Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
Overview
As previously announced, on June 20, 2021, Raven
Industries, Inc. (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CNH
Industrial N.V., a Netherlands public limited liability company (“CNH Industrial”), and CNH Industrial South Dakota, Inc.,
a South Dakota corporation and wholly owned subsidiary of CNH Industrial (“Merger Subsidiary”), pursuant to which, among other
things and subject to the satisfaction or waiver of specified conditions, Merger Subsidiary will merge with and into the Company (the
“Merger”). As a result of the Merger, Merger Subsidiary will cease to exist, and the Company will survive as a wholly owned
subsidiary of CNH Industrial.
Subject to the terms and conditions of the Merger
Agreement, which has been approved by the boards of directors of the respective parties, at the effective time of the Merger (the “Effective
Time”), each share of Company common stock issued and outstanding immediately prior to the Effective Time (other than each share
held by the Company, CNH Industrial or any of their respective subsidiaries) will be converted into the right to receive $58.00 in cash,
without interest (the “Merger Consideration”).
Conditions to the Merger
The completion of the Merger is subject to the
satisfaction or waiver of customary conditions, including, without limitation, (1) the approval of the Merger Agreement and the transactions
contemplated thereunder by the Company’s shareholders (the “Shareholder Approval”), (2) the absence of any order or
injunction issued by any court of competent jurisdiction in the United States preventing or making illegal the consummation of the Merger,
(3) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (4) the receipt of all other required regulatory approvals, (5) receipt of CFIUS Approval (as defined in the Merger Agreement)
and (6) subject to certain qualifications, the accuracy of representations and warranties of the Company, CNH Industrial and Merger Subsidiary,
as applicable, under the Merger Agreement and the performance in all material respects by the Company, CNH Industrial and Merger Subsidiary,
as applicable, of their obligations under the Merger Agreement.
Representations and Warranties; Covenants
The Merger Agreement includes customary representations,
warranties and covenants of the Company, CNH Industrial and Merger Subsidiary. Between the date of execution of the Merger Agreement and
the Effective Time, the Company has agreed to conduct its business in the ordinary course and use its reasonable best efforts to preserve
intact its business organizations and relationships with third parties, including governmental authorities with jurisdiction over the
Company’s operations, customers, suppliers and other third parties and to keep available the services of its present officers and
key employees.
In addition, subject to certain exceptions, the
Company has agreed not to, and to cause its subsidiaries not to, and to instruct its and its subsidiaries’ respective officers,
directors and employees and instruct their investment bankers, attorneys, accountants, consultants or other agents or advisors not to,
directly or indirectly (i) solicit, initiate or take any action to knowingly facilitate or encourage the submission of any Acquisition
Proposal (as defined in the Merger Agreement) or offer or inquiry that would reasonably be expected to lead to any Acquisition Proposal,
(ii) enter into or participate in any discussions or negotiations with, furnish any information relating to the Company or any of its
subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its subsidiaries to, or otherwise
knowingly cooperate in any way, or assist, participate in, knowingly facilitate or otherwise knowingly encourage any effort by any third
party that is seeking to make, or has made, an Acquisition Proposal, (iii) make an Adverse Recommendation Change (as defined in the Merger
Agreement), (iv) fail to enforce or grant any waiver or release under any standstill or similar agreement, (v) approve any transaction
under, or any person becoming an “interested shareholder” under the South Dakota Business Corporation Act, (vi) enter into
any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument
relating to an Acquisition Proposal, or (vii) publicly propose to do any of the foregoing. Notwithstanding these restrictions, the Company
may under certain circumstances provide information to and engage in discussions or negotiations with third parties with respect to a
bona fide written Acquisition Proposal that the board of directors (the “Board”) of the Company reasonably believes, after
consultation with the Company’s financial advisor, constitutes or is reasonably likely to lead to a Superior Proposal (as defined
in the Merger Agreement) and the Board of the Company determines in good faith, after consultation with outside legal counsel, that failure
to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law. In
addition, the Board of the Company is permitted, subject to the terms and conditions set forth in the Merger Agreement, to make an Adverse
Recommendation Change following receipt of a Superior Proposal that did not result from a willful and material breach of the no-shop covenants
in the Merger Agreement or in response to an Intervening Event (as defined in the Merger Agreement), subject, in each case, to certain
matching rights in favor of CNH Industrial.
Each of the Company and CNH Industrial has agreed
to use reasonable best efforts to cause the Merger to be consummated. Under the terms of the Merger Agreement, CNH Industrial is required
to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable
law to consummate the Merger, including divestitures, acceptance of restrictions on business operations and litigation to obtain required
regulatory approvals. Notwithstanding the foregoing, CNH Industrial is not required to take any action that would reasonably be expected
to have a material adverse effect on the business, properties, assets, liabilities, results of operations or financial condition of the
Applied Technologies operating segment of the Company or of CNH Industrial and its subsidiaries, taken as a whole, after giving effect
to the Merger (measured on a scale relative to the Company and its subsidiaries, taken as a whole).
Termination and Termination Fees
The Merger Agreement includes termination provisions
for both the Company and CNH Industrial, including if the Merger has not been consummated on or before July 1, 2022 (the “End Date”),
and provides that, in connection with a termination of the Merger Agreement under specified circumstances, the Company will be required
to pay CNH Industrial a termination fee of $64 million. Such specified circumstances for the payment of a termination fee by the Company
include, among others, (i) termination by CNH Industrial in connection with an Adverse Recommendation Change by the Company’s Board
and (ii) termination by the Company in connection with the entry into a Superior Proposal (as defined in the Merger Agreement). In addition,
under certain circumstances the termination fee may be payable if the Merger Agreement is terminated and the Company subsequently enters
into or consummates an alternative Acquisition Proposal within one year of such termination. The Merger Agreement also provides that CNH
Industrial will be required to pay the Company a termination fee of $200 million under certain circumstances if the Merger Agreement is
terminated in connection with a failure to obtain required regulatory approvals.
Treatment of Equity Awards
The Merger Agreement provides that, at or immediately
prior to the Effective Time, the outstanding equity awards of the Company will be treated as follows:
Each restricted stock unit (a “Raven RSU”)
that is outstanding under the Company’s 2019 Equity Incentive Plan, the Company’s Amended and Restated 2010 Stock Incentive
Plan or the Company’s Deferred Stock Compensation Plan for Directors of the Company (together, the “Raven Stock Plans”),
whether vested or not vested, will automatically be canceled in exchange for the right to receive an amount in cash equal to the product
of the Merger Consideration and the number of shares of common stock represented by the Raven RSU. Any accrued but unpaid dividends granted
with respect to a Raven RSU will automatically vest and be paid or distributed to the holder of such Raven RSU. To the extent the number
of shares of common stock underlying a Raven RSU is based on the satisfaction of performance conditions, such performance conditions will
be deemed to have been earned at the greater of (i) the target amount under the terms of the applicable award agreement and (ii) the amount
based on the actual performance level achieved under such award agreement based on performance through the Effective Time, such performance
to be determined by the Company’s reasonable determination of performance as of immediately prior to the Effective Time.
Each deferred stock unit (a “Raven DSU”)
that is outstanding under a Raven Stock Plan, whether vested or not vested, will automatically be canceled in exchange for the right to
receive an amount in cash equal to the product of the Merger Consideration and the number of shares of common stock represented by the
Raven DSU. Any accrued but unpaid dividends granted with respect to a Raven DSU will automatically vest and be paid or distributed to
the holder of such Raven DSU.
Each option to acquire shares of common stock (a
“Raven Stock Option”) that is outstanding under a Raven Stock Plan, whether or not vested or exercisable, will automatically
be canceled in exchange for the right to receive an amount in cash (without interest) determined by multiplying (i) the excess, if any,
of the Merger Consideration over the applicable exercise price of such Raven Stock Option by (ii) the number of shares of common stock
underlying the Raven Stock Option. Any Raven Stock Option for which the exercise price is equal to or greater than the Merger Consideration
will be canceled without any consideration.
Description of Merger Agreement Not Complete
The foregoing description of the Merger Agreement
and the transactions contemplated thereby do not purport to be complete and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. It is not intended to provide
any factual information about the Company, CNH Industrial or their respective subsidiaries and affiliates. The representations, warranties
and covenants contained in the Merger Agreement have been made solely for the purposes of the Merger Agreement and as of specified dates;
were made solely for the benefit of the parties to the Merger Agreement; are not intended as statements of fact to be relied upon by the
Company’s shareholders, but rather as a way of allocating the risk between the parties in the event that statements therein prove
to be inaccurate; have been modified or qualified by certain confidential disclosures that were made between the parties in connection
with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself; may have been made for
the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts;
and may no longer be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed
as material by the Company’s shareholders. the Company’s shareholders are not third-party beneficiaries under the Merger Agreement
(except, following the Effective Time, with respect to the Company’s shareholders’ right to receive the merger consideration
pursuant to the Merger Agreement and the right of the Company on behalf of its shareholders to pursue damages for any willful and material
breach by CNH Industrial of the Merger Agreement) and should not rely on the representations, warranties and covenants or any descriptions
thereof as characterizations of the actual state of facts or conditions of the Company, CNH Industrial or any of their respective subsidiaries
or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s or CNH Industrial’s
public disclosures.