Snap One (SNPO) PREM14CPreliminary information related to merger

A Non-United States Holder will generally not be subject to United States federal income tax on any gain resulting from the exchange of Company Common Stock pursuant to the Merger, unless such stockholder has certain connections to the United States, but the Merger could be a taxable transaction to such holder under non-United States tax laws applicable to such holder.

Shares of Resideo’s common stock are listed with, and trade on, the NYSE under the symbol “REZI”.

Following the execution of the confidentiality agreements, beginning in June 2023 and into August 2023, members of the Company’s senior management held management meetings with those parties that had expressed an interest in exploring a potential strategic transaction involving the Company, each of which conducted due diligence that included access to written materials, due diligence sessions and other customary due diligence activities. In advance of such meetings, the Company’s management team, at the direction of the Board, also refreshed the Company’s value-creation plan as part of its annual planning process and shared such value-creation plan with potential counterparties as part of the due diligence process.

On August 24, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which representatives of Moelis and J.P. Morgan presented an update on discussions with those parties that had expressed an interest in exploring a potential strategic transaction. While certain parties, including CD&R, continued to express varying degrees of interest in a potential transaction involving the Company, none of the potential buyers had submitted a proposal for a potential transaction involving the Company. Representatives of Moelis and J.P. Morgan discussed the impact of current market conditions, including the limited availability of debt financing on terms that would be attractive to a potential acquiror and the volatility in the equity markets, and the negative impact those conditions were having on mergers and acquisitions opportunities. Representatives of Moelis and J.P. Morgan also discussed alternative strategies available to the Company, including a potential issuance of additional equity by the Company to augment market capacity and increase the Company’s public float, as well as the challenges presented by such options. The Board determined that, with respect to any of the parties that continued to express interest in the Company or a potential transaction, such as CD&R, management and representatives of Moelis and J.P. Morgan should continue to engage with them and update the Board on potential developments.

Throughout September and October 2023, CD&R continued to actively engage in diligence with respect to a potential strategic transaction involving the Company. In connection with this due diligence review, representatives of CD&R periodically spoke to members of the Company’s management relating to the status of their due diligence review of the Company and the progress of other transaction workstreams.

On October 26, 2023, representatives of Moelis held a call with representatives of CD&R to discuss CD&R’s interest in the Company and potential next steps.

On October 26, 2023, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to review the Company’s performance and the status of discussions with CD&R as well as other matters pertaining to the strategic review process. While the Board remained open to pursuing discussions with others, no proposals or indications of interest were made by others during this time frame.

On October 31, 2023, the Board met again, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance. Senior management and the Board, along with its advisors, discussed, among other things, the current state of the Company’s business and financial performance, the status of CD&R’s due diligence, and considerations with regard to a possible proposal by CD&R.

On November 1, 2023, the Board held a meeting, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, during which representatives of Moelis and J.P. Morgan discussed with the Board their preliminary valuation analyses and a representative of Simpson Thacher reviewed with the Board its fiduciary duties in connection with any review of strategic alternatives, including any proposals that might be received by the Company.

At the direction of the Board, beginning on November 17, 2023, Moelis and J.P. Morgan, on behalf of the Company, conducted outreach to strategic parties and financial sponsors who had previously engaged in preliminary conversations and new parties who were perceived by senior management of the Company and the Company’s advisors to be potentially interested counterparties. On behalf of the Company, representatives of Moelis and J.P. Morgan reached out to a group of 9 financial sponsors (excluding CD&R) and 7 strategic buyers (excluding Resideo) to gauge their interest in exploring a potential strategic transaction involving the Company, including certain strategic buyers with whom the Company had not previously engaged.

The Transaction Working Group met on several occasions during the course of December 2023, together with the Company’s advisers and members of senior management, during which meetings representatives of Moelis and J.P. Morgan provided updates on their outreach and counterparty engagement.

During the course of December 2023 and January 2024, the Independent Director Committee also met on several occasions with Skadden to discuss a potential strategic transaction and the impact of such transaction on the Tax Receivable Agreement, including the potential quantum of payments due under the Tax Receivable Agreement in certain circumstances. In addition, the Independent Director Committee also met on December 21, 2023, with representatives of Moelis, J.P. Morgan and Skadden in attendance, to review Moelis’ and J.P. Morgan’s updated preliminary financial analysis.

Throughout this time, CD&R remained engaged regarding a potential strategic transaction involving the Company and continued to conduct diligence on the Company, including through meetings with senior

On February 27, 2024, representatives of Moelis held a call with representatives of Evercore and communicated the Company’s response to the proposal.

On February 28, 2024, representatives of Evercore held a call with representatives of Moelis and communicated Resideo’s updated proposal of $10.50 per share to the Company’s common shareholders, with $13.0 million payable to the holders of the Tax Receivable Agreement as full satisfaction of H&F’s contractual entitlement thereunder. Representatives of Evercore indicated that Resideo was reaching its maximum valuation and was unlikely to increase its price proposal.

On February 29, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss Resideo’s latest proposal. The Board discussed Resideo’s revised proposal, including potential responses, taking into account, among other things, Evercore’s statement that Resideo was unlikely to increase its price proposal as well as considerations regarding the current market environment and feedback from the process that had been conducted to solicit interest in a potential transaction involving the Company. Following discussion, the Board instructed Moelis to again communicate that the Company would be willing to proceed with a potential transaction at a price of $11.00 per share to the Company’s common shareholders.

Representatives of Moelis communicated the Board’s position to Evercore later that day.

On March 1, 2024, representatives of Evercore held a call with representatives of Moelis and communicated Resideo’s updated proposal of $10.60 per share to the Company’s common shareholders, with $13.0 million payable to the holders pursuant to and in accordance with the terms of the Tax Receivable

On March 2, 2024, the Board met, with members of management and representatives of each of Moelis, J.P. Morgan, and Simpson Thacher in attendance, to discuss and consider Resideo’s latest proposal. The Board and its advisors discussed the latest Resideo proposal and potential next steps, including the request for exclusivity. Representatives of Moelis and J.P. Morgan summarized the most recent proposal for the Board and reminded the Board of certain previously discussed valuations metrics, including premiums to the current and recent share prices of the Company that the proposal presented, as well as other financial and market information regarding the Company. A discussion ensued among the members of the Board and its advisors, focusing on, among other things, the value of Resideo’s latest proposal relative to the potential values achievable by the Company on a stand-alone basis, including associated risks and challenges to performance. The Board also discussed the fact that the Company had engaged in discussions with other potential bidders. Representatives of H&F confirmed their willingness to waive H&F’s entitlement to any payment under the Tax Receivable Agreement in connection with the proposed transaction in favor of having such value reflected in the purchase price and allocated to all of the common shareholders (assuming satisfactory resolution of all other open issues related to the transaction). Following discussion, the Board unanimously concluded that $10.75 per share (with no payment being made under the Tax Receivable Agreement) was a price at which it would be willing to transact, subject to satisfactory resolution of open issues and definitive documentation. The Board and representatives of H&F also discussed Resideo’s insistence that the Company and H&F accept Resideo’s written consent requirement in connection with Resideo’s revised proposal. Representatives of Simpson Thacher reviewed with the Board considerations relating to Resideo’s written consent requirement, including prior transactions structured in such a manner, and the Board and representatives of H&F indicated a willingness to accept the written consent construct as part of an overall package aimed at delivering maximum value to all common shareholders.

On March 3, 2024, representatives of Moelis held a call with representatives of Evercore and communicated the Company’s updated proposal of $10.75 per share to the Company’s common shareholders, with a full waiver of all payments in connection with the proposed transaction pursuant to the terms of the Tax Receivable Agreement. Representatives of Moelis communicated that this proposal had been discussed by the Company’s Board and was the Company’s best and final offer and would have to be accepted in totality. Representatives of Moelis also communicated that the Board expected no more than a three-week exclusivity period during which Resideo was expected to move quickly to finalize its diligence.

Following negotiation between representatives of Simpson Thacher and Willkie Farr, on March 12, 2024, the Company and Resideo signed an exclusivity agreement committing the Company to negotiate exclusively with Resideo regarding a potential sale of the Company, with such exclusivity period to expire on April 8, 2024 (subject to automatic extension until April 15, 2024 if Resideo confirmed that it was continuing to negotiate in good faith with respect to a proposed acquisition transaction on terms no less favorable to the Company than those agreed upon prior to the date of the exclusivity agreement).

After careful consideration, the Board unanimously:

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

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

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

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

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

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

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

After taking into account all of the factors set forth above, as well as others, the Board determined that the potentially positive factors outweighed the potentially negative factors. The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but summarizes the material information and factors considered by the Board in its consideration of the Merger. The Board reached the decision to recommend and approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, in light of the factors described above and other factors the Board felt were appropriate. In view of the variety of factors and the quality and amount of information considered, the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and individual members of the Board may have given different weights to different factors. The Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, senior management of the Company, Moelis and

In arriving at its opinion, Moelis, among other things:

Unless the context indicates otherwise, Moelis calculated (a) each TEV for the Company based on estimated net debt as of March 31, 2024, and (b) per share amounts for Company Common Stock (i) based on diluted shares outstanding as of March 31, 2024, using the treasury stock method, and (ii) excluding the estimated change of control payment under the Company’s Tax Receivable Agreement. All such information for the Company was provided by management of the Company. Unless the context indicates otherwise, Moelis performed the analyses below using the closing prices and historical, financial and operating data for the selected public companies (and the Company in the case of Wall Street research (as defined below)) based on publicly available information for each company as of April 10, 2024.

Set forth below is a summary of the material financial analyses performed by Moelis in connection with its opinion.

This data is summarized in the following table:

Based on the foregoing and using its professional judgment, Moelis selected multiples ranges of 9.0x to 12.0x TEV/Adj. EBITDA for CY2024E and 8.0x to 11.0x TEV/Adj. EBITDA for CY2025E. Moelis then applied such multiples ranges to the corresponding financial data for the Company to derive ranges of implied TEVs for the Company. Moelis then derived implied per share reference ranges from the resulting implied TEV reference ranges, using the net debt and other obligations and diluted share information described above. This analysis indicated the following implied per share reference ranges for Company Common Stock, as compared to the Merger Consideration of $10.75 in cash:

Based on the foregoing and using its professional judgment, Moelis selected a multiples range of 9.0x – 12.0x Adj. EBITDA, which selected range generally reflected the mean and median of the Selected Precedent Transactions multiples. Moelis then applied such multiples range to the Adj. EBITDA for the Company for the LTM period ended December 31, 2023, to derive TEV ranges. Moelis then derived an implied per share reference range from the resulting implied TEV reference range, using the net debt and other obligations and diluted share information described above. This analysis indicated the following implied per share reference range for Company Common Stock, as compared to the Merger Consideration of $10.75 in cash:

Moelis performed a discounted cash flow analysis of the Company using the Base Case Projections to calculate the present value of the estimated future Unlevered Free Cash Flow projected to be generated by the Company, adjusted to reflect the impact of the Company’s tax attributes, including its R&D tax credits

This summary of the analyses is not a complete description of the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

No company or transaction used in the analyses described above is identical to the Company or the Merger. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither the Company nor Moelis or any other person assumes responsibility if future results are materially different from those forecasts.

The Merger Consideration of $10.75 in cash was determined through arm’s length negotiations between the parties to the Merger Agreement and was approved by the Board. Moelis did not recommend any specific consideration to the Company or the Board, or that any specific amount or type of consideration constituted the only appropriate consideration in connection with the Merger.

Moelis acted as financial advisor to the Company in connection with the Merger and will receive a fee currently estimated to be approximately $13.5 million, in the aggregate, $2.5 million of which became payable in connection with the delivery of its opinion, regardless of the conclusion reached therein, and the remainder of which is contingent upon the completion of the Merger. Furthermore, the Company has agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement. The Company selected Moelis as a financial advisor in connection with the Merger because Moelis has substantial experience in similar transactions and familiarity with the Company. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings and valuations for corporate and other purposes.

Moelis’ affiliates, employees, officers and partners may, at any time, own securities (long or short) of the Company and Resideo. In the three years prior to the date of its opinion, Moelis did not provide investment banking and other services to the Company or Resideo unrelated to the Merger. In the future, Moelis may provide such services to Resideo and would expect to receive compensation for such services. In the three years prior to the date of its opinion, Moelis acted as financial advisor to (i) an affiliate of H&F in a sellside transaction which was consummated in 2021, for which Moelis received a fee of approximately $10 million and reimbursement for certain expenses arising out of its engagement and (ii) an affiliate of CD&R in a buyside transaction which was consummated in 2023. Moelis is currently acting for an affiliate of CD&R in a pending buyside transaction unrelated to the Merger. In the event such pending buyside transaction is completed, Moelis will have received aggregate fees from CD&R affiliates in such two year period of $7 million, as well as reimbursement for certain expenses arising out of such engagements.

In connection with preparing its opinion, J.P. Morgan, among other things:

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger, and J.P. Morgan also expressed no opinion as to the fairness of any consideration paid in connection with the Merger to the holders of any other class of securities, creditors or other constituencies of the Company or the underlying decision by the Company to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors or employees of any party to the proposed Merger, or any class of such persons relative to the Merger Consideration to be paid to the holders of Company Common Stock (other than the Principal Stockholders, the holders of Excluded Shares, and the holders of Appraisal Shares) in the proposed Merger or with respect to the fairness of any such compensation.

The terms of the Merger Agreement, including the Merger Consideration, were determined through arm’s length negotiations between the Company and Resideo, and the decision to enter into the Merger Agreement was solely that of the Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Board in its evaluation of the proposed Merger and should not be viewed as determinative of the views of the Board or the management of the Company with respect to the proposed Merger or the Merger Consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its opinion to the Board on April 14, 2024 and contained in the presentation delivered to the Board in connection with the rendering of such opinion and this summary does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not

None of the selected transactions reviewed were identical to the Merger. However, the selected transactions were chosen because certain aspects of the transactions, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar to the Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the transaction differently than they would affect the Merger.

Based on the results of the above analysis and other factors J.P. Morgan considered appropriate, J.P. Morgan selected a transaction multiple reference range for FV/LTM Adjusted EBITDA of 8.5x to 13.0x and applied it to the Company’s Adjusted EBITDA for the twelve months ended December 31, 2023 and for the twelve months ended March 31, 2024, each provided by the Company’s management, which resulted in ranges of implied equity values per share of Company Common Stock (rounded to the nearest $0.05) of $6.35 to $12.80 and $6.70 to $13.30, respectively. The ranges of implied per share equity values for Company Common Stock were compared to the amount of the Merger Consideration of $10.75 per share of Company Common Stock.

J.P. Morgan conducted a discounted cash flow analysis of the Company using the unlevered free cash flows that the Company was forecasted to generate from calendar year 2024 through 2028 based on the Base Case Projections. J.P. Morgan calculated ranges of terminal values for the Company at the end of such period by applying terminal growth rates estimated by the management of the Company ranging from 2.0% to 3.0% to the total revenue of the Company during the final year of such period. The unlevered free cash flows and the range of terminal values were then discounted to present values as of March 31, 2024 using a range of discount rates from 9.5% to 10.5%, which was chosen by J.P. Morgan based on an analysis of the weighted average cost of capital of the Company. The ranges of present values were then added together to derive ranges of firm values for the Company based on the Base Case Projections, which were then adjusted by subtracting the Company’s estimated net debt as of March 31, 2024, as provided by the management of the Company, and dividing the result by the fully diluted number of shares of Company

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise the Company with respect to the Merger and deliver an opinion to the Board with respect to the Merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with the Company and the industries in which it operates.

For services rendered in connection with the Merger and the delivery of its opinion, the Company has agreed to pay J.P. Morgan a fee of approximately $9.6 million, of which $2.5 million became payable upon delivery of its opinion and the remainder of which is contingent and payable upon the closing of the Merger. In addition, the Company has agreed to reimburse J.P. Morgan for reasonable expenses incurred in connection with its services, including but not limited to the fees and expenses of outside counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, neither J.P. Morgan nor its affiliates have had any other material financial advisory or other material commercial or investment banking relationships with the Company. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with the Company’s approximately 72% shareholder, affiliates of H&F, for which J.P. Morgan and such affiliates have received customary compensation. Such

The inclusion of this information should not be regarded as an indication that the Board, the Company, Moelis, J.P. Morgan, Resideo, Resideo’s representatives and affiliates or any other recipient of this information considered, or now considers, the Financial Forecasts to be predictive of actual future results.

Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the Financial Forecasts to reflect circumstances existing after the date of the Merger Agreement or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the Financial Forecasts are shown to be in error.

“Unlevered Free Cash Flow” was calculated as Adjusted EBIT, less cash taxes (assuming the Company’s forecast cash tax rate of approximately 25.0%), plus depreciation and amortization, less capital expenditures, less increases in net working capital, plus decreases in net working capital, less increases in other assets and liabilities, plus decreases in other assets and liabilities, less increases in deferred revenue and plus decreases in deferred revenue, in each case, as provided in the Company’s financial projections, and such calculation was authorized by the Board for use by Moelis and J.P. Morgan for purposes of their respective financial analyses and opinions. For purposes of J.P. Morgan’s analysis, J.P. Morgan excluded changes in non-cash assets and liabilities, resulting in unlevered free cash flow calculations of $58 million, $82 million, $98 million, $108 million and $118 million for 2024E, 2025E, 2026E, 2027E and 2028E, respectively.

The following table presents a summary of the material prospective financial information of the Company contained in the Company’s value creation plan forecast for 2024E, 2025E, 2026E, 2027E and 2028E, respectively. The Financial Forecasts described below are included herein because they were made available to Resideo in connection with its due diligence review.

The Merger is not subject to a financing condition. Resideo intends to finance the Merger with a combination of cash, preferred equity and debt financing.

Concurrently with the execution of the Merger Agreement, the TRA Parties delivered to the Company, the TRA Waiver, pursuant to which, among other things, the TRA Parties, effective upon the Effective Time, (a) waived their rights to any and all payments by, and all obligations and liabilities of, the Company and its subsidiaries under the Tax Receivable Agreement and (b) agreed that the Tax Receivable Agreement will be terminated in its entirety and be of no further force or effect, and thereafter each TRA Party and the Company and its subsidiaries will not have any further obligations or rights under the Tax Receivable Agreement. Such obligations will terminate upon the valid termination of the Merger Agreement in accordance with the terms set forth therein.

Additionally, from and after April 14, 2024, until the Effective Time, the TRA Parties waived their rights to any and all Accrued Payments, and the Company will not pay the TRA Parties for any Accrued Payments unless the TRA Waiver is terminated in accordance with the terms set forth therein. In the event the Merger Agreement is validly terminated for any reason, the Company shall pay the Accrued Payments to the TRA Parties in cash, and the TRA Parties shall be entitled to any and all payments by the Company under the Tax Receivable Agreement from and after the date of such termination in accordance with the terms of the Tax Receivable Agreement.

In accordance with the terms of the Merger Agreement, the “double trigger” equity acceleration benefits applicable to Company equity awards held by the executive officers prior to the Merger will continue to apply to the Converted RSUs and Converted PSUs held by the executive officers following consummation of the Merger. Such “double trigger” equity acceleration benefits apply in the event an executive is terminated without “cause” or resigns for “good reason” within a certain period prior to or following a “change in control” ​(as defined in the Company’s 2021 Equity Incentive Plan, and which includes

As of the date of this information statement, none of our executive officers has entered into any agreement, arrangement or understanding with Resideo regarding employment with, or compensation going forward from, Resideo. Prior to the closing of the Merger, however, our executive officers may discuss or enter into agreements, arrangements or understandings with Resideo regarding employment with, or compensation going forward from, Resideo.

As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

For purposes of this discussion, “single-trigger” refers to benefits that arise solely as a result of the closing and “double-trigger” refers to benefits that arise as a result of the closing accompanied by a qualifying termination immediately following the closing.

If the Merger is completed, the Company Common Stock will be delisted from the NASDAQ and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of the Company Common Stock.

As of the filing of this information statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.

The following is a summary of the material United States federal income tax consequences of the Merger generally applicable to holders of Company Common Stock who exchange their shares of Company Common Stock for cash pursuant to the Merger. The summary is based on the Code, applicable United States Treasury Regulations issued thereunder, judicial authority and administrative rulings and pronouncements, all of which are subject to change, possibly with retroactive effect. The discussion applies only to holders whose shares of Company Common Stock are held as capital assets (generally, property held for investment), and does not address the tax consequences that may be relevant to holders of Company Common Stock that are subject to special tax rules, such as insurance companies, United States expatriates, controlled foreign corporations, passive foreign investment companies, holders subject to the alternative minimum tax, tax-exempt organizations, broker-dealers, financial institutions, cooperatives, traders in securities that elect to mark to market, United States Holders whose functional currency is not the United States dollar, holders who hold Company Common Stock through pass-through entities for United States federal income tax purposes or as part of a hedge, straddle or conversion transaction, holders deemed to sell Company Common Stock under the constructive sale provisions of the Code, holders who exercise appraisal rights, or holders who acquired Company Common Stock pursuant to the exercise of employee stock options or otherwise as compensation. This summary does not address any aspect of state, local or foreign taxation, and does not address any United States federal taxation other than income taxation.

If a partnership or other any entity or arrangement treated as a partnership for United States federal income tax purposes is a holder of Company Common Stock, the United States federal income tax treatment of a partner in that partnership will generally depend upon the status of the partner and the activities of the partnership. Partners should consult their own tax advisors as to the particular United States federal income tax consequences of the Merger to them.

Each party will, or will cause the applicable affiliate thereof to, within five (5) business days of entering into the Merger Agreement (unless a different period is otherwise agreed by the parties), make any appropriate filing necessary pursuant to the HSR Act. Each party will, or will cause the applicable affiliate thereof to, within twenty (20) business days (unless a different period is otherwise agreed by the parties in writing), make all necessary filings pursuant to any necessary filings under any other applicable antitrust law or foreign investment law. In relation to any such filing, each party will supply as promptly as reasonably practicable any additional information and documentary material that may be requested by any such reviewing governmental entity with respect to the transactions contemplated by the Merger Agreement.

Each of the Company and Resideo will, and will cause their respective affiliates to, furnish to the other party such necessary information and reasonable assistance as the other party may request in connection with its preparation of any filing or submission under the HSR Act or any other applicable antitrust law or foreign investment law, and will permit the other party to review and discuss in advance, in good faith in connection with any filings, submissions, communications, inquiries or requests with, any governmental entity relating to the Merger Agreement, the Merger, or any of the other transactions contemplated by the Merger Agreement. Resideo acknowledges and agrees that its obligation to use reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary or advisable under applicable law to consummate and make effective the transactions contemplated by the Merger Agreement, includes but is not limited to, as promptly as possible but subject to the terms of the Merger Agreement: proposing, negotiating, effecting, agreeing to or committing to, or executing any settlements, undertakings (affirmative or otherwise), consent decrees, stipulations or other agreements with any governmental entity obligating Resideo or any of its subsidiaries to: (i) sell, divest, license or otherwise convey or hold separate any asset or business of the Company or any subsidiary thereof; (ii) create any relationship, contractual right or

Per the terms of the Merger Agreement, the Company was required to provide Resideo with a copy of the Written Consent promptly upon receipt of the Written Consent. The Written Consent was delivered to the Company on April 14, 2024 shortly after the execution of the Merger Agreement, and the Company provided a copy of the Written Consent to Resideo promptly after its receipt of the Written Consent.

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

Further, the Merger Agreement provides that, with respect to any New Plan that is a welfare plan, Resideo will, and will use commercially reasonable efforts to cause the surviving corporation and its subsidiaries to, (i) waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to Continuing Employees to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans of the Company and its subsidiaries prior to the Effective Time and (ii) provide each Continuing Employee with credit for any co-payments and deductibles for claims incurred during the plan year in which the Effective Time occurs in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such New Plan.

Resideo shall, promptly upon written request by the Company, reimburse the Company for all reasonable and documented out-of-pocket fees and expenses (including professional fees and expenses of accountants, legal counsel and other advisors) to the extent such costs are incurred by the Company or its subsidiaries in connection with such cooperation provided by the Company, its subsidiaries, their respective officers, employees and other representatives in connection with compliance with its cooperation obligations under the Merger Agreement with respect to the Debt Financing. Resideo shall indemnify and hold harmless the Company and its subsidiaries and their respective officers, employees, agents and representatives from and against any and all liabilities or losses suffered or incurred by them in connection with the arrangement of the Debt Financing, any information utilized in connection therewith and any misuse of the logos or marks of the Company or its subsidiaries, except to the extent that such liabilities or losses arose out of or resulted from the willful misconduct of the Company, any of its subsidiaries or any of their respective representatives.

Obtaining the Debt Financing is not a condition to the closing, and none of Resideo’s or Merger Sub’s respective obligations under the Merger Agreement are conditioned in any manner upon Resideo or Merger Sub obtaining financing in respect of the transactions contemplated by the Merger Agreement.

The Merger Agreement contains other covenants and agreements, in which each of Resideo and the Company covenants or agrees to:

In addition, the Company will:

The Merger Agreement also may be terminated by either party if the other party breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of a condition precedent to closing and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 45 days after the giving of written notice to the other party of such breach and (y) the Outside Date.

As of the date of this information statement, the Written Consent has been received.

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

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

The failure of any party to the Merger Agreement to asset any of its rights under the Merger Agreement or otherwise will not constitute a waiver of such rights.

The parties to the Merger Agreement are entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the Merger Agreement and to enforce specifically the performance of the terms and provisions of the Merger Agreement and to enforce specifically the performance of the terms and provisions of the Merger Agreement (including the consummation of the transactions contemplated by the Merger Agreement and the funding by Resideo of the full amount of the aggregate merger consideration) in any court referred to in the Merger Agreement, without the necessity of proving actual damages or the inadequacy of monetary damages as a remedy (and each party to the Merger Agreement has waived any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties to the Merger Agreement has agreed not to assert that a remedy of specific enforcement is unenforceable, invalid or contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach. Each party to the Merger Agreement agrees to irrevocably submit to the exclusive jurisdiction of the Chosen Courts for the purpose of any proceeding arising out of or relating to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement and has agreed that all claims with respect to such proceeding may be heard and determined exclusively in such court. The parties to the Merger Agreement agree that a final trial court judgment in any such proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

If shares of Company Common Stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, the demand for appraisal must be executed by the fiduciary in that capacity. If the shares of Company Common Stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, brokerage firm, trust or other nominee, who holds shares of Company Common Stock as a nominee for others, may exercise his or her right of appraisal with respect to the shares of Company Common Stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of Company Common Stock as to which appraisal is sought. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares of Company Common Stock which are held in the name of such record owner. If you hold shares of Company Common Stock through a broker who, in turn, holds the shares through a central securities depository nominee, such as Cede & Co., a demand for appraisal of such shares of Company Common Stock must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder. Any beneficial holder desiring appraisal who holds shares through a brokerage firm, bank or other financial institution is responsible for ensuring that the demand for appraisal is made by the record holder.

At any time within 60 days after the Effective Time, any stockholder who has demanded an appraisal, but has not commenced an appraisal proceeding or joined a proceeding as a named party, may withdraw the demand and accept the consideration specified by the Merger Agreement for that stockholder’s shares of Company Common Stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the surviving corporation. Unless the demand is properly withdrawn by the stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party within 60 days after the Effective Time, no appraisal proceeding in the Delaware Court of

Within 120 days after the Effective Time, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of Company Common Stock held by all stockholders entitled to appraisal. A person who is the beneficial owner of shares of Company Common Stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition for appraisal. The surviving corporation has no obligation to file such a petition, has no present intention to file a petition and holders of shares of Company Common Stock should not assume that the surviving corporation will file a petition. Accordingly, it is the obligation of the holders of shares of Company Common Stock to initiate all necessary action to demand and perfect their appraisal rights in respect of shares of Company Common Stock, and to file any petitions in the Delaware Court of Chancery relating to an appraisal, within the time prescribed in Section 262. If no petition for appraisal is timely filed, the right to appraisal will cease.

In addition, within 120 days after the Effective Time, any stockholder who has properly complied with the requirements of Section 262 of the DGCL will be entitled to receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares of Company Common Stock not voted in favor of the Merger Agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be given within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of Company Common Stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, request from the surviving corporation such statement.

Upon the timely filing of a petition for appraisal in accordance with Section 262, a copy of the petition must be served upon the surviving corporation. Within 20 days after receiving service of a copy of the petition, the surviving corporation must file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares of Company Common Stock and with whom agreements as to the value of their shares of Company Common Stock have not been reached by the surviving corporation. The Delaware Register in Chancery, if ordered by the Delaware Court of Chancery, will give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving corporation and to the stockholders shown on the verified list. Such notice will also be given by one or more publications at least one day before the date of the hearing in a newspaper of general circulation in the City of Wilmington, Delaware, or such publication as the Delaware Court of Chancery deems advisable. The forms of the notices by mail and by publication shall be approved by the Delaware Court of Chancery, and the costs thereof shall be borne by the surviving corporation.

After notice to stockholders who have demanded appraisal, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing upon the petition and to determine those stockholders who have complied with Section 262 and who have become entitled to the appraisal rights provided by Section 262. In addition, if immediately before the Merger, the Company Common Stock is listed on a national securities exchange (which we expect to be the case), the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of Company Common Stock entitled to appraisal exceeds 1% of the outstanding shares of Company Common Stock, or (2) the value of the consideration provided in the Merger for such total number of shares of Company Common Stock exceeds $1 million.