SEC Form DEFM14A filed by Poshmark Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under §240.14a-12

POSHMARK, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

 

Dear Stockholders:

You are cordially invited to attend a special meeting of stockholders of Poshmark, Inc., a Delaware corporation (“Poshmark” or the “Company”), which will be held virtually on Tuesday, December 27, 2022 at 8:00 am, Pacific time (including any adjournments or postponements thereof, the “Special Meeting”). Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH and using the control number included in your proxy materials. You will not be able to attend the Special Meeting physically in person. For purposes of attendance at the Special Meeting, all references in the accompanying proxy statement to “present in person” or “in person” shall mean virtually present at the Special Meeting.

At the Special Meeting, you will be asked to consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of October 3, 2022 (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, NAVER Corporation, a public corporation organized under the laws of the Republic of Korea (“Parent”), Proton Parent, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Proton Parent”), and Proton Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Proton Parent (“Merger Sub”), which provides for the merger of Merger Sub with and into the Company, with the Company surviving as an indirect subsidiary of Parent (the “Merger”) on the terms and conditions set forth in the Merger Agreement.

If the Merger is completed, you will be entitled to receive $17.90 in cash, without interest and less any applicable withholding taxes (the “Merger Consideration”), for each share of Class A common stock, par value $0.0001 per share (“Class A common stock”), and Class B common stock, par value $0.0001 per share (“Class B common stock” and together with the Class A common stock, the “Poshmark common stock” or “Company common stock”), of the Company that you own as of immediately prior to the effective time of the Merger (the “Effective Time”), unless you seek and perfect your statutory appraisal rights under Delaware law.

After careful consideration, the members of Poshmark’s board of directors (the “Board”, the “Poshmark Board” or the “Company Board”) unanimously: (1) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger; (2) approved the execution, delivery and performance of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations and the consummation of the transactions contemplated by the Merger Agreement, including the Merger; (3) resolved to recommend that the Company’s stockholders adopt the Merger Agreement in accordance with the General Corporation Law of the State of Delaware; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the Company’s stockholders at the Special Meeting. Accordingly, the Poshmark Board recommends a vote “FOR” the proposal to adopt the Merger Agreement and “FOR” each of the other proposals to be voted on at the Special Meeting.

The proxy statement accompanying this letter provides you with more specific information concerning the Special Meeting, the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement. We encourage you to read this proxy statement, the accompanying annexes and any documents incorporated by reference in this proxy statement carefully and in their entirety.

Your vote is important, regardless of the number of shares of Class A common stock and Class B common stock of Poshmark you own. The Merger cannot be completed unless the Merger Agreement is adopted by stockholders holding a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting. The holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class on all proposals described in this proxy statement. Each

holder of Class A common stock is entitled to one (1) vote for each share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each share of Class B common stock owned on the record date. Whether or not you plan to attend the Special Meeting virtually, to ensure your representation at the Special Meeting, we urge you to vote via the Internet at www.proxydocs.com/POSH or by telephone at 1-855-635-6595 by following the instructions on the physical proxy card you received in the mail and which are also provided on that website; or, by signing, voting and returning the enclosed proxy card by mail in the prepaid reply envelope. If you attend the Special Meeting, you may vote electronically at the meeting even if you have previously returned your proxy card or have voted via the Internet or by telephone and your electronic vote at the Special Meeting will revoke any proxy that you have previously submitted.

If you are a beneficial owner of shares of Poshmark common stock held in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

If you have any questions or need assistance voting your shares, please contact Poshmark’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-0637 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

On behalf of the Poshmark Board, I thank you for your ongoing support and appreciate your consideration of these matters.

 

The accompanying proxy statement is dated November 25, 2022 and the form of proxy is first being mailed to holders of Poshmark common stock on or about November 25, 2022.

 

203 Redwood Shores Parkway, 8^th Floor

Redwood City, CA 94065

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held at 8:00 am, Pacific time, on Tuesday, December 27, 2022

To the stockholders of Poshmark, Inc.:

Notice is hereby given that a special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of stockholders of Poshmark, Inc., a Delaware corporation (the “Company” or “Poshmark”), will be held virtually on Tuesday, December 27, 2022, at 8:00 am, Pacific time, for the following purposes:

 

1.

To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of October 3, 2022 (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among Poshmark, NAVER Corporation, a public corporation organized under the laws of the Republic of Korea (“Parent” or “NAVER”), Proton Parent, Inc., a Delaware corporation (“Proton Parent”), and Proton Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Proton Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Poshmark, with Poshmark continuing as the surviving corporation of the merger as an indirect subsidiary of Parent (the “Merger”) (the “Merger Proposal”); and

 

2.	To consider and vote on a proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

Only holders of shares of Class A common stock, par value $0.0001 per share (“Class A common stock”), and Class B common stock, par value $0.0001 per share (“Class B common stock” and together with the Class A common stock, the “Poshmark common stock” or “Company common stock”), of the Company, as of the close of business on November 2, 2022, are entitled to notice of, and to vote at, the Special Meeting. For each of the foregoing proposals, the holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class. Each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date. Poshmark continues to use the virtual meeting format to facilitate stockholder attendance and participation by leveraging technology to communicate more effectively and efficiently with stockholders. This format empowers stockholders to participate fully from any location around the world, at no cost.

All stockholders are cordially invited to attend the Special Meeting. Similar to annual stockholder meetings, Poshmark is pleased to conduct the Special Meeting solely online via the Internet through a live webcast and online stockholder tools. Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH and using the control number included in your proxy materials. You will not be able to attend the Special Meeting physically in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present in person” or “in person” shall mean virtually present at the Special Meeting.

The Board of Directors of Poshmark recommends that stockholders vote “FOR” the proposal to adopt the Merger Agreement and “FOR” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies.

Under Delaware law, Poshmark stockholders who do not vote in favor of the adoption of the Merger Agreement will have the right to seek appraisal of the fair value of their shares of Poshmark common stock as determined by the Delaware Court of Chancery if the Merger is completed, but only if such stockholder submits a written demand for appraisal prior to the vote on the Merger Agreement and complies with the other Delaware law procedures for exercising statutory appraisal rights, which are summarized in the section titled “Appraisal Rights” in the accompanying proxy statement. A copy of Section 262, which details the applicable Delaware appraisal statute, may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.

Whether or not you plan to attend the Special Meeting virtually, to ensure your representation at the Special Meeting, we urge you to vote via the Internet at www.proxydocs.com/POSH or by telephone at 1-855-635-6595 by following the instructions on the physical proxy card you received in the mail and which are also provided on that website; or by signing, voting and returning the enclosed proxy card by mail in the prepaid reply envelope. If you attend the Special Meeting, you may vote electronically at the meeting even if you have previously returned your proxy card or have voted via the Internet or by telephone and your electronic vote at the Special Meeting will revoke any proxy that you have previously submitted.

If you are a beneficial owner of shares of Poshmark common stock held in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote “FOR” the adoption of the Merger Agreement and “FOR” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies.

 

YOUR VOTE IS IMPORTANT

Whether or not you plan to attend the Special Meeting virtually, please submit your proxy as soon as possible, whether over the Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail in the prepaid reply envelope. You may revoke your proxy or change your vote at any time before it is voted at the Special Meeting.

If you hold your shares of Poshmark common stock in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

If you are a Poshmark stockholder of record, voting electronically at the Special Meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” in order to vote virtually at the Special Meeting.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or vote by virtual ballot in person at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement but will have no effect on the other proposals.

You should carefully read and consider the entire proxy statement and the accompanying annexes, including the Merger Agreement attached as Annex A, along with all of the documents incorporated by reference in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. If you have any questions concerning the Merger Agreement, the Merger or the other transactions contemplated by the Merger Agreement, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help submitting a proxy to have your shares of Poshmark common stock voted, please contact Poshmark’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-0637 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

TABLE OF CONTENTS

 

		Page
SUMMARY			1
The Parties (page 1)			1
The Merger (page 2)			2
The Special Meeting (page 2)			2
Reasons for the Merger, Recommendation of the Poshmark Board (page 3)			3
Opinion of Goldman Sachs (page 3)			3
Certain Effects of the Merger (page 4)			4
Effects on the Company if the Merger Is Not Completed (page 4)			4
Treatment of Equity Awards (page 4)			4
Interests of the Company’s Directors and Executive Officers in the Merger (page 5)			5
Poshmark Common Stock Ownership of Directors and Executive Officers (page 6)			6
Voting Agreement (page 6)			6
Conditions of the Merger (page 6)			6
Regulatory Approvals Required for the Merger (page 7)			7
No-Shop; Poshmark Board Recommendation Change (page 7)			7
Termination (page 8)			8
Termination Fees (page 9)			9
Appraisal Rights (page 9)			9
Material U.S. Federal Income Tax Considerations (page 9)			9
Additional Information (page 10)			10
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			11
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			19
THE PARTIES			21
THE SPECIAL MEETING			23
Date, Time and Place			23
Purpose of the Special Meeting			23
Recommendation of the Poshmark Board			23
Record Date and Stockholders Entitled to Vote			23
Quorum			24
Vote Required			24
Voting Procedures			25
Revocation of Proxies			26
Voting at the Special Meeting			26

 

-i-

		Page
Solicitation of Proxies			27
Adjournments			27
Voting by Company Directors and Executive Officers			28
Voting Agreement			28
Assistance; Proxy Solicitor			29
PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT			30
PROPOSAL 2: ADJOURNMENT PROPOSAL			31
THE MERGER			32
General Description of the Merger			32
Background of the Merger			32
Reasons for the Merger; Recommendation of the Poshmark Board			43
Opinion of Goldman Sachs			46
Certain Financial Projections			51
Certain Effects of the Merger			54
Effects on the Company if the Merger Is Not Completed			56
Interests of the Company’s Directors and Executive Officers in the Merger			56
Material U.S. Federal Income Tax Considerations			63
U.S. Holders			64
Non-U.S. Holders			65
Regulatory Approvals Required for the Merger			66
Litigation Related to the Merger			67
Delisting and Deregistration of Poshmark Common Stock			67
THE MERGER AGREEMENT			68
The Merger			68
Closing and Effective Time of the Merger			68
Certificate of Incorporation and By-Laws; Directors and Officers			69
Consideration to be Received in the Merger			69
Treatment of Equity-Based Awards and the 2021 ESPP in the Merger			69
Procedure for Receiving Merger Consideration			70
Representations and Warranties			71
Covenants Regarding Conduct of Business by the Company Until the Effective Time			75
No-Shop; Poshmark Board Recommendation Change			78
Reasonable Best Efforts; Antitrust Filings			81
Proxy Statement; Poshmark Stockholders Meeting			83

 

-ii-

		Page
Financing Efforts			84
Indemnification of Directors and Officers and Insurance			84
Employee Benefits Matters			85
Conditions of the Merger			87
Termination			88
Effect of Termination			89
Termination Fees and Expenses			89
Specific Performance			90
Amendments and Waivers			90
Governing Law			90
VOTING AGREEMENT			91
Voting Provisions			91
Restrictions on Transfer			91
Waiver of Appraisal Rights and Certain Other Actions; Termination			92
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			93
APPRAISAL RIGHTS			96
HOUSEHOLDING			102
FUTURE STOCKHOLDER PROPOSALS			103
WHERE YOU CAN FIND ADDITIONAL INFORMATION			104
Annex A Merger Agreement			A-1
Annex B Opinion of Goldman Sachs & Co. LLC			B-1
Annex C Voting Agreement			C-1

 

-iii-

SUMMARY

This summary highlights selected information in this proxy statement and may not contain all of the information about the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement that are important to you. You should carefully read this proxy statement in its entirety, including the annexes hereto and the other documents to which we have referred you, for a more complete understanding of the matters being considered at the Special Meeting. You may obtain, without charge, copies of any of the documents we file with the Securities and Exchange Commission (the “SEC”) by following the instructions under the section of this proxy statement titled “Where You Can Find Additional Information.”

In this proxy statement: (1) the terms “we,” “us,” “our,” the “Company” and “Poshmark” refer to Poshmark, Inc.; (2) the term “Parent” or “NAVER” refers to NAVER Corporation; (3) the term “Proton Parent” refers to Proton Parent, Inc.; (4) the term “Merger Sub” refers to Proton Merger Sub, Inc.; (5) the term “Merger Agreement” refers to the Agreement and Plan of Merger, dated as of October 3, 2022, by and among the Company, Parent, Proton Parent and Merger Sub, as the same may be amended, supplemented or otherwise modified from time to time; (6) the term “Merger” refers to the merger of Merger Sub with and into Poshmark, with Poshmark continuing as the surviving corporation and as an indirect subsidiary of Parent as described in the Merger Agreement; (7) the term “Class A common stock” refers to shares of Class A common stock, par value $0.0001 per share, of the Company; (8) the term “Class B common stock” refers to shares of Class B common stock, par value $0.0001 per share, of the Company; (9) the term “Poshmark common stock” refers to shares of Class A common stock and shares of Class B common stock; and (10) the term “Special Meeting” refers to the special meeting of Poshmark stockholders described in this proxy statement, including any adjournments or postponements thereof.

The Parties (page 1)

Poshmark, Inc.

Poshmark is a Delaware corporation incorporated in 2011. Poshmark is a leading social marketplace for new and secondhand style for women, men, kids, pets, home and more. By combining the human connection of physical shopping with the scale, ease, and selection benefits of e-commerce, Poshmark makes buying and selling simple, social, and sustainable. Its community of more than 80 million registered users across the U.S., Canada, Australia, and India is driving the future of commerce while promoting more sustainable consumption.

Shares of Poshmark Class A common stock are listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “POSH.” Our principal executive office is located at 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065, our telephone number is (650) 262-4771, and our Internet address is http://www.poshmark.com. Information on Poshmark’s website is not incorporated by reference into or otherwise part of this proxy statement. Additional information about Poshmark is contained in our public filings. See the section of this proxy statement titled “Where You Can Find Additional Information.”

NAVER Corporation

NAVER is Korea’s largest internet company and one of the country’s leaders in both search and e-commerce. In Korea, NAVER is one of the leading platforms for both searching and shopping. NAVER operates Korea’s No.1 search engine and largest e-commerce platform, and is a leading provider of fintech services, digital content and cloud services to a global community. NAVER’s platform is home to more than 530,000 smartstores – “sellers” – and generates more than 70% of online shopping services in South Korea. NAVER cultivates a culture of ‘Founder-type leaders’ who continue to launch innovative mobile applications, including LINE (Japan’s No.1 messaging app), Zepeto and Webtoon. Upon completion of the Merger, Poshmark will be an indirect subsidiary of NAVER.

 

-1-

Proton Parent, Inc.

Proton Parent was formed by Parent solely for the purpose of engaging in the transactions contemplated by the Merger Agreement and has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Poshmark will be an indirect subsidiary of Parent. Upon completion of the Merger, Poshmark will be a subsidiary of Proton Parent.

Proton Merger Sub, Inc.

Merger Sub is a wholly owned subsidiary of Proton Parent and was formed by Parent solely for the purpose of engaging in the transactions contemplated by the Merger Agreement and has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will cease to exist.

The Merger (page 2)

The Company, Parent, Proton Parent and Merger Sub entered into the Merger Agreement on October 3, 2022. A copy of the Merger Agreement is included as Annex A to this proxy statement. On the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), at the effective time of the Merger (the “Effective Time”), Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will thereupon cease, and the Company will continue as the surviving corporation of the Merger as an indirect subsidiary of Parent. From time to time in this proxy statement, we refer to Poshmark as it will exist after the completion of the Merger as the “surviving corporation.”

At the Effective Time, and without any action by any stockholder, each share of Poshmark common stock that is issued and outstanding as of immediately prior to the Effective Time (other than shares of Poshmark common stock held by the Company as treasury stock, owned by Parent or any of its subsidiaries (including Proton Parent and Merger Sub) immediately prior to the Effective Time or as to which holders thereof have properly exercised their statutory rights of appraisal in accordance with Section 262 of the DGCL) will be automatically canceled, extinguished and converted into the right to receive cash in an amount equal to $17.90 without interest (the “Merger Consideration”), less any applicable withholding taxes.

The Special Meeting (page 2)

Date, Time and Place

The Special Meeting will be held virtually on Tuesday, December 27, 2022, at 8:00 am, Pacific time. At the Special Meeting, holders of Poshmark common stock will be asked to, among other things, vote for the adoption of the Merger Agreement. All stockholders are cordially invited to attend the Special Meeting. Poshmark is conducting the Special Meeting solely online via the Internet through a live webcast and online stockholder tools. Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH and using the control number included in your proxy materials. You will not be able to attend the Special Meeting physically in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present in person” or “in person” shall mean virtually present at the Special Meeting.

Record Date and Stockholders Entitled to Vote

Only holders of Poshmark common stock of record as of the close of business on November 2, 2022, the record date for the Special Meeting, are entitled to receive notice of and to vote the shares of Poshmark common stock they held on the record date at the Special Meeting. As of the close of business on the record date, there were 54,649,854 shares of Class A common stock and 24,592,080 shares of Class B common stock outstanding and entitled to vote at the Special Meeting.

 

-2-

Quorum

The representation in person or by proxy of at least a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business.

Vote Required

On each of the proposals presented at the Special Meeting, the holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class. Each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date. The adoption of the Merger Agreement by the holders of Poshmark common stock requires the affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote as of the close of business on the record date. The approval of the Adjournment Proposal requires the affirmative vote of a majority of the voting power of the shares of Poshmark common stock present, in person or represented by proxy, and voting on such matter.

Reasons for the Merger; Recommendation of the Poshmark Board (page 3)

After careful consideration, the Poshmark Board unanimously: (1) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger; (2) approved the execution, delivery and performance of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations and the consummation of the transactions contemplated by the Merger Agreement, including the Merger; (3) resolved to recommend that the Company’s stockholders adopt the Merger Agreement in accordance with the DGCL; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the Company’s stockholders at the Special Meeting. Accordingly, the Poshmark Board recommends that stockholders vote “FOR” the proposal to adopt the Merger Agreement and “FOR” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies.

For a discussion of the material factors that the Poshmark Board considered in determining to recommend the adoption of the Merger Agreement, please see the section of this proxy statement titled “The Merger  - Reasons for the Merger; Recommendation of the Poshmark Board.”

Opinion of Goldman Sachs (page 3)

Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its opinion to the Poshmark Board that, as of October 3, 2022, and based upon and subject to the factors and assumptions set forth therein, the $17.90 in cash per share of Poshmark common stock to be paid to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock, taken in the aggregate, pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated October 3, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Poshmark Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Poshmark common stock should vote with respect to the Merger or any other matter. Pursuant to an engagement letter between Poshmark and Goldman Sachs, Poshmark has agreed to pay Goldman Sachs a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $35.2 million, $400,000 of which became payable in cash in quarterly installments with the first installment being payable three months following the date of the engagement letter, and the remainder of which is contingent upon consummation of the Merger.

 

-3-

For a description of the opinion that the Poshmark Board received from Goldman Sachs, see the section titled “Opinion of Goldman Sachs.”

Certain Effects of the Merger (page 4)

Upon the consummation of the Merger, Merger Sub will be merged with and into Poshmark, the separate corporate existence of Merger Sub will thereupon cease, and Poshmark will continue to exist as the surviving corporation of the Merger as an indirect subsidiary of Parent.

Following the consummation of the Merger, Poshmark Class A common stock will be delisted from Nasdaq, and the registration of Poshmark Class  A common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be terminated.

Effects on the Company if the Merger Is Not Completed (page 4)

In the event that the proposal to adopt the Merger Agreement does not receive the required approval from the holders of Poshmark common stock, or if the Merger is not completed for any other reason, the holders of Poshmark common stock will continue to own their shares and will not receive any payment for their shares of Poshmark common stock in connection with the Merger. Instead, the Company will remain an independent public company, with Poshmark Class A common stock listed and traded on Nasdaq. Under certain circumstances, if the Merger Agreement is terminated, the Company may be obligated to pay to Parent a termination fee of $52,913,000. Please see the section of this proxy statement titled “The Merger Agreement - Termination Fees and Expenses.”

Treatment of Equity Awards (page 4)

At the Effective Time, each Vested Company Option (as defined in the section titled “Questions and Answers About the Special Meeting and the Merger”) as of immediately prior to the Effective Time with an exercise price per share less than the Merger Consideration will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Class B common stock subject to such Vested Company Option as of immediately prior to the Effective Time and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Vested Company Option.

Each Unvested Company Option (as defined in the section titled “Questions and Answers About the Special Meeting and the Merger”) will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the Cash Replacement Company Option Amounts (as defined below in the section titled “Questions and Answers about the Special Meeting and the Merger”), which Cash Replacement Company Option Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company Option for which such Cash Replacement Company Option Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company Option Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company Option for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company Option Amounts.

Each Vested Company Option and Unvested Company Option with an exercise price per share equal to or greater than the Merger Consideration will be cancelled automatically at the Effective Time for no consideration.

Each Vested Company RSU (as defined in the section titled “Questions and Answers About the Special Meeting and the Merger”) will, at the Effective Time, be automatically cancelled and converted into the right to

 

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receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Vested Company RSU as of immediately prior to the Effective Time.

Other than as set forth in the section titled “New Arrangements with Company Executive Officers,” each Unvested Company RSU will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company RSU Amounts (as defined below in the section titled “Questions and Answers About the Special Meeting and the Merger”), which Cash Replacement Company RSU Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company RSU for which such Cash Replacement Company RSU Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company RSU Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company RSU for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company RSU Amounts.

The consideration described above is collectively referred to as the “Equity Award Consideration” and the Equity Award Consideration, together with the aggregate per share Merger Consideration payable pursuant to the Merger Agreement, is referred to collectively as the “Aggregate Merger Consideration.”

Interests of the Company’s Directors and Executive Officers in the Merger (page 5)

The Company’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Company’s Board was aware of and considered these interests in reaching the determination to approve the Merger Agreement and to deem the Merger Agreement, the Merger and the other transactions and agreements contemplated by the Merger Agreement to be advisable, fair to and in the best interests of the Company and its stockholders and in recommending that stockholders vote for the adoption of the Merger Agreement. These interests include:

 

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the Company’s executive officers and non-employee directors hold equity-based awards that will be afforded the treatment described immediately above under “Treatment of Equity Awards”;

 

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the Company’s executive officers are participants in a severance plan established by the Company in connection with the Company’s initial public offering that provides for severance benefits in the event of a termination of employment in certain circumstances, including enhanced severance benefits in connection with a change in control of the Company (including this Merger);

 

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Manish Chandra, the Company’s Chief Executive Officer, will be eligible for certain benefits from compensation arrangements with Parent as described under the section titled “New Arrangements with Company Executive Officers,” including the acceleration of his Unvested Company RSUs upon the Effective Time and a new option grant;

 

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pursuant to the Company’s Amended and Restated Non-Employee Director Compensation Policy that was originally established in connection with the Company’s initial public offering (the “Director Compensation Policy”), the Company’s non-employee directors are entitled to full accelerated vesting of their Company Options and Company RSUs in connection with a change in control, including this Merger;

 

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Ebony Beckwith and Jeff Epstein participate in the Company’s pre-existing Non-Employee Directors’ Deferred Compensation Program (the “Deferred Compensation Program”), pursuant to which their deferred Company RSUs will be settled no later than 30 days following the Effective Time; and

 

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the Company’s non-employee directors and executive officers are entitled to continued indemnification and insurance coverage following the Merger under the Merger Agreement. Please see the section of this proxy statement titled “The Merger Agreement - Indemnification of Directors and Officers and Insurance.”

 

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Poshmark Common Stock Ownership of Directors and Executive Officers (page 6)

As of November 2, 2022, the directors and executive officers of Poshmark beneficially owned in the aggregate approximately 3,431,916 shares of Class A common stock and 22,737,284 shares of Class B common stock, or representing approximately 77% of the total voting power of the outstanding shares, of Poshmark common stock.

Voting Agreement (page 6)

In connection with the execution of the Merger Agreement, each of Manish Chandra, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. entered into a voting and support agreement with the Company and Parent (each, a “Voting Agreement”). Subject to its terms, the Voting Agreement obligates the specified stockholder to, among other things, vote the shares of Poshmark common stock beneficially owned by the specified stockholder in favor of the adoption of the Merger Agreement, against any proposal for an alternative control transaction and, subject to certain exceptions, not transfer any shares of Poshmark common stock prior to the termination of the Voting Agreement. The Voting Agreement will terminate as of the earlier of (1) the earliest to occur of (x) the Effective Time and (y) the termination of the Merger Agreement in accordance with the termination provisions of the Merger Agreement, and (2) the election of such specified stockholder to terminate the Voting Agreement following any amendment to the original unamended Merger Agreement that reduces or changes the form of consideration payable pursuant to the Merger Agreement. As of the close of business on the record date, the specified stockholders beneficially owned in the aggregate approximately 3,339,306 shares of Class A common stock and 22,688,105 shares of Class B common stock, representing approximately 77% of the total voting power of the outstanding shares of Poshmark common stock. A copy of the form of Voting Agreement is included as Annex C to this proxy statement.

Conditions of the Merger (page 6)

The obligations of Poshmark, Parent, Proton Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of various conditions on or prior to the Effective Time, including the following:

 

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the adoption of the Merger Agreement by the Company’s stockholders;

 

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the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (see the section titled “The Merger - Regulatory Approvals Required for the Merger”); and

 

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the absence of any law, injunction or order from any governmental authority having jurisdiction over any party to the Merger Agreement (whether temporary, preliminary or permanent) prohibiting, enjoining or otherwise making illegal the consummation of the Merger.

Each party’s obligation to consummate the Merger is also subject to the satisfaction or waiver of certain additional conditions, including:

 

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subject to certain materiality and other qualifiers, the accuracy of the representations and warranties of the other party;

 

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the other party having performed in all material respects all of the covenants and obligations of the Merger Agreement required to be performed and complied by such party at or prior to the closing;

 

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the delivery of a customary closing certificate signed on behalf of the respective party by an officer of such party certifying certain conditions have been satisfied; and

 

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in the case of Parent’s, Proton Parent’s and Merger Sub’s obligations, the absence of a Company Material Adverse Effect (which term is described in the section titled “The Merger Agreement - Representations and Warranties”).

 

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Before the closing, each of the Company, Parent, Proton Parent and Merger Sub may waive any of the conditions to its obligation to consummate the Merger even though one or more of the conditions described above has not been met, except where waiver is not permissible under applicable law.

Regulatory Approvals Required for the Merger (page 7)

The consummation of the Merger is subject to review under the HSR Act. As described above in the section titled “The Merger Agreement - Conditions of the Merger,” the obligations of Parent and the Company to consummate the Merger are subject to the waiting period applicable to the Merger under the HSR Act. Under the HSR Act and the rules and regulations promulgated thereunder, the Merger may not be completed until notifications have been filed and certain information has been furnished to the Federal Trade Commission (the “FTC”) and the Antitrust Division of the Department of Justice (the “DOJ”) and the specified waiting period has expired or been terminated. The Company and Parent each filed or caused to be filed the requisite notification forms under the HSR Act with the DOJ and the FTC on October 18, 2022, and the applicable waiting period commenced on October 19, 2022. The waiting period under the HSR Act expired at 11:59PM ET on November 18, 2022. The FTC and the DOJ retain the authority to challenge the Merger on antitrust grounds after the expiration of the applicable waiting period.

No-Shop; Poshmark Board Recommendation Change (page 7)

The Merger Agreement generally restricts the Company’s ability to:

 

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solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any inquiry, proposal, indication of interest or offer that constitutes or could reasonably be expected to lead to, an Acquisition Proposal (as defined below in the section titled “The Merger Agreement - No-Shop; Poshmark Board Recommendation Change”);

 

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furnish to any person (other than Parent, Proton Parent, Merger Sub or any designees of Parent, Proton Parent or Merger Sub) any non-public information relating to the Company or any of its subsidiaries or afford to any person access to the business, properties, assets, books, records or personnel, of the Company or any of its subsidiaries, in any such case in connection with any Acquisition Proposal or any inquiry, proposal, indication of interest or offer that could reasonably be expected to lead to an Acquisition Proposal;

 

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participate or engage in or continue discussions or negotiations with any person relating to an Acquisition Proposal (or inquiries, proposals, indications of interest or offers that could reasonably be expected to lead to an Acquisition Proposal);

 

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approve, endorse or recommend an Acquisition Proposal; or

 

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enter into any Alternative Acquisition Agreement (as defined below in the section titled “The Merger Agreement - No-Shop; Poshmark Board Recommendation Change”).

Prior to the adoption of the Merger Agreement by Poshmark stockholders, if the Poshmark Board receives an Acquisition Proposal that the Poshmark Board has determined in good faith (after consultation with its financial advisors and outside legal counsel) constitutes a Superior Proposal (as defined below in the section titled “The Merger Agreement - No-Shop; Poshmark Board Recommendation Change”), the Company is entitled to participate or engage in discussions or negotiations with and furnish any non-public information relating to the Company or any of its subsidiaries, or afford access to the business, properties, assets, books, records or personnel, of the Company or any of its Subsidiaries pursuant to an Acceptable Confidentiality Agreement (as defined below in the section titled “The Merger Agreement - No-Shop; Poshmark Board Recommendation Change”) to the person or such person’s representatives making such Acquisition Proposal.

 

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The Poshmark Board generally is not permitted under the Merger Agreement to change its recommendation to the Company’s stockholders to adopt the Merger Agreement. However, prior to the adoption of the Merger Agreement by Poshmark stockholders, the Poshmark Board is permitted to make a Company Board Recommendation Change (as defined below in the section titled “The Merger Agreement - No-Shop; Poshmark Board Recommendation Change”) in response to certain unforeseen, intervening events or to accept a Superior Proposal if, in either case, the Poshmark Board determines in good faith (after consultation with its financial advisors and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties under applicable law. Any such Company Board Recommendation Change, or acceptance of a Superior Proposal, as applicable, is subject to the procedures set forth in the Merger Agreement, including that the Company negotiates in good faith with Parent and its representatives for five business days (or three business days following an amended Acquisition Proposal) to make amendments to the terms and conditions of the Merger Agreement and related documents so that, as applicable, the Poshmark Board’s fiduciary duties no longer require it to make a Company Board Recommendation Change in response to the intervening event (or to accept such Acquisition Proposal, as applicable) and, if applicable, the Acquisition Proposal no longer constitutes a Superior Proposal.

Termination (page 8)

The Merger Agreement may be terminated at any time prior to the Effective Time in the following circumstances:

 

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by mutual written agreement of Parent and the Company;

 

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by either Parent or the Company if:

the Merger is not consummated on or before April 3, 2023, subject to an extension until July 3, 2023 under certain circumstances for the purpose of obtaining certain regulatory approvals, in either case (the “Termination Date”);

if any governmental authority has issued a final and non-appealable order, preventing or enjoining the consummation of the Merger; or

if the holders of a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting fail to adopt the Merger Agreement at the Special Meeting;

 

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by Parent if:

the Company breaches or fails to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement that would result in a condition to the closing of the Merger not being satisfied and such breach has not been timely cured;

prior to adoption of the Merger Agreement by Poshmark stockholders, the Poshmark Board has effected a Company Board Recommendation Change; or

prior to adoption of the Merger Agreement by Poshmark stockholders, Poshmark or the Poshmark Board willfully and materially breaches its obligations under the no-shop provisions in the Merger Agreement; and

 

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by the Company if:

Parent, Proton Parent or Merger Sub breaches or fails to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement that would result in a condition to the closing of the Merger not being satisfied and such breach has not been timely cured; or

prior to the adoption of the Merger Agreement by Poshmark stockholders and so long as Poshmark is in compliance with and has not breached the requirements of the no-shop provisions in the Merger Agreement, in order to substantially concurrently enter into a definitive Alternative Acquisition Agreement with respect to a Superior Proposal, and substantially concurrently with such termination, Poshmark pays Parent the termination fee.

 

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Termination Fees (page 9)

The Company will be required to pay Parent a termination fee of $52,913,000 if the Merger Agreement is terminated under certain circumstances.

Appraisal Rights (page 9)

Pursuant to Section 262 of the DGCL, Poshmark stockholders who continuously hold shares of Poshmark common stock through the Effective Time, who do not vote in favor of the adoption of the Merger Agreement, who properly demand appraisal of their shares and do not withdraw their demands, and who otherwise comply with the applicable requirements of Section 262 of the DGCL, will be entitled to seek appraisal of their shares of Poshmark common stock in connection with the Merger under Section 262 of the DGCL. The “fair value” of shares of Poshmark common stock as determined by the Delaware Court of Chancery could be greater than, the same as, or less than the Merger Consideration that stockholders would otherwise be entitled to receive under the terms of the Merger Agreement if they did not seek appraisal of their shares of Poshmark common stock.

The right to seek appraisal will be lost if a Poshmark stockholder votes “FOR” the proposal to adopt the Merger Agreement. However, abstaining or voting against adoption of the Merger Agreement is not in itself sufficient to perfect appraisal rights because additional actions must also be taken to perfect such rights. To exercise appraisal rights, Poshmark stockholders who wish to exercise the right to seek an appraisal of their shares must so advise the Company by submitting a written demand for appraisal (or by electronic transmission directed to an information processing system, if any, expressly designated for that purpose in the notice of appraisal) to the Company prior to the taking of the vote on the Merger Proposal at the Special Meeting, and must otherwise strictly follow the applicable procedures and requirements prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of Poshmark common stock held of record in the name of another person, such as a bank, broker or other nominee, may perfect appraisal rights in such person’s name if such beneficial owner continuously owns such shares through the Effective Time and otherwise satisfies the requirements applicable to stockholders of record under Section 262(a) of the DGCL. In addition, the beneficial owner must (1) reasonably identify in his, her or its demand the holder of record of the shares for which the demand is made, (2) provide documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (3) provide an address at which such beneficial owner consents to receive notices given by the Company and to be set forth on the verified list of persons who have demanded appraisal for their shares pursuant to Section 262(f) of the DGCL. In addition, under Section 262 of the DGCL, the Delaware Court of Chancery will dismiss any appraisal proceedings as to all stockholders who have perfected their appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of Poshmark common stock or (2) the value of the per share Merger Consideration multiplied by the total number of shares of Poshmark common stock entitled to appraisal exceeds $1 million. In view of the complexity of Section 262 of the DGCL, Poshmark stockholders that may wish to pursue appraisal rights are urged to consult their legal and financial advisors.

Material U.S. Federal Income Tax Considerations (page 9)

The receipt of cash by a holder of Poshmark common stock who is a U.S. holder (as defined below in the section of this proxy statement titled “The Merger - Material U.S. Federal Income Tax Considerations”) in exchange for shares of Poshmark common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. For U.S. federal income tax purposes, if you are a U.S. holder (as defined below in the section of this proxy statement titled “The Merger - Material U.S. Federal Income Tax Considerations”), you will recognize gain or loss equal to the difference, if any, between the amount of cash you receive (or are deemed to receive) in the Merger and your adjusted tax basis in the shares of Poshmark common stock converted into cash in the Merger. If you are a holder of Poshmark common stock who is a non-U.S. holder (as defined below in the section of this proxy statement titled “The Merger - Material U.S. Federal Income Tax Considerations”), the

 

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Merger will generally not be a taxable transaction to you under U.S. federal income tax laws unless you have certain connections to the United States, or the Company is, or was during the relevant period, a U.S. real property holding corporation. Further, the Merger may be a taxable transaction to you under non-U.S. tax laws, and you are encouraged to seek tax advice regarding such matters. Because individual circumstances may differ, we urge you to consult your tax advisor to determine the particular tax effects to you.

You are urged to read the section of this proxy statement titled “The Merger - Material U.S. Federal Income Tax Considerations” for a more complete discussion of the material U.S. federal income tax consequences of the Merger.

Additional Information (page 10)

You can find more information about Poshmark in the periodic reports and other information we file with the SEC. The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov. See the section of this proxy statement titled “Where You Can Find Additional Information.”

If you have any questions concerning the Merger Agreement, the Merger or the other transactions contemplated by the Merger Agreement, the Special Meeting or the accompanying proxy statement, would like additional copies of this proxy statement, or need help submitting a proxy to have your shares of Poshmark common stock voted, please contact Poshmark’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-0637 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the Special Meeting and the Merger. These questions and answers may not address all questions that may be important to you as a holder of Poshmark common stock. You should read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement.

Why am I receiving this proxy statement?

On October 3, 2022, the Company entered into the Merger Agreement with Parent, Proton Parent and Merger Sub. Pursuant to the Merger Agreement, Merger Sub will be merged with and into Poshmark, with Poshmark surviving as an indirect subsidiary of Parent.

You are receiving this proxy statement in connection with the solicitation of proxies by the Poshmark Board in favor of the proposal to adopt the Merger Agreement and the other matters to be voted on at the Special Meeting as described in this proxy statement.

As a holder of Poshmark common stock, what will I receive in the Merger?

Each share of Poshmark common stock that is issued and outstanding as of immediately prior to the Effective Time (other than shares of Poshmark common stock held by the Company as treasury stock, owned by Parent or any of its subsidiaries (including Proton Parent and Merger Sub) immediately prior to the Effective Time or as to which holders thereof have properly exercised their statutory rights of appraisal in accordance with Section 262 of the DGCL) will be automatically canceled, extinguished and converted into the right to receive the Merger Consideration, less any applicable withholding taxes.

The exchange of shares of Poshmark common stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Please see the section of this proxy statement titled “The Merger - Material U.S. Federal Income Tax Considerations” for a more detailed description of the U.S. federal income tax consequences of the Merger. You are urged to consult your tax advisor for a full understanding of how the Merger will affect you for federal, state, local and/or non-U.S. tax purposes.

How does the Merger Consideration compare to the recent trading price of Poshmark common stock?

The Merger Consideration of $17.90 per share represents a premium of approximately 15% of Poshmark’s Class A common stock closing share price on October 3, 2022, the date of the transaction announcement, a 34% premium to the 30-day volume weighted average price of Poshmark’s Class A common stock as of October 3, 2022 (“VWAP”), and a 48% premium to the 90-day VWAP. On November 21, 2022, the most recent practicable date before the filing of this proxy statement, the closing price of Poshmark common stock was $17.78 per share.

What will happen to outstanding Company equity awards in the Merger and purchase rights under the 2021 ESPP?

At the Effective Time, each outstanding stock option to purchase shares of Company Class A common stock or Class B common stock (a “Company Option”) that is vested (including such Company Options that vest in accordance with their terms as a result of the consummation of the transactions contemplated by the Merger Agreement) (a “Vested Company Option”) as of immediately prior to the Effective Time with an exercise price per share less than $17.90 will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Class B common stock subject to such Vested Company Option

 

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and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Vested Company Option. At the Effective Time, each Company Option that is not a Vested Company Option and is outstanding and unvested as of immediately prior to the Effective Time with an exercise price per share less than the Merger Consideration (an “Unvested Company Option”) will be automatically cancelled and converted into a contingent right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Class B common stock subject to such Unvested Company Option and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Unvested Company Option (the “Cash Replacement Company Option Amounts”), which Cash Replacement Company Option Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company Option for which the Cash Replacement Company Option Amounts is exchanged would have vested pursuant to its terms. All Cash Replacement Company Option Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company Option for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company Option Amounts. At the Effective Time, each Company Option with an exercise price per share equal to or greater than Merger Consideration will be cancelled automatically for no consideration.

At the Effective Time, each award of restricted stock units (“Company RSUs”) of the Company that is vested and outstanding as of immediately prior to the Effective Time or that vests in accordance with its terms as a result of the consummation of the Merger (a “Vested Company RSU”) will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Vested Company RSU. At the Effective Time, other than as set forth in “New Arrangements with Company Executive Officers” below, each award of Company RSUs that is outstanding as of immediately prior to the Effective Time that is not a Vested Company RSU (an “Unvested Company RSU”) will be automatically cancelled and converted into a contingent right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Unvested Company RSU (the “Cash Replacement Company RSU Amounts”), which Cash Replacement Company RSU Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company RSU for which such Cash Replacement Company RSU Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company RSU Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company RSU for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company RSU Amounts.

No later than three business days prior to the Effective Time, each purchase right outstanding as of October 3, 2022, under the Poshmark, Inc. 2021 Employee Stock Purchase Plan (the “2021 ESPP”) will be exercised, with accumulated contributions used to purchase shares of Company Class A common stock in accordance with the terms of the 2021 ESPP on such final exercise date. All shares of Company Class A common stock purchased on such final exercise date shall be cancelled and converted into the right to receive the Merger Consideration. The 2021 ESPP will be terminated effective as of immediately prior to the Effective Time.

When and where is the Special Meeting of our stockholders?

The special meeting will be held virtually on Tuesday, December 27, 2022, at 8:00 am, Pacific time. Poshmark is conducting the Special Meeting solely online via the Internet through a live webcast and online stockholder tools. Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH.

 

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Who is entitled to vote at the Special Meeting?

Only holders of record of Poshmark common stock as of the close of business on November 2, 2022, the record date for the Special Meeting, are entitled to vote the shares of Poshmark common stock they held as of the record date at the Special Meeting. As of the close of business on the record date, there were 54,649,854 shares of Class A common stock and 24,592,080 shares of Class B common stock outstanding and entitled to vote at the Special Meeting.

The holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class on all proposals described in this proxy statement. On each of the proposals presented at the Special Meeting, each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date on each matter properly brought before the Special Meeting.

May I attend the Special Meeting and vote in person?

Poshmark is hosting the Special Meeting virtually. There will be no physical location for stockholders to attend. Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH.

 

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Stockholders of record: If you are a stockholder of record, in order to participate in the Special Meeting, you will need your control number included on the proxy card or the voting instruction form previously distributed to you. If you are a stockholder of record, you may vote electronically during the Special Meeting using your control number by following the instructions available at www.proxydocs.com/POSH.

 

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Stockholders holding shares in “street” name: If your shares are held in “street name” through a brokerage firm, bank, trust or other similar organization and you do not have a control number, in order to participate in the Special Meeting, you must first obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Poshmark common stock you held as of the record date, your name and email address. If you hold your Poshmark common stock in “street name,” you must obtain the appropriate documents from your broker, bank, trustee, or nominee, giving you the right to vote the shares at the Special Meeting.

Instructions on how to attend and participate in the Special Meeting via the webcast are available at www.proxydocs.com/POSH.

You should ensure that you have a strong Internet connection and allow plenty of time to log in and ensure that you can hear streaming audio. You may begin to log in to the virtual-only meeting platform 15 minutes prior to the start of the Special Meeting. We will offer live technical support for all stockholders attending the meeting. Technical support phone numbers will be available on the virtual-only meeting platform and posted in the confirmation email you will receive after registering online to attend at www.proxydocs.com/POSH.

What proposals will be considered at the Special Meeting?

At the Special Meeting, holders of Poshmark common stock will be asked to consider and vote on the following proposals:

 

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a proposal to adopt the Merger Agreement (the “Merger Proposal”); and

 

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a proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

 

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Pursuant to Poshmark’s Amended and Restated By-Laws, the only business that will be transacted at the Special Meeting are the Merger Proposal and the Adjournment Proposal, as stated in the accompanying notice of the Special Meeting.

What constitutes a quorum for purposes of the Special Meeting?

The representation in person or by proxy of at least a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business. The inspector of election appointed for the Special Meeting will determine whether a quorum is present. The inspector of election will treat abstentions as present for purposes of determining the presence of a quorum. If a quorum is not present, the only business that can be transacted at the Special Meeting is the adjournment or postponement of the meeting to another date or time.

What vote of our stockholders is required to approve each of the proposals?

The approval of the Merger Proposal requires the affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote as of the close of business on the record date. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee), abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Merger Proposal.

The approval of the Adjournment Proposal, if necessary or appropriate, requires the affirmative vote of a majority of the voting power of the shares of Poshmark common stock present, in person or represented by proxy, and voting on such matter. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and broker non-votes will have no effect on the outcome of the Adjournment Proposal. Abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal.

The holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class on all proposals described in this proxy statement. On each of the proposals presented at the Special Meeting, each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date on each matter properly brought before the Special Meeting.

What is a “broker non-vote”?

If a beneficial owner of shares of Poshmark common stock held in “street name” by a bank, broker or other nominee does not provide the organization that holds the owner’s shares with specific voting instructions, then, under applicable rules, the organization that holds the owner’s shares may generally vote on “discretionary” matters but cannot vote on “non-discretionary” matters. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of relevant shares. Poshmark does not expect any broker non-votes at the Special Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas each of the proposals to be presented at the Special Meeting is considered non-routine. As a result, no bank, broker or other nominee will be permitted to vote your shares of Poshmark common stock at the Special Meeting without receiving instructions. Failure to instruct your bank, broker or other nominee as to how to vote your shares of Poshmark common stock will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement but will have no effect on the outcome of the Adjournment Proposal.

 

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How does the Poshmark Board recommend that I vote?

The Poshmark Board recommends a vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

For a discussion of the factors that the Poshmark Board considered in determining to recommend that Poshmark stockholders adopt the Merger Agreement, please see the section of this proxy statement titled “The Merger - Reasons for the Merger; Recommendation of the Poshmark Board.” In addition, in considering the recommendation of the Poshmark Board with respect to the Merger Agreement, you should be aware that certain of the Company’s directors and executive officers have interests that may be different from, or in addition to, the interests of the Company’s stockholders generally. Please see the section of this proxy statement titled “The Merger - Interests of the Company’s Directors and Executive Officers in the Merger.”

What happens if I sell my shares of Poshmark common stock before the Special Meeting?

The record date for the Special Meeting is earlier than the date of the Special Meeting. If you sell or transfer your shares of Poshmark common stock after the record date, but before the Special Meeting, you will retain your right to vote such shares at the Special Meeting. However, the right to receive the Merger Consideration will pass to the person to whom you transferred your shares. In order to receive the Merger Consideration in connection with the Merger, you must hold your shares of Poshmark common stock through the Effective Time.

What is a proxy?

A proxy is your legal designation of another person to vote your shares of Poshmark common stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Poshmark common stock is called a “proxy card.”

If a stockholder gives a proxy, how are the shares voted?

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

How do I cast my vote if I am a stockholder of record?

If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, to be the “stockholder of record.” In that case, this proxy statement and your proxy card have been sent directly to you by the Company.

If you are a stockholder of record as of the record date, you may vote by submitting your proxy via the Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail in the prepaid reply envelope. You may also vote your shares by ballot via the Internet during the Special Meeting. Even if you plan to attend the Special Meeting, you are encouraged to submit your vote by proxy as early as possible to ensure that your shares will be represented. For more detailed instructions on how to vote using one of these methods, please see the section of this proxy statement titled “The Special Meeting - Voting Procedures.”

If you are a holder of record of shares of Poshmark common stock and you submit a proxy card or voting instructions but do not direct how to vote on each item, the persons named as proxies will vote your shares in favor of each of the Merger Proposal and, if necessary or appropriate, the Adjournment Proposal.

 

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How do I cast my vote if my shares of Poshmark common stock are held in “street name” by my bank, broker or other nominee?

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of Poshmark common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record.

If you are a beneficial owner of shares of Poshmark common stock held in “street name,” you must follow the instructions from your bank, broker or other nominee in order to vote such shares. Your bank, broker or other nominee will vote your shares only if you provide instructions on how to vote by properly completing the voting instruction form sent to you by your bank, broker or other nominee with this proxy statement. Without providing those instructions, your shares will not be voted, which will have the same effect as a vote “AGAINST” the Merger Proposal but will have no effect on the outcome of the Adjournment Proposal.

What will happen if I abstain from voting or fail to vote on any of the proposals?

If you abstain from voting, it will have the same effect as a vote “AGAINST” the Merger Proposal or the Adjournment Proposal.

If you fail to cast your vote via the Internet during the Special Meeting or by proxy or fail to give voting instructions to your broker, it will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the outcome of the Adjournment Proposal, provided that a quorum is present at the Special Meeting.

Can I change my vote after I have delivered my proxy or my voting instructions?

Yes. If you are a stockholder with shares of Poshmark common stock registered in your name, you may revoke your proxy at any time prior to the time it is voted by:

 

•

filing with our Corporate Secretary a written notice of revocation bearing a later date than the proxy;

 

•

properly casting a new vote via the Internet or by telephone at any time before the closure of the Internet or telephone voting facilities described under “The Special Meeting - Voting Procedures”;

 

•

duly completing a later-dated proxy relating to the same shares and delivering it to our Secretary; or

 

•

attending the Special Meeting online and voting electronically during the meeting (although attendance at the Special Meeting will not in and of itself constitute a revocation of a proxy).

Any written notice of revocation or subsequent proxy should be sent so as to be delivered to our offices at Poshmark, Inc., 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065, Attention: General Counsel and Corporate Secretary, before the taking of the vote at the Special Meeting. If you want to revoke your proxy by sending a new proxy card or an instrument revoking the proxy to the Company, you should ensure that you send your new proxy card or instrument revoking the proxy in sufficient time for it to be received by the Company prior to the Special Meeting.

If you are a beneficial owner of shares of Poshmark common stock held in “street name,” you must contact your bank, broker or other nominee to change your vote or obtain a legal proxy to vote your shares electronically at the Special Meeting.

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your shares of Poshmark common stock in

 

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more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Poshmark common stock. If you are a holder of Poshmark common stock of record and your shares of Poshmark common stock are registered in more than one name, you will receive more than one proxy card. Please submit your proxy and/or voting instructions for each set of materials that you receive to ensure that all your shares of Poshmark common stock are voted.

Where can I find the voting results of the Special Meeting?

If available, we may announce preliminary voting results at the conclusion of the Special Meeting. We intend to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the Special Meeting. All reports that Poshmark files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement titled “Where You Can Find Additional Information.”

Am I entitled to rights of appraisal under the DGCL?

If the Merger is completed, holders of Poshmark common stock who continuously hold shares of Poshmark common stock through the Effective Time, who do not vote in favor of the adoption of the Merger Agreement, who properly demand appraisal of their shares and do not withdraw their demands, and who otherwise comply with the applicable requirements of Section 262 of the DGCL, will be entitled to seek appraisal of their shares of Poshmark common stock in connection with the Merger under Section 262 of the DGCL. This means that holders of shares of Poshmark common stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Poshmark common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest on the amount determined to be fair value, if any, as determined by the court (or, in certain circumstances described below, on the difference between the amount determined to be the fair value and the amount paid to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding). Holders of Poshmark common stock who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in additional detail in this proxy statement, and Section 262 of the DGCL regarding appraisal rights is accessible without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. Failure to comply with the provisions of Section 262 of the DGCL in a timely and proper manner may result in the loss of appraisal rights. See the section of this proxy statement titled “Appraisal Rights.”

When is the Merger expected to be completed?

We are working toward completing the Merger as promptly as possible, and currently expect to complete the Merger by the first quarter of 2023. However, the exact timing of completion of the Merger cannot be accurately predicted, because the Merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to Parent, Proton Parent, Merger Sub and the Company’s respective obligations to consummate the Merger, some of which are not within the parties’ control.

What effect will the Merger have on Poshmark?

If the Merger is consummated, Merger Sub will be merged with and into Poshmark, the separate corporate existence of Merger Sub will thereupon cease, and Poshmark will continue to exist following the Merger as an indirect subsidiary of Parent. Following completion of the Merger, Poshmark Class A common stock will be delisted from Nasdaq, and the registration of Poshmark Class A common stock under the Exchange Act will be terminated.

 

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What happens if the Merger is not completed?

If the Merger Proposal is not approved by our stockholders, or if the Merger is not completed for any other reason, the holders of Poshmark common stock will not receive any payment for their shares of Poshmark common stock in connection with the Merger. Instead, the Company will remain an independent public company and stockholders will continue to own their shares of Poshmark common stock. The Poshmark Class A common stock will continue to be registered under the Exchange Act and listed and traded on Nasdaq. Under certain circumstances, if the Merger is not completed, Poshmark may be obligated to pay to Parent a termination fee. For more information, please see the section of this proxy statement titled “The Merger Agreement - Termination Fees and Expenses.”

What is householding and how does it affect me?

The SEC permits companies to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if the company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. If your shares are held in “street name,” you will receive your proxy card or other voting information from your bank, broker or other nominee and you will return your proxy card(s) to your bank, broker or other nominee. You should vote on and sign each proxy card you receive as discussed above. To request that only one copy of any of these materials be mailed to your household, please contact your bank, broker or other nominee.

Who can help answer my questions?

If you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact Poshmark’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-0637 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and any documents to which Poshmark refers to in this proxy statement, contains “forward-looking statements”, which include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “aim,” “potential,” “continue,” “ongoing,” “goal,” “can,” “seek,” “target” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, the Company. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. These statements are only predictions. The Company has based these forward-looking statements largely on its then-current expectations and projections about future events and financial trends as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including but not limited to:

 

•

the ability of the parties to consummate the proposed transaction in a timely manner or at all;

 

•

the satisfaction (or waiver) of closing conditions to the consummation of the proposed transaction, including with respect to the approval of the Company’s stockholders;

 

•

potential delays in consummation the proposed transaction;

 

•

the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement;

 

•

the impact of the COVID-19 pandemic and the current conflict between the Russian Federation and Ukraine on the Company’s business and general economic conditions;

 

•

the Company’s ability to implement its business strategy;

 

•

significant transaction costs associated with the proposed transaction;

 

•

potential litigation relating to the proposed transaction;

 

•

the risk that disruptions from the proposed transaction will harm the Company’s business, including current plans and operations;

 

•

the ability of the Company to retain and hire key personnel;

 

•

potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction;

 

•

legislative, regulatory and economic developments affecting the Company’s business;

 

•

general economic and market developments and conditions;

 

•

the evolving legal, regulatory and tax regimes under which the Company operates;

 

•

potential business uncertainty, including changes to existing business relationships, during the pendency of the Merger that could affect the Company’s financial performance;

 

•

restrictions during the pendency of the proposed transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions;

 

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•

unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as the Company’s response to any of the aforementioned factors; and

 

•

the fact that under the terms of the Merger Agreement, the Company is unable to solicit other acquisition proposals.

Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” in the Company’s most recent annual and quarterly reports filed with the SEC and any subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed from time to time and available at www.sec.gov. See the section of this proxy statement titled “Where You Can Find Additional Information.” While the list of factors presented in this proxy statement is, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability and similar risks, any of which could have a material adverse effect on the Company’s financial condition, results of operations, or liquidity. The forward-looking statements included herein are made only as of the date hereof. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

 

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THE PARTIES

Poshmark, Inc.

Poshmark, Inc.

203 Redwood Shores Parkway, 8^th Floor

Redwood City, California 94065

(650) 262-4771

Poshmark is a leading social marketplace for new and secondhand style for women, men, kids, pets, home and more. By combining the human connection of physical shopping with the scale, ease, and selection benefits of e-commerce, Poshmark makes buying and selling simple, social, and sustainable. Its community of more than 80 million registered users across the U.S., Canada, Australia, and India is driving the future of commerce while promoting more sustainable consumption.

Poshmark Class A common stock are listed on Nasdaq under the symbol “POSH.” Our principal executive office is located at 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065, our telephone number is (650) 262-4771, and our Internet address is http://www.poshmark.com. Information on Poshmark’s website is not incorporated by reference into or otherwise part of this proxy statement. Additional information about Poshmark is contained in our public filings. See the section of this proxy statement titled “Where You Can Find Additional Information.”

NAVER Corporation

NAVER Corporation

NAVER 1784

95 Jeongjail-ro, Bundang-gu, Seongnam-si, Gyeonggi-do

13561, Republic of Korea

+82-1588-3830

NAVER is Korea’s largest internet company and one of the country’s leaders in both search and e-commerce. In Korea, NAVER is one of the leading platforms for both searching and shopping. NAVER operates Korea’s No.1 search engine and largest e-commerce platform, and is a leading provider of fintech services, digital content and cloud services to a global community. NAVER’s platform is home to more than 530,000 smartstores – “sellers” – and generates more than 70% of online shopping services in South Korea. NAVER cultivates a culture of ‘Founder-type leaders’ who continue to launch innovative mobile applications, including LINE (Japan’s No.1 messaging app), Zepeto and Webtoon. Upon completion of the Merger, Poshmark will be an indirect subsidiary of NAVER.

Proton Parent, Inc.

Proton Parent, Inc.

NAVER 1784

95 Jeongjail-ro, Bundang-gu, Seongnam-si, Gyeonggi-do

13561, Republic of Korea

+82-1588-3830

Proton Parent, Inc. was formed by NAVER solely for the purpose of engaging in the transactions contemplated by the Merger Agreement, and has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Poshmark will be a direct subsidiary of Proton Parent.

 

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Proton Merger Sub, Inc.

Proton Merger Sub, Inc.

NAVER 1784

95 Jeongjail-ro, Bundang-gu, Seongnam-si, Gyeonggi-do

13561, Republic of Korea

+82-1588-3830

Merger Sub is a wholly owned subsidiary of Proton Parent and was formed by Parent solely for the purpose of engaging in the transactions contemplated by the Merger Agreement and has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will cease to exist.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to the holders of Poshmark common stock as part of the solicitation of proxies by the Poshmark Board for use at the Special Meeting and at any adjournments or postponements thereof.

Date, Time and Place

The Special Meeting will be held virtually on Tuesday, December 27, 2022, at 8:00 am, Pacific time. Stockholders will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH, where you, or your proxy, will be able to vote electronically and examine the list of stockholders entitled to vote at the Special Meeting. Poshmark is conducting the Special Meeting solely online via the Internet through a live webcast and online stockholder tools. We continue to use the virtual meeting format to facilitate stockholder attendance and participation by leveraging technology to communicate more effectively and efficiently with our stockholders.

Purpose of the Special Meeting

At the Special Meeting, holders of Poshmark common stock will be asked to consider and vote on the following proposals:

 

•

a proposal to adopt the Merger Agreement (the “Merger Proposal”); and

 

•

a proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

A copy of the Merger Agreement is attached as Annex A to this proxy statement.

Recommendation of the Poshmark Board

After careful consideration, the Poshmark Board unanimously: (1) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger; (2) approved the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement, including the Merger; (3) resolved to recommend that the Company’s stockholders adopt the Merger Agreement in accordance with the DGCL; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the Company’s stockholders at the Special Meeting. Accordingly, the Poshmark Board recommends that stockholders vote “FOR” the proposal to adopt the Merger Agreement and “FOR” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies.

For a discussion of the material factors that the Poshmark Board considered in determining to recommend the adoption of the Merger Agreement, please see the section of this proxy statement titled “The Merger - Reasons for the Merger; Recommendation of the Poshmark Board.”

Record Date and Stockholders Entitled to Vote

Only holders of Poshmark common stock of record as of the close of business on November 2, 2022, the record date for the Special Meeting, are entitled to receive notice of and to vote the shares of Poshmark common stock they held on the record date at the Special Meeting.

As of the close of business on the record date, there were 54,649,854 shares of Class A common stock and 24,592,080 shares of Class B common stock outstanding and entitled to vote at the Special Meeting. The holders

 

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of the outstanding shares of Class A common Stock and Class B common Stock vote together as a single class on all proposals described in this proxy statement. On each of the proposals presented at the Special Meeting, each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date. The adoption of the Merger Agreement by the holders of Poshmark common stock requires the affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote thereon as of the close of business on the record date.

A list of stockholders entitled to vote at the Special Meeting will be available for examination by any stockholder for any purpose germane to the Special Meeting beginning ten days prior to the Special Meeting and ending on the date of the Special Meeting at our corporate headquarters and principal executive offices located at 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065. Such list will also be available during the webcast of the virtual meeting at www.proxydocs.com/POSH.

Quorum

The representation in person or by proxy of at least a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business. If a quorum shall fail to attend the Special Meeting, the chairperson of the meeting may adjourn the meeting to another time and/or place. The inspector of election appointed for the Special Meeting will determine whether a quorum is present. The inspector of election will treat abstentions as present for purposes of determining the presence of a quorum.

If a beneficial owner of shares of Poshmark common stock held in “street name” by a bank, broker or other nominee does not provide the organization that holds its shares with specific voting instructions, then, under applicable rules, the organization that holds its shares may generally vote on “discretionary” matters but cannot vote on “non-discretionary” matters. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of relevant shares. Poshmark does not expect any broker non-votes at the Special Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas each of the proposals to be presented at the Special Meeting is considered non-routine. As a result, no broker will be permitted to vote your shares of Poshmark common stock at the Special Meeting without receiving instructions. Failure to instruct your bank, broker or other nominee as to how to vote your shares of Poshmark common stock will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.

If a quorum is not present, the only business that can be transacted at the Special Meeting is the adjournment or postponement of the meeting to another date or time.

Vote Required

For each of the Merger Proposal and the Adjournment Proposal, the holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class. Each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date.

 

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Adoption of the Merger Proposal

The approval of the Merger Proposal requires the affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote as of the close of business on the record date. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee), abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Merger Proposal.

Under the Merger Agreement, stockholder approval of the Merger Proposal is a condition to the consummation of the Merger.

Approval of the Adjournment Proposal

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the voting power of the shares of Poshmark common stock present, in person or represented by proxy. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and broker non-votes will have no effect on the outcome of the Adjournment Proposal. Abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal.

The vote on the Adjournment Proposal is a vote separate and apart from the vote to adopt the Merger Agreement. The Company does not intend to call a vote on this proposal if the Merger Proposal is approved at the Special Meeting.

Tabulation of Votes; Results

The Company will retain an independent party to receive and tabulate the proxies and ballots, and to serve as the inspector of election to certify the results of the Special Meeting.

Voting Procedures

Whether or not you plan to attend the Special Meeting virtually and regardless of the number of shares of Poshmark common stock you own, your careful consideration of, and vote on, the Merger Agreement is important and we encourage you to vote promptly.

To ensure that your shares of Poshmark common stock are voted at the Special Meeting, we recommend that you promptly submit your proxy, even if you plan to attend the Special Meeting virtually, using one of the following three methods:

 

•

Vote via the Internet. Follow the instructions for Internet voting shown on the proxy card mailed to you.

 

•

Vote by Telephone. Follow the instructions for telephone voting shown on the proxy card mailed to you.

 

•

Vote by Proxy Card. Complete, sign, date and return the enclosed proxy card by mail in the prepaid reply envelope.

The Internet and telephone voting procedures are designed to authenticate your identity and to allow you to vote your shares of Poshmark common stock for the matters brought before the Special Meeting as described in this proxy statement and confirm that your proxy has been properly recorded.

 

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Votes submitted by telephone or via the Internet for the matters brought before the Special Meeting as described in this proxy statement must be received prior to the start of the Special Meeting on 8 am Pacific time, December 27, 2022, or according to the instructions from your bank, broker or other nominee.

If you submit your proxy via the Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail, the persons named as proxies will vote your shares according to your instructions. If you are a stockholder with shares of Poshmark common stock registered in your name and submit your proxy but do not direct the persons named as proxies how to vote your shares on a proposal to be brought before the Special Meeting, the persons named as proxies will vote your shares in favor of the Merger Proposal and the Adjournment Proposal.

If you are a beneficial owner of shares of Poshmark common stock held in “street name” by a bank, broker or other nominee, you must follow the instructions from your bank, broker or other nominee in order to vote your shares. If you follow the instructions from your bank, broker or other nominee for voting your shares, then your bank, broker or other nominee will vote your shares according to your instructions. Under applicable rules, your bank, broker or other nominee has authority to vote your shares only if you provide instructions on how to vote by properly completing the voting instruction form sent to you by your bank, broker or other nominee with this proxy statement. If you do not provide voting instructions to your bank, broker or other nominee on a proposal to be brought before the Special Meeting, your shares will not be voted on that proposal, and if you do not provide voting instructions on any of the proposals to be brought before the Special Meeting, your shares will not be deemed to be in attendance at the meeting.

Revocation of Proxies

If you are a stockholder with shares of Poshmark common stock registered in your name, you may revoke your proxy at any time prior to the time it is voted by:

 

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filing with our Corporate Secretary a written notice of revocation bearing a later date than the proxy;

 

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properly casting a new vote via the Internet or by telephone at any time before the closure of the Internet or telephone voting facilities described under “The Special Meeting - Voting Procedures”;

 

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duly completing a later-dated proxy relating to the same shares and delivering it to our Secretary; or

 

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attending the Special Meeting online and voting electronically during the meeting (although attendance at the Special Meeting will not in and of itself constitute a revocation of a proxy).

Any written notice of revocation or subsequent proxy should be sent so as to be delivered to our offices at Poshmark, Inc., 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065, Attention: General Counsel and Corporate Secretary, before the taking of the vote at the Special Meeting. If you want to revoke your proxy by sending a new proxy card or an instrument revoking the proxy to the Company, you should ensure that you send your new proxy card or instrument revoking the proxy in sufficient time for it to be received by the Company prior to the Special Meeting. If you are a beneficial owner of shares of Poshmark common stock held in “street name,” you must contact your bank, broker or other nominee to change your vote or obtain a legal proxy to vote your shares electronically at the Special Meeting.

Any adjournment, postponement or other delay of the Special Meeting, including for the purpose of soliciting additional proxies, will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned, postponed or delayed.

Voting at the Special Meeting

The Special Meeting will be held virtually. There will be no physical location for stockholders to attend. You will be able to attend the Special Meeting by registering online at www.proxydocs.com/POSH.

 

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Stockholders of record: If you are a stockholder of record, in order to participate in the Special Meeting, you will need your control number included on the proxy card or the voting instruction form

 

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previously distributed to you. If you are a stockholder of record, you may vote electronically during the Special Meeting using your control number by following the instructions available at www.proxydocs.com/POSH.

 

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Stockholders holding shares in “street” name: If your shares are held in “street name” through a brokerage firm, bank, trust or other similar organization and you do not have a control number, in order to participate in the Special Meeting, you must first obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Poshmark common stock you held as of the record date, your name and email address. If you hold your Poshmark common stock in “street name,” you must obtain the appropriate documents from your broker, bank, trustee, or nominee, giving you the right to vote the shares at the Special Meeting.

Instructions on how to attend and participate in the Special Meeting via the webcast are available at www.proxydocs.com/POSH.

You should ensure that you have a strong Internet connection and allow plenty of time to log in and ensure that you can hear streaming audio. You may begin to log in to the virtual-only meeting platform 15 minutes prior to the start of the Special Meeting. We will offer live technical support for all stockholders attending the meeting. Technical support phone numbers will be available on the virtual-only meeting platform and posted in the confirmation email you will receive after registering online to attend at www.proxydocs.com/POSH.

If you hold your Poshmark common stock in “street name,” you must obtain the appropriate documents from your broker, bank, trustee, or nominee, giving you the right to vote the shares at the Special Meeting. For beneficial owners of shares of Poshmark common stock held in “street name,” in addition to providing identification as outlined for record holders above, you will need a legal proxy from your broker or a recent brokerage statement or letter from your broker reflecting your stock ownership as of the record date. Please note that unless you have a legal proxy from your bank, broker or other nominee, you will not be able to vote any shares held in “street name” virtually at the Special Meeting. Please note that even if you plan to virtually attend the Special Meeting, we recommend that you vote by Internet, telephone or by mail, using the enclosed proxy card in advance, to ensure that your shares will be represented.

Solicitation of Proxies

The Poshmark Board is soliciting proxies for the Special Meeting from its stockholders. The Company will bear the cost of soliciting proxies, including the expense of preparing, printing and distributing this proxy statement. In addition to soliciting proxies by mail, telephone or electronic means, we may request banks, brokers and other nominees to solicit their customers who have Poshmark common stock registered in their names and will, upon request, reimburse them for the reasonable, out-of-pocket costs of forwarding proxy materials in accordance with customary practice. We may also use the services of our directors, officers and other employees to solicit proxies, personally, by telephone or by electronic means, without additional compensation. In addition, the Company has retained Innisfree M&A Incorporated to solicit stockholder proxies at a fee of up to $45,000 plus reasonable expenses. We have also agreed to indemnify Innisfree M&A Incorporated against certain losses, damages and expenses.

Adjournments

The Special Meeting may be adjourned from time to time to another time and/or place under our Amended and Restated By-Laws by the chairperson of the meeting. Under our Amended and Restated By-laws, notice need not be given of any such adjournment of less than 30 days if the time and place thereof are announced at the meeting at which the adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned special meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a

 

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new record date is fixed for the adjourned meeting, notice of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present virtually and vote at such adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. All proxies will be voted in the same manner as they would have been voted at the original convening of the Special Meeting, except for any proxies that have been validly revoked or withdrawn prior to the time such proxies are voted at the reconvened meeting.

The Adjournment Proposal set forth in this proxy statement relates only to an adjournment of the Special Meeting for purposes of soliciting additional proxies to obtain the requisite stockholder approval to adopt the Merger Agreement. Poshmark retains full authority to the extent set forth in its Amended and Restated By-laws and Delaware law to adjourn the Special Meeting for any other purpose, or to postpone the Special Meeting before it is convened, without the consent of any Poshmark stockholder.

The holders of the outstanding shares of Class A common stock and Class B common stock vote together as a single class on all proposals described in this proxy statement. Each holder of Class A common stock is entitled to one (1) vote for each outstanding share of Class A common stock owned on the record date and each holder of Class B common stock is entitled to ten (10) votes for each outstanding share of Class B common stock owned on the record date.

Voting by Company Directors and Executive Officers

As of the record date for the Special Meeting, the directors and executive officers of Poshmark beneficially owned in the aggregate approximately 3,431,916 shares of Class A common stock and 22,737,284 shares of Class B common stock entitled to vote at the Special Meeting, representing approximately 77% of the total voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting. Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of their respective shares of Poshmark common stock (1) “FOR” the adoption of the Merger Agreement and (2) “FOR” the Adjournment Proposal.

Certain of the Company’s directors and executive officers have interests in the Merger that may be different from, or in addition to, those of the Company’s stockholders generally. For more information, please see the section of this proxy statement titled “The Merger - Interests of the Company’s Directors and Executive Officers in the Merger.”

Voting Agreement

In connection with the execution of the Merger Agreement, each of Manish Chandra, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. has entered into a Voting Agreement with Parent and the Company. Subject to its terms, the Voting Agreement obligates the specified stockholders to, among other things, vote the shares of Poshmark common stock beneficially owned by the specified stockholders in favor of the adoption of the Merger Agreement, against any proposal for an alternative control transaction and, subject to certain exceptions, not transfer any shares of Poshmark common stock prior to the termination of the Voting Agreement. The Voting Agreement will terminate as of the earlier of (1) the earliest to occur of (x) the Effective Time and (y) the termination of the Merger Agreement in accordance with the termination provisions of the Merger Agreement, and (2) the election of such specified stockholder to terminate the Voting Agreement following any amendment to the original unamended Merger Agreement that reduces or changes the form of consideration payable pursuant to the Merger Agreement.

As of the close of business on the record date, the specified stockholders beneficially owned in the aggregate approximately 3,339,306 shares of Class A common stock and 22,688,105 shares of Class B common stock, representing approximately 77% of the total voting power of the outstanding shares entitled to vote at the Special Meeting.

See the section entitled “Voting Agreement” for further information.

 

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Assistance; Proxy Solicitor

If you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact Poshmark’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York, NY 10022

Stockholders May Call:

1 (877) 750-0637 (TOLL-FREE from the U.S. and Canada)

or

+1 (412) 232-3651 (From other countries)

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

As discussed elsewhere in this proxy statement, at the Special Meeting holders of Poshmark common stock will consider and vote on a proposal to adopt the Merger Agreement (referred to as the “Merger Proposal”). The Merger cannot be completed without the adoption of the Merger Agreement by the requisite vote of Poshmark stockholders. You are urged to carefully read this proxy statement in its entirety for more detailed information concerning the Merger Agreement and the Merger, including the information set forth under the sections of this proxy statement titled “The Merger” and “The Merger Agreement.” A copy of the Merger Agreement is attached as Annex A to this proxy statement. You are urged to read the Merger Agreement carefully and in its entirety.

The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote as of the close of business on the record date. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee), abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Merger Proposal.

The Poshmark Board recommends a vote “FOR” the approval of the Merger Proposal.

 

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PROPOSAL 2: ADJOURNMENT PROPOSAL

We are asking that you approve a proposal to adjourn the Special Meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (referred to as the “Adjournment Proposal”).

Poshmark is asking stockholders to authorize the holder of any proxy solicited by the Poshmark Board to vote in favor of any adjournment of the Special Meeting, if necessary or appropriate, as determined by the Company, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal at the time of the Special Meeting.

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the voting power of the shares of Poshmark common stock present, in person or represented by proxy. Abstentions and broker non-votes (if any) will not count as votes cast on the Adjournment Proposal. Accordingly, shares deemed not in attendance at the Special Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and broker non-votes will have no effect on the outcome of the Adjournment Proposal. Abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal.

The vote on the Adjournment Proposal is a vote separate and apart from the vote to adopt the Merger Agreement. Poshmark does not intend to call a vote on this proposal if the Merger Proposal is approved at the Special Meeting.

The Poshmark Board recommends a vote “FOR” approval of the Adjournment Proposal.

 

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THE MERGER

General Description of the Merger

The Company, Parent, Proton Parent and Merger Sub entered into the Merger Agreement on October 3, 2022. A copy of the Merger Agreement is included as Annex A to this proxy statement. On the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will thereupon cease, and the Company will continue as the surviving corporation of the Merger as an indirect subsidiary of Parent.

At the Effective Time, and without any action by any stockholder, each share of Poshmark common stock that is issued and outstanding as of immediately prior to the Effective Time (other than shares of Poshmark common stock held by the Company as treasury stock, owned by Parent or any of its subsidiaries (including Proton Parent and Merger Sub) immediately prior to the Effective Time or as to which holders thereof have properly exercised their statutory rights of appraisal in accordance with Section 262 of the DGCL) will be automatically canceled, extinguished and converted into the right to receive the Merger Consideration, less any applicable withholding taxes.

Background of the Merger

As part of Poshmark’s ongoing consideration and evaluation of its long-term strategic goals and plans, the Board and management of Poshmark (“Poshmark management” or “Company management”) periodically review, consider and assess Poshmark’s operations and financial performance and overall industry, macroeconomic and geopolitical conditions, as they may affect those strategic goals and plans, with the goal of enhancing stockholder value. This review at times includes, among other things, the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic alternatives.

On January 4, 2022, a member of the Board introduced Manish Chandra, Poshmark’s co-founder and CEO, to representatives of NAVER to explore a potential commercial partnership between the companies involving (i) the expansion of Poshmark’s business into South Korea and potentially Japan and NAVER’s entry into U.S. markets and (ii) a potential private investment in Poshmark’s public equity by NAVER (such partnership and investment referred to together as the “potential commercial partnership and investment”).

On January 12, 2022, the Company and NAVER entered into a mutual non-disclosure agreement to further explore the potential commercial partnership and investment. Such non-disclosure agreement did not contain any standstill or employee non-solicitation provisions. Following the execution of the non-disclosure agreement, Poshmark management proceeded to conduct multiple due diligence sessions with representatives of NAVER.

On January 27, 2022, certain members of the Board met with representatives from Goldman Sachs and representatives of Financial Advisor A and Financial Advisor B in connection with the Company’s ongoing review of potential strategic alternatives.

On February 2, 2022 and February 10, 2022, representatives of NAVER and Poshmark management initiated discussions around the framework for the potential commercial partnership and investment.

On February 16, 2022, NAVER submitted an initial proposal for the potential commercial partnership and investment, which proposal included a preliminary $125 million investment structured as a convertible preferred security. From February 16, 2022 until August 5, 2022, when, as described below, NAVER first submitted an initial non-binding proposal to acquire all outstanding Company common stock, the parties continued to negotiate the key terms of a potential commercial partnership and investment.

 

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On March 4, 2022, the Board held a regularly scheduled meeting, with members of Poshmark management and representatives of Goldman Sachs, Financial Advisor A and Goodwin Procter LLP, Poshmark’s outside counsel (“Goodwin”), in attendance for portions of the meeting. The Board discussed the potential commercial partnership and investment with NAVER, and determined that it would be advisable to engage a financial advisor in order to assist in the evaluation of the potential commercial partnership and investment and other potential strategic alternatives. The Board met with representatives from Goldman Sachs and Financial Advisor A to assess each firm as a potential advisor to the Company in connection with such evaluation. Following discussion, the Board determined to proceed with the formal engagement of Goldman Sachs as its financial advisor, noting Goldman Sachs’ extensive expertise, knowledge of the industry in which Poshmark operates and experience advising technology companies in connection with potential strategic transactions. On the basis of these considerations, and subject in all respects to the Board’s review of a customary relationships disclosure to be produced by Goldman Sachs, the Board authorized Poshmark management and Goodwin to negotiate the terms of an engagement letter for the purpose of engaging Goldman Sachs.

On March 27, 2022, representatives of NAVER had a follow-up call with Poshmark management regarding Poshmark’s Q4 2021 earnings.

On March 28, 2022, at the request of the Board, representatives of Goldman Sachs provided customary relationship disclosures to Poshmark, and such disclosure was promptly shared with the Board and included disclosure of certain relationships between Goldman Sachs and representatives thereof on the one hand and NAVER, Mayfield Fund, L.L.C., and certain other parties and their respective affiliates, on the other hand. A summary of such relationships is set forth in the section titled “Opinion of Goldman Sachs.”

On April 1, 2022, after review and consultation with the Board and with the Board’s unanimous approval, the Company signed a formal engagement letter with Goldman Sachs in connection with the Company’s evaluation of a potential strategic transaction, including the potential commercial partnership and investment with NAVER.

On April 13, 2022, representatives of Goldman Sachs, at the Board’s direction, and representatives of NAVER’s financial advisor, LionTree LLC (“LionTree”), initiated discussions on the topic of a minority equity investment.

On May 2, 2022, NAVER management met with members of Poshmark management at Poshmark’s headquarters to present an overview of NAVER’s business. Following the meeting, a representative of NAVER indicated to Mr. Chandra that NAVER was interested in potentially engaging in a broader strategic transaction with Poshmark in the form of an acquisition of all outstanding Company common stock (such potential strategic transaction involving Poshmark and NAVER, the “proposed transaction”). Mr. Chandra stated he was not in a position to respond to such interest at such time, given the Board had only previously discussed a potential commercial partnership and investment with NAVER. Following the discussion, Mr. Chandra gave an update regarding such expression of interest to certain members of the Board.

On May 6, 2022, the Board held a regularly scheduled meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin in attendance. Mr. Chandra provided the Board a status update on discussions with NAVER regarding the potential commercial partnership and investment and informed the Board of NAVER’s interest in potentially engaging in a broader strategic transaction with Poshmark in the form of an acquisition of all outstanding Company common stock. The Board also discussed that it would need to evaluate Poshmark’s long-range plan, the current value of Poshmark and available strategic opportunities before agreeing to a potential commercial partnership and investment with NAVER or pursuing other strategic alternatives. Accordingly, in order to be able to fully assess Poshmark’s standalone prospects and potential, and to be able to better evaluate such prospects and potential relative to the potential commercial partnership and investment and/or other potential strategic alternatives, the Board authorized Poshmark management to develop a standalone long-range plan using the best up-to-date information then available.

 

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On May 10, during a call between representatives NAVER and Mr. Chandra to discuss the investment process, representatives of NAVER again raised the idea of a full acquisition. Mr. Chandra requested that NAVER continue to focus on the potential commercial partnership and investment.

From May 25, 2022 through June 23, 2022, members of Poshmark management and NAVER management held multiple meetings during which the teams presented overviews of their respective businesses and focused on exploring a potential commercial partnership and investment, especially on joint market opportunity in Korea, the live shopping business and the Japan market.

On June 14, 2022, the Board held a regularly scheduled meeting, with members of Poshmark management in attendance. Mr. Chandra provided an update on Poshmark’s long-range plan and led a discussion on key assumptions made in preparing the long-range plan. The Board also discussed the methodology and investment assumptions and provided feedback on the long-range plan.

On July 5, 2022, the Board held a meeting, with members of Poshmark management and representatives of Goodwin also in attendance. Mr. Chandra provided a status update regarding the potential commercial partnership and investment and recent interactions with NAVER, including NAVER’s continued interest in a potential acquisition of Poshmark. Representatives of Goodwin presented an overview of the directors’ fiduciary duties under Delaware law and discussed certain considerations for the Board when undertaking an evaluation of strategic alternatives, including a potential sale of the Company. The members of Poshmark management also presented certain unaudited financial forecasts for Poshmark for fiscal years 2022 through 2025 (the “Company LRP”), which Poshmark management extrapolated through fiscal year 2032, and certain forecasts related to the expected utilization by the Company of certain net operating loss carryforwards (the “Tax Attributes Forecasts” and together with the Company LRP and extrapolations, the “Management Projections”), which had been prepared at the request of the Board in connection with the Board’s review of strategic alternatives. Poshmark management noted that the Company LRP assumes certain keys to growth and continuous improvement in buyer conversion and spend, growing AUs, seller conversion and monetization, and does not reflect the impact of a potential partnership with NAVER given the early stage of the parties’ discussion around the framework for and key terms of the potential commercial partnership and investment and lack of agreement on any material terms. Poshmark management also discussed the market environment and underscored in their presentation the challenges facing the Company noting certain key execution risks of the standalone plan, including the growth of active user retention or active buyer conversion in part driven by the introduction of new rules or technology disruptions, major changes in the competitive or regulatory landscape and the challenges of gaining a foothold in another country. Poshmark management also discussed Poshmark’s livestreaming and live auctions initiative, which Poshmark described as an opportunity to reinvent selling by making live selling available to everyone and to integrate live selling into Poshmark’s other initiatives such as Poshmark parties. Poshmark management noted that this initiative could potentially be a significant revenue generator and growth opportunity for Poshmark. Poshmark management also noted, however, that while Poshmark was aiming to begin the new initiative in the third quarter of fiscal year 2022, the initiative was still being conceptualized, and therefore it was untested and too speculative at that point to reasonably reflect any potential revenue, costs and other financial metrics associated with such initiative in the projections being reviewed and approved by the Board. Poshmark management and the Board discussed the initiative and the potential opportunity associated therewith, and the Board concurred with Poshmark management’s view to not include such initiative in the projections given the speculative nature of any potential revenue, costs, and other financial metrics associated with the initiative. The Board directed Poshmark management to present information on such initiative to NAVER as part of NAVER’s due diligence and assessment of potential growth drivers such information was subsequently provided to NAVER during the due diligence meetings described below. Following discussion, the Board approved the Company LRP and directed Poshmark management to share the Management Projections with Goldman Sachs for purposes of Goldman Sachs’ financial analyses in connection with the Board’s evaluation of any potential strategic transaction, including both the potential commercial partnership and investment and potential acquisition of Poshmark by NAVER, and if requested, with NAVER for purposes of NAVER’s evaluation of a potential acquisition of Poshmark. The Management Projections are more fully described in the section titled

 

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“Certain Financial Projections.” The directors were then invited to disclose any actual or potential conflicts of interest they may have in relation to NAVER and its affiliates and each of the directors confirmed that such director is independent from and does not have a relationship with NAVER or its affiliates. The Board also authorized Poshmark management, certain members of the Board and representatives of Goldman Sachs to continue to engage in discussions with NAVER and its advisors regarding the potential commercial partnership and investment, noting that consistent with the Board’s consideration of various strategic and other opportunities available to Poshmark and its fiduciary duties, the Board would be willing to review a proposal submitted by NAVER if NAVER remained interested in a potential acquisition of Poshmark.

On July 19, 2022 and July 20, 2022, Poshmark held in-person diligence sessions with NAVER management (with representatives of LionTree in attendance), at Poshmark’s headquarters with respect to the potential commercial partnership and investment. From July 21, 2022 to August 2, 2022, members of Poshmark management and NAVER management held multiple follow-up due diligence meetings.

On August 2, 2022, Mr. Chandra and a NAVER representative spoke by phone, during which NAVER reaffirmed its interest in an acquisition of all outstanding Company common stock. Mr. Chandra indicated the Board’s willingness to review a proposal for the proposed transaction and requested that NAVER submit a formal proposal if it remained interested in an acquisition. Both parties also agreed at that point that the potential commercial partnership and investment did not meet either party’s objectives at that point and discussions with respect to potential commercial partnership and investment were subsequently terminated.

On August 3, 2022, the Board held a regularly scheduled meeting, with members of Poshmark management and representatives of Goodwin also in attendance. Among other things, the Board discussed adopting resolutions forming a transaction committee of the Board (the “Transaction Committee”) to consider, review and evaluate any proposals made with respect to the potential commercial partnership and investment as well as any other potential strategic alternative or alternatives thereto, including, without limitation, Poshmark continuing to operate as an independent, publicly traded company. The Board discussed that the Transaction Committee was being formed for expediency of process, and not in response to any conflict of interest in relation to NAVER and its affiliates. The Board then adopted resolutions forming the Transaction Committee and appointed Mr. Navin Chaddha, Mr. Hans Tung, and Mr. Jeff Epstein, each an independent director, to the Transaction Committee and approved the reimbursement of all reasonable expenses incurred by such directors in connection with their service on the Transaction Committee.

On August 5, 2022, NAVER submitted a non-binding written proposal to acquire Poshmark for $16.50 per share in cash (the “August 5 proposal”). The $16.50 per share offer price implied a premium to Poshmark’s closing price on August 4, 2022 of approximately 38.7%. The August 5 proposal noted that it was not subject to any financing condition and that at the appropriate time and with the approval of the Board, NAVER would like to discuss the possibility of a rollover investment by a limited group of stockholders. NAVER also expressed the view that the retention of Poshmark’s current management and employees is critical to the future success of the business and they are important stakeholders in the potential transaction, and therefore at the appropriate time and with the approval of the Board, NAVER would welcome the opportunity to discuss potential go-forward incentive and alignment arrangements with Poshmark management. Poshmark’s management, including Mr. Chandra, was directed by the Board not to, and they did not, discuss any post-transaction employment or compensation terms for Poshmark management with any potential acquirers, with the sole exception that Mr. Chandra began such discussions with representatives of NAVER with the Board’s approval on September 22, 2022, as discussed below. In addition, Poshmark’s management team, including Mr. Chandra, was directed by the Board not to, and they did not, discuss any potential rollover investment in any potential acquirers. The August 5 proposal also included a request that Mr. Chandra, certain entities affiliated with Menlo Ventures, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. would be required to sign voting agreements and a request for a 30-day exclusivity period.

 

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On August 6, 2022, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Mr. Chandra provided the Transaction Committee with a status update regarding the potential transaction with NAVER and recent interactions with NAVER, noting that NAVER had submitted a non-binding proposal on August 5 to acquire Poshmark for $16.50 per share, and representatives of Goldman Sachs reviewed a summary of the material financial and economic aspects of NAVER’s proposal. The August 5 proposal was provided to the Transaction Committee prior to the meeting. Representatives of Goodwin discussed certain key terms that would be applicable to a potential transaction with NAVER. The Transaction Committee and its advisors discussed potential responses to NAVER’s August 5 proposal, and representatives of Goldman Sachs reviewed a list of strategic and financial sponsor counterparties to be considered by the Transaction Committee for inclusion in a potential market check, if the Board decided to conduct a market check. Following discussion, the Transaction Committee authorized Mr. Chandra to revert to NAVER to confirm receipt of the August 5 proposal and note that the Board would need to discuss and evaluate the proposal.

Later on August 6, 2022, as authorized by the Transaction Committee, Mr. Chandra called a representative of NAVER and conveyed that the Board would meet to discuss and evaluate the August 5 proposal.

On August 7, 2022, the Board held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin in attendance for a portion of the meeting. Mr. Chandra provided the Board with a status update regarding the potential transaction with NAVER, including a discussion of recent interactions with NAVER and the August 5 proposal. Representatives of Goodwin again presented an overview of the directors’ fiduciary duties under Delaware law and discussed certain considerations for the Board when undertaking an evaluation of strategic alternatives, including a potential sale of the Company. The Board and its advisors then discussed the importance of understanding the Company LRP and the role that the Company LRP would play in the preliminary financial analyses to be performed by Goldman Sachs, at the Board’s direction. The Board and its advisors also discussed a potential pre-signing market check and the implications of entering into exclusivity with NAVER at this time. Representatives of Goldman Sachs reviewed a summary of key financial and economic terms of the August 5 proposal and the Board and its advisors discussed potential responses to NAVER, as well as considerations related to the timing and scope for a potential pre-signing market check. Representatives of Goldman Sachs reviewed a potential list of strategic and financial sponsor parties for the Board’s consideration and the Board and its advisors discussed the risks of leaks and management distraction based on the scope of the market check. Following discussion, the Board (i) directed Mr. Chandra, to revert to and encourage NAVER to submit an improved offer to improve NAVER’s chances of receiving a positive reaction from the Board to their proposal, and to indicate that the revised proposal would have to be “in the $20s” for the Board’s consideration as an effort to obtain a higher offer from NAVER, (ii) approved and reaffirmed the Company LRP, which was initially approved by the Board on July 5, 2022, and directed Goldman Sachs to use the Management Projections for the preparation of its preliminary financial analyses and (iii) authorized a pre-signing market check consistent with the discussion between the Board and representatives of Goldman Sachs, with the Transaction Committee determining the specific timing and scope of a pre-signing market check, and authorized representatives of Goldman Sachs to conduct such market check under the guidance of the Transaction Committee.

Immediately following the meeting, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goodwin also in attendance. The Transaction Committee and its advisors discussed the counterparties to be contacted in the pre-signing market check, and subsequent to the meeting, the Transaction Committee directed representatives of Goldman Sachs to contact four strategic counterparties (referred to herein as “Strategic Party A”, “Strategic Party B”, “Strategic Party C” and “Strategic Party D”) and a financial sponsor counterparty (referred to herein as “Financial Sponsor A”), who the Transaction Committee determined, after its discussions with representatives of Goldman Sachs, were the most likely potential parties to be interested in a transaction with Poshmark. The Transaction Committee and representatives of Goodwin then discussed NAVER’s desire to discuss the possibility of a rollover investment by a limited group of stockholders at the appropriate time and with the approval of the Board as indicated in their August 5 proposal, with representatives

 

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of Goodwin explaining the directors’ fiduciary duties under Delaware law and other considerations with respect to any request by NAVER that the directors or their affiliates participate in a rollover investment. Following discussion, the Transaction Committee directed representatives of Goodwin to continue to monitor any subsequent proposals by NAVER regarding any rollover investment.

Later on August 7, 2022, as authorized by the Board, Mr. Chandra called a representative of NAVER and conveyed the message of the Board that (i) the $16.50 per share offer price remained inadequate and (ii) the Board encouraged NAVER to submit an improved offer to improve NAVER’s chances of receiving a positive reaction from the Board to their proposal and the revised proposal would have to be “in the $20s” for the Board’s consideration.

On August 8, 2022, representatives of Goldman Sachs commenced the Company’s pre-signing market check with respect to Financial Sponsor A, Strategic Party A, Strategic Party B, Strategic Party C, and Strategic Party D in accordance with the directions of the Board and the Transaction Committee, in each case with the message that the Company was prepared to enter into a non-disclosure agreement with the counterparty to enable the counterparty to expeditiously receive access to value-determining due diligence and potentially submit a proposal for a potential transaction.

On August 15, 2022, the Company and Financial Sponsor A entered into a non-disclosure agreement that included a standstill provision that prohibited Financial Sponsor A, for an agreed-upon period from the date of the agreement, from offering to acquire or acquiring Poshmark, and from taking certain other actions, including soliciting proxies, without the prior consent of Poshmark (but did not include a so-called “don’t ask, don’t waive” provision), subject to the ability of Financial Sponsor A to make certain confidential proposals to the Company and to certain customary fall-away provisions to the standstill in the event of the entry into, commencement or public announcement of certain change of control transactions involving the Company and any third party.

Later that day, the Board held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Prior to the meeting, Poshmark had shared with members of Poshmark management certain management guidelines which, among other things, directed Poshmark management not to have any discussions regarding post-closing employment with NAVER until and unless approved and authorized by the Board or a committee thereof. Representatives of Goldman Sachs reviewed its preliminary financial analysis of the Company and the proposed $16.50 per share offer price from NAVER, which represented a 40% premium to Poshmark’s closing price on August 12, 2022 (the last full trading day prior to the Board meeting), and the Board discussed such analysis. Representatives of Goldman Sachs provided an update on the pre-signing market check, noting that a total of five potential counterparties had been contacted, with Financial Sponsor A entering into a non-disclosure agreement earlier that day. The Board then discussed the scope of the market check and concurred with the conclusions of the Transaction Committee, with the exception that one additional strategic party, Strategic Party E, should be considered for inclusion in the pre-signing market check. The Board directed representatives of Goldman Sachs to include Strategic Party E in the pre-signing market check. The Board and its advisors then discussed potential responses to NAVER and various tactical considerations with respect to such responses, and the Board unanimously authorized Mr. Chandra, to revert to NAVER with the message that its revised proposal would have to be “solidly in the $20s” for the Board’s consideration and Mr. Chandra conveyed such message to representatives of NAVER the following day.

From August 15, 2022 to August 16, 2022, representatives of NAVER traveled to Poshmark’s headquarters in San Francisco to attend in-person sessions to discuss growth strategy with Poshmark management. Such representatives of NAVER also met with the lead independent director of the Board to further discuss the potential transaction.

Also on August 15, 2022, the Company and Strategic Party D entered into a non-disclosure agreement that included a standstill provision that prohibited Strategic Party D, for an agreed-upon period from the date of the

 

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agreement, from offering to acquire or acquiring Poshmark, and from taking certain other actions, including soliciting proxies, without the prior consent of Poshmark. Such non-disclosure agreement contained a so-called “don’t ask, don’t waive” provision but permitted Strategic Party D to make certain confidential proposals to the Company and was subject to certain customary fall-away provisions to the standstill in the event of the entry into, commencement or public announcement of certain change of control transactions involving the Company and any third party.

On August 16, 2022, representatives of Goldman Sachs reached out to representatives of Strategic Party E as part of the Company’s pre-signing market check in accordance with the directions of the Board. Also on August 16, 2022, representatives of Strategic Party A and Strategic Party C each indicated to representatives of Goldman Sachs that such party would not further evaluate a potential transaction with Poshmark at this time.

From August 18, 2022 to August 23, 2022, representatives of Financial Sponsor A, Strategic Party B, Strategic Party D and Strategic Party E attended management presentations with Poshmark management, except that representatives of Strategic Party B did not receive any non-public confidential information regarding Poshmark given representatives of Strategic Party B, at Strategic Party B’s request, had not executed a confidentiality agreement prior to such presentation. Strategic Party B understood that if it chose to move forward subsequent to such initial meeting, Poshmark would require a customary confidentiality agreement between the parties.

On August 23, 2022, the Company and Strategic Party E entered into a non-disclosure agreement. Such non-disclosure agreement did not contain a standstill provision, but Strategic Party E understood a customary standstill provision would be required if Strategic Party E decided to move forward after the management presentation.

On August 24, 2022, representatives of Strategic Party B indicated to representatives of Goldman Sachs that such party would not further evaluate a potential transaction with Poshmark at this time.

On August 25, 2022, NAVER submitted a revised non-binding proposal to acquire Poshmark for $17.50 per share in cash (the “August 25 proposal”). The $17.50 per share offer price implied a premium to Poshmark’s closing price on August 24, 2022 of approximately 59.1% and represented a 6.1% increase on NAVER’s original offer price per share submitted on August 5, 2022. The August 25 proposal again noted that at the appropriate time and with the approval of the Board, NAVER would like to discuss the possibility of a rollover investment by a limited group of stockholders and potential go-forward arrangements with Poshmark management, and included a request for a 30-day exclusivity period. Poshmark’s management team, including Mr. Chandra, was again directed by the Board not to, and they did not, discuss any post-transaction employment or compensation terms for Poshmark management with representatives of NAVER, with the sole exception that Mr. Chandra began such discussions with the Board’s approval on September 22, 2022, as discussed below. In addition, Poshmark’s management team, including Mr. Chandra, was again directed by the Board not to, and they did not, discuss any potential rollover investment with representatives of NAVER.

On August 26, 2022, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Representatives of Goldman Sachs provided a status update regarding the Company’s pre-signing market check, noting that all of the counterparties included in the market check, other than Financial Sponsor A, had declined to further evaluate a potential transaction with Poshmark at this time. Representatives of Goldman Sachs also provided a status update regarding a potential transaction with NAVER and recent interactions with NAVER, noting that NAVER had submitted the August 25 proposal. Representatives of Goldman Sachs summarized the material financial and economic aspects of NAVER’s revised proposal. The Transaction Committee then discussed tactical considerations relating to the Company’s potential responses to NAVER’s revised proposal, including that Poshmark would not entertain exclusivity until the parties were agreed on price, and the potential timeline to signing, and following discussion, instructed representatives of Goldman Sachs to discuss next steps with representatives of LionTree, including with respect to due diligence, and instructed representatives of Goodwin to prepare an initial draft of the merger agreement.

 

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Also on August 26, 2022, at Financial Sponsor A’s request, Poshmark management attended a follow-up diligence session with representatives of Financial Sponsor A.

On August 27, 2022, the Board held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Representatives of Goldman Sachs provided a status update regarding the Company’s pre-signing market check, noting that all of the counterparties included in the market check, other than Financial Sponsor A, had declined to further evaluate a potential transaction with Poshmark at this time, explaining that (i) Strategic Party A found the present timing of a potential transaction with Poshmark challenging given internal developments, (ii) Strategic Party C, Strategic Party D and Strategic Party E all expressed respect for the platform, but said it was not high enough on their list of M&A priorities at that time and (iii) Strategic Party B questioned the strategic fit within its existing portfolio. Representatives of Goldman Sachs also provided a status update regarding a potential transaction with NAVER, noting that NAVER had submitted the August 25 proposal. Representatives of Goldman Sachs reviewed a summary of the material financial and economic aspects of NAVER’s revised proposal. The Board then discussed at length the potential timeline to entering into a definitive agreement with NAVER and next steps in the process, and representatives of Goodwin again provided the Board with an overview of the directors’ fiduciary duties in their evaluation of a proposed transaction. Representatives of Goodwin also presented a proposed set of certain non-price terms to be reflected in the initial draft of the proposed merger agreement that representatives of Goodwin would send to representatives of NAVER’s legal counsel, Kirkland & Ellis LLP (“Kirkland”). Following discussion, the Board unanimously (i) approved moving forward with a potential transaction with NAVER at a price per share at or above $17.50 so long as NAVER completes business diligence in an expedited manner and agrees to work towards signing prior to September 21, (ii) authorized Poshmark management and representatives of Goldman Sachs to continue to negotiate with NAVER to get the best price available and (iii) authorized representatives of Goodwin to send an initial draft of the merger agreement reflecting the non-price terms discussed with the Board. The Board also approved granting NAVER exclusivity for a limited period of time but only after NAVER confirms completion of its business diligence and provides a full markup of the merger agreement.

On August 27, 2022, Mr. Chandra sent an email to a representative of NAVER indicating that the Board was prepared to move forward with a proposed transaction at a price of $18.50 per share.

On August 29, 2022, representatives of Goodwin sent to representatives of Kirkland Poshmark’s initial draft of a proposed merger agreement for the proposed transaction. Representatives of Goodwin and Kirkland continued to negotiate and revise the merger agreement until the parties’ entry into the merger agreement on October 3, 2022. Representatives of Goodwin also sent to representatives of Kirkland an amendment to the non-disclosure agreement entered into by Poshmark and NAVER on January 11, 2022, which amendment included a standstill provision that prohibited NAVER, for an agreed-upon period from the date of the amendment, from offering to acquire or acquiring Poshmark, and from taking certain other actions, including soliciting proxies, without the prior consent of Poshmark (but did not include a so-called “don’t ask, don’t waive” provision), subject to the ability of NAVER to make certain confidential proposals to the Company and to certain customary fall-away provisions to the standstill in the event of the entry into or commencement or public announcement of certain change of control transactions involving the Company and any third party. Representatives of Goodwin and Kirkland continued to negotiate and revise the amendment to the non-disclosure agreement until the parties’ entry into the amendment on September 5, 2022.

On August 30, 2022 and August 31, 2022, representatives of NAVER and LionTree attended in-person business due diligence sessions at Poshmark’s headquarters.

Also on August 31, 2022, representatives of Goodwin sent to representatives of Kirkland Poshmark’s initial draft of a voting and support agreement to be entered into by certain Poshmark stockholders, including Mr. Chandra, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. Representatives of Goodwin and Kirkland continued to negotiate and revise the voting agreement until execution of the voting and support agreements concurrently with the execution of the merger agreement on October 3, 2022.

 

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On September 2, 2022, representatives of Financial Sponsor A indicated to representatives of Goldman Sachs that such party would not further evaluate a potential transaction with Poshmark at this time, noting that if such party were to submit a proposal following completion of diligence, it would likely not be able to offer a meaningful premium. Also on September 2, 2022, representatives of Kirkland delivered a revised draft of the merger agreement and other transaction documents to representatives of Goodwin.

On September 7, 2022, a representative of NAVER called Mr. Chandra to verbally convey a revised proposal to acquire Poshmark at $17.80 per share (the “September 7 proposal”), noting that NAVER was still in the process of conducting due diligence, but was willing to improve its offer to $17.80 to continue to move the proposed transaction forward and that NAVER did not see any incremental value above $17.80 per share.

On September 8, 2022, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Representatives of Goldman Sachs provided a status update regarding a potential transaction with NAVER and recent interactions with NAVER, noting that earlier that day, a representative of NAVER had verbally conveyed the September 7 proposal. Representatives of Goodwin also reviewed with the Transaction Committee key legal issues reflected in Kirkland’s mark-up of the initial draft merger agreement delivered to representatives of Goodwin on September 2, 2022 including (i) an initial outside date of six months following signing, shortened from the initially proposed nine months, (ii) a Company termination fee equal to 3.5% of equity value, increased from the initially proposed 2.75% of equity value and (iii) the right of NAVER to terminate the merger agreement and collect the Company termination fee if the Company or the Board materially breaches the no-shop provisions of the merger agreement. Representatives of Goodwin discussed such terms with the Transaction Committee. The Transaction Committee then discussed potential responses to NAVER’s September 7 proposal, taking into consideration the $17.80 per share offer price implied a premium to Poshmark’s closing price on September 8, 2022 of approximately 56.7%, the fact that the Board had authorized proceeding with a potential transaction with NAVER at a price at or above $17.50 per share, the limited number of outstanding issues in the draft merger agreement, and NAVER’s proposed timeline to entering into a definitive agreement by October 5, 2022. Following discussion, the Transaction Committee agreed it would be willing to move forward with a potential transaction with NAVER at a price of $17.80 per share but authorized Mr. Chandra to revert to NAVER with a counterproposal of $18.00 per share in order to obtain the best price possible and instructed representatives of Goldman Sachs to reach out to representatives of LionTree to convey the same message and also request a firm commitment on the timeline proposed by NAVER to enter into a definitive agreement by October 5, 2022.

Later that day, at the Transaction Committee’s direction, representatives of Goldman Sachs called representatives of LionTree to convey a counterproposal at $18.00 per share, in accordance with the guidance of the Transaction Committee.

On September 9, 2022, a representative of NAVER called Mr. Chandra to propose a best and final offer of $17.90 per share (the “September 9 proposal”), subject to the parties entering into an exclusivity arrangement, which Mr. Chandra agreed to as authorized by the Board and the Transaction Committee.

Later that evening, in accordance with the directions of the Board and the Transaction Committee, representatives of Goodwin sent to representatives of Kirkland a markup of the exclusivity agreement. Representatives of Goodwin and Kirkland continued to exchange drafts of the exclusivity agreement until the parties’ entry into the exclusivity agreement on September 11, 2022, which granted NAVER exclusivity until September 26, 2022, subject to an automatic extension of such exclusivity period to 9:30 a.m. (New York time) on October 6, 2022, upon NAVER’s written confirmation of (i) the per share offer price pursuant to the September 9 proposal and (ii) an anticipated signing date of no later than October 6, 2022.

On September 11, 2022, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Mr. Chandra provided an update to the Transaction Committee on his call with a representative of NAVER on September 9, 2022, during

 

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which the parties agreed to move forward with a potential transaction at $17.90 per share as described above. Representatives of Goodwin also provided an update on the ongoing negotiations of (i) the merger agreement, noting that the parties were aligned on path forward with respect to a majority of the material issues presented in the current markup of the merger agreement, subject to the Transaction Committee’s approval of such positions, and that the parties were otherwise conceptually aligned on the remaining few issues and (ii) the exclusivity agreement, which representatives of Goodwin noted was in substantially final form. Following discussion, the Transaction Committee authorized Poshmark management to enter into the exclusivity agreement and instructed representatives of Goodwin to send back to representatives of Kirkland markups of the definitive agreements reflecting the positions discussed and continue to negotiate such agreements. Over the course of the ensuing period of time until the parties entered into the merger agreement on October 3, 2022, the parties finalized their negotiation of the terms of the merger agreement and related ancillary documents pertaining to the proposed transaction, with the representatives of Goodwin and Kirkland continuing to exchange drafts of such documents.

Throughout this period of discussions and negotiations, NAVER continued a detailed due diligence review of Poshmark, including without limitation through access to extensive business, financial, accounting, tax, intellectual property and legal related documentation made available in an electronic data room. From September 11, 2022 to September 20, 2022, Poshmark management and representatives of Goldman Sachs and Goodwin proceeded to conduct multiple additional due diligence management sessions with representatives of NAVER and its third party advisors. Poshmark management and representatives of Goldman Sachs and Goodwin also continued to respond to NAVER’s due diligence requests until the parties’ entry into the merger agreement on October 3, 2022.

Subsequent to the parties agreeing on valuation and the material non-financial transaction terms as a basis for moving forward towards a potential transaction, on September 17, 2022, representatives of Kirkland requested that NAVER be permitted to initiate discussions with Mr. Chandra regarding Mr. Chandra’s potential post-closing employment with NAVER and the terms thereof. Representatives of Kirkland stated NAVER’s position that such discussions and agreement with respect to post-closing employment terms for Mr. Chandra would be a condition to signing a definitive agreement with respect to the proposed transaction.

On September 19, 2022, the Transaction Committee held a meeting, with members of Poshmark management, at the request of the Board and Transaction Committee, and representatives of Goldman Sachs and Goodwin also in attendance. Representatives of Goldman Sachs provided a status update regarding the potential transaction with NAVER and recent interactions with NAVER and LionTree. The Transaction Committee and its advisors discussed recent trading patterns in Poshmark common stock, particularly relative to peers and the broader market since entering into exclusivity with NAVER. Representatives of Goodwin then provided an update on the various transaction documents being negotiated with NAVER, noting that the parties were in agreement on all material terms. Representatives of Goodwin also noted NAVER’s request to initiate discussions with Mr. Chandra regarding Mr. Chandra’s potential post-closing employment with NAVER and the terms thereof. Following extensive discussion, and in light of the parties having agreed on valuation and the material non-financial transaction terms as a basis for moving forward towards a potential transaction, the Transaction Committee unanimously authorized Mr. Chandra to have such discussions with NAVER, subject to (i) Mr. Chandra providing timely updates on any such discussions to representatives of Goodwin which representatives of Goodwin would communicate to the Transaction Committee and the Board and (ii) Mr. Chandra retaining his own legal counsel. Mr. Chandra retained his own legal counsel on September 14, 2022, and between September 22, 2022, and October 3, 2022, Mr. Chandra negotiated his post-closing compensatory arrangements with NAVER and arrived at an agreement on such terms (see the section titled “New Arrangements with Company Executive Officers”). Prior to these developments and negotiations commencing on September 22, 2022, Mr. Chandra did not discuss the terms of his potential post-closing employment or compensation with any representatives of NAVER.

On September 26, 2022, representatives of Kirkland delivered NAVER’s written confirmation of (i) the per share offer price pursuant to the September 9 proposal and (ii) an anticipated signing date of no later than October 6, 2022, extending the exclusivity period to 9:30 a.m. (New York time) on October 6, 2022.

 

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On September 28, 2022, NAVER submitted a proposal for Mr. Chandra’s post-closing compensation arrangements. Over the course of the ensuing period of time until the parties entered into the merger agreement on October 3, 2022, Mr. Chandra and NAVER finalized their negotiation of the terms of the binding employee term sheet and holdback agreement, described in further detail in the section titled “New Arrangements with Company Executive Officers.”

On October 2, 2022, the Transaction Committee held a meeting, with members of Poshmark management and representatives of Goldman Sachs and Goodwin also in attendance. Representatives of Goodwin provided a general update on the status of the various transaction documents as well as the ongoing discussions between Mr. Chandra and NAVER regarding his post-closing employment and compensation arrangement. The Transaction Committee and its advisors then discussed the recent trading performance of Poshmark common stock, particularly relative to peers and the broader market since entering into exclusivity with NAVER and representatives of Goldman Sachs also reviewed its preliminary financial analysis of the Company and NAVER’s proposed $17.90 per share offer price. Representatives of Goodwin also provided an update on Mr. Chandra’s discussions with NAVER regarding his post-closing employment and compensation arrangement and noted that representatives of Goodwin have been kept apprised of and included in many of those discussions. The Transaction Committee then held an executive session during which members asked questions regarding the key terms of Mr. Chandra’s post-closing employment and compensation arrangement and timing of negotiations.

On October 3, 2022, the Board met to review the final terms of the proposed definitive agreement between Poshmark and NAVER and related ancillary documents, copies of which were provided to the Board in advance of the meeting, and to vote on whether to approve entry into the proposed definitive agreement with NAVER. Members of Poshmark management and representatives of Goldman Sachs and Goodwin also attended the meeting. Representatives of Goodwin reviewed the final terms of the proposed definitive agreement between Poshmark and NAVER. Representatives of Goodwin also reminded the Board of the employment and compensation discussions between Mr. Chandra and NAVER, noting that, as previously authorized by the Board, Mr. Chandra had engaged in discussions with NAVER, with representatives of Goldman Sachs and Goodwin participating in certain discussions at the request of the Board and Transaction Committee, and summarized the key terms of Mr. Chandra’s post-closing employment with NAVER and related compensation arrangement. Such arrangements are described in further detail in the section titled “New Arrangements with Company Executive Officers.” Members of the Transaction Committee then presented the formal recommendation of the Transaction Committee with respect to the proposed transaction, including that it was the Transaction Committee’s determination to favorably recommend that the Board approve the proposed transaction. At the request of the Board and Transaction Committee, representatives of Goldman Sachs reviewed with the Board its financial analysis of the Company and the proposed Merger Consideration of $17.90 per share of Company common stock in cash and delivered to the Board an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated October 3, 2022, to the effect that, as of October 3, 2022 and based upon and subject to the factors and assumptions set forth therein, the $17.90 in cash per share of Company common stock to be paid to the holders (other than NAVER and its affiliates) of shares of Company common stock, taken in the aggregate, pursuant to the Merger Agreement was fair from a financial point of view to such holders. For a detailed discussion of Goldman Sachs’ opinion, please see the section titled “Opinion of Goldman Sachs.” After discussions of the proposed transaction with NAVER and the matters summarized for the Board at the meeting, the Board then unanimously (i) determined that it was in the best interests of Poshmark and its stockholders, and declared it advisable, to enter into the merger agreement with NAVER and consummate the merger, (ii) approved the execution, delivery and performance of the merger agreement with NAVER, (iii) recommended that Poshmark stockholders adopt the merger agreement with NAVER and (iv) directed that such matter be submitted for consideration of Poshmark stockholders at a special meeting of Poshmark stockholders.

After the Board meeting on October 3, 2022, Poshmark and NAVER executed and delivered the merger agreement, and Mr. Chandra, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P executed and delivered voting and support agreements. Subsequent to the execution of the merger agreement and the voting and support agreements, Poshmark and NAVER issued a press release publicly announcing the transaction.

 

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Reasons for the Merger; Recommendation of the Poshmark Board

The Board carefully reviewed and considered the proposed Merger in consultation with Poshmark’s senior management and legal and financial advisors and, upon the unanimous recommendation of the Transaction Committee, the Board unanimously: (1) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger; (2) approved the execution, delivery and performance of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations and the consummation of the transactions contemplated by the Merger Agreement, including the Merger; (3) resolved to recommend that the Company’s stockholders adopt the Merger Agreement in accordance with the DGCL; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the Company’s stockholders at the Special Meeting. Accordingly, the Board recommends that stockholders vote “FOR” adoption of the Merger Agreement at the Special Meeting.

In reaching their decision to approve the Merger Agreement, and to recommend that Poshmark stockholders adopt the Merger Agreement, the Board and the Transaction Committee considered the following positive reasons to support the Merger Agreement:

 

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the fact that the price of $17.90 per share in cash payable in the Merger provides certainty, immediate and attractive value and liquidity to Poshmark stockholders;

 

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the financial strength of NAVER and its ability to fund the Merger Consideration with cash on hand;

 

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the absence of any financing condition in the Merger Agreement;

 

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the current and historical market prices of Poshmark common stock, including the market performance of Poshmark Class A common stock in light of current industry, market and macroeconomic conditions, and the fact that the $17.90 per share to be received by Poshmark stockholders in the Merger represents a substantial premium of approximately 15% of Poshmark’s Class A common stock closing price as of October 3, 2022, a 34% premium to the 30-day VWAP and a 48% to the 90-day VWAP of Poshmark Class A common stock;

 

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the belief that the $17.90 per share in cash payable in the Merger was more favorable to Poshmark stockholders on a risk-adjusted, time-adjusted basis than the other alternatives reasonably available to Poshmark, including;

 

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the continued operation of Poshmark on a standalone basis and the pursuit of other potential actionable strategic or financial transactions, including an investment by and commercial partnership with Parent as discussed between the parties prior to exploring a potential sale transaction with Parent;

 

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the Board’s assessment of Poshmark’s business, assets and prospects, its competitive position and historical and projected financial performance, which assessment included consideration of the following factors among others: (i) Poshmark’s growth rate and concerns about macroeconomic conditions; (ii) nature of Poshmark’s industry, including competition from a range of competitors, including both online and offline retailers; (iii) the need to continually innovate, improve and enhance Poshmark’s platform in response to Poshmark users’ evolving needs; (iv) challenges Poshmark has faced in its standalone efforts to expand internationally; (v) incremental regulatory requirements; and (vi) the investments that would be required in connection with Poshmark’s long-term plan;

 

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possible strategic transactions with third parties other than Parent, taking into account the financial capacity, risk of leaks, regulatory considerations and other execution risks associated with potential alternative bidders; and

 

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the fact that a pre-signing market check, which included outreach to five strategic counterparties and one financial sponsor counterparty, did not result in likely actionable interest within the foreseeable near term (as described in more detail under the section titled “The Merger - Background of the Merger”).

 

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•

the belief that, after negotiations with Parent and its representatives (as described in more detail under the section titled “The Merger - Background of the Merger”), $17.90 per share was the highest price that Parent was willing to pay as of the date of execution of the Merger Agreement and that the terms of the Merger Agreement include the most favorable terms to Poshmark, in the aggregate, to which Parent would be willing to agree;

 

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the Board’s assessment of the terms of the Merger Agreement relating to Poshmark’s ability to respond to unsolicited acquisition proposals, including:

 

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Poshmark’s right to provide non-public information in response to, and to discuss and negotiate, certain unsolicited acquisition proposals made before Company shareholder approval of the Merger is obtained; and

 

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Poshmark’s ability to terminate the Merger Agreement prior to obtaining Company shareholder approval of the Merger, in specified circumstances relating to a superior proposal, subject to payment of a termination fee of $52,913,000, which the Board believes to be reasonable under the circumstances and not an impediment to a competing transaction;

 

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the Board’s assessment that the likelihood of completion of the Merger and the relatively low risk of regulatory challenges to the transaction are significant factors in support of the transaction, in light of, among other things:

 

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the lack of competitive overlaps between the businesses of Poshmark and Parent;

 

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the obligations of Parent and Poshmark under the Merger Agreement to use reasonable best efforts to take all action reasonably necessary to cause the expiration or termination of the applicable waiting periods pursuant to the HSR Act applicable to the Merger, including Parent’s obligation to refrain from certain acquisition activity that would reasonably be expected to exacerbate such challenges;

 

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the absence of a financing condition in the Merger Agreement and the fact that Parent has a substantial amount of cash on its balance sheet; and

 

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the conditions to closing contained in the Merger Agreement, which the Board believes are reasonable and customary, and which, in the case of the conditions related to the accuracy of the Company’s representations and warranties, are generally subject to a Company Material Adverse Effect (as defined in the section of this proxy statement titled “The Merger Agreement - Representations and Warranties”);

 

•

the Board’s consideration of the financial analyses presented by representatives of Goldman Sachs at the Board’s meeting on October 3, 2022, as well as the oral opinion of Goldman Sachs, which was subsequently confirmed by delivery of a written opinion, dated October 3, 2022, to the effect that, as of October 3, 2022, and based upon and subject to the factors and assumptions set forth therein, the $17.90 in cash per share of Poshmark common stock to be paid to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock, taken in the aggregate, pursuant to the Merger Agreement was fair from a financial point of view to such holders, as more fully described under the section of this proxy statement titled “Opinion of Goldman Sachs”, which full text of the written opinion of Goldman Sachs is attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement in its entirety;

 

•

the fact that Poshmark has sufficient operating flexibility to conduct its business in the ordinary course prior to the consummation of the Merger;

 

•

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

 

•

the end date of April 3, 2023 (subject to extension under certain circumstances), which is expected to allow for sufficient time to complete the Merger;

 

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•

the availability of statutory appraisal rights to Poshmark stockholders who do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures under the DGCL;

 

•

the fact that the Merger Agreement was approved by the Board, which is comprised of a majority of independent directors who are not employees of Poshmark or any of its subsidiaries, and which received advice from the Company’s outside financial and legal advisors in evaluating, negotiating and recommending the terms of the Merger Agreement;

 

•

the fact that the consideration and negotiation of the Merger Agreement was conducted through extensive arm’s-length negotiations;

 

•

Poshmark’s rights to specific performance under the terms of the Merger Agreement; and

 

•

the fact that stockholders representing greater than a majority of the outstanding voting power of Poshmark’s common stock entered into Voting Agreements concurrently with the execution of the Merger Agreement.

In the course of its deliberations, the Board and the Transaction Committee also considered, among other things, the following negative factors:

 

•

the fact that Poshmark stockholders will have no ongoing equity participation in Poshmark following the Merger (other than as described in the section titled “New Arrangements with Company Executive Officers”) and therefore will cease to participate in the future earnings of growth that Poshmark may achieve;

 

•

the fact that the Merger Agreement does not provide Poshmark with an opportunity to actively solicit alternative bids after entry into the Merger Agreement;

 

•

the possibility that the Merger is not completed as a result of failure to obtain required regulatory clearances or the institution of regulatory injunctions in the United States, or the failure of other closing conditions;

 

•

the risk and costs of stockholder or third-party litigation relating to the Merger;

 

•

the risks and costs to Poshmark if the Merger is not completed;

 

•

the potential uncertainty about the likelihood, timing or effects of completion of the Merger, including on Poshmark’s stockholders, employees, potential and existing customers, sellers, users and other parties, and the risk that such uncertainty may impair Poshmark’s ability to attract, retain and motivate key personnel and could cause third parties to seek to change or not enter into business relationships with Poshmark;

 

•

the restrictions on the conduct of Poshmark’s business before completion of the Merger, generally requiring Poshmark to use reasonable best efforts to conduct its business in the ordinary course and prohibiting Poshmark from taking certain specified actions, subject to specific limitations, which may delay or prevent Poshmark from undertaking business opportunities, anticipated or not, that may arise;

 

•

the significant costs involved in connection with entering into the Merger Agreement and completing the Merger (many of which are payable whether or not the Merger is consummated) and the substantial time and effort of Poshmark management required to complete the Merger, which may distract management, disrupt its business operations and have a negative effect on its financial results;

 

•

the possibility that Poshmark may be required to pay a termination fee equal to $52,913,000 under certain circumstances;

 

•

the other transaction costs to be incurred in connection with the Merger;

 

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•

the fact that the receipt of cash by Poshmark stockholders in exchange for their shares of common stock will generally be a taxable transaction to Poshmark stockholders for U.S. federal income tax purposes; and

 

•

the interests that certain Poshmark directors and executive officers may have with respect to the Merger, in addition to their interests as Poshmark stockholders generally, as described in the section of this proxy statement titled “Interests of Poshmark’s Directors and Executive Officers in the Merger.”

The preceding discussion of the information and factors considered by the Board and the Transaction Committee is not, and is not intended to be, exhaustive. In light of the variety of factors considered in connection with their evaluation of the Merger and the complexity of these matters, the Board and the Transaction Committee did not find it practicable to, and did not, quantify or otherwise attempt to rank or assign relative weights to the various factors considered in reaching their respective determinations. In considering the factors described above and any other factors, individual members of the Board and the Transaction Committee may have viewed factors differently or given different weight, merit or consideration to different factors. In addition, the Board and the Transaction Committee did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board or the Transaction Committee, but rather the Board and the Transaction Committee conducted an overall review of the factors described above, including discussions with Poshmark’s senior management and legal and financial advisors.

The foregoing discussion of the reasoning of the Board and the Transaction Committee and certain information presented in this section is forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section of this proxy statement titled “Cautionary Note Regarding Forward-Looking Statements.”

Opinion of Goldman Sachs

At a meeting of the Poshmark Board held on October 3, 2022, Goldman Sachs rendered its opinion to the Poshmark Board that, as of October 3, 2022, and based upon and subject to the factors and assumptions set forth therein, the $17.90 in cash per share of Poshmark common stock to be paid to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock, taken in the aggregate, pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated October 3, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Poshmark Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Poshmark common stock should vote with respect to the Merger, or any other matter.

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

 

•

the Merger Agreement;

 

•

annual reports to stockholders and Annual Reports on Form 10-K of Poshmark for the two years ended December 31, 2021;

 

•

Poshmark’s Registration Statement on Form S-1, including the prospectus contained therein last amended on January 13, 2021, relating to an initial public offering of the Poshmark common stock;

 

•

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

 

•

certain other communications from Poshmark to its stockholders;

 

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•

certain publicly available research analyst reports for Poshmark;

 

•

certain internal financial analyses and forecasts for Poshmark prepared by its management, as approved for Goldman Sachs’ use by Poshmark, which, together with the Tax Attributes Forecasts (as defined in the section titled “Certain Financial Projections”), are referred to as the Management Projections (as defined and summarized in the section titled “Certain Financial Projections”); and

 

•

certain net operating loss projections for Poshmark prepared by its management, as approved for Goldman Sachs’ use by Poshmark, which are referred to as the Tax Attributes Forecasts (as defined in the section titled “Certain Financial Projections”).

Goldman Sachs also held discussions with members of the senior management of Poshmark regarding their assessment of the past and current business operations, financial condition and future prospects of Poshmark; reviewed the reported price and trading activity for the shares of Class A common stock; compared certain financial and stock market information for Poshmark with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the technology industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with the consent of the Poshmark Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Poshmark Board that the Management Projections were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of Poshmark. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Poshmark or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Poshmark to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to Poshmark; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock as of the date of the opinion, of the $17.90 in cash per share of Poshmark common stock to be paid to such holders, taken in the aggregate, pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including any allocation of the aggregate consideration payable to the holders of shares of Poshmark common stock pursuant to the Merger Agreement, including among the holders of shares of Class A common stock and Class B common stock, the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Poshmark; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Poshmark, or class of such persons, in connection with the Merger, whether relative to the $17.90 in cash per share of Poshmark common stock to be paid to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock, taken in the aggregate, pursuant to the Merger Agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition,

 

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Goldman Sachs does not express any opinion as to the prices at which the Poshmark common stock will trade at any time or as to the potential effects of volatility in the credit, financial and stock markets on Poshmark, NAVER or the Merger, or as to the impact of the Merger on the solvency or viability of Poshmark or NAVER or the ability of Poshmark or NAVER to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Poshmark Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before September 30, 2022, the last trading day before the date of the public announcement of the Merger, and is not necessarily indicative of current market conditions.

Summary of Material Financial Analysis of Goldman Sachs

Implied Premia Analysis. Goldman Sachs calculated and compared certain implied premia described below based on the $17.90 in cash per share of Poshmark common stock to be paid to holders of shares of Poshmark common stock (other than NAVER and its affiliates) pursuant to the Merger Agreement.

Goldman Sachs calculated the implied premia represented by the $17.90 in cash per share of Poshmark common stock relative to:

 

•

the closing price per share of Class A common stock as of September 30, 2022 (the last trading day before the date of the public announcement of the Merger);

 

•

the VWAP per share of Class A common stock for the 30-day period ended September 30, 2022; and

 

•

the VWAP per share of Class A common stock for the 90-day period ended September 30, 2022.

The results of these calculations and comparisons were as follows:

 

Poshmark Class A Common Stock Reference Price Per  Share		Implied Premium Represented by $17.90 per Share of Poshmark Class A Common Stock
September 30, 2022 closing price of $15.67			14	%
VWAP of $13.21 for the 30-day period ended on September 30, 2022			36	%
VWAP of $12.01 for the 90-day period ended on September 30, 2022			49	%

Illustrative Present Value of Future Share Price Analyses. Goldman Sachs performed illustrative analyses of the implied present value of an illustrative future value per share of Poshmark common stock, which is designed to provide an indication of the present value of a theoretical future value of Poshmark’s equity as a function of Poshmark’s financial multiples. For these analyses, Goldman Sachs used the Management Projections (including the Tax Attributes Forecasts as provided by Poshmark’s management) for each of the fiscal years 2023, 2024, 2025 and 2026. Goldman Sachs first calculated the implied future enterprise values of Poshmark as of December 31 for each of the fiscal years 2023, 2024 and 2025 in two ways: first, by applying a range of enterprise values to Poshmark’s next twelve months (“NTM”) revenue multiples (which is referred to as

 

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“EV/NTM revenue multiple”) of 1.5x to 3.0x to estimates of Poshmark’s revenue as reflected in the Management Projections for each of the fiscal years 2023, 2024 and 2025 (the “Revenue Multiple Method”), and second, by applying a range of enterprise values to Poshmark’s NTM gross profit multiples (which is referred to as “EV/NTM gross profit multiple”) of 1.75x to 3.50x to estimates of Poshmark’s gross profit for each of the fiscal years 2023, 2024 and 2025 (the “Gross Profit Multiple Method”) as reflected in the Management Projections. These illustrative EV/NTM revenue multiples and illustrative EV/NTM gross profit multiples were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, current and historical EV/NTM revenue multiples and EV/NTM gross profit multiples for Poshmark, respectively, during the one-month, three-month, six-month and one-year periods ending September 30, 2022, and the period starting on the date of Poshmark’s initial public offering and ending on September 30, 2022.

For each of the Revenue Multiple Method and the Gross Profit Multiple Method, Goldman Sachs then subtracted the amount of Poshmark’s projected debt and added the amount of Poshmark’s projected cash (excluding funds payable to customers and the Suede One earnout estimate) as of December 31, 2023, 2024 and 2025, each as reflected in the Management Projections, from the range of respective implied enterprise values in order to derive a range of illustrative equity values for Poshmark as of December 31, 2023, 2024 and 2025. In each case, Goldman Sachs then divided these implied equity values by the projected number of fully diluted outstanding shares of Poshmark common stock as of December 31, 2023, 2024 and 2025, each as provided by Poshmark’s management and approved for Goldman Sachs’ use by Poshmark’s management, using the treasury stock method, and NTM revenue multiples of 1.5x to 3.0x (with respect to the Revenue Multiple Method) and NTM gross profit multiples of 1.75x to 3.5x (with respect to the Gross Profit Multiple Method), to derive a range of implied future equity values per share of Poshmark common stock.

For each of the Revenue Multiple Method and the Gross Profit Multiple Method, Goldman Sachs then discounted these implied future equity values back one and a half years, two and a half years, and three and a half years, respectively, using an illustrative discount rate of 15.0%, reflecting an estimate of Poshmark’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for Poshmark, as well as certain financial metrics for the United States financial markets generally. These analyses resulted in a range of implied present values of $9.30 to $17.51 per share of Poshmark common stock under the Revenue Multiple Method and $9.12 to $17.15 per share of Poshmark common stock under the Gross Profit Multiple Method.

Illustrative Discounted Cash Flow Analysis. Using the Management Projections including the Tax Attributes Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Poshmark to derive a range of illustrative present values per share of Poshmark common stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 12.5% to 15.0%, reflecting estimates of Poshmark’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 (i) estimates of unlevered free cash flow for Poshmark for the third and fourth quarters of 2022 and the fiscal years 2023 through 2032 as reflected in the Management Projections and (ii) a range of illustrative terminal values for Poshmark, which were calculated by applying perpetuity growth rates ranging from 2.0% to 4.0% to a terminal year estimate of the unlevered free cash flow to be generated by Poshmark, as reflected in the Management Projections (which analysis implied exit terminal year EV/revenue multiples ranging from 1.1x to 1.8x). In addition, using discount rates ranging from 12.5% to 15.0%, reflecting an estimate of Poshmark’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 the estimated benefits of Poshmark’s net operating losses for the ten-and-a-half-year period through the year ending 2032, as reflected in the Tax Attributes Forecasts (as summarized in the section titled “Certain Financial Projections”). Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including Poshmark’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Poshmark, as well as certain financial metrics for the United States financial markets generally. The range of

 

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perpetuity growth rates for Poshmark was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Management Projections and market expectations regarding long-term real growth of gross domestic product and inflation.

Goldman Sachs derived ranges of illustrative enterprise values for Poshmark by adding the ranges of present values it derived as described above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Poshmark the debt of Poshmark as of June 30, 2022 of $0 and added the amount of Poshmark’s cash (excluding funds payable to customers and the Suede One earnout estimate) of $433.5 million as of June 30, 2022, in each case, as provided by Poshmark’s management and approved for Goldman Sachs’ use by Poshmark’s management, and added the net present value of cash tax savings from net operating loss carryforwards, as reflected in the Management Projections including the Tax Attributes Forecasts, to derive a range of illustrative equity values for Poshmark. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Poshmark common stock as of September 30, 2022, as provided by Poshmark’s management and approved for Goldman Sachs’ use by Poshmark’s management, using the treasury method, to derive a range of illustrative present values per share of Poshmark common stock ranging from $12.19 to $17.71.

Premia Analysis. Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced during the time period from July 1, 2017 through September 30, 2022 involving a public company in the technology industry as the target where the disclosed enterprise values for the transaction were above $500 million. For the entire period, using publicly available information, Goldman Sachs calculated the median, 25th percentile and 75th percentile premia of the price paid in each of the 112 transactions relative to the target’s last undisturbed closing stock price prior to a leak or rumor of transaction. This analysis indicated a median premium of 32% across the period. This analysis also indicated a 25th percentile premium of 23% and 75th percentile premium of 50% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premia of 23% to 50% to the closing price per share of Class A common stock of $15.67 as of September 30, 2022 and calculated a range of implied equity values per share of Poshmark common stock of $19.30 to $23.47.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness 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 above analyses as a comparison is directly comparable to Poshmark or NAVER or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Poshmark Board as to the fairness from a financial point of view to the holders (other than NAVER and its affiliates) of shares of Poshmark common stock as of the date of the opinion, of the $17.90 in cash per share of Poshmark common stock to be paid to such holders, taken in the aggregate, pursuant to the Merger Agreement. These 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 these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Poshmark, NAVER, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasts.

The Merger Consideration was determined through arm’s-length negotiations between Poshmark and NAVER and was approved by the Poshmark Board. Goldman Sachs provided advice to Poshmark during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Poshmark or the Poshmark Board or that any specific amount of consideration constituted the only consideration for the Merger.

 

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As described above, Goldman Sachs’ opinion to the Poshmark Board was one of many factors taken into consideration by the Poshmark Board in making its determination to approve the Merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Poshmark, NAVER, any of their respective affiliates and third parties, including Mayfield Fund, L.L.C. (“Mayfield”), a significant shareholder of Poshmark, and its affiliates and, as applicable, portfolio companies, or any currency or commodity that may be involved in the Merger. Goldman Sachs has acted as financial advisor to Poshmark in connection with, and has participated in certain of the negotiations leading to, the Merger. Goldman Sachs has provided certain financial advisory and/or underwriting services to Poshmark and/or its affiliates from time to time for which its Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as underwriter with respect to the initial public offering of 7,590,000 shares of Poshmark’s Class A common stock in January 2021. During the two-year period ended October 3, 2022, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Poshmark and/or its affiliates of approximately $7.8 million. During the two-year period ended October 3, 2022, the Investment Banking Division of Goldman Sachs has not been engaged by NAVER or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended October 3, 2022, the Investment Banking Division of Goldman Sachs has not been engaged by Mayfield or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Poshmark, NAVER, Mayfield, and their respective affiliates and, as applicable, portfolio companies for which its Investment Banking Division may receive compensation. Affiliates of Goldman Sachs also may have co-invested with Mayfield and its affiliates from time to time and may have invested in limited partnership units of affiliates of Mayfield from time to time and may do so in the future.

The Poshmark Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated March 22, 2022, Poshmark engaged Goldman Sachs to act as its financial advisor in connection with its evaluation of a potential strategic transaction, including the Merger. The engagement letter between Poshmark and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $35.2 million, $400,000 of which became payable in cash in quarterly installments with the first installment being payable three months following the date of the engagement letter, and the remainder of which is contingent upon consummation of the Merger. In addition, Poshmark has agreed to reimburse Goldman Sachs for certain of its reasonable expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under federal securities laws.

Certain Financial Projections

Summary of Projections

Except for quarterly financial outlooks issued in connection with its ordinary course earnings announcements, Poshmark does not, as a matter of course, publicly disclose forecasts or projections as to future performance, earnings or other results due to the inherent unpredictability of the underlying assumptions, estimates and projections, especially over the longer term periods. In connection with the evaluation of the Merger, however, Poshmark’s management

 

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prepared the Management Projections. As more fully described in the background section, the Board directed Goldman Sachs to use and rely on the Management Projections for purposes of Goldman Sachs’ financial analyses and fairness opinion as described in the section of this proxy statement captioned - “Opinion of Goldman Sachs.” Poshmark is including a summary of the Management Projections in order to provide Poshmark stockholders with access to information that was made available to the Board and the Transaction Committee in connection with their evaluation of the Merger and the Merger Consideration. The Management Projections (excluding the Tax Attributes Forecasts) were also made available to Parent, Proton Parent and Merger Sub prior to signing the definitive agreement.

The following tables present a summary of the Management Projections.

 

($ in millions)		Q3 22E				Q4 22E				2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				Terminal Year
Total GMV		$	493			$	517			$	2,331			$	2,820			$	3,506			$	4,229			$	4,936			$	5,639			$	6,294			$	6,918			$	7,516			$	8,076			$	8,076
Total Revenue		$	91			$	96			$	447			$	551			$	694			$	846			$	998			$	1,152			$	1,300			$	1,445			$	1,586			$	1,726			$	1,726
Gross Profit		$	76			$	80			$	375			$	462			$	582			$	710			$	837			$	966			$	1,090			$	1,211			$	1,329			$	1,445
Adjusted EBITDA (Unburdened by SBC)		($	13	)		($	11	)		($	30	)		$	1			$	30			$	65			$	114			$	172			$	233			$	302			$	371			$	446			$	446
Unlevered Free Cash Flow		($	13	)		($	21	)		($	60	)		($	42	)		($	17	)		$	13			$	43			$	80			$	117			$	158			$	202			$	250			$	249

The following table is a summary of the Tax Attributes Forecasts.

 

($ in millions)		2022E				2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E
NOL Balance		$	219			$	296			$	346			$	379			$	382			$	343			$	252			$	111			$	0			$	0			$	0

The following tables are summaries of Poshmark’s projected cash and the projected number of fully diluted outstanding shares of Poshmark common stock as of December 31, 2023, 2024 and 2025.

 

Future Share Price Metrics1
		2023 YE				2024 YE				2025 YE
NTM Total Revenue		$	551			$	694			$	846
Debt			0				0				0
Cash (Ex. Funds Payable to Customers & Suede One Earnout)			363				329				314
Fully Diluted Shares Outstanding			95.15				98.18				101.43

Note: Based on 30-Jun-2022 valuation date and 15.0% cost of equity. 31-Dec fiscal year end. Fully diluted shares outstanding are calculated based on Poshmark Capitalization and the treasury stock method.

1	FDSO metrics shown reflect 2.25x NTM Gross Revenue multiple.

 

Future Share Price Metrics1
		2023 YE				2024 YE				2025 YE
NTM Total Gross Profit		$	462			$	582			$	710
Debt			0				0				0
Cash (Ex. Funds Payable to Customers & Suede One Earnout)			363				329				314
Fully Diluted Shares Outstanding			95.11				98.09				101.28

Note: Based on 30-Jun-2022 valuation date and 15.0% cost of equity. 31-Dec fiscal year end. Fully diluted shares outstanding are calculated based on Poshmark Capitalization and the treasury stock method.

1	FDSO metrics shown reflect 2.75x NTM Gross Profit multiple.

 

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Important Information Regarding the Management Projections

The Management Projections were developed by Poshmark management on a standalone basis without giving effect to the Merger and the other transactions contemplated by the Merger Agreement. Furthermore, the Management Projections do not take into account the effect of any failure of the transactions contemplated by the Merger Agreement to be completed and should not be viewed as accurate or continuing in that context. Although the Management Projections are presented with numerical specificity, they were based on numerous variables and assumptions made by Poshmark management with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Poshmark’s business, all of which are difficult or impossible to predict accurately and many of which are beyond Poshmark’s control. The Management Projections constitute forward-looking information and are subject to many risks and uncertainties that could cause actual results to differ materially from the results forecasted in the Management Projections, including, but not limited to, Poshmark’s performance, industry performance, general business and economic conditions, customer requirements, staffing levels, competition, adverse changes in applicable laws, regulations or rules, the ability to successfully pursue and complete acquisitions, and the various risks set forth in Poshmark’s reports filed with the SEC. There can be no assurance that the Management Projections will be realized or that actual results will not be significantly higher or lower than the Management Projections. The Management Projections cover several years, and such information by its nature becomes increasingly unreliable with each successive year. In addition, the Management Projections will be affected by Poshmark’s ability to achieve strategic goals, objectives and targets over the applicable periods. The Management Projections reflect assumptions as to certain business decisions that are subject to change and cannot, therefore, be considered a guarantee of future operating results, and this information should not be relied on as such. The inclusion of the Management Projections should not be regarded as an indication that Poshmark, Goldman Sachs, NAVER, their respective officers, directors, affiliates, advisors, or other representatives or anyone who received this information then considered, or now considers, them a reliable prediction of future events, and this information should not be relied upon as such. The inclusion of the Management Projections in this proxy statement should not be regarded as an indication that the Management Projections will be necessarily predictive of actual future events.

None of Poshmark, the Board, Goldman Sachs, NAVER or any of their respective affiliates, advisors or other representatives makes any representation or warranty to any stockholder regarding the validity, reasonableness, accuracy or completeness of the Management Projections or the ultimate performance of Poshmark relative to the Management Projections. In the view of Poshmark management, the Management Projections were prepared on a reasonable basis, reflected the best currently available estimates and judgments of Poshmark management at the time and presented, to the best of Poshmark management’s knowledge and belief, the expected course of action and Poshmark’s expected future financial performance as of the date such information was prepared.

The Management Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information about Poshmark contained in Poshmark’s public filings with the SEC. For more information, please see the section of this proxy statement captioned - “Where You Can Find More Information.” In light of the foregoing factors, and the uncertainties inherent in the Management Projections, Poshmark stockholders are cautioned not to place undue, if any, reliance on the Management Projections.

The Management Projections were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC regarding projections or accounting principles generally accepted in the United States (“GAAP”), or the guidelines established by the American Institute of Certified Public Accountants with respect to the preparation or presentation of Management Projections. The Management Projections included in this proxy statement have been prepared by, and are the responsibility of, Poshmark management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying Management Projections and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

 

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The PricewaterhouseCoopers LLP report incorporated by reference into this proxy statement relates to the Company’s previously issued financial statements. It does not extend to the Management Projections and should not be read to do so.

Adjusted EBITDA (Unburdened by SBC) and Unlevered Free Cash Flow contained in the Management Projections summarized above are “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with GAAP. The non-GAAP financial measures used in the Management Projections were relied upon by Goldman Sachs, as directed by the Board and as provided by Poshmark’s management and approved for Goldman Sachs’ use by Poshmark’s management, for purposes of its opinion and by the Board and the Transaction Committee in connection with their evaluation of the Merger. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Goldman Sachs for purposes of its opinion or by the Board or the Transaction Committee in connection with their evaluation of the Merger. Accordingly, Poshmark has not provided a reconciliation of the financial measures included in the Management Projections to the relevant GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Poshmark may not be comparable to similarly titled amounts used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.

The summary of such information above is included solely to give Poshmark stockholders access to the information that was made available to the Board of Directors, the Transaction Committee, Goldman Sachs, Parent, Proton Parent and Merger Sub, and is not included in this proxy statement in order to influence any Poshmark stockholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to their shares of Poshmark common stock. In addition, the Management Projections have not been updated, corrected or otherwise revised to reflect transactions, events, information or results after the date they were prepared or as of the date of this proxy statement, and except as required by applicable securities laws, none of Poshmark, the Board, Goldman Sachs, NAVER nor any of their respective affiliates, advisors or other representatives intend to, and each of them disclaims any obligations to update, correct or otherwise revise the Management Projections if any or all of it has changed or changes, even in the event that any or all of the underlying assumptions are shown to be in error. Since the Management Projections were created, Poshmark has made publicly available its actual results of operations for the fiscal quarter ended September 30, 2022. You should review Poshmark’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2022 for this information.

Certain Effects of the Merger

If the Merger Proposal is approved and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into Poshmark upon the terms set forth in the Merger Agreement. As the surviving corporation in the Merger, Poshmark will continue to exist following the Merger as an indirect subsidiary of Parent.

Following the Merger, all of the Poshmark common stock will be beneficially owned by Parent and none of the Company’s current stockholders will have any direct ownership interest in, or be a stockholder of, the Company, the surviving corporation or Parent after the consummation of the Merger (other than as described in the section titled “New Arrangements with Company Executive Officers”). As a result, the Company’s current stockholders will no longer have the potential to benefit from any increase in the value, nor will they bear the risk of any decrease in the

 

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value, of Poshmark common stock. Following the Merger, Parent will have the potential to benefit from any increase in the Company’s value and also will bear the risk of any decrease in the Company’s value.

At the Effective Time:

 

•

Common Stock: Without any action by any stockholder, each share of Poshmark common stock that is issued and outstanding as of immediately prior to the Effective Time (other than shares of Poshmark common stock held by the Company as treasury stock, owned by Parent or any of its subsidiaries (including Proton Parent and Merger Sub) or as to which holders thereof have properly exercised their statutory rights of appraisal in accordance with Section 262 of the DGCL) will be automatically canceled, extinguished and converted into the right to receive the Merger Consideration, less any applicable withholding taxes. Please see the section of this proxy statement titled “The Merger Agreement - Consideration to be Received in the Merger.”

 

•

Vested Company Options: Each Vested Company Option that is outstanding as of immediately prior to the Effective Time with an exercise price per share less than the Merger Consideration will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Company Class B common stock subject to such stock option as of immediately prior to the Effective Time and (ii) the excess, if any, of the Merger Consideration over the per share exercise price per share of such stock option. Each Vested Company Option with an exercise price per share equal to or greater than the Merger Consideration will be cancelled automatically at the Effective Time for no consideration.

 

•

Unvested Company Options: Each Unvested Company Option that is outstanding as of immediately prior to the Effective Time will be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company Option Amounts, which will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company Option for which the Cash Replacement Company Option Amounts is exchanged would have vested pursuant to its terms. All Cash Replacement Company Option Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company Option for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company Option Amounts. Each Unvested Company Option with an exercise price per share equal to or greater than the Merger Consideration will be cancelled automatically at the Effective Time for no consideration.

 

•

Vested Company RSUs: Each Vested Company RSU will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Vested Company RSU as of immediately prior to the Effective Time.

 

•

Unvested Company RSUs: Other than as set forth in “New Arrangements with Company Executive Officers” below, each Unvested Company RSU will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company RSU Amounts which will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company RSU for which such Cash Replacement Company RSU Amounts is exchanged would have vested pursuant to its terms. All Cash Replacement Company RSU Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company RSU for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company RSU Amounts.

 

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•

2021 ESPP: No later than three business days prior to the Effective Time, each purchase right outstanding as of October 3, 2022, under the 2021 ESPP will be exercised, with accumulated contributions used to purchase shares of Company Class A common stock in accordance with the terms of the 2021 ESPP on such final exercise date. All shares of Company Class A common stock purchased on such final exercise date will be cancelled and converted into the right to receive the Merger Consideration. The 2021 ESPP will be terminated effective as of immediately prior to the Effective Time.

Poshmark Class A common stock is currently registered under the Exchange Act and trades on Nasdaq under the ticker symbol “POSH.” Following the consummation of the Merger, Poshmark Class A common stock will be delisted from Nasdaq. In addition, the registration of Poshmark Class A common stock under the Exchange Act will be terminated and the Company will no longer be required to file periodic and other reports with the SEC with respect to its common stock. Termination of registration of Poshmark common stock under the Exchange Act will reduce the information required to be furnished by the Company to the Company’s stockholders and the SEC, and will make provisions of the Exchange Act, such as the requirement to file annual and quarterly reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxy statement in connection with stockholders’ meetings pursuant to Section 14(a) of the Exchange Act, no longer applicable to the Company.

Effects on the Company if the Merger Is Not Completed

If the Merger Proposal is not approved by the Company’s stockholders, or if the Merger is not completed for any other reason, the Company’s stockholders will not receive any payment for their shares of Poshmark common stock in connection with the Merger. Instead, the Company will remain an independent public company, Poshmark Class A common stock will continue to be listed and traded on Nasdaq, Poshmark Class A common stock will continue to be registered under the Exchange Act, the Company will continue to file periodic and other reports with the SEC with respect to its common stock and the Company’s stockholders will continue to own their shares of Poshmark common stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of Poshmark common stock.

If the Merger is not completed, there is no assurance as to the effect of these risks and opportunities on the future value of your shares of Poshmark common stock, including the risk that the market price of Poshmark Class A common stock may decline to the extent that the current market price of Poshmark Class A common stock reflects a market assumption that the Merger will be completed. If the Merger is not completed, there is no assurance that any other transaction acceptable to the Company will be offered or that the business, operations, financial condition, earnings or prospects of the Company will not be adversely affected. Pursuant to the Merger Agreement, under certain circumstances, the Company is permitted to terminate the Merger Agreement in order to enter into an alternative transaction and may be obligated to pay to Parent the Company Termination Fee. Please see the section of this proxy statement titled “The Merger Agreement - Termination.”

Interests of the Company’s Directors and Executive Officers in the Merger

In addition to their interests in the Merger as stockholders, the Company’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. In considering the proposals to be voted on at the Special Meeting, you should be aware of these interests. Members of the Poshmark Board and the Transaction Committee were aware of and considered these interests in reaching the determination to approve the Merger Agreement and to declare that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were advisable and in the best interests of the Company and its stockholders, and in recommending that the holders of Poshmark common stock vote for adoption of the Merger Agreement.

 

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Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

•

the Merger Consideration is $17.90;

 

•

except as set forth below, each executive officer’s employment is terminated by the Company without “cause” or by the executive officer for “good reason” (as such terms are defined in the Severance Plan (as defined below)), in each case, immediately following the Effective Time;

 

•

each director and executive officer holds the outstanding equity awards that were held by them as of October 18, 2022, the latest practicable date before the filing of this proxy statement; and

 

•

the amounts set forth below regarding executive officer compensation are based on compensation levels as of October 18, 2022.

The Company’s current executive officers are:

 

•

Manish Chandra, our Chief Executive Officer

 

•

Rodrigo Brumana, our Chief Financial Officer

 

•

John McDonald, our Chief Operating Officer

The below disclosures do not include information regarding Kapil Agrawal, our former Interim Chief Financial Officer, or Anan Kashyap, our former Chief Financial Officer, each of whom was a named executive officer in the last proxy statement that we filed with the SEC. Mr. Agrawal ceased to be our Interim Chief Financial Officer in December 2021 upon the hiring of Mr. Brumana, and transitioned to serving in an advisory role until his employment with the Company ended in June 2022. Mr. Kashyap’s employment with the Company terminated in August 2021. Such individuals do not currently hold any outstanding equity awards and are, therefore, ineligible for any of the payments or benefits described below.

The Company’s non-employee directors (who constitute the entire Board other than our Chief Executive Officer, Manish Chandra) are:

 

•

Ebony Beckwith

 

•

Navin Chaddha

 

•

Jeff Epstein

 

•

Jenny Ming

 

•

Hans Tung

 

•

Serena Williams

The below disclosures do not include information regarding John Marren who resigned from the Board in March 2022, because he does not currently hold any outstanding equity awards and is, therefore, ineligible for any of the payments or benefits described below.

Treatment of Equity-Based Awards and the 2021 ESPP

The Company’s non-employee directors and executive officers hold Company Options and Company RSUs under the Company’s 2011 Stock Option and Grant Plan and the Company’s 2021 Stock Option and Incentive Plan (the “2011 Plan” and the “2021 Plan,” respectively). In addition, certain of the Company’s executive officers participate in the 2021 ESPP.

 

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Pursuant to the Company’s Executive Severance Plan for the Chief Executive Officer and Senior Executive Officers in place prior to the Merger (the “Severance Plan”), if the employment of an executive officer of the Company is terminated by the Company without “cause” (other than on account of death or “disability”) or by the executive officer for “good reason” (each as defined in the Severance Plan) during the period beginning on the date three months prior to a Change in Control and ending 12 months after the date of such Change in Control, then the Company Options and Company RSUs held by such executive officer are subject to 100% accelerated vesting and exercisability. “Change in Control” is defined in the Severance Plan and the consummation of the Merger meets such definition.

The Company’s non-employee directors hold Company Options and Company RSUs under both the 2011 Plan and 2021 Plan. Pursuant to the Director Compensation Policy in place prior to the Merger, all Unvested Company Options and Unvested Company RSUs held by the non-employee directors of the Company will become fully vested and exercisable in connection with the Merger.

Each of the Company’s non-employee directors and executive officers will be entitled to receive, for each share of Company Class A common stock or Class B common stock he or she holds as of immediately prior to the Effective Time, the same Merger Consideration in cash, and in the same manner, as other holders of the Company Class A common stock or Class B common stock. For additional information regarding the beneficial ownership of Company Class A common stock and Class B common stock held by each of the Company’s non-employee directors and executive officers and the beneficial ownership of Company Class A common stock and Class B common stock held by all non-employee directors and executive officers as a group, please see the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management.”

In addition to the vesting acceleration rights set forth above pursuant to the Company’s equity plans in place prior to the Merger, at the Effective Time, all Company equity awards, including awards held by our non-employee directors and executive officers, that are outstanding immediately prior to the Effective Time will generally be subject to the following treatment pursuant to the Merger Agreement:

Company Options

At the Effective Time, each Vested Company Option as of immediately prior to the Effective Time with an exercise price per share less than the Merger Consideration will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Class B common stock subject to such Vested Company Option and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Vested Company Option.

At the Effective Time, each Unvested Company Option as of immediately prior to the Effective Time with an exercise price per share less than the Merger Consideration will be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company Option Amounts, which Cash Replacement Company Option Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company Option for which such Cash Replacement Company Option Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company Option Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company Option for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company Option Amounts.

Each Vested Company Option and Unvested Company Option with an exercise price per share equal to or greater than the Merger Consideration will be cancelled automatically at the Effective Time for no consideration.

 

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Company RSUs

Each Vested Company RSU will, at the Effective Time, be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Vested Company RSU as of immediately prior to the Effective Time.

Other than as set forth in “New Arrangements with Company Executive Officers” below, each Unvested Company RSU will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company RSU Amounts, which Cash Replacement Company RSU Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company RSU for which such Cash Replacement Company RSU Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company RSU Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company RSU for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company RSU Amounts.

In addition, Ms. Beckwith elected to defer settlement of all of her previously vested Company RSUs pursuant to the Deferred Compensation Program and Mr. Epstein elected to defer settlement of any Company RSUs granted to him after March 2021 pursuant to the Deferred Compensation Program. In accordance with the Deferred Compensation Program, all of Ms. Beckwith’s and Mr. Epstein’s deferred Company RSUs will settle within 30 days of the Effective Time, such that Ms. Beckwith and Mr. Epstein will receive upon such settlement an amount equal to the product of (i) the Merger Consideration and (ii) the total number of their deferred Company RSUs of Company Class A common stock.

2021 ESPP

Pursuant to the Merger Agreement, (i) except for the offering period in effect as of October 3, 2022, no new offering periods will be authorized or commenced under the 2021 ESPP, (ii) no new participants will commence participation in the 2021 ESPP, (iii) no participant will be permitted to increase such participant’s payroll deduction election or contribution rates or to make separate non-payroll contributions, except as may be required by law, (iv) each purchase right outstanding under the 2021 ESPP as of October 3, 2022, will be exercised no later than three business days prior to the Effective Time, (v) the accumulated contributions will be used to purchase shares of Company Class A common stock in accordance with the terms of the 2021 ESPP on such final exercise date, and (vi) the 2021 ESPP will be terminated effective as of immediately prior to the Effective Time. All shares of Company Class A common stock purchased on such final exercise date will, at the Effective Time, be cancelled and converted into the right to receive the Merger Consideration.

Quantification of Potential Payments for Equity Awards

The table below sets forth (i) the number of Vested Company Options, Unvested Company Options and Unvested Company RSUs, as applicable, as of October 18, 2022, the assumed date of the Merger solely for the purposes of this disclosure, held by each current executive officer and non-employee director, and (ii) the estimated value of those awards (on a pre-tax basis). These values have been calculated assuming the price of a share of Company Class A and Class B common stock is $17.90, which represents the per share price of the Merger Consideration. For purposes of this table, we have also assumed that the employment of all executive officers will terminate immediately following the Merger (based on the assumed date of October 18, 2022).

 

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		Number of Shares Subject to Vested Company Options (#)(1)				Weighted Average Exercise Price of Vested Company Options ($)				Number of Shares Subject to Unvested Company Options (#)(2)				Weighted Average Exercise Price of Unvested Company Options ($)				Value of Shares Subject to Company Options ($)				Number of Unvested Company RSUs (#)(3)				Value of Shares Subject to Unvested Company RSUs ($)				Total ($)
The Company’s Executive Officers
Manish Chandra			938,457				1.45				41,667				10.77				11,464,345				562,359				10,066,226				21,530,571
Rodrigo Brumana			—				—				—				—				—				688,415				12,322,629				12,322,629
John McDonald			470,212				2.54				6,667				10.77				7,271,160				167,352				2,995,601				10,266,761
The Company’s Non-Employee Directors
Ebony Beckwith			—				—				—				—				—				19,625				351,288				351,288
Navin Chaddha			—				—				—				—				—				15,324				274,300				274,300
Jeff Epstein			359,512				4.60				—				—				4,781,510				15,324				274,300				5,055,810
Jenny Ming			41,339				14.80				—				—				128,151				15,324				274,300				402,451
Hans Tung			—				—				—				—				—				15,324				274,300				274,300
Serena Williams			127,500				10.77				52,500				10.77				1,283,400				—				—				1,283,400

 

(1)	Consists of all Vested Company Options with an exercise price per share that is less than the Merger Consideration that are held and outstanding by the individual as of October 18, 2022, all of which were granted under the 2011 Plan or the 2021 Plan.

(2)	Consists of all Unvested Company Options with an exercise price per share that is less than the Merger Consideration that are held and outstanding by the individual as of October 18, 2022, all of which were granted under the 2011 Plan or the 2021 Plan.

(3)	Consists of all Unvested Company RSUs held by the individual (and, for Ms. Beckwith, additionally includes the Company RSUs that have been deferred as of October 18, 2022 under the Deferred Compensation Program) as of October 18, 2022, all of which were granted under the 2011 Plan or the 2021 Plan.

Severance Entitlements

Each of the Company’s executive officers is a participant in the Severance Plan, which provides for certain severance payments and benefits in connection with certain terminations of employment.

The Severance Plan provides that upon a (a) termination by the Company other than for “cause,” death, or “disability” or (b) resignation for “good reason,” (each as defined in the Severance Plan), in each case, within the change in control period (i.e., the period beginning three months prior to, and ending 12 months after, a “change in control,” as defined in the Severance Plan, which includes the Merger), the participants will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to 18 months of base salary for Mr. Chandra and 12 months of base salary for Messrs. Brumana and McDonald, (ii) a monthly cash payment equal to our contribution towards 100% of requisite premiums for continued medical, dental and vision insurance benefit coverage for up to 18 months for Mr. Chandra and up to 12 months for Messrs. Brumana and McDonald, (iii) a pro rata target annual bonus for the year in which the termination occurs, based on the number of days in such year prior to the termination date of such executive officer, and (iv) full accelerated vesting of all outstanding and unvested equity awards held by such executive officer; provided, that any unvested and outstanding equity awards subject to performance conditions will be deemed satisfied (if at all) at the target levels specified in the applicable award agreements.

The foregoing severance payments and benefits under the Severance Plan are subject to the delivery of an effective separation and release agreement by the executive officer containing, among other provisions, a general release of claims in favor of the Company. The Severance Plan does not provide for any tax gross-up payments. If any amounts or benefits to be paid or provided under the Severance Plan would cause payments or benefits (or other compensation) to not be fully deductible by the Company for federal income tax purposes because of

 

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Section 280G of the Code, or any successor provision thereto (or that would subject the executive officer to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto), then such payments and benefits (and other compensation) will be reduced to the extent necessary such that no portion of such payments or benefits (or other compensation) will be subject to the excise tax imposed by Section 4999 of the Code; however such a reduction will be made only if, by reason of such reduction, the executive officer’s net after-tax benefit exceeds the net after-tax benefit such executive officer would realize if such reduction were not made.

For purpose of the following table, we have assumed that the employment of all executive officers will terminate immediately following the Merger in a manner that entitles them to benefits under the Severance Plan. The estimated value of the severance payments and benefits, excluding equity acceleration, assuming the Merger occurs on October 18, 2022, for each of our executive officers is set forth below.

 

The Company’s Executive Officers		Cash ($)(1)				Continued Health Benefits ($)(2)				Total ($)
Manish Chandra			955,377				41,196				996,573
Rodrigo Brumana			653,160				26,361				679,521
John McDonald			619,132				26,361				645,493

 

(1)	Amounts shown reflect the base salary and target bonus severance payments provided under the Severance Plan to the executive officers, as described above.

(2)	Amounts shown reflect the Company’s total contribution for continuation of medical, dental and vision insurance that would be provided to the executive officers if they received such benefits for the entire 18- or 12-month period, as applicable, as described above.

280G Mitigation Actions

Under the Merger Agreement, 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”)), including the executive officers. Such actions may include obtaining third party valuations of restrictive covenants and accelerating certain pending payments into 2022. As of the date of this proxy statement, the Company has not yet approved any specific actions to mitigate any impact of Section 280G of the Code on the Company or 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.

The Company’s Non-Employee Director Compensation

Under the Merger Agreement, the Company may continue to pay non-employee members of the Board their annual fees, cash and equity retainers, reimbursements and stipends, in each case, without proration and in accordance with the terms of the Director Compensation Policy. As described above in the section entitled “Interests of the Company’s Directors and Executive Officers in the Merger,” all Company Options and Company RSUs held by non-employee directors will accelerate and fully vest in connection with the closing of the Merger.

Potential Future Arrangements

As of the date of this proxy statement, other than as set forth below (including in the “Employee Benefits Matters”), none of the Company’s non-employee directors of executive officers has entered into any agreement with Parent or any of its affiliates regarding employment with, or the right to purchase or participate in the equity of, Parent or one or more of its affiliates. Prior to or following the closing of the Merger, however, certain executive officers of the Company may have discussions, or may enter into agreements with, Parent, the Company or their respective affiliates regarding employment with, or the right to purchase or participate in the equity of, Parent or one or more of its affiliates.

 

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New Arrangements with Company Executive Officers

Employment Term Sheet

On October 3, 2022, Mr. Chandra entered into a binding employment term sheet with Merger Sub (the “Employment Term Sheet”) pursuant to which Mr. Chandra will serve as Chief Executive Officer of the surviving corporation and will be appointed to the board of directors of Proton Parent, effective as of the date on which the closing occurs (the “closing date”). Under the Employment Term Sheet, Mr. Chandra will be entitled to an annual base salary of $425,000 and be eligible for a target annual bonus equal to 100% of his base salary.

Under the Employment Term Sheet, all Unvested Company RSUs held by Mr. Chandra, valued at approximately $10,000,000, will fully vest as of the closing date and be converted into the right to receive on the day following the closing date a number of fully vested shares of Proton Parent common stock having an equivalent fair market value as of the closing date.

Mr. Chandra will also be granted an option to purchase a number of shares of Proton Parent common stock (the “New Hire Options”), having an aggregate grant date fair market value equal to (a) (i) the Company’s equity value as of the closing date, divided by (ii) the Company’s enterprise value as of the closing date, multiplied by (b) $32,500,000. By way of example for illustrative purposes only, if the Company’s equity value as of the closing date is $1,634 million (which is what it approximately was as of the date of signing of the Merger Agreement), and the Company’s enterprise value as of the closing date is $1,200 million (which is what it approximately was as of the date of signing of the Merger Agreement), then the aggregate grant date fair market value of the shares subject to the New Hire Options would be $44,254,167. The exercise price of the New Hire Options shall be equal to the fair market value as of the date of grant of the underlying shares of Proton Parent common stock. The New Hire Options will vest as follows, subject to Mr. Chandra’s continued employment as CEO through the applicable vesting date:

 

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25% upon Proton Parent (or the surviving corporation) filing a Registration Statement on Form S-1 with the SEC with respect to an initial public offering of Proton Parent (or the surviving corporation) (“IPO”),

 

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25% upon consummation of an IPO, and

 

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50% on the 180th day following consummation of an IPO.

Upon the occurrence of a change in control, any unvested New Hire Options will become fully vested, subject to Mr. Chandra’s continued employment as Chief Executive Officer through such change in control. In the event of a termination of Mr. Chandra’s employment (i) by the surviving corporation without cause, (ii) due to Mr. Chandra’s death or disability or (iii) by Mr. Chandra with good reason, any outstanding and unvested New Hire Options will remain outstanding and eligible to vest if a vesting date (as described above) or a change in control occurs during the 12-month period following such termination.

Additionally, if (i) neither a change in control nor an IPO has occurred by the fifth anniversary of the closing date (the “Put Date”) and (ii) the enterprise value of Proton Parent as of the Put Date is at least equal to 1.5 times the enterprise value of Proton Parent as of the closing date, then Mr. Chandra will have the right, during the one-year period following the Put Date, to require Proton Parent to repurchase all of the shares of Proton Parent common stock held by Mr. Chandra as of the date of exercise of the put right (including any shares of Proton Parent common stock issuable upon the exercise of unforfeited New Hire Options, subject to certain exceptions) at the most recent fair market valuation of such shares. The put right expires on the earliest to occur of an IPO, a change in control and the sixth anniversary of the closing date.

In the event of a termination of Mr. Chandra’s employment by the surviving corporation without cause or by Mr. Chandra with good reason, subject to Mr. Chandra signing and not revoking a release in favor of the surviving corporation, Mr. Chandra will receive severance consisting of: (i) 12 months (or 18 months, if

 

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terminated within 12 months of the closing date) of base salary, (ii) prorated target annual bonus for the year of termination and (iii) 12 months (or 18 months, if terminated within 12 months of the closing date) of COBRA continuation coverage. These severance benefits will, as of the closing, supersede and replace any entitlement Mr. Chandra previously had under the Severance Plan.

The Employment Term Sheet also provides that the parties will negotiate in good faith to enter into an employment agreement prior to the closing date.

Holdback Agreement

In connection with the Employment Term Sheet, Mr. Chandra entered into a Holdback Agreement pursuant to which $20,000,000 of the Merger Consideration otherwise payable to Mr. Chandra (the “Pre-Tax Holdback Amount”), less the amount of taxes owed by Mr . Chandra on the Pre-Tax holdback Amount (such amount, the “Post-Tax Holdback Amount”), will be placed into an escrow account at the closing date. The Post-Tax Holdback Amount will be paid to Mr. Chandra in three equal installments on each of the first three anniversaries of the closing date, subject to Mr. Chandra’s continued employment with Parent or any of its subsidiaries through each applicable payment date. If Mr. Chandra’s employment with Parent or any of its subsidiaries is terminated prior to the third anniversary of the closing date (i) by the surviving corporation without cause, (ii) due to Mr. Chandra’s death or disability or (iii) by Mr. Chandra with good reason, then any remaining portion of the Post-Tax Holdback Amount held in escrow will no longer be subject to forfeiture and will be paid to Mr. Chandra within 30 days following such termination. Upon any termination of his employment other than as set forth in the immediately preceding sentence, any portion of the Post-Tax Holdback Amount that has not become deliverable as of such termination will be forfeited.

In connection with the negotiation of the Employment Term Sheet and Holdback Agreement, Mr. Chandra retained his own legal counsel and the Poshmark Board approved reimbursement of the costs and expenses to be incurred by Mr. Chandra in connection therewith up to an amount equal to $75,000.

Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, Poshmark’s directors and executive officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies. See “The Merger Agreement - Indemnification of Directors and Officers and Insurance.”

Material U.S. Federal Income Tax Considerations

The following discussion summarizes certain material U.S. federal income tax considerations applicable to holders of Poshmark common stock who receive cash in exchange for shares of Poshmark common stock pursuant to the Merger. This discussion is for general informational purposes only and does not purport to be a complete analysis of all potential tax consequences of the Merger. This discussion is based upon the provisions of the Code, the U.S. Treasury Regulations promulgated thereunder and judicial decisions and administrative rulings, all as in effect as of the date of this proxy statement and all of which are subject to change or varying interpretation, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements set forth herein. The U.S. federal income tax laws are complex and subject to varying interpretation. We have not sought, and do not intend to seek, any ruling from the Internal Revenue Service (referred to herein as the “IRS”) regarding any of the tax issues discussed herein. There can be no assurance that the IRS will not challenge one or more of the tax consequences of the Merger described in this proxy statement.

This discussion assumes that holders of Poshmark common stock hold their shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular holder of Poshmark common stock in light of such holder’s individual circumstances, nor does it address U.S. state or local,

 

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non-U.S., or estate or gift taxes, the alternative minimum tax, the rules regarding qualified small business stock within the meaning of Section 1202 of the Code, the Medicare tax on net investment income or any other aspect of any U.S. federal tax other than the income tax. This discussion also does not address tax considerations that may be relevant to holders of Poshmark common stock subject to special treatment under the U.S. federal income tax laws, such as, for example, financial institutions, brokers or dealers in securities or currencies, mutual funds, partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes or other pass-through entities and their partners or members, S corporations, tax-exempt organizations, governmental organizations, retirement or other tax-deferred accounts, insurance companies, traders in securities who elect mark-to-market method of accounting, controlled foreign corporations, passive foreign investment companies, corporations that accumulate earnings to avoid U.S. federal income tax, U.S. expatriates and former citizens or long-term residents of the United States, holders who acquired their Poshmark common stock through the exercise of Company stock options or otherwise as compensation, holders who hold their Poshmark common stock as part of a hedge, straddle, constructive sale, conversion transaction, U.S. holders (as defined below) whose functional currency is not the U.S. dollar, real estate investment trusts, regulated investment companies, holders deemed to sell their shares of Poshmark common stock under the constructive sale provisions of the Code, persons who own (directly, indirectly or constructively) an equity interest in Parent or the surviving corporation and holders who exercise appraisal rights in connection with the merger under the DGCL.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Poshmark common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and activities of the partner and the partnership. If you are a partnership holding Poshmark common stock or a partner of a partnership holding Poshmark common stock, you are urged to consult your own tax advisor regarding the U.S. federal income tax consequences of the Merger relevant to you.

This discussion is for informational purposes only and is not tax advice. Holders of Poshmark common stock are urged to consult their tax advisors with respect to the U.S. federal income tax consequences of the Merger to them in light of their particular circumstances, as well as any tax consequences of the Merger arising under the U.S. federal tax laws other than those pertaining to income tax, including estate or gift tax laws, “golden parachute” rules, or under any state, local or non-U.S. tax laws or under any applicable income tax treaty.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Poshmark common stock that, for U.S. federal income tax purposes, is:

 

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an individual who is a citizen or resident of the United States;

 

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a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;

 

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a trust if (1) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons as described in Section 7701(a)(30) of the Code have the authority to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person (within the meaning of the Code); and

 

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an estate, the income of which is subject to U.S. federal income tax regardless of its source.

For purposes of this discussion, a “non-U.S. holder” means a beneficial owner of Poshmark common stock that is, for U.S. federal income tax purposes, an individual, a corporation, a trust or an estate that is not a U.S. holder.

U.S. Holders

The receipt of cash in exchange for shares of Poshmark common stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. A U.S. holder generally will recognize gain or loss

 

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for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received pursuant to the Merger (determined before the deduction of any applicable withholding taxes) and such U.S. holder’s adjusted tax basis in the shares exchanged for cash pursuant to the Merger. A U.S. holder’s adjusted tax basis in a share of Poshmark common stock will generally be equal to the amount the U.S. holder paid for such share. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. holder’s holding period for such shares exceeds one year as of the date of the closing. Long-term capital gains for certain non-corporate U.S. holders, including individuals, are generally eligible for a reduced rate of federal income taxation. Short-term capital gains are taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Gain or loss must be calculated separately for each block of Poshmark common stock (i.e., common stock acquired at the same time and at the same price in a single transaction). U.S. holders who own separate blocks of Poshmark common stock should consult their tax advisors with respect to these rules.

A U.S. holder may, unless an exception applies, be subject to information reporting and backup withholding (currently at a rate of 24%) with respect to the cash received pursuant to the Merger, unless such U.S. holder provides its correct taxpayer identification number (referred to as the “TIN”) on IRS Form W-9 (or if appropriate, a substitute or successor form) and certifies under penalties of perjury that such TIN is correct and that such U.S. holder is not subject to backup withholding. Backup withholding is not an additional tax. Rather, any amounts withheld under the backup withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax liability, if any; provided that such U.S. holder furnishes the required information to the IRS in a timely manner and other requirements are satisfied.

Non-U.S. Holders

Any gain recognized on the receipt of cash pursuant to the Merger by a non-U.S. holder generally will not be subject to U.S. federal income tax unless:

 

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the gain is effectively connected with the conduct of a U.S. trade or business of such non-U.S. holder (and, if required by an applicable income tax treaty, is also attributable to a permanent establishment or, in the case of an individual, a fixed base in the United States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be subject to tax on such gain in the same manner as a U.S. holder and, if the non-U.S. holder is a foreign corporation, such corporation may be subject to branch profits tax at the rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on earnings and profits (as determined for U.S. federal income tax purposes) effectively connected with a U.S. trade or business, subject to certain adjustments;

 

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the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the aggregate in the taxable year of the Merger and certain other conditions are met, in which case the non-U.S. holder generally will be subject to a 30% tax (or tax at such lower rate as may be specified under an applicable income tax treaty) on the non-U.S. holder’s net gain realized in the Merger, which may be offset by certain U.S. source capital losses of the non-U.S. holder, if any (even though the individual is not considered a resident of the United States), provided that such non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses; or

 

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the Company is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of (1) the five-year period ending on the date of the Merger and (2) the non-U.S. holder’s holding period in the Poshmark common stock, and, at any time during such period, the non-U.S. holder owned (directly, indirectly or constructively) more than 5% of the outstanding Poshmark common stock. Generally, a corporation is a U.S. real property holding corporation only if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The Company does not believe that it was and does not expect that it will be a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the five-year period ending on the date of the Merger.

 

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A non-U.S. holder will be subject to information reporting and, in certain circumstances, backup withholding (currently at a rate of 24%) with respect to the cash received by such non-U.S. holder pursuant to the Merger, unless such non-U.S. holder provides the paying agent with an applicable and properly executed IRS Form W-8 certifying under penalties of perjury the holder’s non-U.S. status (and the payor or applicable withholding agent does not have actual knowledge or reason to know that the non-U.S. holder is a U.S. person as defined under the Code) or otherwise establishes an exemption. Copies of information returns that are filed with the IRS may be made available under an applicable tax treaty or information exchange agreement to the taxing authorities of the country in which the non-U.S. holder resides or is established. Backup withholding is not an additional tax. Rather, any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder’s U.S. federal income tax liability, if any, provided that the non-U.S. holder furnishes the required information to the IRS in a timely manner and other applicable requirements are satisfied. Non-U.S. holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.

THE FOREGOING DISCUSSION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER. THIS SUMMARY IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. IN ADDITION, THIS DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES WHICH MAY VARY WITH, OR ARE CONTINGENT ON, A HOLDER’S INDIVIDUAL CIRCUMSTANCES, SUCH AS A HOLDER WHO IS SUBJECT TO THE “GOLDEN PARACHUTE” PROVISIONS OF THE CODE. ACCORDINGLY, EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER IN LIGHT OF SUCH HOLDER’S PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES WITH RESPECT TO ANY NON-INCOME TAX OR ANY STATE, LOCAL OR NON-U.S. TAX LAWS OR ANY “GOLDEN PARACHUTE” RULES.

Regulatory Approvals Required for the Merger

U.S. Antitrust

The obligations of Parent and the Company to consummate the Merger are subject to the waiting period applicable to the Merger under the HSR Act. Under the HSR Act and the rules and regulations promulgated thereunder, the Merger may not be completed until notifications have been filed and certain information has been furnished to the FTC and the DOJ and the specified waiting period has expired or has been terminated. The Company and Parent each filed or caused to be filed the requisite notification forms under the HSR Act with the DOJ and the FTC on October 18, 2022, and the applicable waiting period commenced on October 19, 2022. The waiting period under the HSR Act expired at 11:59PM ET on November 18, 2022. The FTC and the DOJ retain the authority to challenge the Merger on antitrust grounds after the expiration of the applicable waiting period.

In addition, the Merger may be reviewed by the state attorneys general in the various states in which Parent and the Company operate. These authorities may claim that there is authority, under the applicable state and federal antitrust laws and regulations, to investigate and/or seek to prohibit the Merger under the circumstances and based on the standards set forth in applicable state laws and regulations. There can be no assurance that one or more state attorneys general will not attempt to file an antitrust action to challenge the Merger. As of the date of this proxy statement, neither Parent nor the Company has been notified by any state attorney general indicating any plan to review the Merger.

The Merger Agreement includes covenants obligating each of the parties, with respect to filings under the HSR Act, to supply (or cause to be supplied) information that may be required to make such filings or any additional information that may be required or requested by the FTC, DOJ, or other governmental authorities, to cooperate and coordinate (and to cause their respective affiliates to cooperate and coordinate) with the other to

 

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make such filings, and to use their reasonable best efforts to take, all actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods pursuant to the HSR Act as promptly as reasonably practicable. For more information regarding these covenants, see the section of this proxy statement titled “The Merger Agreement - Reasonable Best Efforts; Antitrust Filings.”

Litigation Related to the Merger

In connection with the Merger Agreement, four complaints have been filed as individual actions in United States District Courts. One complaint has been filed in the United States District Court for the Southern District of New York and is captioned O’Dell v. Poshmark, Inc., et al., 22-cv-9799 (filed November 16, 2022). Three complaints have been filed in the United States District Court for the Northern District of California, and are captioned Olive v. Poshmark, Inc., et al.¸ 3:22-cv-07337 (filed November 21, 2022), Bushansky v. Poshmark, Inc., et al., 3:22-cv-07373 (filed November 22, 2022), and Da Camara v. Poshmark, Inc., et al., 3:22-cv-07379 (filed November 22, 2022). The foregoing complaints are referred to as the “Merger Actions”.

The Merger Actions generally allege that the preliminary proxy statement filed by the Company with the SEC on November 15, 2022 misrepresents and/or omits certain purportedly material information relating to the Company’s financial projections, the analyses performed by the financial advisor to the Poshmark Board in connection with the Merger, potential conflicts of interest of the Company’s officers and directors, and the events that led to the signing of the Merger Agreement, among other things. The Merger Actions assert violations of Section 14(a) of the Exchange Act, and Rule 14a-9 promulgated thereunder, against all defendants (the Company and its Board of Directors) and violations of Section 20(a) of the Exchange Act against Poshmark’s Board. The Merger Actions seek, among other things, an injunction enjoining the stockholder vote on the Merger and the consummation of the Merger unless and until certain additional information is disclosed to Poshmark stockholders, and costs of the action, including plaintiffs’ attorneys’ fees and experts’ fees. Certain demand letters have also been sent to the Company by purported stockholders making similar disclosure allegations.

The Company cannot predict the outcome of the Merger Actions. The Company believes that the Merger Actions are without merit. If additional similar complaints are filed, absent new or significantly different allegations, the Company will not necessarily disclose such additional filings.

Delisting and Deregistration of Poshmark Common Stock

If the Merger is completed, Poshmark Class A common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and Poshmark Class A common stock will no longer be publicly traded.

 

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THE MERGER AGREEMENT

The following is a summary of the material provisions of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated into this proxy statement by reference. We urge you to carefully read this entire proxy statement, including the annexes and the other documents to which we have referred you. You should also review the section titled “Where You Can Find Additional Information.”

The Merger Agreement has been included to provide you with information regarding its terms, and we recommend that you read it in its entirety. The Merger Agreement is a contractual document that establishes and governs the legal relations between the Company, Parent, Proton Parent and Merger Sub and allocates risks between the parties, with respect to the Merger, the other agreements contemplated by the Merger Agreement, and the transactions contemplated by the Merger Agreement.

The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates specified in the Merger Agreement. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract between the respective parties and are subject to representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of such agreement and as of specific dates, were 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 a confidential disclosure letter 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 investors, security holders, or securities laws. Investors and security holders are not third party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties 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.

The representations and warranties in the Merger Agreement and the description of them in this proxy statement should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings the Company publicly files with the SEC. Such information can be found elsewhere in this proxy statement and in the public filings the Company makes with the SEC, as described in the section titled “Where You Can Find Additional Information.”

The 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 merge with and into the Company, the separate corporate existence of Merger Sub will thereupon cease and the Company will continue as the surviving corporation of the Merger as an indirect subsidiary of Parent.

Closing and Effective Time of the Merger

The closing of the Merger will take place at 9:00 a.m., New York City time, within three business days after the satisfaction or waiver (to the extent permitted by the Merger Agreement) of the last to be satisfied or waived of all of the conditions described in the section below titled “Conditions to the Merger” (other than those conditions that by their terms are to be satisfied at the closing, but subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions) or such other time as Parent, Merger Sub and Poshmark mutually agree in writing.

 

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The Merger will become effective at the time a certificate of merger is filed with and accepted by the Secretary of State of the State of Delaware or at such later time specified in the certificate of merger and agreed to by the parties (the “Effective Time”).

Certificate of Incorporation and By-Laws; Directors and Officers

At the Effective Time, (a) the certificate of incorporation of the surviving corporation will be amended and restated in its entirety to read as set forth in the applicable exhibit attached to the Merger Agreement, and (b) the bylaws of the surviving corporation will be amended and restated in their entirety to be identical to the bylaws of Merger Sub, except that all references to Merger Sub will be automatically amended and become references to the surviving corporation.

Under the Merger Agreement, the directors of Merger Sub immediately prior to the Effective Time will be the directors of the Company, as the surviving corporation, immediately following the Effective Time. The officers of the Company immediately prior to the Effective Time will be the officers of the Company, as the surviving corporation, immediately following the Effective Time.

Consideration to be Received in the Merger

At the Effective Time, each share of Poshmark common stock that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Poshmark common stock that are held by the Company as treasury stock, owned by Parent or any of its subsidiaries (including Proton Parent and Merger Sub) immediately prior to the Effective Time or as to which appraisal rights have been properly exercised in accordance with Delaware law) will be automatically canceled, extinguished and converted into the right to receive cash in an amount equal to $17.90, without interest (the “Merger Consideration”), less any applicable withholding taxes.

Treatment of Equity-Based Awards and the 2021 ESPP in the Merger

Under our equity incentive programs, we grant Company Options and Company RSUs to our employees and non-employee directors, including grants of Company Options and Company RSUs to our executive officers, to incentivize and reward them for our long-term corporate performance based on the value of Company common stock. Our non-employee directors are granted RSUs under our equity incentive programs in accordance with the terms of the 2011 Plan and 2021 Plan and our Director Compensation Policy. We have granted Options pursuant to the 2011 Plan and 2021 Plan, and we have granted Options and RSUs (including RSUs held by our non-employee directors) pursuant to the 2011 Plan and 2021 Plan. In addition, Poshmark maintains the 2021 ESPP.

At the Effective Time, all Company equity awards, including awards held by our non-employee directors and executive officers, that are outstanding immediately prior to the Effective Time will generally be subject to the following treatment:

Company Options

At the Effective Time, each Vested Company Option with an exercise price per share less than the Merger Consideration will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the number of shares of Company Class A common stock or Class B common stock subject to such Vested Company Option and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Vested Company Option.

Each Unvested Company Option will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company Option Amounts, which Cash Replacement Company

 

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Option Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company Option for which such Cash Replacement Company Option Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company Option Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company Option for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company Option Amounts.

Each Company Option with an exercise price per share equal to or greater than the Merger Consideration will be canceled automatically at the Effective Time for no consideration.

Company RSUs

At the Effective Time, each Vested Company RSU will be automatically cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Merger Consideration and (ii) the total number of shares of Company Class A common stock or Class B common stock subject to such Vested Company RSU.

Other than as set forth in “New Arrangements with Company Executive Officers,” each Unvested Company RSU will, at the Effective Time, be automatically cancelled and converted into a contingent right to receive the Cash Replacement Company RSU Amounts, which Cash Replacement Company RSU Amounts will, subject to the holder’s continued service with Parent or its affiliates through the applicable vesting dates, vest and be payable at the same time as the Unvested Company RSU for which such Cash Replacement Company RSU Amounts were exchanged would have vested pursuant to its terms. All Cash Replacement Company RSU Amounts will have the same terms and conditions (including with respect to vesting) as applied to the Unvested Company RSU for which they were exchanged, except for terms rendered inoperative by reason of the Merger or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Cash Replacement Company RSU Amounts.

2021 ESPP

Pursuant to the Merger Agreement, (i) except for the offering period in effect as of October 3, 2022, no new offering periods will be authorized or commenced under the 2021 ESPP, (ii) no new participants will commence participation in the 2021 ESPP, (iii) no participant will be permitted to increase such participant’s payroll deduction election or contribution rates or to make separate non-payroll contributions, except as may be required by law, (iv) each purchase right outstanding under the 2021 ESPP as of October 3, 2022, will be exercised no later than three business days prior to the Effective Time, (v) accumulated contributions used to purchase shares of Company Class A common stock in accordance with the terms of the 2021 ESPP on such final exercise date, and (vi) the 2021 ESPP will be terminated effective as of immediately prior to the Effective Time. All shares of Company Class A common stock purchased on such final exercise date will, at the Effective Time, be cancelled and converted into the right to receive the Merger Consideration.

Procedure for Receiving Merger Consideration

Prior to the Effective Time, Parent agreed to select, or cause Proton Parent to select, a nationally recognized bank or trust company reasonably acceptable to the Company to act as the payment agent for the Merger (the “Payment Agent”). At or prior to the closing of the Merger, Parent will or will cause Proton Parent to deposit (or cause to be deposited) with the Payment Agent an amount of cash equal to the aggregate Merger Consideration payable to holders of Poshmark common stock. The Company will, at the written request of Parent, deposit with the Payment Agent at the closing such portion of such aggregate consideration from the Company’s cash denominated in United States dollars and held in United States bank accounts as specified in such request.

 

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Promptly following the Effective Time (and in any event no later than three business days), Parent (or Proton Parent) and the surviving corporation will cause the Payment Agent to mail to each holder of record as of immediately prior to the Effective Time (other than any shares of Poshmark common stock that are held by the Company as treasury stock or owned by Parent, Proton Parent, Merger Sub or any other subsidiaries, as applicable) of one or more certificates that immediately prior to the Effective Time represented issued and outstanding shares of Poshmark common stock (other than any shares of Poshmark common stock that are held by the Company as treasury stock or owned by Parent, Proton Parent, Merger Sub or any other subsidiaries, as applicable) (the “Certificates”) (i) a letter of transmittal (which will be in customary form and which 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 Payment Agent) and (ii) instructions for effecting the surrender of the Certificates in exchange for the Merger Consideration payable with respect to the shares of Poshmark common stock formerly represented by the Certificates. Upon surrender of Certificates for cancellation to the Payment Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates will be entitled to receive in exchange therefor an amount in cash equal to the product obtained by multiplying (x) the aggregate number of shares of Poshmark common stock represented by such Certificates by (y) the Merger Consideration, and the Certificates so surrendered will be canceled. With respect to record holders of uncertificated shares of Poshmark common stock (other than any shares of Poshmark common stock that are held by the Company as treasury stock or owned by Parent, Proton Parent, Merger Sub or any other subsidiaries thereof), upon the Payment Agent’s receipt of an “agent’s message” (or such other evidence as the paying agent may reasonably request), the holder of such uncertificated shares will be entitled to receive in exchange an amount in cash equal to the product obtained by multiplying (1) the aggregate number of shares of Poshmark common stock represented by such holder’s transferred uncertificated shares by (2) the Merger Consideration, and the transferred uncertificated shares will be canceled.

No interest will be paid or accrue on the cash payable to any holder of a Certificate or uncertificated share. Until so surrendered or transferred, outstanding Certificates and uncertificated shares will be deemed from and after the Effective Time to evidence only the right to receive the Merger Consideration payable in respect thereof.

As promptly as reasonably practicable, but in any event no later than the first regularly scheduled payroll date that is no less than five business days after the closing date, the holders of Unvested Option and Vested RSUs will be paid by Poshmark or the surviving corporation, through its payroll system or payroll provider, all amounts required to be paid to such holders in respect of such equity awards that are canceled and converted into a cash payment, less any required withholding.

The Company will take all actions necessary to effect the cancellation and conversion of Company Options, Unvested RSUs and to effectuate the treatment of the 2021 ESPP upon the Effective Time and otherwise to give effect to the applicable provisions of the Merger Agreement.

Each of the surviving corporation, Merger Sub, Parent and the Payment Agent will be entitled to deduct and withhold from any cash 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 Parent, Proton Parent, Merger Sub and Poshmark, 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;

 

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•

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

 

•

other than Goldman Sachs and LionTree LLC, as applicable, absence of brokers’, finders’ and investment bankers’ fees or commissions.

In addition, the Merger Agreement contains the following customary representations and warranties of Poshmark relating to, among other things:

 

•

capitalization;

 

•

the due incorporation or organization, good standing, power and authority and qualifications of Poshmark’s subsidiaries;

 

•

ownership of the Company’s subsidiaries;

 

•

inapplicability of certain takeover laws;

 

•

antitrust matters and other governmental approvals;

 

•

the required approval of the Company’s stockholders of the adoption of the Merger Agreement;

 

•

non-contravention;

 

•

documents filed with the SEC, compliance with applicable SEC filing requirements and accuracy of information contained in such documents;

 

•

preparation of Company financial statements in accordance with the GAAP;

 

•

internal controls and indebtedness;

 

•

the absence of certain undisclosed liabilities;

 

•

the ordinary conduct of business of Poshmark since January 1, 2022 and the absence of a Company Material Adverse Effect (as defined below) since that date;

 

•

material contracts, including top sources of revenues and sources of payment obligations;

 

•

real property;

 

•

environmental matters;

 

•

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

 

•

ownership and use of intellectual property;

 

•

employee benefits matters;

 

•

labor matters;

 

•

compliance with laws and possession of governmental authorizations;

 

•

data privacy matters;

 

•

the absence of pending or threatened litigation;

 

•

insurance;

 

•

anti-corruption and compliance, sanctions matters and compliance with import-export matters; and

 

•

the receipt of a fairness opinion from Goldman Sachs.

The Merger Agreement also contains the following customary representations and warranties of Parent and Merger Sub relating to among other things:

 

•

absence of pending or threatened litigation that would reasonably be expected to prevent, materially delay or have a material adverse effect on the ability of Parent or Merger Sub to perform its obligations under the Merger Agreement or consummate the transactions contemplated by the Merger Agreement (a “Parent Material Adverse Effect”)

 

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•

Other than as described in the section titled “New Arrangements with Company Executive Officers,” Parent’s lack of ownership, or certain agreements with respect to, of Poshmark common stock;

 

•

antitrust matters and other governmental approvals;

 

•

non-contravention;

 

•

the operations of Merger Sub;

 

•

sufficiency of funds to consummate the Merger; and

 

•

the absence of a Parent vote or approval requirement.

Certain of the Company’s 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, circumstance, event, effect or development that, (A) individually or in the aggregate, has or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, or (B) would reasonably be expected to prevent the consummation by the Company of the Merger prior to the Termination Date; provided, that, for the purposes of clause (A), none of the following, and no conditions, circumstances, changes, events, effects or developments to the extent arising out of or resulting from the following (in each case, by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred (subject to the limitations set forth below):

 

•

general economic conditions, or conditions in the global, international or regional economy generally, including changes in inflation and (to the extent comprising general conditions as aforesaid), supply chain disruptions, and labor shortages;

 

•

conditions in the equity, credit, debt, financial, currency or capital markets, including (A) changes in interest rates; (B) changes in exchange rates for the currencies of any country; or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;

 

•

general conditions in the industries in which the Company and its subsidiaries conduct business or in any specific jurisdiction or geographical area in which the Company conducts business, or changes therein;

 

•

any political or geopolitical conditions, outbreak of hostilities, armed conflicts, acts of war (whether or not declared), rebellion, insurrection, cyberterrorism, cyber-attacks or sabotage by or sponsored by a governmental authority, terrorism or military actions, including any escalation or worsening of the foregoing or any threats thereof, in each case, in the United States or any other country or region in the world;

 

•

earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, nuclear incidents, foreign or domestic social protest or social unrest (whether or not violent) or other natural or man-made disasters, weather conditions, power outages or electrical black-outs, and other force majeure events, including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world;

 

•

the negotiation, execution, delivery or performance of the Merger Agreement or the announcement of the Merger Agreement or the pendency of the Merger, including the impact thereof on the relationships, contractual or otherwise, of the Company and its subsidiaries with customers, suppliers, lenders, lessors, business partners, employees (including any such resulting employee attrition), regulators, governmental authorities, vendors or any other third Person (other than for purposes of the Company’s representations and warranties relating to non-contravention or to any other representation or warranty to the extent such representation or warranty addresses the consequences resulting from the

 

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execution and delivery of the Merger Agreement, the performance of any party’s obligations under the Merger Agreement or the consummation of the transactions contemplated by the Merger Agreement);

 

•

the compliance by any party to the Merger Agreement with the express terms thereof (other than any action or omission required by the interim operating covenants of Poshmark);

 

•

any action taken or refrained from being taken, in each case pursuant to the express written request of Parent;

 

•

changes or proposed changes in GAAP or other accounting standards, in any applicable laws (or the enforcement or interpretation of any of the foregoing) or in any regulatory or legislative conditions, including the adoption, implementation, repeal, modification, reinterpretation or proposal of any law, regulation or policy (or the enforcement thereof) by any governmental authority, or any panel or advisory body empowered or appointed thereby;

 

•

any epidemics, pandemics, plagues, other outbreaks of illness or public health events (including quarantine restrictions mandated or recommended by an applicable governmental authority), including any escalation or worsening of any of the foregoing, in each case, in the United States or any other country or region in the world; provided, that COVID-19, any evolutions or mutations thereof and COVID-19 measures will be exclusively covered by the clause below;

 

•

COVID-19 and any evolutions or mutations thereof and any COVID-19 measures;

 

•

any anti-dumping actions, international tariffs, sanctions, trade policies or disputes or any “trade war” or similar actions (including in connection with any dispute involving the Russian Federation and Ukraine);

 

•

any changes in the price or trading volume of Poshmark common stock or to Poshmark’s credit ratings, in each case in and of itself (it being understood that the underlying cause of such change may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder);

 

•

any failure by the Company and its subsidiaries to meet (A) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period; or (B) any budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the underlying cause of any such failure in clauses (A) or (B) may be taken into consideration when determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded hereunder);

 

•

the availability or cost of equity, debt or other financing to Parent or Merger Sub;

 

•

any litigation relating to the Merger or any demand or legal proceeding for appraisal of the fair value of any shares of Poshmark common stock pursuant to the DGCL in connection herewith, provided that the underlying facts or causes relating to such litigation relating to the Merger or any demand or legal proceeding for appraisal of fair value may be considered in determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded in the Merger Agreement; and

 

•

the identity of, or any facts or circumstances relating to, Parent, Merger Sub, or the respective affiliates of the foregoing, the respective financing sources of or investors in the foregoing;

except, in each case of the first five bullets and bullets nine, ten, eleven and twelve above, to the extent that such conditions, changes, events, effects or developments have had a disproportionate adverse effect on the Company relative to other companies operating in the industries in which the Company and its subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred.

The representations and warranties of the Company, Parent, Proton Parent and Merger Sub will terminate at the Effective Time.

 

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Covenants Regarding Conduct of Business by the Company Until the Effective Time

Except for matters set forth in the confidential disclosure letter or as otherwise expressly contemplated by the Merger Agreement or required by applicable law or as approved by Parent in writing (which approval will not be unreasonably withheld, conditioned or delayed), from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, the Company will and will cause each of its subsidiaries to use commercially reasonably efforts to (i) conduct its business in all material respects in the ordinary course of business consistent with past practice and (ii) preserve substantially intact its business organization (including the service of key employees) and to maintain existing relations in all material respects with key customers, suppliers and other persons with whom the Company and its Subsidiaries have significant relationships; provided, that no action by the Company or its subsidiaries to the extent specifically addressed by any provision of the forbearance covenants section will be deemed a breach of this sentence unless such action would constitute a breach of such relevant provision of the forbearance covenants section; provided further, that the Company and its subsidiaries may make any necessary changes in their respective business practices, based on advice of outside legal counsel, in response to COVID-19 and any COVID-19 measures, including to (A) protect the health and safety of the Company’s and its subsidiaries’ employees, suppliers, partners and other individuals having business dealings with the Company and its subsidiaries or (B) respond to third party supply or service disruptions caused by COVID-19 or any COVID-19 measures; provided further, that the Company as promptly as practicable will give Parent prior written notice of any such action to the extent reasonably practicable, which notice will describe in reasonable detail the action and the reason(s) that such action is being taken pursuant to the immediately preceding proviso and take into account in good faith the reasonable suggestions of Parent with such action to be taken by the Company, and, in the event that it is not reasonably practicable for the Company to give the prior written notice described in this proviso, the Company will instead give such written notice to Parent promptly after taking such action.

In addition, without limiting the generality of the foregoing, except for matters set forth in the confidential disclosure letter or as otherwise expressly permitted or required by the Merger Agreement, as required by applicable law or with respect to COVID-19 measures as permitted by the Merger Agreement, from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, the Company will not, and will not permit any of its subsidiaries to, do any of the following without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed):

 

•

amend, modify, waive, rescind, change or otherwise restate the organizational documents of the Company or any of its subsidiaries;

 

•

propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

•

issue, sell, deliver or agree or commit to issue, sell or deliver any Company securities, except in accordance with or as required by the terms of any award agreements under Poshmark stock plans or otherwise with respect to, and upon the vesting, exercise or settlement of, Options or Poshmark RSUs, in each case in effect on the date of the Merger Agreement or granted after the date of the Merger Agreement in compliance with the Merger Agreement or as contemplated by the Merger Agreement;

 

•

except for transactions solely among Poshmark and its wholly owned subsidiaries or solely among Poshmark’s wholly owned subsidiaries, reclassify, split, combine, subdivide or redeem, repurchase, purchase or otherwise acquire or amend the terms of, directly or indirectly, any of its capital stock or other equity or voting interest, other than (i) the acquisitions of shares of Poshmark common stock in connection with the surrender of shares of Poshmark common stock by holders of Options in order to pay the exercise price of such stock options, (ii) the withholding of shares of Poshmark common stock to satisfy tax obligations incurred in connection with the exercise of Options and the vesting and settlement of Poshmark RSUs, and (iii) the acquisition by the Company of Options and Poshmark RSUs in connection with the forfeiture of such awards, in each case in accordance with their terms;

 

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•

(i) adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest; (ii) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly-owned subsidiary of the Company to the Company or one of its other wholly-owned subsidiaries; (iii) modify the terms of any shares of its capital stock or other equity or voting interest; or (iv) pledge or encumber any shares of its capital stock or other equity or voting interest;

 

•

incur, assume, endorse, guarantee, or otherwise become liable for any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its subsidiaries except (i) performance bonds and surety bonds entered into in the ordinary course of business consistent with past practice and (ii) any indebtedness among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries;

 

•

except to the extent required by applicable law or any employee plan in existence as of the date of the Merger Agreement, (i) enter into, adopt, establish, amend or modify in any material respect (including accelerating the vesting or payment), or terminate any employee plan or make or grant any award under any employee plan (including any equity, bonus, or incentive compensation); (ii) increase the compensation or benefits payable to any director, officer, employee or other individual service provider of the Company or any of its subsidiaries; (iii) take any action to accelerate any payment, vesting, or funding of any compensation or benefits, payable, or to become payable, to any director, officer, employee, or individual service provider of the Company or any of its subsidiaries; or (iv) hire, engage, or terminate (other than for “cause”) any employee or other individual service provider whose annual cash compensation exceed $150,000;

 

•

settle, release, waive, or compromise any pending or threatened legal proceeding (x) for an amount equal to or in excess of $1,000,000 individually or $3,000,000 in the aggregate or (y) on a basis that would result in the imposition of any writ, judgment, decree, settlement, agreement, award, injunction or similar order of any governmental authority that would restrict the future activity or conduct of Parent, the Company or any of their respective Subsidiaries or a finding or admission of a violation of Law or violation of the rights of any person other than with respect to monetary settlements only, (i) any settlement where the amount paid or to be paid by the Company or any of its subsidiaries is covered in full by insurance coverage maintained by the Company or any of its subsidiaries or (ii) of any legal proceedings for an amount not in excess of the amount, if any, reflected or reserved expressly and specifically with respect to such legal proceedings in the balance sheet (or the notes thereto) of the Company;

 

•

change in any material respect the Company’s or its subsidiaries’ methods, principles or practices of financial accounting or annual accounting period, except as required by GAAP, Regulation S-X of the Exchange Act (or any interpretation thereof), or by any governmental authority or applicable law;

 

•

make, change or revoke any material tax election; settle any material tax claim or assessment; surrender any right to claim a material refund of taxes; consent to any extension or waiver of any limitation period with respect to any material tax claim or assessment; file an amended tax return that could reasonably be expected to materially increase the taxes payable by the Company or its subsidiaries; or enter into a closing agreement with any governmental authority regarding any material tax;

 

•

(i) incur or commit to incur any capital expenditures other than (x) during fiscal year 2022, amounts not in excess of 120% of the capital expenditure budget for fiscal year 2022, in accordance with the capital expenditure budget for fiscal years 2022 and 2023 set forth in the confidential disclosure letter and (y) during any quarter during fiscal year 2023, amounts not in excess of 120% of the applicable corresponding quarterly amounts set forth in the capital expenditure budget for fiscal year 2023 in the

 

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confidential disclosure letter; or (ii) fail to incur or commit to any capital or research and development expenditures in the amounts and on the time frames set forth in the capital expenditure budget in the confidential disclosure letter in all material respects;

 

•

enter into, modify in any material respect, amend in any material respect or terminate (other than any material contract that has expired in accordance with its terms in the ordinary course of business) any material contract, subject to certain exceptions, or otherwise waive, release or assign any material rights, claims or benefits of the Company or any of its subsidiaries thereunder;

 

•

acquire any division, assets, properties, businesses or equity securities (or otherwise make any investment) in any person (including by merger, consolidation or acquisition of stock or assets), other than (i) in or from any wholly owned subsidiary of the Company, (ii) acquisitions of products and services in the ordinary course of business or (iii) such acquisitions that do not exceed $1,000,000 individually or $3,000,000 in the aggregate;

 

•

sell, assign, transfer, lease, pledge, cancel or otherwise dispose of, or permit or suffer to exist the creation of any lien upon, any of the Company’s or its subsidiaries’ assets, other than such sales, assignments, leases, pledges, transfers, cancellations or other dispositions that (i) are sales of products and services or dispositions of assets in the ordinary course of business consistent with past practice or (ii) do not have a purchase price that exceeds $1,000,000 individually or $3,000,000 in the aggregate;

 

•

sell, assign, transfer, license, sublicense, abandon, cancel, permit to lapse or enter the public domain, pledge, encumber or otherwise dispose of any Company intellectual property, other than (i) the grant of non-exclusive licenses in the ordinary course of business to customers or suppliers on substantially the Company’s standard form of agreement (or an agreement with comparable intellectual property and confidentiality protections), (ii) disclosure of trade secrets pursuant to written confidentiality agreements or to recipients who are bound by professional or fiduciary obligations of non-disclosure, in each case, in the ordinary course of business, or (iii) the expiration of registered intellectual property at the end of their statutory term;

 

•

engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of the Company or other person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;

 

•

make any loans, advances or capital contributions to, any other person, except for (i) extensions of credit to customers in the ordinary course of business consistent with past practice; (ii) advances to directors, officers and other employees for travel and other business-related expenses, in each case in the ordinary course of business and in compliance in all material respects with the Company’s or its subsidiaries’ policies related thereto; and (iii) loans, advances or capital contributions to, any direct or indirect wholly owned subsidiaries of the Company;

 

•

effectuate or announce any closing, employee layoff, employee furlough, plant closing or other employment action that would reasonably be expected to implicate the Worker Adjustment and Retraining Notification Act of 1988 or any similar applicable law;

 

•

negotiate, enter into, amend in any material respect, or terminate any labor agreement or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representative for any employees of the Company or its subsidiaries;

 

•

waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor; or

 

•

agree, resolve or commit to take any of the foregoing prohibited actions.

 

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No-Shop; Poshmark Board Recommendation Change

No-Shop

From the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement and the Effective Time, Poshmark and its subsidiaries agreed to not, and agreed to cause the directors, officers and employees of it and its subsidiaries not to, and to instruct and use its reasonable best efforts to cause its and its subsidiaries’ other representatives not to, directly or indirectly:

 

•

solicit, initiate, propose, induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any inquiry, proposal, indication of interest or offer that constitutes or could reasonably be expected to lead to, an Acquisition Proposal;

 

•

furnish to any person (other than Parent, Proton Parent or Merger Sub or any designees of Parent, Proton Parent or Merger Sub) any non-public information relating to the Company or any of its subsidiaries or afford to any person access to the business, properties, assets, books, records or personnel, of the Company or any of its subsidiaries, in any such case in connection with any Acquisition Proposal or any inquiry, proposal, indication of interest or offer that could reasonably be expected to lead to an Acquisition Proposal;

 

•

participate or engage in or continue discussions or negotiations with any person relating to an Acquisition Proposal (or inquiries, proposals, indications of interest or offers that could reasonably be expected to lead to an Acquisition Proposal);

 

•

approve, endorse or recommend an Acquisition Proposal; or

 

•

enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to any Acquisition Proposal (other than certain Acceptable Confidentiality Agreements) (an “Alternative Acquisition Agreement”). “Acceptable Confidentiality Agreement” means any confidentiality agreement (i) containing terms that are not less favorable in the aggregate to the Company or less restrictive in the aggregate of a third party than those contained in the confidentiality agreement, except that such confidentiality agreement need not contain any “standstill” or similar provision or otherwise prohibit the making of any Acquisition Proposal and (ii) that does not prohibit the Company from providing any information to Parent in accordance with the no-solicitation provision of the Merger Agreement or otherwise prohibit the Company from complying with its obligations under the no-solicitation provision.

The Company also agreed to, within 24 hours following the execution of the Merger Agreement, request that all non-public information previously provided by or on behalf of Poshmark or any of its subsidiaries to any third party with whom a confidentiality agreement was entered into during the twelve-month period immediately preceding the date of the Merger Agreement with respect to a potential Acquisition Transaction be returned or destroyed, and agreed to immediately upon the execution of the Merger Agreement cease and cause its subsidiaries and each of its and its subsidiaries’ directors, officers and employees to, and instruct and use reasonable best efforts to cause its and its subsidiaries’ other representatives to, immediately cease and cause to be terminated any discussions, communications or negotiations with any person (other than the parties to the Merger Agreement and their respective representatives) relating to an Acquisition Proposal (or inquiries, proposals, indications of interest or offers that could reasonably be expected to lead to an Acquisition Proposal) and shut off all access granted to any such person to any electronic data room maintained by the Company with respect to the Transactions or any Acquisition Proposal (or inquires, proposals, indications of interest or offers that could reasonably be expected to lead to an Acquisition Proposal).

From the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement and the Effective Time, the Company will enforce, to the fullest extent permitted under applicable Law, and will not waive, terminate or modify, any provision of any standstill or similar provision that prohibits a proposal being made to Poshmark or the Poshmark Board unless the Poshmark Board has determined in good

 

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faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action for the purpose of permitting a person to make a private Acquisition Proposal to the Poshmark Board would be inconsistent with its fiduciary duties under applicable law.

If, at any time on or after the date of the Merger Agreement, until the earlier to occur of the termination of the Merger Agreement and the Company’s receipt of the Poshmark stockholder approval, Poshmark and the Poshmark Board receives an Acquisition Proposal that the Poshmark Board has determined in good faith (after consultation with its financial advisors and outside legal counsel) (i) either constitutes a Superior Proposal or would reasonably be expected to lead to a Superior Proposal, and that the failure to take such action would be inconsistent with the Board’s fiduciary duties under applicable Law and (ii) did not result from a breach of the no-shop provisions, subject to compliance with the no-shop provisions in the Merger Agreement, the Company is entitled to participate or engage in discussions or negotiations with and furnish any non-public information relating to the Company or any of its subsidiaries to the person making such Acquisition Proposal. The Company will provide to Parent, Proton Parent and Merger Sub any non-public information, data and/or access that is provided to any person given such information, data and/or access that was not previously made available to Parent, Proton Parent or Merger Sub prior to or promptly (and in any event within 24 hours) following the time it is provided to such person.

From and after the date of the Merger Agreement, Poshmark agreed to as promptly as practicable (and in any event within 24 hours) notify Parent in writing of Poshmark’s receipt of any Acquisition Proposal (or inquiries, proposals, indications of interest or offers that could reasonably be expected to lead to an Acquisition Proposal). Such notice must include the identity of the person making such Acquisition Proposal and a summary of the material terms and conditions of such Acquisition Proposal, including, if applicable, complete copies of any written documentation or materials. The Company must also keep Parent reasonably informed, on a prompt basis (and in any event within 24 hours), of changes to the status and terms of any such Acquisition Proposal and any changes to the status of any related discussions or negotiations.

As used in the Merger Agreement, the term “Acquisition Proposal” means any bona fide written offer or proposal (other than an offer or proposal by Parent, Proton Parent or Merger Sub) relating to an Acquisition Transaction. Furthermore, the term “Acquisition Transaction” means any transaction or series of related transactions (other than the Merger) involving:

 

•

any direct or indirect purchase or other acquisition of shares of more than 20% of the outstanding Poshmark common stock or voting power of Poshmark, including pursuant to a tender offer or exchange offer that, if consummated, would result in a person or group beneficially owning more than 20% of the Poshmark common stock outstanding or voting power of Poshmark after giving effect to the consummation of such tender or exchange offer;

 

•

any direct or indirect purchase or other acquisition of more than 20% of the consolidated assets, net revenue or net income of the Company and its subsidiaries taken as a whole (measured by the fair market value thereof);

 

•

any merger, consolidation, share exchange, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving the Company or any of its subsidiaries pursuant to which any person or group (or stockholders of any such person or group) would hold, directly or indirectly, shares of Poshmark common stock representing more than 20% of the equity interests or voting power of the surviving or resulting entity of such transaction after giving effect to the consummation of such transaction; or

 

•

any combination of the foregoing.

For the avoidance of doubt, the Merger and the other transactions contemplated by the Merger Agreement will not be deemed an Acquisition Proposal.

 

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As used in the Merger Agreement, the term “Superior Proposal” means any unsolicited, bona fide written Acquisition Proposal for an Acquisition Transaction first made after the date of the Merger Agreement that did not result from a breach of the no-solicitation provision of the Merger Agreement on terms that the Company Board has determined in good faith (after consultation with its financial advisors and outside legal counsel) would be more favorable, from a financial point of view, to the Company stockholders than the Merger (taking into account any legal, regulatory, financial, timing, financing and other aspects of such proposal that the Company Board considers relevant and any revisions to the Merger Agreement made or proposed in writing by Parent prior to the time of such determination). For purposes of the reference to an “Acquisition Proposal” in this definition, all references to “20%” in the definition of “Acquisition Transaction” will be deemed to be references to “50%”.

Poshmark Board Recommendation Change

The Poshmark Board may not (any of the following actions, a “Company Board Recommendation Change”):

 

•

(i) withhold, withdraw, amend, or fail to make when required by the Merger Agreement, or resolve or publicly propose to withhold, withdraw, amend, or fail to make when required by the Merger Agreement, its recommendation to Poshmark stockholders to adopt the Merger Agreement (the “Company Board Recommendation”), or (ii) qualify or modify (or resolve or publicly propose to qualify or modify) the Company Board Recommendation in a manner adverse to Parent;

 

•

adopt, approve or recommend or publicly declare advisable an Acquisition Proposal;

 

•

fail to include the Company Board Recommendation in this proxy statement;

 

•

fail to publicly recommend against acceptance of such tender or exchange offer by the Company’s stockholders prior to the earlier of (i) three business days prior to the date of the meeting of its stockholders (the “Company Stockholders Meeting”) and (ii) the tenth business day following the commencement thereof pursuant to Rule 14d-2 of the Exchange Act (or the fifth business day following public disclosure of such material modifications, as applicable) if an Acquisition Proposal structured as a tender or exchange offer is commenced; or

 

•

other than in connection with an Acquisition Proposal structured as a tender or exchange offer, fail to publicly reaffirm the Company Board Recommendation within five business days after Parent so requests in writing (with the Company having no obligation to make such reaffirmation on more than two separate occasions per acquisition proposal and one occasion per material modification thereto).

In addition, neither the Company nor any subsidiary of the Company may enter into an Alternative Acquisition Agreement.

Notwithstanding anything in the Merger Agreement to the contrary, at any time prior to obtaining the Poshmark stockholder approval, the Poshmark Board or any committee of the Poshmark Board may make a Company Board Recommendation Change in response to (i) a Superior Proposal that did not result from a breach of the no-solicitation provision of the Merger Agreement, if it determines in good faith (after consultation with its financial advisors and outside legal counsel), that the failure to do so would be inconsistent with its fiduciary duties under applicable law, or (ii) any material change, event, effect, development or circumstance occurring or becoming known after the date of the Merger Agreement that was not known or reasonably foreseeable or the consequences of which were not known or reasonably foreseeable to the Company Board on the date of the Merger Agreement and does not relate to any Acquisition Proposal or any matter relating thereto or changes in the stock price of the Company, in and of itself, any breach by the Company of the Merger Agreement or the mere fact that the Company meets or exceeds any internal or published financial projections or forecasts for any period ending on or after the date of the Merger Agreement; or changes in general economic or geopolitical conditions, or changes in conditions in the global, international or U.S. economy generally (an “Intervening

 

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Event”), if it determines in good faith (after consultation with its financial advisors and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties under applicable law, subject in each case to compliance with the procedures described below.

In the case of a Superior Proposal, no adverse recommendation change and/or termination of the Merger Agreement may be made:

 

•

until after the fifth business day following written notice from the Company to Parent advising Parent that the Poshmark Board intends to resolve to effect a Company Board Recommendation Change and/or terminate the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal and specifying the reasons, including the identity of the third party making, such Superior Proposal, the material terms and conditions of such Superior Proposal and copies of all agreements, term sheets, financing commitments and any other documents or written communications relating to such Superior Proposal (with any amendment to the financial terms or any other material term of such Superior Proposal requiring a new notice of superior proposal with a new notice period of three business days); and

 

•

unless during such five business day period (or three business day period following an amended proposal), the Company agreed to negotiate with Parent and its representatives in good faith (to the extent that Parent desires to so negotiate) to enable Parent to make such adjustments to the terms and conditions of the Merger Agreement such that the failure to effect a Company Board Recommendation Change and/or terminate the Merger Agreement, as applicable, would no longer be inconsistent with the Board’s fiduciary duties under applicable law.

In the case of an Intervening Event, no adverse recommendation change may be made:

 

•

until after the fifth business day following written notice from the Company to Parent advising Parent that the Poshmark Board or any committee of the Poshmark Board intends to take such action and specifying the basis for such change in the Company Board Recommendation;

 

•

unless, prior to effecting such Company Board Recommendation Change, the Company and its representatives, during such five business day period, agreed to negotiate with Parent and its representatives in good faith to enable Parent to propose adjustments to the terms and conditions of the Merger Agreement such that the failure to effect a Company Board Recommendation Change would no longer be inconsistent with the Board’s fiduciary duties under applicable law; and

 

•

unless, at the end of such five business day period and prior to effecting such Company Board Recommendation Change, the Company Board has considered in good faith any such proposals by Parent to make revisions to the terms of this Agreement, and has determined in good faith (after consultation with its financial advisors and outside legal counsel), that the failure to effect a Company Board Recommendation Change would continue to be inconsistent with the Board’s fiduciary duties under applicable law if such changes proposed by Parent were to be given effect.

As used in the Merger Agreement, the term “Alternative Acquisition Agreement” means any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an Acquisition Transaction, other than an Acceptable Confidentiality Agreement.

Reasonable Best Efforts; Antitrust Filings

Poshmark and Parent agreed to use their reasonable best efforts to take all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing (or causing to be done), all things necessary, proper or advisable under applicable law or otherwise to consummate and make effective the transactions contemplated by the Merger Agreement, including by:

 

•

causing the conditions to the Merger as set forth in the Merger Agreement to be satisfied;

 

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•

obtaining all consents, waivers, approvals, orders and authorizations from governmental authorities;

 

•

making all registrations, declarations and filings with governmental authorities in each case that are necessary and advisable to consummate the transactions.

Each of Poshmark and Parent agreed to:

 

•

within ten business days after the date of the Merger Agreement, file with the FTC and Antitrust Division of the DOJ a Notification and Report Form (and, if applicable, cause their respective affiliates to make such filing) as required under the HSR Act with respect to the Merger and the other transactions contemplated by the Merger Agreement;

 

•

use their respective reasonable best efforts to take all action reasonably necessary, proper or advisable as promptly as reasonably practicable, and in any event, at least three business days prior to the Termination Date, cause the expiration or termination of any applicable waiting periods under the HSR Act;

 

•

supply, or cause to be supplied, such information as may be required or requested by FTC, DOJ, or any governmental authority;

 

•

promptly inform (and to cause its affiliates to inform) the other parties of any substantive communication from any governmental authority regarding the Merger;

 

•

make (or cause to be made) an appropriate response to any comments or request for additional information or documentary material from any governmental authority as promptly as practicable, after consultation with the other party;

 

•

not extend, or request the extension of, any waiting period or decision period, or enter in any agreement or understanding with any governmental authority to delay or otherwise not consummate the Merger, without the consent of the other parties, which consent will not be unreasonably withheld, conditioned or delayed;

 

•

subject to any restrictions under applicable laws, promptly notify the other parties of, and, if in writing, furnish the others with copies of (or, in the case of oral communications, advise the others of the contents of) any material communication received by such party from a governmental authority in connection with the Merger and permit the other parties to review and discuss in advance (and to consider in good faith any comments made by the other parties in relation to) any proposed draft notifications, formal notifications, filing, submission or other written communication (and any analyses, memoranda, white papers, presentations, correspondence or other documents submitted therewith) made in connection with the Merger to a governmental authority;

 

•

keep the other parties informed with respect to the status of any submissions and filings to any governmental authority in connection with the Merger and any developments, meetings or discussions with any governmental authority in respect thereof; and

 

•

not independently participate in any substantive meeting, hearing, proceeding or discussions (whether in person, by telephone, by video or otherwise) with or before any governmental authority in respect of the Merger without giving the other parties reasonable prior notice of such meeting or substantive discussions and, unless prohibited by such governmental authority, the opportunity to attend or participate.

Until the earlier of the valid termination of the Merger Agreement and the expiration or termination of the waiting period under the HSR Act, Parent and Merger Sub will not, nor will they permit their respective subsidiaries or controlled affiliates to, enter into a definitive agreement to, or otherwise agree to, acquire any business or assets or equity of any person, if such acquisition would reasonably be expected to prevent, materially delay or materially impede the obtaining of the expiration or termination of the waiting period under the HSR Act applicable to the Merger.

 

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Proxy Statement; Poshmark Stockholders Meeting

The Company has agreed, in consultation with Parent, to conduct a “broker search” in accordance with Rule 14a-13 of the Exchange Act as soon as reasonably practicable after the date of the Merger Agreement to enable a record date to be set for a special meeting of its stockholders for the purpose of obtaining stockholder approval of the Merger (the “Special Meeting”). The Company agreed to hold the Special Meeting as promptly as reasonably practicable following the clearance of the proxy statement by the SEC.

The Company may, and will, at the request of Parent, postpone or adjourn the Special Meeting:

 

•

to allow additional solicitation of votes in order to obtain the stockholder approval (provided that (i) such postponement or adjournment will not occur more than two times, in each case, be so delayed by more than ten business days each and (ii) in no event shall the record date of the Company Stockholders Meeting be changed without Parent’s written consent, which shall not be unreasonably withheld, conditioned or delayed);

 

•

for the absence of a quorum (provided that (i) such postponement or adjournment will not occur more than two times, in each case, be so delayed by more than ten business days each and (ii) in no event shall the record date of the Company Stockholders Meeting be changed without Parent’s written consent, which shall not be unreasonably withheld, conditioned or delayed);

 

•

if the Company is required to postpone or adjourn the stockholder meeting by applicable law or a request from the SEC or its staff; or

 

•

to the extent necessary to ensure that any supplement or amendment to the Proxy Statement that is required by applicable law is provided the Company’s stockholders for the amount of time required by law in advance of the Company Stockholders Meeting (provided that the stockholder meeting will not be so delayed by more than 5 business days).

Unless there has been a Company Board Recommendation Change, the Company has agreed to use reasonable efforts to solicit from stockholders of the Company proxies in favor of the adoption of the Merger Agreement. Unless the Merger Agreement is validly terminated, the Company will submit the Merger Agreement for a vote by its stockholders at the Special Meeting even if the Poshmark Board (or a committee thereof) has effected a Company Board Recommendation Change.

The Company has agreed to ensure that the proxy statement will not, on the date it is first disseminated to stockholders of the Company or at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. However, the Company assumes no responsibility with respect to information supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in the proxy statement. Parent and Merger Sub agreed to ensure that such information supplied by them for inclusion in the proxy statement will not, on the date it is first disseminated to stockholders of the Company or at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. However, Parent and Merger Sub assume no responsibility with respect to information supplied by or on behalf of the Company for inclusion or incorporation by reference in the proxy statement.

If at any time prior to the Special Meeting, any information relating to the Company, Parent, Proton Parent, Merger Sub or any of their respective affiliates should be discovered by the Company, on the one hand, or Parent or Merger Sub, on the other hand, that should be set forth in an amendment or supplement to the proxy statement or any other required Company filing, as the case may be, so that such filing would not include any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, then the party that

 

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discovers such information will promptly notify the other, and an appropriate amendment or supplement to such filing describing such information will be promptly prepared and filed with the SEC by the appropriate party and, to the extent required by applicable law or the SEC or its staff, disseminated to the Company’s stockholders.

Subject to applicable law, the Company will use its reasonable best efforts to cause the proxy statement to be disseminated to Poshmark’s stockholders as promptly as reasonably practicable, and in no event more than three business days, following the filing thereof with the SEC and confirmation from the SEC that it will not review, or that it has completed its review of, the proxy statement, which confirmation will be deemed to have occurred if the SEC has not affirmatively notified the Company by 11:59 p.m., New York City time, on the tenth calendar day following such filing with the SEC that the SEC will or will not be reviewing the proxy statement.

Financing Efforts

Prior to the earlier of the Effective Time and Termination Date, subject to customary limitations and exceptions, Poshmark will, and will cause its subsidiaries to, and will use its commercially reasonable efforts to cause its representatives to, use commercially reasonable efforts to provide all cooperation that is necessary, customary or advisable and reasonably requested by Parent to assist Parent in the arrangement of any third party debt or equity financing in connection with the consummation of the transactions contemplated by the Merger Agreement and all related fees and expenses of Parent and Merger Sub (the “Financing”). The receipt of such Financing is not a condition to the Merger.

Indemnification of Directors and Officers and Insurance

As of the Effective Time, the surviving corporation and its subsidiaries will, and Parent and Proton Parent will cause the surviving corporation and its subsidiaries to, honor and fulfill, in all respects, the obligations of Poshmark and its subsidiaries pursuant to any indemnification agreements in effect as of October 3, 2022 between the Company and any of its subsidiaries or affiliates, on the one hand, and any of their respective current or former directors or officers (and any person who becomes a director or officer of Poshmark or any of its subsidiaries prior to the Effective Time), on the other hand (each, together with such person’s heirs, executors and administrators, an “Indemnified Person” and, collectively, the “Indemnified Persons”). In addition, for a period of six years following the Effective Time, the surviving company or any of its subsidiaries will, and Parent and Proton Parent will cause the surviving company and its subsidiaries to, cause all the organizational documents of the surviving corporation and its subsidiaries to contain provisions with respect to indemnification, exculpation and the advancement of expenses that are at least as favorable as the indemnification, advancement and reimbursement of expenses provisions set forth in the organizational documents as of October 3, 2022, which provisions will not be repealed, amended or otherwise modified in any manner except as required by applicable law.

For a period of six years following the Effective Time, the surviving corporation will, and Parent and Proton Parent will cause the surviving corporation to, indemnify and hold harmless, to the fullest extent permitted by applicable law (including with respect to advancement of expenses and attorneys’ fees and advancing such expenses and fees without requiring any preliminary determination of entitlement subject to such individual’s affirmation or undertaking as contemplated by the DGCL), each Indemnified Person from and against any costs, fees and expenses, including reasonable attorneys’ fees and investigation expenses, judgments, fines, penalties, losses, claims, damages, liabilities and amounts paid in settlement or compromise in connection with any legal proceeding, whether civil, criminal, administrative or investigative, whenever asserted, to the extent that such legal proceeding arises, directly or indirectly, out of or pertains, directly or indirectly, to the fact that an Indemnified Person is or was a director, officer, employee or agent of Poshmark or any of its subsidiaries; any action or omission, or alleged action or omission, prior to the Effective time, in such Indemnified Person’s capacity as a director, officer, employee or agent of the Company or any of its subsidiaries, or taken at the request of Poshmark or such subsidiary (including in connection with serving at the request of the Company or such subsidiary as a director, officer, employee, agent, trustee or fiduciary of another person (including any

 

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employee benefit plan), regardless of whether such action or omission, or alleged action or omission, occurred prior to or at the Effective Time); and the Merger, as well as any actions taken prior to the Effective Time by Poshmark, Parent, Proton Parent or Merger Sub with respect to the Merger.

If, at any time prior to the sixth anniversary of the Effective Time, any Indemnified Person delivers to Parent a written notice asserting a good faith claim for indemnification, then the claim asserted in such notice will survive the sixth anniversary of the Effective Time until such claim is fully and finally resolved. No Indemnified Person will settle or otherwise compromise or consent to the entry of any judgment with respect to any legal proceeding for which he or she has submitted or may submit an indemnification claim without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed).

For a period of six years following the Effective Time, the surviving corporation will, and Parent and Proton Parent will cause the surviving corporation to, maintain in effect Poshmark’s current directors’ and officers’ liability and similar insurance in respect of acts or omissions occurring at or prior to the Effective Time on terms (including with respect to coverage, conditions, retentions, limits and amounts) that are equivalent to those of Poshmark’s current directors’ and officers’ liability insurance; provided that in no event will the surviving corporation be obligated to pay annual premiums in excess of 300% of the amount paid by the Company for coverage for its last full fiscal year, which amount is referred to as the maximum annual premium. If the annual premiums of such insurance coverage exceed the maximum annual premium, then the surviving corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding the maximum annual premium from an insurance carrier with the same or better credit rating as Poshmark’s current directors’ and officers’ liability insurance carrier. In satisfaction of the foregoing obligations, prior to the Effective Time Poshmark may purchase a prepaid “tail” policy with respect to the Company’s current directors’ and officers’ liability insurance from an insurance carrier with the same or better credit rating as Poshmark’s current directors’ and officers’ liability insurance carrier so long as the aggregate cost for such “tail” policy does not exceed the maximum annual premium. If the Company elects to purchase such a “tail” policy prior to the Effective Time, the surviving corporation will (and Parent and Proton Parent will cause the surviving corporation to) maintain such “tail” policy in full force and effect for a period of no less than six years after the Effective Time and continue to honor its obligations under such “tail” policy. If the Company is unable to obtain the “tail” policy and Parent and Proton Parent or the surviving corporation are unable to obtain the insurance described above for an annual cost less than or equal to the maximum annual premium, Parent and Proton Parent will cause the surviving corporation to instead obtain as much comparable insurance as possible for an aggregate annual premium equal to the maximum annual premium.

Employee Benefits Matters

For a period of 12 months following the Effective Time, Parent agreed to provide each employee of the Company or any of its subsidiaries who continues to be an employee of Parent or one of its subsidiaries (including the surviving corporation) immediately following the Effective Time (a “Continuing Employee”) with (i) base salary or wage rate and short-term (i.e., annual or shorter) cash incentive opportunities that are no less favorable in the aggregate than those in effect for such Continuing Employee immediately before the Effective Time; and (ii) employee benefits (excluding, in each case, nonqualified deferred compensation, defined benefit pension, retiree or post-termination health or welfare benefits other than COBRA, severance, retention, change in control compensation, long-term bonus or incentive (longer than a year), or equity or equity-based plans or arrangements (the “Excluded Benefits”)) that are substantially comparable in the aggregate to those in effect for (or available to) the Continuing Employees (as a group) under the employee plans as of immediately prior to the Effective Time. In addition, during the 12 month period following the Effective Time, Parent agreed to cause the surviving corporation and its respective subsidiaries to provide severance benefits or compensation to certain eligible employees in the event of a qualifying termination in accordance with certain specified pre-existing employee benefit plans or agreements.

 

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With respect to each benefit or compensation plan, program, policy, arrangement or agreement that is made available to any Continuing Employee at or after the Effective Time, other than any such plans or programs providing for Excluded Benefits (each such plans, a “New Plan”), the surviving corporation and its subsidiaries shall, and Parent shall cause the surviving corporation and its subsidiaries to, cause to be granted to such Continuing Employee credit for all service with the Company and its subsidiaries prior to the Effective Time for purposes of eligibility to participate, vesting and (for vacation and severance benefits only) entitlement to benefits to the same extent and for the same purpose as such service was credited under the analogous employee plan prior to the Effective Time, except to the extent that it would result in duplication of coverage or benefits for the same period of service. In addition, and without limiting the generality of the foregoing, during the plan year in which the Effective Time occurs, Parent will or will cause the surviving corporation and its subsidiaries to use commercially reasonable efforts to provide that (i) each Continuing Employee will be immediately eligible to participate, without any waiting period, in any and all New Plans to the extent that coverage pursuant to any such New Plan replaces coverage pursuant to a corresponding employee plan (such plans, the “Old Plans”); (ii) for purposes of each New Plan providing group medical, dental, pharmaceutical, or vision benefits, all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such New Plan be waived for the Continuing Employees and their covered dependents to the extent such conditions were inapplicable, met or waived under the comparable employee plan in which such Continuing Employee participated immediately prior to the Effective Time; and (iii) for purposes of each New Plan providing medical, dental, pharmaceutical, or vision benefits, any eligible expenses incurred by the Continuing Employees and their covered dependents during the portion of the plan year of the Old Plan ending on the date that Continuing Employees’ participation in the corresponding New Plan begins, if such participation begins in the year in which the Effective Time occurs, to be given full credit pursuant to such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Continuing Employees and their covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. Any vacation or paid time off accrued but unused by a Continuing Employee as of immediately prior to the Effective Time will be credited to such Continuing Employee following the Effective Time, and will otherwise be subject to the terms of such vacation and/or paid time off policies as determined by Parent and its affiliates from time to time (but in no event subject to forfeiture).

With respect to each of the Company’s annual cash incentive plans (each, a “Company Incentive Plan”), for the fiscal year in which the Effective Time occurs, the surviving corporation and its subsidiaries shall (and Parent shall cause the surviving corporation and its subsidiaries to) pay to each Continuing Employee who remains employed with Parent, the surviving corporation or their respective subsidiaries through the applicable payment date, at the same time or times that Parent, the surviving corporation or their applicable subsidiary pays annual bonuses in respect of such fiscal year to other similarly situated employees thereof, the bonus (the “Annual Bonus”) that such Continuing Employee is entitled to receive under the applicable Company Incentive Plan based on the actual level of achievement of the applicable performance criteria for such fiscal year (as determined after giving appropriate effect to the Merger).

The Merger Agreement provides that the foregoing provisions under this “Employee Benefits Matters” section will not be deemed to: (i) guarantee employment for any period of time for, or preclude the ability of Parent, the surviving corporation or any of their respective subsidiaries to terminate or modify the employment of any Continuing Employee; (ii) establish, modify, or amend any employee plan or New Plan or limit or prohibit the right of Parent or any of its affiliates (including, following the Effective Time, the surviving corporation and its subsidiaries) to modify, amend or terminate any employee plan or any New Plan; or (iii) create any third party beneficiary rights in any Continuing Employee (or beneficiary or dependent thereof).

Other Agreements

The Merger Agreement contains additional agreements between Poshmark, on the one hand, and Parent, Proton Parent and Merger Sub, on the other hand, relating to, among other things:

 

•

Parent’s access to information of Poshmark;

 

•

notification of certain matters;

 

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•

confidentiality;

 

•

consultations regarding public statements and disclosure; and

 

•

litigation relating to the transactions contemplated by the Merger Agreement.

Conditions of the Merger

The obligations of Poshmark, Parent, Proton Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of various conditions on or prior to the Effective Time, including the following:

 

•

the adoption of the Merger Agreement by the Company’s stockholders;

 

•

the expiration or termination of any applicable waiting periods under the HSR Act (see the section titled “The Merger - Regulatory Approvals Required for the Merger”); and.

 

•

the absence of any law, injunction or order from any governmental authority having jurisdiction over any party to the Merger Agreement (whether temporary, preliminary or permanent) prohibiting, enjoining or otherwise making illegal the consummation of the Merger.

Parent, Proton Parent and Merger Sub’s obligations to consummate the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

•

the representations and warranties made by Poshmark relating to the absence of a Company Material Adverse Effect since January 1, 2022 being true and correct in all respects as of October 3, 2022 and the closing;

 

•

certain representations and warranties regarding Poshmark’s capitalization and capital structure being true and correct in all respects as of October 3, 2022 and as of the closing, except for any inaccuracies that are de minimus in the aggregate;

 

•

the representations and warranties made by Poshmark relating to organization and good standing, corporate power and enforceability, Company Board approval, anti-takeover laws, Company securities and brokers’ fees being true and correct in all material respects as of October 3, 2022 and as of the closing;

 

•

the other representations and warranties made by the Company in the Merger Agreement being true and correct as of October 3, 2022 and as of the closing, except where the failure of such representations and warranties to be so true and correct (disregarding all qualifications or limitations as to “materiality,” “Company Material Adverse Effect” or words of similar import) would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect;

 

•

Poshmark having performed in all material respects all of the covenants and obligations of the Merger Agreement required to be performed and complied with by Poshmark at or prior to the closing;

 

•

no Company Material Adverse Effect having occurred since October 3, 2022; and

 

•

receipt by Parent, Proton Parent and Merger Sub of a certificate of the Company, executed for and on behalf of the Company by a duly authorized executive officer of Poshmark certifying to the satisfaction of the conditions described immediately above.

The Company’s obligations to consummate the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

•

the representations and warranties made by Parent, Proton Parent and Merger Sub set forth in the Merger Agreement being true and correct as of the date of the Merger Agreement and the closing, except where the failure of such representations and warranties to be so true and correct (disregarding all qualifications or limitations as to “materiality,” “Parent Material Adverse Effect” or words of similar import) would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect;

 

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•

Parent, Proton Parent and Merger Sub having performed in all material respects all of the covenants and obligations of the Merger Agreement required to be performed and complied with by Parent, Proton Parent and Merger Sub at or prior to closing; and

 

•

receipt by Poshmark of a certificate of Parent, Proton Parent and Merger Sub, executed for and on behalf of Parent, Proton Parent and Merger Sub certifying to the satisfaction of the conditions described immediately above.

The Merger Agreement does not contain any financing-related closing condition. Parent, Proton Parent and Merger Sub each acknowledged and agreed in the Merger Agreement that obtaining the financing is not a condition to the closing.

Poshmark, Parent, Proton Parent and Merger Sub can provide no assurance that all of the conditions precedent to the Merger will be satisfied or waived by the party permitted to do so.

Termination

The Merger Agreement may be terminated at any time prior to the Effective Time in the following circumstances:

 

•

by mutual written agreement of Parent and the Company;

 

•

by either Parent or the Company:

 

•

if any governmental authority has issued a permanent injunction or final and non-appealable order, which remains in effect, preventing or enjoining the consummation of the Merger; provided, however, that the right to terminate the Merger Agreement on this basis is not available to any party whose failure to perform its obligations under the Merger Agreement has been the primary cause of, or primarily resulted in, the issuance of such permanent injunction or final and non-appealable order (referred to as a “Legal Restraint Termination”);

 

•

if the Merger is not consummated on or before 11:59 p.m., New York City time, on April 3, 2023 (the “Termination Date”); provided, however, that the Termination Date will be automatically extended until 11:59 p.m., New York City time, on July 3, 2023 if the conditions to the closing of the Merger related to an order or applicable law prohibiting the Merger and/or expirations of waiting periods applicable to the merger under the HSR Act have not been satisfied or waived as of the Termination Date and all other conditions to the closing of the Merger have been satisfied or would be capable of being satisfied, as applicable, if the closing date were the Termination Date; and provided, further, that the right to terminate the Merger Agreement on this basis is not available to any party whose material breach of any provision of the Merger Agreement has been the primary cause of, or primarily resulted in, the failure of the Merger to be consummated prior to the Termination Date; and

 

•

if the holders of a majority of the voting power of the outstanding shares of Poshmark common stock entitled to vote at the Special Meeting fail to adopt the Merger Agreement at the Special Meeting (referred to as a “Stockholder Vote Termination”);

 

•

by Parent if:

 

•

the Company breaches or fails to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement that would result in a condition to the closing of the Merger not being satisfied and such breach has not been timely cured (provided that Parent is not then in material breach of its obligations under the Merger Agreement such that the Company would be entitled to terminate the Merger Agreement pursuant to the Parent Breach Termination) (referred to as a “Company Breach Termination”);

 

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•

prior to the adoption of the Merger Agreement by Poshmark stockholders, the Poshmark Board has effected a Company Board Recommendation Change (referred to as a “Recommendation Change Termination”); or

 

•

Poshmark or the Poshmark Board has willfully and materially breached its obligations under the no-shop provisions; and

 

•

by the Company if:

 

•

Parent, Proton Parent or Merger Sub breaches or fails to perform any representation, warranty, covenant or other agreement contained in the Merger Agreement that would result in a condition to the closing of the Merger not being satisfied and such breach has not been timely cured (provided that the Company is not then in material breach of its obligations under the Merger Agreement such that Parent would be entitled to terminate the Merger Agreement pursuant to the Company Breach Termination) (referred to as a “Parent Breach Termination”);

 

•

prior to the adoption of the Merger Agreement by Poshmark stockholders and so long as Poshmark is in compliance with and has not breached the requirements of the no-shop provisions, in order to substantially concurrently enter into a definitive Alternative Acquisition Agreement with respect to a Superior Proposal received after October 3, 2022, if Poshmark pays Parent the Company Termination Fee (summarized below) (referred to as a “Superior Proposal Termination”).

Effect of Termination

Any valid termination of the Merger Agreement will be effective immediately upon the delivery of written notice by the terminating party to the other parties, and the Merger Agreement will be of no further force or effect without liability of any party to the other parties, as applicable, except that certain provisions of the Merger Agreement will survive the termination of the Merger Agreement in accordance with their respective terms, including the provisions regarding the effect of termination and payment of termination fees and related expenses and the general provisions contained in Article IX of the Merger Agreement. Subject to the provisions regarding payment of the Company Termination Fee, each party also will not be relieved or released from any liabilities or damages arising out of fraud or its willful and material breach of any provision of the Merger Agreement. For purposes of the Merger Agreement, a “willful and material breach” means a breach that is a consequence of an act or omission undertaken by the breaching party with the actual knowledge that the taking of, or failure to take, such act would cause or constitute or would reasonably be expected to cause or constitute a material breach of the Merger Agreement.

Termination Fees and Expenses

The Company will promptly pay Parent a termination fee of $52,913,000 (the “Company Termination Fee”) if (i) the Merger Agreement is validly terminated by (x) either Parent or the Company, if the Merger has not occurred by the Termination Date (provided that at the Termination Date, the approval of the Merger by the holders of a majority of the voting power of the outstanding shares of Poshmark common stock has not been obtained or Parent has the right to terminate due to the Company Breach Termination), (y) either Parent or the Company for a Stockholder Vote Termination or (z) Parent for a Company Breach Termination; (ii) prior to such termination, a third party publicly announces an Acquisition Proposal (or an Acquisition Proposal otherwise becomes publicly known) and does not publicly withdraw such Acquisition Proposal without qualification prior to the earlier of (x) five days prior to the Company Stockholders Meeting (as such meeting may have been adjourned or postponed in accordance with the Merger Agreement) and (y) such termination of the Merger Agreement; and (iii) within 12 months following such termination of the Merger Agreement, (1) the Company enters into a definitive agreement providing for the consummation of an Acquisition Transaction, (2) an Acquisition Transaction is consummated or (3) to the extent the Company has not entered into a definitive agreement providing for the consummation of an Acquisition Transaction, in the case of an Acquisition Proposal

 

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that is a tender or exchange offer, the Poshmark Board shall have (A) approved or recommended such Acquisition Transaction to the Company’s stockholders or (B) otherwise not opposed such Acquisition Transaction and in the case of this clause (B), such Acquisition Proposal is subsequently consummated. For purposes of this paragraph, all references to “20%” in the definition of “Acquisition Transaction” will be deemed to be references to “50%.”

The Company is also required to pay the Company Termination Fee if Parent terminates the Merger Agreement due to (i) a Company Board Recommendation Change or (ii) the Company or the Company Board, as applicable, willfully and materially breaching the no-shop provisions of the Merger Agreement. The Company is also required to pay the Company Termination Fee in the case of a Superior Proposal Termination.

The payment of the Company Termination Fee is the sole and exclusive remedy available to Parent, Proton Parent and Merger Sub with respect to the Merger Agreement in the event the Company Termination Fee becomes due and payable pursuant to the terms of the Merger Agreement, and is paid, except for fraud or willful and material breach.

Specific Performance

The parties to the Merger Agreement will be entitled, in addition to any other remedy to which they are entitled at law or in equity, to an injunction, specific performance and other equitable relief to prevent breaches (or threatened breaches) of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement. Any party seeking an injunction or injunctions to prevent breaches of the Merger Agreement and to enforce specifically its terms and provisions will not be required to provide any bond or other security in connection with such injunction or enforcement.

Amendments and Waivers

Prior to the Poshmark stockholder approval, the Merger Agreement may be amended at any time by the parties to the Merger Agreement; however, following the receipt of the Poshmark stockholder approval, no amendment to the Merger Agreement that requires the approval of the stockholders of the Company under the DGCL may be made unless the further required approval is obtained.

Any agreement on the part of a party to any extension or waiver with respect to the Merger Agreement is valid only if set forth in an instrument in writing signed on behalf of such party. At any time prior to the Effective Time, the parties to the Merger Agreement (treating Parent, Proton Parent and Merger Sub as one party for this purpose) may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement or (iii) subject to the requirements of applicable Law, waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement. The failure or delay of any party to the Merger Agreement to assert any of its rights under the Merger Agreement or otherwise will not constitute a waiver of such rights nor will any single or partial exercise of such rights preclude any other or further exercise of any other right under the Merger Agreement.

Governing Law

The Merger Agreement is governed by and construed in accordance with the laws of the State of Delaware.

 

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VOTING AGREEMENT

In connection with the execution of the Merger Agreement, Poshmark entered into a Voting Agreement with Parent and each of Manish Chandra, Mayfield XIII, Mayfield Select, GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. (each, a “specified stockholder”). The following is a summary of the material provisions of the Voting Agreement, a copy of which is attached as Annex C to this proxy statement and is incorporated into this proxy statement by reference.

As of the close of business on the record date, the specified stockholders beneficially owned in the aggregate approximately 3,339,306 shares of Class A common stock and 22,688,105 shares of Class B common stock, representing approximately 77% of the total voting power of the outstanding shares entitled to vote at the Special Meeting. In the event any specified stockholder acquires record ownership or beneficial ownership of Poshmark common stock after the execution of the Voting Agreement, such additional shares will automatically become subject to the Voting Agreement. The shares of Poshmark common stock subject to the Voting Agreement are referred to in this section as “covered shares.”

Voting Provisions

Under the Voting Agreements, each specified stockholder agreed to vote or cause to be voted all covered shares: (1) in favor of the approval and adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement; (2) in favor of the approval of any proposal to adjourn or postpone the meeting to a later date if there are not sufficient votes present for there to be a quorum or for the approval and adoption of the Merger Agreement on the date on which such meeting is held; (3) in favor of any other transactions reasonably required in furtherance of the matters set forth in (1) and (2); and (4) against (i) any action, proposal, transaction or agreement that would reasonably be expected to result in any condition set forth in the Merger Agreement not being satisfied prior to the Termination Date, (ii) any Acquisition Proposal or any action with the intention to further any Acquisition Proposal, (iii) any action that would reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the adoption of the Merger Agreement or the timely consummation of the Merger or the fulfillment of the Poshmark’s, Parent’s, Proton Parent’s or Merger Sub’s conditions to closing under the Merger Agreement, (iv) any reorganization, dissolution, liquidation, winding up or similar extraordinary transaction involving Poshmark (except as expressly contemplated by the Merger Agreement), and (v) any action which would reasonably be expected to result in a material breach of any representation, warranty, covenant or agreement of the Company in the Merger Agreement or of a stockholder contained in the Merger Agreement.

Each specified stockholder also has agreed to be represented in person or by proxy held by the Chief Executive Officer of the Company or otherwise cause each covered share to be counted for the purposes of a quorum at every meeting of the Company’s stockholders during the term of the Voting Agreement in order for the covered shares to be counted as present for purposes of establishing a quorum.

Restrictions on Transfer

Pursuant to the Voting Agreement, each specified stockholder agreed that, during the term of the Voting Agreement, it will not (1) directly or indirectly offer, sell, assign, encumber, pledge, hypothecate, divide, dispose of, loan or otherwise transfer (voluntary or involuntary and including by merger, by testamentary disposition, by gift, by operation of law or otherwise) any of the covered shares or any interest in any covered shares (other than the Voting Agreement), (2) deposit any covered shares into a voting trust or enter into a voting agreement or arrangement or understanding or commitment (other than the Voting Agreement) or grant any proxy or power of attorney with respect to the covered shares, (3) create any lien or enter into any contract, swap, arrangement, agreement or understanding creating any lien, with respect to any covered shares (other than permitted liens), (4) enter into any derivative or hedging arrangement with respect to any covered securities or any interest therein, (5) with respect to covered shares that are shares of Class B common stock,

 

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any other action that would constitute a “Transfer” as such term is defined in the Company’s amended and restated charter, or (6) contract or commit (whether or not in writing) to take any of the actions referred to in the foregoing clauses.

Waiver of Appraisal Rights and Certain Other Actions; Termination

Under the Voting Agreement, the specified stockholders irrevocably waived and agreed not to exercise any and all appraisal rights under Section 262 of the DGCL and agreed not to commence or participate in any class action or legal action against Parent, Proton Parent, the Company or any of their respective subsidiaries or successors challenging the validity of, or seeking to enjoin or delay the operation of the Voting Agreement or the Merger Agreement or alleging a breach of any duty of the Poshmark Board, Proton Parent or Parent in connection with the Voting Agreement or the Merger Agreement (or the transactions contemplated thereby).

The Voting Agreement will terminate as of the earlier of (1) the earliest to occur of (x) the Effective Time and (y) the termination of the Merger Agreement in accordance with the termination provisions of the Merger Agreement, and (2) the election of such specified stockholder to terminate the Voting Agreement following any amendment to the Merger Agreement that reduces or changes the form of consideration payable pursuant to the Merger Agreement.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below sets forth certain information regarding the beneficial ownership of Poshmark common stock as of October 18, 2022 by (1) each person or entity known to us who beneficially owns more than five percent of any class of Poshmark’s voting securities, (2) our named executive officers and directors, and (3) all of our executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the SEC. For purposes of the table below, we deem shares of Poshmark common stock issuable upon settlement of restricted stock units held by the respective person or group within 60 days of October 18, 2022 and pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of October 18, 2022 to be outstanding and to be beneficially owned by the person holding restricted stock units or options for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person.

Applicable percentage of ownership is based upon 54,625,540 shares of Class A common stock and 24,592,080 shares of Class B common stock outstanding as of October 18, 2022.

Unless otherwise noted below, the address of each of the directors and executive officers is c/o Poshmark, Inc., 203 Redwood Shores Parkway, 8^th Floor, Redwood City, California 94065.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise indicated in the footnotes below, to our knowledge, all persons listed in the table above have sole voting and investment power with respect to all shares that they beneficially owned, except to the extent authority is shared by spouses under applicable law.

 

		Shares Beneficially Owned																% Total Voting Power
		Class A								Class B
		Shares				%				Shares				%
Name of 5% Stockholders:
Entities affiliated with Mayfield(1)			—				—				17,253,647				70.2	%			57.4	%
Entities affiliated with GGV Capital(2)			3,334,091				6.1	%			—				—				1.1	%
Entities affiliated with Menlo Ventures(3)			5,172,016				9.8	%			—				—				1.7	%
Anderson Investments Pte. Ltd.(4)			5,971,646				11.3	%			—				—				2.0	%
Dorsey Asset Management, LLC(5)			3,306,561				6.2	%			—				—				1.1	%
The Vanguard Group(6)			3,065,459				5.8	%			—				—				1.0	%
Manish Chandra(7)			7,298				*				6,495,137				26.4	%			21.6	%
Named Executive Officers and Directors:
Manish Chandra(7)			7,298				*				6,495,137				26.4	%			21.6	%
Rodrigo Brumana(8)			20,027				*				—				—				—
John McDonald(9)			68,377				*				519,391				2.1	%			1.8	%
Ebony Beckwith(10)			4,981				*				—				—				*
Navin Chaddha(11)			6,555				*				17,253,647				70.2	%			57.4	%
Jeff Epstein(12)			366,067				*				—				—				*
Jenny Ming(13)			65,630				*				—				—				*
Hans Tung(14)			3,338,563				6.1	%			—				—				1.1	%
Serena J. Williams(15)			175,305				*				—				—				*
All directors and executive officers as a group (9 persons)(16)			4,052,803				7.4	%			24,268,175				98.7	%			82.1	%

 

*	Represents less than 1% of the outstanding common stock.

(1)	Consists of (i) 15,748,793 shares of Class B common stock held of record by Mayfield XIII, a Cayman Islands Exempted Limited Partnership, or MF XIII, and (ii) 1,504,854 shares of Class B common stock held

 

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of record by Mayfield Select, a Cayman Islands Exempted Limited Partnership, or MF Select. Mayfield XIII Management (UGP), Ltd., a Cayman Islands Exempted Company, or MF XIII UGP, is the general partner of Mayfield XIII Management (EGP), L.P., a Cayman Islands Exempted Limited Partnership, which is the general partner of MF XIII. Rajeev Batra, Navin Chaddha, and Vaneeta Varma are the directors of MF XIII UGP. As a result, each of the foregoing entities and individuals may be deemed to share beneficial ownership of the shares owned by MF XIII, but each of the individuals disclaims such beneficial ownership. Mayfield Select Management (UGP), Ltd., a Cayman Islands Exempted Company, or MF Select UGP, is the general partner of Mayfield Select Management (EGP), L.P., a Cayman Islands Exempted Limited Partnership, which is the general partner of MF Select. Rajeev Batra, Navin Chaddha, and Urshit Parikh are the directors of MF Select UGP. As a result, each of the foregoing entities and individuals may be deemed to share beneficial ownership of the shares owned by MF Select, but each of the individuals disclaims such beneficial ownership. The address for each of these entities is c/o Mayfield, 2484 Sand Hill Road, Menlo Park, CA 94025.

(2)

Consists of (i) 3,214,052 shares of Class A common stock held by GGV Capital V L.P., (ii) 117,956 shares of Class A common stock held by GGV Capital V Entrepreneurs Fund L.P. and (iii) 2,083 shares held by GGV Capital LLC. GGV Capital V L.L.C. is the general partner of GGV Capital V L.P. and GGV Capital V Entrepreneurs Fund L.P. Glenn Solomon, Jixun Foo, Jenny Lee, Jeff Richards, and Hans Tung are the managing directors of GGV Capital V L.L.C., and share voting and investment control over these shares. The address for each of these entities is 3000 Sand Hill Road, Building 4, Suite 230, Menlo Park, CA 94025.

(3)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022, reporting beneficial ownership as of December 31, 2021. Consists of (i) 4,826,294 shares of Class A common stock held directly by Menlo Ventures XI, L.P., (ii) 186,245 shares of Class A common stock held of record by MMEF XI, L.P., (iii) 156,925 shares of Class A common stock held of record by Menlo Special Opportunities Fund, L.P. and (iv) 2,552 shares of Class A common stock held of record by MMSOP, L.P. MV Management XI, L.L.C. is the general partner of each of Menlo Ventures XI, L.P. and MMEF XI, L.P. and MSOP GP, L.L.C. is the general partner of each of Menlo Special Opportunities Fund, L.P. and MMSOP, L.P. The managing members of MV Management XI, L.L.C., H. DuBose Montgomery, John W. Javre, Douglas C. Carlisle, Mark A. Siegel and Venky V. Ganesan, may be deemed to have shared voting and investment power over the shares held by Menlo Ventures XI, L.P. and MMEF XI, L.P., but each of these individuals disclaims beneficial ownership of such shares, except to the extent of his proportionate pecuniary interest therein. The managing members of MSOP GP, L.L.C., Mark A. Siegel, Matthew J. Murphy, Shawn T. Carolan, and Venky V. Ganesan, may be deemed to have shared voting and investment power over the shares held by Menlo Special Opportunities Fund, L.P. and MMSOP, L.P., but each of these individuals disclaims beneficial ownership of such shares, except to the extent of his proportionate pecuniary interest therein. The address for each of these entities is 32884 Sand Hill Road, Suite 100, Menlo Park, CA 94025.

(4)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022, reporting beneficial ownership as of December 31, 2021. Consists of 5,971,646 shares of Class A common stock held of record by Anderson Investments Pte. Ltd, or Anderson. Anderson is a direct wholly-owned subsidiary of Thomson Capital Pte. Ltd., or Thomson, which in turn is a direct wholly-owned subsidiary of Tembusu Capital Pte. Ltd., or Tembusu, which in turn is a direct wholly-owned subsidiary of Temasek Holdings (Private) Limited, or Temasek. In such capacities, each of Thomson, Tembusu, and Temasek may be deemed to have voting and dispositive power over the shares held by Anderson. The address for Anderson, Thomson, Tembusu, and Temasek is 60B Orchard Road #06-18 Tower 2, The Atrium@Orchard, Singapore 238891.

(5)

Based on the Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022, reporting beneficial ownership as of December 31, 2021. The shares are owned by various investment advisory clients of Dorsey Asset Management, LLC, which is deemed to be a beneficial owner of those shares pursuant to Rule 13d-3 under the Exchange Act, due to its discretionary power to make investment decisions over such shares and/or its ability to vote such shares. The address for Dorsey Asset Management, LLC is 150 North Wacker Dr., Suite 960, Chicago, IL 60606.

 

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