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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
SNAP ONE HOLDINGS CORP.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check all boxes that apply):

No fee required.

Fee paid previously with preliminary materials.

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

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SNAP ONE HOLDINGS CORP.
1800 Continental Boulevard, Suite 200
Charlotte, North Carolina 28273
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 and appraisal rights and information statement is being furnished to the holders of common stock, par value $0.01 per share (the “Company Common Stock”), of Snap One Holdings Corp., a Delaware corporation (the “Company”), in connection with the Agreement and Plan of Merger, dated as of April 14, 2024, by and among Resideo Technologies, Inc., a Delaware corporation (“Resideo”), Pop Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Resideo (“Merger Sub”), and the Company (the “Merger Agreement”), a copy of which is attached as Annex A to this information statement. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving such merger as a wholly owned subsidiary of Resideo (the “Merger”). Upon consummation of the Merger, each share of Company Common Stock issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will be canceled and converted into the right to receive an amount in cash equal to $10.75, without interest and less any applicable withholding taxes (the “Merger Consideration”). However, the Merger Consideration will not be paid in respect of (a) any shares of Company Common Stock owned by the Company, Resideo or Merger Sub or any other direct or indirect wholly owned subsidiary of the Company or Resideo, in each case immediately prior to the Effective Time, which will no longer be outstanding and will automatically be cancelled and retired and will cease to exist and no Merger Consideration will be delivered or deliverable in exchange therefore and (b) those shares of Company Common Stock held by any person who is entitled to demand and properly demands appraisal of such shares of Company Common Stock pursuant to, and who complies in all respects with, Delaware law and has not withdrawn his, her or its demand for appraisal.
The board of directors of the Company (the “Board”), after consultation with its financial advisors and its legal counsel, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its stockholders, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon.
The adoption of the Merger Agreement by the Company stockholders required the affirmative vote or written consent by holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon. On April 14, 2024, following the execution of the Merger Agreement, Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P., H&F Associates VIII, L.P. and H&F Copper Holdings VIII, L.P. (collectively, the “Principal Stockholders”), which together on such date beneficially owned 55,424,435 shares of Company Common Stock representing approximately 72% of the then outstanding shares of Company Common Stock as of April 14, 2024, delivered a written consent approving and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). As a result, no further action by any stockholder 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 contemplated thereby and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement and the approval of the transactions contemplated thereby. This notice
 

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and the accompanying information statement shall constitute notice to you from the Company of the Written Consent contemplated by Section 228(e) of the General Corporation Law of the State of Delaware (theDGCL).
Under Section 262 of the DGCL, if the Merger is completed, subject to compliance with the requirements of Section 262 of the DGCL, holders of shares of Company Common Stock, other than the Principal Stockholders, will have the right to seek an appraisal for, and be paid the “fair value” in cash of, their shares of Company 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 May 24, 2024, and comply precisely with other procedures set forth in Section 262 of the DGCL, which are summarized in the accompanying information statement. A copy of Section 262 of the DGCL is attached to the accompanying information statement as Annex C. This notice and the accompanying information statement shall constitute notice to you from the Company of the availability of appraisal rights under Section 262 of the DGCL in connection with the Merger.
We urge you to read the entire information statement carefully. If the Merger is completed, you will receive instructions regarding payment for your shares of Company Common Stock.
BY ORDER OF THE BOARD OF DIRECTORS,
Erik Ragatz
John Heyman
Chairman of the Board
Chief Executive Officer & Director
Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosures in this notice or the accompanying information statement. Any representation to the contrary is a criminal offense.
This information statement is dated May 24, 2024 and is first being mailed to stockholders on or about May 24, 2024.
 

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SUMMARY
This summary highlights selected information from this information statement and may not contain all of the information that is important to you. To fully understand the Merger, as hereinafter defined and as described below, contemplated by the Agreement and Plan of Merger dated as of April 14, 2024 (the “Merger Agreement”), by and among Resideo Technologies, Inc., a Delaware corporation (“Resideo”), Pop Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Resideo (“Merger Sub”), and Snap One Holdings Corp., a Delaware corporation (the “Company”), and for a more complete description of the legal terms of the Merger, you should carefully read this entire information statement, the annexes attached to this information statement and the documents referred to or incorporated by reference in this information statement. We have included page references in parentheses to direct you to the appropriate place in this information statement for a more complete description of the topics presented in this summary. In this information statement, the terms “Snap One,” “Company,” “we,” “us,” and “our” refer to Snap One Holdings Corp. and its consolidated subsidiaries. All references in this information statement to terms defined in the notice to which this information statement is attached have the meanings provided in that notice. This information statement is dated May 24, 2024 and is first being mailed to our stockholders on or about May 24, 2024.
The Parties to the Merger Agreement (page 17)

The Company.   The Company is a leading distributor of smart-living technology. The Company empowers its vast network of professional integrators to deliver entertainment, connectivity, automation, and security solutions to residential and commercial end users worldwide. The Company distributes an expansive portfolio of proprietary and third-party products through its intuitive online portal and local branch network, blending the benefits of e-commerce with the convenience of same-day pickup. The Company provides software, award-winning support, and digital workflow tools to help its integrator partners build thriving and profitable businesses. The Company’s principal executive offices are located at 1800 Continental Boulevard, Suite 200, Charlotte, North Carolina and its telephone number is (704) 927-7620. The Company’s website is www.snapone.com. The Company’s website address is being provided as an inactive textual reference only. The information provided on, or accessible through, our website is not part of this information statement, and therefore is not incorporated herein by reference. Additional information about the Company is included in documents incorporated by reference into this information statement and our filings with the Securities and Exchange Commission (the “SEC”), copies of which may be obtained without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 91.
The Company’s shares of Company Common Stock are listed with, and trade on, The NASDAQ Global Select Market (the “NASDAQ”) under the symbol “SNPO”.

Resideo.   Resideo is a leading global manufacturer and developer of technology-driven products and components that provide critical comfort, energy management, and safety and security solutions to over 150 million homes globally. Through its ADI Global Distribution business, it is also a leading wholesale distributor of professionally installed electronic security and life safety products for commercial and residential markets and serve a variety of adjacent product categories including audio visual, data communications, and smart home solutions. Resideo’s principal executive offices are located at 16100 N. 71st Street, Suite 550, Scottsdale, Arizona, 85254 and its telephone number is (480) 573-5340. Resideo’s website is www.resideo.com. This website address is being provided as an inactive textual reference only. The information provided on, or accessible through, Resideo’s website is not part of this information statement, and therefore is not incorporated herein by reference.
Shares of Resideo’s common stock are listed with, and trade on, the New York Stock Exchange (the “NYSE”) under the symbol “REZI”.

Merger Sub.   Merger Sub was formed by Resideo solely for the purpose of entering into the transactions contemplated by the Merger Agreement. Merger Sub is a wholly owned subsidiary of Resideo and, since the date of its incorporation, has not carried on any business, conducted any operations or incurred any liabilities or obligations other than those incidental to its formation and pursuant to the Merger Agreement, the performance of its obligations thereunder and matters
 
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ancillary thereto. Upon consummation of the Merger, Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at 16100 N. 71st Street, Suite 550, Scottsdale, Arizona 85254 and its telephone number is (480) 573-5340.
The Merger (page 18)

On April 14, 2024, the Company entered into the Merger Agreement with Resideo and Merger Sub. Upon the terms and subject to the conditions provided in the Merger Agreement, and in accordance with Delaware law, at the effective time of the Merger (the “Effective Time”), Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the “Surviving Corporation”) and a wholly owned subsidiary of Resideo (the “Merger”). Unless otherwise set out in the Merger Agreement, because the Merger Consideration (as defined below) will be paid in cash, you will receive no equity interest in Resideo in consideration for your shares of Company Common Stock, and after the Effective Time you will not own any shares of Company Common Stock.
The Merger Consideration

Upon consummation of the Merger, each issued and outstanding share of common stock of the Company, par value $0.01 per share (“Company Common Stock”), other than (i) shares of Company Common Stock owned by the Company, Resideo or Merger Sub or any other direct or indirect wholly owned subsidiary of the Company or of Resideo, (ii) Appraisal Shares (as defined in the section entitled “Appraisal Rights” beginning on page 83) and (iii) any shares of Company Common Stock subject to vesting or forfeiture (each, a “Company Restricted Share”), shall be converted into the right to receive $10.75 in cash, without interest and after giving effect to any required withholding taxes (the “Merger Consideration”).

In addition, upon consummation of the Merger,
(i)
each option to purchase Company Common Stock (a “Company Option”) and cash-settled stock appreciation right that relates to the value of Company Common Stock (a “Phantom Option”) (all of which are “out-of-the-money”) will be cancelled for no consideration,
(ii)
each Company Restricted Share will be cancelled and converted into the right to receive the Merger Consideration,
(iii)
each vested restricted stock unit payable in shares of Company Common Stock (a “Company RSU”) and vested “phantom restricted stock unit” that relate to the value of Company Common Stock and are settled in cash pursuant to the terms thereof (a “Phantom RSU”) will be cancelled and converted into the right to receive an amount in cash, without interest, equal to (a) the total number of shares of Company Common Stock subject to such Company RSU or Phantom RSU (as applicable) immediately prior to the Effective Time multiplied by (b) the Merger Consideration,
(iv)
each performance-based restricted stock unit payable in shares of Company Common Stock that remains subject to performance vesting conditions (a “Company PSU”) will be assumed by Resideo and automatically converted into a Resideo restricted stock unit award with respect to shares of common stock of Resideo, par value $0.001 per share (the “Resideo Common Stock”), assuming a number of shares of Company Common Stock based on target performance (or actual performance with respect to any Company PSUs for which the performance period that has been completed prior to the Effective Time) (a “Converted PSU”), in each case pursuant to an exchange ratio that is designed to maintain the intrinsic value of the award immediately prior to the Effective Time, and
(v)
each unvested Company RSU and unvested Phantom RSU will be assumed by Resideo and automatically converted into a Resideo restricted stock unit award (a “Converted RSU”) and a cash-settled restricted stock unit award (a “Converted Phantom RSU”), respectively, in each case, pursuant to an exchange ratio that is designed to maintain the intrinsic value of the award immediately prior to the Effective Time.
 
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Any fractional shares resulting from the conversion of awards covering Company Common Stock into Converted RSUs and Converted Phantom RSUs, as applicable, will be converted into a right to receive an amount in cash at the Effective Time equal to (x) such fractional share multiplied by (y) the Parent Common Stock Value (as defined in the Merger Agreement). Following the Effective Time, the Converted PSUs, Converted RSUs and Converted Phantom RSUs will generally be subject to the same terms and conditions (including vesting terms, but excluding performance-based vesting conditions) that were previously applicable to the corresponding equity award of the Company prior to conversion. The exchange ratio described above (the “Exchange Ratio”), as set forth in the Merger Agreement, shall be the Merger Consideration divided by the volume-weighted average sales price per on share of Resideo Common Stock on the NYSE for the 30 full trading days ending on and including the full trading day three (3) Business Days immediately prior to the Closing Date (the “Parent Common Stock Value”).
We encourage you to read the Merger Agreement, which is attached as Annex A to this information statement, as it is the legal document that governs the Merger and the other transactions contemplated thereby.
Employee Stock Purchase Plan

In accordance with the terms of the Merger Agreement, (i) no enrollment or new offering period under the Snap One Holdings Corp. 2021 Employee Stock Purchase Plan (the “Company ESPP”) will commence on or after the date of the Merger Agreement, and (ii) if the Closing occurs prior to the end of the offering period under the Company ESPP in effect as of the date of the Merger Agreement, the Company will cause a new exercise date to be set under the Company ESPP (to be no later than one (1) Business Day prior to the Effective Time). The Merger Agreement also provides that the Company ESPP will be terminated effective as of no later than the Effective Time, and the amount of any accumulated, unused contributions under the Company ESPP will be refunded to participants no later than ten (10) Business Days following the Effective Time.
Recommendation of the Board; Reasons for the Merger (page 29)

After consideration of various factors as discussed in the section entitled “The Merger — Recommendation of the Board; Reasons for the Merger” beginning on page 29, the Board after consultation with its financial advisors and its legal counsel, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its stockholders, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon.
Required Stockholder Approval for the Merger (page 33)

Under Delaware law and the Company’s certificate of incorporation, the adoption of the Merger Agreement by its stockholders required the affirmative vote or written consent of stockholders of the Company holding in the aggregate at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon. As of April 14, 2024, the record date for determining stockholders of the Company entitled to vote on the adoption of the Merger Agreement, there were 76,535,644 shares of Company Common Stock outstanding. Holders of Company 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 April 14, 2024, following the execution of the Merger Agreement, Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P., H&F Associates VIII, L.P. and H&F Copper Holdings VIII, L.P. (collectively, the “Principal Stockholders”), which together on such date beneficially owned 55,424,435 shares of Company Common Stock representing approximately 72% of the then outstanding shares of Company Common Stock, delivered a written consent approving
 
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and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). No further action by any other Company stockholder is required under applicable law or the Merger Agreement (or otherwise) in connection with the adoption of the Merger Agreement. 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 Resideo 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 General Corporation Law of the State of Delaware (“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 Financial Advisors (page 33, Annex B-1 and Annex B-2)

Opinion of Moelis & Company LLC

In connection with the Merger, the Board received an oral opinion on April 14, 2024, which was subsequently confirmed by delivery of a written opinion dated the same date, from Moelis & Company LLC (“Moelis”), as of the date of such opinion, as to the fairness, from a financial point of view, to the holders of Company Common Stock of the Merger Consideration of $10.75 in cash set forth in the Merger Agreement.

The full text of Moelis’ written opinion dated April 14, 2024, which sets forth the assumptions made, procedures followed, matters considered and other limitations on the review undertaken in connection with the opinion, is attached as Annex B-1 to this information statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Board (solely in its capacity as such) in its evaluation of the Merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the Merger Consideration of $10.75 in cash and does not address the Company’s underlying business decision to effect the Merger or the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available to the Company. Moelis’ opinion does not constitute a recommendation as to how any Company stockholder should vote or act with respect to the Merger or any other matter.
For more information, see the section entitled “The Merger — Opinion of Financial Advisors — Opinion of Moelis & Company LLC” and Annex B-1.

Opinion of J.P. Morgan Securities LLC

Pursuant to an engagement letter dated January 21, 2024, the Company retained J.P. Morgan Securities LLC (“J.P. Morgan”) as its financial advisor in connection with the proposed Merger.

At the meeting of the Board held on April 14, 2024, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its written opinion, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of shares of Company Common Stock that are owned by the Company, Resideo or Merger Sub or any other direct or indirect wholly owned subsidiary of the Company or of Resideo (such shares, “Excluded Shares”), and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders. J.P. Morgan has confirmed its April 14, 2024 oral opinion by delivering its written opinion to the Board, dated April 14, 2024, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders.
 
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The full text of the written opinion of J.P. Morgan dated April 14, 2024, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B-2 to this information statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the Merger Consideration to be paid in the Merger to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of any consideration to be paid in connection with the Merger to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness opinion committee of J.P. Morgan. The opinion does not constitute a recommendation to any Company stockholder as to how such stockholder should vote with respect to the proposed Merger or any other matter.
For more information, see the section entitled “The Merger — Opinion of Financial Advisors — Opinion of J.P. Morgan Securities LLC” and Annex B-2.
Financing (page 49)

The Merger is not subject to a financing condition. Resideo intends to finance the Merger with a combination of cash, preferred equity and debt financing.
The Merger Agreement (page 59 and Annex A)
Conditions to Consummation of the Merger (page 75)

The obligation of each party to consummate the Merger is subject to the satisfaction (or waiver by each of the parties) on or prior to the date of the closing of the Merger (the “Closing Date”) of the following conditions:

no applicable law enacted or applicable to the transactions by any governmental entity of competent jurisdiction or any judgment (whether temporary, preliminary or otherwise) or other legal restraint or prohibition issued or adopted or applicable to the transaction by any such governmental entity, restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger being in effect;

the expiration or termination of any applicable waiting period (including any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) having occurred;

the affirmative vote (in person or by written consent, including by obtaining the Written Consent) of holders of a majority of the outstanding shares of Company Common Stock in favor of approving and adopting the Merger Agreement; and

the elapsing of at least twenty (20) calendar days since the Company’s mailing of this information statement to the Company stockholders as contemplated by Regulation 14C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including Rule 14c-2 promulgated thereunder).

As of the date of this information statement, the Written Consent has been obtained and is in full force and effect, which satisfies the stockholder approval condition described above.

The obligations of Resideo and Merger Sub to consummate the Merger are further subject to satisfaction (or waiver by Resideo and Merger Sub), on or prior to the Closing Date of the following conditions:

the representations and warranties of the Company being true and correct as of the date of the Merger Agreement and the Closing Date in the manner described in the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 75;
 
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the Company having performed in all material respects all obligations, covenants and agreements required to be performed by it under the Merger Agreement at or prior to the Effective Time;

no Company Material Adverse Effect (as defined in the section entitled “The Merger Agreement — Representations and Warranties” beginning on page 62) having occurred since the date of the Merger Agreement; and

the receipt by Resideo and Merger Sub from the Company of a certificate, dated the Closing Date and signed on behalf of the Company by a duly authorized officer of the Company, certifying that the conditions specified above have been satisfied.

The obligation of the Company to consummate the Merger is further subject to satisfaction (or waiver by the Company) on or prior to the Closing Date of the following conditions:

the representations and warranties of Resideo and Merger Sub being true and correct as of the date of the Merger Agreement and the Closing Date in the manner described in the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 75;

Resideo and Merger Sub having performed in all material respects all obligations, covenants and agreements required to be performed by it under the Merger Agreement as of the Effective Time; and

the receipt by the Company from Resideo a certificate, dated the Closing Date and signed on behalf of Resideo by a duly authorized officer of Resideo, certifying that the conditions specified above have been satisfied.
No Solicitation (page 69)

The Merger Agreement provides that, from and after the execution and delivery of the Merger Agreement until the earlier of the termination of the Merger Agreement and the Effective Time, the Company will not, and will cause its subsidiaries and its and their respective directors, officers and employees not to, and the Company will use its reasonable best efforts to cause its other representatives not to, directly or indirectly:

solicit, initiate, propose, induce, encourage or knowingly facilitate any inquiries regarding, or the submission or announcement of any inquiry, proposal or offer that constitutes, or could reasonably be expected to lead to, any Company Takeover Proposal (as defined in the section entitled “The Merger Agreement — No Solicitation” beginning on page 69);

enter into, continue or otherwise participate in any discussions or negotiations regarding any Company Takeover Proposal (or inquiries, proposals or offers that could reasonably be expected to lead to a Company Takeover Proposal);

furnish to any person (other than Resideo or Merger Sub) any non-public information with respect to the Company or any of its subsidiaries or afford to any person (other than Resideo or Merger Sub) access to the business, properties, assets, books, records or personnel of the Company or any of its subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or to encourage or knowingly facilitate, any inquiry, proposal or offer that constitutes or could reasonably be expected to lead to a Company Takeover Proposal;

subject to the terms of the Merger Agreement, approve, endorse or recommend a Company Takeover Proposal; or

execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership agreement or any other agreement relating to any Company Takeover Proposal (other than certain acceptable confidentiality agreements entered into in accordance with the terms set forth in the Merger Agreement).
Adverse Recommendation Change (page 78)

Notwithstanding anything to the contrary contained in the Merger Agreement, if at any time after the execution of the Merger Agreement and prior to obtaining the Written Consent, which was
 
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obtained on April 14, 2024, the Company or any of its representatives received a bona fide, written Company Takeover Proposal, which Company Takeover Proposal did not result from a material breach of the no-solicitation provision of the Merger Agreement described above, then in response to such Company Takeover Proposal the Company and its representatives could have engaged in or otherwise participated in discussions or negotiations with such person or group and its representatives if the Board determined in good faith (after consultation with its outside legal counsel and financial advisor) that such Company Takeover Proposal constituted or would reasonably have been expected to lead to a Superior Proposal (as defined in the section entitled “The Merger Agreement — Adverse Recommendation Change” beginning on page 78).

Prior to obtaining the Written Consent, which was obtained on April 14, 2024, following the execution of the Merger Agreement, the Board could have made an Adverse Recommendation Change (as defined in the section entitled “The Merger Agreement — Adverse Recommendation Change” beginning on page 78) (A) in response to an Intervening Event (as defined in the section entitled “The Merger Agreement — Adverse Recommendation Change” beginning on page 78) if the Board determined in good faith (after consultation with its legal counsel and financial advisor) that the failure to take such action would reasonably be expected to be inconsistent with the Company’s directors’ fiduciary duties under applicable law or (B) if the Company received a Company Takeover Proposal that did not result from a material breach of no-solicitation provision of the Merger Agreement described above and which the Board determined in good faith (after consultation with its legal counsel and financial advisor) that such Company Takeover Proposal constituted a Superior Proposal, subject in each case, to certain notice provisions and renegotiation periods specified in the Merger Agreement. In the case of the Company’s receipt of what it determined in good faith to be a Superior Proposal, and subject to the aforementioned conditions, the Company would have also been entitled to enter into a definitive written agreement for the consummation of such Superior Proposal and concurrently terminate the Merger Agreement and pay Resideo the Termination Fee.
A more detailed description of the foregoing circumstances is provided below and in the section entitled “The Merger Agreement” beginning on page 59.
Termination of the Merger Agreement (page 76)

The Merger Agreement may be terminated at any time prior to the Effective Time (whether before or after receipt of the Written Consent, except as otherwise expressly noted in the Merger Agreement) by the mutual written consent of Resideo, Merger Sub and the Company.

In addition, the Merger Agreement may be terminated by either Resideo or the Company:

if the Merger is not consummated on or before the Outside Date (as defined in the section entitled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 76), as may be extended pursuant to the terms of the Merger Agreement; provided, however, that the right to terminate the Merger Agreement under this clause is not available to a party (which in the case of Resideo or Merger Sub, includes either or both of Resideo and Merger Sub) if any action of such party or the failure of such party to perform any of its obligations under the Merger Agreement is a principal cause of or directly resulted in the failure of the Merger to occur on or before the Outside Date and such action or failure to perform such obligations constituted a breach of the Merger Agreement; or

if any legal restraint permanently restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger is in effect and has become final and non-appealable; provided, that the right to terminate the Merger Agreement under this clause is not available to a party (which in the case of Resideo or Merger Sub, includes either or both of Resideo and Merger Sub) if the failure of such party to perform any of its obligations under the Merger Agreement is a principal cause of or directly resulted in the issuance of such final, non-appealable legal restraint.

The Merger Agreement also may be terminated by either Resideo or the Company if Resideo, Merger Sub or the Company, as applicable, breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of certain conditions precedent to Closing (as
 
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defined in the Merger Agreement) and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 45 days after the giving of written notice to Resideo, Merger Sub or the Company, as applicable, of such breach and (y) the Outside Date (provided, that such party is not then in material breach of the Merger Agreement or if any representation or warranty of such party has become untrue, in either case, so as to result in the failure of certain conditions precedent to closing).

The Merger Agreement also provided that Resideo could have terminated the Merger Agreement if (i) the Written Consent was not delivered to Resideo within 12 hours following the execution and delivery of the Merger Agreement or (ii) prior to Resideo’s receipt of the Written Consent, if an Adverse Recommendation Change had occurred; however, these termination provisions expired following delivery of the Written Consent on April 14, 2024.

The Merger Agreement also provided that the Company could have terminated the Merger Agreement, prior to receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 14, 2024.
Termination Fees and Expenses (page 77)

The Company will pay Resideo (or its designee) a termination fee of $26,348,250 under the following circumstances:

if the Merger Agreement is terminated by the Company, prior to Resideo’s receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 14, 2024;

if the Merger Agreement is terminated by Resideo, prior to receipt of the Written Consent, if an Adverse Recommendation Change has occurred; however, this termination provision expired following delivery of the Written Consent on April 14, 2024; and

if the Merger Agreement is terminated by Resideo for a breach by the Company of its representations or warranties or for failure to perform any of its covenants or obligations contained in the Merger Agreement or for the Company’s failure to deliver the Written Consent within 12 hours following the execution and delivery of the Merger Agreement and (A) at any time after the date of the Merger Agreement and prior to such termination, a Company Takeover Proposal is communicated to the senior management of the Company or the Board and (B) within 12 months after such termination, the Company or a subsidiary thereof consummates a Company Takeover Proposal or enters into a definitive agreement with respect to a Company Takeover Proposal (provided, that for purposes of this subclause, the references to “20% or more” in the definition of the term “Company Takeover Proposal” ​(as defined in the section entitled “The Merger Agreement — No Solicitation” beginning on page 69) will be deemed to be references to “more than 50%”)).
A more detailed description of the Termination Fee is provided in the section entitled “The Merger Agreement — Termination Fees and Expenses” beginning on page 77.
Tax Receivable Agreement Waiver (page 49)

Concurrently with the execution of the Merger Agreement, the Principal Stockholders and certain affiliates thereof (the “TRA Parties”) party to that certain Tax Receivable Agreement, dated as of July 27, 2021, with the Company (the “Tax Receivable Agreement”) delivered to the Company, a waiver and termination letter with respect to the Tax Receivable Agreement (the “TRA Waiver”) pursuant to which, among other things, the TRA Parties, effective upon the Effective Time, (i) waived their rights to any and all payments by, and all obligations and liabilities of, the Company and its subsidiaries under the Tax Receivable Agreement and (ii) agreed that the Tax Receivable Agreement will be terminated in its entirety and be of no further force or effect, and thereafter each TRA Party
 
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and the Company and its subsidiaries will not have any further obligations or rights under the Tax Receivable Agreement. Such obligations will terminate upon the valid termination of the Merger Agreement in accordance with the terms set forth therein. Additionally, from and after April 14, 2024, until the Effective Time, the TRA Parties waived their rights to any and all payments otherwise due and payable by, or claims against, the Company and its subsidiaries under the Tax Receivable Agreement during such period or attributable to any period prior April 14, 2024 (“Accrued Payments”), and the Company will not pay the TRA Parties for any Accrued Payments unless the TRA Waiver is terminated in accordance with the terms set forth therein. In the event the Merger Agreement is validly terminated for any reason, the Company shall pay the Accrued Payments to the TRA Parties in cash, and the TRA Parties shall be entitled to any and all payments by the Company under the Tax Receivable Agreement from and after the date of such termination in accordance with the terms of the Tax Receivable Agreement.
Interests of Our Directors and Executive Officers in the Merger (page 50)

You should be aware that the Company’s executive officers and directors have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests are described below in the section entitled “The Merger — Interests of Our Directors and Executive Officers in the Merger” beginning on page 50.
Material United States Federal Income Tax Consequences of the Merger (page 56)

The exchange of Company Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes. Therefore, a United States Holder (as defined in the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 56) receiving cash in the Merger generally will recognize capital gain or loss for United States federal income tax purposes in an amount equal to the difference between (x) the amount of cash the United States Holder received (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Company Common Stock.

A Non-United States Holder (as defined in “The Merger — Material United States Federal Income Tax Consequences of the Merger”) will generally not be subject to United States federal income tax on any gain resulting from the exchange of Company Common Stock pursuant to the Merger, unless such holder has certain connections to the United States.

Holders of Company Common Stock should read the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 56 for a more detailed description of the United States federal income tax consequences of the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will depend on your particular situation. Holders of Company Common Stock are urged to consult their own tax advisors about the United States federal, state, local and foreign tax consequences of the Merger.
Regulatory Approvals (page 58)

Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until notifications have been given to the Antitrust Division of the United States Department of Justice (“Antitrust Division”) and the Federal Trade Commission (“FTC”) and all statutory waiting period requirements have been satisfied or early termination has been granted by the applicable agencies. On April 19, 2024, both the Company and Resideo filed their respective notification and report forms under the HSR Act and requested early termination of the initial 30-day waiting period under the HSR Act. The 30-day waiting period expired at 11:59 p.m. on May 20, 2024, and no comments were received with respect to the filings under the HSR Act.
Procedures for Receiving Merger Consideration (page 61)

Promptly (and in any event no later than two (2) business days) after the Effective Time, Resideo will direct the paying agent to mail to each holder of record of shares of Company Common Stock immediately prior to the Effective Time which were converted into the right to receive Merger
 
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Consideration (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of the Certificates (as defined in the section entitled “The Merger Agreement — Procedures for Receiving Merger Consideration” beginning on page 61) or Book-Entry Shares (as defined in the section entitled “The Merger Agreement — Procedures for Receiving Merger Consideration” beginning on page 61), as applicable, in exchange for the Merger Consideration. With regard to (A) holders of Certificates, upon surrender of such Certificate to the paying agent for cancellation, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the paying agent, or (B) holders of Book-Entry Shares, upon receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of the transfer as the paying agent may reasonably request), the holder of such Certificate or Book-Entry Share, as applicable, will be entitled to receive the Merger Consideration for each share of Company Common Stock theretofore represented by such Certificate or Book-Entry Shares, as applicable, and the Certificate or Book-Entry Share, as applicable, so surrendered will be canceled.
Specific Performance; Jurisdiction (page 80)

The parties to the Merger Agreement are entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the Merger Agreement and to enforce specifically the performance of the terms and provisions of the Merger Agreement (including the consummation of the transactions under the Merger Agreement and the funding by Resideo of the full amount of the aggregate Merger Consideration), without the necessity of proving actual damages or the inadequacy of monetary damages as a remedy (and each party to the Merger Agreement has waived any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties to the Merger Agreement has agreed not to assert that a remedy of specific enforcement is unenforceable, invalid or contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach. In the event any party to the Merger Agreement brings any action, claim, complaint, suit, action or other proceeding to enforce specifically the performance of the terms and provisions of the Merger Agreement prior to the Closing, the Outside Date will automatically be extended by the amount of time during which such action, claim, complaint, suit, action or other proceeding is pending, plus 20 business days, or such other time period established by the court presiding over such action, claim, complaint, suit, action or other proceeding. Each party to the Merger Agreement has agreed to irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only if such court declines to accept jurisdiction over a particular matter, then in the United States District Court for the District of Delaware or, if jurisdiction is not then available in the United States District Court for the District of Delaware (but only in such event), then in any Delaware state court sitting in New Castle County) and any appellate court from any of such courts (the “Chosen Courts”) for the purpose of any proceeding arising out of or relating to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement and has agreed that all claims with respect to such proceeding may be heard and determined exclusively in such court. The parties to the Merger Agreement have agreed that a final trial court judgment in any such proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Appraisal Rights (page 83 and Annex C)

Pursuant to Section 262 of the DGCL, holders of shares of Company Common Stock (other than the Principal Stockholders) have the right to demand an appraisal of, and be paid the “fair value” of, their shares of Company Common Stock (as determined by the Delaware Court of Chancery), together with interest, if any, on the amount determined to be the fair value, instead of receiving the per share Merger Consideration if the Merger is completed, but only if they strictly comply with the procedures and requirements set forth under Section 262 of the DGCL. The judicially determined fair value under Section 262 could be greater than, equal to or less than the $10.75 per share of Company Common Stock that our stockholders are entitled to receive in the Merger. In order to exercise your appraisal rights, you must submit a written demand for an appraisal of your shares no later than 20 days after the date of mailing of this notice and the accompanying information statement, which mailing date is May 24, 2024, and precisely comply with other procedures set forth under
 
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Section 262 of the DGCL. In addition, even if you comply with such procedures in seeking to exercise your appraisal rights in connection with the Merger, the Delaware Court of Chancery will dismiss any such appraisal proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of Company Common Stock entitled to appraisal exceeds 1% of the outstanding shares of Company Common Stock, or (2) the value of the consideration provided in the Merger for such total number of shares of Company Common Stock exceeds $1 million. For a more complete discussion of these procedures, please refer to the section entitled “Appraisal Rights” beginning on page 83 and the provisions of Delaware law that grant appraisal rights and govern such procedures attached as Annex C to this information statement. We urge you to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising the right to demand appraisal, stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to comply strictly with all of the requirements of Section 262 may result in loss of the right of appraisal.
Transaction Litigation (page 56)

As of the filing of this information statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.
Market Information and Dividends (page 82)

Shares of Company Common Stock are listed on the NASDAQ under the trading symbol “SNPO”. As of May 20, 2024, 76,628,213 shares of Company Common Stock were issued and outstanding, held by approximately 82 stockholders of record. The Company has never declared or paid any cash dividend on our Company Common Stock and it does not intend to pay any cash dividends in the foreseeable future. Furthermore, the terms of the Merger Agreement do not allow the Company to declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of our capital stock or other equity interests between April 14, 2024 and the earlier of the termination of the Merger Agreement and the Effective Time.
 
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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 “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 91.
Q:
What is the proposed transaction and what effects will it have on the Company?
A:
The proposed transaction is the acquisition of the Company by Resideo pursuant to the Merger Agreement. Once the closing conditions under the Merger Agreement have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement, Merger Sub will merge with and into the Company. The Company will be the surviving corporation of the Merger and a wholly-owned subsidiary of Resideo, and the Company will cease to be an independent publicly traded company.
Q:
What will I receive in the Merger?
A:
Upon completion of the Merger and subject to the terms and conditions in the Merger Agreement, and subject to your compliance with the letter of transmittal delivered to you by the paying agent after the closing as further described in the section entitled “The Merger Agreement — Procedures for Receiving Merger Consideration” beginning on page 61, you will receive the Merger Consideration, $10.75 in cash, without interest and less any required withholding taxes, for each share of Company Common Stock that you own, unless you properly exercise, and do not withdraw, waive or fail to perfect, appraisal rights under Section 262 of the DGCL. For example, if you own 100 shares of Company Common Stock, you will receive $1,075.00 in cash in exchange for your shares of Company Common Stock without interest and less any required withholding taxes. Upon completion of the Merger, subject to the rights of certain RSU and PSU holders and holders of Company Restricted Shares (described below), you will not own any equity in the surviving corporation.
Q:
What happens to Options, Phantom Options, Company Restricted Shares, RSUs, Phantom RSUs, and PSUs if the Merger is completed?
A:
Upon consummation of the Merger, (i) each Company Option and Phantom Option (all of which are “out-of-the-money”) will be cancelled for no consideration, (ii) each Company Restricted Share will be cancelled and converted into the right to receive the Merger Consideration, (iii) each vested Company RSU and vested Phantom RSU will be cancelled and converted into the right to receive an amount in cash, without interest, equal to (a) the total number of shares of Company Common Stock subject to such Company RSU or Phantom RSU (as applicable) immediately prior to the Effective Time multiplied by (b) the Merger Consideration, (iv) each Company PSU will be assumed by Resideo and automatically converted into a Resideo restricted stock unit award, assuming a number of shares of Company Common Stock based on target performance (or actual performance with respect to any Company PSUs for which the performance period that has been completed prior to the Effective Time) (the “Converted PSUs”), in each case pursuant to the Exchange Ratio and (v) each unvested Company RSU and unvested Phantom RSU will be assumed by Resideo and automatically converted into a Resideo restricted stock unit award (a “Converted RSU”) and a cash-settled restricted stock unit award (a “Converted Phantom RSU”), respectively, in each case, pursuant to the Exchange Ratio. Any fractional shares resulting from the conversion of awards covering Company Common Stock into Converted RSUs and Converted Phantom RSUs, as applicable, will be converted into a right to receive an amount in cash at the Effective Time equal to (x) such fractional share multiplied by (y) the Parent Common Stock Value (as defined in the Merger Agreement). Following the Effective Time, the Converted PSUs, Converted RSUs and Converted Phantom RSUs will generally be subject to the same terms and conditions (including vesting terms, but excluding performance-based vesting conditions) that were previously applicable to the corresponding equity award of the Company prior to conversion.
 
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Q:
When do you expect the Merger to be completed?
A:
We are working to complete the Merger as quickly as possible. We currently expect to complete the Merger promptly after all of the conditions to the Merger have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement. Completion of the Merger is currently expected to occur prior to the end of June 2024, although the Company cannot assure completion by any particular date, if at all.
Q:
What happens if the Merger is not completed?
A:
If the Merger is not completed for any reason, stockholders will not receive any payment for their shares of Company Common Stock in connection with the Merger, and options, restricted Company Common Stock, RSUs and PSUs will remain outstanding and the holding restrictions applicable to each restricted stock unit will remain in place. Instead, the Company will remain a publicly traded company, and shares of Company Common Stock will continue to be traded on the NASDAQ.
Q:
Why am I not being asked to vote on the Merger?
A:
Applicable Delaware law and the Company’s certificate of incorporation require the adoption of the Merger Agreement by the holders in the aggregate of a majority of the outstanding shares of Company Common Stock entitled to vote in order to effect the Merger. The Company’s certificate of incorporation permits stockholders to act by written consent in certain circumstances, including in connection with the approval of transactions such as the Merger. The requisite stockholder approval was obtained immediately following the execution of the Merger Agreement on April 14, 2024, when the Written Consent was delivered by the Principal Stockholders, which owned shares of Company Common Stock constituting approximately 72% of the issued and outstanding shares of Company Common Stock on that date. Therefore, your vote is not required and is not being sought. We are not asking you for a proxy, and you are requested not to send us a proxy.
Q:
Why did I receive this information statement?
A:
Applicable laws and securities regulations require us to provide you with notice of the Written Consent that was delivered by the Principal Stockholders, as well as other information regarding the Merger, even though your vote or consent is neither required nor requested to adopt or authorize the Merger Agreement or complete the Merger. This information statement also constitutes notice to you of the availability of appraisal rights in connection with the Merger under Section 262 of the DGCL, a copy of which is attached to this information statement as Annex C.
Q:
Did the Board approve and recommend the Merger Agreement?
A:
Yes. After careful consideration, the Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and the stockholders of the Company, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and (iv) directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon. For a discussion of the factors that the Board considered in determining to approve and recommend the Merger Agreement, please refer to the section entitled “The Merger — Recommendation of the Board; Reasons for the Merger” beginning on page 29.
Q:
What happens if I sell my shares before completion of the Merger?
A:
If you transfer your shares of Company Common Stock before consummation of the Merger, you will have transferred the right to receive the Merger Consideration and lose your appraisal rights. In order to receive the Merger Consideration or exercise appraisal rights, you must hold your shares through the Effective Time of the Merger.
 
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Q:
How do I surrender my shares?
A:
Resideo will direct the paying agent to mail to each holder of record of Certificates or Book-Entry Shares instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for the Merger Consideration. With regard to (A) holders of Certificates, upon surrender of such Certificate to the paying agent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the paying agent, or (B) holders of Book-Entry Shares, upon receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of the transfer as the paying agent may reasonably request), the holder of such Certificate or Book-Entry Share, as applicable, will be entitled to receive the Merger Consideration.
Q:
Is the Merger subject to the fulfillment of certain conditions?
A:
Yes. Before the Merger can be completed, the Company, Resideo and Merger Sub must fulfill or, if permissible, waive certain closing conditions. If these conditions are not satisfied or waived, the Merger will not be completed. For more information, please refer to the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 75.
Q:
Am I entitled to exercise appraisal rights instead of receiving the Merger Consideration for my shares?
A:
Yes. Under Section 262 of the DGCL, stockholders who did not provide a consent to the adoption of the Merger Agreement (i.e., stockholders other than the Principal Stockholders) are entitled to exercise appraisal rights in connection with the Merger with respect to their shares of Company Common Stock if they meet certain conditions and comply with the applicable statutory procedures for demanding and perfecting appraisal rights and do not subsequently validly withdraw or lose such rights. For more information, please refer to the section entitled “Appraisal Rights” beginning on page 83.
Q:
What happens if a third party makes an offer to acquire the Company before the Merger is completed?
A:
If prior to obtaining the Written Consent, the Company or any of its representatives had received a bona fide, written Company Takeover Proposal, then in response to such Company Takeover Proposal the Company could have engaged in or otherwise participated in discussions or negotiations with such person or group and its representatives if the Board had determined in good faith that such Company Takeover Proposal constituted or would reasonably be expected to lead to a Superior Proposal (as further described in the section entitled “The Merger Agreement — Adverse Recommendation Change” beginning on page 78). The Company obtained the Written Consent on April 14, 2024, thus extinguishing the Company’s rights with respect to Company Takeover Proposals.
Q:
Will I owe taxes as a result of the Merger?
A:
The exchange of Company Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes. Therefore, a United States Holder receiving cash in the Merger generally will recognize capital gain or loss for United States federal income tax purposes in an amount equal to the difference between (x) the amount of cash the United States Holder received (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Company Common Stock. Additional tax consequences may apply with respect to Company Common Stock received as compensation (and/or equity awards covering Company Common Stock).
A Non-United States Holder will generally not be subject to United States federal income tax on any gain resulting from the exchange of Company Common Stock pursuant to the Merger, unless such stockholder has certain connections to the United States, but the Merger could be a taxable transaction to such holder under non-United States tax laws applicable to such holder.
Holders of Company Common Stock should read the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 56 for a more detailed description of the United States federal income tax consequences of the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will depend on your particular situation.
 
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Holders of Company Common Stock are urged to consult their own tax advisors about the United States federal, state, local and foreign tax consequences of the Merger.
Q:
Where can I find more information about the Company?
A:
We file periodic reports, proxy statements and other information with the SEC. You may read a copy of this information at the SEC’s public reference facilities. Please call the SEC at (800) SEC-0330 for information about these facilities. This information is also available on the website maintained by the SEC at www.sec.gov. For a more detailed description of the available information, please refer to the section entitled “Where You Can Find More Information” beginning on page 91.
Q:
Who can help answer my other questions?
A:
If you have more questions about the Merger, please contact our Investor Relations Department at (949) 574-3860. If your broker holds your shares, you should call your broker for additional information.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This information statement, and the documents to which we refer you in this information statement, contain “forward-looking statements” within the meaning of federal securities laws, including, without limitation, statements regarding projections as described in the section entitled “The Merger — Certain Company Financial Forecasts” beginning on page 46, which are subject to the “safe harbor” created by those sections. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, (1) the ability of the conditions to the closing of the transaction to be timely satisfied and the consummation of the transaction, (2) the ability of the Company and/or Resideo to drive increased customer value and financial returns and enhance strategic and operational capabilities, (3) the ability to integrate the Company business into Resideo and realize the anticipated strategic benefits of the transaction, including the anticipated operational and strategic benefits of the transaction, (4) the ability to recognize the expected savings from, and the timing and impact of, existing and anticipated cost reduction actions, (5) the likelihood of continued success of our transformation programs and initiatives, and (6) the other risks described under the headings “Risk Factors” and “Special Note Regarding Forward-Looking Statements and Risk Factor Summary” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2023 and the other risks described under the headings “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in Resideo’s Annual Report on Form 10-K for the year ended December 31, 2023 and such other periodic filings as each of the Company and Resideo makes from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are not guarantees of future performance, and actual results, developments, and business decisions may differ from those envisaged by our forward-looking statements. Except as required by law, we undertake no obligation to update such statements to reflect events or circumstances arising after the date of this information statement, and we caution investors not to place undue reliance on any such forward-looking statements.
 
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THE PARTIES TO THE MERGER AGREEMENT
The Company
Snap One Holdings Corp.
1800 Continental Boulevard, Suite 200
Charlotte, North Carolina 28273
Phone: (704) 927-7620
The Company is a leading distributor of smart-living technology. The Company empowers its vast network of professional integrators to deliver entertainment, connectivity, automation, and security solutions to residential and commercial end users worldwide. The Company distributes an expansive portfolio of proprietary and third-party products through its intuitive online portal and local branch network, blending the benefits of e-commerce with the convenience of same-day pickup. The Company provides software, award-winning support, and digital workflow tools to help its integrator partners build thriving and profitable businesses.
The Company’s website is www.snapone.com. The Company’s website address is being provided as an inactive textual reference only. The information provided on, or accessible through, our website is not part of this information statement, and therefore is not incorporated herein by reference. Additional information about the Company is included in documents incorporated by reference into this information statement and our filings with the SEC, copies of which may be obtained without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 91.
The Company’s shares of Company Common Stock are listed with, and trade on, NASDAQ under the symbol “SNPO”.
Resideo
Resideo Technologies, Inc.
16100 N. 71st Street, Suite 550
Scottsdale, Arizona 85254
Phone: (480) 573-5340
Resideo is a leading global manufacturer and developer of technology-driven products and components that provide critical comfort, energy management, and safety and security solutions to over 150 million homes globally. Through its ADI Global Distribution business, it is also a leading wholesale distributor of professionally installed electronic security and life safety products for commercial and residential markets and serve a variety of adjacent product categories including audio visual, data communications, and smart home solutions. Resideo’s website is www.resideo.com. Resideo’s website address is being provided as an inactive textual reference only. The information provided on, or accessible through, our website is not part of this information statement, and therefore is not incorporated herein by reference.
Shares of Resideo’s common stock are listed with, and trade on, the NYSE under the symbol “REZI”.
Merger Sub
Pop Acquisition Inc.
c/o Pop Acquisition Inc.
16100 N. 71st Street, Suite 550
Scottsdale, Arizona 85254
Phone: (480) 573-5340
Merger Sub was formed by Resideo solely for the purpose of entering into the transactions contemplated by the Merger Agreement. Merger Sub is a wholly owned subsidiary of Resideo and, since the date of its incorporation, has not carried on any business, conducted any operations or incurred any liabilities or obligations other than those incidental to its formation and pursuant to the Merger Agreement, the performance of its obligations thereunder and matters ancillary thereto. Upon consummation of the Merger, Merger Sub will cease to exist.
 
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THE MERGER
Background of the Merger
The Board, together with the Company’s management team, regularly reviews and assesses the Company’s performance, risks, opportunities and strategy, including the Company’s prospects and strategy in light of then-current business and economic conditions, as well as developments in the Company’s industry. As part of its ongoing oversight and management of the Company’s business, from time to time, the Board and the Company’s management, together with their legal and financial advisors, review and evaluate strategic opportunities and alternatives available to the Company, with a focus on maximizing stockholder value. Such opportunities and alternatives include, among other things, remaining as a stand-alone entity and pursuing organic growth initiatives, share repurchases, business combinations and similar transactions and considering acquisition or sale transactions.
In addition, from time to time prior to and since the Company became a publicly traded company in July 2021, various parties have approached the Company regarding possible strategic transactions involving the Company. In response to such expressions of interest, the Board, or the Company’s management in consultation with the Board, have generally engaged in preliminary discussions with such parties to assess their level of interest and ability to pursue a potential transaction that would enhance stockholder value. Generally, these discussions did not result in formal proposals for the Company to evaluate or, in certain cases, resulted in proposals that the Company and/or such counterparty decided not to pursue.
As part of this ongoing review and evaluation, representatives of Moelis and J.P. Morgan have periodically met with the Board and the Company’s management to offer their perspectives with respect to various strategic opportunities and alternatives potentially available to the Company as well as the overall market environment.
On April 27, 2023, the Board held a meeting, with representatives of Simpson Thacher & Bartlett LLP (“Simpson Thacher”) in attendance. Representatives of the Company provided the Board with an update on certain discussions with potential financial advisors. A representative of Simpson Thacher reviewed with the Board its fiduciary duties generally and if the Company were to pursue potential strategic alternatives.
On May 18, 2023, the Board held a meeting, with representatives of Simpson Thacher in attendance, to which representatives of Moelis and J.P. Morgan were invited to attend and provide an overview of current market conditions and present on strategic opportunities and alternatives that could be available to the Company. Among the opportunities discussed was the possible exploration of strategic alternatives, including a possible sale transaction. During the meeting, representatives of Moelis and J.P. Morgan presented their views on the Company and various strategic alternatives potentially available to the Company as well as the overall M&A market environment, particularly for companies with high-quality assets, like the Company, as well as certain unique challenges facing the Company, including due to its limited float. As part of this presentation, they outlined a potential process and potential timeline for outreach to potential buyers to gauge interest in a potential transaction involving the Company. Prior to the May 18, 2023 meeting, on May 8, 2023, members of the Company’s management had informed Moelis and J.P. Morgan that the Board had approved retaining Moelis and J.P. Morgan to act as financial advisors to the Company in connection with a potential review of strategic alternatives. The Board determined to retain Moelis and J.P. Morgan to act as its financial advisors in connection with its review of strategic opportunities and alternatives based on, among other factors, each of Moelis and J.P. Morgan’s experience, their overall reputation and experience as investment banking firms, and their knowledge of the Company’s business, operations and industry. As part of this meeting, the Board also directed the Company’s management to prepare a refreshed value-creation plan as part of the Company’s annual planning process and develop a long-term forecast for purposes of assisting it in its evaluation of any strategic alternatives.
In June 2023, following further discussion and at the Board’s direction, representatives of Moelis and J.P. Morgan and certain Board members, on behalf of the Company, began reaching out to a group of 11 financial sponsors and 19 strategic buyers to gauge their interest in exploring a potential strategic transaction involving the Company. The Company executed confidentiality agreements containing customary provisions, including standstill provisions that would fall away upon entry into a definitive transaction agreement, with four counterparties, including Clayton, Dubilier & Rice LLC (“CD&R”). Representatives
 
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of Moelis and J.P. Morgan arranged a set of initial meetings with those counterparties that expressed interest in potentially exploring a strategic transaction involving the Company.
Following the execution of the confidentiality agreements, beginning in June 2023 and into August 2023, members of the Company’s senior management held management meetings with those parties that had expressed an interest in exploring a potential strategic transaction involving the Company, each of which conducted due diligence that included access to written materials, due diligence sessions and other customary due diligence activities. In advance of such meetings, the Company’s management team, at the direction of the Board, also refreshed the Company’s value-creation plan as part of its annual planning process and shared such value-creation plan with potential counterparties as part of the due diligence process.
On August 24, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which representatives of Moelis and J.P. Morgan presented an update on discussions with those parties that had expressed an interest in exploring a potential strategic transaction. While certain parties, including CD&R, continued to express varying degrees of interest in a potential transaction involving the Company, none of the potential buyers had submitted a proposal for a potential transaction involving the Company. Representatives of Moelis and J.P. Morgan discussed the impact of current market conditions, including the limited availability of debt financing on terms that would be attractive to a potential acquiror and the volatility in the equity markets, and the negative impact those conditions were having on mergers and acquisitions opportunities. Representatives of Moelis and J.P. Morgan also discussed alternative strategies available to the Company, including a potential issuance of additional equity by the Company to augment market capacity and increase the Company’s public float, as well as the challenges presented by such options. The Board determined that, with respect to any of the parties that continued to express interest in the Company or a potential transaction, such as CD&R, management and representatives of Moelis and J.P. Morgan should continue to engage with them and update the Board on potential developments.
Throughout September and October 2023, CD&R continued to actively engage in diligence with respect to a potential strategic transaction involving the Company. In connection with this due diligence review, representatives of CD&R periodically spoke to members of the Company’s management relating to the status of their due diligence review of the Company and the progress of other transaction workstreams.
Over the course of May 2023 to the end of October 2023, certain independent directors had communicated with and discussed engaging Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) as counsel regarding transaction-related considerations due to their familiarity and preexisting relationships with Skadden.
On October 26, 2023, representatives of Moelis held a call with representatives of CD&R to discuss CD&R’s interest in the Company and potential next steps.
On October 26, 2023, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to review the Company’s performance and the status of discussions with CD&R as well as other matters pertaining to the strategic review process. While the Board remained open to pursuing discussions with others, no proposals or indications of interest were made by others during this time frame.
On October 31, 2023, the Board met again, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Senior management and the Board, along with its advisors, discussed, among other things, the current state of the Company’s business and financial performance, the status of CD&R’s due diligence, and considerations with regard to a possible proposal by CD&R.
On November 1, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which representatives of Moelis and J.P. Morgan discussed with the Board their preliminary valuation analyses and a representative of Simpson Thacher reviewed with the Board its fiduciary duties in connection with any review of strategic alternatives, including any proposals that might be received by the Company.
 
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On November 1, 2023, representatives of Moelis held a call with representatives of CD&R, during which CD&R verbally indicated it was interested in pursuing an acquisition of 100% of the outstanding capital stock of the Company at a price equal to $9.00 per share, which represented a 20% premium to the Company’s closing share price.
On November 2, 2023, the independent directors of the Board, consisting of Tom Hendrickson, Adalio Sanchez, Amy Steel Vanden-Eykel and Kenny Wagers, retained Skadden, to provide counsel and assist in discussions in respect of their role as directors in connection with a potential sale of the Company.
On November 6, 2023, a discussion was held between representatives of the Company and Resideo regarding a potential combination transaction between the companies.
On November 6, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which representatives of Moelis and J.P. Morgan presented the Board with their preliminary valuation analyses and responded to questions from the Board about such analyses. Representatives of Moelis and J.P. Morgan also provided a process update, described the CD&R proposal and reviewed their outreach to other potential buyers. The Board discussed CD&R’s verbal proposal, and a representative of Simpson Thacher reviewed with the Board its fiduciary duties in connection with its review of strategic alternatives, including in connection with a potential acquisition transaction as contemplated by the CD&R proposal. The Board discussed proposed responses to CD&R’s verbal proposal.
Following discussion, the Board determined, and directed Moelis, to seek an improved proposal from CD&R. Representatives of Moelis held a call with representatives of CD&R and informed them of the Board’s feedback, including the Board’s view that the CD&R verbal offer of $9.00 per share undervalued the Company and its future prospects. CD&R indicated it would continue to progress its diligence on the Company and potentially present an updated offer.
On November 6, 2023, the Board also formally approved Moelis’ written engagement letter. Prior to such meeting, Moelis provided the Board with updated customary relationship disclosures regarding its relationships with the Company and its affiliates, dated as of August 11, 2023. Certain relationships with Moelis are discussed in greater detail in the section entitled “The Merger  — Opinion of Financial Advisors’’ beginning on page 33.
On November 13, 2023, representatives from each of CD&R and Moelis held a call, during which CD&R reiterated its interest in the Company and increased its verbal offer from $9.00 per share to $9.50 per share. CD&R noted that it remained value sensitive and did not expect to be able to further increase its price above $9.50 per share, absent a negotiation with respect to the termination of certain required payments in connection with a change of control under the Company’s existing Tax Receivable Agreement.
On November 16, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which the Company discussed CD&R’s updated verbal proposal, and representatives of Simpson Thacher reviewed with the Board its fiduciary duties, including in connection with a potential acquisition transaction as contemplated by the CD&R proposal. Representatives of Moelis and J.P. Morgan also reviewed with the Board the list of potential parties that had participated in the prior outreach process and a list of potential additional parties that could potentially be approached as potential acquirors of the Company. Following discussion, the Board determined it would be beneficial to attempt to reconnect with certain parties involved in the prior outreach as well as contact certain additional parties to solicit interest in a potential strategic transaction. The Board also decided to provide CD&R with access to additional information to potentially increase the value of its bid.
In connection with the proposed expanded outreach, on November 6, 2023, the Board also discussed forming a transaction working group to efficiently oversee any discussions with potential bidders and to allow for agile decision making with the convenience of having a subset of directors oversee and direct these matters. Following discussion, the Board decided to move forward with the formation of a transaction working group consisting of Jacob Best, Tom Hendrickson, John Heyman and Adalio Sanchez (the “Transaction Working Group”). On November 30, 2023, the Board authorized and instructed the Transaction Working Group, among other things, to (i) oversee and provide assistance to the Company’s management
 
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and advisors with respect to the exploration, evaluation, consideration, review and negotiation of the terms and conditions of any strategic alternative, including any sale of the Company and (ii) explore, evaluate, consider, review and discuss the terms and conditions of any strategic alternative, including any sale of Company, and to take such other actions with respect to any strategic alternative as the Transaction Working Group deemed necessary, appropriate or advisable. The Board did not delegate to the Transaction Working Group the power and authority to pursue or approve any strategic alternative, including any sale of the Company, and retained all such authority; rather, it was understood that the Board would continue to have an active role in the pursuit and consideration of all strategic alternatives. In addition to the designated members of the Transaction Working Group, other directors and members of senior management were welcome to join meetings of the Transaction Working Group and periodically attended and participated in such meetings.
In addition, on November 6, 2023, the Board also discussed the formation of a committee comprised of directors unaffiliated with Hellman & Friedman LLC (“H&F”) to assess the Tax Receivable Agreement in the context of a potential strategic transaction resulting in a change-of-control of the Company and any associated payments in connection therewith and other matters where a potential conflict of interest may exist or arise between affiliates of H&F, on the one hand, and the Company and the other holders of Company Common Stock, on the other hand. Following discussion, on November 30, 2023, the Board formed an independent director committee, consisting of Tom Hendrickson, Adalio Sanchez, Amy Steel Vanden-Eykel and Kenny Wagers (the “Independent Director Committee”). The Board authorized and granted the Independent Director Committee the exclusive power and authority to (i) assess the implications of any potential strategic transaction (x) on the Tax Receivable Agreement, including any early termination payment payable pursuant to the terms of the Tax Receivable Agreement and (y) on any other matter where a potential conflict of interest (actual or perceived) may exist or arise between H&F, on the one hand, and the Company and the other holders of Company Common Stock, on the other hand and (ii) act on behalf of the Company regarding any matter in respect of the Tax Receivable Agreement in connection with a strategic transaction, including any potential waiver or modification of any provision of such agreement or any potential negotiations with H&F with respect thereto.
On November 15, 2023, following the preliminary discussion that had occurred on November 6, 2023, the representative of the Company reconnected with the representative from Resideo and discussed further a potential combination transaction involving both companies. During this conversation, Resideo indicated to the Company that it had retained Evercore Inc. (“Evercore”) as its financial adviser, and the parties agreed to introduce their respective financial advisers.
At the direction of the Board, beginning on November 17, 2023, Moelis and J.P. Morgan, on behalf of the Company, conducted outreach to strategic parties and financial sponsors who had previously engaged in preliminary conversations and new parties who were perceived by senior management of the Company and the Company’s advisors to be potentially interested counterparties. On behalf of the Company, representatives of Moelis and J.P. Morgan reached out to a group of 9 financial sponsors (excluding CD&R) and 7 strategic buyers (excluding Resideo) to gauge their interest in exploring a potential strategic transaction involving the Company, including certain strategic buyers with whom the Company had not previously engaged.
The Transaction Working Group met on several occasions during the course of December 2023, together with the Company’s advisers and members of senior management, during which meetings representatives of Moelis and J.P. Morgan provided updates on their outreach and counterparty engagement.
During the course of December 2023 and January 2024, the Independent Director Committee also met on several occasions with Skadden to discuss a potential strategic transaction and the impact of such transaction on the Tax Receivable Agreement, including the potential quantum of payments due under the Tax Receivable Agreement in certain circumstances. In addition, the Independent Director Committee also met on December 21, 2023, with representatives of Moelis, J.P. Morgan and Skadden in attendance, to review Moelis’ updated preliminary financial analysis.
Throughout this time, CD&R remained engaged regarding a potential strategic transaction involving the Company and continued to conduct diligence on the Company, including through meetings with senior
 
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management of the Company. On December 19, 2023, members of the Company’s senior management team had an in-person meeting with representatives of CD&R in Atlanta as part of CD&R’s ongoing due diligence of the Company.
In December 2023, representatives of Resideo and the Company spoke regarding Resideo’s interest in a potential transaction with the Company. During this conversation, the Resideo representative expressed that Resideo was focused on an acquisition of the Company for cash instead of a combination transaction and that they needed some additional time to provide more specific feedback.
On December 28, 2023, representatives of Moelis held a call with representatives of CD&R and requested that CD&R revert with an updated view on value during the first week of January.
Moelis and J.P. Morgan also continued their outreach to additional potentially interested parties, but received limited engagement from these parties and no such parties expressed sufficient interest to merit scheduling meetings with Company management.
On January 4, 2024, the Board held a meeting, with members of management and representatives of each of Moelis and J.P. Morgan in attendance, during which meeting the Board discussed the Company’s 2023 fiscal year performance. In addition, Moelis and J.P. Morgan, together with representatives from the Transaction Working Group, provided the Board with an update regarding their outreach to potential acquirors of the Company and the feedback that had been received to-date.
On January 9, 2024, representatives of Moelis held a call with representatives of CD&R during which call CD&R reiterated its proposal that it was willing to pursue a standalone acquisition of the Company at $9.50 per share but informed Moelis that, notwithstanding its additional work, it was unable to find incremental value relative to its prior proposal.
On January 12, 2024, the Transaction Working Group met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss potential responses to CD&R.
On January 13, 2024, CD&R informed Moelis that, although it remained willing to pursue a standalone acquisition of the Company at $9.50 per share, it believed the valuation could be improved if the Company were to pursue a transaction with Resideo in light of the potential synergies such a transaction could potentially achieve and that CD&R would be potentially interested in providing financing to support a transaction. CD&R communicated that it viewed such a transaction as the preferred path to maximize value for all constituents, including the Company’s stockholders, based on its work to date and view as to the broader market in which the Company operates and that CD&R would not otherwise pursue a transaction with the Company above $9.50 per share.
On January 17, 2024, the Transaction Working Group met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Moelis provided the Transaction Working Group with an update on the CD&R proposal and communications. The Transaction Working Group discussed the CD&R proposal and instructed Moelis to reach out directly to Resideo to confirm the potential proposal.
On January 19, 2024, a representative of the Board held a call with a member of the Board of Resideo, who confirmed Resideo’s interest in a potential acquisition of the Company and that Resideo would be open to having further discussions with CD&R regarding a potential investment in Resideo in connection with such acquisition. The Resideo representative emphasized the seriousness of Resideo’s interest, including the Resideo Board’s support of such potential acquisition of the Company, subject to, among other things, completion of diligence and confirmation of valuation, synergies and structure. On January 20, 2024, representatives of each of Moelis and Evercore also held a call to discuss the potential transaction, in which representatives of Evercore indicated their expectation that Resideo would structure a transaction as an all-cash acquisition of the Company. Representatives of Evercore confirmed the seriousness of Resideo’s interest in a potential acquisition of the Company and its interest in exploring the participation of CD&R as a financing source in support of such acquisition.
On January 21, 2024, each of Resideo and CD&R reached out to Moelis to request certain amendments to each of their confidentiality agreements with the Company. On January 21, 2024, the Transaction Working
 
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Group met to discuss the revised proposal as well as a proposed response to Resideo and CD&R regarding their requested modifications to their respective confidentiality agreements.
Also on January 21, 2024, the Board formally approved J.P. Morgan’s written engagement letter. Prior to such meeting, J.P. Morgan provided the Board with customary relationship disclosures regarding its relationships with the Company, Resideo, CD&R and H&F and certain of their respective affiliates and portfolio companies, dated as of November 10, 2023.
On January 22, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Moelis provided the Board with an update on the CD&R proposal that had been verbally communicated as well as the discussions with Resideo, and representatives of Simpson Thacher reviewed with the Board its fiduciary duties. Representatives of Moelis and J.P. Morgan also reviewed with the Board the results of the prior outreach to potential acquirors of the Company. Senior management and the Board, along with its advisors, also discussed, among other things, the current state of the Company’s business and financial performance, and members of management provided an update on the performance of the Company for the first month of the fiscal year 2024. Representatives of Moelis and J.P. Morgan then provided preliminary thoughts on a potential acquisition of the Company by Resideo, including expectations around timing of the due diligence process and speed of execution. Following discussion, the Board expressed its support for the Company’s management and advisors to continue discussions to evaluate the possibility of a potential transaction with Resideo.
Over the course of this process and in preparation for the August 2023 Board meeting, the Company’s senior management had prepared a long-term forecast, which included a set of financial projections based on assumptions and metrics that management believed were reasonably likely to be achieved (which we refer to as the “base case”). In early 2024, the Board directed the Company’s management to refresh its long-term base case forecast to reflect the recent actual performance of the Company through the remainder of fiscal year 2023, for purposes of assisting the Board in its evaluation of any strategic alternatives.
On January 26, 2024, the Company executed an amendment to its confidentiality agreement with Resideo. On January 26, 2024, Resideo sent the Company an initial data request list, soon after which the Company provided Resideo with select information responsive to its requests.
On February 2, 2024, the Transaction Working Group met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Moelis and J.P. Morgan provided the Transaction Working Group with an update regarding Resideo’s recent diligence requests and provided the Transaction Working Group with a preview of certain preliminary diligence conducted on Resideo. Representatives of Moelis and J.P. Morgan also provided the Transaction Working Group with their preliminary assessment of a potential acquisition of the Company by Resideo and an updated view of the stand-alone prospects of the Company, including the potential impact that a large primary and secondary issuance to increase the Company’s public float could have on the future share price of the Company.
On February 5, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Moelis and J.P. Morgan provided the Board with an update on the initial due diligence being conducted by Resideo. Representatives of Moelis and J.P. Morgan also provided the Board with their preliminary assessment of a potential acquisition of the Company by Resideo, including expectations around potential synergies that could be achieved, and preliminary views on Resideo’s financing for the potential transaction. Representatives of Moelis and J.P. Morgan also provided the Board with an updated view on the stand-alone prospects of the Company, including the potential impact that a large primary and secondary issuance to increase the Company’s public float could have on the future share price of the Company, based on precedent transactions. Based on the foregoing and following discussion, the Board instructed Moelis and J.P. Morgan to deliver a process letter to Resideo, indicating that the Company had provided Resideo with access to sufficient key business information about the Company to enable Resideo to submit a preliminary indication of interest and requesting that Resideo provide such a written indication of interest, outlining all of the material terms and assumptions on which Resideo would be interested in proceeding with an acquisition of the Company, by no later than February 16, 2024, one day following Resideo’s regularly scheduled board meetings on February 14, 2024 and February 15, 2024.
 
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During this time, as directed by the Board, the Company’s senior management refined its long-term forecast, including the base case, to reflect actual 2023 performance and the final 2024 budget that had been approved by the Board and to reflect the continuing macroeconomic headwinds facing the Company through 2024. The Company’s senior management reviewed the long-term forecast with the Transaction Working Group at a meeting held on January 19, 2024. As part of this review, the Company’s senior management discussed with the Transaction Working Group, among other things, key assumptions underlying such forecast, including potential opportunities related to new product introductions, revenue acceleration through upgrades and acquisition opportunities, as well as potential risks and challenges, including increased risks based on year-to-date performance, the potential negative impact of increasing geopolitical tensions and the possibility of an economic downturn or continued stagnation of the housing market, with respect to the potential achievement of such forecast. The Transaction Working Group suggested several refinements to the forecast and recommended that the refined forecast be shared with the full Board for approval at the next regularly scheduled Board meeting. Following discussion, the Board approved the refined forecast provided by management at the February 22, 2024 Board meeting, as described below.
On February 7, 2024, a meeting was held between representatives of the Company and Resideo whereby representatives of the Company presented certain cost-saving initiatives of the Company and an update on their services offerings and other critical business strategies.
On February 13, 2024, representatives of Evercore contacted representatives of Moelis and asked to extend the deadline for submission of its written proposal to the middle of the week of February 19, 2024 and reiterated again to Moelis that any proposal by Resideo would be in the form of an all-cash offer for all of the outstanding shares of the Company.
On February 21, 2024, Resideo submitted a preliminary, non-binding proposal to acquire 100% of the outstanding capital stock of the Company at a price of $10.00 per share. The proposal confirmed that the proposed transaction would not be subject to a financing contingency and that consummation of the proposed transaction would not be subject to or conditioned on any investment in Resideo by CD&R. The proposal also indicated it was predicated on the waiver by the holders of the Tax Receivable Agreement of any payment obligations by the Company thereunder as a result of a change in control of the Company. The proposal also indicated that Resideo expected H&F (as majority stockholder) to deliver a written consent approving the proposed transaction and requested sixty days of exclusivity to complete its diligence on the Company and finalize transaction terms.
On February 22, 2024, the Board held a previously scheduled meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to review the financial projections shared by management, including the base case. Members of the Company’s senior management reviewed the Company’s then-current business plan and forecasts, including the base case, together with underlying assumptions and market sensitivities. The Board discussed the challenges facing the Company’s standalone operations, including increased risks based on year-to-date performance, potential industry-specific risks, the possible negative impact from geopolitical risk and the possibility of an economic downturn. The Board approved the financial projections, including the base case, shared by management and discussed with the Board.
The Board, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, also discussed a process update and reviewed a variety of strategic alternatives, including the Company’s prospects on a stand-alone basis. The Board discussed, among other things, the potential upside in the business (on a standalone basis) and the potential challenges of remaining independent, taking into account the Company’s recent underperformance, potential industry-specific risks (including the challenges facing the Company), potential negative impacts from geopolitical risks and the possibility of an extended period of stagnation, especially in the housing market, due to elevated interest rates. Representatives of Simpson Thacher reviewed with the Board its fiduciary duties. Representatives of Moelis and J.P. Morgan also reviewed with the Board the terms of Resideo’s proposal and considerations associated with a potential transaction with Resideo, including preliminary views on Resideo’s potential financing for a transaction. During the meeting, Jacob Best, in his capacity as a Partner of H&F confirmed that, if the Board were to move forward with Resideo’s proposal at an improved valuation and reach a definitive agreement, H&F would likely be supportive and were willing to consider waiving its contractual entitlement to payments under the Tax Receivable Agreement to facilitate a transaction. Mr. Best also
 
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reiterated to the Board that H&F did not have an external need to sell their shares in the near-term and was focused on maximizing value for all of the Company’s stockholders.
Based on these discussions, it was the consensus of the Board that Resideo’s proposal merited further evaluation and the Company should engage with and have targeted discussions with Resideo to explore a potential transaction in an effort to maximize value for the Company’s shareholders, including the upfront cash value of any future potential synergies that could be realized by the proposed transaction. The Board instructed Moelis to engage with Evercore on that basis promptly following the conclusion of the meeting and specifically instructed Moelis to communicate that (i) $10.00 per share undervalued the Company in light of the significant value creation potential presented by the potential transaction, (ii) the Board would be willing to transact at $12.00 per share and (iii) the Tax Receivable Agreement is a contractual obligation of the Company.
On February 23, 2024, representatives of Moelis held a call with representatives of Evercore and communicated the Company’s counterproposal. Representatives of Moelis also communicated that the Board would not entertain discussion or concession of process points, such as the written consent or exclusivity, absent movement on the foregoing terms.
On February 24, 2024, representatives of Evercore held a call with representatives of Moelis and communicated Resideo’s updated proposal of $10.35 per share to the Company’s common shareholders, with $13.0 million payable to the holders of the Tax Receivable Agreement as full satisfaction of H&F’s contractual entitlement thereunder.
On February 25, 2024, the Transaction Working Group met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss Resideo’s revised proposal and the Company’s proposed response. Following discussions, the Transaction Working Group instructed Moelis to communicate that the Board was not supportive of a transaction at a price per share that was less than $11.00 to the Company’s common shareholders but that H&F, in its capacity as a counterparty to the Tax Receivable Agreement, was potentially willing to forego 50% of its existing contractual entitlement to payment under the Tax Receivable Agreement. Representatives of Moelis again reiterated that the Board would not entertain discussion or concession of process points, such as the written consent or exclusivity, absent agreement on the foregoing value points.
On February 26, 2024, the Independent Director Committee met, with representatives of Skadden in attendance, to discuss Resideo’s proposal and the treatment of the Tax Receivable Agreement thereunder.
On February 27, 2024, representatives of Moelis held a call with representatives of Evercore and communicated the Company’s response to the proposal.
On February 28, 2024, representatives of Evercore held a call with representatives of Moelis and communicated Resideo’s updated proposal of $10.50 per share to the Company’s common shareholders, with $13.0 million payable to the holders of the Tax Receivable Agreement as full satisfaction of H&F’s contractual entitlement thereunder. Representatives of Evercore indicated that Resideo was reaching its maximum valuation and was unlikely to increase its price proposal.
On February 29, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss Resideo’s latest proposal. The Board discussed Resideo’s revised proposal, including potential responses, taking into account, among other things, Evercore’s statement that Resideo was unlikely to increase its price proposal as well as considerations regarding the current market environment and feedback from the process that had been conducted to solicit interest in a potential transaction involving the Company. Following discussion, the Board instructed Moelis to again communicate that the Company would be willing to proceed with a potential transaction at a price of $11.00 per share to the Company’s common shareholders.
Representatives of Moelis communicated the Board’s position to Evercore later that day.
On March 1, 2024, representatives of Evercore held a call with representatives of Moelis and communicated Resideo’s updated proposal of $10.60 per share to the Company’s common shareholders, with $13.0 million payable to the holders pursuant to and in accordance with the terms of the Tax Receivable
 
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Agreement. Representatives of Evercore also communicated that this proposal had been discussed by Resideo’s Board and was Resideo’s best and final offer and that Resideo would not pursue a transaction at a higher valuation. Representatives of Evercore also again reiterated Resideo’s insistence that H&F provide a written consent approving the proposed transaction and again requested exclusivity to complete its diligence on the Company and finalize transaction terms.
On March 2, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss and consider Resideo’s latest proposal. The Board and its advisors discussed the latest Resideo proposal and potential next steps, including the request for exclusivity. Representatives of Moelis and J.P. Morgan summarized the most recent proposal for the Board and reminded the Board of certain previously discussed valuations metrics, including premiums to the current and recent share prices of the Company that the proposal presented, as well as other financial and market information regarding the Company. A discussion ensued among the members of the Board and its advisors, focusing on, among other things, the value of Resideo’s latest proposal relative to the potential values achievable by the Company on a stand-alone basis, including associated risks and challenges to performance. The Board also discussed the fact that the Company had engaged in discussions with other potential bidders. Representatives of H&F confirmed their willingness to waive H&F’s entitlement to any payment under the Tax Receivable Agreement in connection with the proposed transaction in favor of having such value reflected in the purchase price and allocated to all of the common shareholders (assuming satisfactory resolution of all other open issues related to the transaction). Following discussion, the Board unanimously concluded that $10.75 per share (with no payment being made under the Tax Receivable Agreement) was a price at which it would be willing to transact, subject to satisfactory resolution of open issues and definitive documentation. The Board and representatives of H&F also discussed Resideo’s insistence that the Company and H&F accept Resideo’s written consent requirement in connection with Resideo’s revised proposal. Representatives of Simpson Thacher reviewed with the Board considerations relating to Resideo’s written consent requirement, including prior transactions structured in such a manner, and the Board and representatives of H&F indicated a willingness to accept the written consent construct as part of an overall package aimed at delivering maximum value to all common shareholders.
On March 3, 2024, representatives of Moelis held a call with representatives of Evercore and communicated the Company’s updated proposal of $10.75 per share to the Company’s common shareholders, with a full waiver of all payments in connection with the proposed transaction pursuant to the terms of the Tax Receivable Agreement. Representatives of Moelis communicated that this proposal had been discussed by the Company’s Board and was the Company’s best and final offer and would have to be accepted in totality. Representatives of Moelis also communicated that the Board expected no more than a three-week exclusivity period during which Resideo was expected to move quickly to finalize its diligence.
In follow-up to Moelis’ conversation, on March 4, 2024, the respective CEOs of the Company and Resideo held a call whereby they confirmed the parties’ mutual understanding of the foregoing business terms with respect to a potential transaction and immediate next steps, including with respect to diligence. On March 4, 2024, representatives of Simpson Thacher shared a revised draft of the exclusivity agreement with representatives of Willkie Farr & Gallagher LLP (“Willkie Farr”), counsel to Resideo. The revised draft of the exclusivity agreement contemplated a three-week exclusivity period.
Following negotiation between representatives of Simpson Thacher and Willkie Farr, on March 12, 2024, the Company and Resideo signed an exclusivity agreement committing the Company to negotiate exclusively with Resideo regarding a potential sale of the Company, with such exclusivity period to expire on April 8, 2024 (subject to automatic extension until April 15, 2024 if Resideo confirmed that it was continuing to negotiate in good faith with respect to a proposed acquisition transaction on terms no less favorable to the Company than those agreed upon prior to the date of the exclusivity agreement).
After entry in such agreement, representatives of Resideo began submitting additional diligence requests to the Company. On March 13, 2024, the Transaction Working Group met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss information sharing and how to best progress Resideo’s due diligence efforts. In addition, representatives of Simpson Thacher reviewed with the Transaction Working Group the terms proposed to be included in the initial draft of the merger agreement prepared by Simpson Thacher (the “Initial Draft Merger Agreement”).
 
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Over the course of the following weeks, the Company also provided Resideo and its representatives and financing sources with access to a virtual data room with detailed information about the Company and access to management, including calls with business leaders, a site visit to the Company’s offices in Salt Lake City on March 22, 2024 as well as an all-day diligence meeting in Charlotte on March 27, 2024 and an in-person diligence session in Scottsdale on April 2, 2024 and a tour of the Company’s San Bernadino distribution facility on April 3, 2024.
On March 19, 2024, representatives of Simpson Thacher delivered the Initial Draft Merger Agreement to Resideo and Willkie Farr. The Initial Draft Merger Agreement included, among other things, (i) accelerated vesting and cash-out of certain equity awards of the Company in connection with the closing of the transactions, (ii) limited representations, warranties and interim operating covenants applicable to the Company, (iii) specific performance with respect to Resideo’s obligation to consummate the proposed transaction, irrespective of the availability of any financing and (iv) an outside date of nine months, subject to automatic extension if the transaction was not consummated for regulatory reasons by such date and a termination fee payable by Resideo in the event that the merger was not consummated by the outside date as a result of a failure to receive antitrust approval or a legal restraint in connection with any applicable antitrust law.
On March 27, 2024, Willkie Farr delivered a revised draft merger agreement to Simpson Thacher (the “Revised Merger Agreement”), which, among other things, (i) contemplated that the outstanding and unvested equity awards (other than out-of-the-money awards) would roll over into outstanding equity of Resideo following the closing of the transaction and remain subject to their existing time vesting schedule, (ii) expanded the scope of the representations, warranties and covenants applicable to the Company, and (iii) shortened the outside date to five months and removed the termination fee payable by Resideo.
On March 28, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Members of management and representatives of Moelis provided an update on progress of Resideo’s due diligence. Representatives of Simpson Thacher also made a presentation summarizing the ongoing discussions with respect to the potential transaction, reviewed the fiduciary duties of the Board, summarized the material terms of the Revised Merger Agreement, and discussed the potential timetable to close the transaction.
Between March 29, 2024 and April 12, 2024, the Company and Resideo and their respective legal advisors negotiated the terms of the merger agreement and related transaction documents. Key terms negotiated between the parties included (i) the treatment of the outstanding equity awards in connection with the potential transaction; (ii) the scope of the representations and warranties provided by the Company; (iii) the interim operating covenants applicable to the Company prior to the closing of the merger and related exceptions; (iv) the efforts applicable to the parties’ obligations to obtain regulatory approvals; (v) the outside date for completing the transactions contemplated by the merger agreement; and (vi) the timing for delivery of the written consent by H&F for purposes of approving the transactions contemplated by the merger agreement.
On April 11, 2024, the Independent Director Committee met, with representatives of Skadden in attendance, to review the TRA Waiver. Pursuant to the TRA Waiver, H&F would (a) waive its rights to any and all payments under the Tax Receivable Agreement by the Company or a subsidiary thereof (including any amounts otherwise payable in connection with the transactions contemplated by the merger agreement) that were due and payable prior to April 14, 2024 (and that had not been paid prior to such date) or that may have thereafter become payable following such date and (b) agree that, upon the effective time of the merger, the Tax Receivable Agreement would terminate and cease to be of any further force and effect. After discussion and deliberation, subject to the Board’s approval of the merger agreement, the Independent Director Committee authorized, approved and adopted the TRA Waiver, and the Company’s performance of its obligations thereunder. The Independent Director Committee acknowledged that to the extent there were any changes to the final version of the TRA Waiver (as it had not yet been approved by Resideo or Willkie Farr), the Independent Director Committee would reconvene to discuss such changes and determine if such changes were acceptable.
On April 12, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Simpson Thacher reviewed
 
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with the Board its fiduciary duties and obligations in respect of evaluating and approving a potential acquisition of the Company by Resideo. Representatives of Simpson Thacher also reviewed with the Board the key terms of the merger agreement and related transaction documents and the final key open items subject to resolution. Following this discussion, the Board directed representatives of Simpson Thacher to finalize the merger agreement and related transaction documents. Representatives of each of Moelis and J.P. Morgan then summarized the financial terms of the proposed merger and their respective financial analyses with respect to the proposed consideration of $10.75 per share, and a discussion ensued. The representatives of each of Moelis and J.P. Morgan discussed the procedures and process in connection with delivery of each of their opinions, assuming successful completion of the negotiations and finalization of the terms of the merger agreement and related transaction documents. Following the meeting, the Board was provided updated customary relationship disclosures by each of J.P. Morgan and Moelis, dated April 14, 2024 and April 9, 2024, respectively, regarding their respective relationships with each of Resideo, CD&R, the Company and the H&F Stockholders and certain of their respective affiliates and portfolio companies. Certain relationships with Moelis and J.P. Morgan are discussed in greater detail in the section entitled “The Merger — Opinion of Financial Advisors” beginning on page 33. Also at this meeting, representatives of Simpson Thacher met with the independent directors in executive session.
On April 12, 2024, Willkie Farr delivered a revised TRA Waiver to Simpson Thacher, which Simpson Thacher subsequently shared with Skadden. On April 14, 2024, the Independent Director Committee met, with representatives of Skadden in attendance, to discuss the TRA Waiver as so revised. After discussion and deliberation, subject to the Board’s approval of the merger agreement, the Independent Director Committee authorized, approved and adopted the TRA Waiver as so revised, and the Company’s performance of its obligations thereunder.
Following the meeting until the finalization of the merger agreement on April 14, 2024, the Company and Resideo and their respective legal advisors negotiated and finalized the terms of the merger agreement and the related transaction documents.
On the afternoon of April 14, 2024, following the finalization of the merger agreement, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Representatives of Simpson Thacher then provided the Board with a summary of the final terms of the merger agreement. A discussion ensued and Simpson Thacher answered questions of the directors.
Following such discussion, representatives of each of Moelis and J.P. Morgan reviewed the performance of the Company Common Stock since the April 12 meeting in light of its small public float and recent price volatility, but noted that its price had closed slightly lower than at the prior meeting and, accordingly, did not affect their respective analyses. Representatives of Moelis then rendered on behalf of Moelis its oral opinion to the Board, which was subsequently confirmed by delivery of a written opinion from Moelis, dated as of April 14, 2024, subject to the limitations, qualifications and assumptions set forth therein, with respect to the fairness, from a financial point of view, of the $10.75 in cash per share of Company Common Stock to be paid to the holders of Company Common Stock pursuant to the merger agreement, as more fully described in “The Merger — Opinion of Financial Advisors — Opinion of Moelis & Company LLC” set forth below. Representatives of J.P. Morgan also rendered on behalf of J.P. Morgan its oral opinion to the Board, which was subsequently confirmed by delivery of a written opinion from J.P. Morgan, dated as of April 14, 2024, that, as of such date and based upon and subject to the factors and assumptions set forth in its written opinion, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders, as more fully described in “The Merger — Opinion of Financial Advisors — Opinion of J.P. Morgan Securities LLC” set forth below. The financial forecasts relied on for purposes of the Moelis and J.P. Morgan opinions are the base case approved by the Board on February 22, 2024 and further described in “Certain Company Financial Forecasts” beginning on page 46. For a detailed discussion of Moelis’ opinion and J.P. Morgan’s opinion, please see below under “The Merger — Opinion of Financial Advisors”.
After considering the foregoing and taking into consideration the factors described under “The Merger — Recommendation of the Board; Reasons for the Merger”, the Board unanimously (i) declared the merger agreement, and the transactions contemplated by the merger agreement advisable, (ii) approved and
 
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adopted the merger agreement and the transactions contemplated by the merger agreement, (iii) directed that the merger agreement and the transactions contemplated by the merger agreement, be submitted to the stockholders of the Company for adoption and approval by such holders and (iv) resolved to recommend that stockholders of the Company vote to adopt the merger agreement and approve the transactions contemplated by the merger agreement.
On April 14, 2024, the Company and Resideo executed the merger agreement. Shortly after execution of the merger agreement, H&F delivered its approval of the transaction contemplated by the merger agreement via written consent.
Recommendation of the Board; Reasons for the Merger
After careful consideration, the Board unanimously:

determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its stockholders;

approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in each case on the terms and subject to the conditions set forth in the Merger Agreement;

resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement; and

directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon.
In the course of the Board making such determination, the Board consulted with management of the Company, as well as the Company’s legal and financial advisors, and considered the following potentially positive factors, which are not intended to be exhaustive and are not presented in any relative order of importance:

Merger Consideration:   The Board considered the $10.75 per share of Company Common Stock in cash to be paid as merger consideration in relation to (i) the Board’s estimate of the current and future value of the Company as an independent entity, (ii) the multiple of enterprise value to EBITDA implied by such price and (iii) the market price of the Company Common Stock.

Negotiations with Resideo:   The Board considered its belief that, after extensive negotiations and several increases in price by Resideo, the Company obtained the highest price and most favorable terms to which Resideo was willing to agree.

Strategic Alternatives:   The Board considered the likelihood and potential benefits of other potential strategic or other business combination transactions (including with alternative acquirers) and continuing as an independent company.

The Board considered the potential values, benefits, risks and uncertainties facing the Company’s stockholders associated with possible strategic alternatives to the Merger (including possible alternative business combinations and scenarios involving the possibility of remaining independent), and the timing, risks and likelihood of accomplishing such alternatives, taking into account the Board’s belief that there were likely no other potential strategic purchasers that would be reasonably likely to engage in a transaction in the near term at a price greater than the price being offered by Resideo and no financial sponsors that would be reasonably likely to make an offer at a price greater than the price being offered by Resideo.

The Board also considered other alternative strategic opportunities available to the Company, including additional potential primary or secondary offerings of securities to augment the Company’s existing limited public float, and the potentially material adverse impact such offerings could have on the Company’s per share price.

The Board also considered that, if the Company did not enter into the Merger Agreement with Resideo, there may be a considerable period of time before the Company’s stockholders would have the opportunity to receive as high a price as a result of a sale of the Company and before
 
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the trading price of the Company Common Stock would reach and sustain the per share merger consideration of $10.75, as adjusted for present value (even assuming full realization of the management projections). In addition, the Board considered that a robust sale process had been undertaken, with outreach to numerous potential counterparties, and that such process had yielded only limited interest in a potential strategic transaction involving the Company.

The Board also considered the risk that further continuing to engage in a sale process and solicit additional interest in the face of limited engagement by other third parties could result in the loss of an opportunity to consummate a transaction with Resideo.

While the Board remained supportive of the Company’s strategic plan and optimistic about its prospects on a stand-alone basis, the Board considered the Company’s future prospects if the Company was to remain an independent public company, including the competitive landscape, macroeconomic factors and the business, financial and execution risks and the Company’s relationships with customers, providers and suppliers and the potential impact of those factors on the trading price of Company Common Stock (which cannot be quantified numerically).

Based on the value, risk allocation, timing and other terms and conditions negotiated with Resideo, the Board ultimately determined that the acquisition by Resideo is more favorable to the Company’s stockholders than any other strategic alternative reasonably available to the Company, including continuing as an independent public company.

Premium to trading price:   The Board considered that the Merger Consideration of $10.75 per share of Company Common Stock to be received by the Company stockholders in the Merger represents a significant premium over the market prices at which shares of Company Common Stock traded prior to the announcement of the execution of the Merger Agreement, including the fact that the Merger Consideration of $10.75 represented a premium of approximately 32% over the closing price of shares of Company Common Stock as of April 12, 2024.

Cash consideration:   The Board considered the fact that the Merger Consideration is all cash, which provides certainty and immediate liquidity and value to the Company’s stockholders, enabling the Company’s stockholders to realize value that has been created at the Company while eliminating long-term business and execution risk.

Principal Stockholder support:   The Board considered the support of the Principal Stockholders, which collectively controlled approximately 72% of the aggregate outstanding shares of Company Common Stock as of April 14, 2024 and which will be receiving the same form and amount of Merger Consideration for their shares of Company Common Stock as all other stockholders of the Company (and no payment under the Tax Receivable Agreement).

Waiver under the Tax Receivable Agreement:   The Board also considered the fact that the TRA Parties, effective upon the Effective Time, agreed to waive their rights to any and all payments by, and all obligations and liabilities of, the Company and its subsidiaries under the Tax Receivable Agreement and agreed that the Tax Receivable Agreement will be terminated in its entirety and be of no further force or effect, and thereafter each TRA Party and the Company and its subsidiaries will not have any further obligations or rights under the Tax Receivable Agreement.

Resideo’s reputation:   The Board considered the business reputation, experience and capabilities of Resideo and its management.

Fairness opinions:   The Board considered:

the oral opinion of Moelis, delivered on April 14, 2024, to the Board, as to the fairness, from a financial point of view, to the holders of Company Common Stock of the Merger Consideration of $10.75 in cash set forth in the Merger Agreement, based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the written opinion of Moelis, dated that same date, as more fully described below under the section entitled “The Merger — Opinion of Financial Advisors” beginning on page 33 and the full text of the Moelis opinion is attached to this information statement as Annex B-1.
 
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the oral opinion of J.P. Morgan, delivered on April 14, 2024, to the Board, that, as of such date and based upon and subject to the factors and assumptions set forth in its written opinion, dated that same date, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders, as more fully described below in the section entitled “The Merger — Opinion of Financial Advisors — Opinion of J.P. Morgan Securities LLC” beginning on page 41, and the full text of the J.P. Morgan opinion is attached to this information statement as Annex B-2.

Merger Agreement:   The Board considered, in consultation with its outside legal counsel, the terms of the Merger Agreement, which were the product of arm’s-length negotiations and contained terms and conditions that were, in the Board’s view, advisable and favorable to the Company and its stockholders, including:

the representations, warranties and covenants of the parties, the conditions to the parties’ obligations to complete the Merger and their ability to terminate the Merger Agreement;

the limited number and nature of the conditions to Resideo’s obligation to consummate the Merger;

the fact that the definition of “Company Material Adverse Effect” has a number of customary exceptions and is generally a very high standard applied by courts;

the fact that the Company has sufficient operating flexibility to conduct its business in the ordinary course between execution of the Merger Agreement and consummation of the Merger;

the Merger not being subject to a financing condition, and the financial capacity of Resideo to complete the transaction;

the ability of the Company to seek specific performance in the event that Resideo breaches the Merger Agreement; and

the requirement that the parties use their respective reasonable best efforts to complete the transactions contemplated by the Merger Agreement, including to obtain all necessary governmental approvals as promptly as reasonably practicable.

Likelihood of consummation:   The Board considered the likelihood that the Merger would be completed, in light of, among other things, the conditions to the Merger, the absence of a financing condition, the covenants by the parties to use their respective reasonable best efforts to obtain all necessary governmental approvals and the likelihood of obtaining required regulatory approvals for a transaction with Resideo prior to the Outside Date (as defined in the section entitled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 76) and the potential regulatory challenges and stockholder approvals that certain other potential buyers would face in connection with an acquisition of the Company.

Financing:   The Board considered that Resideo’s market capitalization, cash on hand, receipt of committed financing and access to the capital markets as an investment grade issuer provides for sufficient access to funds to consummate the transactions contemplated by the Merger Agreement, including related fees and expenses required to be paid as of the consummation of the Merger.

Appraisal rights:   The Board considered the fact that appraisal rights are available to the Company’s stockholders who properly exercise their statutory rights under Section 262 of the DGCL (see the section entitled “Appraisal Rights” beginning on page 83 and Annex C to this information statement).
The Board also considered and balanced against the potentially positive factors a number of potentially negative factors concerning the Merger, including the following factors:

Participation in future gains:   The Board considered the fact that following the completion of the Merger, the Company will no longer exist as an independent public company and that the Company’s existing stockholders will not be able to participate in any future earnings or growth of the Company, or in any future appreciation in value of shares of Company Common Stock.
 
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Risks associated with announcement of the Merger:   The Board considered the possibility of disruption to the Company’s business that could result from the announcement of the Merger on the Company’s operations, stock price, business ventures, employees, customers, suppliers and other business partners and the resulting distraction of management’s attention from day-to-day operations of the business and its ability to attract and retain key employees during the pendency of the Merger.

Risks associated with a failure to consummate the Merger:   The Board considered the fact that, while the Merger is expected to be completed, there are no assurances that all conditions to the parties’ obligations to complete the Merger will be satisfied or waived, and as a result, it is possible that the Merger may not be completed, as described in the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 75. The Board noted the fact that, if the Merger is not completed, (i) the Company will have incurred significant risk, transaction expenses and opportunity costs, including the possibility of disruption to its operations, diversion of management and employee attention, employee attrition and a potentially negative effect on its business and client relationships, (ii) depending on the circumstances that caused the Merger not to be completed, it is likely that the trading price of the Company Common Stock will decline, potentially significantly and (iii) the market’s perception of the Company’s prospects could be adversely affected.

Restrictions on the operation of the Company’s business:   The Board considered the fact that, although the Company will continue to exercise control over its operations prior to the closing, the Merger Agreement prohibits the Company from taking a number of actions relating to the conduct of its business prior to the closing without the prior written consent of Resideo, which may delay or prevent the Company from undertaking business opportunities that may arise during the pendency of the Merger, whether or not the Merger is completed.

No-solicitation provision:   The Board considered the fact that the Merger Agreement restricts the Company’s ability to actively solicit acquisition proposals, subject to certain exceptions that expired upon the delivery of the Written Consent.

Written Consent:   The Board considered the fact that, as a condition to entering into the Merger Agreement, Resideo required that the Merger Agreement include a provision permitting Resideo to terminate the Merger Agreement if the Principal Stockholders failed to execute and deliver the Written Consent 12 hours following the execution and delivery of the Merger Agreement.

Tax Treatment:   The Board considered the fact that any gains arising from the receipt of the Merger Consideration would generally be taxable to United States Holders for United States federal income tax purposes.

Stockholder Litigation:   The Board considered the risk of litigation arising from stockholders in respect of the Merger Agreement or transactions contemplated thereby.
During its consideration of the transaction with Resideo, the Board was also aware of and considered that the Company’s directors and executive officers may have interests in the Merger that differ from, or are in addition to, the interests of the Company’s stockholders generally, as described in the section entitled “The Merger — Interests of Our Directors and Executive Officers in the Merger” beginning on page 50.
After taking into account all of the factors set forth above, as well as others, the Board determined that the potentially positive factors outweighed the potentially negative factors. The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but summarizes the material information and factors considered by the Board in its consideration of the Merger. The Board reached the decision to recommend and approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, in light of the factors described above and other factors the Board felt were appropriate. In view of the variety of factors and the quality and amount of information considered, the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and individual members of the Board may have given different weights to different factors. The Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, senior management of the Company, Moelis and
 
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J.P. Morgan as financial advisors, and Simpson Thacher & Bartlett LLP as legal advisor, and considered the factors overall to be favorable to, and to support, its determinations. This explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 16.
Required Stockholder Approval for the Merger
Under Delaware law and the Company’s certificate of incorporation, the adoption of the Merger Agreement by our stockholders required the affirmative vote or written consent of stockholders of the Company holding in the aggregate at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon. As of April 14, 2024, the record date for determining stockholders of the Company entitled to vote on the adoption of the Merger Agreement, there were 76,535,644 shares of Company Common Stock outstanding. Holders of Company 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 April 14, 2024, following the execution of the Merger Agreement, Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P., H&F Associates VIII, L.P. and H&F Copper Holdings VIII, L.P. (collectively, the “Principal Stockholders”), which together on such date beneficially owned 55,424,435 shares of Company Common Stock representing approximately 72% of the then outstanding shares of Company Common Stock, delivered a written consent approving and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). No further action by any other Company stockholder is required under applicable law or the Merger Agreement (or otherwise) in connection with the adoption of the Merger Agreement. 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 Resideo 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 General Corporation Law of the State of Delaware (“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 Financial Advisors
Opinion of Moelis
At a meeting of the Board on April 14, 2024 to evaluate and approve the Merger, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated April 14, 2024, addressed to the Board to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the written opinion, the Merger Consideration of $10.75 in cash set forth in the Merger Agreement was fair, from a financial point of view, to the holders of Company Common Stock.
The full text of Moelis’ written opinion dated April 14, 2024, which sets forth the assumptions made, procedures followed, matters considered and other limitations on the review undertaken in connection with the opinion, is attached as Annex B-1 to this information statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Board (solely in its capacity as such) in its evaluation of the Merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the Merger Consideration of $10.75 in cash and does not address the Company’s underlying business decision to effect the Merger or the relative merits of the Merger as compared to any alternative business
 
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strategies or transactions that might be available to the Company. Moelis’ opinion does not constitute a recommendation as to how any holder of Company Common Stock should vote or act with respect to the Merger or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee.
In arriving at its opinion, Moelis, among other things:

reviewed certain publicly available business and financial information relating to the Company;

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company furnished to Moelis by the Company, including financial forecasts provided to or discussed with Moelis by the management of the Company;

reviewed information regarding the capitalization of the Company furnished to Moelis by the Company;

conducted discussions with members of the senior management and representatives of the Company concerning the information described in the foregoing, as well as the business and prospects of the Company generally;

reviewed the reported prices and trading activity for the Company Common Stock;

reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;

reviewed the financial terms of certain other transactions that Moelis deemed relevant;

reviewed (i) a draft, dated April 14, 2024, of the Merger Agreement and (ii) a draft of a certain related transaction document (collectively, the “Agreements”);

participated in certain discussions and negotiations among representatives of the Company and Resideo and their advisors; and

conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.
In connection with its analysis and opinion, Moelis, at the direction of the Board, relied on the information supplied to, discussed with or reviewed by Moelis for purposes of its opinion being complete and accurate in all material respects. Moelis did not independently verify any such information (or assume any responsibility for the independent verification of any of such information). With the consent of the Board, Moelis also relied on the representation of the Company’s management that they were not aware of any facts or circumstances that would make any such information inaccurate or misleading. With the consent of the Board, Moelis relied upon, without independent verification, the assessment of the Company and its legal, tax, regulatory and accounting advisors with respect to legal, tax, regulatory and accounting matters. With respect to the financial forecasts referred to above, Moelis assumed, at the direction of the Board, that they were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future performance of the Company. Moelis expressed no views as to the reasonableness of any financial forecasts or the assumptions on which they were based. In addition, Moelis 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 Moelis furnished with any such evaluation or appraisal.
Moelis’ opinion did not address the Company’s underlying business decision to effect the Merger or the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available to the Company and did not address any legal, regulatory, tax or accounting matters. Moelis was not asked to, nor did it, offer any opinion as to any terms of the Merger Agreement or any aspect or implication of the Merger, except for the fairness of the Merger Consideration of $10.75 in cash from a financial point of view to the holders of Company Common Stock. Moelis expressed no opinion as to as to fair value, viability or the solvency of the Company following the closing of the Merger. In rendering its opinion, Moelis assumed, with the consent of the Board, that the final executed form of the Agreements would not differ in any material respect from the drafts that Moelis reviewed, that the Merger would be consummated in accordance with their terms without any waiver or modification that could be material to Moelis’ analysis, that the representations and warranties of each party set forth in the Agreements were
 
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accurate and correct in all respects that could be material to Moelis’ analysis, and that the parties to the Agreements would comply with all terms of the Agreements that could be material to Moelis’ analysis. Moelis assumed that all governmental, regulatory or other consents or approvals necessary for the completion of the Merger would be obtained, except to the extent that could not be material to Moelis’ analysis.
Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of its opinion, and Moelis assumed no responsibility to update its opinion for developments after the date of its opinion.
Moelis’ opinion did not address the fairness of the Merger or any aspect or implication thereof to, or any other consideration of or relating to, the holders of any class of securities, creditors or other constituencies of the Company, other than the fairness of the Merger Consideration of $10.75 in cash from a financial point of view to the holders of Company Common Stock. In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the Merger, or any class of such persons, relative to the Merger Consideration or otherwise.
Financial Analyses
The following is a summary of the material financial analyses presented by Moelis to the Board at a meeting held on April 12, 2024, in connection with its opinion.
Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.
For purposes of its analyses, Moelis reviewed a number of financial and operating metrics, including the following:

“Total Enterprise Value”, which is referred to as “TEV”, was calculated as (a) equity value (calculated (unless the context indicates otherwise) as market value of the relevant company’s diluted common equity (using the treasury stock method) based on its closing stock price on a specified date), plus (b) (i) net debt (calculated as debt, including finance leases, where applicable, less cash and cash equivalents, adjusted for restricted cash, where applicable) and (ii) book value of preferred stock and non-controlling interests, where applicable (in each of the foregoing cases as of the relevant company’s most recently reported quarter end or semi-annual report, where applicable).

“EBITDA” was generally calculated as the relevant company’s earnings before interest, taxes, depreciation and amortization.

“Adjusted EBITDA”, which is referred to as “Adj. EBITDA”, unless the context indicates otherwise, was calculated as EBITDA, adjusted for (x) company-defined non-recurring and non-cash items and (y) stock-based compensation.

“LTM”, which refers to the latest twelve (12) month period for which historical financial information was publicly available as of the relevant date.
Unless the context indicates otherwise, Moelis calculated (a) each TEV for the Company based on estimated net debt as of March 31, 2024, and (b) per share amounts for Company Common Stock (i) based on diluted shares outstanding as of March 31, 2024, using the treasury stock method, and (ii) excluding the estimated change of control payment under the Company’s Tax Receivable Agreement. All such information for the Company was provided by management of the Company. Unless the context indicates otherwise, Moelis performed the analyses below using the closing prices and historical, financial and operating data for the selected public companies (and the Company in the case of Wall Street research (as defined below)) based on publicly available information for each company as of April 10, 2024.
Set forth below is a summary of the material financial analyses performed by Moelis in connection with its opinion.
 
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Selected Publicly Traded Companies Analysis
Moelis reviewed financial and stock market information of 15 publicly traded companies engaged in one or more of (i) the connected home sector (“Connected Home”), (ii) the residential/commercial product distribution sector (“Residential/Commercial Product Distribution”), or (iii) the technology/ electronics distribution sector (“Technology/Electronics Distribution”, and, collectively, the “Selected Public Companies”), in each case, whose operations Moelis believed, based on its experience and professional judgment, to be generally relevant in certain respects to the Company for purposes of Moelis’ analysis, and for which consensus Wall Street analyst estimates (such consensus estimates, the “Wall Street research”) were available. Moelis reviewed the TEV of each of the Selected Public Companies, as well as the Company, as a multiple of estimated Adj. EBITDA for each of calendar years 2024 and 2025 (“CY2024E” and “CY2025E”, respectively), based on Wall Street research available as of April 10, 2024. Moelis also reviewed corresponding information and corresponding multiples for the Company based on projections provided by Company management. Financial data for the Selected Public Companies was based on public filings as of the relevant company’s most recently reported quarter end or semi-annual report, where applicable.
This data is summarized in the following table:
TEV/ Adj. EBITDA
2024E
2025E
Selected Connected Home Companies
Legrand S.A. (“Legrand”)
14.7x 13.9x
Logitech International S.A.
17.5x 15.6x
Ubiquiti Inc.
13.6x 12.1x
Alarm.com Holdings, Inc.
21.3x 19.8x
Sonos, Inc. (“Sonos”)
12.4x 9.4x
Selected Residential / Commercial Product Distribution Companies
Watsco, Inc.
20.4x 18.3x
Pool Corporation
20.0x 18.3x
SiteOne Landscape Supply, Inc.
18.9x 17.2x
Beacon Roofing Supply, Inc.
9.6x 9.1x
Selected Technology / Electronics Distribution Companies
CDW Corporation
17.4x 16.2x
WESCO International, Inc.
7.9x 7.4x
Arrow Electronics, Inc.
7.9x 6.5x
Rexel S.A.
7.1x 6.8x
Avnet, Inc.
7.9x 7.0x
Resideo
7.0x 6.3x
The Company (Wall Street Research)
9.7x 8.9x
The Company (Management)
9.3x 7.8x
In reviewing the Selected Public Companies data for purposes of determining EBITDA multiple ranges for the Company, Moelis believes that although there were no directly comparable publicly traded companies in light of the Company’s hybrid distribution and product business model, Sonos, Resideo and Legrand were the most relevant publicly traded companies. Moelis concluded that the other Selected Public Companies were less relevant because of: (i) different end markets and recurring/maintenance driven business models for the Residential / Commercial Product Distribution companies, as well as longer track records as public companies, (ii) high volume, low margin, and more commodity technology product distribution models for the Technology/Electronics Distribution companies, and (iii) largely software business, less relevant products/end markets and minimal Wall Street research coverage/unique ownership for the other Connected Home businesses. With respect to the EBITDA multiples for Sonos, Resideo and
 
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Legrand, Moelis (i) did not rely on Sonos’ CY2024E EBITDA multiple because of an anticipated 2024 significant product launch by Sonos which is expected to drive a meaningful increase in subsequent years’ EBITDA (Sonos has historically traded roughly in-line with the Company on an EBITDA multiple basis), (ii) selected a low end of EBITDA multiple ranges which were below the Company’s current EBITDA multiples and higher than Resideo’s corresponding multiples, in light of the continued adverse impact of Resideo’s varying financial performance and the cash flow impact of its ongoing Honeywell liability, and (iii) selected a high end of EBITDA multiple ranges above the Company’s current EBITDA multiples, but below Legrand’s corresponding multiples in light of Legrand’s significant scale, strong profitability and large exposure to the commercial end market.
Based on the foregoing and using its professional judgment, Moelis selected multiples ranges of 9.0x to 12.0x TEV/Adj. EBITDA for CY2024E and 8.0x to 11.0x TEV/Adj. EBITDA for CY2025E. Moelis then applied such multiples ranges to the corresponding financial data for the Company to derive ranges of implied TEVs for the Company. Moelis then derived implied per share reference ranges from the resulting implied TEV reference ranges, using the net debt and other obligations and diluted share information described above. This analysis indicated the following implied per share reference ranges for Company Common Stock, as compared to the Merger Consideration of $10.75 in cash:
Implied Per Share Reference Ranges Based On:
Merger Consideration
CY2024E Adj. EBITDA
CY2025E Adj. EBITDA
$8.47 – $13.25
$ 9.37 – $15.08 $ 10.75
Selected Precedent Transactions Analysis
Moelis reviewed financial information of certain selected transactions announced since 2014 involving target businesses engaged in selling connected home/business products and software, as well as businesses with distribution models focused on the residential/commercial and technology end markets (the “Selected Precedent Transactions”) whose operations Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to the Company for purposes of Moelis’ analysis and for which TEV/LTM EBITDA multiples were publicly available. Moelis reviewed implied TEV of each target business as a multiple of LTM Adj. EBITDA immediately preceding announcement of the relevant transaction. Implied TEVs were based on the announced purchase prices paid for the target businesses, as well as publicly available LTM Adj. EBITDAs for such target businesses. This data is summarized in the following table:
Announcement Date
Target
Acquirer
Group
TEV/ LTM
EBITDA
May 2023
Wasco Holding B.V.
Rexel S.A.
Distribution
9.2x
December 2022
Vivint Smart Home, Inc.
NRG Energy, Inc.
Product
7.2x
November 2022
Somfy SA
Despature Family
Product
13.1x
February 2022
Sound United, LLC
Masimo Corporation
Product
8.2x
February 2022
First Alert, Inc.
Resideo Technologies, Inc.
Product
9.9x
December 2021
Hunter Douglas N.V.
3G Capital Partners LP
Product
8.1x
March 2021
Tech Data Corporation
SYNNEX Corporation
Distribution
8.4x
December 2019
Anixter International Inc.
WESCO International, Inc.
Distribution
9.6x
November 2019
Tech Data Corporation
Apollo Global Management, Inc.
Distribution
6.9x
May 2019
Control4 Corporation
Snap One Holdings Corp. (f/k/a Wirepath Home Systems, LLC) / Hellman & Friedman
Product
13.0x
 
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Announcement Date
Target
Acquirer
Group
TEV/ LTM
EBITDA
LLC
June 2019
PCM, Inc.
Insight Enterprises, Inc.
Distribution
9.0x
November 2018
ARRIS International plc
CommScope Holding Company, Inc.
Product
8.7x
February 2018
Avigilon Corporation
Motorola Solutions, Inc.
Product
16.5x
November 2016
Harman International Industries, Incorporated
Samsung Electronics Co., Ltd.
Product
9.8x
April 2016
Rovi Corporation
TiVo Inc.
Product
11.1x
August 2014
Tri-Northern Acquisition Holdings, Inc.
Anixter International Inc.
Distribution
11.7x
All Selected Precedent Product Transactions
Median (Product)
9.9x
Mean (Product)
10.6x
All Selected Precedent Distribution Transactions
Median (Distribution)
9.4x
Mean (Distribution)
9.4x
All Selected Precedent Transactions
Overall Median
9.6x
Overall Mean
10.1x
In reviewing the Selected Precedent Transactions for purposes of determining EBITDA multiple ranges for the Company, Moelis noted that the comparability of the Selected Precedent Transactions to the Merger were limited due to several factors, including (i) the historical nature of the data and the possible transaction execution under different macroeconomic conditions, (ii) different business model, end market focus and competitive positioning by the target business, (iii) different potential transaction structure and tax implications, (iv) different competitive dynamics of the transaction sale process, and (v) different synergy potential.
Based on the foregoing and using its professional judgment, Moelis selected a multiples range of 9.0x – 12.0x Adj. EBITDA, which selected range generally reflected the mean and median of the Selected Precedent Transactions multiples. Moelis then applied such multiples range to the Adj. EBITDA for the Company for the LTM period ended December 31, 2023, to derive TEV ranges. Moelis then derived an implied per share reference range from the resulting implied TEV reference range, using the net debt and other obligations and diluted share information described above. This analysis indicated the following implied per share reference range for Company Common Stock, as compared to the Merger Consideration of $10.75 in cash:
Implied Per Share Reference Range Based On:
Merger Consideration
LTM Adj. EBITDA
$7.06 – $11.36
$ 10.75
Discounted Cash Flow Analysis
Moelis performed a discounted cash flow analysis of the Company using the Base Case Projections to calculate the present value of the estimated future Unlevered Free Cash Flow projected to be generated by the Company, adjusted to reflect the impact of the Company’s tax attributes, including its R&D tax credits
 
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and the Company’s portion of savings from the utilization of pre-IPO tax attributes, and an estimate of the present value of the terminal value of the Company at the end of such projection period. In performing its discounted cash flow analysis, Moelis used a range of discount rates of 11.5% to 14.0% based on an estimate of the Company’s weighted average cost of capital. The estimated weighted average cost of capital range was derived using the Capital Asset Pricing Model, as well as a size premium.
Moelis applied this range of discount rates to (i) the estimated after-tax Unlevered Free Cash Flow from April 1, 2024 through the end of the calendar year ending December 31, 2028 (discounted to March 31, 2024, using the mid-year discounting convention), treating stock-based compensation as a cash expense, and (ii) a range of estimated terminal values derived by applying a range of multiples of 8.0x to 11.5x to the Company’s Adj. EBITDA for CY2028E, as provided by Company management.   Moelis noted that the selected terminal multiple range was informed by the current trading multiple for the Company, as well as such trading multiples for each of Resideo, Legrand and Sonos. In particular, (i) the low end of the range was below the Company’s current Wall Street research CY2024E EBITDA multiple, but above both Resideo’s current CY2024E multiple and its longer term average, and (ii) the high end of the range was above the Company’s current CY2024E Wall Street research EBITDA multiple, but below Legrand’s current CY2024E multiple (the high end of the range was above Sonos’ CY2025E EBITDA multiple as well as its longer term average; Moelis did not rely on Sonos’ CY2024E multiple because of an anticipated 2024 significant product launch by Sonos which is expected to drive a meaningful increase in subsequent years’ EBITDA).
Moelis then derived an implied per share reference range from the resulting implied TEV reference range, using the net debt and other obligations and diluted share information described above. This analysis indicated the following implied per share reference range for Company Common Stock, as compared to the Merger Consideration of $10.75 in cash:
Implied Per Share Reference Range
Merger Consideration
$9.12 – $15.68
$ 10.75
Other Information
Moelis also noted for the Board the following information that was not considered part of Moelis’ financial analyses with respect to its opinion but was provided for reference purposes:
Analyst Price Targets
Moelis reviewed forward stock price targets for Company Common Stock in eight recently published, publicly available Wall Street research analysts’ reports as of April 10, 2024, which indicated low and high stock price targets ranging from $10.00 to $12.00 per share, with a median of $11.00 per share.
LBO Analysis
Moelis also reviewed theoretical purchase prices that could be paid by a hypothetical financial buyer in a leveraged buyout of the Company based on (i) the Company’s estimated after-tax levered free cash flow from April 1, 2024 through the end of the calendar year ending December 31, 2028 and (ii) estimated exit values for the Company derived by applying a range of multiples of 8.0x to 11.5x to the Company’s estimated Adj. EBITDA CY2028E, which analysis, assumed net debt/CY2023 Adj. EBITDA for the Company of 5.0x, and required internal rates of return for the financial buyer ranging from 17.5% to 22.5%. Levered free cash flow was based on Unlevered Free Cash Flow adjusted for interest expense related to the net debt referred to above and the impact of 100% of the Company’s tax attributes, in each case, on a tax effected basis. This analysis indicated an implied range of purchase prices of Company Common Stock of $5.90 to $11.03 per share, as compared to the Merger Consideration of $10.75 per share in cash.
Historical Stock Price Performance
Moelis reviewed, among other things, the historical closing prices for Company Common Stock during the 52-week period ended April 10, 2024, which reflected a high closing price of $11.65 per share and a low closing price of $7.08 per share, as compared to the closing stock price of Company Common Stock on April 10, 2024 of $8.98 and the Merger Consideration of $10.75 per share in cash. Moelis also reviewed the
 
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volume weighted average price (“VWAP”) per share of Company Common Stock for certain historical periods, including the 30-day period, 60-day period and 90-day period each ending April 10, 2024, which were $8.45, $8.41 and $8.45, respectively.
Review of Solicitation Process
Moelis reviewed the scope and results of the solicitation of interest from other parties with respect to the sale of the Company, as discussed more fully in the section entitled “The Merger — Background of the Merger” beginning on page 18.
Miscellaneous
This summary of the analyses is not a complete description of the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.
No company or transaction used in the analyses described above is identical to the Company or the Merger. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither the Company nor Moelis or any other person assumes responsibility if future results are materially different from those forecasts.
The Merger Consideration of $10.75 in cash was determined through arm’s length negotiations between the parties to the Merger Agreement and was approved by the Board. Moelis did not recommend any specific consideration to the Company or the Board, or that any specific amount or type of consideration constituted the only appropriate consideration in connection with the Merger.
Moelis acted as financial advisor to the Company in connection with the Merger and will receive a fee currently estimated to be approximately $13.5 million, in the aggregate, $2.5 million of which became payable in connection with the delivery of its opinion, regardless of the conclusion reached therein, and the remainder of which is contingent upon the completion of the Merger. Furthermore, the Company has agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement. The Company selected Moelis as a financial advisor in connection with the Merger because Moelis has substantial experience in similar transactions and familiarity with the Company. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings and valuations for corporate and other purposes.
Moelis’ affiliates, employees, officers and partners may, at any time, own securities (long or short) of the Company and Resideo. In the three years prior to the date of its opinion, Moelis did not provide investment banking and other services to the Company or Resideo unrelated to the Merger. In the future, Moelis may provide such services to Resideo and would expect to receive compensation for such services. In the three years prior to the date of its opinion, Moelis acted as financial advisor to (i) an affiliate of H&F in a sellside transaction which was consummated in 2021, for which Moelis received a fee of approximately $10 million and reimbursement for certain expenses arising out of its engagement and (ii) an affiliate of CD&R in a buyside transaction which was consummated in 2023. Moelis is currently acting for an affiliate of CD&R in a pending buyside transaction unrelated to the Merger. In the event such pending buyside transaction is completed, Moelis will have received aggregate fees from CD&R affiliates in such three year period of $7 million, as well as reimbursement for certain expenses arising out of such engagements.
 
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Opinion of J.P. Morgan Securities LLC
Pursuant to an engagement letter dated January 21, 2024, the Company retained J.P. Morgan as its financial advisor in connection with the proposed Merger.
At the meeting of the Board held on April 14, 2024, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its written opinion, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders. J.P. Morgan has confirmed its April 14, 2024 oral opinion by delivering its written opinion to the Board, dated April 14, 2024, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger was fair, from a financial point of view, to such holders.
The full text of the written opinion of J.P. Morgan dated April 14, 2024, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B-2 to this information statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board (in its capacity as such) in connection with and for the purposes of its evaluation of the Merger, was directed only to the Merger Consideration to be paid in the Merger to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of any consideration to be paid in connection with the Merger to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness opinion committee of J.P. Morgan. The opinion does not constitute a recommendation to any Company stockholder as to how such stockholder should vote with respect to the Merger or any other matter.
In connection with preparing its opinion, J.P. Morgan, among other things:

reviewed a draft, dated April 14, 2024, of the Merger Agreement;

reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates;

compared the proposed financial terms of the Merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

compared the financial and operating performance of the Company with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of Company Common Stock and certain publicly traded securities of such other companies;

reviewed certain internal financial analyses and forecasts prepared by the management of the Company relating to its business; and

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
In addition, J.P. Morgan held discussions with certain members of the management of the Company with respect to certain aspects of the Merger, and the past and current business operations of the Company, the financial condition and future prospects and operations of the Company, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Company
 
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or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with the Company, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of the Company or Resideo under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they had been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the Merger and the other transactions contemplated by the Merger Agreement will be consummated as described in the Merger Agreement, and that the definitive Merger Agreement would not differ in any material respects from the draft thereof furnished to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by the Company and Resideo in the Merger Agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or on the contemplated benefits of the Merger.
The financial forecasts furnished to J.P. Morgan were prepared by the management of the Company. The Company does not publicly disclose internal management forecasts of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the proposed Merger, and such financial forecasts were not prepared with a view toward public disclosure. These financial forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of the management of the Company, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such financial forecasts. For more information regarding the use of the financial forecasts and other forward-looking statements, please see the section entitled “The Merger — Certain Company Financial Forecasts”.
J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger, and J.P. Morgan also expressed no opinion as to the fairness of any consideration paid in connection with the Merger to the holders of any other class of securities, creditors or other constituencies of the Company or the underlying decision by the Company to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors or employees of any party to the proposed Merger, or any class of such persons relative to the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger or with respect to the fairness of any such compensation.
The terms of the Merger Agreement, including the Merger Consideration, were determined through arm’s length negotiations between the Company and Resideo, and the decision to enter into the Merger Agreement was solely that of the Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Board in its evaluation of the proposed Merger and should not be viewed as determinative of the views of the Board or the management of the Company with respect to the proposed Merger or the Merger Consideration.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its opinion to the Board on April 14, 2024 and contained in the presentation delivered to the Board in connection with the rendering of such opinion and this summary does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not
 
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intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion.
Public Trading Multiples Analysis
Using publicly available information, J.P. Morgan compared selected financial data of the Company with similar data for certain selected publicly traded companies engaged in businesses that, for purposes of J.P. Morgan’s analysis, J.P. Morgan judged to be sufficiently similar to the Company’s operations and businesses or aspects thereof. The companies selected by J.P. Morgan were:

Legrand S.A.

Resideo

Sonos, Inc.
The selected companies were chosen, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analyses, may be considered sufficiently similar to those of the Company or aspects thereof based on business sector participation, operational characteristics and financial metrics. However, none of the selected companies reviewed are identical to the Company, and certain of these companies have financial and operating characteristics that are materially different from those of the Company. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the selected companies differently than they would affect the Company.
Using information obtained from the selected companies’ public filings, certain public equity research analysts’ estimates available as of April 10, 2024 and FactSet Research Systems as of April 10, 2024, J.P. Morgan calculated for each selected company the ratio of such company’s firm value (“FV”) to the consensus equity research analyst estimates for such company’s adjusted earnings before interest, taxes, depreciation and amortization, unburdened by stock-based compensation (“Adjusted EBITDA”), for the calendar year 2024 (the “FV/24E Adjusted EBITDA”).
Based on the results of the above analysis and other factors J.P. Morgan considered appropriate, J.P. Morgan selected a FV/2024E Adjusted EBITDA multiple reference range for the Company of 9.0x to 12.0x. J.P. Morgan then applied that multiple reference range to the Company’s projected Adjusted EBITDA for the year ending December 31, 2024, as reflected in the Base Case Projections (as defined and summarized in the section entitled “The Merger — Certain Company Financial Forecasts” beginning on page 46). The analysis indicated a range of implied equity values per share of Company Common Stock (rounded to the nearest $0.05) of approximately $8.45 to $13.25. The range of implied per share equity values for Company Common Stock was compared to the amount of the Merger Consideration of $10.75 per share of Company Common Stock.
Selected Transaction Analysis
Using publicly available information, J.P. Morgan examined selected transactions involving businesses which J.P. Morgan judged to be similar to the Company’s business (or aspects thereof) based on J.P. Morgan’s experience and familiarity with the industries in which the Company operates. Specifically, J.P. Morgan reviewed the transactions below, and calculated the ratio of each target company’s firm value implied in the relevant transaction to the target company’s adjusted earnings before interest, taxes, depreciation and amortization for the twelve calendar-month period (“LTM”) prior to announcement of the applicable transaction (“FV/LTM Adjusted EBITDA”), based on publicly available information.
 
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Announcement
Month and Year
Acquiror
Target
Smart Living
May 2019 Wirepath Home Systems, LLC
d/b/a SnapAV
Control4 Corporation
February 2022 Resideo Technologies, Inc. First Alert, Inc.
February 2022 Masimo Corporation Viper Holdings Corporation d/b/a Sound United, LLC
Distribution
August 2014 Anixter Inc. Tri-Northern Acquisition Holdings, Inc.
June 2019 Insight Enterprises, Inc. PCM, Inc.
January 2020 WESCO International, Inc. Anixter International Inc.
November 2020 American Securities LLC Foundation Building Materials, Inc.
December 2020 American Securities LLC Beacon Roofing Supply, Inc.
January 2021 Clayton, Dubilier & Rise, LLC Wolseley UK Limited
September 2021 TopBuild Corp. DI Super Holdings, Inc.
September 2021 Specialty Building Products, LLC Reeb Millwork Corporation
May 2022 Beijer Ref AB (publ) Heritage Distribution Holdings
March 2023 Distribution Solutions Group, Inc. HIS Company, Inc.
May 2023 Rexel S.A. Wasco Holding B.V.
July 2023 TopBuild Corp. SPI LLC d/b/a Specialty Products & Insulation
None of the selected transactions reviewed were identical to the Merger. However, the selected transactions were chosen because certain aspects of the transactions, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar to the Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the transaction differently than they would affect the Merger.
Based on the results of the above analysis and other factors J.P. Morgan considered appropriate, J.P. Morgan selected a transaction multiple reference range for FV/LTM Adjusted EBITDA of 8.5x to 13.0x and applied it to the Company’s Adjusted EBITDA for the twelve months ended December 31, 2023 and for the twelve months ended March 31, 2024, each provided by the Company’s management, which resulted in ranges of implied equity values per share of Company Common Stock (rounded to the nearest $0.05) of $6.35 to $12.80 and $6.70 to $13.30, respectively. The ranges of implied per share equity values for Company Common Stock were compared to the amount of the Merger Consideration of $10.75 per share of Company Common Stock.
Discounted Cash Flow Analysis
J.P. Morgan conducted a discounted cash flow analysis of the Company using the unlevered free cash flows that the Company was forecasted to generate from calendar year 2024 through 2028 based on the Base Case Projections. J.P. Morgan calculated ranges of terminal values for the Company at the end of such period by applying terminal growth rates estimated by the management of the Company ranging from 2.0% to 3.0% to the total revenue of the Company during the final year of such period. The unlevered free cash flows and the range of terminal values were then discounted to present values as of March 31, 2024 using a range of discount rates from 9.5% to 10.5%, which was chosen by J.P. Morgan based on an analysis of the weighted average cost of capital of the Company. The ranges of present values were then added together to derive ranges of firm values for the Company based on the Base Case Projections, which were then adjusted by subtracting the Company’s estimated net debt as of March 31, 2024, as provided by the management of the Company, and dividing the result by the fully diluted number of shares of Company
 
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Common Stock outstanding as of March 31, 2024, as provided by and approved for J.P. Morgan’s use by the management of the Company. Based on the results of this analysis, J.P. Morgan arrived at a range of implied equity values per share of Company Common Stock, rounded to the nearest $0.05, of $9.25 to $13.35. The range of implied per share equity values for Company Common Stock was compared to the amount of the Merger Consideration of $10.75 per share of Company Common Stock.
Miscellaneous
The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or a summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of the Company. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.
Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to the Company, and none of the selected transactions reviewed was identical to the Merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of the Company. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to the Company and the transactions compared to the Merger.
As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise the Company with respect to the Merger and deliver an opinion to the Board with respect to the Merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with the Company and the industries in which it operates.
For services rendered in connection with the Merger and the delivery of its opinion, the Company has agreed to pay J.P. Morgan a fee of approximately $9.6 million, of which $2.5 million became payable upon delivery of its opinion and the remainder of which is contingent and payable upon the closing of the Merger. In addition, the Company has agreed to reimburse J.P. Morgan for reasonable expenses incurred in connection with its services, including but not limited to the fees and expenses of outside counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, neither J.P. Morgan nor its affiliates have had any other material financial advisory or other material commercial or investment banking relationships with the Company. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with the Company’s approximately 72% shareholder, affiliates of H&F, for which J.P. Morgan and such affiliates have received customary compensation. Such
 
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services during such period have included acting as financial advisor in connection with H&F’s sale of a minority stake in TeamSystem S.p.A. which closed in March 2024. In addition, during the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with H&F portfolio companies for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included providing debt syndication, debt underwriting and financial advisory services to H&F portfolio companies. During the two years preceding the date J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Resideo, for which J.P. Morgan and such affiliates have received customary compensation.   Such services during such period have included acting as joint lead arranger and joint bookrunner on a credit facility in March 2022, and as financial advisor in connection with the sale of Resideo’s Genesis Cable business to Southwire Company which closed in October 2023. During the two years preceding the date of J.P. Morgan’s opinion, the aggregate fees recognized by J.P. Morgan from the Company were approximately $125,000, from H&F were approximately $50 million, and from Resideo were approximately $5.7 million. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Resideo and H&F portfolio companies, for which it receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company and Resideo. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company or Resideo for its own account or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities or other financial instruments.
Certain Company Financial Forecasts
The Company does not generally publish its business plans and strategies or make external disclosures of 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.
The Company is especially wary of making financial forecasts or projections for extended earnings periods due to the unpredictability of the underlying assumptions and estimates and does not prepare five-year forecasts or projections in the ordinary course of business. However, in connection with its evaluation of the Merger, the Board reviewed, among other things, certain forward-looking financial cases developed by the Company’s management with respect to fiscal years 2024 through 2028.
The financial cases included in this information statement (the “Financial Forecasts”) have been prepared by the Company’s management and are subjective in many respects. The Financial Forecasts were not prepared with a view to public disclosure and are included in this information statement only because such information was made available to the Board as described above. The Financial Forecasts were not prepared with a view to compliance with generally accepted accounting principles as applied in the United States, which we refer to herein as “GAAP”, the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Furthermore, the Financial Forecasts do not take into account any circumstances or events occurring after the date they were prepared, including the Merger. The Financial Forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this information statement are cautioned not to place undue reliance on this information. Although this summary of the Financial Forecasts is presented with numerical specificity, the forecasts reflect numerous variables, assumptions and estimates as to future events made by our management that our management believed were reasonable at the time the Financial Forecasts were prepared, taking into account the relevant information available to management at the time. However, such variables, assumptions and estimates are inherently uncertain and many are beyond the control of our management. Because the Financial Forecasts cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The Financial Forecasts reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to the Company’s business, all of which are difficult to predict and many of which are beyond the Company’s control. As a result, the Financial Forecasts may not be realized and actual results may be significantly higher or lower than projected.
 
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The Financial Forecasts are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments.
Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
As such, the Financial Forecasts constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the Company’s Annual Report on Form 10-K for the year ended December 29, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2024 and the other reports filed by the Company with the SEC, as well as the section entitled “Cautionary Statement Regarding Forward-Looking Statements” elsewhere in this information statement.
The inclusion of this information should not be regarded as an indication that the Board, the Company, Moelis, J.P. Morgan, Resideo, Resideo’s representatives and affiliates or any other recipient of this information considered, or now considers, the Financial Forecasts to be predictive of actual future results.
Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the Financial Forecasts to reflect circumstances existing after the date of the Merger Agreement or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the Financial Forecasts are shown to be in error.
The following tables present a summary of the material prospective financial information of the Company contained in the Company’s financial projections for the fiscal years ending December 27, 2024 (“2024E”) (or with respect to the “Summary Unlevered Free Cash Flow” and “Tax Attribute Projections”, the period between March 30, 2024 and December 27, 2024 (“9M 2024E”)), December 26, 2025 (“2025E”), December 25, 2026 (“2026E”), December 31, 2027 (“2027E”) and December 29, 2028 (“2028E”), respectively. The Financial Forecasts described below are included herein because they were made available to Moelis and J.P. Morgan in connection with their respective financial analyses and for use in connection with their respective opinions, as described in the sections entitled “The Merger — Opinion of Financial Advisors” beginning on page 33 and “The Merger — Background of the Merger” beginning on page 18 and were made available to the Board in connection with its consideration of the Merger and other strategic alternatives available to the Company, as described in the section entitled “The Merger — Background of the Merger” beginning on page 18 and “The Merger — Recommendation of the Board; Reasons for the Merger” beginning on page 29.
Management Projections – Base Case (“Base Case Projections”)
$ in millions
2024E
2025E
2026E
2027E
2028E
Net Sales(1)
$ 1,157 $ 1,233 $ 1,327 $ 1,430 $ 1,540
Contribution Margin(2)
$ 493 $ 529 $ 571 $ 616 $ 663
Contribution Margin %
42.6% 42.9% 43.1% 43.1% 43.0%
Adjusted EBITDA(3)
$ 130 $ 155 $ 178 $ 188 $ 200
Adjusted EBITDA Margin %
11.2% 12.6% 13.4% 13.1% 13.0%
(1)
Total net sales primarily driven by the following: (i) stable market growth outlook with no additional headwinds or channel inventory impacts in 2024 and thereafter and modest pricing growth in line with inflation, (ii) growth above market driven by new partner acquisition, share of wallet gains and continued ramp of new local branch openings (approximately 2 per year) and (iii) ramp of new Control4 Connect and Assist RMR offerings with launch in first quarter of 2024.
(2)
Lower 1P margins and higher 3P mix offset by inflight cost savings initiatives and growing contribution of higher margin RMR.
 
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(3)
“Adjusted EBITDA” was calculated as earnings (excluding stock-based compensation expense) before interest, tax, depreciation and amortization, adjusted for, among other things, variable expenses and operating expenses (including bonuses).
Summary Unlevered Free Cash Flow – Base Case
$ in millions
9M 2024E
2025E
2026E
2027E
2028E
Net Sales
$ 889 $ 1,233 $ 1,327 $ 1,430 $ 1,540
Adjusted EBITDA
$ 106 $ 155 $ 178 $ 188 $ 200
Adjusted EBIT(4)
$ 75 $ 120 $ 139 $ 147 $ 148
Unlevered Free Cash Flow(5)
$ 64 $ 79 $ 96 $ 104 $ 116
(4)
“Adjusted EBIT” was calculated as Adjusted EBITDA, less stock-based compensation expense, less depreciation and amortization (excluding Tax Receivable Agreement amortization).
(5)
“Unlevered Free Cash Flow” was calculated as Adjusted EBIT, less cash taxes (assuming the Company’s forecast cash tax rate of approximately 25.0%), plus depreciation and amortization, less capital expenditures, less increases in net working capital, plus decreases in net working capital, less increases in other assets and liabilities, plus decreases in other assets and liabilities, less increases in deferred revenue and plus decreases in deferred revenue, in each case, as provided in the Company’s financial projections, and such calculation was authorized by the Board for use by Moelis and J.P. Morgan for purposes of their respective financial analyses and opinions. For purposes of J.P. Morgan’s analysis, J.P. Morgan excluded changes in non-cash assets and liabilities, resulting in unlevered free cash flow calculations of $58 million, $82 million, $98 million, $108 million and $118 million for 2024E, 2025E, 2026E, 2027E and 2028E, respectively.
Tax Attribute Utilization Projections(6)
$ in millions
9M 2024E
2025E
2026E
2027E
2028E
Realized Tax Benefit
$ 16.0 $ 15.9 $ 11.8 $ 11.8 $ 10.2
Tax Receivable Agreement Payment
$ 13.6 $ 13.6 $ 10.0 $ 10.0 $ 8.7
Tax Receivable Agreement Benefit(7)
$ 2.4 $ 2.4 $ 1.8 $ 1.8 $ 1.5
R&D Tax Credits
$ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0
Total Tax Benefits
$ 4.4 $ 4.4 $ 3.8 $ 3.8 $ 3.5
(6)
Under the Tax Receivable Agreement, the Company receives 15% of the savings from the utilization of pre-IPO tax attributes. Full schedule extends to 2036.
(7)
The Company realized approximately $2.0 million each year in tax credits from research and development costs.
The following table presents a summary of the material prospective financial information of the Company contained in the Company’s value creation plan forecast for 2024E, 2025E, 2026E, 2027E and 2028E, respectively. The Financial Forecasts described below are included herein because they were made available to Resideo in connection with its due diligence review.
Value Creation Plan Forecast Summary
$ in millions
2024E
2025E
2026E
2027E
2028E
Net Sales
$ 1,197 $ 1,342 $ 1,502 $ 1,678 $ 1,870
Contribution Margin
$ 515 $ 588 $ 666 $ 754 $ 849
Adjusted EBITDA(8)
$ 144 $ 180 $ 217 $ 262 $ 312
(8)
“Adjusted EBITDA” was calculated as earnings (less GAAP adjustments) before interest, tax, depreciation and amortization, further adjusted to exclude equity-based compensation, acquisition-related and integration-related costs and certain other non-recurring, non-core, infrequent or unusual charges.
 
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Certain of the measures included in the cases above may be considered non-GAAP financial measures, including Adjusted EBITDA and Unlevered Free Cash Flow. 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. The Company has not prepared, and the Board has not considered, a reconciliation of these non-GAAP financial measures to applicable GAAP financial measures.
Financing
The Merger is not subject to a financing condition. Resideo intends to finance the Merger with a combination of cash, preferred equity and debt financing.
In connection with entering into the Merger Agreement, Resideo entered into an investment agreement (the “Investment Agreement”) with CD&R Channel Holdings, L.P. (the “CD&R Stockholder” and, together with its affiliated funds, the “CD&R Investors”) and Clayton, Dubilier & Rice Fund XII, L.P. (“CD&R Fund”) (solely for the purpose of limited provisions therein) providing for the purchase by the CD&R Stockholder of shares of Series A Cumulative Convertible Participating Preferred Stock, par value $0.001 per share (the “Preferred Stock”) (the “Investment”). Pursuant to the Investment Agreement, subject to the terms and conditions of the Investment Agreement, the CD&R Stockholder agrees that it will purchase 500,000 shares of Preferred Stock (the “Purchased Shares”) at a purchase price of $1,000 per share for an aggregate purchase price of $500.0 million. The consummation of the transactions contemplated by the Investment Agreement is conditioned upon the substantially concurrent closing of the Merger and upon certain other conditions, including (i) the expiration or termination of all applicable waiting periods under the HSR Act, (ii) the absence of any law or governmental authority enjoining, prohibiting or otherwise making illegal the transactions contemplated by the Investment Agreement, and (iii) other customary conditions.
In connection with entering into the Merger Agreement, Resideo entered into a commitment letter (the “Commitment Letter”), dated as of April 14, 2024, with Bank of America, N.A., BofA Securities, Inc., and Morgan Stanley Senior Funding, Inc. (collectively, the “Commitment Parties”), pursuant to which, subject to the terms and conditions set forth therein, the Commitment Parties have agreed to provide Resideo with debt financing in connection with the Merger comprised of a senior secured term loan facility in an aggregate principal amount of up to $600.0 million, to be incurred as an incremental term loan under the Resideo’s existing credit agreement. The funding of the debt financing pursuant to the Commitment Letter is contingent on the satisfaction of certain conditions set forth therein, including negotiation and execution of the definitive debt financing agreements contemplated by the Commitment Letter, the Merger being consummated substantially contemporaneously with the initial funding of the debt financing and Resideo having received gross proceeds from certain equity offerings (which may include the Investment) in an amount not less than $500.0 million.
Tax Receivable Agreement Waiver
Concurrently with the execution of the Merger Agreement, the TRA Parties delivered to the Company, the TRA Waiver, pursuant to which, among other things, the TRA Parties, effective upon the Effective Time, (a) waived their rights to any and all payments by, and all obligations and liabilities of, the Company and its subsidiaries under the Tax Receivable Agreement and (b) agreed that the Tax Receivable Agreement will be terminated in its entirety and be of no further force or effect, and thereafter each TRA Party and the Company and its subsidiaries will not have any further obligations or rights under the Tax Receivable Agreement. Such obligations will terminate upon the valid termination of the Merger Agreement in accordance with the terms set forth therein.
Additionally, from and after April 14, 2024, until the Effective Time, the TRA Parties waived their rights to any and all Accrued Payments, and the Company will not pay the TRA Parties for any Accrued Payments unless the TRA Waiver is terminated in accordance with the terms set forth therein. In the event the Merger Agreement is validly terminated for any reason, the Company shall pay the Accrued Payments to the TRA Parties in cash, and the TRA Parties shall be entitled to any and all payments by the Company under the Tax Receivable Agreement from and after the date of such termination in accordance with the terms of the Tax Receivable Agreement.
 
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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 was aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests are described below. For purposes of the discussion below, the Company’s executive officers are John Heyman (Chief Executive Officer), Michael Carlet (Chief Financial Officer), G Paul Hess (Chief Product Officer) (Messrs. Heyman, Carlet and Hess, together, the “named executive officers”), Kathleen Creech (Chief People Officer), Jefferson Dungan (Chief Operations Officer), JD Ellis (Chief Legal Officer) and Ryan Marsh (Chief Revenue Officer).
Directors’ and Officers’ Indemnification and Insurance
Pursuant to the terms of the Merger Agreement, the Company’s directors and executive officers will be entitled to certain ongoing indemnification, expense advancement and insurance arrangements. For more information, please refer to the section entitled “The Merger Agreement — Indemnification and Insurance” beginning on page 72.
Treatment of Company Equity Awards
Pursuant to the terms of the Merger Agreement, all Company equity awards outstanding immediately prior to the Effective Time (including those held by our executive officers) will generally be subject to the following treatment at the Effective Time:

Each option to purchase shares of Company Common Stock (each, a “Company Stock Option”) and cash-settled stock appreciation right that relates to the value of Company Common Stock (each, a “Phantom Option”) will be cancelled without any cash payment being made in respect thereof;

Each restricted stock unit payable in shares of Company Common Stock (including deferred stock units issued under Snap One Holdings Corp. Directors Deferral Plan) other than a Company PSU (as defined below) (each, a “Company RSU”) that is outstanding and vested immediately prior to the Effective Time, after taking into account any accelerated vesting that occurs immediately prior to, or in connection with, the Effective Time, in each case, pursuant to any contract or Company benefit plan (as defined in the Merger Agreement) that provides for such acceleration (each, a “Vested Company RSU”) shall automatically be cancelled and converted into the right to receive an amount in cash, without interest, equal to (x) the total number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time multiplied by (y) the Merger Consideration;

Each Company RSU other than a Vested Company RSU that is outstanding as of immediately prior to the Effective Time (each, an “Unvested Company RSU”), shall be assumed by Resideo and automatically converted into a Resideo restricted stock unit award with respect to shares of Resideo Common Stock (each, a “Converted RSU”) under the Amended and Restated 2018 Stock Incentive Plan of Resideo Technologies, Inc. (the “Resideo Equity Plan”) and from and after the Effective Time, the aggregate number of shares of Resideo Common Stock underlying such award will be determined by multiplying (A) the number of shares of Company Common Stock subject to such Unvested Company RSU immediately prior to the Effective Time multiplied by the Exchange Ratio, with any resulting fractional share rounded down to the nearest whole share of Resideo Common Stock; provided, that, any such fractional share shall be converted into a right to receive an amount in cash at the Effective Time equal to (x) such fractional share multiplied by (y) the Parent Company Stock Value (as defined in the Merger Agreement). Each Converted RSU shall be subject to the same terms and conditions (including vesting terms) applicable to the corresponding Unvested Company RSU immediately prior to the Effective Time (which includes, for the avoidance of doubt, any acceleration benefits that applied to such Unvested Company RSU upon a qualifying termination of employment or service pursuant to the terms thereof);

Each share of Company Common Stock subject to vesting or forfeiture (each, a “Company Restricted Share”) outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Merger Consideration;
 
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Each restricted stock unit subject to performance-based vesting criteria payable in shares of Company Common Stock (each, a “Company PSU”) that is outstanding as of immediately prior to the Effective Time (each, an “Unvested Company PSU”) shall be assumed by Resideo and automatically be converted into a Resideo restricted stock unit award with respect to shares of Resideo Common Stock on the same terms and conditions as applied to the Company PSU as of immediately prior to the Effective Time, except that the aggregate number of shares of Resideo Common Stock underlying such award will be determined by multiplying (A) the number of shares of Company Common Stock subject to such Company PSU immediately prior to the Effective Time based on (i) with respect to any Company PSU for which the performance period has not been completed as of the Effective Time, target performance, or (ii) with respect to any Company PSU for which the performance period has been completed prior to the Effective Time, the actual level of performance (as determined by the Compensation Committee of the Board (the “Compensation Committee”) prior to the Effective Time in good faith consistent with past practices) through the end of such performance period (provided, that the Company will consult with Resideo in good faith on such determination of actual performance), which for the avoidance of doubt may be zero for any Company PSU that does not satisfy the applicable performance conditions, by (B) the Exchange Ratio, with any resulting fractional share rounded up to the nearest whole share of Resideo Common Stock. As a result of the conversion, each Converted PSU shall be subject to the same terms and conditions (including the remaining service-based vesting conditions that would apply with respect to any such Company PSU (or portions thereof) following the completion (or deemed completion) of any applicable performance period), and settlement terms applicable to the corresponding Company PSU immediately prior to the Effective Time (including, for the avoidance of doubt, any acceleration benefits that apply to such Company PSU upon a qualifying termination of employment or service pursuant to the terms thereof);

Each “phantom restricted stock unit” that relates to the value of Company Common Stock and is settled in cash pursuant to the terms thereof (each, a “Phantom RSU”) that is outstanding and vested immediately prior to the Effective Time, after taking into account any accelerated vesting that occurs immediately prior to, or in connection with, the Effective Time, in each case pursuant to any contract or Company benefit plan that provides for such acceleration (each, a “Vested Phantom RSU”), shall automatically be cancelled and converted into the right to receive an amount in cash, without interest, equal to (x) the total number of shares of Company Common Stock underlying such Phantom RSU immediately prior to the Effective Time multiplied by (y) the Merger Consideration; and

Each Phantom RSU other than a Vested Phantom RSU that is outstanding as of immediately prior to the Effective Time (each, an “Unvested Phantom RSU”), shall be assumed by Resideo and automatically converted into a Resideo cash-settled restricted stock unit award under the Resideo Equity Plan that will be settled in cash by reference to the value of shares of Resideo Common Stock (as of the applicable vesting date) and from and after the Effective Time, the aggregate number of shares of Resideo Common Stock underlying such award will be determined by multiplying (A) the number of shares of Company Common Stock subject to such Unvested Phantom RSU immediately prior to the Effective Time by the (B) Exchange Ratio, with any resulting fractional share rounded down to the nearest whole share of Resideo Common Stock; provided, that, any such fractional share shall be converted into a right to receive an amount in cash at the Effective Time equal to (x) such fractional share multiplied by (y) the Resideo Company Stock Value; provided, that, as a result of the conversion, each Converted Phantom RSU shall be subject to the same terms and conditions (including vesting terms) applicable to the corresponding Unvested Phantom RSU immediately prior to the Effective Time (which includes, for the avoidance of doubt, any acceleration benefits that applied to such Unvested Phantom RSU upon a qualifying termination of employment or service pursuant to the terms thereof).
In accordance with the terms of the Merger Agreement, the “double trigger” equity acceleration benefits applicable to Company equity awards held by the executive officers prior to the Merger will continue to apply to the Converted RSUs and Converted PSUs held by the executive officers following consummation of the Merger. Such “double trigger” equity acceleration benefits apply in the event an executive is terminated without “cause” or resigns for “good reason” within a certain period prior to or following a “change in control” ​(as defined in the Company’s 2021 Equity Incentive Plan, and which includes
 
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the Merger), as further described in the “Severance Benefits” section below. With respect to equity awards held by non-employee directors, outstanding Company RSUs (including deferred stock units issued under the Snap One Holdings Corp. Directors Deferral Plan) will vest in connection with the Merger pursuant to the terms of the award agreements entered into with such non-employee directors (or settle in connection with the Merger to the extent previously deferred pursuant to the Snap One Holdings Corp. Directors Deferral Plan).
Quantification of Company Equity Awards
For an estimate of the amounts that would be realized by each of our named executive officers with respect to their unvested Company equity awards that are expected to vest in connection with the Merger (assuming each executive is terminated without “cause” or resigns for “good reason” immediately following the Merger) or otherwise be cancelled for Merger Consideration in connection with the Merger, see “— Golden Parachute Compensation” below.
The estimated aggregate amount that would be realized by our executive officers (other than our named executive officers) with respect to their unvested Company equity awards held as of the May 13, 2024 in connection with the Merger (assuming each executive is terminated without “cause” or resigns for “good reason” immediately following the Effective Time) is $9,372,914.25 ($208,679.00 of which is attributable to the Company Restricted Shares which will be cancelled for Merger Consideration at the Effective Time (i.e., a “single trigger” benefit) and the remaining $9,164,235.25 of which is attributable to “double trigger” acceleration benefits applicable to the Unvested Company RSUs and Unvested Company PSUs). In addition, the estimated aggregate amount that would be realized by the Company’s non-employee directors in settlement of their Company RSUs (including deferred stock units issued pursuant to the Snap One Holdings Corp. Directors Deferral Plan) held as of May 13, 2024 in accordance with the Merger Agreement is $821,859.00.
The estimated amounts included above are calculated using a price per share of Company Common Stock of $10.75 (equal to the Merger Consideration) and, in the case of Company PSUs, assuming target performance (except for the Company PSUs issued in 2022 (“2022 PSUs”), based on actual performance (given that the performance period for such 2022 PSUs was previously completed and one-third (1/3) of such 2022 PSUs remain subject to time-based conditions only as of May 13, 2024 and are scheduled to vest in 2025)). These amounts assume that any time-vesting equity awards or other amounts that are expected to vest in accordance with their terms prior to June 14, 2024 (the assumed date of closing of the Merger) vest, but do not attempt to forecast any additional equity grants (which are generally prohibited by the Merger Agreement during the interim period without Resideo’s consent) or issuances or forfeitures that may occur prior to the closing of the Merger. As a result of the foregoing assumptions, which may or may not be accurate on the relevant date, the actual amounts, if any, to be realized by the Company’s executive officers who are not named executive officers and non-employee directors may materially differ from the amounts set forth above.
Arrangements with Resideo
As of the date of this information statement, none of our executive officers has entered into any agreement, arrangement or understanding with Resideo regarding employment with, or compensation going forward from, Resideo. Prior to the closing of the Merger, however, our executive officers may discuss or enter into agreements, arrangements or understandings with Resideo regarding employment with, or compensation going forward from, Resideo.
280G Mitigation Actions
The Company may take certain actions before the Effective Time to mitigate the amount of potential “excess parachute payments” for “disqualified individuals” ​(each as defined in Section 280G of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)). As of the date of this information statement, the Company has not yet approved any specific actions to mitigate the expected impact of Section 280G of the Code on the Company and any disqualified individuals. No executive officer is entitled to receive gross-ups or tax reimbursements from the Company with respect to any potential excise taxes.
 
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Retention Bonus Agreements
Prior to entering into the Merger Agreement, but in anticipation of consummation of the Merger, the Company entered into a cash retention bonus agreement with each of the Company’s executive officers (the “Retention Bonus Agreements”). The amount of the retention bonus (each, a “Retention Bonus”) payable to each of our named executive officers is as follows: $1,837,500 for Mr. Heyman, $1,286,250 for Mr. Carlet and $730,750 for Mr. Hess. The aggregate amount of Retention Bonuses payable to our other executive officers (other than our named executive officers) is $2,944,500.
Pursuant to the terms of the Retention Bonus Agreements, each executive officer will earn his or her respective Retention Bonus if he or she remains employed with the Company, Resideo or an affiliate thereof for six months following the closing of the Merger (the “Retention Date”), and will be paid shortly following the Retention Date. However, in each case, in the event the executive officer’s employment is terminated without “cause” ​(as defined in the Retention Bonus Agreement) or if the executive officer resigns for “good reason” ​(as defined in the Retention Bonus Agreement) prior to the Retention Date, then the Retention Bonus will instead be paid shortly following the executive officer’s employment termination date (subject to the executive’s execution and non-revocation of a general release of claims in favor of the Company and its affiliates). For Mr. Heyman, “good reason” has the same meaning as set forth in his employment agreement with the Company. For the other executive officers, “good reason” generally means (subject to certain notice and cure periods), (i) a reduction in base salary or target annual bonus opportunity or (ii) relocation by more than 25 miles.
The Retention Bonus Agreements also extends the non-competition periods set forth in each of the executive officer’s employment agreement (as described below) with the Company to 36 months following a termination of employment, in the case of Messrs. Heyman, Carlet and Hess, and 24 months following a termination of employment, in the case of Ms. Creech and Messrs. Marsh, Dungan and Ellis.
Severance Benefits
The Company entered into employment agreements with each of the Company’s executive officers. The employment agreements provide for payment of severance benefits in the event of a termination of employment by the Company without “cause” or by the executive for “good reason” ​(each as defined in employment agreements) (each a “qualifying termination”), and enhanced severance benefits in the event a qualifying termination occurs within a certain period prior to or following a “change in control” ​(as defined in the employment agreement, and which includes the merger), as further described below.
Pursuant to the terms of the employment agreements with our other executive officers, if a qualifying termination occurs within two months prior to, or two years following, a change in control, the applicable executive officer is entitled to the following severance benefits:

CEO.   Pursuant to the terms of Mr. Heyman’s employment agreement, in the event of a qualifying termination during the two month period prior to, or the two year period following, a change in control (the “CIC Protected Period”), Mr. Heyman is entitled to: (i) any unpaid prior year bonus; (ii) a pro-rated annual bonus (based on actual performance); (iii) two times the sum of his base salary and target annual bonus, payable in a lump sum; and (iv) Company payment of the employee portion of COBRA premiums during the severance period (24 months) (or until Mr. Heyman becomes eligible to receive health benefits from a subsequent employer, if earlier). Mr. Heyman’s employment agreement also provides that in the event such qualifying termination occurs within the three months prior to, or three years following, a change in control, Mr. Heyman is entitled to full acceleration of his Company equity awards (with any performance-based conditions deemed satisfied at target or based on actual performance if the qualifying termination occurs following the completion of an applicable performance period).

Other Executive Officers.   Pursuant to the terms of the employment agreements with our other executive officers, if a qualifying termination occurs within the CIC Protected Period, the applicable executive officer is entitled to the following severance benefits: (i) any unpaid prior year bonus; (ii) one and one-half (1/2) times his or her target annual bonus, payable in lump sum; (iii) 18 months of base salary, payable in a lump sum; and (iv) Company payment of the employee portion of COBRA premiums for the severance period (18 months) (or until such applicable executive officer
 
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becomes eligible to receive health benefits from a subsequent employer, if earlier). In addition, such executive officers are entitled to full acceleration of their respective Company equity awards (with any performance-based conditions deemed satisfied at target) if such qualifying termination occurs within the CIC Protected Period.
The severance benefits described above are subject to each executive officers’ execution and non-revocation of a general release of claims in favor of the Company, and continued compliance with the restrictive covenants. The employment agreements include the following restrictive covenants (as modified by the retention bonus letter agreements described above): (i) non-competition covenant that applies for 36 months (in the case of Messrs. Heyman, Carlet and Hess) or for 24 months (for the other executive officers) following a termination of employment, (ii) employee and consultant non-solicitation, employee no-hire, and non-interference covenants (with the last such covenant prohibiting interference with the relationship between the Company and its business relations, such as current or prospective clients, customers, licensees, suppliers, and vendors) that apply for 18 months following a termination of employment, and (iii) perpetual confidentiality, non-disparagement, and assignment of intellectual property covenants.
For an estimate of the amounts that would be realized by each of our named executive officers upon a qualifying termination event under their employment agreements, see “— Golden Parachute Compensation” below. The estimated aggregate value of the severance benefits described above (excluding equity acceleration benefits) that would be payable to our four executive officers who are not named executive officers, under their employment agreements if the Effective Time occurred on June 14, 2024 and each executive officer experienced a termination without “cause” or a resignation for “good reason” on that date is $4,535,649.72. The value attributable to equity awards held by the executive officers who are not named executive officers is described in the “— Quantification of Company Equity Awards” section above.
Golden Parachute Compensation
In accordance with Item 402(t) of Regulation S-K of the Securities Act, the table below sets forth the compensation that is based on, or otherwise relates to, the Merger that will or may become payable to each named executive officer of the Company in connection with the Merger. For additional details regarding the terms of the payments and benefits described below, see the discussion under the caption “— Interests of Our Directors and Executive Officers in the Merger” above.
The amounts shown in the table below are estimates based on several assumptions that may or may not actually occur or be accurate on the effective date of the Merger, including the assumptions described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur prior to completion of the Merger. The calculations in the table below do not include amounts the named executive officers were already entitled to receive or were vested in as of May 13, 2024. In addition, these amounts assume that any time-vesting equity awards or other amounts that are expected to vest in accordance with their terms prior to June 14, 2024 vest, but do not attempt to forecast any additional equity or cash award grants (which are generally prohibited by the Merger Agreement during the interim period without Resideo’s consent), issuances or forfeitures that may occur, or future dividend equivalents that may be accrued, prior to the closing of the Merger. For purposes of calculating such amounts, the value of Company Common Stock was based on the Merger Consideration ($10.75 per share) and the following assumptions were used:

the effective date of the Merger is June 14, 2024, which is the assumed date of the closing of the Merger solely for purposes of the disclosure in this section;

the employment of each named executive officer will have been terminated by Resideo or an affiliate without “cause” or due to a resignation for “good reason” ​(as such terms are defined in each named executive officer’s employment agreement, as applicable) (we refer to such a termination or resignation as a qualifying termination event), in either case immediately following the assumed date of the closing of the Merger specified above;

each named executive officer’s base salary rate and annual target bonus remains unchanged from those in place as of May 13, 2024; and

each named executive officer holds only those equity awards that were outstanding and unvested on May 13, 2024, and PSUs are converted into Converted PSU Awards based on target performance
 
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(except for the 2022 PSUs, based on actual performance (given that the performance period for such 2022 PSUs was previously completed and one-third (1/3) of such 2022 PSUs remain subject to time-based vesting conditions only as of May 13, 2024 and are scheduled to vest in 2025)).
As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.
For purposes of this discussion, “single-trigger” refers to benefits that arise solely as a result of the closing and “double-trigger” refers to benefits that arise as a result of the closing accompanied by a qualifying termination immediately following the closing.
Name
Cash(1)
($)
Equity(2)
($)
Perquisites/ Benefits(3)
($)
Other
($)(4)
Total
($)
John Heyman
4,180,312.50 8,881,983.25 44,855.04 1,837,500.00 14,944,650.79
Mike Carlet
1,179,375.00 2,685,210.25 36,399.24 1,286,250.00 5,187,234.49
GPaul Hess
1,096,125.00 2,288,277.25 33,641.28 730,750.00 4,148,793.53
(1)
Cash.   The amount set forth in this column include the value of the cash severance benefits payable to the executives under their respective employment agreements. The employment agreements provide for the following cash severance benefits: (A) 2.0x (for Mr. Heyman) and 1.5 times (for Messrs. Carlet and Hess) the sum of the executive’s annual base salary and target annual bonus (i.e. $3,675,000.00 for Heyman, $1,179,375.00 for Mr. Carlet, and $1,096,125.00 for Mr. Hess), and (B) for Mr. Heyman, a pro-rated annual bonus (assuming achievement at target performance level) (i.e. $505,312.50). The ultimate amount of Mr. Heyman’s pro-rated annual bonus payable upon a qualifying termination will be based on actual performance, which is not yet determinable. As further described in the “Severance Benefits” section above, such severance benefits are only payable upon a qualifying termination and are, accordingly, “double-trigger” benefits.
(2)
Equity.   The amounts in this table represent the value of (i) accelerated vesting of unvested Company RSUs and Company PSUs held by the named executive officers as of May 13, 2024, which is attributable to “double-trigger” equity acceleration arrangements (as further described in the Treatment of Equity Awards” and “Severance Benefits” section above that will continue apply to the corresponding Converted RSUs and Converted PSUs following the Effective Time) and (ii) Company Restricted Shares held by the named executive officers as of May 13, 2024 which is attributable to a “single-trigger” arrangement (i.e., cancellation of the Company Restricted Shares for Merger Consideration at the Effective Time pursuant to the terms of the Merger Agreement). All options held by the named executive officers will be cancelled for no consideration upon the Closing, and, accordingly, no value is attributable to such options for purposes of this table.
RSUs
PSUs
Restricted Shares
Name
Number (#)
Value ($)
Number (#)
Value ($)
Number (#)
Value ($)
John Heyman
357,295 3,840,921.25 466,190.00 $ 5,011,542.50 2,746 29,519.50
Michael Carlet
128,927 1,385,965.25 119,770.00 $ 1,287,527.50 1,090 11,717.50
GPaul Hess
112,446 1,208,794.50 99,148.00 $ 1,065,841.00 1,269 13,641.75
(3)
Benefits.   Amounts in this column represent 24 months (for Mr. Heyman) and 18 months (for Messrs. Carlet and Hess) of continued coverage under the Company’s group health plan, as provided under each named executive officer’s employment in the event of a qualifying termination. Such benefit is a “double-trigger” benefit.
(4)
Other.   Amounts in the column represent the retention bonuses payable pursuant to each named executive officer’s retention bonus agreement. As further described in the “Retention Bonus Agreements” section above, the retention bonuses are payable if the executives remain employed for 6 months following the Closing or if they incur a qualifying termination prior to such date (i.e. the retention bonuses are a “double-trigger” benefit for purposes of this “Golden Parachute Compensation” section).
 
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Delisting and Deregistration of Company Common Stock
If the Merger is completed, the Company Common Stock will be delisted from the NASDAQ and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of the Company Common Stock.
Transaction Litigation
As of the filing of this information statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.
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 Company Common Stock who exchange their shares of Company Common Stock for cash pursuant to the Merger. The summary is based on 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 Company 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 Company Common Stock that are subject to special tax rules, such as insurance companies, United States expatriates, controlled foreign corporations, passive foreign investment companies, holders subject to the alternative minimum tax, tax-exempt organizations, broker-dealers, financial institutions, cooperatives, traders in securities that elect to mark to market, United States Holders whose functional currency is not the United States dollar, holders who hold Company Common Stock through pass-through entities for United States federal income tax purposes or as part of a hedge, straddle or conversion transaction, holders deemed to sell Company Common Stock under the constructive sale provisions of the Code, holders who exercise appraisal rights, or holders who acquired Company Common Stock pursuant to the exercise of employee stock options or otherwise as compensation. This summary does not address any aspect of state, local or foreign 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 Company 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 or any state thereof (including 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 Company Common Stock, other than a partnership or other entity or arrangement treated as a partnership for United States federal income tax purposes, that is not a United States Holder.
If a partnership or other any entity or arrangement treated as a partnership for United States federal income tax purposes is a holder of Company 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. Partners should consult their own tax advisors as to the particular United States federal income tax consequences of the Merger to them.
 
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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 Company 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 United States federal, state, local and foreign tax laws.
United States Holders.   The receipt of the Merger Consideration by a United States Holder in exchange for shares of Company 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 Company Common Stock. A United States Holder’s adjusted tax basis generally will equal the price the United States Holder paid for such shares, and if applicable, will have been reduced by return of capital distributions. Gain or loss will be calculated separately for each block of Company Common Stock converted in the Merger (generally shares acquired at the same cost in a single transaction). Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the Company Common Stock has 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 shares of Company 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 Company Common Stock at any time during the five-year period preceding the Merger, 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 shares of Company 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 a 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 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.
 
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Holders of Company Common Stock 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, we and the other parties to the Merger Agreement have agreed to use our respective reasonable best efforts to complete the transactions contemplated by the Merger Agreement including to obtain all necessary governmental approvals as promptly as reasonably practicable.
Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until notifications have been given to the Antitrust Division and the FTC and all statutory waiting period requirements have been satisfied or early termination has been granted by the applicable agencies. On April 19, 2024, both the Company and Resideo filed their respective notification and report forms under the HSR Act and requested early termination of the initial 30-day waiting period under the HSR Act. The 30-day waiting period expired at 11:59 p.m. on May 20, 2024, and no comments were received with respect to the filings under the HSR Act.
At any time before or after the Effective Time of the Merger, the Antitrust Division or the FTC could take action under the antitrust laws, including seeking to prevent the Merger, to rescind the Merger or to conditionally approve the Merger upon the divestiture of assets of the Company or Resideo or subject to regulatory conditions or other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the Merger or permitting completion subject to regulatory conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the Merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.
 
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THE MERGER AGREEMENT
This section describes the material terms and conditions of the Merger Agreement. The description in this section and elsewhere in this information statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A and is incorporated by reference into this information statement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with factual information about the Company. Such information can be found elsewhere in this information statement and in the public filings the Company makes with the SEC, which may be obtained by following the instructions set forth in the section entitled “Where You Can Find More Information” beginning on page 91.
Explanatory Note Regarding the Merger Agreement
The Merger Agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about the Company, Resideo or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made by the parties thereto only for purposes of that agreement and as of specific dates; were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement (such disclosures include information that has been included in the Company’s public disclosures, as well as additional nonpublic information); 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 be subject to standards of materiality applicable to the contracting parties that differ from those applicable to you. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or Resideo or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. 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 public disclosures.
Form of Merger
Upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub will be merged with and into the Company, whereupon the separate corporate existence of Merger Sub will cease, and the Company will continue as the surviving corporation and a wholly-owned subsidiary of Resideo.
Consummation and Effectiveness of the Merger
The Merger will become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such other time as Resideo and the Company agree and specify in the certificate of merger. The closing of the Merger will take place at 10:00 a.m., New York City time, on a date to be specified and agreed by Resideo and the Company, which date will be no later than the third (3rd) business day after the satisfaction (or waiver by the party entitled thereto) of all conditions to the consummation of the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction (or waiver by the parties entitled to in accordance with the Merger Agreement) of such conditions), unless another time or date is agreed to in writing by Resideo, Merger Sub and the Company; provided that, notwithstanding the satisfaction (or waiver by the party entitled thereto) of the conditions to the consummation of the Merger set forth in the Merger Agreement, unless otherwise agreed to in writing by Resideo, the parties will not be required to effect the closing prior to June 14, 2024.
Consideration to be Received in the Merger
Upon consummation of the Merger, each issued and outstanding share of Company Common Stock, other than (i) shares of Company Common Stock owned by the Company, Resideo or Merger Sub or any
 
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other direct or indirect wholly owned subsidiary of the Company or of Resideo, (ii) Appraisal Shares (as defined below) and (iii) any shares of Company Common Stock subject to vesting or forfeiture, whether granted pursuant to the Company’s 2021 Equity Incentive Plan or otherwise, shall be converted into the Merger Consideration.
The Merger Agreement also provides that, at the Effective Time, (i) issued and outstanding options, including phantom options, to purchase Company Common Stock (all of which are “out-of-the-money”) will be cancelled for no consideration, (ii) issued and outstanding shares of restricted Company Common Stock will be cancelled and converted into the right to receive the Merger Consideration, (iii) issued and outstanding restricted stock units, including phantom restricted stock units, covering Company Common Stock that are vested immediately prior to the Effective Time (after taking into account any accelerated vesting that occurs immediately prior to, or in connection with, the Effective Time) will be cancelled and converted into the right to receive an amount in cash, without interest, equal to (a) the total number of shares of Company Common Stock subject to such restricted stock unit (or phantom restricted stock unit) immediately prior to the Effective Time multiplied by (b) the Merger Consideration, (iv) issued and outstanding performance stock units covering Company Common Stock will be assumed by Resideo and automatically converted into Converted PSUs, in each case pursuant to the Exchange Ratio and (v) issued and outstanding restricted stock units, including phantom restricted stock units, covering Company Common Stock that are not vested immediately prior to the Effective Time will be assumed by Resideo and automatically converted into Converted RSUs and Converted Phantom RSUs, as applicable, in each case pursuant to the Exchange Ratio; provided, that the Converted Phantom RSUs will be settled in cash by reference to the value of shares of Resideo Common Stock (as of the applicable vesting date). Any fractional shares resulting from the conversion of awards covering Company Common Stock into Converted RSUs and Converted Phantom RSUs, as applicable, will be converted into a right to receive an amount in cash at the Effective Time equal to (x) such fractional share multiplied by (y) the Parent Common Stock Value (as defined in the Merger Agreement). Following the Effective Time, the Converted PSUs, Converted RSUs and Converted Phantom RSUs will be subject to the terms of Resideo’s Amended and Restated 2018 Stock Incentive Plan and the other terms and conditions (other than the performance vesting conditions) that were previously applicable to the corresponding equity award of the Company, except as set forth in the Merger Agreement.
Employee Stock Purchase Plan
In accordance with the terms of the Merger Agreement, (i) no enrollment or new offering period under the Snap One Holdings Corp. 2021 Employee Stock Purchase Plan (the “Company ESPP”) will commence on or after the date of the Merger Agreement, and (ii) if the Closing occurs prior to the end of the offering period under the Company ESPP in effect as of the date of the Merger Agreement, the Company will cause a new exercise date to be set under the Company ESPP (to be no later than one (1) Business Day prior to the Effective Time). The Merger Agreement also provides that the Company ESPP will be terminated effective as of no later than the Effective Time, and the amount of any accumulated, unused contributions under the Company ESPP will be refunded to participants no later than ten (10) Business Days following the Effective Time.
Appraisal Shares
Shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“Section 262”) (such shares, “Appraisal Shares”) will not be converted into the right to receive the Merger Consideration, but instead, at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, will be canceled and retired and will cease to exist and will represent the right to receive only those rights provided under Section 262. However, if any such holder fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 or a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Section 262, then the right of such holder to receive those rights under and to be paid such consideration as is determined pursuant to Section 262, will cease and such Appraisal Shares will be deemed to have been converted as of the Effective Time into, and will represent only the right to receive, the Merger Consideration. If the surviving corporation makes any payment after the Effective
 
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Time with respect to Appraisal Shares to the holders thereof pursuant to such holders’ appraisal rights under Section 262, then any portion of the Merger Consideration relating to such Appraisal Shares held in the Exchange Fund (as defined below) will be delivered by the paying agent to the surviving corporation upon demand. The Company will provide prompt notice to Resideo of any demands received by the Company for appraisal of any shares of Company Common Stock, any withdrawals of any such demands or any other instruments served pursuant to the DGCL or otherwise and received by the Company relating to the rights of appraisal of the holders of shares of Company Common Stock, and Resideo will have the right to participate in all negotiations and proceedings with respect to such demands. Except with the prior written consent of Resideo, the Company will not (i) make any payment with respect to any such demand, (ii) offer to settle or settle any such demand, (iii) waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with the DGCL.
Procedures for Receiving Merger Consideration
Prior to the Effective Time, Resideo will select a bank or trust company reasonably acceptable to the Company to act as paying agent for the payment of the Merger Consideration and at or prior to the Effective Time, Resideo will deposit or cause to be deposited with the paying agent an amount in cash necessary to pay for the shares of Company Common Stock converted into the right to receive the Merger Consideration (such cash being hereinafter referred to as the “Exchange Fund”).
Promptly (and in any event no later than two (2) business days) after the Effective Time, Resideo will direct the paying agent to mail to each holder of record of a certificate or certificates (if any), or a non-certificated share or non-certificated shares, that immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates” or “Book-Entry Shares”, respectively) which were converted into the right to receive the Merger Consideration (i) a letter of transmittal (with will specify that delivery will be effected, and risk of loss and title to the Certificates will pass, only upon delivery of the Certificates to the paying agent and will be in customary form and have such other provisions as Resideo and the Company may reasonably agree prior to the Effective Time) and (ii) instructions for use in effecting the surrender of the Certificates or Book-Entry Shares, as applicable, in exchange for the Merger Consideration.
Upon (A) in the case of a Certificate, surrender of such Certificate to the paying agent for cancellation, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the paying agent or (B) in the case of Book-Entry Shares, receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of the transfer as the paying agent may reasonably request), the holder of such Certificate or Book-Entry Share, as applicable, will be entitled to receive the Merger Consideration in exchange for each share of Company Common Stock represented by such Certificate or Book-Entry Share, as applicable, and such surrendered Certificate or Book-Entry Share will be canceled. In the event of a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, payment may be made to a person other than the person in whose name the Certificate so surrendered is registered if such Certificate will be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment will pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the reasonable satisfaction of Resideo that such tax has been paid or is not applicable.
Until surrendered, each Certificate or Book-Entry Share will be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration. No interest will be paid or accrue on the cash payable to any holder of a Certificate or Book-Entry Share.
The Merger Consideration paid in accordance with the terms of the Merger Agreement upon the surrender of any Certificate or Book-Entry Share will be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock that such Certificate or Book-Entry Share represented immediately prior to the Effective Time. After the Effective Time, there will be no further registration of transfers on the stock transfer books of the surviving corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates or Book-Entry Shares are presented to the surviving corporation or the paying agent for any reason, they will be canceled and exchanged as provided in the Merger Agreement. No cash payment with
 
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respect to the Merger Consideration will be paid to the holder of any unsurrendered Certificate or Book-Entry Share until the surrender of such Certificate or Book-Entry Share in accordance with the Merger Agreement.
Any portion of the Exchange Fund that remains undistributed to the holders of Certificates or Book-Entry Shares for nine (9) months after the Effective Time will be delivered to Resideo (or the surviving corporation, as directed by Resideo), upon demand, and any former holder of Company Common Stock entitled to payment of Merger Consideration who has not complied with procedures for receiving Merger Consideration will thereafter look only to Resideo for payment of its claim for Merger Consideration, without any interest thereon. If any Certificate or Book-Entry Share has not been surrendered for Merger Consideration prior to the five (5) year anniversary of the Effective Time (or, if earlier, immediately prior to the date on which the Merger Consideration in respect of such Certificate or Book-Entry Share would otherwise escheat to or become the property of any governmental entity), any such Merger Consideration in respect of such Certificate or Book-Entry Share will, to the extent permitted by applicable law, become the property of the surviving corporation, free and clear of all claims or interest of any person previously entitled thereto. None of Resideo, Merger Sub, the surviving corporation or the paying agent will be liable to any person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
The paying agent will invest any cash included in the Exchange Fund, as directed by Resideo, on a daily basis. Any interest and other income resulting from such investments will be paid to Resideo (net of any applicable withholding taxes). No such investment or any loss thereon will affect the amounts payable pursuant to the Merger Agreement. Resideo will take actions necessary to ensure that the Exchange Fund includes at all times cash in an amount sufficient for the paying agent to pay the Merger Consideration in accordance with the Merger Agreement.
If any Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by the paying agent or Resideo, the posting by such person of a bond in such reasonable and customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the paying agent or Resideo, as applicable, will deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration.
Each of the surviving corporation, Merger Sub, Resideo and the paying agent will be entitled to deduct and withhold from any amounts otherwise payable to any person pursuant to the Merger Agreement such amounts as may be required to be deducted and withheld under applicable law with respect to taxes. Any amounts so deducted or withheld and paid over to the appropriate taxing authority will be treated for all purposes as having been paid to the person in respect of which such deduction or withholding was made.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of Resideo, Merger Sub and the Company, including representations and warranties relating to, among other things:

organization, good standing and similar company matters;

due authorization, execution, delivery and enforceability of the Merger Agreement;

absence of conflicts with the parties’ governing documents, applicable laws and contracts; and

absence of brokers’, finders’ and investment bankers’ fees or commissions.
In addition, the Merger Agreement contains the following customary representations and warranties of the Company relating to, among other things:

capitalization;

ownership of the Company’s subsidiaries;

documents filed with the SEC, compliance with applicable SEC filing requirements and accuracy of information contained in such documents;
 
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compliance of financial statements with applicable accounting requirements and SEC rules and regulations and preparation in accordance with the United States generally accepted accounting principles, and the absence of certain undisclosed liabilities;

the Company and each of its subsidiaries has conducted its business in the ordinary course consistent with past practice since December 31, 2023 and since this date there has not occurred a Company Material Adverse Effect (as defined below) and there have not been any payments made under the Tax Receivable Agreement, except as set forth in the confidential disclosure schedules;

filing of tax returns, payment of taxes and other tax matters;

labor matters;

employee benefits matters;

real property;

material contracts, including top customers and suppliers;

absence of pending or, to the knowledge of the Company, threatened proceedings or judgments that individually or in the aggregate are material to the Company and its subsidiaries, taken as a whole, and that would reasonably be expected to prevent or materially impair or materially delay the Company’s ability to carry out its obligations under the Merger Agreement and to consummate the transactions contemplated by the Merger Agreement;

compliance with laws, including compliance with anti-bribery and foreign corrupt practices laws and applicable regulatory laws, in each case except as would not be reasonably expected to be material to the Company and its subsidiaries, taken as a whole;

environmental matters;

ownership and use of intellectual property;

cybersecurity and data privacy matters;

compliance with international trade and sanctions laws;

insurance;

affiliate transactions;

the receipt of fairness opinions from financial advisors;

disclosures;

material customers and suppliers;

products liability and product warranties; and

personal property and operating equipment.
The Merger Agreement also contains the following customary representations and warranties of Resideo and Merger Sub:

the operations of Merger Sub;

absence of pending or, to the knowledge of Resideo, threatened litigation that would reasonably be expected to have, individually or in the aggregate, any change, event, effect, development, occurrence or state of facts that, considered individually or together with all other changes, events, effects, developments, occurrences or state of facts, would reasonably be expected to prevent or materially impair or materially delay the ability of Resideo or Merger Sub to perform its obligations under the Merger Agreement or to consummate the Merger (a “Parent Material Adverse Effect”).

availability of funds to consummate the Merger and financing;

disclosure;

Resideo’s lack of ownership of Company Common Stock and lack of arrangements between Resideo, Merger Sub or any of their affiliates, on the one hand, and the Company or any of its affiliates (including directors, officers or stockholders) on the other hand.
 
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Certain of the representations and warranties in the Merger Agreement are qualified as to “materiality” or “Company Material Adverse Effect”. The Merger Agreement provides that a “Company Material Adverse Effect” means any change, event, effect, development, occurrence or state of facts that, considered individually or together with all other changes, events, effects, developments, occurrences or state of facts, (a) would reasonably be expected to prevent or materially impair or materially delay the ability of the Company to perform its obligations under the Merger Agreement or to consummate the Merger, or (b) has had or resulted in, or would reasonably be expected to have, a material adverse effect on the business, assets, condition (financial or otherwise), prospects or results of operations of the Company and the subsidiaries of the Company, taken as a whole, excluding in the case of this clause (b), any change, event, effect, development, occurrence or state of facts to the extent it results from or arises out of:

general conditions in the industries in which the Company operates;

general economic or regulatory, legislative or political conditions or general conditions in the securities, credit, financial or other capital markets (including changes generally in prevailing interest rates, currency exchange rates, credit market conditions and capital markets price levels or trading volumes), in each case in the United States or elsewhere in the world;

any change in applicable law or GAAP (or interpretation or enforcement thereof) after the date of the Merger Agreement;

geopolitical conditions, the outbreak or escalation of war or similar hostilities, terrorism or widespread or industry-wide cyberattack, or any escalation or worsening of any such acts;

any hurricane, tornado, flood, volcano, earthquake, epidemic, disease outbreak, public health event, pandemic (including COVID-19 and any worsening thereof (including any COVID-19 response)) or other natural or man-made disaster;

the failure of the Company to meet any internal or external projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics after the date of the Merger Agreement, or changes in the market price or trading volume of the Company Common Stock or the credit rating of the Company and/or its subsidiaries (it being understood that the underlying facts or occurrences giving rise or contributing to such failure or change may be taken into account in determining whether there has been a Company Material Adverse Effect if such facts or occurrences are not otherwise excluded from being taken into account pursuant to this definition in determining whether there has been a Company Material Adverse Effect);

the execution and delivery or performance of the Merger Agreement or the negotiation, announcement or consummation of any of the transactions contemplated by the Merger Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, employees of governmental authorities or any stockholder litigation resulting therefrom, provided that, for the avoidance of doubt, the exception in this clause will not be deemed to apply to references to Company Material Adverse Effect in the representations and warranties set forth Section 3.05 of the Merger Agreement, and, solely to the extent related to the representations and warranties set forth in Section 3.05 of the Merger Agreement, the condition set forth in Section 7.02(a) of the Merger Agreement;

any action taken by the Company or its subsidiaries that is required by the Merger Agreement or with Resideo’s written consent or at Resideo’s written request, or the failure to take any action by the Company or its subsidiaries if that action is prohibited by the Merger Agreement;

any litigation, claim or proceeding threatened or initiated by Resideo or Merger Sub against the Company, in each case, arising out of relating to the Merger Agreement or the transactions contemplated by the Merger Agreement; or

changes resulting or arising from the identity of, or any facts or circumstances relating to, Resideo, Merger Sub or any of their respective affiliates, including the financing obtained or to be obtained by Resideo, Merger Sub or any of their respective affiliates;
provided that, in the case of the first five bullets above, to the extent that the Company and its subsidiaries, taken as a whole, are materially disproportionately affected by such matters as compared with other
 
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participants in the industries in which the Company and its subsidiaries operate (in which case solely the incremental materially disproportionate impact or impacts may be taken into account in determining whether there has been a Company Material Adverse Effect).
Conduct of Business by the Company Prior to Consummation of the Merger
Except for matters set forth on the confidential disclosure schedules or as otherwise required or expressly contemplated by the Merger Agreement or required by applicable law or with the prior written consent of Resideo (such consent not to be unreasonably withheld, delayed or conditioned), from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, (a) the Company will, and will cause each of its subsidiaries to, conduct their respective businesses and operations in the ordinary course of business consistent with past practice in all material respects and (b) the Company will, and will cause its subsidiaries to, use commercially reasonable efforts to preserve intact their respective current business organizations and commercially reasonable efforts to maintain their relations and goodwill with all material suppliers, customers, landlords, creditors, employees and other persons having material business relationships with the Company or any subsidiary thereof.
In addition, without limiting the generality of the foregoing, except for matters set forth on the confidential disclosure schedules or as otherwise expressly contemplated by the Merger Agreement or required by applicable law, from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to, do any of the following without the prior written consent of Resideo (such consent not to be unreasonably withheld, delayed or conditioned):

declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of its capital stock or other equity interests,

split, combine or reclassify any of its capital stock or other equity interests,

directly or indirectly redeem, repurchase or otherwise acquire any equity interests in the Company or any subsidiary of the Company, except for (1) acquisitions of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price of such Company Stock Options, (2) the withholding of shares of Company Common Stock to satisfy tax obligations with respect to Company equity awards, or (3) the acquisition by the Company of Company equity awards that are outstanding as of the date of the Merger Agreement in connection with the forfeiture of such awards in accordance with their respective terms in effect at such time;

issue, sell, register to issue or sell, encumber, subject to any lien, grant, or amend any terms of, any of its capital stock or equity interests or make any change in or to the terms of any outstanding shares of capital stock or other equity interests, other than the issuance of shares of Company Common Stock upon the exercise of Company Stock Options, the settlement of Company RSUs or Company PSUs or vesting of Company Restricted Shares, in each case, only to the extent outstanding as of, and pursuant to the respective vesting and settlement terms applicable thereto, as of, the date of the Merger Agreement;

amend the Company’s charter or bylaws or amend in any material respect the certificate of incorporation, bylaws or other comparable organizational documents of any subsidiary of the Company;

propose or adopt a plan of, or effect any, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any subsidiary thereof, other than the Merger;

except as required by the terms of any Company benefit plan set forth in confidential disclosure schedules, (A) increase the compensation (whether base salary or wages, bonus opportunity or otherwise) of any Company service provider, other than increases in the ordinary course of business consistent with past practice to the base compensation for any such individual who is not a Senior Employee (as defined below) by an amount not exceeding (x) for any such individual who is an hourly employee or whose base salary is less than $70,000, 10% of his or her base compensation (as in
 
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effect on the date of the Merger Agreement) and (y) for any other such individual, 3% of his or her base compensation (as in effect on the date of the Merger Agreement), in each case, so long as the aggregate effect of all such increases, on a quarterly basis, does not exceed $300,000; (B) accelerate the vesting, payment or provision of any compensation or benefit under any Company benefit plan, or any Contract or arrangement, including any award or grant agreement in respect of any Company Stock Options, Company RSUs, Company PSUs or Company Restricted Shares; (C) adopt, enter into, terminate or materially amend any Company benefit plan (or any arrangement which if in existence as of the date of the Merger Agreement would constitute a Company benefit plan, as the case may be), other than (1) annual renewals of benefit plans in the ordinary course of business consistent with past practices, (2) in connection with the actions contemplated by the Merger Agreement, or (3) offer letters entered into in the ordinary course of business and consistent with past practice that are in substantially the form as a form offer letter provided to Resideo prior to the date of the Merger Agreement, or, with respect to individuals located outside of the United States, employment contracts that do not provide for severance benefits beyond those required by applicable law, in either case, only to the extent entered into with individuals who are hired in accordance with the Merger Agreement; (D) fund any payments or benefits that are payable or to be provided under any Company benefit plan; (E) make or forgive any loan to any Company service provider (other than routine travel advances issued in the ordinary course of business); or (F) without limitation of the foregoing, commit to pay any new severance benefits or increase any existing severance benefits (in each case, other than as may be required by applicable law), or grant any change in control, retention, or transaction bonuses;

(A) terminate the employment of any employee of the Company or any subsidiary of the Company with an annual base salary in excess of $175,000 (a “Senior Employee”), other than due to such individual’s death, disability or for cause (each as determined by the Company in the ordinary course of business consistent with past practices and the terms of relevant Company benefit plans or PEO Plans (as defined in the Merger Agreement)); (B) hire any individual who would be a Senior Employee, or promote any employee to the level of Senior Employee; (C) engage any Company service provider who is not an employee with annual base compensation in excess of $175,000; (D) voluntarily recognize or certify any labor union, works council, bargaining representative, or any other similar organization as the bargaining representative for any Company service provider; (E) implement or announce any employee layoffs, furloughs, reductions in force, reductions in compensation, hour or benefits, work schedule changes or similar actions that trigger the Worker Adjustment and Retraining Notification Act or any similar state law; or (F) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any Company service provider (other than in connection with changes in applicable law);

purchase or acquire all or a material portion of the assets, properties, rights or equity interests of or in any person or division thereof (including by license, merger, consolidation or otherwise), other than the purchase or acquisition of supplies, inventory, merchandise, intellectual property rights or products (A) in the ordinary course of business consistent with past practice or (B) the value or purchase price of which would not exceed $1,500,000, individually or in the aggregate;

assign, lease, license, encumber, pledge, sell or otherwise dispose of (whether by license, merger, consolidation or otherwise) all or any material portion of the assets, rights or properties of the Company or any subsidiary thereof (including the capital stock or equity interests in any subsidiary of the Company), other than sales, dispositions or non-exclusive licensing (A) in the ordinary course of business consistent with past practice, (B) pursuant to existing contracts that, if required pursuant to the terms of the Merger Agreement, are set forth in the applicable section of the confidential disclosure schedules, or (C) with a value or purchase price of less than $1,500,000, individually or in the aggregate;

incur, assume, guarantee, or otherwise become liable for any, or amend or modify the terms or conditions of, any indebtedness for borrowed money (or any interest rate or other hedging contracts or arrangements entered into in connection therewith) or issue or sell any debt securities, other than (x) solely between any of the Company and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries, (y) performance bonds and surety bonds entered into in the ordinary course of business consistent with past practice and in a face or exposure amount that does
 
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not exceed, in the aggregate, $1,500,000, or (z) borrowings incurred under the revolving credit facility contained in the Credit Agreement as in effect as of the date of the Merger Agreement in an amount not in excess of $2,500,000; or

make any pledge of or permit any of its properties, assets or rights to become subject to any material lien other than permitted liens;

(A) materially modify, materially amend, renew, extend or terminate (other than any expiration in accordance with existing terms) or waive or release any rights under any material contract or (B) enter into any contract that would be a material contract if in effect on the date of the Merger Agreement, in each case, other than any modification, renewal, extension, termination, waiver, release or entry into a material contract in the ordinary course of business consistent with past practice; provided, that neither the Company nor any subsidiary thereof shall modify, amend, renew, extend, terminate or enter into any material contract (or any contract that would constitute a material contract if in effect on the date of the Merger Agreement) if the effect thereof would be to (1) impose any material restrictions on the right or ability of the Company or any subsidiary thereof to engage in any line of business or compete with, or provide services to, any other person or in any geographic area, (2) grant any exclusive rights to license, market, sell or deliver any material product, service or intellectual property of the Company or any subsidiary thereof, (3) require the Company or any subsidiary thereof to exclusively or predominantly purchase any material inventory, products, or services from such person, (4) grant any “most favored nation” or similar provision in favor of the other party or a right of first refusal, first offer or first negotiation binding upon the Company or any subsidiary thereof that, in each case, is material to the Company or (5) impose minimum purchase obligations on the Company or any subsidiary thereof in excess of $250,000 annually in respect of any such contract or $1,000,000 in the aggregate with respect to all such contracts;

(A) commence, settle, release, compromise or forgive any proceeding, other than (1) in the case of a commencement of a proceeding, (x) with respect to routine matters in the ordinary course of business or in cases where the Company reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of its business; or (y) in connection with a breach by Resideo or Merger Sub of the Merger Agreement or any other agreement (including any Ancillary Document (as defined in the Merger Agreement)) contemplated thereby, and (2) settlements, releases, compromises or forgiveness that require only payment by the Company or any subsidiary of the Company of cash amounts that does not exceed $1,000,000 individually or $2,000,000 in the aggregate and, for the avoidance of doubt, does not involve any material injunctive or other equitable relief, admissions of fault or other material obligations of the Company or any or any subsidiary thereof; or (B) waive or relinquish any material claim held by the Company or any subsidiary thereof, other than in the ordinary course of business consistent with past practice; provided, that this clause will not apply to any stockholder proceeding which will be governed by the Merger Agreement;

make any material change in any financial or accounting policy, principle, procedure, method, estimate or practice, except for any such change required by changes in GAAP (or any interpretation thereof) or applicable law, in each case, occurring after the date of the Merger Agreement;

(A) make, change or revoke any material tax election, (B) adopt or change any material tax accounting method or change any tax accounting period, unless required by changes in GAAP, (C) file any amended U.S. federal income or other material tax return, (D) settle any proceeding or audit relating to the Company or any of its subsidiaries involving a material amount of taxes, (E) surrender any right to claim a refund of a material amount of taxes, (F) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) with respect to a material amount of taxes, or (G) amend or modify the Tax Receivable Agreement;

fail to maintain in all material respects insurance in the name of the Company and its subsidiaries in such amounts and covering such risks as are consistent with past practice, subject to availability of such insurance in the market at commercially reasonable rates;

enter into or amend any contract, arrangement or transaction with the Principal Stockholders or any affiliate thereof (other than the Company or any subsidiary thereof);
 
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make any material capital expenditures or commitments therefor in excess of $5,000,000 in the aggregate, except in the ordinary course of business;

abandon or discontinue any material existing line of business;

adopt or implement any stockholder rights plan or similar arrangement;

amend or modify in any materially adverse respect any publicly posted privacy policies, or any administrative, technical or physical safeguards related to privacy or cybersecurity, except in each case, as applicable, to remediate any security issue, to enhance data security or integrity, to comply with or improve compliance with applicable law, as otherwise directed or required by a governmental entity, or in relation to any new or updated software, products or technologies of the Company or any of its subsidiaries; or

authorize, commit or agree to take any of the foregoing actions.
Regulatory Filings; Efforts
Upon the terms and subject to the conditions set forth in the Merger Agreement, each party to the Merger Agreement will use, and will cause its affiliates to use, its reasonable best efforts to take, or cause to be taken, all reasonable actions to consummate the transactions contemplated by the Merger Agreement, including the Merger, including: (i) obtaining all necessary or advisable authorizations and consents from, making all necessary or advisable registrations, declarations and filings with and taking all reasonable steps as may be necessary or advisable to obtain any authorizations or consents from, or avoid a proceeding with, any governmental entity or other third party with respect to the Merger Agreement or the transactions contemplated thereby, including the Merger, including the expiration or termination of any applicable waiting period in respect of the HSR Act and other applicable antitrust law or foreign investment law; (ii) furnishing all information required to be furnished in connection with obtaining any such authorizations or consents from or making any filings with any governmental entity or other third party; (iii) defending or contesting any proceedings by any governmental entity or third party challenging the Merger Agreement or the consummation of the transactions contemplated thereby, including the Merger; and (iv) executing and delivering any additional instruments necessary to consummate the transactions contemplated by the Merger Agreement, including the Merger, and to fully carry out the purposes of the Merger Agreement so long as such additional instruments are consistent with the terms of this Agreement.
Each party will, or will cause the applicable affiliate thereof to, within five (5) business days of entering into the Merger Agreement (unless a different period is otherwise agreed by the parties), make any appropriate filing necessary pursuant to the HSR Act. Each party will, or will cause the applicable affiliate thereof to, within twenty (20) business days (unless a different period is otherwise agreed by the parties in writing), make all necessary filings pursuant to any necessary filings under any other applicable antitrust law or foreign investment law. In relation to any such filing, each party will supply as promptly as reasonably practicable any additional information and documentary material that may be requested by any such reviewing governmental entity with respect to the transactions contemplated by the Merger Agreement.
Each of the Company and Resideo will, and will cause their respective affiliates to, furnish to the other party such necessary information and reasonable assistance as the other party may request in connection with its preparation of any filing or submission under the HSR Act or any other applicable antitrust law or foreign investment law, and will permit the other party to review and discuss in advance, in good faith in connection with any filings, submissions, communications, inquiries or requests with, any governmental entity relating to the Merger Agreement, the Merger, or any of the other transactions contemplated by the Merger Agreement. Resideo acknowledges and agrees that its obligation to use reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary or advisable under applicable law to consummate and make effective the transactions contemplated by the Merger Agreement, includes but is not limited to, as promptly as possible but subject to the terms of the Merger Agreement: proposing, negotiating, effecting, agreeing to or committing to, or executing any settlements, undertakings (affirmative or otherwise), consent decrees, stipulations or other agreements with any governmental entity obligating Resideo or any of its subsidiaries to: (i) sell, divest, license or otherwise convey or hold separate any asset or business of the Company or any subsidiary thereof; (ii) create any relationship, contractual right or
 
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obligation of the Company or any subsidiary thereof; or (iii) implement any limitations, prohibitions or restrictions affecting the business, operations or assets of the Company or any subsidiary thereof, or (iv) litigate, contest defend, and appeal any proceeding, whether judicial or administrative, challenging the Merger Agreement or the transactions contemplated by the Merger Agreement, except notwithstanding anything to the contrary in the Merger Agreement, any such actions set forth in (i) through (iv) above (each, a “Remedial Action”). Notwithstanding anything contained in the Merger Agreement to the contrary, neither Resideo nor any of its subsidiaries will be required to take or effect (or agree to take or effect) any Remedial Action (A) in respect of any of the product lines, rights, assets or properties (including intellectual property rights) of Resideo or any subsidiary thereof (excluding the Company and its subsidiaries) or that otherwise materially impact or effect the businesses and operations of Resideo and its subsidiaries (excluding the Company and its subsidiaries), and (B) if such Remedial Action would, in the aggregate, be reasonably likely to either (x) result in a loss of revenue equal to or greater than five percent (5%) of the total sales revenue of the Company and its subsidiaries for the 12-month period ending December 31, 2023 as reflected in the most recent financial statements, or (y) have a material and adverse impact to Resideo and its subsidiaries, taken as a whole, in respect of the benefits (including synergy benefits) that Resideo and its subsidiaries expect to derive from the consummation of the transactions contemplated by the Merger Agreement and their ownership and operation of the businesses of the Company and its subsidiaries. The Company will not take or agree to, and will not permit any subsidiary to take or agree to, any Remedial Action without the prior consent of Resideo. Furthermore, Resideo will not, and will cause its affiliates not to, enter into any merger, acquisition or similar transaction, or any agreement to effect any such transaction, for any business that competes directly and materially with the Company’s business, that will make it materially more difficult, or materially increase the time required, to (i) obtain the required regulatory approvals, or (ii) avoid a legal restraint.
Written Consent
Per the terms of the Merger Agreement, the Company was required to provide Resideo with a copy of the Written Consent promptly upon receipt of the Written Consent. The Written Consent was delivered to the Company on April 14, 2024 shortly after the execution of the Merger Agreement, and the Company provided a copy of the Written Consent to Resideo promptly after its receipt of the Written Consent.
No Solicitation
The Company has agreed that it will not, and will cause its subsidiaries and its and their respective directors, officers and employees not to, and will use its reasonable best efforts to cause its other representatives not to, directly or indirectly, from and after the execution and delivery of the Merger Agreement until the earlier of the termination of the Merger Agreement and the Effective Time:

solicit, initiate, propose, induce, encourage or knowingly facilitate any inquiries regarding, or the submission or announcement of any inquiry, proposal or offer that constitutes, or could reasonably be expected to lead to, any Company Takeover Proposal;

enter into, continue or otherwise participate in any discussions or negotiations regarding any Company Takeover Proposal (or inquiries, proposals or offers that could reasonably be expected to lead to Company Takeover Proposal);

furnish to any person (other than Resideo or Merger Sub) any non-public information with respect to the Company or any of its subsidiaries or afford to any person (other than Resideo or Merger Sub) access to the business, properties, assets, books, records or personnel of the Company or any of its subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or to encourage or knowingly facilitate, any inquiry, proposal or offer that constitutes or could reasonably be expected to lead to a Company Takeover Proposal;

subject to the terms of the Merger Agreement, approve, endorse or recommend a Company Takeover Proposal; or

execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership
 
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agreement or any other agreement relating to any Company Takeover Proposal, other than an acceptable confidentiality agreement entered into in accordance with the terms set forth in the Merger Agreement.
The Merger Agreement provides that the term “Company Takeover Proposal” means any inquiry, proposal or offer from any person or group (other than Resideo and its subsidiaries) relating to, in a single transaction or series of related transactions, any:

direct or indirect acquisition of 20% or more of the consolidated assets of the Company and its subsidiaries (based on the fair market value thereof, as determined in good faith by the Board);

direct or indirect acquisition of 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof);

tender offer or exchange offer that if consummated would result directly or indirectly in any person or group (or the stockholders of any person or group) (other than Resideo and its subsidiaries) beneficially owning 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof); or

merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or other transaction involving the Company which would result in any person or group (or the stockholders of any person or group) (other than Resideo and its subsidiaries) beneficially owning, directly or indirectly, 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company or of the surviving entity in a merger involving the Company or the resulting direct or indirect parent of the Company or such surviving entity (or any equity interests representing such voting power giving effect to any right of conversion or exchange thereof).
For the avoidance of doubt, the Merger and the other transactions contemplated by the Merger Agreement shall not be deemed a Company Takeover Proposal.
Upon execution and delivery of the Merger Agreement, the Company will, and will cause its subsidiaries and its and their respective directors, officers and employees to, and will use reasonable best efforts to cause its other representatives to, immediately cease all discussions and negotiations regarding any inquiry, proposal or offer pending on or prior to the date of the Merger Agreement that constitutes, or could reasonably be expected to lead to, a Company Takeover Proposal. In furtherance of the foregoing, promptly following the execution and delivery of the Merger Agreement (and, in the case of the second bullet point below, no later than the next business day following the date of the Merger Agreement), the Company will:

request that each person and its representatives (other than Resideo or its representatives) that has, prior to the execution and delivery of the Merger Agreement, executed a confidentiality agreement in connection with such person’s consideration of making a possible Company Takeover Proposal, to promptly return or destroy all non-public confidential information previously furnished to such person in accordance with the terms of the applicable confidentiality agreement, and

terminate access to any physical or electronic data rooms relating to a possible Company Takeover Proposal.
The Company will not release any person from, or waive, amend or modify any provision of, or grant any permission under any “standstill” provision or similar provision with respect to any capital stock of the Company in any confidentiality or standstill agreement (or similar agreement) to which the Company or any of its subsidiaries is a party; provided that, prior to obtaining the affirmative vote (in person or by written consent, including by obtaining the Written Consent) of holders of a majority of the outstanding shares of Company Common Stock in favor of approving and adopting the Merger Agreement, the Company will be permitted to grant waivers of, and not to enforce, any “standstill” or similar provision to the extent necessary to permit the party referred therein to submit a Company Takeover Proposal to the Board on a confidential basis solely to the extent that the Board determines in good faith (after consultation with the Company’s financial advisor and outside legal counsel) that the failure to release such person from such agreement or provision or the failure to amend such agreement or waive such provision, or the enforcement
 
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of such agreement or provision, would reasonably be expected to be inconsistent with its fiduciary obligations to the Company’s stockholders under applicable Delaware law; and the Company provides Resideo with written notice of the Company’s intent to take such action prior to communicating such action to such person.
Continuing Employee Matters
The Merger Agreement provides that, for the period from the Effective Time through the first anniversary of the Effective Time, each employee of the Company or its subsidiaries who remains in the employment of the surviving corporation and its subsidiaries (each, a “Continuing Employee”) will receive (for Continuing Employees primarily based outside of the United States, subject to any discretionary modifications or adjustments permitted in accordance with local Company benefit plans and requirements under applicable law) (i) unless otherwise agreed to in writing between Resideo or its affiliates and the Continuing Employee, a base salary or wage rate, as applicable, and target short-term cash incentive compensation opportunities that, in the aggregate, are not less favorable than as provided by the Company or its subsidiaries to such Continuing Employee immediately prior to the Effective Time; provided, that, the base salary or wage rate, as applicable, of any Continue Employee during such period shall not be reduced; (ii) for any such Continuing Employee located in the United States, severance benefits that are no less favorable than as provided by the Company or its subsidiaries to such Continuing Employee immediately prior to the date of the Merger Agreement (based on severance arrangements as in effect on the date of the Merger Agreement and listed on the confidential disclosure schedules) and (iii) employee benefits (excluding any equity or equity-based arrangements, long-term incentive programs, nonqualified deferred compensation arrangements, post-termination or retiree health and welfare benefits, defined benefit pension plans, and change-in-control payments, retention payments, or other similar nonrecurring compensation) that are substantially comparable in the aggregate to either (x) those provided by the Company or its subsidiaries to such Continuing Employee immediately prior to the date of the Merger Agreement and (y) those provided by Resideo or its affiliates to similarly situated employees of Resideo or its affiliates.
The Merger Agreement also provides that, Resideo will, and will cause the surviving corporation and its subsidiaries to, cause any plans, programs, agreements or arrangements established or maintained by Resideo or any of its affiliates (including, after the Effective Time, the surviving corporation and its subsidiaries) (the “New Plans”) to recognize each Continuing Employee’s service with the Company or any of its subsidiaries and any of their respective predecessors (to the extent such service is recognized by the Company or such subsidiary), for purposes of eligibility, participation, vesting and levels of benefits; provided, however, that such service need not be recognized (i) to the extent that such recognition would result in any duplication of benefits, (ii) for purposes of eligibility, benefit accruals or vesting under any defined benefit pension plan, nonqualified deferred compensation arrangements, or retiree health or welfare plans or arrangements (except as may be required under applicable Law with respect to Continuing Employees located outside of the United States), (iii) for purposes of vesting of any incentive, equity, or equity-based compensation, or (iv) with respect to any New Plan to the extent that, under such New Plan, Resideo or the relevant affiliate does not provide for the crediting of any prior service for any other similarly situated employee of Resideo and its affiliates (other than the Company and its subsidiaries).
Further, the Merger Agreement provides that, with respect to any New Plan that is a welfare plan, Resideo will, and will use commercially reasonable efforts to cause the surviving corporation and its subsidiaries to, (i) waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to Continuing Employees to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans of the Company and its subsidiaries prior to the Effective Time and (ii) provide each Continuing Employee with credit for any co-payments and deductibles for claims incurred during the plan year in which the Effective Time occurs in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such New Plan.
Pursuant to the Merger Agreement, with respect to each cash short-term incentive bonus program of the Company and its subsidiaries with a performance period that is in-cycle as of the Closing (each, a “Company Bonus Program”), (i) payments pursuant to such Company Bonus Program with respect to the performance period commencing on January 1 of the year in which the Closing occurs and ending on the
 
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Closing Date (the “Pre-Closing Bonus Period”) shall be determined and paid by Resideo or its affiliates in the ordinary course of business, and (ii) Resideo shall not make any modification to such Company Bonus Program with respect to the Pre-Closing Bonus Period in a manner that is detrimental to any participant therein.
The Merger Agreement provides that the foregoing provisions under this Continuing Employee Matters section will be binding upon and will inure solely to the benefit of each of the parties to the Merger Agreement, and nothing in the sections covering Continuing Employee Matters, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever (including any right to continued employment by or services with Resideo, the Company, the surviving corporation or any of their respective subsidiaries) under or by reason of such provisions. Further, none of the provisions under this Continuing Employee Matters will be construed as requiring Resideo or the surviving corporation to continue any specific plans, programs, agreements or arrangements or prohibit or limit the ability of Resideo, the surviving corporation or any of their subsidiaries from amending, modifying or terminating any plans, programs, agreements or arrangements.
Indemnification and Insurance
For a period of six years following the Effective Time, Resideo will cause the surviving corporation or applicable subsidiary thereof to honor and comply with the obligations with respect to all rights to indemnification, advancement of expenses and exculpation from liabilities, for acts or omissions occurring at or prior to the Effective Time existing at the time of the Merger Agreement in favor of any current or former director, officer, employee, agent or benefits trustee (the “Indemnified Persons”) of the Company or any subsidiary of the Company as provided in the Company’s charter or bylaws, the organizational documents of any subsidiary of the Company or any indemnification agreement between such Indemnified Person and the Company or any subsidiary of the Company (in each case, as in effect on the date of the Merger Agreement and, in the case of any indemnification agreement, as set forth in the confidential disclosure schedules), without further action, as of the Effective Time (including by granting the Indemnified Persons rights to indemnification and advancement of expenses pursuant to Section 7.07 of the bylaws of the Company or similar provisions of the organizational documents of any subsidiary of the Company, as applicable, in each case, as in effect on the date of the Merger Agreement), and such obligations will survive the Merger and will continue in full force and effect in accordance with their terms. However, all rights to indemnification in respect of any action pending or asserted or any claim made within such six year period will continue until the disposition of such action or resolution of such claim. For the avoidance of doubt, for a period of six years following the Effective Time, the applicable rights of indemnification and exculpation contemplated by the Merger Agreement and pursuant to the terms of the Company’s charter or bylaws as in effect at or immediately prior to the Effective Time will not be impaired by any modification of such terms in any amendment or restatement of such Company charter or bylaws following the Effective Time and prior to such six year anniversary (including in connection with the filing of the certificate of merger).
As promptly as practicable following the date of the Merger Agreement, in consultation with Resideo, the Company will obtain a prepaid non-cancelable (“tail”) policy with coverage for six years following the Effective Time with terms and coverage limits that are substantially similar to those in the existing policy of directors’ and officers’ liability insurance, employment practice liability insurance, and fiduciary liability insurance maintained by the Company and its subsidiaries with respect to matters arising on or prior to the Effective Time, except as set forth on the confidential disclosure schedules; provided, that, such tail insurance will act on a primary basis with respect to any other applicable directors’ and officers’ liability, employment practices liability and fiduciary liability insurance; provided, further, that the Company will use reasonable best efforts to obtain such policy on favorable pricing terms in reasonable consultation with Resideo. For purposes of the forgoing, consultation will include (i) providing copies of policy documents and quotes to the Resideo prior to binding and allowing Resideo to comment thereon (and reasonably considering any such comments) and (ii) making the broker available for consultation with Resideo upon Resideo’s reasonable request.
Financing Covenant; Company Cooperation
The Company shall, or shall cause its subsidiaries to, deliver a notice of prepayment with respect to the loans and other extensions of credit outstanding under, a notice of termination of all commitments under,
 
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that certain Credit Agreement, dated as of December 8, 2021 (as amended by Incremental Agreement No. 1, dated as of October 2, 2022, and Amendment to Credit Agreement, dated as of April 17, 2023), among the Company, as borrower, the lenders and letter of credit issuers party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, collateral agent and swingline lender (as amended, supplemented or otherwise modified, the “Credit Agreement”) (in each case, contingent upon the occurrence of the closing). In addition, the Company and its subsidiaries will use commercially reasonable efforts to obtain from the agent under the Credit Agreement at least one business day prior to the Closing Date, and shall deliver on or prior to the Closing Date, an executed payoff letter (and a draft reasonably in advance thereof) with respect to the obligations under the Credit Agreement (the “Payoff Letter”), in form and substance customary for transactions of this type which Payoff Letter shall, among other things, include the payoff amount (and the daily accrual thereafter) and provide that liens (and guarantees), if any, granted in connection with the Credit Agreement relating to the assets, rights and properties of the Company and its subsidiaries securing such indebtedness shall, upon the payment of the amount set forth in the Payoff Letter at the closing, be automatically released and terminated.
Prior to and until the Closing, the Company shall, and shall cause its subsidiaries to, and the Company and each of its subsidiaries shall use reasonable best efforts to cause its and its subsidiaries’ respective directors, officers, employees, financial advisors, legal counsel, financing sources and other agents, advisors or representatives (collectively, the “Company Representatives”) to, at Resideo’s sole cost and expense, provide required financial information and use reasonable best efforts to provide to Resideo all cooperation reasonably requested by Resideo that is necessary or reasonably required in connection with the financing contemplated by the Commitment Letter (the “Debt Financing”). Notwithstanding the foregoing, except as the Company and Resideo may otherwise agree, nothing will require the Company or its subsidiaries to provide (or be deemed to require the Company to prepare) any (i) pro forma financial statements, projections or other prospective information; (ii) description of all or any portion of the Debt Financing; (iii) risk factors relating to all or any component of the Debt Financing, including any such description to be included in liquidity and capital resources disclosure; (iv) “segment” financial information and separate subsidiary financial statements, (v) any financial statements or other information required by Rules 3-09, 3-10, 3-16, 13-01 or 13-02 of Regulation S-X, Regulation S-K Item 302 or for any period prior to January 1, 2019, (vi) certain information regarding officers or directors, executive compensation and related party disclosure, (vii) information regarding affiliate transactions that may exist following consummation of the Merger, (viii) information regarding any post-closing pro forma cost savings, synergies, capitalization, ownership or other post-closing pro forma adjustments (excluding certain information that is historical financial information of the Company and is derivable without undue effort or expense by the Company from the books and records of the Company or any of its subsidiaries) or (ix) information necessary for the preparation of any projected or forward-looking financial statements or information that is not derivable without undue effort or expense by the Company.
Any requested cooperation in connection with the Debt Financing shall not be required if such cooperation (A) unreasonably disrupts or interferes with the business or the operations of the Company or its subsidiaries or (B) causes significant competitive harm to the Company or its subsidiaries if the transactions contemplated by the Merger Agreement are not consummated. Additionally, cooperation is not required to the extent that it would (A) subject, or reasonably be expected to subject, any of the Company’s or its subsidiaries’ respective directors, managers, officers or employees to any personal liability, (B) based on the advice of the Company’s legal counsel, conflict with, or violate, the Company’s and/or any of its subsidiaries’ organization documents or any applicable law or judgment, or result in the contravention of, or violation or breach of, or default under, any material contract to which the Company or any of its subsidiaries is a party, (C) cause any condition to the closing to not be satisfied or (D) cause any breach of the Merger Agreement. Further, neither the Company nor any subsidiary of the Company shall be required to (1) pay any commitment or other similar fee or incur or assume any liability or other obligation in connection with the financings contemplated by the Debt Financing or the definitive agreements related to the Debt Financing, to bear any cost or expense or to make any other payment (in each case to the extent it has not received prior reimbursement or is not otherwise concurrently indemnified by or on behalf of Resideo) or agree to provide any indemnity in connection with the Debt Financing or any information utilized in connection therewith, in each case prior to the Effective Time (2) deliver or obtain opinions of internal or external counsel or (3) require the directors or managers of the Company or any of its subsidiaries to adopt resolutions approving the agreements, documents and instruments pursuant to which the Debt Financing is obtained
 
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unless Resideo shall have determined that such directors or managers are to remain as directors and managers of the Company on and after the Closing Date and such resolutions are contingent upon the occurrence of, or only effective as of, the closing.
Resideo shall, promptly upon written request by the Company, reimburse the Company for all reasonable and documented out-of-pocket fees and expenses (including professional fees and expenses of accountants, legal counsel and other advisors) to the extent such costs are incurred by the Company or its subsidiaries in connection with such cooperation provided by the Company, its subsidiaries, their respective officers, employees and other representatives in connection with compliance with its cooperation obligations under the Merger Agreement with respect to the Debt Financing. Resideo shall indemnify and hold harmless the Company and its subsidiaries and their respective officers, employees, agents and representatives from and against any and all liabilities or losses suffered or incurred by them in connection with the arrangement of the Debt Financing, any information utilized in connection therewith and any misuse of the logos or marks of the Company or its subsidiaries, except to the extent that such liabilities or losses arose out of or resulted from the willful misconduct of the Company, any of its subsidiaries or any of their respective representatives.
Obtaining the Debt Financing is not a condition to the closing, and none of Resideo’s or Merger Sub’s respective obligations under the Merger Agreement are conditioned in any manner upon Resideo or Merger Sub obtaining financing in respect of the transactions contemplated by the Merger Agreement.
Other Covenants and Agreements
The Merger Agreement contains other covenants and agreements, in which each of Resideo and the Company covenants or agrees to:

consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements, including any press conference or conference call with investors or analysts, with respect to the transactions contemplated by the Merger Agreement, including the Merger, and will not, and will cause their respective affiliates not to, issue any such press release or make any such public statement without the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed), except as otherwise provided in the Merger Agreement; and

notify each other in writing upon becoming aware of (a) any event, condition, fact or circumstance that would reasonably be expected to cause any of the conditions precedent to the Merger to not be satisfied as of the Closing Date were the date that such event, condition, fact or circumstance occurred, arose, existed or came into effect, (b) any proceeding or claim threatened (in writing), commenced or asserted against any of the Company or its subsidiaries or their respective officers or directors that either relates to the Merger Agreement, the Merger or the transactions contemplated by the Merger Agreement or (c) any allegation by a third party that its consent or approval is required in connection with the consummation of the transactions contemplated by the Merger Agreement if the failure to obtain such consent or approval is material to the applicable party.
In addition, the Company will:

and will cause its subsidiaries and its and their respective directors, officers and employees to, and will use reasonable best efforts to cause its other representatives to, if reasonably requested by Resideo, give Resideo, its counsel, financial advisors, auditors and other authorized representatives reasonable access during reasonable business hours to the offices, properties, books, records and personnel of the Company and the subsidiaries of the Company, in each case, for the purposes of implementing and/or consummating the transactions contemplated by the Merger Agreement;

cause all affiliates transactions set forth in the confidential disclosure schedules to be terminated pursuant to a written agreement in form and substance reasonably satisfactory to Resideo, in each case without further liability or obligation (contingent or otherwise) of any party thereunder (or any affiliate thereof), with such termination to be effective immediately prior to the Closing, except for any liabilities or obligations (including any indemnity obligations under the Stockholders Agreement,
 
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dated as of July 27, 2021) that survive pursuant to the express terms of the applicable contract or as set forth in the confidential disclosure schedules;

promptly advise Resideo in writing of any proceeding commenced or threatened in writing by a stockholder or holder of any equity interests of the Company against the Company, its subsidiaries or their respective directors or officers or otherwise asserted by or on behalf of the Company (including any asserted derivative proceeding), in each case, to the extent relating to the Merger, the Merger Agreement or the transactions contemplated by the Merger Agreement, and will keep Resideo reasonably informed, consult with Resideo regarding and give Resideo the opportunity to participate in (but not control) the defense and settlement of any such proceeding, and none of the Company, its subsidiaries or any of their respective representatives will agree to or propose any settlement or compromise of any such proceeding without Resideo’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned);

take all steps as may be required to cause any dispositions of equity interests of the Company in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement by each individual who is subject to the reporting requirements of Section 16 of the Exchange Act, with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act;

cooperate with Resideo and use its reasonable best efforts to take, or cause to be taken, all actions reasonably necessary, proper or advisable on its part under applicable laws and rules and policies of NASDAQ to enable the de-listing by the surviving corporation of the Company Common Stock from NASDAQ and the deregistration of the Company Common Stock and the suspension of the Company’s reporting obligations under the Exchange Act as promptly as practicable after the Effective Time;

with the reasonable assistance of Resideo, prepare and file with the SEC this information statement and, as promptly as reasonably practicable after the first to occur of (i) confirmation from the SEC that it has no further comments on this information statement, (ii) confirmation from the SEC that this information statement is otherwise not to be reviewed or (iii) expiration of the 10-day period after filing in the event the SEC does not review this information statement, cause this information statement to be mailed to holders of Company Common Stock; and

not, and will cause its subsidiaries not to, make any payments under the Tax Receivable Agreement or agree to any amendment or modification of the waiver and termination letter, in each case without the consent of Resideo.
Conditions to Consummation of the Merger
The obligation of each party to consummate the Merger are subject to the satisfaction or, to the extent not prohibited by applicable law, waiver of, on or prior to the Closing Date, of the following conditions:

no applicable law enacted or applicable to the transactions by any governmental entity of competent jurisdiction or any judgment (whether temporary, preliminary or otherwise) or other legal restraint or prohibition issued or adopted or applicable to the transactions by any such governmental entity, restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger being in effect;

the expiration or termination of any applicable waiting period (including any extension thereof) under the HSR Act having occurred;

the affirmative vote (including by obtaining the Written Consent) of holders of a majority of the outstanding shares of Company Common Stock in favor of approving and adopting the Merger Agreement having been obtained and being in full force and effect; and

at least 20 calendar days having elapsed since the Company mailed to the stockholders of the Company this information statement as contemplated by Regulation 14C of the Exchange Act (including Rule 14c-2 promulgated under the Exchange Act).
As of the date of this information statement, the Written Consent has been obtained and is in full force and effect, which satisfies the stockholder approval condition described below.
 
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The obligations of Resideo and Merger Sub to consummate the Merger are further subject to satisfaction of or, to the extent not prohibited by applicable law, waiver of, on or prior to the Closing Date, among other things, the following additional conditions:

the representations and warranties of the Company (i)(A) related to the absence of a Company Material Adverse Effect and (B) there having been no payments made under the Tax Receivable Agreement, except as set forth in the confidential disclosure schedules, in each case, since December 31, 2023, being true and correct as of the date of the Merger Agreement and the Closing Date as though made at and as of such date; (ii) related to organization, standing and power, subsidiaries, corporate authority, execution and delivery and enforceability, brokers and other advisors being true and correct in all material respects as of the date of the Merger Agreement and the Closing Date as thought made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)); (iii) related to fundamental portions of its capitalization representation being true and correct as of the date of the Merger Agreement and the Closing Date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for de minimis inaccuracies; and (iv) all other representations and warranties of the Company being true and correct (without regard to any “materiality,” “Company Material Adverse Effect” or similar qualifications and exceptions contained therein) as of the date of the Merger Agreement and the Closing Date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

Company having performed in all material respects all obligations, covenants and agreements required to be performed by it under the Merger Agreement at or prior to the Effective Time; and

receipt by Resideo and Merger Sub from the Company a certificate, dated the Closing Date and signed on behalf of the Company by a duly authorized officer of the Company, certifying that each of the conditions specified above has been satisfied.
The obligation of the Company to effect the Merger is further subject to the satisfaction (or waiver by the Company) on or prior to the Closing Date of the following conditions:

representations and warranties of Resideo and Merger Sub (i) related to organization, standing and power, corporate authority, execution and delivery, enforceability and brokers being true and correct (without regard to any “materiality,” “Parent Material Adverse Effect” or similar qualifications and exceptions contained therein) in all material respects as of the date of the Merger Agreement and as of the Closing Date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)) and (ii) all other representations and warranties of Resideo and Merger Sub being true and correct (without regard to any “materiality,” “Parent Material Adverse Effect” or similar qualifications and exceptions contained therein) as of the date of the Merger Agreement and at and as of the Closing Date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect;

each of Resideo and Merger Sub having performed in all material respects all obligations, covenants and agreements required to be performed by it under the Merger Agreement as of the Effective Time; and

receipt by the Company from Resideo a certificate, dated the Closing Date and signed on behalf of Resideo by a duly authorized officer of Resideo, certifying that the conditions specified above have been satisfied.
Termination of the Merger Agreement
The Merger Agreement may be terminated at any time prior to the Effective Time by the mutual written consent of Resideo, Merger Sub and the Company.
 
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In addition, the Merger Agreement may be terminated by either Resideo or the Company:

if the Merger is not consummated on or before October 15, 2024 (the “Outside Date”), as may be extended to January 15, 2025, pursuant to the terms of the Merger Agreement; provided, that the right to terminate the Merger Agreement under this clause is not available to a party if any action of such party or the failure of such party to perform any of its obligations under the Merger Agreement has been a principal cause of or directly resulted in the failure of the Merger to occur on or before the Outside Date and such action or failure to perform such obligations constitutes a breach of the Merger Agreement; or

if any legal restraint permanently restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger is in effect and has become final and non-appealable; provided, that the right to terminate the Merger Agreement under this clause is not available to a party if the failure of such party to perform any of its obligations under the Merger Agreement has been a principal cause of or directly resulted in the issuance of such final, non-appealable legal restraint.
The Merger Agreement also may be terminated by either party if the other party breaches any of its represe