AGM Information • Oct 6, 2021
AGM Information
Open in ViewerOpens in native device viewer
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the action you should take, you are recommended to seek your own personal professional financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
If you sell or have sold or otherwise transferred or do transfer all of your Ordinary Shares please send this document, at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. This document should not, however, be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws of such jurisdiction. If you have sold or transferred only part of your holding of Ordinary Shares, you should retain this document and consult the stockbroker, bank or other agent through whom the sale or transfer was effected.
This document should be read in conjunction with the Form of Proxy available at www.signalshares.com or otherwise upon request from the Company's registrar and the definitions set out at Part III of this document. The whole of this document should be read and, in particular, your attention is drawn to the letter from the Chairman of the Company set out at Part I of this document which contains the unanimous recommendation by the Directors to Shareholders to vote in favour of the Resolution to be proposed at the General Meeting.
The contents of this document should not be construed as legal, business or tax advice. Each Shareholder should consult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.
(incorporated under the Laws of England & Wales with registered number 03320972)
Proposed amendment to terms of option agreement in relation to Xaar's remaining
Notice of the General Meeting of Xaar plc to be held at the offices of Xaar plc at 1 Hurricane Close, Ermine Business Park, Huntingdon, Cambridgeshire, PE29 6XX UK at 10.00 a.m. on 25 October 2021 is set out at Part IV of this document. If a Shareholder wishes to appoint a proxy (or multiple proxies) they may do so at www.signalshares.com and if paper proxy forms are required, the Shareholder should contact the Company's registrar using the details provided in note 1 to the Notice of General Meeting set out in Part IV of this document. Submission of a proxy vote shall not preclude a member from attending and voting in person at the meeting in respect of which the proxy is appointed or at any adjournment thereof. To be effective, the proxy vote must be submitted at www.signalshares.com or by post to Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds LS1 4DL so as to have been received by the Company's registrars not less than 48 hours (excluding weekends and public holidays) before 10.00 a.m. on 25 October 2021. Any power of attorney or other authority under which the proxy is submitted must be returned to the Company's registrars within the time periods and in line with the instructions set out in the Notice of General Meeting set out in Part IV of this document.
Investec, which is authorised in the UK by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority, is acting exclusively for the Company in connection with the Revised Call Option and not for any other person and will not be responsible to any other person for providing the protections afforded to its customers, or for providing advice in relation to the Revised Call Option, the contents of this document or any accompanying documents or any arrangement referred to therein.
Apart from the responsibilities and liabilities, if any, which may be imposed on Investec by FSMA or the regulatory regime established thereunder, Investec does not accept any responsibility whatsoever and makes no representation or warranty, express or implied, for or in relation to the contents of this document including its accuracy, completeness or verification or for or in relation to any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Revised Call Option and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Accordingly, Investec disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this document.
A summary of the action to be taken by Shareholders is set out in Part I of this document and in the Notice of General Meeting set out at Part IV of this document.
| PART I | LETTER FROM THE CHAIRMAN OF XAAR PLC | 7 |
|---|---|---|
| PART II | ADDITIONAL INFORMATION | 14 |
| PART III | DEFINITIONS AND GLOSSARY | 17 |
| PART IV | NOTICE OF GENERAL MEETING | 20 |
Each of the times and dates in the table below is indicative only and may be subject to change.
| Latest time and date for receipt of proxy vote from Shareholders for 10.00 a.m. on 21 October 2021 the General Meeting Latest time and date for receipt of CREST proxy instructions from 10.00 a.m. on 21 October 2021 Shareholders Voting Record Time for General Meeting 10.00 a.m. on 21 October 2021 General Meeting 10.00 a.m. on 25 October 2021 Expected date of Completion 1 November 2021 |
Date of this document | 6 October 2021 |
|---|---|---|
(2) References to times in this document are to London time unless otherwise stated.
The UK government's roadmap to lifting the restrictions on public gatherings due to the COVID-19 pandemic were effected from 19 July 2021. The Company will therefore hold the General Meeting as an open meeting, with shareholders able to attend in person in the usual way (to the extent this remains possible in accordance with UK Government guidance, which may change after the publication of this document). The wellbeing of our Shareholders, employees and advisers is of primary importance to the Company. While our preference is to welcome Shareholders in person to the General Meeting, we will be practising social distancing and face coverings will need to be used.
If a Shareholder is attending the General Meeting in person, we require them to adhere to the site guidelines in place at the time in relation to health, safety and security. For the safety of others, in line with the UK Government guidance and legislation, please do not attend the General Meeting in person if you are experiencing any of the symptoms connected with COVID-19 or are otherwise required to isolate or quarantine.
The Company will continue to closely monitor the developing impact of COVID-19, including the latest UK Government guidance. Should it become appropriate to revise the current arrangements for the General Meeting, any such changes will be notified to Shareholders through our website at www.xaar.com and, where appropriate, by announcement made by the Company to a Regulatory Information Service.
If a Shareholder wishes to appoint a proxy (or multiple proxies) they may do so at www.signalshares.com and if paper proxy forms are required, the Shareholder should contact the Company's registrar's using the details provided in note 1 to the notes to the Notice of General Meeting set out in Part IV of this document.
In light of the continuing uncertainty, the Board strongly urge shareholders to complete a Form of Proxy and return it in accordance with the instructions set out therein and to submit any questions in advance of the General Meeting by email to [email protected]. Questions should, of course, be on the business and affairs of the Company and, to the extent the Company is in a position to do so, the Company will aim to publish answers to all that are relevant and appropriate on the Company's website (www.xaar.com) after the General Meeting. To be effective, the proxy
(1) The times and dates set out in the expected timetable of principal events above and mentioned throughout this document may be adjusted by Xaar (in consultation with Investec), in which event details of the new times and dates will be announced to a Regulatory Information Service.
vote must be submitted at www.signalshares.com so as to have been received by the Company's registrars not less than 48 hours (excluding weekends and public holidays) before 10.00 a.m. on 25 October 2021. If returning a Form of Proxy in hard copy the Form of Proxy should be deposited at the Company's UK registrar, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds LS1 4DL, not later than 10.00 a.m. on 21 October 2021. For further details see the notes to the Notice of General Meeting set out at the end of this document.
It is important that as many votes as possible are cast. Whether or not you plan to attend the General Meeting in person, you are encouraged to complete and return your Form of Proxy, as soon as possible. Completion and return of the Form of Proxy (in hard copy or electronic form as applicable) will not preclude a Shareholder from attending and voting at the General Meeting, in person.
If you have any questions relating to this document or the Form of Proxy, please call the Company's registrar on 0371 664 0300 or, if calling from outside the UK, on +44 (0)371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 a.m. and 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales. For legal reasons, the Company's registrar will not be able to provide advice on the merits of the Revised Call Option or to give financial advice.
Completion of the Revised Call Option is subject to conditions which are described in detail in Part I of this document.
All times referred to in this document are, unless otherwise stated, references to London (BST) time.
Certain terms used in this document, including capitalised terms and certain technical and other terms, are explained in Part III of this document.
This document includes statements that are, or may be deemed to be, forward looking statements. These forward looking statements can be identified by the use of forward looking terminology, including the terms "anticipates", "believes", "estimates", "expects", "intends", "may", "plans", "projects", "should" or "will", or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, statements regarding Xaar's and/or the Group's intentions, beliefs or current expectations concerning, amongst other things, Xaar's results of operations, financial position, prospects, growth, strategies and expectations for the industry in which it operates. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward looking statements are not guarantees of future performance and the actual results of Xaar's operations, financial position, and the development of the markets and the industry in which Xaar operates may differ materially from those described in or suggested by, the forward looking statements contained in this document. In addition, even if the results of operations, financial position, and the development of the markets and the industry in which Xaar and/or the Group operates, are consistent with the forward looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments of Xaar and/or the Group to differ materially from those expressed or implied by the forward looking statements including, without limitation, general economic and business conditions, industry trends, competition, changes in regulation, currency fluctuations, changes in its business strategy, political and economic uncertainty.
Forward looking statements may, and often do, differ materially from actual results. Any forward looking statements in this document reflect Xaar's and/or the Group's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Xaar's and/or the Group's operations, results of operations and growth strategy.
Save as required by the Prospectus Regulation Rules, the Listing Rules, the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules, Xaar undertakes no obligation to update these forward looking statements and will not publicly release any revisions it may make to these forward looking statements that may occur due to any change in Xaar's and/or the Group's expectations or to reflect events or circumstances after the date of this document.
| Directors | Andrew Herbert John Mills Ian Tichias Chris Morgan Alison Littley |
|---|---|
| Company Secretary | Camila Cottage |
| Registered Office | 3950 Cambridge Research Park Waterbeach Cambridge CB25 9PE |
| Sponsor to the Company | Investec Bank plc 30 Gresham Street London EC2V 7QP |
| Legal Adviser to the Company | Mills & Reeve LLP Botanic House 100 Hills Road Cambridge CB2 1PH |
| Registrars | Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL |
| Auditors | Ernst & Young LLP One Cambridge Business Park Cowley Road Cambridge CB4 0DZ |
(incorporated under the Laws of England & Wales with registered number 03320972)
John Mills Chief Executive Officer Ian Tichias Chief Financial Officer Chris Morgan Non-Executive Director Alison Littley Senior Independent Director
Directors Registered Office Andrew Herbert Chairman 3950 Cambridge Research Park Waterbeach Cambridge CB25 9PE
6 October 2021
On 12 September 2019, Xaar announced that it had entered into an agreement with Stratasys Solutions Limited ("SSYS"), its partner in Xaar 3D to sell 20 per cent of the enlarged share capital of Xaar 3D to SSYS for US\$10 million (which was implemented in combination with an additional issuance of shares by Xaar 3D to SSYS), and grant SSYS a call option to acquire the remaining 55 per cent of Xaar 3D not held by SSYS for at least US\$33 million, exercisable over three years (the "Call Option"). Exercising such Call Option would entitle Xaar to receive a two percent royalty on Xaar 3D products and services sales for up to 15 years, subject to a US\$10 million cap (the "Two Per Cent Initial Earn-out").
In order to provide for staff incentivisation arrangements at Xaar 3D and in light of the proposed future divestment of Xaar's remaining interests in Xaar 3D, subsequent to the agreement of the Call Option, Xaar determined to set aside five per cent. of certain cash amounts to be received by Xaar from such future divestment for the purpose of staff incentivisation. Accordingly, the amounts payable to Xaar referred to below are shown, as applicable, net of such five per cent. (which, following the exercise of the Revised Call Option (as defined below) will, for practical reasons, be held by SSYS to be distributed to staff at Xaar 3D at SSYS' sole discretion).
Due to delays caused by the impact of the COVID-19 pandemic on the development of Xaar 3D products, the Directors believe there is a risk that the Xaar 3D programme may take longer than anticipated when it entered into the Call Option, and subsequently the Company would be required to commit additional cash funding to Xaar 3D of up to US\$10 million over the next two years. Additionally, the delays in the programme increase the risk of Stratasys deciding to not exercise the original Call Option before the end of 2022. The Board of Xaar has, therefore, conditionally agreed with SSYS to amend the terms of the Call Option (the "Revised Call Option") pursuant to the terms of a conditional call option amendment agreement entered into on 6 October 2021 (the "Call Option Amendment Agreement"). The proposed amendments to the financial terms of the Revised Call Option are, in summary, as follows:
The aggregate of the Initial Consideration together with the Three Per Cent Revised Earn-out and the Earn-out Payments is, therefore, up to US\$33.83 million (the "Revised Consideration").
Further details of the Call Option Amendment Agreement are set out in paragraph 6 below.
In connection with the Revised Call Option a new supply agreement has been entered into between Xaar 3D, XaarJet and SSYS on 6 October 2021 (the "New Supply Agreement") conditional upon completion of the Revised Call Option. The existing Supply Agreement (as defined below) shall be superseded by the New Supply Agreement and shall terminate upon completion of the Revised Call Option.
In addition a new service agreement to cater for certain transitional services has been entered into between the Company and Xaar 3D on 6 October 2021 (the "New Service Agreement") conditional upon completion of the Revised Call Option. The existing Service Agreement (as defined below) shall be superseded and shall terminate upon completion of the Revised Call Option.
SSYS, by virtue of its 45% shareholding in Xaar 3D, a subsidiary of Xaar, is a related party to the Company for the purposes of Chapter 11 of the Listing Rules. The proposed amendments to the Call Option and the entering into of the Revised Call Option by Xaar is, therefore, considered to be a related party transaction for the purposes of Chapter 11 of the Listing Rules. Consequently, the Revised Call Option is subject to and conditional upon the approval of Shareholders and this document is being sent to all Shareholders to convene the General Meeting in order to seek this approval.
Pursuant to the terms of the Call Option Amendment Agreement SSYS and Xaar 3D Holdings have undertaken to exercise the Revised Call Option conditional upon, amongst other things, Shareholders approving the amendment to the Call Option. Subject to the passing of the Resolution and the satisfaction of certain other conditions, including there having been no material adverse effect on the business of Xaar 3D and the receipt of a third party consent, which is required under the terms of a licence pertaining to certain of Xaar 3D's technology, it is anticipated that completion, which will result in the sale of Xaar 3D to SSYS, will occur on the 5th business day following the passing of the Resolution.
The purpose of this document is to provide Shareholders with details of the Revised Call Option, to convene the General Meeting and to explain why the Board considers the Revised Call Option to be in the best interests of the Company and its Shareholders as a whole and why the Board unanimously recommends that Shareholders vote in favour of the Resolution to approve the Revised Call Option to be proposed at the General Meeting, as each member of the Board who holds Ordinary Shares intends to do in respect of his own beneficial holdings of Ordinary Shares.
Shareholders are being asked to vote in favour of the Resolution to be proposed at the General Meeting because the passing of this Resolution is required to implement the Revised Call Option. The passing of the Resolution is required pursuant to the Listing Rules as the Revised Call Option is a related party transaction.
Xaar 3D is developing 3D printing machines which leverage the benefits of industrial Xaar printheads. These machines deposit a fine layer of plastic powder, onto which Xaar piezoelectric printheads print a high resolution cross-sectional pattern of the parts to be manufactured. The complete powder layer is exposed to infra-red energy, causing the imaged powder to absorb this energy and fuse. This process is then repeated layer by layer until the whole build is complete.
In order to maximise the revenue opportunity and expedite time-to-market for Xaar 3D's products, on 11 July 2018, Xaar announced a joint investment agreement with SSYS to develop 3D printing solutions based on high speed sintering technologies, forming Xaar 3D. Xaar's position in the 3D business is one of technology enabler and our end goal has been, and remains to, supply printheads for use in 3D applications and not become an OEM in the sector. That was the rationale behind our joint venture agreement with SSYS, a recognised leader in 3D with a proven track record and strong routes to market, and the subsequent option agreement signed with SSYS.
For the year ended 31 December 2020, Xaar 3D generated a loss before tax of approximately £6.4 million. The value of the gross assets of Xaar 3D as at 31 December 2020 was approximately £10.0 million.
For the six months ended 30 June 2021, Xaar 3D recorded a loss of £3.5 million, up from £2.9 million recorded over the six months ended 30 June 2020. The increased level of losses in the business primarily relate to R&D expenses recognised in the period, which increased by £0.5 million compared to H1 2020.
SSYS, a subsidiary of SSYS Ltd, one of the world's leading 3D printing companies, owns 45 per cent of Xaar 3D as at the date of this document.
SSYS Ltd, (NASDAQ: SSYS) and its wider group of companies is a global leader in additive manufacturing or 3D printing technology and is the manufacturer of FDM®, PolyJet™, P3, SAF and stereolithography 3D printers. The group's technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For more than 30 years, SSYS group products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. Their 3D printing ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.
On 12 September 2019, Xaar announced that it had entered into an agreement with SSYS to sell 20 per cent of the enlarged share capital of Xaar 3D to SSYS for US\$10 million (which was implemented in combination with an additional issuance of shares by Xaar 3D to SSYS), and grant SSYS a call option to acquire the remaining 55 per cent of Xaar 3D not held by SSYS for at least US\$33 million. Exercising such Call Option would entitle Xaar to receive a two percent royalty on Xaar 3D products and services sales for up to 15 years, subject to a US\$10 million cap. At the point of entering into the Call Option, Xaar 3D was recapitalised and Xaar 3D's funding was deemed sufficient to operate the business through to full commercialisation, with the sale of initial products being contributed to by the Group and SSYS.
In April 2020, the Board announced its strategy to return the Group to profitability and deliver sustainable growth for the long term. This included focussing on the Group's printhead business and Xaar Bulk technology; to focus on the Group's product print system business, ("EPS"); to utilise existing technologies and expand into adjacent markets; and to execute its 3D business unit strategy following the investment by SSYS in Xaar 3D in 2019.
As announced on 30 September 2020 in the Company's interim results for the six months ended 30 June 2020, the focus for Xaar 3D for 2020 was the successful testing of machines, shipping these machines to SSYS for beta trials and establishing the go-to-market teams and infrastructure prior to product launch. The Company announced on 14 January 2021 in its year end trading update that further progress with product development and testing in Xaar 3D, despite continued COVID-19 related delays, was made and the Company continues to work closely with SSYS to optimise the approach to commercialisation of the Xaar 3D product range.
It was announced on 27 April 2021, in the Company's results for the year ended 31 December 2020, that whilst Xaar 3D continued to make progress over 2020, it was impacted by the COVID-19 pandemic, which affected the programme most significantly in two areas. Firstly, due to restrictions put in place in Denmark, the number of people able to access the Copenhagen facility has been limited, and these limitations have restricted both the test capacity and the speed at which testing can take place. Secondly, travel restrictions have prevented the team from travelling and has meant face-to-face time with the sub-contract manufacturer has also been limited and has affected the program timeline.
Due to delays caused by the impact of the COVID-19 pandemic on the development of Xaar 3D products, the Directors believe there is a risk that the Xaar 3D programme may take longer than anticipated when it entered into the Call Option, and subsequently the Company would be required to commit additional cash funding to Xaar 3D of up to US\$10 million over the next two years. Subsequently, in the announcement of the Company's results for the year ended 31 December 2020, it was stated that Xaar 3D was classified as a discontinued operation and is held on the Group's balance sheet as an asset held for sale. Additionally, the delays in the programme increase the risk of Stratasys deciding to not exercise the original Call Option and means Xaar considers it to be unlikely that Stratasys would exercise their option before the end of 2022.
The Board announced on 14 September 2021 in the Company's results for the six months ended 30 June 2021, that its printhead business continues to perform well, with a growing pipeline of new product development. The Board believes the Group's ImagineX platform, which builds upon several technology and development programmes from the Group's legacy Bulk and Thin Film investment, is driving the next phase of Xaar's success by enabling the business to increase its addressable market whilst establishing market leading products across all sectors. The Board added that the Company's continued strong performance which, despite challenging market conditions, demonstrates the positive momentum its strategy is driving across the business.
On 12 July 2021 the Board announced the completion of the acquisition of FFEI Limited ("FFEI"), a leading integrator and manufacturer of industrial digital inkjet systems and digital life science technology for an initial cash consideration of £3.7 million, which reflected existing FFEI free cash reserves, with an additional £5.4 million deferred consideration to be paid out over three years (the "Acquisition"). The Acquisition of FFEI strengthens Xaar's capabilities and skills and will accelerate Xaar's existing growth strategy.
The Board, therefore, believes that its sole focus on delivering its printhead and print systems strategy will be vital to the future success of the business, and investment of both management time and capital (including the application of the proceeds from the Revised Call Option) should be prioritised in these business lines and not Xaar 3D as the underpin to the Group's future growth.
The payment terms of the Revised Call Option are as follows:
The payment due to be received by Xaar following the exercise of the Revised Call Option by SSYS will, therefore, be US\$12.83 million and the aggregate of the Initial Consideration together with the Three Per Cent Revised Earn-out and the Earn-out Payments is, therefore, up to US\$33.83 million.
Pursuant to the terms of the Call Option Amendment Agreement SSYS and Xaar 3D Holdings have undertaken to exercise the Revised Call Option, conditional amongst other matters, upon approval by the Shareholders of the amendment to the Call Option, and which will result in the sale of Xaar 3D to SSYS.
In addition to the financial terms detailed above, the Call Option Amendment Agreement includes terms consistent with a transaction of this nature including a non-compete undertaking pursuant to which the Company and its affiliates agree not to compete with the business of Xaar 3D for a period of three years from the date of completion, certain warranties and indemnities not considered to be unusual for a transaction of this nature and certain escrow terms to enable SSYS access to the Company's print-head technology in the unlikely event of the insolvency of the Company so as to enable SSYS to continue to manufacture the Xaar 3D products in such circumstances.
Whilst the Company has, in accordance with the terms of the Call Option Amendment Agreement, undertaken to procure that Xaar 3D Holdings shall perform on demand any of its obligations or undertakings under the Call Option Amendment Agreement, including any obligation to pay on demand any amount that Xaar 3D Holdings is liable to pay under the Call Option Amendment Agreement (and shall upon the default of any such payment obligation, pay and discharge that obligation on behalf of Xaar 3D Holdings), the liability of Xaar 3D Holdings under the warranties and indemnities included in the Call Option Amendment are, with the exception of certain warranties and indemnities given in relation to intellectual property (the "IP Warranties & Indemnities"), subject to a buy-side warranty and indemnity insurance policy (the "W&I Policy") that has been entered into in connection with the Call Option Amendment Agreement. Pursuant to the terms of the W&I Policy, the sole recourse of SSYS under those warranties and indemnities (not being the IP Warranties & Indemnities) in excess of £1.00 is to bring a claim against the W&I Policy. With regards to the IP Warranties & Indemnities, any recourse of SSYS is limited to any amounts of the Three Per Cent Revised Earn-out that actually becomes payable following the receipt of a claim against the IP Warranties & Indemnities and there would be no recourse against any amounts of the Three Per Cent Revised Earn-out already paid at such time, nor against the Initial Consideration or any Earn-out Payments.
The New Supply Agreement will be for a minimum duration of five years and thereafter it shall automatically renew for a term of three years unless either party serves notice to terminate. Pursuant to the terms of the New Supply Agreement, XaarJet has agreed to supply SSYS with printheads at an agreed level of pricing with XaarJet having the ability to upwardly adjust such pricing subject to certain usual restrictions. Save for certain specified amendments, XaarJet's standard warranty conditions shall apply to the printheads supplied under the New Supply Agreement.
The purpose of the New Service Agreement is to cater for certain transitional services required by SSYS following the exercise of the Revised Call Option. Pursuant to the terms of the New Service Agreement Xaar has agreed to provide Xaar 3D with certain ordinary course transitional services, including with regards to the provision of office space, finance and accounts support, procurement management and information technology, at an agreed level of pricing. The New Service Agreement provides SSYS with such transitional services for a period of 90 days from completion of the Revised Call Option, unless terminated earlier for convenience by SSYS, and save that certain services relating to the provision of office space shall continue until the lease relating to such office space is formally transferred from the Company to Xaar 3D. The liability of the Company under the New Service Agreement shall be limited to the fees payable to the Company thereunder.
The Directors believe that the following are the principal risks in relation to the proposed amendment of the terms of the Call Option:
7.2 If the Revised Call Option is not approved by Shareholders, the Directors estimate that Xaar may be required to commit additional cash funding of up to US\$10 million to Xaar 3D over the next two years which may otherwise have been invested in the Group's core printhead and EPS business, and there can be no assurance that these funds would be recouped on any possible future sale of Xaar 3D;
7.3 If the Revised Call Option is not approved by Shareholders, there can be no assurance that SSYS would exercise the Call Option and nor that Xaar would be able to dispose of its interest in Xaar 3D at a later date;
As noted above, the Revised Call Option is subject to the passing of the Resolution at the General Meeting. A notice convening the General Meeting, to be held at the offices of Xaar at 1 Hurricane Close, Ermine Business Park, Huntingdon, Cambridgeshire, PE29 6XX UK at 10.00 a.m. on 25 October 2021, is set out at Part IV of this document.
The General Meeting is being convened for the purposes of considering and, if thought fit, passing the Resolution which is required to implement the Revised Call Option. Shareholders will be able to join and participate in the General Meeting in person (to the extent this remains possible in accordance with UK Government guidance, which may change after the publication of this document). Shareholders are encouraged to submit questions in advance of the General Meeting by email to [email protected]. If a Shareholder is attending the General Meeting in person, we require them to adhere to the site guidelines in place at the time in relation to health, safety and security. Further information will be provided to you upon your registration. This will allow us to properly implement social distancing measures and other health and safety precautions including mask coverings which will need to be used. For the safety of others, in line with the UK Government guidance and legislation, please do not attend the General Meeting in person if you are experiencing any of the symptoms connected with COVID-19 or are otherwise required to isolate or quarantine.
The Company will continue to closely monitor the developing impact of COVID-19, including the latest UK Government guidance. Should it become appropriate to revise the current arrangements for the General Meeting, any such changes will be notified to Shareholders through our website at www.xaar.com and, where appropriate, by announcement made by the Company to a Regulatory Information Service.
Each of the Directors is supportive of the Revised Call Option.
Each of the Directors who holds Ordinary Shares has irrevocably undertaken to vote in favour of the Resolution in respect of his own beneficial holding to the extent that he has any such holding, which together amount to 275,000 Ordinary Shares representing approximately 0.4 per cent. of the Ordinary Shares as at 5 October 2021 (being the last practicable date prior to the publication of this document).
Under the Listing Rules, a Related Party is precluded from voting in relation to the Revised Call Option. SSYS has undertaken to the Company that it will not, and will procure that its Associates will not, exercise their voting rights, in relation to the Resolution, in respect of any Ordinary Shares they may hold as at the date of the General Meeting.
If a Shareholder wishes to appoint a proxy (or multiple proxies) they may do so at www.signalshares.com and if paper proxy forms are required, the Shareholder should contact the Company's registrar's using the details provided in note 1 to the notes to the Notice of General Meeting set out in Part IV of this document. Submission of a proxy vote shall not preclude a member from attending and voting in person at the meeting in respect of which the proxy is appointed or at any adjournment thereof. To be effective, the proxy vote must be submitted at www.signalshares.com so as to have been received by the Company's registrars not less than 48 hours (excluding weekends and public holidays) before 10.00 a.m. on 25 October 2021. If returning a Form of Proxy in hard copy the Form of Proxy should be deposited at the Company's UK registrar, Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds LS1 4DL not later than 10.00 a.m. on 21 October 2021. You are requested to complete and return the Form of Proxy, in accordance with the instructions contained therein as soon as possible. Any power of attorney or other authority under which the proxy is submitted must be returned to the Company's registrars within the time periods and in line with the instructions set out in the Notice of General Meeting set out in Part IV of this document.
If you hold your Ordinary Shares in CREST, you may appoint a proxy by completing and transmitting a CREST Proxy Instruction to agent ID RA10 so that it is received by no later than 10.00 a.m. on 21 October 2021. The completion and return of a proxy vote (electronically or otherwise) or completion and transmission of a CREST proxy instruction will not prevent you from attending the General Meeting and voting in person if you wish to do so.
Shareholders should read the Notice of General Meeting at the end of this document for the full text of the Resolution and for further details about the General Meeting.
Your attention is drawn to the additional information set out at Part II of this document. You are advised to read the whole of this document and not to rely solely on the information contained in this letter.
The Board, having been so advised by Investec, in Investec's capacity as the Company's Sponsor is of the opinion that the Revised Call Option is fair and reasonable so far as the Shareholders are concerned. The Board is also of the opinion that the Revised Call Option is in the best interests of the Company and its Shareholders as a whole and, therefore, recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own respective beneficial holdings of, in aggregate, 275,000 Ordinary Shares, representing approximately 0.4 per cent. of the Company's existing issued share capital. In giving its advice, Investec has taken into account the commercial assessment of the Directors.
Yours faithfully
Andrew Herbert Chairman
As at 24 September 2021 (being the last practicable date prior to the publication of this document), in so far as it is known to the Company, the name of each person who holds voting rights (within the meaning of Chapter 5 of the Disclosure and Transparency Rules as incorporated by reference under the Articles) representing 3 per cent. or more of the total voting rights in respect of the Ordinary Shares, are as follows:
| Name | Number of shares |
Percentage |
|---|---|---|
| Schroders Investment Management | 22,791,868 | 29.1 |
| Aberforth Partners | 7,075,267 | 9.0 |
| Odyssean Capital | 5,100,000 | 6.5 |
| Columbia Threadneedle Investments | 4,966,183 | 6.3 |
| Hargreaves Lansdown Asset Management | 4,553,468 | 5.8 |
| Invesco (Oppenheimer Funds) | 4,068,105 | 5.2 |
| Interactive Investor | 3,601,775 | 4.6 |
3.1 Save for the Investment Agreement dated 11 September 2019 (as amended on 15 October 2019), the Supply Agreement dated 11 September 2019 and the Master Distribution Agreement dated 11 September 2019 (as amended on 15 October 2019), details of which are set out below, and the Call Option Amendment Agreement, details of which are set out in Part I of this document, there are no other contracts, not being entered into in the ordinary course of business, which has been entered into by the Company or a member of the Group within two year's immediately preceding the date of this document and which is, or may be, material to Shareholders to make a properly informed decision of how to vote on the Resolution.
An investment agreement was entered into on 11 September 2019 between SSYS, SSYS Ltd, Xaar 3D Holdings, Xaar and Xaar 3D (the "Investment Agreement"). Under the Investment Agreement, SSYS undertook to exercise its option to subscribe for 226 Xaar 3D shares for an aggregate subscription price of US\$4 million and the unexercised part of any pre-existing option was cancelled. Xaar 3D Holdings agreed to sell a further 454 Xaar 3D shares to SSYS for US\$10 million. Xaar 3D Holdings agreed to subscribe for a further 74 Xaar 3D shares for an aggregate subscription price of US\$1.79 million; and SSYS agreed to subscribe for 60 Xaar 3D shares for an aggregate subscription price of US\$1.46 million. Additionally, Xaar 3D Holdings granted to SSYS the Call Option. The Call Option may be exercised by SSYS at any time during a three year period and the consideration payable would be the base exercise price and the earn-out payments, calculated as:
SSYS shall pay Xaar an amount equal to two per cent. of the gross revenue of SSYS, Xaar 3D and their affiliates for the 15 year period from the supply, leasing or rental of 3D printers using or leveraging HSS technology (or other derivative technology) to third parties as well as technical and maintenance services relating to those products capped at US\$10 million.
The Investment Agreement contained customary warranties given on behalf of Xaar 3D, Xaar 3D Holdings and SSYS.
The Investment Agreement (together with the original investment agreement dated 11 July 2018 between, inter alia, the Company, Xaar 3D Holdings, Xaar 3D and SSYS) will be terminated in the event that the Call Option Amendment Agreement becomes unconditional.
On 11 September 2019 XaarJet entered into an agreement with Xaar 3D pursuant to which XaarJet agreed to supply Xaar 3D with Xaar printheads, consumables, spare parts, software and services and offer preferential printhead pricing to Xaar 3D (the "Supply Agreement"). The agreement had an initial term of five years and thereafter it shall automatically renew on an annual basis unless either party serves notice to terminate.
The Supply Agreement will be terminated in the event that the Call Option Amendment Agreement becomes unconditional.
On 11 July 2018 the Company, XaarJet and Xaar Technology Ltd entered into an agreement with Xaar 3D pursuant to which the Company, XaarJet and Xaar Technology Ltd agreed to provide Xaar 3D with certain intra-group management services including finance, human resources and information technology in consideration for the payment of a quarterly fee (the "Service Agreement"). The agreement endures unless terminated by the parties in accordance with its terms.
The Service Agreement will be terminated in the event that the Call Option Amendment Agreement becomes unconditional.
On 11 September 2019 Xaar 3D appointed SSYS Ltd as exclusive distributor of 3D printers using HSS technology and associated spare points and consumables the ("Master Distribution Agreement") subject to certain performance obligations on SSYS Ltd and Xaar 3D demonstrating that at least one initial product is ready for commercial launch.
4.1 There has been no significant change in the financial position of the Group since 30 June 2021, being the date to which the half year results for the six months ended 30 June 2021 were prepared.
Investec has given and not withdrawn its written consent to the inclusion in this document of the references to its name in the form and context in which they appear.
The website of the Company is www.xaar.com and this document is available on that website. Except to the extent expressly stated in this document, information on that website, any website mentioned in this document or any website directly or indirectly linked to those websites has not been verified and does not form part of this document and Shareholders should not rely on it.
The US Dollar/pound sterling rate was 1.36 (rounded down to two decimal points) on 5 October 2021 (being the last practicable date prior to publication of this document). Unless otherwise stated, this rate has been applied to references in this document where amounts are expressed in US Dollars and a pound sterling equivalent.
Copies of the following documents will be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered office of the Company, which is located at 3950 Cambridge Research Park, Waterbeach, Cambridge, CB25 9PE until the General Meeting, will also be available for inspection at the General Meeting for at least 15 minutes prior to and during the meeting, and will be accessible to verified shareholders via the Company's website at https://www.xaar.com/en/ campaigns/xaar3d.
Dated: 6 October 2021
| "Acquisition" | has the meaning given to it in paragraph 7 of Part 5 of this document; |
|---|---|
| "Articles of Association" or "Articles" |
the articles of association of the Company; |
| "Associate" | has the meaning given to it in the Listing Rules; |
| "Board" | the board of directors of the Company; |
| "Call Option" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Call Option Amendment Agreement" |
has the meaning given to it in paragraph 1 of Part I of this document; |
| "Companies Act 2006" | the United Kingdom's Companies Act 2006, as amended from time to time; |
| "Companies Acts" | has the meaning given to it in section 2 of the 2006 Act; |
| "Company" or "Xaar" | Xaar plc a company registered in England and Wales with company number 03320972 whose registered office is at 3950 Cambridge Research Park, Waterbeach, Cambridge, CB25 9PE; |
| "Completion" | completion of the Call Option Amendment Agreement in accordance with its terms |
| "CREST" | the relevant computer system, as defined in the CREST Regulations, for paperless settlement of share transfers and the holding of shares in uncertificated form (in respect of which Euroclear is the operator, as defined in the CREST Regulations); |
| "CREST Manual" | the rules governing the operation of CREST as published by Euroclear; |
| "CREST member" | a person who has been admitted by Euroclear as a system member (as defined in the CREST Regulations); |
| "CREST participant" | a person who is, in relation to CREST, a system participant (as defined in the CREST Regulations); |
| "CREST Regulations" | Companies Uncertificated Securities (Jersey) Order 1998, as amended from time to time; |
| "CREST sponsor" | a CREST participant admitted to CREST as a CREST sponsor; |
| "Directors" | the directors of the Company whose names are set out on page 6 of this document; |
| "Disclosure and Transparency Rules" |
the rules made by the FCA under Part VI of FSMA relating to the disclosure of information, as amended from time to time; |
| "Earn-out Payments" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Euroclear" | Euroclear UK & Ireland Limited; |
| "FCA" | the UK Financial Conduct Authority (or any successor regulatory organisation); |
| "FFEI" | has the meaning given to it in paragraph 7 of Part 5 of this document; |
| "Form of Proxy" | the form of proxy available at www.signalshares.com (and if paper forms are required from the Company's registrars) for use by Shareholders in relation to the General Meeting; |
| "FSMA" | the Financial Services and Markets Act 2000, as amended from time to time; |
|---|---|
| "General Meeting" | the general meeting of Xaar to be held on 25 October 2021 at the offices of Xaar at 1 Hurricane Close, Ermine Business Park, Huntingdon, Cambridgeshire, PE29 6XX UK, or any adjournment thereof, notice of which is set out at Part IV of this document; |
| "Group" or "Xaar Group" | the Company and each of its subsidiaries and subsidiary undertakings from time to time; |
| "HSS" | high speed sintering; |
| "Initial Consideration" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Investec" | Investec Bank plc; |
| "Investor" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Link Group" | the trading name of Link Market Services Limited; |
| "Listing Rules" | the listing rules made by the FCA under Part VI of FSMA, as amended from time to time; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "Memorandum" | the memorandum of association of the Company; |
| "Milestones" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Notice of General Meeting" | the notice of the General Meeting which is set out at Part IV of this document; |
| "New Service Agreement" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "New Supply Agreement" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Official List" | the Official List of the UK Listing Authority; |
| "Ordinary Shares" | ordinary shares of 10 pence each in the capital of the Company; |
| "Regulatory Information Service" |
one of the regulatory information services authorised by the UK Listing Authority to receive, process and disseminate regulatory information in respect of listed companies; |
| "Related Party" | a person or company meeting the definition of a related party in the Listing Rules; |
| "Resolution" | the ordinary resolution to be proposed at the General Meeting, as set out in the Notice of General Meeting, in connection with the Revised Call Option; |
| "Revised Call Option" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Revised Consideration" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "Service Agreement" | has the meaning given to it in paragraph 3.4 of Part II of this document; |
| "Shareholders" | holders of Ordinary Shares; |
| "SSYS" | Stratasys Solutions Limited, a company incorporated under the laws of England and Wales with registered number 08857563 and whose registered office is at Suite 1, 3rd Floor 11-12 St. James's |
| Square, London, United Kingdom, SW1Y 4LB, and is a wholly owned subsidiary of SSYS Ltd; |
|
|---|---|
| "SSYS Ltd" | Stratasys Limited, a company incorporated under the laws of the State of Israel and whose registered office is at Science Park, 1 Haim Holtzman Street, Rehovot, Israel; |
| "sterling" or "pound" or "£" or "pence" |
the lawful currency of the UK; |
| "subsidiary" | a subsidiary, as that term is defined in section 1159 of the Companies Act 2006; |
| "subsidiary undertaking" | a subsidiary undertaking, as that term is defined in section 1162 of the Companies Act 2006; |
| "Supply Agreement" | has the meaning given to it in paragraph 3.3 of Part II of this document; |
| "Three Per Cent Revised Earn-out" |
has the meaning given to it in paragraph 1 of Part I of this document; |
| "Two Per Cent Initial Earn-out" | has the meaning given to it in paragraph 1 of Part I of this document; |
| "uncertificated" or "in uncertificated form" |
recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST; |
| "United Kingdom" or "UK" | the United Kingdom of Great Britain and Northern Ireland; |
| "US\$" or "US Dollar" | the lawful currency of the United States of America; |
| "Voting Record Time" | in relation to the General Meeting, 10.00 a.m. on 21 October 2021 or, if the General Meeting is adjourned, 10.00 a.m. on the day which is two days before the date of the adjourned meeting; |
| "Xaar 3D" | Xaar 3D Limited a company registered in England and Wales with company number 11389105 whose registered office is at 3950 Cambridge Research Park, Waterbeach, Cambridge, CB25 9PE, United Kingdom; |
| "Xaar 3D Holdings" | Xaar 3D Holdings Limited a company registered in England and Wales with company number 11425540 whose registered office is at 3950 Cambridge Research Park, Waterbeach, Cambridge, CB25 9PE, United Kingdom; |
| "XaarJet" | XaarJet Limited, a wholly owned subsidiary of the Group. |
Notice is hereby given that a GENERAL MEETING of Xaar plc (the "Company") will be held at 10.00 a.m. on 25 October 2021 at the offices of Xaar plc at 1 Hurricane Close, Ermine Business Park, Huntingdon, Cambridgeshire, PE29 6XX UK, to consider and, if thought fit, pass the following resolution to be proposed as an ordinary resolution.
THAT the entry by the Company and certain other members of the Company's group into the revised arrangements regarding the call option agreement with Stratasys Solutions Limited regarding the sale of the Company's interest in Xaar 3D Limited as described in the circular to the Company's shareholders dated 6 October 2021 (the "Revised Call Option") of which this notice of general meeting forms part, a copy of which is produced to the meeting and, for the purposes of identification only, is initialled by the Chairman (the "Circular") be and it is hereby approved as a related party transaction for the purpose of Chapter 11 of the Listing Rules, and the directors of the Company (the "Directors") be and they are hereby authorised to do or procure to be done all such acts and things on behalf of the Company as they consider necessary or expedient for the purpose of giving effect to the Revised Call Option and this resolution and to carry the same into effect with such modifications, variations, revisions, waivers or amendments as the Directors may in their absolute discretion think fit, provided such variations, revisions, waivers or amendments are not of a material nature.
By order of the Board
Camila Cottage
Company Secretary Registered office:
6 October 2021 3950 Cambridge Research Park Waterbeach Cambridge CB25 9PE
10 The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).
11 On 6 October 2021 (the date of publication of this Notice), the Company's issued share capital comprised 78,343,434 ordinary shares of 10p each. Each ordinary share carries the right to one vote at a general meeting of the Company, except for the shares held in trust for the Xaar Share Incentive Plan totalling 72,237 ordinary shares and, therefore, the total number of voting rights in the Company on 6 October 2021 is 78,271,197.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.