Item 1.01 Entry Into A Material Definitive Agreement.
On November 24, 2020, INSU Acquisition Corp. II, a Delaware corporation (the
"Company"), entered into an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") by and among the Company, INSU II Merger Sub Corp., a
Delaware corporation and a direct wholly owned subsidiary of the Company
("Merger Sub"), and MetroMile, Inc., a Delaware corporation ("Metromile"),
pursuant to which, among other things, Merger Sub will merge with and into
Metromile (the "Merger" and together with the other transactions contemplated by
the Merger Agreement, the "Transactions"), with Metromile surviving the merger
as a wholly owned subsidiary of the Company.
The Merger Agreement
Transactions
As a result of the Transactions, Metromile and its various operating
subsidiaries will become subsidiaries of the Company, with the former
stockholders of Metromile becoming stockholders of the Company.
Consideration
The aggregate consideration to be paid in the Transactions will consist of (i)
based on Metromile's current capitalization, assuming no redemptions by the
Company's public stockholders, an estimated $30 million in cash and 84.2 million
shares of the Company's Class A common stock and (ii) an additional 10 million
shares of the Company's Class A common stock (the "Additional Shares"), in the
event that the closing share price of the Company's Class A common stock exceeds
$15.00 per share for 20 out of any 30 consecutive trading days during the first
two years following the closing of the Transactions. The number of shares of the
equity consideration will be based on a $10.00 per share value for the Company's
Class A common stock. The cash consideration will be funded from the cash held
in the Company's trust account (after permitted redemptions by the Company's
public stockholders) and the proceeds of the PIPE Investment (as defined and
described below).
Redemption Offer
Pursuant to the Company's amended and restated certificate of incorporation and
in accordance with the terms of the Merger Agreement, the Company will be
providing its public stockholders with the opportunity to redeem, upon the
closing of the Transactions, their shares of the Company's Class A common stock
for cash equal to their pro rata share of the aggregate amount on deposit as of
two (2) business days prior to the consummation of the Transactions in the
Company's trust account (which holds the proceeds of the Company's initial
public offering (the "IPO"), less taxes payable (the "Redemption Offer").
Representations, Warranties and Covenants
Each of the Company, Merger Sub and Metromile have made representations,
warranties and covenants in the Merger Agreement that are customary for
transactions of this nature. The representations and warranties of the Company,
Merger Sub and Metromile will not survive the closing of the Transactions.
Conditions to Consummation of the Transactions
Consummation of the Transactions is subject to customary conditions of the
respective parties, including, among others, that (i) the Transactions be
approved by the Company's stockholders and the Metromile stockholders (the
"Metromile Stockholder Vote"); (ii) there has been no material adverse effect
(as defined in the Merger Agreement) with respect to Metromile or the Company
since the date of the Merger Agreement; (iii) the registration statement on Form
S-4 of the Company containing the proxy statement/prospectus for the Company's
special meeting of stockholders in lieu of its first annual meeting will have
become effective; (iv) the Company will have at least $5,000,001 of net tangible
assets immediately following the closing of the Transactions (after giving
effect to the redemption of public shares by the Company's public stockholders);
(v) the filings of the Company and Metromile pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have been made and the
applicable waiting period and any extension thereof will have expired or been
terminated; (vi) the parties will have received certain consents and
authorizations to the Merger; and (vii) the Company will have at least $199
million in cash as of the closing, after giving effect to the PIPE Investment
(as defined below), the redemption of the Company's Class A common stock by the
Company's public stockholders, the payment of the transaction expenses of the
parties, the payment of deferred underwriting fees and the repayment of certain
Metromile indebtedness.
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Termination
The Merger Agreement may be terminated at any time prior to the consummation of
the Transactions (whether before or after the required Company stockholder vote
has been obtained) by mutual written consent of the Company and Metromile and in
certain other limited circumstances, including if the Transactions have not been
consummated by May 1, 2021.
The Company may also terminate the Merger Agreement if Metromile does not
deliver to the Company (i) within 10 business days following the date of the
Merger Agreement, Stockholder Support Agreements (as defined below) from a
sufficient number of the Metromile stockholders constituting requisite consent
in support of the Merger, or (ii) within 15 business days following the date of
the Merger Agreement, the consolidated financial statements of Metromile and its
subsidiaries as of December 31, 2019, audited in accordance with the standards
of the Public Company Accounting Oversight Board, together with the auditor's
signed opinion on such financial statements.
If the Merger Agreement is validly terminated, no party thereto will have any
liability or any further obligation to any other party under the Merger
Agreement, with certain limited exceptions, including liability for any
intentional and willful breach of the Merger Agreement.
The Merger Agreement has been approved by the Company's board of directors, and
the board has recommended that the Company's stockholders adopt the Merger
Agreement and approve the Transactions.
The Merger Agreement contains representations, warranties and covenants that the
respective parties made to each other as of the date of such agreement or other
specific dates. The assertions embodied in those representations, warranties and
covenants were made for purposes of the contract among the respective parties
and are subject to important qualifications and limitations agreed to by the
parties in connection with negotiating such agreement. The representations,
warranties and covenants in the Merger Agreement are also modified in important
part by the underlying disclosure schedules which are not filed publicly and
which are subject to a contractual standard of materiality different from that
generally applicable to stockholders and were used for the purpose of allocating
risk among the parties rather than establishing matters as facts. The Company
does not believe that these schedules contain information that is material to an
investment decision. Investors are not third-party beneficiaries under the
Merger Agreement and should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under the heading "PIPE Subscription Agreements" in
Item 1.01 above is incorporated by reference herein. The shares of Class A
common stock to be issued in the PIPE Investment in connection with the Closing
will not be registered under the Securities Act, in reliance on the exemption
from registration provided by Section 4(a)(2) of the Securities Act.
Item 7.01 Regulation FD Disclosure.
Attached hereto as Exhibit 99.l and incorporated into this Item 7.01 by
reference is the investor presentation that will be used by the Company in
making presentations to certain existing and potential stockholders of the
Company with respect to the Transactions.
Attached hereto as Exhibit 99.2 and incorporated into this Item 7.01 by
reference is a copy of the joint press release issued on November 24, 2020 by
the Company and Metromile announcing the execution of the Merger Agreement.
The Company and Metromile management will hold a joint investor conference call
on November 24, 2020 at 9:00 a.m. (Eastern time) to discuss the Metromile
business and the Transactions. The conference call may be accessed by dialing
(877) 407-0789 for domestic callers or (201) 689-8562 for international callers.
Once connected with the operator, please provide the conference ID of
"13713586." A copy of the script for this conference call is also furnished as
Exhibit 99.3 to this report.
The information in this Item 7.01 (including Exhibits 99.1, 99.2 and 99.3) is
being furnished and shall not be deemed to be filed for purposes of Section 18
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise be subject to the liabilities of that section, nor shall it be deemed
to be incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act.
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Additional Information About the Transaction and Where to Find It
The Company intends to file with the SEC a Registration Statement on Form S-4,
which will include a preliminary proxy statement/prospectus, in connection with
the Transactions and will mail a definitive proxy statement/prospectus and other
relevant documents to its stockholders. The Company's stockholders and other
interested persons are advised to read, when available, the preliminary proxy
statement/prospectus, and amendments thereto, and the definitive proxy
statement/prospectus in connection with the Company's solicitation of proxies
for its stockholders' meeting to be held to approve the Transactions because the
proxy statement/prospectus will contain important information about the Company,
Metromile and the Transactions. The definitive proxy statement/prospectus will
be mailed to stockholders of the Company as of a record date to be established
for voting on the Transactions. Stockholders will also be able to obtain copies
of the Registration Statement on Form S-4 and the proxy statement/prospectus,
without charge, once available, at the SEC's website at www.sec.gov or by
directing a request to: INSU Acquisition Corp. II, 2929 Arch Street, Suite 1703,
Philadelphia, PA 19104, Attn: Joseph W. Pooler, Jr.
Participants in Solicitation
The Company, Metromile and certain of their directors and officers may be deemed
participants in the solicitation of proxies of the Company's stockholders with
respect to the approval of the Transactions. Information regarding the Company's
directors and officers and a description of their interests in the Company is
contained in the Company's final prospectus relating to its initial public
offering, which was filed with the SEC. Additional information regarding the
participants in the proxy solicitation, including Metromile's directors and
officers, and a description of their direct and indirect interests, by security
holdings or otherwise, will be included in the Registration Statement on Form
S-4 and the definitive proxy statement/prospectus for the Transactions when
available. Each of these documents is, or will be, available at the SEC's
website or by directing a request to the Company as described above under
"Additional Information About the Transaction and Where to Find It."
In connection with the Transactions, at any time prior to the special meeting to
approve the Transactions, certain existing Company stockholders, which may
include certain of the Company's officers, directors and other affiliates, may
enter into transactions with stockholders and other persons with respect to the
Company's securities to provide such investors or other persons with incentives
in connection with the approval and consummation of the Transactions. While the
exact nature of such incentives has not yet been determined, they might include,
without limitation, arrangements to purchase shares from or sell shares to such
investors and persons at nominal prices or prices other than fair market value.
These stockholders will only effect such transactions when they are not then
aware of any material nonpublic information regarding the Company, Metromile or
their respective securities.
Forward Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by the use of
words such as "anticipate", "believe", "could", "continue", "expect",
"estimate", "may", "plan", "outlook", "future" and "project" and other similar
expressions that predict or indicate future events or trends or that are not
statements of historical matters. These statements, which involve risks and
uncertainties, relate to analyses and other information that are based on
forecasts of future results and estimates of amounts not yet determinable and
may also relate to the Company's or Metromile's future prospects, developments
and business strategies. In particular, such forward-looking statements include
statements concerning the timing of the Transactions; the business plans,
objectives, expectations and intentions of the public company once the
transaction is complete, and Metromile's estimated and future results of
operations, business strategies, competitive position, industry environment and
potential growth opportunities. These statements are based on the Company's or
Metromile's management's current expectations and beliefs, as well as a number
of assumptions concerning future events.
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Such forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside the Company's or Metromile's control that could cause actual results to
differ materially from the results discussed in the forward-looking statements.
These risks, uncertainties, assumptions and other important factors include, but
are not limited to, (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the Merger Agreement;
(2) the inability to complete the transactions contemplated by the Merger
Agreement due to the failure to obtain approval of the stockholders of the
Company or other conditions to closing in the Merger Agreement; (3) the ability
of the public entity to meet Nasdaq's listing standards following the
Transactions; (4) the inability to complete the PIPE Investment; (5) the risk
that the proposed transaction disrupts current plans and operations of Metromile
as a result of the announcement and consummation of the transactions described
herein; (6) the ability to recognize the anticipated benefits of the proposed
business combination, which may be affected by, among other things, competition,
the ability of the combined company to grow and manage growth profitably,
maintain relationships with suppliers and agents and retain its management and
key employees; (7) costs related to the proposed business combination; (8)
changes in applicable laws or regulations and delays in obtaining, adverse
conditions contained in, or the inability to obtain necessary regulatory
approvals required to complete the business combination; (9) the possibility
that Metromile may be adversely affected by other economic, business, regulatory
and/or competitive factors; (10) the outcome of any legal proceedings that may
be instituted against the Company, Metromile or any of their respective
directors or officers, following the announcement of the potential transaction;
and (11) the failure to realize anticipated pro forma results and underlying
assumptions, including with respect to estimated stockholder redemptions.
Additional factors that could cause actual results to differ materially from
those expressed or implied in forward-looking statements can be found in the
Company's final prospectus for its initial public offering, subsequently filed
quarterly reports on Form 10-Q and current reports on Form 8-K, which are
available, free of charge, at the SEC's website at www.sec.gov, and will also be
provided in the Registration Statement on Form S-4 and the Company's proxy
statement/prospectus when available. New risks and uncertainties arise from time
to time, and it is impossible for us to predict these events or how they may
affect us. You are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made, and the
Company and Metromile undertake no obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.
This communication is not intended to be all-inclusive or to contain all the
information that a person may desire in considering an investment in the Company
and is not intended to form the basis of an investment decision in the Company.
All subsequent written and oral forward-looking statements concerning the
Company and Metromile, the proposed transaction or other matters and
attributable to the Company and Metromile or any person acting on their behalf
are expressly qualified in their entirety by the cautionary statements above.
Disclaimer
This communication shall neither constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of securities in
any jurisdiction in which the offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities laws of any such
jurisdiction.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Merger and Reorganization, dated November 24,
2020, by and among INSU Acquisition Corp. II, INSU II Merger Sub Corp.
and MetroMile, Inc.*
10.1 Sponsor Share Cancellation and Vesting Agreement, dated November 24,
2020, by and among INSU Acquisition Corp. II, Insurance Acquisition
Sponsor II, LLC and Dioptra Advisors II, LLC.
10.2 Form of Stockholder Support Agreement by and among INSU Acquisition
Corp. II, MetroMile, Inc. and the Persons set forth on Schedule I
thereto.
10.3 Sponsor Support Agreement dated November 24, 2020, by and among INSU
Acquisition Corp. II, Insurance Acquisition Sponsor II, LLC, Dioptra
Advisors II, LLC, MetroMile, Inc. and the officers and directors of INSU
Acquisition Corp. II
10.4 Form of Lock-Up Agreement
10.5 Form of PIPE Subscription Agreement
10.6 Form of Registration Rights Agreement
99.1 Investor Presentation
99.2 Press Release, dated November 24, 2020
99.3 Script for November 24, 2020 Investor Call
* Schedules and other similar attachments to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish
supplementally a copy of all omitted schedules to the Securities and Exchange
Commission upon its request.
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