paid the “fair value” in cash of, their shares of Common Stock as determined by the Delaware Court of Chancery, together with interest, if any, on the amount determined to be fair value, instead of receiving the Merger Consideration. To exercise your appraisal rights, you must submit a written demand for an appraisal to the Company no later than twenty (20) days after the mailing of this Information Statement, which mailing date is April 15, 2024, and comply precisely with other procedures set forth in Section 262, which are summarized in this Information Statement. This Information Statement shall constitute notice to you from the Company of the availability of appraisal rights under Section 262 in connection with the Merger. A copy of Section 262 is attached as Annex D to this Information Statement, and is incorporated by reference in this notice. We urge you to read this entire Information Statement carefully. If the Merger is completed, you will receive instructions regarding payment for your shares of Common Stock.

BY ORDER OF THE BOARD OF DIRECTORS,

Thomas J. Leonard

Chief Executive Officer

Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosures in this Information Statement. Any representation to the contrary is a criminal offense.

This Information Statement is dated April 15, 2024 and is being mailed to stockholders on or about April 15, 2024.

TABLE OF CONTENTS

 

		Page
SUMMARY			1
The Parties to the Merger Agreement (page 72)			1
The Merger (page 83)			1
The Merger Consideration (page 84)			2
Treatment of Equity Awards (page 84)			3
Recommendation of the Board; Reasons for the Merger (page 25)			4
Required Stockholder Approval for the Merger (page 32)			5
Opinion of Centerview (page 32 and Annex B)			5
Financing (page 42)			6
The Merger Agreement (page 83 and Annex A)			7
Interests of Our Directors and Executive Officers in the Merger (page 52)			10
The Rollover Commitment Letter (page 57)			10
Material United States Federal Income Tax Consequences of the Merger (page 61)			10
Regulatory Approvals (page 63)			10
Procedures for Receiving Merger Consideration (page 86)			10
Governing Law (page 106)			11
Appraisal Rights (page 114 and Annex D)			11
Transaction Litigation (page 61)			12
Market Information, Dividends and Certain Transactions in the Common Stock (page 109)			12
THE SPECIAL FACTORS			13
Background of the Merger			13
Recommendation of the Board; Reasons for the Merger			25
Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board			25
Notice Regarding Ratification Under Section 204 of the DGCL			31
Required Stockholder Approval for the Merger			32
Opinion of Centerview			32
Certain Company Financial Forecasts			39
Financing			42
Position of the Company on the Fairness of the Merger			45
Position of the Sponsor Entities and Mr. Leonard in Connection with the Merger			46
Purposes and Reasons of the Company in Connection with the Merger			50
Purposes and Reasons of the Sponsor Entities and Mr. Leonard in Connection with the Merger			51
The Company’s Net Book Value and Net Earnings			51
Accounting Treatment			52
Interests of Our Directors and Executive Officers in the Merger			52
Delisting and Deregistration of Common Stock			60
Plans for the Company After the Merger			60
Transaction Litigation			61
Fees and Expenses			61
Material United States Federal Income Tax Consequences of the Merger			61
Regulatory Approvals			63
Alternatives to the Merger			64
QUESTIONS AND ANSWERS ABOUT THE MERGER			66
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			71
THE PARTIES TO THE MERGER AGREEMENT			72
DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING PERSONS OF THE COMPANY			73
THE MERGER AGREEMENT			83
Explanatory Note Regarding the Merger Agreement			83
Form of Merger			83

 

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		Page
Consummation and Effectiveness of the Merger			83
Consideration to be Received in the Merger			84
Treatment of Equity Awards			84
Dissenting Shares			85
Procedures for Receiving Merger Consideration			86
Tax Withholding			88
Certificate of Incorporation; Bylaws			88
Representations and Warranties			88
Conduct of Business by the Company Prior to Consummation of the Merger			90
Regulatory Filings; Efforts			93
Written Consent; Merger Sub Shareholder Consent			94
No Solicitation; Superior Proposal and Adverse Recommendation Change			94
Indemnification and Insurance			96
Financing of the Merger			97
Other Covenants and Agreements			101
Conditions to Consummation of the Merger			102
Termination of the Merger Agreement			104
Termination Fees and Expenses			105
Amendment and Waiver			105
Jurisdiction; Specific Performance			105
Governing Law			106
SUMMARY FINANCIAL INFORMATION			107
MARKET INFORMATION, DIVIDENDS AND CERTAIN TRANSACTIONS IN THE COMMON STOCK			109
PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS			113
APPRAISAL RIGHTS			114
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			119
WHERE YOU CAN FIND MORE INFORMATION			122
ANNEX A			A-1
ANNEX B			B-1
ANNEX C			C-1
ANNEX D			D-1
ANNEX E			E-1
ANNEX F			F-1
ANNEX G			G-1

 

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THE SPECIAL FACTORS

Background of the Merger

On January 4, 2019, Federal Street Acquisition Corp, a special purpose acquisition company sponsored by an affiliate of THL, completed its business combination with the Company. Following completion of the business combination, on March 21, 2019, the Company filed a Form 15 with the SEC thereby suspending its filing obligations with the SEC. Subsequently, on April 27, 2021, the Company completed an initial public offering (the “IPO”) of its common stock. Since the business combination transaction in 2019, the THL Agiliti Stockholder has held a majority controlling equity interest in the Company. As of the date of this Information Statement, the THL Agiliti Stockholder held approximately 72% of the issued and outstanding shares of Common Stock.

The Board and the Company’s management team regularly review and discuss the Company’s performance, risks, strategy and opportunities and the competitive environment in which the Company operates, as well as the capital markets environment for the Company in light of the ownership profile of the Company (and its impact on the trading price of the Common Stock). As part of this review and assessment, from time to time, the Board and the Company’s management have considered the Company’s potential strategic alternatives, including strategic acquisitions and divestitures.

In July 2022, the Company received two unsolicited expressions of interest in an acquisition of the Company. Both of the interested parties (referred to herein as Party A and Party B) indicated that any transaction would be conditioned on the THL Agiliti Stockholder agreeing to rollover all or a portion of its Common Stock in connection with the transaction in order to prevent a “change of control” from occurring under the Company’s credit agreement. In order to evaluate each proposed transaction and given THL’s required involvement in any such transaction, the Board formed a special committee comprised of directors not affiliated or associated with THL, consisting of Dr. Gary Gottlieb, Diane Patrick and John Workman (the “2022 Special Committee”). As part of the formation of the 2022 Special Committee, the THL Agiliti Stockholder waived its right to designate directors to the 2022 Special Committee under that certain Amended and Restated Director Nomination Agreement, dated April 26, 2021, by and between the Company and the THL Agiliti Stockholder (the “Director Nomination Agreement”), which grants the THL Agiliti Stockholder the right to designate directors to each committee of the Board. A formal written waiver was executed by the THL Agiliti Stockholder on August 16, 2022. The 2022 Special Committee engaged Weil as its legal counsel.

On July 20, 2022, the 2022 Special Committee held a meeting, via video conference, with representatives of the Company’s management and a representative of Weil present where management provided the 2022 Special Committee an overview of the level of engagement by each of Party A and Party B with respect to their diligence of the Company and also provided an update on management’s view of the financial forecast for the next three years. The 2022 Special Committee discussed engaging a financial advisor given the interest from Party A and Party B and requested that Weil reach out to two potential financial advisors for the members of the 2022 Special Committee and management to interview.

In July 2022, a member of the 2022 Special Committee and members of the Company’s management met with each of Centerview Partners LLC (“Centerview”) and another nationally recognized investment bank.

On August 3, 2022, Party B submitted a non-binding proposal (the “Party B Proposal”) to the 2022 Special Committee to acquire all of the issued and outstanding shares of Common Stock not held by the THL Agiliti Stockholder, as well as a portion of the outstanding shares of Common Stock held by the THL Agiliti Stockholder, in each case, at a price in the range of $25.00 to $27.00 per share in cash, subject to completion of due diligence and negotiation of definitive transaction agreements. The Party B Proposal represented a 17.2% to 26.6% premium to the closing stock price of the Common Stock on August 2, 2022 and a 18.3% to 27.7% premium to the VWAP of the Common Stock for the 30-day period ended on August 2, 2022.

 

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Following receipt of the Party B Proposal, on August 3, 2022, the 2022 Special Committee held a meeting, via video conference, with representatives of Weil present to discuss the Party B Proposal and authorized certain representatives of THL to enter into limited discussions with each of Party A and Party B in accordance with guidelines outlined by the 2022 Special Committee and Weil. The guidelines provided that THL was not authorized to negotiate the terms of a potential transaction on behalf of the Company or the 2022 Special Committee (THL was only permitted to discuss its willingness to rollover its equity stake in a potential transaction and the shareholder arrangements that would be applicable following closing), THL could not share confidential information of the Company and THL could not enter into an exclusivity agreement with either Party A or Party B, in each case, without prior approval from the 2022 Special Committee.

On July 25, 2022, the Company hosted a site visit with representatives of Party A to review the Company’s business and provide a tour of operations at a local service center.

From August 5, 2022 through August 15, 2022, the Company held two management calls with Party A during which the parties discussed the operations of the Company.

On August 15, 2022, the 2022 Special Committee held a meeting, via video conference, with representatives of the Company’s management, Centerview and Weil present to discuss updates on the non-binding proposal received from Party B and the general inquiry from Party A. Mr. Leonard updated the 2022 Special Committee with respect to the meetings that had taken place with respect to Party A as well as his understanding of the discussions that had taken place between THL and each of Party A and Party B in a manner consistent with the guidelines provided by the 2022 Special Committee. The 2022 Special Committee directed the Company’s management to negotiate non-disclosure agreements with each of Party A and Party B and provide each party with diligence materials following execution of a non-disclosure agreement. At this meeting, without Centerview present, the 2022 Special Committee also discussed the potential engagement of Centerview, including reviewing the proposed terms of Centerview’s engagement and Centerview’s independence of THL. After discussion, the 2022 Special Committee determined to engage Centerview as its independent financial advisor based on, among other things, Centerview’s independence, reputation and experience both in the Company’s industry and with respect to special committee assignments and merger and acquisition engagements. The 2022 Special Committee, the Company and Centerview entered into a formal engagement letter on August 24, 2022.

On August 29, 2022, following discussions and exchanges of drafts, Party B executed a non-disclosure agreement with the Company with respect to a potential transaction. The Party B non-disclosure agreement contained a standstill for a period of 18 months that would automatically fallaway upon entry into certain transactions.

On September 2, 2022, following discussions and exchanges of drafts, Party A executed a non-disclosure agreement with the Company with respect to a possible transaction. The Party A non-disclosure agreement contained a standstill for a period of 12 months that would automatically fallaway upon entry into certain transactions. Further, on September 2, 2022, the Company opened a virtual data room, to which it provided representatives of Party A and Party B access.

On September 12, 2022, the Company hosted a site visit with representatives of Party B to review the Company’s business and provide a tour of operations at a local service center.

On September 15, 2022, at the instruction of the 2022 Special Committee, Centerview delivered a process letter to Party A and Party B outlining, among other things, the information that should be set forth in a formal written proposal to acquire the Company with respect to valuation and consideration, the timeline with respect to the deadline to submit such a proposal (which, in the case of Party A, was set for September 30, 2022 given Party A had yet to indicate an offer price and, in the case of Party B, was set for October 11, 2022), a work plan with respect to diligence, an anticipated timeline to signing a potential agreement and assumptions surrounding financing (including the pro forma capitalization of the post-closing Company) to be submitted to Centerview on behalf of the 2022 Special Committee.

 

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During September 2022, representatives of the Company’s management had several due diligence calls with representatives of each of Party A and Party B, separately, to discuss the Company’s financial forecast, business strategy, sales, compensation, performance, organizational structure and operations.

On September 21, 2022, Party B delivered a term sheet to the Company that outlined a proposed transaction structure that included, among other things, a transaction that would be financed by Party B using convertible preferred equity, convertible in full or in part at any time into shares of common equity of the post-closing company on a one-to-one basis, and joint ownership between Party B and the THL Agiliti Stockholder, with Party B owning, on an as-converted basis, 49.9% of the post-closing company’s common equity in order to prevent a “change of control” from occurring under the Company’s credit agreement. Under the terms outlined in Party B’s term sheet, Party B would be issued convertible preferred equity while the THL Agiliti Stockholder would hold common equity of the post-closing company.

On September 22, 2022, at the instruction of the 2022 Special Committee, Centerview delivered to Party A and Party B an initial draft of the merger agreement. The initial draft of the merger agreement did not provide for a rollover of the equity interests held by the THL Agiliti Stockholder. The initial draft of the merger agreement also proposed (a) a go-shop period post signing, (b) a “fiduciary out” termination right with a termination fee equal to (i) 1% in the event of a termination of the agreement during the go-shop period to pursue a superior proposal and (ii) 2.25% in the event of a termination of the agreement by Parent for a change in recommendation by the Company or to pursue a superior proposal after the go-shop period had ended, in each case, as a percentage of the value of the equity of the Company being cashed out in the transaction and (c) full specific performance.

Between September 24, 2022 and September 25, 2022, representatives of THL held calls with representatives of Party A regarding the transaction and, at the direction of the 2022 Special Committee, informed representatives of Party A that Party B was further advanced in diligence and its evaluation of the Company. Party A indicated they were not interested in participating in a competitive process and expressed that they may not submit an indication of interest by the bid deadline of September 30, 2022.

On October 2, 2022, Party B submitted an updated non-binding indication of interest, which proposed a purchase price of $20 per share of Common Stock and required (i) a rollover of equity interests of the Company held by the THL Agiliti Stockholder resulting in Party B owning, on an as-converted basis, 49.9% of the post-closing company’s equity in order to prevent a “change of control” from occurring under the Company’s credit agreement, (ii) confirmation of renewal of a certain government contract on terms no less favorable than the terms of the then-current contract, and (iii) the convertible preferred equity financing as well as incremental debt financing (the “Party B Offer”). The Party B Offer represented a 39.8% premium to the closing stock price of the Company on September 30, 2022, of $14.31 and a 19.7% premium to the VWAP of the Common Stock for the 30-day period ended on September 30, 2022.

On October 3, 2022, at the instruction of the 2022 Special Committee, representatives of THL were provided with the Party B Offer.

On October 4, 2022, the 2022 Special Committee held a meeting, via video conference, with representatives of the Company’s management, Centerview and Weil present to review the Party B Offer. The 2022 Special Committee discussed the terms and conditions of the Party B Offer. Representatives of Centerview conveyed THL’s preliminary feedback to the Party B Offer to the 2022 Special Committee, noting that THL had informed Centerview that while THL remained interested in potentially pursuing a transaction with Party B, the terms proposed in the Party B Offer, including the fact that Party B would finance the transaction with convertible preferred equity that would rank senior to the common equity of the post-closing company to be held by the THL Agiliti Stockholder, were not acceptable to THL. The 2022 Special Committee then further discussed the terms proposed by Party B and also inquired as to the status of engagement by Party A, which Centerview confirmed had not engaged in any discussions or diligence in over a week. Following discussion, the 2022

 

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Special Committee determined to reject the Party B Offer and instructed Centerview to inform THL of its decision and to also inform THL that while the terms of the Party B Offer were not acceptable, THL remained authorized to continue to engage in discussions with Party B (and, if applicable, Party A) in a manner consistent with the guidelines previously provided by the 2022 Special Committee.

On October 10, 2022, at the direction of the Special Committee, representatives of Centerview had a call with representatives of Party B. Representatives of Party B indicated that they had progressed their diligence and were considering submitting a revised indication of interest at a different purchase price subject to finalizing a few additional outstanding financial diligence items.

Later in October 2022, representatives of Party B informed representatives of Centerview that they were no longer interested in pursuing a potential transaction with the Company in light of the then current financial market conditions, including the anticipated challenges to complete such a transaction, and the difficulty Party B would have obtaining support from its investment committee. As a result, discussions with Party B regarding a potential transaction were discontinued by the Special Committee and representatives of Weil and Centerview. On separate occasions in October 2022 and November 2022, representatives of Party B continued to discuss with representatives of THL revised terms regarding the potential post-closing company’s capitalization and THL’s willingness to participate in a transaction involving the rollover of a portion of the Company’s equity held by the THL Agiliti Stockholder to the extent Party B was able to reach agreement with the 2022 Special Committee on the terms of a transaction.

On November 10, 2022, the Company released its third quarter 2022 earnings and revised its 2022 outlook and lowered its adjusted EBITDA forecast for 2022 from $305 - $315 million to $290 - $300 million, a reduction of 4.8% at the midpoint of such ranges.

On December 14, 2022, the government contract whose renewal was a condition to the Party B Offer was renewed but on terms less favorable than the terms existing at the time the Party B Offer was made.

In December 2022, representatives of Party B discontinued discussions with representatives of THL regarding the potential participation by THL in a transaction between the Company and Party B.

On January 18, 2023, the 2022 Special Committee sent a letter to Centerview terminating its engagement to provide financial advisory services.

On January 9, 2023, the Company announced the retirement of Mr. Leonard as CEO effective as of March 10, 2023 and the appointment of Thomas W. Boehning, who was then serving as the Company’s President, to the role of CEO, effective March 10, 2023.

In March of 2023, a member of the Board affiliated with THL was contacted by a third party, referred to as Party C, who expressed an interest in acquiring the Company and ultimately executed a non-disclosure agreement with the Company. The Party C non-disclosure agreement contained a standstill for a period of 12 months that would automatically fall upon entry into certain transactions.

From March 2023 to April 2023, members of the Company’s management held diligence calls with representatives of Party C, focused on discussing publicly available information regarding the Company.

On April 3, 2023, THL engaged Mr. Leonard as an Executive Partner to provide consulting services to THL with respect to identifying and assisting with potential investment opportunities unrelated to the Company. While engaged as a consultant to THL, Mr. Leonard continued to serve in his capacity as a director of the Company.

On April 8, 2023, the Company received a non-binding indication of interest from Party C to acquire all of the outstanding shares of Common Stock for $16.00 per share on a fully diluted basis. The offer represented a 2.3% discount to the closing stock price of the Common Stock on April 6, 2023, of $16.37 and a 0.3% premium to the VWAP of the Common Stock for the 30-day period ended on April 6, 2023.

 

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On April 11, 2023, following conversations with the Board, the Company rejected Party C’s offer in light of the valuation it ascribed to the Company and discussions with Party C regarding a potential transaction were discontinued.

On August 3, 2023, the Board held its third quarter meeting, attended by all members of the Board, including Mr. Leonard and the members of the Board affiliated with the Sponsor Entities, whereby they discussed the financial performance and future growth trajectory of the Company. After such Board meeting, the Board determined that it was in the best interests of the Company for Mr. Leonard to consider returning to the Company as a member of management in addition to his role as a director of the Company.

On August 8, 2023, the Company released its second quarter 2023 earnings, which reported a net loss of $4 million compared to net income of $5 million for the second quarter of 2022. The Company also announced a loss per share of $0.03 compared to income per share of $0.04 in the second quarter of 2022. The Company also revised its 2023 outlook and lowered its adjusted EBITDA forecast for 2023 from $295 million -$305 million to $260 million -$270 million, a reduction of 11.7% at the midpoint of such ranges. In the following week, the market price of the Common Stock fell from $16.96 on August 7, 2023 to $9.79 on September 1, 2023, a decline of 42.3%. Throughout September and October, the Common Stock price continued to decline and hit a historical intraday low of $5.07 on October 25, 2023, a decline of 70.1% from the price immediately prior to the Company’s second quarter 2023 earnings.

On August 11, 2023, Mr. Leonard, in his capacity as a director of the Company, met with certain THL-affiliated members of the Board to discuss the financial performance and future growth trajectory of the Company as well as Mr. Leonard potentially rejoining the Company as a member of management and the scope of his potential role as a member of management.

On September 12, 2023, members of the Company’s management received an unsolicited inquiry from Party D to acquire all of the outstanding shares of Common Stock. Party D did not however, indicate the price at which it would propose to acquire the shares of Common Stock.

On September 13, 2023, the Board held a meeting, via video conference, attended by all members of the Board, excluding Mr. Boehning, including Mr. Leonard and the members of the Board affiliated with the Sponsor Entities, whereby Mr. Leonard presented his analysis of the financial performance and future growth trajectory of the Company.

On September 28, 2023, the Board (excluding Mr. Boehning) discussed Mr. Leonard’s presentation and determined it was in the best interests of the Company and its stockholders to reappoint Mr. Leonard as the Company’s Chief Executive Officer.

On October 2, 2023, THL and Mr. Leonard terminated his consulting engagement as Executive Partner to THL.

On September 28, 2023, the Board terminated Mr. Boehning’s employment as CEO without cause, and on October 2, 2023, the Company announced the re-appointment of Mr. Leonard as CEO.

On October 6, 2023, the Company received an unsolicited, non-binding indication of interest from THL to acquire all of the shares of Common Stock not owned by the THL Agiliti Stockholder for $9.00 per share in cash (the “THL October 6th Proposal”). The THL October 6th Proposal stated that the THL Agiliti Stockholder would not proceed with the proposed transaction unless a special committee of the Board that was comprised of directors who are disinterested and independent of THL was delegated full authority to consider any proposal and was empowered with the ability to reject the THL October 6th Proposal and consider alternative transactions. The THL October 6^th Proposal represented a 60.1% premium to the closing stock price of the Common Stock on October 6, 2023 of $5.62 and a 14.0% premium to the VWAP of the Common Stock for the 30-day period ended on October 6, 2023.

 

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On October 9, 2023, the Board held a meeting, via video conference, attended by a representative of Weil, to discuss the offer received from THL, and the Board determined to form a special committee comprised of directors not affiliated or associated with THL. Members of the Board affiliated with THL provided the remainder of the Board with their rationale for the offer, which included their views of the Company’s performance and trading price and the potential benefits of the Company operating outside of the public markets. In response to a question asked by a member of the Board, the Board members affiliated with THL confirmed that the THL Agiliti Stockholder would not be willing to sell its shares of Common Stock at the price contemplated by the THL October 6th Proposal. A representative of Weil then discussed the formation of the special committee with the Board and the legal framework for the special committee to evaluate the THL October 6th Proposal. The Board then determined to establish a special committee comprised of Dr. Gary Gottlieb, Dr. C. Martin Harris, Diane Patrick and John Workman, each of whom were determined by the Board to not be affiliated or associated with THL (the “Special Committee”). The Special Committee was fully-empowered with respect to considering, evaluating, negotiating and overseeing the negotiations of the THL October 6th Proposal, including the authority to reject the THL October 6th Proposal and consider alternative transactions with third parties.

Following the conclusion of the full Board meeting on October 9, 2023, the THL-affiliated directors left the meeting and the Special Committee met to discuss the THL October 6th Proposal with representatives of the Company’s management and Weil present. A representative of Weil then further discussed with the Special Committee the legal framework under which it would need to evaluate the proposal. The Special Committee determined to continue working with Weil as its independent legal counsel and to re-engage Centerview as financial advisor for the potential transaction given Centerview’s historical relationship with the 2022 Special Committee.

On October 13, 2023, Management provided Centerview with its preliminary unaudited prospective financial information for the fiscal years 2023 through 2028, as further described in the section below entitled “The Special Factors—Certain Company Financial Forecasts—Prior Iterations of the Projections” (which projections were updated in February 2024, as further described in the section below entitled “The Special Factors—Certain Company Financial Forecasts”).

On October 13, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL October 6th Proposal and the steps to be taken in connection with evaluating the THL October 6th Proposal. The materials that were presented by representatives of Centerview at this meeting are filed as Exhibit (c)(2) to the Rule 13e-3 Transaction Statement on Schedule 13E-3 filed by the Company, Parent and certain other persons with respect to the Transactions (including all exhibits and any amendments or supplements thereto, the “Schedule 13E-3”), of which this Information Statement forms a part.

From October 13, 2023 through October 22, 2023, at the direction of the Special Committee, representatives of Centerview had discussions with the Company’s management regarding the Company’s strategic plans and financial projections. In addition, during that same time period and at the direction of the Special Committee, representatives of Centerview and THL had discussions regarding the terms of, and the assumptions underlying, the THL October 6th Proposal.

On October 23, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Weil and Centerview to discuss the THL October 6th Proposal. Representatives of Centerview provided an update on the THL October 6th Proposal in light of the October Projections (as defined in the section below entitled “The Special Factors—Certain Company Financial Forecasts —Prior Iterations of the Projections”). The Special Committee discussed the October Projections as well as the execution risk associated with the October Projections as compared to the certainty provided by an all cash offer from THL. Representatives of Centerview also provided certain preliminary financial analysis with respect to the THL October 6th Proposal. Representatives of Weil provided the Special Committee with an overview of the legal

 

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framework under which the Special Committee should evaluate the potential transaction as well as its fiduciary duties. Following discussions, the Special Committee determined to make a counterproposal of $13.00 per share of Common Stock in cash. In addition, the Special Committee instructed Centerview to provide the October Projections to THL as part of its counterproposal. The Special Committee also discussed that the Company had previously received a preliminary inquiry from another private equity fund regarding a potential take private of the Company (referred to herein as Party D). Following discussions, the Special Committee instructed management and Centerview to engage with Party D to determine if Party D would be interested in a potential transaction with the Company. The materials that were presented by representatives of Centerview at this meeting are filed as Exhibit (c)(3) to the Schedule 13E-3 of which this Information Statement forms a part.

On October 23, 2023, at the direction of the Special Committee, representatives of Centerview held a call with representatives of THL to relay that the Special Committee had rejected the October 6th Proposal and to deliver the counterproposal of $13.00 per share of Common Stock in cash. Later that same day, on October 23, 2023, also at the direction of the Special Committee, representatives of Centerview provided representatives of THL with the October Projections which had been presented to the Special Committee.

On October 24, 2023, members of the Company’s management held an informational call with representatives of Centerview and representatives of Party D to discuss an overview of the Company’s business.

On October 24, 2023, the Company received an updated non-binding indication of interest from THL to acquire all of the shares of Common Stock not owned by the THL Agiliti Stockholder for $9.35 per share in cash (the “THL October 24th Proposal”). The THL October 24th Proposal represented a 72.2% premium to the closing stock price of the Common Stock on October 24, 2023 of $5.43 and a 51.3% premium to the VWAP of the Common Stock for the 30-day period ended on October 24, 2023.

On October 25, 2023, representatives of the Company’s management held a call with representatives of Party D to provide further information regarding of the Company’s business, market and strategy as well as industry dynamics.

On October 26, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL October 24th Proposal. The meeting participants discussed the October Projections as well as the execution risk associated with achieving the results reflected in such projections as compared to the certainty provided by an all cash-offer from THL. The Special Committee also discussed the considerations and challenges of remaining a standalone public company, including the likely valuation the public markets would ascribe to its business (in particular taking into account the Company’s capital structure) and how that compared to the THL October 24th Proposal. Representatives of Centerview presented certain additional preliminary financial analysis with respect to the THL October 24th Proposal. Representatives of Weil also reviewed with the Special Committee its fiduciary duties and the considerations that the Special Committee should take into account when evaluating the THL October 24th Proposal. Representatives of Centerview additionally provided an update on the discussions it had with representatives of Party D (who did not sign a non-disclosure agreement that had been previously provided to them) at the direction of the Special Committee. The materials that were presented by representatives of Centerview at this meeting are filed as Exhibit (c)(4) to the Schedule 13E-3 of which this Information Statement forms a part.

On October 30, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview, Weil and the remaining members of the Board. The members of the Board affiliated with THL provided THL’s perspective on the THL October 24th Proposal and their view on the market dynamics and challenges facing the Company, including the impact that the Company’s limited float had on its stock price and the willingness of institutional investors to purchase the Common Stock as well as the execution risk surrounding the management plan.

On October 30, 2023, members of the Company’s management met with representatives of THL and StepStone to discuss the October Projections that had been provided to THL on October 23, 2023.

 

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On October 31, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL October 24th Proposal. Representatives of Centerview discussed with the Special Committee their preliminary financial analysis of the THL October 24th Proposal. The Special Committee then discussed the perspectives shared by the members of the Board affiliated with THL at the October 30^th meeting. Following discussion, the Special Committee determined to make a counterproposal to the THL October 24th Proposal of $10.00 per share of Common Stock in cash.

On November 1, 2023, the Company received a revised non-binding indication of interest from THL to acquire all of the shares of Common Stock not owned by the THL Agiliti Stockholder for $9.75 per share in cash (the “THL November 1st Proposal”). The THL November 1st Proposal represented a 75.0% premium to the closing stock price of the Common Stock on November 1, 2023 of $5.57 and a 69.6% premium to the VWAP of the Common Stock for the 30-day period ended on November 1, 2023.

On November 2, 2023, representatives of Weil sent a draft merger agreement to Ropes & Gray LLP (“Ropes”), counsel to THL. The draft merger agreement provided for, among other things, (a) delivery of a written consent approving the merger by the THL Agiliti Stockholder (the “Written Consent”), (b) the full cash out of all equity awards at the transaction price, (c) a termination fee equal to 2.25% of the equity value of the Company payable by the Company in the event that Parent terminates the merger agreement due to a change in recommendation of the Company or if the Company terminates due to the pursuit of a superior proposal, and (d) an obligation that Parent reimburse the Company for expenses if the agreement is terminated for failure to deliver the THL Agiliti Stockholder Written Consent within 24 hours after signing.

On November 2, 2023, certain members of the Special Committee held an informational session, via video conference, attended by representatives of the Company’s management, Centerview and Weil, to discuss the THL November 1st Proposal. Following discussion and taking into account feedback that had been provided prior to the meeting by those members of the Special Committee who were not able to attend, it was determined that the Special Committee would again reiterate its counterproposal to THL of $10.00 per share of Common Stock in cash.

On November 3, 2023, the Company received a revised non-binding indication of interest from THL to acquire all of the shares of Common Stock not owned by the THL Agiliti Stockholder for $10.00 per share in cash (the “THL November 3rd Proposal”). The THL November 3^rd Proposal represented a 76.4% premium to the closing stock price of the Common Stock on November 2, 2023 of $5.67 and a 75.0% premium to the VWAP of the Common Stock for the 30-day period ended on November 2, 2023.

On November 3, 2023, representatives of Weil sent a draft of the disclosure schedules to Ropes based on the draft of the merger agreement circulated on November 2, 2023.

On November 4, 2023, the Special Committee and the Company executed a formal engagement letter with Centerview with respect to Centerview’s engagement as financial advisor to the Special Committee.

On November 4, 2023, representatives of Ropes sent a revised draft of the merger agreement to Weil. The Ropes draft of the merger agreement provided for, among other things, (a) the rollover of certain equity interests held by the members of management of the Company, including Mr. Leonard, (b) the cashing out of all vested Options, (c) the cancellation and conversion of unvested Options into cash-based awards with substantially the same vesting conditions, (d) the cashing out the 2021 Performance Restricted Stock Units, (e) the cancellation and conversion of all vested and unvested 2022 and 2023 Performance Restricted Stock Units into cash-based awards equal to the number of shares of Common Stock subject to such 2022 and 2023 Performance Restricted Stock Units multiplied by the merger consideration with substantially the same vesting conditions, and (f) capping Parent’s obligation to reimburse Company expenses for failure to deliver the Written Consent of the THL Agiliti Stockholder within 24 hours after signing at $2 million.

 

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Following receipt of the revised merger agreement from representatives of Ropes, representatives of Weil had discussions with the Company’s management and representatives of the Special Committee regarding the terms of the November 4th draft of the merger agreement, in particular with respect to the treatment of certain members of management’s equity and the proposed treatment of equity awards.

On November 4, 2023, representatives of Ropes sent to representatives of Weil drafts of an equity commitment letter and limited guaranty. Representatives of Ropes also circulated a revised draft of the disclosure schedules to the merger agreement to representatives of Weil.

On November 4, 2023, representatives of Weil circulated a revised draft of the merger agreement to representatives of Ropes as well as a draft of the Written Consent. The Weil draft of the merger agreement reflected input from the Special Committee and management on, among other things, the terms of the equity rollover and the treatment of equity awards, which included (a) the rejection of the proposed rollover of certain equity interests held by the members of management of the Company, including Mr. Leonard, because management desired to have the management equity interests treated in the same manner as the equity interests held by the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, (b) the cashing out of all vested and unvested Options, (c) the cancellation and conversion of vested and unvested RSUs into cash-based awards with substantially the same vesting conditions, (d) the cashing out the 2021 Performance Restricted Stock Units, (e) the cancellation of all vested and unvested 2022 Performance Restricted Stock Units for no consideration as the performance conditions for such awards would not be satisfied, (f) the cancellation and conversion of all vested and unvested 2023 Performance Restricted Stock Units into cash-based awards equal to the number of shares of Common Stock subject to such 2023 Performance Restricted Stock Units multiplied by 51% and multiplied by the Merger Consideration with substantially the same vesting conditions and (g) capping Parent’s obligation to reimburse Company expenses for failure to deliver the Written Consent of the THL Agiliti Stockholder within 24 hours after signing at $2 million.

On November 4, 2023, the Special Committee authorized THL to commence discussions with the Company’s management regarding the treatment of management equity and equity awards.

On November 5, 2023, Centerview provided disclosures regarding its relationships with THL.

On November 5, 2023, following discussions between the Company’s management and representatives of THL regarding the treatment of management equity and equity awards, it was determined that the parties would not be able to reach agreement on such terms and the Special Committee, management and THL mutually agreed to discontinue their discussions.

On November 5, 2023, the Company received an unsolicited non-binding indication of interest from Party D to acquire all of the outstanding shares of Common Stock for a price of $8.00 to $10.00 per share in cash, subject to completion of due diligence and negotiation of definitive transaction documentation (the “Party D Proposal”), which represented a 40.8% to 76.0% premium to the VWAP of the Common Stock for the 30-day period ended on November 3, 2023.

On December 6, 2023, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management and Weil to discuss the Party D Proposal and following discussion the Special Committee determined that pursuing the proposal provided by Party D was not in the best interests of the Company or its stockholders at the time. The Special Committee then instructed Centerview to provide such feedback to Party D.

On December 6, 2023, the Special Committee sent a letter to Centerview terminating its engagement to provide financial advisory services.

 

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On January 26, 2024, the Company received an unsolicited non-binding indication of interest from THL to acquire all of the shares of Common Stock not owned by the THL Agiliti Stockholder for $9.00 per share in cash (the “THL January 26th Proposal”). The THL January 26th Proposal represented a 22.3% premium to the closing stock price of the Common Stock on January 26, 2024 of $7.36 and a 19.4% premium to the VWAP of the Common Stock for the 30-day period ended on January 26, 2024.

On January 30, 2024, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL January 26th Proposal. Following the meeting, the Special Committee instructed Centerview to update their financial analysis from the Company’s 2023 transaction process in light of (i) then-current market conditions and (ii) any updates to the October Projections made by the Company since the 2023 transaction process.

On February 1, 2024, the Special Committee and the Company entered into an engagement letter with Centerview with respect to Centerview’s reengagement as financial advisor to the Special Committee on substantially the same terms and conditions as its prior engagement letter in 2023.

On February 2, 2024, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL January 26th Proposal. Representatives of Centerview discussed their preliminary financial analysis of THL January 26th Proposal in light of the updated draft of the management plan and market assumptions, and discussed the changes in the business of the Company since the prior discussions with THL in late 2023. The Special Committee then discussed the execution risk associated with the management plan as compared to the certainty provided by a cash offer from THL. Following discussion, the Special Committee determined to counter the THL January 26th Proposal at $11.50 per share in cash. The materials that were presented by representatives of Centerview at the meeting are filed as Exhibit (c)(5) to the Schedule 13E-3 of which this Information Statement forms a part.

On February 5, 2024, the Company received an updated non-binding indication of interest from THL to acquire all of the shares of Common Stock of the Company not owned by the THL Agiliti Stockholder for $9.25 per share in cash (the “THL February 5th Proposal”). The THL February 5th Proposal represented a premium of 36.8% premium to the closing stock price of the Common Stock on February 5, 2024 of $6.76 and a 23.5% premium to the VWAP of the Common Stock for the 30-day period ended on February 5, 2024.

On February 6, 2024, the Special Committee held a meeting, via video conference, attended by representatives of management, Centerview and Weil to discuss the THL February 5th Proposal. The discussion included an overview of Centerview’s discussions with THL regarding the THL February 5th Proposal as well as the potential next steps. Following discussion, the Special Committee determined to seek from THL a per share price no less than $10 per share of Common Stock.

On February 6, 2024, at the direction of the Special Committee, representatives of Centerview provided representatives of THL with an updated financial forecast contained in a draft of the February Projections (as defined in the section below entitled “The Special Factors—Certain Company Financial Forecasts”), which had been presented to the Special Committee, such forecasts are further described in the section below entitled “The Special Factors—Certain Company Financial Forecasts.”

On February 8, 2024, the Company received an updated non-binding indication of interest from THL to acquire all of the shares of Common Stock of the Company not owned by the THL Agiliti Stockholder for $9.50 per share in cash (the “THL February 8th Proposal”). The THL February 8th Proposal represented a 38.7% premium to the closing price of the Common Stock on February 7, 2024 of $6.85 and a 28.0% premium to the VWAP of the Common Stock for the 30-day period ended on February 7, 2024.

On February 9, 2024, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss the THL February 8th Proposal. The Special

 

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Committee reviewed and discussed with representatives of Centerview and Weil the history of negotiations with THL and determined that it would not agree to transact at a price that was lower than $10.00 per share in light of the Special Committee’s view of the intrinsic value of the Company. Following discussion, the Special Committee authorized a member of the Special Committee to communicate such decision to THL.

On February 16, 2024, the Company received an updated non-binding indication of interest from THL to acquire all of the shares of Common Stock of the Company not owned by the THL Agiliti Stockholder for $10.00 per share in cash (the “THL February 16th Proposal”). The offer represented a 30.2% premium to the closing price of the Common Stock on February 15, 2024 of $7.68 and a 37.0% premium to the VWAP of the Common Stock for the 30-day period ended on February 15, 2024.

On February 18, 2024, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management, Centerview and Weil to discuss THL February 16th Proposal. Representatives of Centerview presented certain preliminary financial analysis with respect to the THL February 16th Proposal. The Special Committee, together with its advisors and the Company’s management also discussed the various transaction documents and their status as of November 2023 when discussions previously were discontinued, as well as the status of the terms of a potential management rollover. Following the discussion, the Special Committee determined to accept the THL February 16th Proposal and authorized Weil to finalize the transaction documentation and authorized management to finalize any terms with respect to a management rollover. The materials that were presented by representatives of Centerview at this meeting are filed as Exhibit (c)(6) to the Schedule 13E-3 of which this Information Statement forms a part.

On February 19, 2024, representatives of Weil sent to representatives of Ropes updated drafts of the disclosure schedules, equity commitment letter and limited guaranty.

On February 21, 2024, members of the Company’s management met, via video conference, with representatives of THL, StepStone and Centerview to discuss the substantially final draft of the February Projections circulated on February 6, 2024. At the direction of the Special Committee, THL was provided with a slightly updated version of the substantially final draft of the February Projections, to update the draft received on February 6, 2024.

On February 21, 2024, representatives of Ropes sent to Mr. Leonard a draft rollover agreement which contemplated Mr. Leonard rolling over certain of his shares of Common Stock and restricted stock units.

On February 23, 2024, representatives of Weil sent to representatives of Ropes, on behalf of Mr. Leonard, comments to the draft rollover agreement.

In addition, between February 20, 2024 and February 25, 2024, representatives of Weil and Ropes worked to finalize the proposed merger agreement and other transaction documents.

On February 25, 2024, the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management and representatives of Centerview and Weil. The representatives of Weil reviewed with the Special Committee certain legal matters, including the fiduciary duties of the members of the Special Committee and a summary of the key terms of the transaction documentation. Representatives of Centerview then reviewed with the Special Committee Centerview’s financial analysis of the Merger Consideration and rendered to the Special Committee an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated as of such date, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations , upon the review undertaken in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. For a more detailed discussion of Centerview’s opinion, please see the section entitled “The Special Factors—Opinion of Centerview” beginning on page 32. As had previously been discussed, representatives of Weil reviewed with the Special Committee that Weil has represented THL from time to time

 

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and had previously been engaged as counsel to THL with respect to unrelated transactions, but the total amount of revenues generated by such matters were de minimis relative to the firm’s total revenues. In addition, as had previously been discussed, Ms. Patrick reviewed with the other members of the Special Committee that she served as Senior Counsel to Ropes, which was representing THL in connection with the Transactions. Following further discussion and after considering the factors reviewed and discussed at the meeting and prior meetings of the Special Committee (for a more detailed discussion of such factors, see the section entitled “The Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board” beginning on page 25), the Special Committee unanimously resolved (a) that the Merger Agreement and the Transactions, including the Merger, are advisable, fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), and (b) to recommend to the Board that the Board (i) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declare the Merger Agreement and the Transactions advisable, (iii) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained therein and the consummation of the Merger and the other transactions contemplated thereby upon the terms and subject to the conditions contained therein and (iv) resolve to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, in accordance with DGCL. The materials that were presented by representatives of Centerview at the meeting are filed as Exhibit (c)(7) to the Schedule 13E-3 of which this Information Statement forms a part.

On February 25, 2024, the Board held a meeting, via video conference, attended by members of the Company’s management and representatives of Weil and Centerview. The members of the Board that attended the meeting were Mr. Friedman, Dr. Gottlieb, Dr. Harris, Mr. Leonard, Ms. Patrick and Mr. Workman. The representatives of Weil reviewed with the Board its fiduciary duties and a summary of the key terms of the transaction documentation. The members of the Special Committee then provided the Board with the Special Committee’s recommendation with respect to the proposed Merger Agreement and the Transactions, including the proposed Merger, and the Special Committee and representatives of Weil and Centerview provided the Board with an overview of the Special Committee’s evaluation of the proposed Merger Agreement and the Transactions, including the proposed Merger and the negotiating history with THL, the matters considered by the Special Committee and the reasons for the Special Committee’s recommendation. After discussion, the Board (with Messrs. Friedman and Leonard abstaining), acting upon the unanimous recommendation of the Special Committee, resolved to (a) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (b) declare the Merger Agreement and the Transactions advisable, (c) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein and (d) recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, in accordance with the DGCL.

On February 26, 2024, the Company, Parent and Merger Sub entered into the Merger Agreement. In connection with the signing of the Merger Agreement, Parent delivered an executed Equity Commitment Letter from the Equity Commitment Parties and an executed Limited Guaranty. Later that day, the THL Agiliti Stockholder executed and delivered to the Company the Written Consent adopting the Merger Agreement and approving the Merger.

On March 11, 2024, in light of the Activision Decision (as defined in the section entitled “The Special Factors — Notice Regarding Ratification Under Section 204 of the DGCL”), the Special Committee held a meeting, via video conference, attended by representatives of the Company’s management and representatives of Weil whereby the Special Committee unanimously ratified, pursuant to Section 204 of the DGCL, the findings, determinations and recommendations of the Special Committee at the February 25, 2024 meeting of the Special Committee as provided in the resolutions of the Special Committee adopted at such meeting, as further described in the section entitled “The Special Factors — Notice Regarding Ratification Under Section 204 of the DGCL.”

On March 11, 2024, in light of the Activision decision, the Board (acting upon the unanimous recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance) held a meeting, via video

 

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conference, attended by members of the Company’s management and representatives of Weil whereby the Board ratified, pursuant to Section 204 of the DGCL, the findings, determinations and recommendations of the Board at the February 25, 2024 meeting of the Board as provided in the resolutions of the Board adopted at such meeting, and the approval of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Transaction including the Merger, upon the terms and subject to the conditions contained therein, pursuant to Section 204 of the DGCL as further described in the section entitled “The Special Factors — Notice Regarding Ratification Under Section 204 of the DGCL.”

Later in the day on March 11, 2024, in connection with the ratification of the Merger Agreement by the Special Committee and the Board pursuant to Section 204 of the DGCL, the THL Agiliti Stockholder executed and delivered to the Company a Written Consent adopting the Merger Agreement and approving the Merger, a copy of which is attached as Annex G to this Information Statement.

Recommendation of the Board; Reasons for the Merger

After careful consideration, the Board, acting on the unanimous recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining (and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance), resolved:

 

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to determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates);

 

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to declare the Merger Agreement and the Transactions advisable;

 

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to approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein; and

 

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subject to the terms of the Merger Agreement, to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, in accordance with the DGCL.

The Board, on behalf of the Company, believes, based on the factors described in this Information Statement, that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board

On February 25, 2024, the Special Committee, acting with the advice and assistance of its own independent legal counsel and financial advisors, considered and evaluated the Merger Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and unanimously determined that the Merger Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, are advisable, fair to and in the best interests of the Company and the Company’s stockholders (other than the THL Agiliti Stockholder and its affiliates).

The Special Committee also unanimously recommended to the Board that the Board:

 

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determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates);

 

•

declare the Merger Agreement and the Transactions advisable;

 

•

approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein; and

 

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•

resolve to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions in accordance with the DGCL.

The Special Committee believes, based on the factors described in this Information Statement, that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

Reasons for the Merger; Recommendation of the Special Committee

In the course of reaching the determination described above, the Special Committee considered, in consultation with its own independent legal counsel and financial advisors, the following material factors that weighed in favor of the Merger, which are not intended to be exhaustive and are not presented in any relative order of importance:

 

•

the Special Committee’s understanding of the Company’s industry, business, operations, financial condition, earnings, strategy and prospects (including the risks involved in achieving such prospects), as well as the Company’s historical and projected financial performance;

 

•

the fact that the stockholders of the Company other than the THL Agiliti Stockholder and the Rollover Stockholder will receive all cash for their Common Stock and will therefore have immediate certainty of value and liquidity for their Common Stock at $10.00 per share;

 

•

the current and historical prices of the Common Stock, including the fact that the Merger Consideration of $10.00 per share of Common Stock represented: a premium of approximately 78% over the closing price per share on October 6, 2023 ($5.62), the day THL submitted its initial acquisition proposal, and approximately 31% over the closing price per share on February 23, 2024 ($7.64), the last trading day before the Special Committee meeting to discuss the Transaction);

 

•

the Special Committee’s belief that the Merger Consideration compares favorably to the potential value of the Company and the Common Stock if the Company were to remain as a publicly traded company after taking into consideration the risks and uncertainties of remaining public and the risk that the trading price of the Common Stock would not, in the foreseeable future, reflect a net present value greater than the Merger Consideration of $10.00 per share of Common Stock, particularly given the trading multiple of the Common Stock and the limited trading volume of the Common Stock;

 

•

that the Special Committee was able to negotiate an increase in the Merger Consideration of $1.00 per share from the per share consideration offered in THL’s October 6, 2023 and January 26, 2024 offer letters, representing an increase of approximately 11%;

 

•

the risks associated with remaining a publicly traded company, including the Company’s near-and long-term challenges of achieving and accomplishing management’s plans and goals as a public company, the continuing uncertainty and volatility in the stock and equity markets, the challenges in retaining senior management as a public company and that the Company would continue to be controlled by the THL Agiliti Stockholder, which would likely result in the Common Stock continuing to trade at a discount to the Company’s estimated intrinsic value based on long term earnings;

 

•

the Company’s future prospects if the Company did not enter into the Merger Agreement, including the competitive landscape, the current macroeconomic environment, the business, financial and execution risks and the Company’s relationships with customers and suppliers and the potential impact of those factors on the Company’s results of operations and trading price of the Common Stock (which cannot be quantified numerically);

 

•

the belief by the Special Committee that the Merger Consideration was the highest price that could reasonably be obtained from Parent and THL, that the terms set forth in the Merger Agreement were the most favorable terms for the Company that Parent would be willing to agree to and that further negotiations would create a risk of causing Parent to abandon the transaction altogether or materially delay the entry into a definitive agreement for the transaction;

 

•

the fact that the representatives of the THL Agiliti Stockholder stated in discussions with Centerview and certain members of the Special Committee that it was not interested in selling its stake in the Company to a third party and would not vote in favor of any alternative sale, merger or similar transaction involving the Company;

 

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•

the likelihood that the Merger would be completed, based on, among other things, the limited number and nature of the conditions to the completion of the Merger, including the fact that there is no financing condition and that there are no required regulatory approvals;

 

•

the anticipated timing of the Merger which allows for a potential closing of the Merger and the other Transactions in a relatively short time frame;

 

•

the fact that the Company would have the right to seek specific performance to cause the parties to the Equity Commitment Letter to fund their commitments under the Equity Commitment Letter;

 

•

the fact that the Company would only be obligated to pay Parent a termination fee of $8,803,499 if Parent terminated the Merger Agreement because the Board or the Special Committee changed its recommendation with respect to the Merger or because the Board or the Special Committee enters into an alternative acquisition agreement and that the likelihood of such fee becoming payable was relatively low because the Special Committee expected the THL Agiliti Stockholder to deliver the written stockholder consent shortly after the execution of the Merger Agreement following which Parent would no longer be able to exercise such termination right;

 

•

the fact that the Merger Agreement provides the Company sufficient operating flexibility to conduct its business in the ordinary course consistent with past practices until the earlier of the consummation of the Merger and the termination of the Merger Agreement (as more fully described under the section entitled “The Merger Agreement—Conduct of Business by the Company Prior to Consummation of the Merger” beginning on page 90);

 

•

the opinion of Centerview rendered to the Special Committee, which opinion and financial analyses the Special Committee adopted as its own, on February 25, 2024, which was subsequently confirmed by delivery of a written opinion dated as of such date, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders (as more fully described below in the section entitled “The Special Factors —Opinion of Centerview” beginning on page 32) (the Special Committee considered the holders of Common Stock (other than as specified in such opinion) to be situated substantially similarly to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act);

 

•

the requirement under the Merger Agreement for Parent to reimburse expenses of the Company in connection with the Merger Agreement and the Merger and the other Transactions upon termination of the Merger Agreement for certain reasons specified therein;

 

•

THL’s business reputation, experience and capabilities; and

 

•

the terms and conditions of the Merger Agreement, as discussed in more detail in the section entitled “The Merger Agreement” beginning on page 83.

The Special Committee also considered the factors discussed below, relating to the procedural safeguards that it believes were and are present to ensure the fairness of the Merger to the Company and the Company’s stockholders (excluding the THL Agiliti Stockholder and its affiliates). The Special Committee believes such factors support its determinations and recommendations and provide assurance of the procedural fairness of the Merger:

 

•

the authority granted to the Special Committee by the Board to evaluate the potential transaction involving THL and its affiliates and/or the THL Agiliti Stockholder and if the Special Committee deemed it appropriate, consider alternative transactions with third parties, or to determine not to pursue the proposed transaction involving THL and its affiliates, and the fact that in THL’s initial proposal on October 6, 2023, THL stated it would not proceed with the proposed transaction without a Special Committee to consider such proposals;

 

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•

that the Special Committee consists solely of directors not affiliated or associated with THL or StepStone who are able to evaluate and negotiate a potential transaction between the Company and THL on behalf of the Company’s stockholders (excluding the THL Agiliti Stockholder and its affiliates (excluding the Company and its subsidiaries));

 

•

that, following receipt of THL’s October 6, 2023 proposal and prior to the announcement of the Transaction, the Special Committee held 14 formal meetings to discuss and evaluate a potential THL acquisition and each member of the Special Committee was actively engaged in the process;

 

•

that, as authorized and directed by the Board, the Special Committee retained and received the advice of (i) Centerview as its own independent financial advisor and (ii) Weil, Gotshal & Manges LLP as its own independent legal advisor;

 

•

that the financial and other terms and conditions of the proposed transaction were the product of extensive and robust negotiations that took place over the course of several weeks between the Special Committee, with the assistance of its own financial and legal advisors, on the one hand, and THL and its representatives, on the other hand;

 

•

that the compensation provided to the members of the Special Committee in respect of their services was not contingent on the Special Committee approving the Merger Agreement or taking the other actions described in this Information Statement;

 

•

that under the DGCL, the Company’s stockholders (excluding the THL Agiliti Stockholder) have the right to demand appraisal of their Common Shares, as discussed in the section entitled “Appraisal Rights” beginning on page 114; and

 

•

the fact that the Special Committee made its evaluation of the Merger Agreement, the Merger, and the other Transactions based upon the factors discussed in this Information Statement.

In the course of reaching the determination described above, the Special Committee also considered and balanced, in consultation with its own independent legal and financial advisors, the factors that weighed in favor of the Merger against a variety of potentially negative factors, uncertainties and risks in its deliberations concerning the Merger Agreement and the Merger, including, among others:

 

•

that the closing of the Merger is not conditioned upon the receipt of the affirmative vote of a majority of the stockholders of the Company other than the THL Agiliti Stockholder to adopt the Merger Agreement;

 

•

that the Merger Agreement precludes the Company from (i) actively soliciting alternative acquisition proposals and (ii) engaging with a third party with respect to, or discussing or negotiating, any unsolicited alternative Acquisition Proposal and the Board and the Special Committee from changing its recommendation with respect to a superior acquisition proposal or an intervening event after delivery by the THL Agiliti Stockholder of the written consent, which occurred on February 26, 2024, shortly after the execution of the Merger Agreement;

 

•

that the stockholders of the Company other than the THL Agiliti Stockholder, the Rollover Stockholder with respect to the Rollover Shares and certain Continuing Employees who hold certain equity awards will have no ongoing equity participation in the Company following the Merger and that those stockholders will cease to participate in the Company’s future earnings or growth, if any, and will not benefit from increases, if any, in the value of the common stock of the Surviving Corporation;

 

•

that THL’s ownership of approximately 72% of the Company may limit the likelihood of an alternative offer given both the effect of a change of control transaction on acceleration of the Company’s credit facility and securitization facility and that as the majority shareholder, THL would need to approve any alternative transaction;

 

•

the possibility that, at some future time, the THL Agiliti Stockholder could sell some or all of the Company or its securities, businesses or assets to one or more purchasers at a valuation higher than the

 

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valuation implied by the Merger Consideration, and that the stockholders of the Company other than the THL Agiliti Stockholder, the Rollover Stockholder and certain Continuing Employees who hold certain equity awards would not be able to participate in or benefit from such a sale;

 

•

the risk that, while the Merger is expected to be completed, there can be no guarantee that all conditions to the parties’ obligations to complete the Merger will be satisfied, and as a result, it is possible that the Merger may not be completed;

 

•

the risks and costs to the Company during the period between the execution of the Merger Agreement and the closing of the Merger or the termination of the Merger Agreement, including the potential effect of the diversion of management and employee attention from the Company’s business, the substantial expenses which the Company will have incurred and the potential adverse effect on the relationship of the Company and its subsidiaries with their respective employees, agents, customers and other business contacts;

 

•

the risk of litigation arising from stockholders in respect of the Merger Agreement or the Transactions;

 

•

that the receipt by stockholders of the Merger Consideration will be taxable transactions for U.S. federal income tax purposes as discussed in the section entitled “Material United States Federal Income Tax Consequences of the Merger” beginning on page 61; and

 

•

that certain of the Company’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of the Company’s stockholders, including certain of the Company’s directors’ involvement with Parent, the interests of the Company’s directors and executive officers in being entitled to continued indemnification and insurance coverage from the Surviving Corporation under the Merger Agreement and the Company’s certificate of incorporation and other interests, as described in the section entitled “Interests of Our Directors and Executive Officers in the Merger” beginning on page 52.

The Special Committee believes, based on the factors described in this Information Statement, that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

The above discussion of the information and factors considered by the Special Committee is not intended to be exhaustive but indicates the material matters considered. In reaching its determination and recommendation, the Special Committee did not quantify, rank or assign any relative or specific weight to any of the foregoing factors and individual members of the Special Committee may have considered various factors differently. The Special Committee did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. The Special Committee based its unanimous recommendation on the totality of the information presented.

Recommendation of the Board

At a meeting of the Board (which Michael Bell, Joshua Nelson, Megan Preiner, and Scott Sperling did not attend) held on February 25, 2024, the Board, acting upon the unanimous recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining:

 

•

determined that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates);

 

•

declared the Merger Agreement and the Transactions advisable;

 

•

approved the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein; and

 

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•

recommended that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions in accordance with the DGCL.

The Board, on behalf of the Company, believes, based on the factors described in this Information Statement, that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

In reaching its determination, the Board considered a number of factors, including the following material factors:

 

•

the current and historical prices of the Common Stock, including the fact that the Merger Consideration of $10.00 per share of Common Stock represented a premium of approximately 78% over the closing price per share on October 6, 2023 ($5.62), the day THL submitted its initial acquisition proposal to the Board, and approximately 31% over the closing price per share on February 23, 2024 ($7.64), the last trading day before the Special Committee meeting to discuss the Transaction);

 

•

the opinion of Centerview rendered to the Special Committee, which opinion and financial analyses the Special Committee adopted as its own, on February 25, 2024, which was subsequently confirmed by delivery of a written opinion dated as of such date, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below in the section entitled “The Special Factors —Opinion of Centerview” beginning on page 32;

 

•

the Special Committee’s unanimous determination that the Merger Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement are advisable, fair to and in the best interests of the Company and the Company’s stockholders (other than the THL Agiliti Stockholder and its affiliates (excluding the Company and its subsidiaries)) and the Special Committee’s unanimous recommendation to the Board that the Board (i) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declare the Merger Agreement and the Transactions advisable, (iii) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained therein and the consummation of the Merger and the Transactions upon the terms and subject to the conditions contained therein and (iv) resolve to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions in accordance with the DGCL; and

 

•

the procedural fairness of the Transactions, including that the Transactions were negotiated over a period of several weeks by a Special Committee consisting of four directors who are not representatives of or affiliated with THL or StepStone and are not employees of the Company or any of its subsidiaries, that could objectively and independently assess the potential transaction, and that the Special Committee was advised by its own independent legal and financial advisors.

The Board, on behalf of the Company, believes, based on the factors described in this Information Statement, that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

The above discussion of the information and factors considered by the Board is not intended to be exhaustive but indicates the material matters considered. In reaching its determinations and recommendations, the Board did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual members of the Board may have considered various factors differently. The Board did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. The Board based its recommendation on the totality of the information presented.

 

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The Special Committee and the Board did not specifically consider the liquidation value or the net book value of the Company in the evaluation of the Merger, because of the belief that neither liquidation value nor net book value presents a meaningful valuation for the Company and its business, as (i) determining a liquidation value would be impracticable given the significant execution risk involved in any breakup of the Company, (ii) the Company’s value is derived from the cash flows generated from its continuing operations rather than from the value of assets that might be realized in a liquidation, (iii) net book value is significantly influenced by historical costs and (iv) net book value does not take into account the prospects of the Company, market conditions, trends in the industries in which the Company operates or the business risks inherent in those industries.

In addition, the Special Committee and the Board did not specifically seek to establish a pre-Merger going concern valuation of the Company, and no such value was directly considered by the Special Committee or the Board. Rather, the Special Committee believed that the financial analyses presented by Centerview, as more fully summarized in the section entitled “The Special Factors —Opinion of Centerview” beginning on page 32, which opinion and financial analyses the Special Committee adopted as its own, on which the Special Committee relied in making its recommendation to the Board, represented potential valuations of the Company as it continues to operate its business, and to that extent, the Special Committee implicitly characterized such analyses as forms of going concern valuations. The Special Committee considered each of the analyses performed by Centerview in the full context of the fairness opinion provided by Centerview as well as various additional factors, as discussed above. The full text of Centerview’s written opinion, which is attached as Annex B, should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

The Special Committee and the Board are not aware of any firm offer by any other person during the prior two years for a merger or consolidation of the Company with another company, the sale or transfer of all or substantially all of the Company’s assets or a purchase of the Company’s securities that would enable such person to exercise control of the Company.

Please also see the notice regarding ratification under Section 204 of the DGCL as further described in the section entitled “The Special Factors — Notice Regarding Ratification Under Section 204 of the DGCL.”

Notice Regarding Ratification Under Section 204 of the DGCL

On February 29, 2024, the Delaware Court of Chancery issued an opinion, Sjunde AP-Fonden v. Activision Blizzard, Inc., et al., C.A. No. 2022-1001- KSJM (Del. Ch. Feb. 29, 2024) (“Activision”), pursuant to which the Delaware Court provided certain guidance with respect to the requirements of Section 251 of the DGCL in the context of the approval of an agreement and plan of merger.

The Special Committee believes that their prior approval of the Merger Agreement and the Company’s execution thereof complied with the requirements of Section 251 of the DGCL, and that, to the extent it did not, the Special Committee adopted resolutions in accordance with Section 204 of the DGCL and in light of the Activision decision, ratifying its findings, determinations and recommendations with respect to approving the Merger Agreement and Transactions to eliminate the risk that, or any uncertainty as to whether, the prior approval or execution did not comply with Section 251 of the DGCL or was otherwise a “defective corporate act” (as defined in Section 204(h)(1) of the DGCL). A copy of such Special Committee resolutions are attached as Annex E to this Information Statement.

The Board believes that their prior approval of the Merger Agreement and the Company’s execution thereof complied with the requirements of Section 251 of the DGCL, and that, to the extent it did not, the Board acting upon the unanimous recommendation of the Special Committee (and with Darren Friedman and Thomas J. Leonard abstaining and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance) adopted resolutions in accordance with Section 204 of the DGCL and in light of the Activision decision, ratifying its findings, determinations and recommendations with respect to approving the Merger

 

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Agreement and Transactions to eliminate the risk that, or any uncertainty as to whether, the prior approval or execution did not comply with Section 251 of the DGCL or was otherwise a “defective corporate act” (as defined in Section 204(h)(1) of the DGCL). A copy of such Board resolutions are attached as Annex F to this Information Statement.

This notice constitutes the notice required to be given to our stockholders in accordance with Section 204 of the DGCL. Any claim that any potentially defective corporate act identified and ratified under Section 204 of the DGCL pursuant to the resolutions attached as Annex E or Annex F is void or voidable due to the failure of authorization, or that the Delaware Court should declare in its discretion that the ratification thereof in accordance with Section 204 of the DGCL not be effective or be effective only on certain conditions, must be brought within 120 days from the date this notice is given.

Required Stockholder Approval for the Merger

The adoption of the Merger Agreement and the approval of the Merger and the other Transactions required the affirmative vote or written consent, in accordance with Section 228 and Section 251 of the DGCL, the Company Certificate of Incorporation and the Company Bylaws, by stockholders of the Company holding a majority of the shares of Common Stock outstanding. As of March 11, 2024, the record date for determining stockholders of the Company entitled to vote on the adoption of the Merger Agreement, there were 135,960,875 shares of Common Stock outstanding. Holders of Common Stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including adoption of the Merger Agreement.

On February 26, 2024, following the execution of the Merger Agreement and again on March 11, 2024 (following the ratification by the Special Committee and the Board (as further described in the section entitled “The Special Factors — Notice Regarding Ratification Under Section 204 of the DGCL”), the THL Agiliti Stockholder, which on such dates beneficially owned 98,195,398 shares of Common Stock, representing approximately 72% of the then-outstanding shares of Common Stock, delivered the Written Consent. No further action by any other stockholder of the Company is required under applicable law or the Merger Agreement (or otherwise) in connection with the adoption of the Merger Agreement. Approval of the Merger does not require the approval of a minority of the stockholders unaffiliated with THL. As a result, the Company is not soliciting your vote for the adoption of the Merger Agreement and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement. No action by the stockholders of the Company is required to complete the Merger, and all requisite corporate action by and on behalf of Merger Sub required to complete the Merger has been taken.

When actions are taken by the written consent of less than all of the stockholders entitled to vote on a matter, Delaware law requires notice of the action be given to those stockholders who did not consent in writing to the action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of holders to take the action were delivered to the corporation in accordance with Section 228 of the DGCL. This Information Statement and the notice attached hereto constitute notice to you from the Company of the Written Consent as required by Delaware law.

Opinion of Centerview

On February 25, 2024, Centerview rendered to the Special Committee its oral opinion, subsequently confirmed in a written opinion dated as of such date, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than the Excluded Shares), a group of security holders which the Special Committee considered to be situated substantially similarly to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

 

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The full text of Centerview’s written opinion, dated February 25, 2024, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety to the full text of Centerview’s written opinion attached as Annex B. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Special Committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transactions and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Common Stock (other than Excluded Shares) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the Transactions and does not constitute a recommendation to any stockholder of the Company or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Transactions or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

•

a draft of the Merger Agreement dated February 25, 2024, referred to in this summary of Centerview’s opinion as the “Draft Merger Agreement”;

 

•

Annual Reports on Form 10-K of the Company for the years ended December 31, 2022 and December 31, 2021;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;

 

•

certain publicly available research analyst reports for the Company;

 

•

certain other communications from the Company to its stockholders; and

 

•

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of the Company, including certain financial forecasts, analyses and projections relating to the Company prepared by management of the Company and furnished to Centerview by the Company for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the “Forecasts,” and which are collectively referred to in this summary of Centerview’s opinion as the “Internal Data.”

Centerview also participated in discussions with members of the senior management and representatives of the Company regarding their assessment of the Internal Data. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant, and conducted such financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with the Special Committee’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at the Special Committee’s direction, that the Internal Data (including, without limitation, the Forecasts) were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the matters covered thereby and Centerview relied, at the Special Committee’s direction, on the Internal Data for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion

 

33

as to the Internal Data or the assumptions on which it was based. In addition, at the Special Committee’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of the Company, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company. Centerview assumed, at the Special Committee’s direction, that the final executed Merger Agreement would not differ in any respect material to Centerview’s analysis or opinion from the Draft Merger Agreement reviewed by Centerview. Centerview also assumed, at the Special Committee’s direction, that the Transactions will be consummated on the terms set forth in the Merger Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Transactions, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of the Company, or the ability of the Company to pay its obligations when they come due, or as to the impact of the Transactions on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, the Company’s underlying business decision to proceed with or effect the Transactions, or the relative merits of the Transactions as compared to any alternative business strategies or transactions that might be available to the Company or in which the Company might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of shares of Common Stock (other than Excluded Shares), solely in their capacity as holders of shares of Common Stock, of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or the Transactions, including, without limitation, the structure or form of the Transactions, or any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with or otherwise contemplated by the Transactions, including, without limitation, the fairness of the Transactions or any other term or aspect of the Transactions to, or any consideration to be received in connection therewith by, or the impact of the Transactions on, the holders of any other class of securities, creditors or other constituencies of the Company or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of the Company or any party, or class of such persons in connection with the Transactions, whether relative to the Merger Consideration to be paid to the holders of shares of Common Stock (other than Excluded Shares) pursuant to the Merger Agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any stockholder of the Company or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Transactions or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Special Committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transactions. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Special Committee in connection with Centerview’s written opinion, dated February 25, 2024. The summary set forth below does

 

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not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of the Company. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion.

In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company or any other parties to the Transactions. None of the Company, Parent, Merger Sub or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the Company do not purport to be appraisals or reflect the prices at which the Company may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 23, 2024 (the last trading day before the public announcement of the Transactions) and is not necessarily indicative of current market conditions.

Selected Public Company Analysis

Centerview reviewed certain financial information of the Company and compared it to corresponding financial information of selected comparable public companies that Centerview deemed comparable, based on its experience and professional judgment, to the Company (the “selected companies”). Although none of the selected companies is directly comparable to the Company, the selected companies listed below were chosen by Centerview, among other reasons, because they are companies with certain operational, business and/or financial characteristics that, for purposes of Centerview’s analysis, Centerview considered similar to those of the Company. However, because none of the selected companies is exactly the same as the Company, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operational characteristics of the Company and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

Using publicly available information obtained from SEC filings and other data sources as of February 23, 2024, Centerview calculated for each selected company, such company’s implied enterprise value (calculated as the equity value (determined using the treasury stock method and taking into account outstanding in-the-money options, warrants, restricted stock units and other dilutive equity instruments) plus the non-controlling interests, face value of debt and certain liabilities less cash and cash equivalents, in each case calculated consistently with the determinations made in arriving at the Company’s implied enterprise value for purposes of Centerview’s analyses to the extent comparable information was publicly available) (“EV”), as a multiple of Wall Street research analyst consensus estimated earnings before interest expense, income taxes, depreciation and amortization and stock based compensation (“EBITDA”), calendarized to the Company’s fiscal year 2024 (“2024E”). Such multiple is referred to in this section, with respect to a selected company, as “EV / 2024E EBITDA.”

 

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The selected companies and the results of this analysis are summarized as follows:

 

Selected Company		EV / 2024E Multiple
Healthcare Services Group Inc.			7.2x
Pediatrix Medical Group Inc.			5.6x
Premier Inc.			5.8x
Sotera Health Co.			12.5x
Stericycle Inc.			12.0x
Steris PLC			16.4x
Median			9.6x
Average			9.9x

Based on the foregoing analysis and other considerations that Centerview deemed relevant in its professional judgment and experience, Centerview selected a range of multiples of EV to 2024E EBITDA of 7.5x to 10.0x. In selecting this range of multiples, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of the Company and the selected companies that could affect their public trading values in order to provide a context in which to consider the results of the quantitative analysis.

Centerview applied the range of multiples of EV to 2024E EBITDA to the Company’s 2024E EBITDA of $269 million derived from the Internal Data, to derive a range of implied enterprise values for the Company. Centerview subtracted from each of these ranges the Company’s estimate of the face value of the Company’s net debt expected to be outstanding as of March 31, 2024 as set forth in the Internal Data to derive a range of implied equity values for the Company. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares of Common Stock as of February 19, 2024, calculated on a treasury stock basis based on the Internal Data, to derive a range of implied values per share of approximately $6.80 to $11.55, rounded to the nearest $0.05. Centerview compared this range to the Merger Consideration of $10.00 per share proposed to be paid to the holders of shares of Common Stock (other than Excluded Shares) pursuant to the Merger Agreement.

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of the Company based on the Forecasts. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

In performing this analysis, Centerview calculated a range of implied enterprise values for the Company by discounting to present value as of March 31, 2024 (using discount rates ranging from 10.00% to 11.50%, based upon Centerview’s analysis of the Company’s weighted average cost of capital, determined using the capital asset pricing model and based on considerations that Centerview deemed relevant in its professional judgment and experience): (i) the forecasted unlevered free cash flows of the Company based on the forecasts over the period beginning April 1, 2024 and ending on December 31, 2028 (see the section entitled “The Special Factors—Certain Company Financial Forecasts” beginning on page 39) and (ii) a range of implied terminal values of the Company at the end of the forecast period shown in the Forecasts, applying a range of exit multiples to the Company’s next twelve month EBITDA ranging from 7.50x to 10.00x. Centerview then (a) subtracted from this range the face value of the Company’s net debt as of March 31, 2024 as set forth in the Internal Data and (b) divided this range of implied equity values by the number of fully diluted outstanding shares of Common Stock as of February 19, 2024, calculated on a treasury stock basis based on the Internal Data. Centerview then added on a per share basis the net present implied per share value of federal net operating losses attributable to the Company of approximately $0.00 per share based on Internal Data to derive a range of implied values per

 

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share of Common Stock of approximately $8.65 to $14.10, rounded to the nearest $0.05. Centerview compared this range to the Merger Consideration of $10.00 per share proposed to be paid to the holders of shares of Common Stock (other than Excluded Shares) pursuant to the Merger Agreement.

Other Factors

Centerview noted for the Special Committee certain additional factors solely for reference and informational purposes only, including, among other things, the following:

 

•

Analyst Price Targets Analysis. Centerview reviewed price targets for the shares of Common Stock in publicly available Wall Street research analyst reports as of market close on February 23, 2024, noting that these price targets ranged from $6.25 per share of Common Stock to $23.00 per share of Common Stock.

 

•

Historical Price Trading Analysis. Centerview reviewed historical trading prices of the shares of Common Stock during the 52-week period ended February 23, 2024, which reflected low and high closing stock prices for the shares of Common Stock during such period of $5.14 and $19.47 per shares of Common Stock.

General

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

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Special Committee in its evaluation of the Transactions. Consequently, the analyses described above should not be viewed as determinative of the views of the Special Committee or management of the Company with respect to the Merger Consideration or as to whether the Special Committee would have been willing to determine that a different consideration was fair. The consideration for the Transactions was determined through arm’s-length negotiations between the Company and Parent and was approved by the Special Committee. Centerview provided advice to the Special Committee during these negotiations. Centerview did not, however, recommend any specific amount of consideration to the Company or the Special Committee or that any specific amount of consideration constituted the only appropriate consideration for the Transactions.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, Centerview had not been engaged to provide financial advisory or other services to the Company, except for Centerview’s engagements to provide financial advisory services to the predecessor to the Special Committee, for which Centerview received $250,000 in compensation from the Company. In the two years prior to the date of its written opinion, Centerview had not been engaged to provide financial advisory or other services to Parent or THL, the ultimate sponsor of Parent, and Centerview did not receive any compensation from Parent or THL during such period. Centerview may provide investment banking and other services to or with respect to the Company or Parent or their respective affiliates, including portfolio companies of THL in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, the Company, Parent, THL or any of their respective affiliates, including portfolio companies of THL, or any other party that may be involved in the Transactions.

 

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The Special Committee selected Centerview as its financial advisor in connection with the Transactions based on, among other things, Centerview’s independence, reputation, experience (including with respect to special committee assignments and merger and acquisition engagements) and absence of a concurrent engagement on behalf of THL or its portfolio companies. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Transactions.

In connection with Centerview’s services as the financial advisor to the Special Committee, the Company has agreed to pay Centerview an aggregate fee of approximately $9,500,000, (i) $2,000,000 of which was payable upon the rendering of Centerview’s opinion and (ii) approximately $7,500,000 of which is payable contingent upon consummation of the Merger (the “Transaction Fee”) (which includes a $250,000 retainer, which is creditable against the Transaction Fee). In addition, the Company may, in its discretion, pay Centerview an additional fee of up to $5,000,000. The Company has also agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Other Presentations by Centerview

In addition to the presentation made to the Special Committee on February 25, 2024, which will be filed with the SEC as exhibit (c)(7) to the Schedule 13E-3 and is described above, copies of preliminary illustrative presentations presented or delivered by Centerview to the Special Committee on October 13, 2023, October 23, 2023, October 26, 2023, February 2, 2024, and February 18, 2024, containing, among other things, preliminary illustrative financial analyses are attached as exhibits to such Schedule 13E-3.

A summary of these preliminary illustrative presentations is provided below. The following summaries, however, do not purport to be a complete description of these preliminary illustrative presentations or of the preliminary financial analyses performed by Centerview.

 

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on October 13, 2023, filed as exhibit (c)(2) to the Schedule 13E-3, contains, among other information, (i) a transaction process overview, (ii) preliminary overview of THL’s indicative valuation of $9.00 per share pursuant to the THL October 6th Proposal, and (iii) certain other terms of precedent transactions.

 

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on October 23, 2023, filed as exhibit (c)(3) to the Schedule 13E-3, contains, among other information, (i) a transaction status update and overview, (ii) preliminary analysis of THL’s indicative valuation of $9.00 per share pursuant to the THL October 6th Proposal, (iii) observations and perspectives on the Company’s historical financial performance and (iv) observations and perspectives of the management plan, (v) observations and perspectives of the market and industry, (vi) certain other terms of precedent transactions and selected companies analysis, and (vii) an analysis of premiums paid and timing in minority “squeeze out transactions.

 

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on October 26, 2023, filed as exhibit (c)(4) to the Schedule 13E-3, contains, among other information, (i) a transaction status update and overview, (ii) preliminary analysis of THL’s updated indicative valuation of $9.35 per share pursuant to the THL October 24th Proposal, (iii) observations and perspectives on the Company’s historical financial performance and (iv) observations and perspectives of the management plan and (v) an analysis of premiums paid and timing in minority “squeeze out transactions.

 

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on February 2, 2024, filed as exhibit (c)(5) to the Schedule 13E-3, contains, among other information, (i) a transaction status update and overview, (ii) preliminary analysis of THL’s indicative valuation of $9.00 per share pursuant to the THL January 26th Proposal, (iii) observations and perspectives on the Company’s historical financial performance and (iv) observations and perspectives

 

38

of the February management plan, (v) observations and perspectives of the market and industry, and (vi) observations and perspectives on analyst reactions to the Q3 earnings announcement.

 

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on February 18, 2024, filed as exhibit (c)(6) to the Schedule 13E-3, contains, among other information, (i) preliminary analysis of THL’s indicative valuation of $10.00 per share pursuant to the THL February 16th Proposal and (ii) observations and perspectives on the Company’s historical financial performance.

None of these other preliminary illustrative presentations by Centerview, alone or together, constitute, or form the basis of, an opinion of Centerview with respect to the consideration payable under the Merger Agreement, and the preliminary illustrative financial analyses therein were based on economic, monetary, market and other conditions as in effect on, and the information made available to Centerview as of, the dates of the respective presentations.

Certain Company Financial Forecasts

The Company does not generally as a matter of course publish or make public its business plans and strategies or make external disclosures about its anticipated financial position or results of operations, other than for providing, from time to time, estimates of certain expected financial results and operational metrics in its regular annual and quarterly earnings press releases and other investor materials.

Projections as to future performance, revenues, earnings or other results, particularly for extended time periods further in the future, are inherently uncertain and unpredictable, including due to the subjectivity of the underlying assumptions and estimates. As a result, the Company does not endorse projections or other unaudited prospective financial information as a reliable indication of future results.

However, in connection with the Special Committee’s evaluation of a potential transaction, on February 22, 2024, the Company’s management provided to Centerview certain independently prepared unaudited prospective financial information for fiscal years 2024 through 2028, which we refer to generally as the “February Projections.” The February Projections were made available to the Special Committee in connection with their consideration and evaluation of the Merger and were provided to Centerview in connection with its financial analyses and opinion. At the direction of the Special Committee, a substantially final draft of the February Projections was also made available to THL through Centerview earlier in February 2024.

The February Projections reflect numerous assumptions including the Company’s continued standalone operation and other relevant factors relating to the Company’s strategic plan, and do not reflect any effects or expenses attributable solely with respect to the Merger, future mergers and acquisitions, or failure to consummate the Merger. The foregoing is a summary of certain key assumptions and estimates and does not purport to be a comprehensive overview of all assumptions and estimates reflected in the February Projections prepared by Company management.

The Company is including a summary of the February Projections in this Information Statement in order to provide the Company’s stockholders with access to the final projections that were made available to the Special Committee in connection with its evaluation of the Merger, made available to THL in connection with its due diligence review and provided to Centerview, and which were approved by the Special Committee for Centerview to use, in connection with its financial analyses and opinion.

 

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The following table presents a summary of the February Projections:

US Dollars in millions

 

Fiscal year		FY 2023A				FY 2024E				FY 2025E				FY 2026E				FY 2027E				FY 2028E
Fiscal year end date		12/31/23				12/31/24				12/31/25				12/31/26				12/31/27				12/31/28
Revenue			1,175				1,209				1,275				1,357				1,445				1,538
Adjusted EBITDA (1)			267				269				293				318				345				373
Unlevered Free Cash Flow (2)							86				116				123				136				148

 

(1)

Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs, remeasurement of tax receivable agreement and loss on extinguishment / modification of debt.

(2)

Unlevered Free Cash Flow was calculated by Centerview as Adjusted EBITDA less non-cash share base compensation expenses, less management and other expenses, less cash taxes (assuming the Company’s tax rate of 29%), less increases in net working capital, plus decreases in net working capital, and less capital expenditures and capital development costs, in each case, as provided in the Company’s financial projections. 2024E unlevered free cash flow represents cash flows from Q2-Q4 2024E.

Prior Iterations of the Projections

On October 13, 2023, the Company’s management provided Centerview with preliminary unaudited prospective financial information for the fiscal years 2023 through 2028, which we refer generally as the “October Projections,” together with the February Projections, the “Projections”, which were presented to the Special Committee on October 23, 2023. The primary differences between the October Projections and February Projections were a result of changes in forecasted assumptions as a result of the actual fiscal year 2023 results. The October Projections were made available to the Special Committee in connection with their consideration and evaluation of the Merger and were provided to Centerview in connection with its preliminary financial analyses. At the direction of the Special Committee, the October Projections were also made available to THL through Centerview on October 23, 2023. The October Projections reflect numerous assumptions including those reflected in the February Projections and did not reflect any effects or expenses attributable solely with respect to the Merger, or failure to consummate the Merger.

The following table presents a summary of the October Projections:

US Dollars in millions

 

Fiscal year		FY 2023E				FY 2024E				FY 2025E				FY 2026E				FY 2027E				FY 2028E
Fiscal year end date		12/31/23				12/31/24				12/31/25				12/31/26				12/31/27				12/31/28
Revenue			1,180				1,215				1,280				1,362				1,450				1,542
Adjusted EBITDA (1)			270				273				298				323				349				378
Unlevered Free Cash Flow(2)			67				117				116				124				136				150

 

(1)

Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs, remeasurement of tax receivable agreement and loss on extinguishment / modification of debt.

(2)

Unlevered Free Cash Flow was calculated by Centerview as Adjusted EBITDA less non-cash share base compensation expenses, less management and other expenses, less cash taxes (assuming the Company’s tax rate of 29%), less increases in net working capital, plus decreases in net working capital, and less capital expenditures and capital development costs in each case, and other expenses relating to acquisition spend in

 

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the second half of 2023, as provided in the Company’s financial projections. 2023E unlevered free cash flow represents cash flows from the second half of 2023E.

Additional Information About the Projections

The inclusion of the Projections in this Information Statement should not be regarded as an indication that any of the Company, THL or any of their affiliates, advisors or representatives have considered the Projections to be predictive of actual future events, and the Projections should not be relied upon as such. The Company’s internal financial forecasts upon which the Projections were based are subjective in many respects. The Projections did not take into account any changes or expenses attributable solely to the Transactions nor do they reflect any effects of the Merger or effect of the failure of the Merger to be consummated. Additionally, the Projections were created in a similar manner and method compared with forecasts historically created for internal use by the Company.

Although presented with numerical specificity, the Projections were based on numerous variables, assumptions and estimates as to future events made by the Company’s management that the Company’s management believed were reasonable at the time the Projections were prepared, taking into account the relevant information available to management at the time. These variables, assumptions and estimates are inherently uncertain and many are beyond the control of the Company and the Company’s management. Important factors that may affect actual results and cause these internal financial Projections to not be achieved include, but are not limited to, risks and uncertainties relating to the business of the Company (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the regulatory and competitive environment, changes in technology, general business and economic conditions and other risk factors referenced in the section entitled “Cautionary Statement Concerning Forward-Looking Information” beginning on page 71. Various assumptions underlying the Projections may not prove to have been, or may no longer be, accurate. The Projections may not be realized, and actual results may be significantly higher or lower than projected in the Projections.

The Projections summarized above do not give effect to the Merger or expenses attributable solely to the proposed Merger or reflect any effects of the Merger or the effect of the failure of the Merger to be consummated. The Projections also reflect assumptions as to certain business strategies or plans that are subject to change. The Projections do not take into account any circumstances or events occurring after the date they were prepared. The financial projections included in this Information Statement have been prepared by the Company’s management and are subjective in many respects.

The Projections cover multiple years, and such information by its nature becomes less predictive with each successive year. As a result, the inclusion of the Projections in this Information Statement should not be relied on as necessarily predictive of actual future events and actual results may differ materially (and will differ materially if the Transactions are completed) from the Projections. For all of these reasons, the internal financial Projections, and the assumptions upon which they are based, (i) are not guarantees of future results; (ii) are inherently speculative; and (iii) are subject to a number of risks and uncertainties. As a result, actual results may differ materially from those contained in these internal financial Projections. Accordingly, there can be no assurance that the Projections will be realized.

The Projections were prepared solely for internal use and to assist the Special Committee with their consideration and evaluation of the Transactions, including the Merger, Centerview with its financial analyses and opinion and THL with its due diligence review of the Company, and although they were prepared on an accounting basis consistent with the Company’s financial statements, they were not prepared with a view toward public disclosure or toward compliance with published guidelines of the SEC, compliance with GAAP, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Projections included in this document have been prepared by, and are the responsibility of, the Company. Neither the Company’s independent auditor nor any other independent accountant has compiled, examined or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

 

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Adjusted EBITDA and Unlevered Free Cash Flow contained in the Projections are “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with GAAP. The non-GAAP financial measures used in the Projections were relied upon by Centerview for purposes of its opinion. The non-GAAP financial measures used in the Projections were also relied upon by the Special Committee in connection with its evaluation of the Merger. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the merger if the disclosure is included in a document such as this Information Statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Centerview for purposes of its opinion, nor were they relied upon by the Special Committee in connection with its evaluation of the Merger. Accordingly, the Company has not provided a reconciliation of the financial measures included in the Projections to the relevant GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used 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 GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.

For these reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this Information Statement should not be regarded as an indication that such Projections will be an accurate prediction of future events, and they should not be relied on as such. None of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) can give you any assurance that actual results will not differ from these Projections.

Except to the extent required by applicable federal securities laws, none of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) undertake any obligation to update or otherwise revise or reconcile the Projections or the specific portions presented to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error. Therefore, readers of this Information Statement are cautioned not to place undue, if any, reliance on the specific portions of the Projections set forth above. None of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) intend to make publicly available any update or other revision to these Projections. In addition, none of the Company, THL or any of their affiliates, advisors, officers, directors, partners or representatives (including Centerview) have made, make, or are authorized in the future to make, any representation to any stockholder or other person regarding the Company’s ultimate performance compared to the information contained in the Projections or that projected results will be achieved, and any statements to the contrary should be disregarded. The Company has made no representation to Parent or THL, in the Merger Agreement or otherwise, concerning the Projections.

Financing

The parties estimate that the total amount of funds necessary to pay the aggregate cash consideration to the public stockholders in the Merger, inclusive of estimated fees and expenses, is up to approximately $427 million, assuming no exercise of dissenters’ rights by stockholders of the Company. Parent expects to obtain the amount of funds necessary to complete the Merger and the related transactions through a combination of (i) borrowings from the Incremental Term Facility (as defined below) and (ii) the available borrowings under the Company’s Existing Credit Agreement (as defined below) and/or the Existing Receivables Agreement (as defined below). As of March 31, 2024, the available borrowings under the Existing Credit Agreement and the Existing Receivables Agreement were, in the aggregate, in excess of $430 million. In the event that the Incremental Term Facility is not available at the closing of the Merger, Parent intends to obtain funds from a cash contribution from the Equity Commitment Parties pursuant to the Equity Commitment Letter, subject to the terms and conditions thereof.

 

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Existing Credit Agreement

An indirect subsidiary of the Company, Agiliti Health, Inc., as borrower (the “Borrower”), has outstanding senior secured credit facilities consisting of a $1,075.0 million term loan facility (the “Term Loan Facility”) and a $300.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”) pursuant to the Amended and Restated Credit Agreement (the “Existing Credit Agreement”) among the Borrower, Agiliti Holdco, Inc., as holdings (“Holdings”), the subsidiaries of the Borrower party thereto from time to time, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “Administrative Agent”). The following is a summary description of certain terms of the Senior Secured Credit Facilities.

Interest Rate and Fees

Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to an applicable margin plus, at our option, either (1)(x) with respect to loans denominated in US Dollars, Term SOFR, which is subject to a floor of 0.00% per annum, (y) with respect to loans denominated in Euros, the EURIBOR Rate, which is subject to a floor of 0.00% per annum, plus an adjustment, or (z) with respect to loans denominated in Sterling, SONIA, which is subject to a floor of 0.00% per annum, or (2) a base rate determined by reference to the highest of (x) the U.S. Prime Rate as quoted in the Wall Street Journal, (y) the sum of (A) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate plus (B) 0.50% or (z) the Term SOFR Rate for an interest period of one month plus 1.00%.

In addition, under the Existing Credit Agreement, the Borrower is required to pay certain recurring fees with respect to the Senior Secured Credit Facilities, including (i) a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder, (ii) letter of credit fees on the aggregate face amounts of outstanding letters of credit plus a fronting fee to the issuing bank and (iii) agency and administration fees.

Prepayments

The Existing Credit Agreement contains certain mandatory prepayment provisions, including with respect to excess cash flow, asset sale proceeds and proceeds from certain incurrences of indebtedness, which are subject to certain exceptions.

Amortization and Maturity

Under the Existing Credit Agreement, the Borrower is required to make scheduled quarterly payments on the Term Loan Facility in an annual amount equal to 1% of the initial outstanding balance of the Term Loan Facility, with the balance of the Term Loan Facility to be due and payable on May 1, 2030.

There will be no scheduled amortization under the Revolving Credit Facility. Any principal amount outstanding under the Revolving Credit Facility will be due and payable in full on the earlier to occur of (x) the date that is six months prior to the then existing final maturity date of the Term Loan Facility and (y) April 6, 2028.

Guarantees; Security

Subject to certain exceptions, all obligations under the Existing Credit Agreement are unconditionally guaranteed by Holdings and certain of the Borrower’s existing direct or indirect wholly-owned material United States subsidiaries, and will be required to be guaranteed by certain future direct or indirect wholly-owned material United States subsidiaries of the Borrower. Subject to certain exceptions, all obligations under the Existing Credit Agreement, and the guarantees of those obligations, will be secured on a first-priority basis, subject to certain exceptions, by substantially all of the assets of Holdings, the Borrower and the other guarantors.

 

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Representations, Warranties and Covenants

The Existing Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Borrower and its restricted subsidiaries’ ability to: (i) incur additional indebtedness, (ii) pay dividends on our capital stock or redeem, repurchase or retire our capital stock, (iii) make investments, (iv) create restrictions on the payment of dividends or other amounts, (v) engage in transactions with our affiliates, (vi) make dispositions, (vii) consummate fundamental changes, (viii) incur liens, (ix) prepay, redeem, repurchase, retire or amend certain junior or subordinated debt and (x) enter into sale and lease-back transactions.

The Existing Credit Agreement also contains a First Lien Leverage Ratio financial maintenance covenant that is only applicable to the Revolving Credit Facility and is only tested if the Revolving Credit Facility is drawn over a certain amount.

Existing Receivables Agreement

An indirect subsidiary of the Company, Agiliti Receivables LLC, a special purpose entity (the “SPV”) , has an accounts receivable securitization facility (the “AR Facility”) of up to $150.0 million with MUFG Bank, Ltd., as administrative agent (the “Administrative Agent”) pursuant to a receivables financing agreement (the “Existing Receivables Agreement”), among the SPV, Agiliti Health, Inc., as servicer (the “Servicer”), the Administrative Agent and the group and agents and lenders party thereto. In connection with the AR Facility, certain subsidiaries of the Company, as originators (the “Originators”), have sold and will continue to sell all of their accounts receivable and certain related assets (collectively, the “Receivables”) to the SPV. The Servicer performs administrative and collection services relating to the Receivables on behalf of the SPV for a fee. The amount available for borrowing at any one time under the Existing Receivables Agreement is limited to the greater of (i) $150 million and (ii) a borrowing base amount calculated based on the outstanding balance of eligible Receivables, subject to certain reserves, concentration limits, and other limitations. The following is a summary description of certain terms of the AR Facility.

Interest Rate and Fees

Borrowings under the Existing Receivables Agreement bear interest at a rate equal to an applicable margin plus 1-month Term SOFR plus a SOFR spread or, with respect to the initial interest period of any borrowing that occurs on any date other than a monthly settlement date, a base rate (the “Base Rate”) determined by reference to the highest of (x) the applicable Prime Rate, (y) the sum of (i) the federal funds effective rate and (ii) 0.50% or (z) 1-month Term SOFR plus a SOFR spread.

In addition, under the Existing Receivables Agreement, the SPV will be required to pay certain recurring fees with respect to the AR Facility, including (i) a commitment in respect of the unutilized commitments thereunder and (ii) administration fees.

Prepayments

The SPV must prepay the loans under the Existing Receivables Agreement as necessary in order to reduce the borrowing base deficit to $0 within 3 business days of the first date on which the borrowing base deficit exceeds $0. In addition, the SPV must prepay an amount equal to the borrowing base deficit, if any, on each monthly settlement date and on each borrowing date.

Amortization and Maturity

There is no scheduled amortization under the Existing Receivables Agreement. Any principal amount outstanding under the Existing Receivables Agreement will be due and payable in full on the third anniversary of the closing date unless extended or earlier terminated.

 

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Guarantees; Security

The Servicer guarantees the respective performance of its obligations and the obligations of the Originators under the Existing Receivables Agreement pursuant to a performance guaranty. However, neither the Servicer nor any of its affiliates guarantees the SPV’s borrowings under the Existing Receivables Agreement or the collectability of the Receivables.

The SPV pledged its ownership interest in the Receivables as collateral security for all amounts outstanding under the Existing Receivables Agreement.

Representations, Warranties and Covenants

The Existing Receivables Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the SPV’s ability to: (i) dispose of Receivables, (ii) modify or amend (x) the payment terms of Receivables, (y) its credit and collection policies or (z) the transaction documents related to the AR Facility, (iii) have any subsidiaries, (iv) deposit funds or direct any obligor to deposit funds to an account that is not subject to an account control agreement, or comingle any funds therein, (v) incur or guarantee debt, (vi) purchase assets other than Receivables or make any investment, (vii) consummate fundamental changes.

In addition, the Existing Receivables Agreement contains a covenant that the SPV’s net worth will remain greater than or equal to a required capital amount and a First Lien Leverage Ratio covenant consistent with the Existing Credit Agreement.

Incremental Amendment to Existing Credit Agreement

Substantially concurrently with the closing of the Merger and the other Transactions, the Company intends to enter into an amendment to the Existing Credit Agreement (such amendment, the “Amendment”), which will, among other things, increase the amount of the Term Loan Facility by $400.0 million (the “Incremental Term Facility”). The Incremental Term Facility will be fungible with the loans outstanding under the Term Loan Facility and will have the same terms as the Term Loan Facility, including those terms described under the Section titled “Existing Credit Agreement”. The Senior Secured Credit Facilities, including the Incremental Term Facility, and the AR Facility may be used as a source of funds for the Merger and the other Transactions.

There can be no assurance that the closing of the Amendment will occur on the terms described herein or at all. There can also be no assurance that proceeds from the Senior Secured Credit Facilities, including the Incremental Term Facility, and the AR Facility will be used as a source of funds for the Merger and the other Transactions or that the Merger and the other Transactions will close concurrently with the entry into the Amendment.

For more information on Parent’s financing arrangements for the Merger, see the section entitled “The Merger Agreement —Financing of the Merger” beginning on page 97.

Position of the Company on the Fairness of the Merger

On February 25, 2024, the Board, acting in reliance upon the unanimous recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining (and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance), (i) determined the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declared the Merger Agreement and the Transactions advisable, (iii) approved the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the

 

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conditions contained therein; and (iv) subject to the terms of the Merger Agreement, resolved to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, in accordance with the DGCL.

Position of the Sponsor Entities and Mr. Leonard in Connection with the Merger

Under the SEC rules governing “going-private” transactions, each of Parent, Merger Sub, the THL Entities (as defined below in the section entitled “Directors, Executive Officers and Controlling Persons of the Company”) and the StepStone Entities (as defined below in the section entitled “Directors, Executive Officers and Controlling Persons of the Company”) (collectively, the “Sponsor Entities”) and Mr. Thomas J. Leonard may be deemed to be an affiliate of the Company and engaged in the going-private transaction and, therefore, be required to express their beliefs as to the fairness of the Transactions, including the Merger, to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. The Sponsor Entities and Mr. Leonard are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. The Sponsor Entities and Mr. Leonard have interests in the Merger that are different from, and in addition to, the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. For additional information on Mr. Leonard’s interests in the Merger, please see the section entitled “The Special Factors—Interests of Our Directors and Executive Officers in the Merger.”

The Sponsor Entities and Mr. Leonard believe that the Merger (which is the Rule 13e-3 transaction for which the Schedule 13E-3 is filed with the SEC) is fair to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, on the basis of the factors described in the sections entitled “The Special Factors —Recommendation of the Board; Reasons for the Merger” and “The Special Factors—Position of the Company on the Fairness of the Merger” beginning on pages 25 and 45, respectively, the factors described in the section entitled “The Special Factors —Purposes and Reasons of the Sponsor Entities and Mr. Leonard in Connection with the Merger” beginning on page 51 and the additional factors described below with respect to the Sponsor Entities and Mr. Leonard.

The Sponsor Entities and Mr. Leonard also believe that the interests of the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, were properly represented by the Special Committee (of which Mr. Leonard was not a member), which evaluated and negotiated the terms and conditions of the Merger Agreement on behalf of the stockholders of the Company (excluding the THL Agiliti Stockholder and their respective affiliates (excluding the Company and its subsidiaries)) with the assistance of its independent legal and financial advisors.

The Sponsor Entities did not participate in the deliberations of the Special Committee. Mr. Leonard did attend certain Special Committee meetings in his capacity as Chief Executive Officer of the Company. Neither the Sponsor Entities nor Mr. Leonard received advice from the Special Committee’s independent legal or financial advisors as to the substantive or procedural fairness of the Merger. Neither the Sponsor Entities nor Mr. Leonard have performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the Merger to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. Neither the Sponsor Entities nor Mr. Leonard have received any report, opinion or appraisal from any outside party materially related to the Merger, including any report, opinion or appraisal relating to the fairness of the Merger to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, or the Sponsor Entities or Mr. Leonard.

Based on the factors considered by, and findings of, the Board and the Special Committee described in the sections entitled “The Special Factors —Recommendation of the Board; Reasons for the Merger,” and “The Special Factors —Position of the Company on the Fairness of the Merger” beginning on pages 25 and 45, respectively, the Sponsor Entities and Mr. Leonard believe that the Merger is substantively and procedurally fair to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. The Sponsor

 

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Entities and Mr. Leonard believe the factors considered by, and findings of, the Board and the Special Committee provide a reasonable basis upon which to form their belief that the Merger is fair to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. This belief should not, however, be construed as a recommendation to any “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, as to whether they should, and the Sponsor Entities and Mr. Leonard do not make any recommendation as to whether any “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, should exercise their appraisal rights under the DGCL.

Based on the Sponsor Entities’ knowledge and analysis of available information regarding the Company, as well as discussions with members of the Company’s senior management regarding the Company and its business and with respect to Mr. Leonard, based on Mr. Leonard’s knowledge regarding the Company as its Chief Executive Officer and member of the Board, as well as his discussions with other members of the Company’s senior management regarding the Company and its business, and with respect to both the Sponsor Entities and Mr. Leonard, the factors considered by, and findings of, the Board and the Special Committee described in the sections entitled “The Special Factors —Recommendation of the Board; Reasons for the Merger,” and “The Special Factors —Position of the Company on the Fairness of the Merger” beginning on pages 25 and 45, respectively, the Sponsor Entities and Mr. Leonard believe that the Merger is substantively and procedurally fair to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. In particular, the Sponsor Entities and Mr. Leonard considered the following substantive factors:

 

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the current and historical prices of the Common Stock, including the fact that the Merger Consideration of $10.00 per share of Common Stock represented a premium of approximately 78% over the closing price per share on October 6, 2023 ($5.62), the day THL submitted its initial acquisition proposal to the Board, and approximately 31% over the closing price per share on February 23, 2024 ($7.64), the last trading day before the Special Committee meeting to discuss the Transaction);

 

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the fact that the Merger Consideration is all cash which (i) provides the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, with certainty of value and liquidity for their shares of Common Stock, (ii) eliminates (x) any uncertainty in valuing the consideration to be received by such stockholders, (y) the difficulty in liquidating shares of the Common Stock in light of the current public trading market and (z) the delays that would otherwise be necessary in order to liquidate the positions of larger holders and without incurring brokerage and other costs typically associated with market sales and (iii) allows the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, to avoid exposure to the risks and uncertainties relating to the prospects of the Company;

 

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the risks associated with remaining a publicly traded company, including the Company’s near- and long-term challenges of achieving and accomplishing management’s plans and goals as a public company and the continuing uncertainty and volatility in the stock and equity markets;

 

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the likelihood that the Merger would be completed, based on, among other things, the limited number and nature of the conditions to the completion of the Merger, including the fact that there is no financing condition and that there are no required regulatory approvals; and

 

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the fact that the Company would have the right to seek specific performance to cause the parties to the Equity Commitment Letter to fund their commitments under the Equity Commitment Letter.

Mr. Leonard also considered the following substantive factors:

 

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his understanding of the Company’s industry, business, operations, financial condition, earnings, strategy and prospects (including the risks involved in achieving such prospects), as well as the Company’s historical and projected financial performance;

 

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his belief that the Merger Consideration compares favorably to the potential value of the Company and the Common Stock if the Company were to remain as a publicly traded company after taking into

 

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consideration the risks and uncertainties of remaining public and the risk that the trading price of the Common Stock would not, in the foreseeable future, reflect a net present value greater than the Merger Consideration of $10.00 per share of Common Stock, particularly given the trading multiple of the Common Stock and the limited trading volume of the Common Stock; and

 

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his belief of the Company’s future prospects if the Company did not enter into the Merger Agreement, including the competitive landscape, the current macroeconomic environment, the business, financial and execution risks and the Company’s relationships with customers and suppliers and the potential impact of those factors on the Company’s results of operations and trading price of the Common Stock (which cannot be quantified numerically).

The Sponsor Entities and Mr. Leonard also considered a variety of procedural factors related to the fairness of the Merger, including the following:

 

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the Merger Consideration resulted from active, extensive, arm’s-length negotiations between the Special Committee and THL, which resulted in the Special Committee negotiating to increase THL’s initial bid of $9.00 per share of Common Stock to $10.00 per share of Common Stock;

 

•

the Merger Agreement and the Transactions were negotiated at arm’s-length and unanimously approved by the Special Committee composed of four directors, who are not representatives of the Sponsor Entities and are not employees of the Company or any of its subsidiaries, who could objectively and independently assess the potential transaction, and the Special Committee retained its own independent legal and financial advisors which were fully informed about the extent to which the interests of the Sponsor Entities in the Merger differed from those of the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act;

 

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the fact that appraisal rights are available to “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, who comply with all of the required procedures under the DGCL for exercising appraisal rights, which allows such stockholders to seek appraisal of the “fair value” of their Common Stock in lieu of receiving the Merger Consideration;

 

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the fact that since the outset of discussions of the THL acquisition proposal with the Special Committee, THL had conditioned the THL acquisition proposal on approval by the Special Committee;

 

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the fact that the Special Committee had no obligation to recommend any transaction, including a transaction with THL, and that the Special Committee had the authority to reject any proposals made by THL or any other person;

 

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the analyses and presentations given by Centerview to the Special Committee, including the opinion of Centerview rendered to the Special Committee, which opinion and financial analyses the Special Committee adopted as its own, on February 25, 2024, which was subsequently confirmed by delivery of a written opinion to the Special Committee dated such date, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described in the section entitled “The Special Factors —Opinion of Centerview” beginning on page 32;

 

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the Special Committee, acting with the advice and assistance of its own independent legal and financial advisors, considered and determined that the Merger Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, are advisable, fair to and in the best interests of the Company and the Company’s stockholders (other than the THL Agiliti Stockholder and its affiliates) and the Special Committee unanimously recommended to the Board that the Board (i) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declare the Merger Agreement and the

 

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Transactions advisable, (iii) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein and (iv) subject to the terms of the Merger Agreement, resolve to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, including the Merger, in accordance with the DGCL; and

 

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the Board (acting on the recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance), (i) determined that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declared the Merger Agreement and the Transactions advisable, (iii) approved the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein and (iv) subject to the terms of the Merger Agreement, resolved to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, including the Merger, in accordance with the DGCL.

The Sponsor Entities and Mr. Leonard also considered a variety of risks and other countervailing factors related to the substantive and procedural fairness of the proposed Merger, including:

 

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that the stockholders of the Company as of the closing of the Merger other than the THL Agiliti Stockholder, the Rollover Stockholder with respect to the Rollover Shares and certain Continuing Employees who hold certain equity awards will not participate in any future earning, appreciation in value or growth of the Company’s business and will not benefit from any potential sale of the Company or its assets to a third party in the future;

 

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the risk that the Merger might not be completed in a timely manner or at all;

 

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that Parent and Merger Sub are newly formed entities with essentially no assets, other than the funding commitments of the Equity Commitment Parties;

 

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the restrictions on the conduct of the Company’s business prior to the completion of the Merger set forth in the Merger Agreement, which may delay or prevent the Company from undertaking business opportunities that may arise and certain other actions it might otherwise take with respect to the operations of the Company pending completion of the Merger;

 

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the negative effect that the pendency of the Merger, or a failure to complete the Merger, could potentially have on the Company’s business and relationships with its employees, vendors and customers; and

 

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the fact that an all cash transaction would be taxable to the Company’s stockholders that are United States Holders for U.S. federal income tax purposes.

The Sponsor Entities and Mr. Leonard did not find it practicable to assign, nor did they assign, specific relative weights to the individual factors that they considered in reaching their conclusion as to fairness. The Sponsor Entities and Mr. Leonard believe these factors provide a reasonable basis upon which to form their belief that the Merger is fair to the “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. This belief should not, however, be construed as a recommendation to any “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, as to whether they should, and the Sponsor Entities and Mr. Leonard do not make any recommendation as to whether any “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, should, exercise their appraisal rights under the DGCL.

The Sponsor Entities did not consider liquidation value or book value as a factor because they consider the Company to be a viable going concern business and the trading history of the Common Stock to generally be an

 

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indication of its value as such and they have no present intention to liquidate the Company. The Sponsor Entities note, however, that the per share Merger Consideration of $10.00 is substantially higher than the book value per Common Stock as of December 31, 2023 of $6.95, calculated by dividing total equity of $940,822,621 by the total number of Common Stock outstanding on December 31, 2023, of 135,352,336 Common Stock.

The Sponsor Entities and Mr. Leonard did not establish, and did not consider, an explicit going concern value for the Company to determine the fairness of the Merger Consideration to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act, because the Sponsor Entities believe that going concern value is not an appropriate method of determining the value of the shares of Common Stock for the purposes of the Merger. However, the Sponsor Entities and Mr. Leonard did implicitly consider the value of the Company in a sale as a going concern by taking into account the Company’s current and anticipated business, financial condition, results and operations, prospects and other forward-looking matters. The Sponsor Entities and Mr. Leonard note, however, that to the extent the pre-Merger going concern value was reflected in the pre-announcement price of the Common Stock, the Merger Consideration represents a premium to the going concern value of the Company at the time the Merger Agreement was executed.

Purposes and Reasons of the Company in Connection with the Merger

On October 9, 2023, the Board established the Special Committee, comprising Dr. Gary Gottlieb, Dr. C. Martin Harris, Diane Patrick and John Workman, to evaluate the potential transaction involving THL and its affiliates and/or the THL Agiliti Stockholder and if the Special Committee deemed it appropriate, consider alternative transactions with third parties, or to determine not to pursue the proposed transaction involving THL and its affiliates.

On February 25, 2024, the Special Committee, acting with the advice and assistance of its own independent legal and financial advisors, considered and evaluated the Merger Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, and unanimously resolved to (a) determine that the Merger Agreement and Transactions, including the Merger, are advisable, fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), and (b) recommend to the Company Board that the Company Board (i) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (ii) declare the Merger Agreement and the Transactions advisable, (iii) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of the covenants and agreements contained herein and the consummation of the Merger and the Transactions upon the terms and subject to the conditions contained therein and (iv) subject to the terms of the Merger Agreement, resolve to recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions in accordance with the DGCL.

The Special Committee believes that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

Also on February 25, 2024, the Board held a meeting, at which the Board, acting upon the unanimous recommendation of the Special Committee and with Darren Friedman and Thomas J. Leonard abstaining (and Scott M. Sperling, Michael A. Bell, Joshua M. Nelson and Megan M. Preiner not in attendance), resolved to (a) determine that the terms of the Merger Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and its stockholders (other than the THL Agiliti Stockholder and its affiliates), (b) declare the Merger Agreement and the Transactions advisable, (c) approve the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained therein and (d) subject to the terms of the Merger Agreement, recommend that the stockholders of the Company vote to adopt and approve the Merger Agreement in accordance with the DGCL.

 

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The Board, on behalf of the Company, believes that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

For more information, see the section entitled “The Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board” beginning on page 25.

Purposes and Reasons of the Sponsor Entities and Mr. Leonard in Connection with the Merger

Under the SEC rules governing “going-private” transactions, the Sponsor Entities and Mr. Leonard may be deemed to be affiliates of the Company and, therefore, required to express their reasons for the Merger to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act. The Sponsor Entities and Mr. Leonard are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The Sponsor Entities and Mr. Leonard believe that structuring the Transactions as a merger is preferable to other transaction structures because it (1) will enable Parent to acquire all of the Common Stock (other than (i) THL Agiliti Stockholder Shares, (ii) Rollover Shares and (iii) Treasury Shares and (iv) shares of Common Stock that are owned by Dissenting Stockholders) at the same time, (2) will allow the Company to cease to be a publicly registered and reporting company, and (3) represents an opportunity for the holders of Common Stock (other than (i) THL Agiliti Stockholder Shares, (ii) Rollover Shares and (iii) Treasury Shares and (iv) shares of Common Stock that are owned by Dissenting Stockholders) to receive the Merger Consideration in cash, without interest and less any applicable withholding taxes, subject to and in accordance with the terms and conditions of the Merger Agreement.

For the Sponsor Entities and Mr. Leonard, the primary purpose of the Merger is to allow Parent to own equity interests in the Company and to bear the rewards and risks of such ownership after the Merger is completed and to cause the Common Stock to cease to be publicly traded. The Sponsor Entities and Mr. Leonard believe that the Company requires business decisions focused on long-term growth and that changes to the Company’s operations or strategy could cause earnings volatility and uncertainty in the short- and medium-term. The Sponsor Entities and Mr. Leonard believe that these changes would be most effectively implemented in the context of a private company structure. As a privately held entity, the Company’s management will have greater flexibility to focus on improving long-term profitability and cash generation without the pressures exerted by the public market’s valuation of the Company and its emphasis on short-term period-to-period performance. Further, as a privately held entity, the Company will be relieved of many of the expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the U.S. federal securities laws, including the Exchange Act and the Sarbanes-Oxley Act of 2002. The Sponsor Entities and Mr. Leonard also believe that the management and employees of the Company will be able to execute more effectively on future strategic plans. The Sponsor Entities have undertaken to pursue the Merger at this time because the Sponsor Entities believe that achieving management’s plans and goals would be better addressed as a privately held entity, for the reasons discussed above, and that a delay in entering into the Merger Agreement and consummating the Merger could accordingly have an adverse effect on the Company’s ability to do so.

The Company’s Net Book Value and Net Earnings

After the closing of the Merger, the Sponsor Entities and Mr. Leonard will have a direct or indirect interest in the Company’s net book value and net earnings in proportion to such individual’s or entity’s direct or indirect ownership interest in the Surviving Corporation. The Company’s historical net earnings attributable to its shareholders for the fiscal year ended December 31, 2023 was approximately $(19.43) million and its historical net book value as of December 31, 2023 was approximately $940.82 million.

 

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The following table sets forth the direct or indirect beneficial interests of the Company’s net book value and net earnings for the Company and Sponsor Entities before and after the Merger, based on the historical net book value and net earnings of the Company as of and for the fiscal year ended December 31, 2023.

 

		Ownership Prior to the Merger(1)																Ownership After the Merger(2)
		Net Book Value								Earnings								Net Book Value								Earnings
Name		$(millions)				%				$(millions)				%				$(millions)				%				$(millions)				%
Sponsor Entities			678.90				72.16				(14.02	)			72.16				932.34				99.10				(19.25	)			99.10
Thomas J. Leonard			26.34				2.80				(0.54	)			2.80				8.47				0.90				(0.17	)			0.90

 

(1)	Ownership determined as of March 31, 2024.

(2)	Ownership excludes equity interests subject to a rollover held by non-filing persons.

Accounting Treatment

The Company will account for the Merger in accordance with ASC 805, Business Combinations—Related Issues—Transactions Between Entities Under Common Control. This will result in the Merger being accounted for as if the exchange had occurred at the beginning of the period, and the results of operations for that period will comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date forward. As the THL Agiliti Stockholder controls the Company, controls the acquiring entity, and will continue to control the Company after the Merger, there is no impact to the accounting basis of the Company’s assets and liabilities.

Interests of Our Directors and Executive Officers in the Merger

You should be aware that the Company’s executive officers and directors have interests in the Merger that are different from, or in addition to, the interests of the Company’s stockholders generally. The Board and the Special Committee were aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests are described below.

The Company’s executive officers as of the date hereof are Thomas J. Leonard (Chief Executive Officer), James B. Pekarek (Executive Vice President and Chief Financial Officer), Bettyann Bird (Executive Vice President and Chief Strategy Officer), Robert L. Creviston (Executive Vice President and Chief Human Resources Officer), Lee M. Neumann (Executive Vice President and General Counsel), Derrick L. Johnson (Senior Vice President and Chief Operating Officer), Lori M. Jones (Senior Vice President and Chief Commercial Officer), Scott A. Christensen (Senior Vice President, Controller and Chief Accounting Officer), Matthew Neale (Senior Vice President of IT and Chief Information Officer) and Matthew E. McCabe (Senior Vice President of Finance and Treasurer).

In addition to the individuals identified above, each of Thomas W. Boehning (Former Chief Executive Officer) and David L. Anbari (Former Senior Vice President, Chief Strategy Officer) served as executive officers of the Company during the fiscal year ended December 31, 2023 (the “Former Executives”).

Treatment of Common Stock and Company Equity Awards

For information regarding beneficial ownership of Common Stock generally held by each of the Company’s directors and named executive officers and all directors and executive officers as a group, see the section entitled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 119. Each of the Company’s directors and executive officers and each of the Former Executives will be entitled to receive, for each share of Common Stock, the Merger Consideration in the same manner as other Company stockholders.

At the Effective Time, except as otherwise agreed by Parent and the applicable holder thereof and other than with respect to the Rollover RSUs as further described in the section below entitled “The Special Factors—Interests of

 

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Our Directors and Executive Officers in the Merger–The Rollover Commitment Letter”, the Company Equity Awards held by each of the Company’s directors and executive officers will be treated in the same manner as those held by other employees of the Company, as set forth below:

 

•

each outstanding In-the-Money Option will be terminated and cancelled in exchange for the right to receive a lump sum cash payment, without interest thereon and subject to applicable withholding taxes, equal to (1) the number of shares of Common Stock underlying the In-the-Money Option immediately prior to the Effective Time, multiplied by (2) an amount equal to the excess of the Merger Consideration over the applicable exercise price, and each Underwater Option will terminate and be cancelled with no payment due to the holder thereof.

 

•

each unvested and outstanding RSU will remain issued and outstanding and generally subject to the same terms and conditions as those that applied immediately prior to the Effective Time, except that: (i) RSUs held by Continuing Employees at or above the level of “Vice President” will be settled in shares of Common Stock or other equity interests in the Company or one of its affiliates, as determined by the Parent Board in its sole discretion; with applicable withholding taxes satisfied through net share settlement and (ii) RSUs held by all other grantees will be settled in cash based on the fair market value of a share of stock or other equity interest in the Company or one of its affiliates as determined by the Parent Board in its sole discretion. Each outstanding vested RSU will be terminated and cancelled in exchange for the right to receive a lump sum cash payment, without interest thereon and subject to applicable withholding taxes, equal to (i) the number of shares of Common Stock subject to the RSUs, multiplied by (ii) an amount equal to the Merger Consideration.

 

•

each 2021 Performance Restricted Stock Unit that is outstanding or payable as of immediately prior to the Effective Time will, except as otherwise provided under the Merger Agreement, become fully vested and will be terminated and cancelled in exchange for the right to receive a cash payment, without interest thereon and subject to applicable withholding taxes, equal to (i) the number of shares of Common Stock subject to such 2021 Performance Restricted Stock Unit that were earned under the terms of such 2021 Performance Restricted Stock Unit based on the actual level of achievement (as determined by the Compensation Committee) in accordance with the applicable Company Stock Plan and award agreement evidencing such awards), multiplied by (ii) an amount equal to the Merger Consideration.

 

•

each 2022/2023 Performance Restricted Stock Unit that is outstanding or payable as of immediately prior to the Effective Time will remain issued and outstanding and generally subject to the same terms and conditions (including with respect to time- and performance- based vesting conditions and settlement terms) as those that applied immediately prior to the Effective Time, except: (i) any total shareholder return performance vesting conditions will no longer apply; (ii) each 2022/2023 Performance Restricted Stock Unit held by Continuing Employees at or above the level of “Vice President” will be settled in shares of Common Stock or other equity interests in the Company or one of its affiliates, as determined by the Parent Board in its sole discretion, with applicable withholding taxes satisfied through net share settlement; and (iii) each 2022/2023 Performance Restricted Stock Unit held by all other grantees will be settled in cash based on the fair market value of a share of stock or other equity interest in the Company or one of its affiliates as determined by the Parent Board in its sole discretion.

 

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The following table sets forth, for each executive officer, (a) the number of vested In-the-Money Options, (b) the number vested RSUs and (c) the number of 2021 Performance Restricted Stock Units, in each case, as held by such individual as of March 31, 2024, with the estimated value of such Company Equity Awards in connection with the Merger. The values in the table below have been determined based on the Merger Consideration of $10.00 per share of Common Stock and assume that (i) the 2021 Performance Restricted Stock Units are earned at 52.5% target and remain outstanding as of Closing, (ii) the vested RSUs remain outstanding as of Closing and (iii) the executive officers identified below do not receive any additional grants of, vest in or forfeit any, or exercise (in the case of In-the-Money Options), RSUs, In-the-Money Options or 2021 Performance Restricted Stock Units after March 31, 2024, nor are any vested RSUs or 2021 Performance Restricted Stock Units settled after March 31, 2024.

 

Name (1)		Vested In-the- Money Options (#)				Estimated Value of Vested In-the- Money Options ($)				Vested RSUs (#)				Estimated Value of Vested RSUs ($)				2021 Performance Restricted Stock Units (#)				Estimated Value of 2021 Performance Restricted Stock Units ($)				Estimated Value of In-the Money Options, Vested RSUs and 2021 Performance Restricted Stock Units ($)
Executive Officers
Thomas J. Leonard			1,876,657			$	8,453,541				192,603	(2)		$	1,926,030				—				—			$	10,379,571
James B. Pekarek			444,000			$	1,486,020				—				—				—				—			$	1,486,020
Bettyann Bird			102,316			$	805,227				27,045			$	270,450				—				—			$	1,075,677
Scott A. Christensen			70,024			$	232,899				—				—				—				—			$	232,899
Robert L. Creviston			123,425			$	402,223				—				—				—				—			$	402,223
Derrick L. Johnson			—				—				—				—				—				—			$	—
Lori M. Jones			—				—				—				—				—				—				—
Matthew E. McCabe			40,024			$	120,999				—				—				—				—			$	120,999
Matthew Neale			—				—				—				—				1,316	(3)		$	13,160			$	13,160
Lee M. Neumann			—				—				—				—				—				—				—
Non-Employee Directors
Michael A. Bell			—				—				—				—				—				—				—
Darren M. Friedman			106,612			$	296,863				—				—				—				—			$	296,863
Dr. Gary Gottlieb			50,909			$	89,091				—				—				—				—			$	89,091
Dr. C. Martin Harris			—				—				—				—				—				—				—
Joshua M. Nelson			—				—				—				—				—				—				—
Diane B. Patrick			—				—				—				—				—				—				—
Megan M. Preiner			—				—				—				—				—				—				—
Scott M. Sperling			—				—				—				—				—				—				—
John L. Workman			134,265			$	514,492																			$	514,492

 

(1)	As of March 31, 2024, (a) no Executive Officer held any unvested In-the-Money Options, (b) neither Former Executive held any In-the-Money Options, vested RSUs or 2021 Performance Restricted Stock

 

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Units and (c) no non-employee director held any unvested In-the Money Options, vested RSUs or 2021 Performance Restricted Stock Units.

(2)

Mr. Leonard’s vested RSUs are Rollover RSUs and are subject to the terms of his Rollover Commitment Letter, as described more fully below under “The Special Factors—Interests of Our Directors and Executive Officers in the Merger—The Rollover Commitment Letter”. Accordingly, notwithstanding the treatment set forth in the Merger Agreement, at the Effective Time, Mr. Leonard’s vested RSUs will not be cancelled in exchange for a cash payment based on the Merger Consideration, but will instead be converted into equity of the Surviving Corporation or a newly formed parent entity of the Surviving Corporation or Parent.

(3)	Notwithstanding the treatment set forth in the Merger Agreement, generally, at the Effective Time, the 2021 Performance Restricted Stock Units held by Matthew Neale, to the extent earned based on performance, will continue to remain issued and outstanding and will be treated as unvested RSUs.

The following table sets forth, for each non-employee director and executive officer, as applicable, (a) the number of unvested RSUs and (b) the number of 2022/2023 Performance Restricted Stock Units, in each case, as held by such individual as of March 31, 2024. The quantifications in the table below are based, in the case of the 2022/2023 Performance Restricted Stock Units, on target performance, and assume that neither the executive officers nor the non-employee directors receive any additional grants of, vest in or forfeit any unvested RSUs or 2022/2023 Performance Restricted Stock Units, after March 31, 2024.

 

Name (1)		Unvested RSUs (#)				2022/2023 Performance Restricted Stock Units (#)
Executive Officers
Thomas J. Leonard			577,814				76,152
James B. Pekarek			37,484				52,410
Bettyann Bird			85,376				—
Scott A. Christensen			20,849				5,747
Robert L. Creviston			16,519				19,393
Derrick L. Johnson			16,114				12,892
Lori M. Jones			16,309				8,991
Matthew E. McCabe			20,849				5,747
Matthew Neale			8,214				6,637
Lee M. Neumann			16,445				19,172
Non-Employee Directors
Michael A. Bell			—				—
Darren M. Friedman			—				—
Dr. Gary Gottlieb			—				—
Dr. C. Martin Harris			—				—
Joshua M. Nelson			—				—
Diane B. Patrick			—				—
Megan M. Preiner			—				—
Scott M. Sperling			—				—
John L. Workman			—				—

 

(1)	As of March 31, 2024, neither Former Executive held any unvested RSUs or 2022/2023 Performance Restricted Stock Units.

Severance Entitlements

Each of the Company’s executive officers is party to an employment arrangement or participates in the Company’s Executive Severance Pay Plan, which provide for payments upon qualifying terminations of employment.

 

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Mr. Leonard entered into an offer letter with the Company in connection with his reappointment as Chief Executive Officer, effective as of October 1, 2023. Mr. Leonard’s offer letter does not provide for any severance benefits or additional payments upon a termination of Mr. Leonard’s employment, other than in connection with a “change in control”. The Merger will not constitute a “change in control” for purposes of Mr. Leonard’s offer letter and thus he would not be entitled to any severance benefits in the event he experiences a qualifying termination of employment following the Merger.

Mr. Pekarek entered into an employment agreement with the Company, effective as of March 5, 2019. In the event Mr. Pekarek’s employment is terminated by the Company without “cause” or by Mr. Pekarek due to “good reason” (as each such term is defined in his employment agreement), Mr. Pekarek would, subject to execution and non-revocation of a release of claims, be eligible to receive:

 

•

an amount equal to the sum of (i) twelve (12) months of Mr. Pekarek’s base salary as in effect immediately prior to the date of his termination and (ii) target bonus opportunity for the year of termination, paid in substantially equal installments in accordance with the Company’s regular payroll practices over the twelve (12) month period following the date of his termination;

 

•

a lump sum payment equal to the pro-rata portion of Mr. Pekarek’s annual bonus for the year of termination, based on the number of days Mr. Pekarek was employed during such year and based on objective actual performance through the date of termination (or the end of the month proceeding such termination if such performance is generally determined as of the end of the month);

 

•

a lump sum payment equal to twelve (12) multiplied by the monthly COBRA premium for Mr. Pekarek’s (and, to the extent applicable, his dependents’) continued coverage on Company health plans, based on the level of coverage in effect prior to his date of termination;

 

•

full vesting of any Options and RSUs that would have vested by their terms during the twelve (12) months following such termination of employment; and

 

•

vesting of any 2021 Performance Restricted Stock Units or 2022/2023 Performance Restricted Stock Units based on actual performance through the date of Mr. Pekarek’s termination of employment and projected performance from such date through the end of the applicable performance period (as based on the Company’s then current operating budget), with the number of shares of Common Stock earned, prorated based on the number of days Mr. Pekarek would have been employed during the performance period if Mr. Pekarek had remained employed through the first anniversary of Mr. Pekarek’s termination of employment in comparison to the total number of days in the performance period.

Mr. Pekarek’s employment agreement provides for certain enhanced severance benefits upon a termination of employment in connection with a “change in control”. The Merger will not constitute a “change in control” for purposes of Mr. Pekarek’s employment agreement and thus he would only be entitled to the severance benefits described above in the event he experiences a qualifying termination of employment following the Merger.

Each other executive officer of the Company (other than the Former Executives) participate in the Company’s Executive Severance Pay Plan, effective as of November 2, 2016. In the event of termination of employment by the Company without “cause” or by the executive for “good reason” (as each such term is defined in the Executive Severance Pay Plan), each executive would, subject to execution and non-revocation of a release of claims, be eligible to receive the following amounts:

 

•

continued payment of base salary (at the level in effect as of the termination date) in accordance with the Company’s regular payroll practices over the twelve (12) month period following the date of the termination;

 

•

a lump sum payment equal to $11,350 in respect to COBRA premiums;

 

•

a lump sum payment equal to the pro-rata portion of the executive’s annual bonus for the year of termination, based on the number of days the executive was employed during such year and based on target performance; and

 

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•

outplacement assistance services, as determined by the Company.

For an estimate of the value of the severance payments and benefits described above that would be payable to the Company’s named executive officers upon a qualifying termination in connection with the Merger, see the section below entitled “Interests of Our Directors and Executive Officers in the Merger —  Quantification of Payments and Benefits—Golden Parachute Compensation”. The estimated aggregate cash severance amount that would be payable to the Company’s five executive officers who are not named executive officers under the Executive Severance Pay Plan if the Merger were to be completed and they were to experience a qualifying termination of employment on March 31, 2024 is $2,117,678. The amount in this paragraph is based on the executive officers’ respective base salary and target bonus opportunities in effect as of the date of this Information Statement.

In connection with his September 28, 2023 termination of employment with the Company (and subject to his execution and non-revocation of a release of claims and his compliance with the terms of such release), Mr. Boehning received the following severance benefits: (i) an amount equal to twelve (12) months of annual base salary, plus his target bonus for 2023, payable in substantially equal installments over the twelve (12)-month period following his termination date, (ii) a lump sum payment in respect of his pro-rata 2023 annual bonus, based on actual performance through the termination date, (iii) a lump sum payment in respect of twelve (12) months of COBRA premiums, (iv) full vesting of those options and restricted stock units that were subject solely to time-based vesting conditions and that would have otherwise vested during the twelve (12) months following the termination date and (v) vesting of performance restricted stock units based on actual performance through the termination date, with the number of shares of Common Stock earned, prorated based on the number of days Mr. Boehning would have been employed during the performance period if Mr. Boehning had remained employed through the first anniversary of his termination of employment, in comparison to the total number of days in the performance period.

In connection with his October 11, 2023 termination of employment with the Company (and subject to his execution and non-revocation of a release of claims), Mr. Anbari received severance payments under the Company’s Executive Severance Pay Plan, as described above.

Neither Former Executive will be eligible to receive any additional severance benefits as a result of the Merger.

The Rollover Commitment Letter

Concurrently with the execution and delivery of the Merger Agreement on February 26, 2024, Thomas J. Leonard, member of the Board and Chief Executive Officer of the Company, entered into an agreement with Parent (the “Rollover Commitment Letter”) pursuant to which, among other matters, he agreed to roll over 892,462 of his shares of Common Stock and/or RSUs (the “Rollover Shares” and “Rollover RSUs”, respectively, and collectively, the “Retained Equity Interests”) into equity of the Surviving Corporation or a newly formed parent entity of the Surviving Corporation or Parent in lieu of the treatment of such shares of Common Stock and/or RSUs under the Merger.

The Retained Equity Interests held by Thomas J. Leonard comprised of Common Stock will be “rolled-over” into shares of the Company or a newly formed parent entity of the Company or Parent.

The Retained Equity Interests held by Thomas J. Leonard comprised of Rollover RSUs will be “rolled-over” into restricted stock units subject to the same terms and conditions that applied to the corresponding RSU prior to the Closing (other than for any such terms rendered inoperative by reason of the Transactions or for such other administrative or ministerial changes that are reasonable and made in good faith in connection with the administration of such award following the Effective Time) and which shall, upon vesting, be settled in shares of the Company or a newly formed parent entity of the Company or Parent.

 

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Other Arrangements

Prior to the Effective Time, the Company, Parent or their affiliates may, in their discretion, initiate negotiations of agreements, arrangements and understandings with any of the Company’s directors and executive officers regarding their employment or other future service or compensation or benefits and may enter into definitive agreements with such individuals regarding the foregoing. As of the date of this Information Statement, preliminary discussions with respect to certain such new agreements, arrangements or understandings have occurred. However, to the Company’s knowledge, no such new agreements, arrangements or understandings have been entered into as of the date of this Information Statement. Current agreements, arrangements and understandings between the Company, Parent or their affiliates and any of the Company’s directors and executive officers are described below in the section entitled “Interests of Our Directors and Executive Officers in the Merger — Other Interests”.

Quantification of Payments and Benefits

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation of each of the Company’s named executive officers, that is based on or otherwise relates to the Merger and that will or may become payable to the named executive officers at the completion of the Merger or on a qualifying termination of employment upon or following the consummation of the Merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to the Company’s named executive officers.

The table below sets forth, for the purposes of this golden parachute disclosure, the amount of payments and benefits (on a pre-tax basis) that each of the Company’s named executive officers would receive based on the following: (i) the Merger is completed on March 31, 2024, (ii) each named executive officer experiences a qualifying termination at such time, (iii) the named executive officer’s base salary rate and annual target bonus remain unchanged from that in effect as of March 31, 2024, (iv) each named executive officer’s Company Equity Awards are those that are outstanding as of March 31, 2024, excluding the 2021 Performance Restricted Stock Units, which for these purposes, are treated as being earned based on actual performance in accordance with their terms, through the performance period that was complete as of December 31, 2023, and (v) each named executive officer has properly executed any required releases and complied with all requirements (including any applicable restrictive covenants) necessary in order to receive the payments and benefits. Some of the assumptions used in the table below are based upon information not currently available and, as a result, the actual amounts to be received by any of the individuals below may materially differ from the amounts set forth below. Additional detail regarding the named executive officers’ interests in the Merger is provided above under the heading “The Special Factors—Interests of Our Executive Officers and Directors in the Merger”.

Golden Parachute Compensation

 

Named Executive Officer(1)		Cash(2) ($)				Equity(3) ($)				Benefits(4) ($)				Total ($)
Thomas J. Leonard			—				—				—				—
James B. Pekarek		$	1,039,205			$	898,940			$	20,626			$	1,958,771
Robert L. Creviston		$	452,448				—			$	23,350			$	475,798
Lee M. Neumann		$	452,448				—			$	23,350			$	475,798
Lori M. Jones		$	522,850				—			$	23,350			$	546,200

(1) Does not include the Former Executives, Mr. Boehning or Mr. Anbari, who following their terminations with the Company as of September 28, 2023 and October 11, 2023, respectively, are not eligible to receive any compensation that is based on or otherwise relates to the Merger.

(2) The amounts consist of: (a) for Mr. Pekarek, twelve (12) months of base salary and 100% of target bonus, (b) for Mr. Creviston and Mses. Neumann and Jones, twelve (12) months of base salary and (c) for Messrs.

 

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Pekarek and Creviston and Mses. Neumann and Jones, a pro-rated 2024 bonus, assuming achievement at target performance. These cash severance and pro-rated 2024 bonus amounts are considered to be double-trigger payments, which means that a qualifying termination of employment must occur prior to any payment being provided to the named executive officer.

 

Named Executive Officer		Cash Severance ($)				Pro-Rata 2024 Bonus ($)				Total ($)
James B. Pekarek		$	942,693			$	96,512			$	1,039,205
Robert L. Creviston		$	389,500			$	62,948			$	452,448
Lee M. Neumann		$	389,500			$	62,948			$	452,448
Lori M. Jones		$	410,562			$	112,288			$	522,850

 

(3)

As described above under the heading “The Special Factors – Interests of Our Executive Officers and Directors in the Merger – Treatment of Company Equity Awards”, In-the-Money Options are subject to single-trigger vesting and will terminate and be cancelled in exchange for the right to receive a lump sum cash payment, without interest thereon and subject to applicable withholding taxes, equal to (1) the number of shares of Common Stock underlying the Option, multiplied by (2) an amount equal to the excess of the Merger Consideration over the applicable exercise price. In addition, as described above under the heading “The Special Factors – Interests of Our Executive Officers and Directors in the Merger – Severance Entitlements”, Mr. Pekarek has certain vesting protections that would apply to his unvested RSUs and 2022/2023 Performance Restricted Stock Units upon experiencing a qualifying termination of employment. For purposes of the following quantifications, the 2022/2023 Performance Restricted Stock Units are assumed to be earned at target performance.

 

Named Executive Officer		Unvested In- the-Money Options ($)				Unvested RSUs ($)				2022/2023 Performance Restricted Stock Units ($)				Total ($)
Thomas J. Leonard			—				—				—				—
James B. Pekarek			—			$	374,840			$	524,100			$	898,940
Robert L. Creviston			—				—				—				—
Lee M. Neumann			—				—				—				—
Lori M. Jones			—				—				—				—

 

(4)

As described above under the heading “The Special Factors – Interests of Our Executive Officers and Directors in the Merger – Severance Entitlements”, these “double-trigger” amounts consist of: (a) for Mr. Pekarek, a payment in respect of twelve (12) months of COBRA premiums (based on the cost of such COBRA premiums as of March 31, 2024) and (b) for Mr. Creviston and Mses. Neumann and Jones, $11,350, which is the designated amount payable in respect of COBRA benefits under the Executive Severance Pay Plan, and $12,000 in respect of outplacement services.

Special Committee Compensation

In consideration of the expected time and effort that would be required of the members of the Special Committee in evaluating the Merger, including negotiating the terms and conditions of the Merger Agreement, the Board determined that each member of the Special Committee would receive as compensation $25,000 and that the lead director of the Special Committee would receive as compensation $45,000. The compensation was approved by the Compensation Committee of the Board and the Board and was not, and is not, contingent upon the completion of the Merger or any other transaction. No other meeting fees or other compensation (other than reimbursement for reasonable out-of-pocket expenses incurred in connection with their service on the Special Committee) will be paid to the members of the Special Committee in connection with their service on the Special Committee.

 

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Directors’ and Officers’ Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, the Company’s current and former directors and executive officers will be entitled to certain ongoing indemnification, expense advancement and insurance arrangements. See the section entitled “The Merger Agreement—Indemnification and Insurance” beginning on page 96 for a description of such ongoing arrangements.

Other Interests

The following Company’s directors currently have, or have previously had, employment relationships or other compensation arrangements with THL, and its majority-owned companies:

 

•

Michael Bell is a Managing Director at THL.

 

•

Joshua M. Nelson is a Managing Director and Head of Healthcare at THL.

 

•

Megan M. Preiner is a Managing Director at THL.

 

•

Scott M. Sperling is a Co-Chief Executive Officer of THL.

 

•

Thomas J. Leonard previously served as an Executive Partner at THL.

 

•

Darren M. Friedman is a Partner of StepStone.

Delisting and Deregistration of Common Stock

If the Merger is completed, the Common Stock will be delisted from the NYSE and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of the Common Stock.

Upon completion of the Merger, Merger Sub will merge with and into the Company, with the Company surviving the Merger. The Common Stock are currently listed on the NYSE and registered under the Exchange Act. Following completion of the Merger, there will be no further market for the Common Stock and, as promptly as practicable following the Effective Time and in compliance with applicable law, the Common Stock will be delisted from the NYSE and deregistered under the Exchange Act.

Plans for the Company After the Merger

The Company, Parent and the Sponsor Entities each anticipate that the Company’s operations will, after the Effective Time, be conducted substantially as they are currently being conducted, except that the Common Stock will cease to be publicly traded.

After the Effective Time, the directors of Merger Sub immediately prior to the Effective Time will be the directors of the Surviving Corporation, and the officers of the Company in office immediately prior to the Effective Time will become the officers of the Surviving Corporation, in each case until the earlier of their death, resignation or removal or until their respective successors are duly elected or appointed, as the case may be.

Except as described above or elsewhere in this Information Statement, the Sponsor Entities have advised the Company that they do not have any current intentions, plans or proposals to cause the Company to engage in any of the following:

 

•

an extraordinary corporate transaction following the consummation of the Merger involving the Company’s corporate structure;

 

•

the purchase, sale or transfer of a material amount of assets of the Company or any of its subsidiaries; or

 

•

any other material changes to the Company’s corporate structure or business.

 

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Notwithstanding the foregoing, following the Effective Time, as part of their long-term corporate goal of optimizing value, the Sponsor Entities intend to conduct a review of the Company and its assets, capital allocation, corporate and capital structure, tax position, capitalization, operations, business, properties and policies to determine what changes, if any, may be desirable following the Merger to enhance the business and operations of the Company. In connection with this review, the Sponsor Entities may consider a range of alternatives including the types of transactions set forth above as well as other strategic transactions and other structural and balance sheet optimization activities, if the Sponsor Entities decide that such transactions or other activities are desirable upon such review. Except as otherwise disclosed in this Information Statement (including in the Company’s filings with the SEC incorporated by reference into this Information Statement), as of the date hereof, no agreements, understandings or decisions have been reached and there is no assurance that the Sponsor Entities will or will not decide to undertake any such alternatives. The Sponsor Entities expressly reserve the right to make any changes to the Company operations after consummation of the Merger that they deem appropriate in light of such review or in light of future developments.

Transaction Litigation

Lawsuits arising out of the Merger may be filed in the future. In addition, the Company has received stockholder demand letters pursuant to DGCL Section 220 relating to the events leading to the execution of the Merger Agreement and could receive other stockholder demand letters relating to books and records requests or the disclosure in this Information Statement. No assurances can be made as to the outcome of such lawsuits, demands or other actions.

Fees and Expenses

The estimated maximum amount of fees and expenses incurred or expected to be incurred by the Company in connection with the Merger are as follows:

 

Description		Amount
Financial advisory fees and expenses		$	9,500,000
Legal, accounting and other professional fees and expenses		$	4,750,000
Financing fees and expenses		$	7,200,000
SEC filing fees		$	57,600
Printing and mailing costs		$	19,800
Total		$	21,527,400

It is also expected that Merger Sub and/or Parent will incur approximately $10.0 million of legal, other advisory and financing fees in connection with the Merger.

The estimate for legal fees set forth in this Information Statement does not include any amounts attributable to any existing or future litigation challenging the Merger. All costs and expenses incurred in connection with the preparation, negotiation, execution and performance of the Merger Agreement and the Transactions, will be paid by the party incurring such expense.

Material United States Federal Income Tax Consequences of the Merger

The following is a summary of the material United States federal income tax consequences of the Merger generally applicable to holders of Common Stock who exchange their shares of Common Stock for cash pursuant to the Merger. The summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), applicable United States Treasury Regulations issued thereunder, judicial authority and administrative rulings and pronouncements, all of which are subject to change, possibly with retroactive effect. The discussion applies only to holders whose shares of Common Stock are held as capital assets (generally, property held for investment), and does not address the tax consequences that may be relevant to holders of Common Stock that

 

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are subject to special tax rules, such as insurance companies, United States expatriates, controlled foreign corporations, passive foreign investment companies, tax-exempt organizations, broker-dealers, financial institutions, cooperatives, traders in securities that elect to mark to market, United States Holders (as defined below) whose functional currency is not the United States dollar, holders who hold Common Stock through pass-through entities for United States federal income tax purposes or as part of a straddle or conversion transaction, holders deemed to sell Common Stock under the constructive sale provisions of the Code, holders who exercise appraisal rights, holders who acquired Common Stock pursuant to the exercise of employee stock options or otherwise as compensation, holders who own (or are deemed to own) Rollover Shares, holders of Common Stock who own (or are deemed to own) any interest in the THL Agiliti Stockholder, or holders of THL Agiliti Stockholder Shares. This summary does not address any Medicare tax or alternative minimum tax considerations or any aspect of state, local or non-United States taxation, and does not address any United States federal taxation other than income taxation.

For purposes of this Information Statement, a “United States Holder” means a beneficial owner of Common Stock that is:

 

•

a citizen or individual resident of the United States,

 

•

a corporation (or any entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia,

 

•

an estate, the income of which is subject to United States federal income tax regardless of its source, or

 

•

a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect to be treated as a United States person.

The term “Non-United States Holder” refers to any beneficial owner of Common Stock, other than a partnership or other entity or arrangement treated as a partnership or disregarded entity for United States federal income tax purposes that is not a United States Holder.

If a partnership or any other entity or arrangement treated as a partnership for United States federal income tax purposes is a holder of Common Stock, the United States federal income tax treatment of a partner in that partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships owning Common Stock and partners in such partnerships should consult their own tax advisors as to the particular United States federal income tax consequences of the Merger to them.

The United States federal income tax consequences set forth below are included for general informational purposes only and are based upon current law as of the date hereof. Because individual circumstances may differ, each holder of Common Stock should consult such holder’s own tax advisor to determine the applicability of the rules discussed below to such holder and the particular tax effects of the Merger, including the application and effect of U.S. federal, state, local and non-U.S. tax laws.

United States Holders. The receipt of the Merger Consideration by a United States Holder in exchange for Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes. In general, for United States federal income tax purposes, a United States Holder who receives the Merger Consideration will recognize gain or loss in an amount equal to the difference between (x) the amount of cash the United States Holder receives (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Common Stock. A United States Holder’s adjusted tax basis generally will equal the price the United States Holder paid for such shares of Common Stock. Gain or loss will be calculated separately for each block of Common Stock exchanged in the Merger (generally shares of Common Stock acquired at the same cost in a single transaction). Such gain or loss generally will be capital gain

 

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or loss, and will be long-term capital gain or loss if the shares of Common Stock have been held for more than one year as of the Effective Time. Long-term capital gains of non-corporate United States Holders may be eligible for reduced rates of taxation. The deductibility of capital losses is limited.

Non-United States Holders. Subject to the discussion below regarding backup withholding, a Non-United States Holder that receives cash for Common Stock pursuant to the Merger generally will not be subject to United States federal income tax on any gain realized on the disposition, unless (i) such holder is an individual who is present in the United States for 183 or more days during the taxable year of the Merger and certain other conditions are met, (ii) the gain is effectively connected with the conduct of a trade or business in the United States by the Non-United States Holder (and, in the case of certain income tax treaties, is attributable to a permanent establishment or fixed base within the United States) or (iii) such holder owned, directly or under certain constructive ownership rules of the Code, more than 5% of the Common Stock at any time during the shorter of the five-year period preceding the Merger or the period that the Non-United States Holder held Common Stock, and the Company is or has been a “United States real property holding corporation” for United States federal income tax purposes at any time during the shorter of the five-year period preceding the Merger or the period that the Non-United States Holder held Common Stock. The Company believes it has not been a “United States real property holding corporation” for United States federal income tax purposes at any time during the five-year period preceding the Merger.

If you are a Non-United States Holder who is an individual and has been present in the United States for 183 or more days during the taxable year of the Merger and certain other conditions are satisfied, you will be subject to tax at a rate of 30% (or such lower rate as may be specified in an applicable income tax treaty) on any gain realized, which generally may be offset by certain United States source capital losses.

If you are a Non-United States Holder and your gain is effectively connected with a United States trade or business (and, in the case of certain income tax treaties, is attributable to a permanent establishment or fixed base within the United States), you will be subject to United States federal income tax on any gain realized on a net basis in the same manner as United States Holders. Non-United States Holders that are corporations may also be subject to branch profits tax on their effectively connected income at a rate of 30% (or such lower rate as may be specified in an applicable income tax treaty), subject to adjustments.

Information Reporting and Backup Withholding. Cash consideration received by a United States Holder or a Non-United States Holder in the Merger may be subject to information reporting and backup withholding. To avoid backup withholding, a United States Holder that does not otherwise establish an exemption should complete and return to the applicable paying agent an Internal Revenue Service (“IRS”) Form W-9, certifying that such United States Holder is a United States person, that the taxpayer identification number provided is correct and that such United States Holder is not subject to backup withholding. A Non-United States Holder generally may establish an exemption from backup withholding by certifying its status as a non-United States person under penalties of perjury on an IRS Form W-8BEN or IRS Form W-8BEN-E or other applicable IRS Form W-8. Backup withholding is not an additional tax. Amounts so withheld can be credited against such holder’s United States federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

Holders should consult their tax advisors regarding the application of United States federal income tax laws and non-United States tax laws, including information reporting and backup withholding, to their particular situations.

Regulatory Approvals

Under the Merger Agreement and subject to the terms thereof, the Company and Parent have agreed to cooperate with each other and use, and will cause their respective subsidiaries and controlled affiliates to use, their respective reasonable best efforts to take (or cause to be taken) all actions, and do (or cause to be done) all things necessary, proper or advisable under the Merger Agreement and applicable laws to consummate and make

 

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effective the Merger and the other transactions contemplated by the Merger Agreement as expeditiously as possible, and in no event later than the Termination Date, including:

 

•

preparing and filing all documentation to effect all necessary notices, reports and other filings and to obtain as expeditiously as possible all consents, registrations, approvals, permits, expirations of waiting periods and authorizations necessary or advisable to be obtained from any third party or any Governmental Entity (defined below) in order to consummate the Merger or any of the other Transactions;

 

•

satisfying the conditions to consummating the Merger;

 

•

defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Merger Agreement or the consummation of the Merger;

 

•

obtaining (and cooperating with each other in obtaining) any consent, approval of, waiver or any exemption by, any non-governmental third party, in each case, to the extent necessary, proper or advisable in connection with the Merger; and

 

•

executing and delivering any reasonable additional instruments necessary to consummate the Transactions and to fully carry out the purposes of the Merger Agreement.

Notwithstanding anything in the Merger Agreement to the contrary, the obligations in the bullets above do not apply to any existing portfolio company (as such term is common understood in the private equity industry) of THL, and for the avoidance of doubt for purposes of this and the foregoing sentence the Company and its subsidiaries will not be considered an existing portfolio company.

Under the Merger Agreement and subject to the terms thereof, the Company and Parent have agreed (i) each party will notify the other, as far in advance as practicable, of any filing or material or substantive communication or inquiry it or any of its subsidiaries intends to make with any Governmental Entity, (ii) prior to submitting any such filing or making any such communication or inquiry, such party will provide the other party and its counsel a reasonable opportunity to review, and will consider in good faith the comments of the other party in connection with, any such filing, communication or inquiry, (iii) promptly following the submission of such filing or making such communication or inquiry, provide the other party with a copy of any such filing or, if in written form, communication or inquiry, or a summary of any oral communication and (iv) consult with the other party in connection with any inquiry, hearing, investigation or litigation by, or negotiations with, any Governmental Entity relating to the Merger, including the scheduling of, and strategic planning for, any meetings with any Governmental Entity relating thereto. In exercising the foregoing cooperation rights, the Company and Parent each will act reasonably and as promptly as reasonably practicable.

“Governmental Entity” means any domestic, foreign or transnational governmental, competition or regulatory authority, court, arbitral tribunal agency, commission, body or other legislative, executive or judicial governmental entity or self-regulatory agency.

Alternatives to the Merger

In response to the proposed offer from THL, the Special Committee reviewed, with the assistance of Centerview, the desirability for the Special Committee to initiate a process to solicit alternative change of control proposals from third parties. In this regard, the Special Committee took into account the fact that THL stated that they were not interested in selling its stake in the Company to a third party and would not vote in favor of any alternative sale, merger or similar transaction involving the Company.

Prior to the delivery of the Written Consent, the Company and its representatives were allowed, under certain circumstances and in compliance with certain obligations set forth in the Merger Agreement, to provide non-public information and engage in discussions and negotiations with respect to an unsolicited takeover

 

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proposal that would reasonably be expected to lead to a superior proposal. However, the Company’s rights to engage in negotiations or discussions with third parties ceased by virtue of the delivery of the Written Consent following the execution of the Merger Agreement and re-delivery following the ratification.

For more information on the alternatives to the Merger, see the sections entitled “The Special Factors—Background of the Merger” beginning on page 13, “The Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board” beginning on page 25 and “The Special Factors—Position of the Company on the Fairness of the Merger” beginning on page 45.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Merger Agreement and the Merger. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the section entitled “Summary” beginning on page 1 and the more detailed information contained elsewhere in this Information Statement, the annexes to this Information Statement and the documents referred to or incorporated by reference in this Information Statement, each of which you should read carefully. You may obtain additional information, which is incorporated by reference in this Information Statement, without charge, by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 122.

 

Q:	What is the proposed transaction and what effects will it have on the Company?

 

A:

The proposed transaction is the acquisition by Parent of all of the shares of Common Stock (other than (i) THL Agiliti Stockholder Shares, (ii) Rollover Shares, (iii) Treasury Shares and (iv) shares of Common Stock that are owned by Dissenting Stockholders). Once the Closing conditions under the Merger Agreement have been satisfied or waived (to the extent waivable) and subject to the other terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. The Company will be the Surviving Corporation of the Merger and will cease to be a publicly traded company.

 

Q:	What will I receive in the Merger?

 

A:

Upon completion of the Merger and subject to the terms and conditions set forth in the Merger Agreement, you will receive the Merger Consideration equal to $10.00 in cash, without interest and less any required withholding taxes, for each share of Common Stock that you own, unless you are entitled to demand and properly demand appraisal pursuant to, and in a manner that complies with, Section 262, and do not withdraw or otherwise lose the right to appraisal pursuant to the DGCL. For example, if you own 100 shares of Common Stock, you will receive $1,000.00 in cash for your shares of Common Stock without interest and less any required withholding taxes. Upon completion of the Merger, subject to the rights of holders of Company Equity Awards (if applicable), you will not own any equity in the Surviving Corporation.

 

Q:	What happens to Company Equity Awards if the Merger is Completed?

 

A:

At the Effective Time, except as otherwise agreed by Parent and the applicable holder thereof and other than with respect to the Rollover RSUs as further described in the section entitled “The Special Factors—Interests of Our Directors and Executive Officers in the Merger—The Rollover Commitment Letter”, the Company Equity Awards will be treated as follows:

 

•

each outstanding In-the-Money Option will be terminated and cancelled in exchange for the right to receive a lump sum cash payment, without interest thereon and subject to applicable withholding taxes, equal to (1) the number of shares of Common Stock underlying the In-the-Money Option immediately prior to the Effective Time, multiplied by (2) an amount equal to the excess of the Merger Consideration over the applicable exercise price, and each Underwater Option will terminate and be cancelled with no payment due to the holder thereof;

 

•

each unvested and outstanding RSU will remain issued and outstanding and generally subject to the same terms and conditions as those that applied immediately prior to the Effective Time, except that: (i) RSUs held by Continuing Employees at or above the level of “Vice President” will be settled in shares of Common Stock or other equity interests in the Company or one of its affiliates, as determined by the Parent Board in its sole discretion; with applicable withholding taxes satisfied through net share settlement and (ii) RSUs held by all other grantees will be settled in cash based on the fair market value of a share of stock or other equity interest in the Company or one of its affiliates as determined by the Parent Board in its sole discretion. Each outstanding vested RSU will be terminated and cancelled in

 

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