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Agreement And Plan Of Merger

Agreement and Plan of Merger

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 This Agreement and Plan of Merger involves

MATTRESS FIRM HOLDING CORP. | Linklaters LLP | Mattress Firm Holding Corp | Steinhoff International Holdings NV | Stripes Acquisition Corp | Stripes US Holding, Inc

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware     Date: 8/8/2016
Industry: Retail (Specialty)     Law Firm: Ropes Gray     Sector: Services

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Exhibit 2.1

 

Dated August 6, 2016

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

STEINHOFF INTERNATIONAL HOLDINGS N.V.,

 

STRIPES US HOLDING, INC.,

 

STRIPES ACQUISITION CORP.

 

and

 

MATTRESS FIRM HOLDING CORP.

 

 

Linklaters LLP

1345 Avenue of the Americas

New York, NY 10105

 

Telephone (+1) 212 903 9000

Facsimile (+1) 212 903 9100

 

Ref L-241480

 



 

Table of Contents

 

Contents

 

Page

 

 

 

1

The Transactions

5

 

 

 

1.1

The Offer

5

1.2

Company Actions

8

1.3

The Merger

9

1.4

Closing

10

1.5

Effective Time

10

1.6

Merger Without Meeting of Stockholders

10

1.7

Effects of the Merger

10

1.8

Certificate of Incorporation and Bylaws of the Surviving Corporation

10

1.9

Directors and Officers of the Surviving Corporation

11

 

 

 

2

Effect of the Merger on Capital Stock; Exchange of Certificates; Equity-Based Awards

11

 

 

 

2.1

Effect on Capital Stock

11

2.2

Exchange of Certificates and Book Entry Shares

12

2.3

Equity-Based Awards

15

2.4

Payments with Respect to Equity-Based Awards

15

2.5

Adjustments

15

2.6

Appraisal Rights

16

 

 

 

3

Representations and Warranties of the Company

16

 

 

 

3.1

Organization; Standing

17

3.2

Capitalization

17

3.3

Authority; Noncontravention

19

3.4

Governmental Approvals

21

3.5

Company SEC Documents; Undisclosed Liabilities

21

3.6

Absence of Certain Changes

23

3.7

Legal Proceedings

23

3.8

Compliance with Laws; Permits

23

3.9

Tax Matters

24

3.10

Employee Benefits

27

3.11

Labor Matters

28

3.12

Environmental Matters

29

3.13

Intellectual Property

29

3.14

No Rights Agreement; Anti-Takeover Provisions

30

3.15

Property

30

3.16

Contracts

31

3.17

Insurance

32

3.18

Privacy and Data Protection

32

3.19

Opinion of Financial Advisor

33

3.20

Brokers and Other Advisors

33

3.21

Affiliate Transactions

33

3.22

No Other Representations or Warranties

34

 

i



 

4

Representations and Warranties of Parent, HoldCo and Merger Sub

34

 

 

 

4.1

Organization; Standing

34

4.2

Authority; Noncontravention

34

4.3

Governmental Approvals

35

4.4

Certain Arrangements

35

4.5

Brokers and Other Advisors

36

4.6

Legal Proceedings

36

4.7

Ownership of Company Common Stock

36

4.8

Financing

37

4.9

Capitalization of Merger Sub

37

4.10

Projections, Forecasts, Forward-Looking Statements and Business Plans

38

4.11

No Other Company Representations or Warranties

38

 

 

 

5

Additional Covenants and Agreements

39

 

 

 

5.1

Conduct of Business

39

5.2

No Solicitation; Change in Recommendation

43

5.3

Efforts

48

5.4

Public Announcements

50

5.5

Access to Information; Confidentiality

50

5.6

Indemnification and Insurance

51

5.7

Rule 16b-3

52

5.8

Employee Matters

52

5.9

Notification of Certain Matters; Stockholder Litigation

54

5.10

Stock Exchange De-listing

54

5.11

Rule 14d-10 Matters

55

5.12

Financing

55

5.13

FIRPTA Certificate

58

5.14

HoldCo Authorization

58

5.15

Offer Documents

59

5.16

Schedule 14D-9

59

 

 

 

6

Conditions to the Merger

60

 

 

 

6.1

Conditions to Each Party’s Obligation to Effect the Merger

60

 

 

 

7

Termination

60

 

 

 

7.1

Termination

60

7.2

Effect of Termination

62

7.3

Termination Fee

62

 

 

 

8

Miscellaneous

63

 

 

 

8.1

No Survival of Representations and Warranties

63

8.2

Amendment or Supplement

63

8.3

Extension of Time, Waiver, Etc.

64

8.4

Assignment

64

8.5

Counterparts

64

8.6

Entire Agreement; No Third Party Beneficiaries

64

 

ii



 

8.7

Governing Law; Jurisdiction

65

8.8

Remedies

65

8.9

WAIVER OF JURY TRIAL

66

8.10

Notices

67

8.11

Definitions

68

8.12

Fees and Expenses

77

8.13

Interpretation

77

8.14

Financing Sources

78

 

iii



 

This AGREEMENT AND PLAN OF MERGER , dated as of August 6, 2016 (this “ Agreement ”), is by and among Steinhoff International Holdings N.V., a company incorporated under the laws of the Netherlands ( Naamloze Vennootschap ) (“ Parent ”), Mattress Firm Holding Corp., a Delaware corporation (the “ Company ”), Stripes US Holding, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ HoldCo ”), and Stripes Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary of HoldCo (“ Merger Sub ”). Certain capitalized terms used in this Agreement are defined in Section 8.11.

 

WHEREAS , upon the terms and subject to the conditions set forth in this Agreement, Merger Sub has agreed to commence a tender offer to acquire any and all of the outstanding shares of the common stock, par value $0.01 per share, of the Company (“ Company Common Stock ”) for $64.00 per share in cash without interest (such consideration, or any other consideration per share paid in such offer in accordance with this Agreement, the “ Offer Price ”) (such offer, as may be extended and amended from time to time as permitted under, or required by, this Agreement, the “ Offer ”);

 

WHEREAS , following the consummation of the Offer, upon the terms and subject to the conditions set forth in this Agreement and in accordance with Section 251(h) of the General Corporation Law of the State of Delaware (the “ DGCL ”), Merger Sub will be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger, and pursuant to the Merger each share of Company Common Stock that is not validly tendered and irrevocably accepted for payment pursuant to the Offer (except as otherwise provided herein) will be converted into the right to receive the Offer Price;

 

WHEREAS , Parent, HoldCo, Merger Sub and the Company acknowledge and agree that the Merger shall be governed by and effected under Section 251(h) of the DGCL and, subject to the terms of this Agreement, effected as soon as practicable following the consummation (as defined in Section 251(h) of the DGCL) of the Offer;

 

WHEREAS , the board of directors of the Company (the “ Company Board ”) has (i) determined that the Transactions are fair to and in the best interests of the Company and its stockholders, (ii) duly authorized and approved the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions, (iii) declared this Agreement and the Transactions advisable and (iv) recommended that the Company’s stockholders tender their shares of Company Common Stock in the Offer;

 

WHEREAS , each of the relevant governing board of Parent and the board of directors of each of HoldCo and Merger Sub has duly authorized and approved the execution, delivery and performance by each of Parent, HoldCo and Merger Sub of this Agreement and the consummation by Parent, HoldCo and Merger Sub of the Transactions, and each of the relevant governing board of Parent and the board of directors of each of HoldCo and Merger Sub has declared this Agreement advisable;

 

WHEREAS , HoldCo, in its capacity as sole stockholder of Merger Sub, will approve and adopt this Agreement by written consent immediately following its execution;

 

WHEREAS , concurrently with the execution and delivery of this agreement, each of JWC Mattress Holdings, LLC, Winter Street Opportunities Fund, L.P., JWC Fund III Co-Invest, LLC and John W. Childs 2013 Charitable Remainder Trust is entering into a Tender and Support Agreement with Parent, HoldCo and Merger Sub, dated as of the date hereof (the “ Tender and Support Agreements ”);

 

4



 

WHEREAS , concurrently with the execution and delivery of this agreement, each of Berkshire Fund VIII, L.P., Berkshire Fund VIII-A, L.P., Berkshire Investors III LLC, Berkshire Investors IV LLC, Stockbridge Fund, L.P., Stockbridge Absolute Return Fund, L.P., Stockbridge Master Fund (OS), L.P., Stockbridge Partners LLC, Dale R. Carlsen, Dale R. Carlsen Stock Trust U.D.T. August 5, 1997 and Dale R. Carlsen Family Revocable Trust is entering into a Support Agreement with Parent, HoldCo and Merger Sub, dated as of the date hereof (the “ Support Agreements ”); and

 

WHEREAS , the Company, Parent, HoldCo and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

 

NOW, THEREFORE , in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, Parent, the Company, HoldCo and Merger Sub hereby agree as follows:

 

1                                       The Transactions

 

1.1                             The Offer

 

1.1.1                   As promptly as practical after the date of this Agreement on a date mutually agreeable to Parent, HoldCo and the Company (but in no event later than August 16, 2016), Merger Sub shall (and Parent and HoldCo shall (and Parent shall cause HoldCo to) cause Merger Sub to) commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer.

 

1.1.2                   In accordance with the terms and conditions of this Agreement, and subject to the satisfaction or waiver (to the extent such waiver is permitted by applicable Law) of the conditions set forth in Annex I (collectively, the “ Offer Conditions ”), Merger Sub shall (and HoldCo shall (and Parent shall cause HoldCo to) cause Merger Sub to), promptly (within the meaning of Rule 14e-1(c) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”)) following the Expiration Time, irrevocably accept for payment (the time of acceptance for payment, the “ Offer Acceptance Time ”) and, at or as promptly as practicable following the Offer Acceptance Time (but in any event within three (3) Business Days (calculated as set forth in Rule 14d-1(g)(3) under the Exchange Act) thereafter) pay for all shares of Company Common Stock validly tendered and not properly withdrawn pursuant to the Offer. HoldCo shall (and Parent shall cause HoldCo to) provide or cause to be provided to Merger Sub, at the Offer Acceptance Time and on a timely basis at all times thereafter, the funds necessary to purchase any shares of Company Common Stock that Merger Sub becomes obligated to purchase pursuant to the Offer.

 

1.1.3                   The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) in accordance with the terms set forth in this Agreement and subject only to the Offer Conditions. Merger Sub expressly reserves the right to (i) increase the Offer Price, (ii) waive any Offer Condition other than the Minimum

 

5



 

Condition and (iii) make any other changes to the terms and conditions of the Offer not inconsistent with the terms of this Agreement; provided that, without the prior written consent of the Company, Merger Sub shall not, and HoldCo shall (and Parent shall cause HoldCo to) cause Merger Sub not to:

 

(i)                                   decrease the Offer Price;

 

(ii)                                change the form of consideration to be paid in the Offer;

 

(iii)                             decrease the number of shares subject to the Offer; or

 

(iv)                            impose additional conditions to the Offer or, except as permitted by this Agreement, otherwise amend, modify or supplement any of the conditions to the Offer or terms of the Offer in a manner materially adverse to the holders of the shares of Company Common Stock.

 

1.1.4                   The Offer shall expire at Midnight (New York City time) on the date that is twenty (20) Business Days following commencement (within the meaning of Rule 14d-2 under the Exchange Act) of the Offer (such initial expiration date and time of the Offer, the “ Initial Expiration Time ”) or, if the Offer has been extended pursuant to and in accordance with Section 1.1.5, the date and time to which the Offer has been so extended (the Initial Expiration Time, or such later expiration date and time to which the Offer has been so extended, the “ Expiration Time ”).

 

1.1.5                   Subject to the parties’ respective rights to terminate the Agreement pursuant to Section 7, the Offer may or shall, as applicable, be extended from time to time as follows:

 

(i)                                   if, at the then-scheduled Expiration Time, any of the Offer Conditions has not been satisfied or waived by Parent, HoldCo and Merger Sub (to the extent such waiver is permitted under this Agreement and applicable Law), then Merger Sub shall, and HoldCo shall (and Parent shall cause HoldCo to) cause Merger Sub to, extend the Offer on one or more occasions in consecutive increments of five Business Days each (each such increment to end at 5:00 p.m. (New York City time), on the last Business Day of such increment) (or such other duration of up to 20 successive Business Days at the sole discretion of Parent and HoldCo or as may be agreed to by Parent, HoldCo and the Company) in order to permit the satisfaction of such Offer Condition(s); provided , however , that Merger Sub shall not be required or permitted to extend the Offer to a date later than the Outside Date; and

 

(ii)                                Merger Sub shall extend the Offer for the minimum period required by applicable Law, interpretation or position of the Securities and Exchange Commission (the “ SEC ”) or its staff, or The NASDAQ Global Select Market (“ NASDAQ ”) or its staff.

 

Merger Sub shall not, and HoldCo shall (and Parent shall cause HoldCo to) not permit Merger Sub to, extend the Offer in any manner except as required or expressly permitted pursuant to this Section 1.1.5 or as may otherwise be agreed in writing with the Company.

 

6



 

Notwithstanding the foregoing, in the event that, as a result of the extension of the Offer in accordance with the provisions of this Section 1.1.5, the Expiration Time would occur on or after the date that is the Outside Date, the Expiration Time shall instead occur at 5:00 p.m., (New York City time), on the Business Day immediately preceding the Outside Date.

 

1.1.6                   The Offer Price shall be adjusted appropriately and proportionately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Company Common Stock occurring on or after the date of this Agreement and at or prior to the Offer Acceptance Time, and such amendment to the Offer Price shall provide to the holders of shares of Company Common Stock the same economic effect as contemplated by this Agreement prior to such action; provided , however , that the Company may not effect such change except as expressly permitted by this Agreement.

 

1.1.7                   In the event that this Agreement is terminated in accordance with Section 7, Merger Sub shall (and HoldCo shall  (and Parent shall cause HoldCo to) cause Merger Sub to) as promptly as practicable (and in any event within one Business Day of such termination) irrevocably and unconditionally terminate the Offer, and shall not acquire any shares of Company Common Stock pursuant to the Offer and shall instruct any depository acting on behalf of Parent, HoldCo or Merger Sub to return, in accordance with applicable Law, all tendered shares of Company Common Stock to the registered holders thereof.

 

1.1.8                   On the date of commencement of the Offer (within the meaning of Rule 14d-2 under the Exchange Act), Parent, HoldCo or Merger Sub shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer in accordance with Rule 14d-3 under the Exchange Act (together with all exhibits, amendments and supplements thereto, the “ Schedule TO ”) that will contain or incorporate by reference the Offer to Purchase and form of the related letter of transmittal (the Schedule TO, together with all documents included therein pursuant to which the Offer will be made, the “ Offer Documents ”). Parent, HoldCo and Merger Sub shall cause, at Merger Sub’s expense, the Offer Documents to be disseminated to the Company’s stockholders as and to the extent required by applicable Law. Each of Parent, HoldCo, Merger Sub and the Company shall use its respective reasonable best efforts to promptly correct any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and Parent and HoldCo further agree to use reasonable best efforts to promptly cause, at Merger Sub’s expense, the Offer Documents, as so corrected, to be filed with the SEC and to promptly be disseminated to the Company’s stockholders, in each case as and to the extent required by applicable Law. The Company shall use reasonable best efforts to promptly furnish or otherwise make available to Parent, HoldCo, Merger Sub or Parent’s, HoldCo’s and Merger Sub’s legal counsel any information concerning the Company and the Company’s Subsidiaries that is required by the Exchange Act to be set forth in the Offer Documents or reasonably requested by

 

7



 

Parent, HoldCo or Merger Sub for inclusion in or in connection with the Offer Documents. Parent, HoldCo and Merger Sub shall give the Company and its counsel reasonable opportunity to review and comment on the Offer Documents prior to the filing thereof with the SEC. Parent, HoldCo and Merger Sub shall provide the Company and its counsel with a copy of any written comments, and a written summary of any oral comments, that Parent, HoldCo, Merger Sub or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of any such comments. Each of Parent, HoldCo and Merger Sub shall give the Company and its counsel a reasonable opportunity to review and comment on any proposed written responses to any comments of the SEC or its staff with respect to the Offer Documents.

 

1.1.9                   Parent, HoldCo, Merger Sub and the paying agent with respect to the Offer shall be entitled to deduct and withhold from the Offer Price payable pursuant to the Offer such amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “ Code ”), or under any provision of state, local or foreign Tax Law. To the extent amounts are so withheld and (if required) paid over to the appropriate Governmental Authority, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

1.2                             Company Actions

 

1.2.1                   On the day that the Offer is commenced, in a manner that complies with Rule  14d-9 under the Exchange Act, the Company shall, concurrently with or promptly following the filing of the Schedule TO, file with the SEC and disseminate to the Company’s stockholders a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with any exhibits, amendments or supplements thereto, the “ Schedule 14D-9 ”) that, subject to Section 5.2, shall contain the Company Board Recommendation. The Schedule 14D-9 shall also contain the notice of appraisal rights required to be delivered by the Company under Section 262(d) of the DGCL at the time the Company first files the Schedule 14D-9 with the SEC. The Company shall set the record date for the Company’s stockholders to receive such notice of appraisal rights as the same date as the Stockholder List Date and shall disseminate the Schedule 14D-9 including such notice of appraisal rights to the Company’s stockholders to the extent required by Section 262(d) of the DGCL. Each of Parent, HoldCo, Merger Sub and the Company shall promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to use reasonable best efforts to cause the Schedule 14D-9, as so corrected, to promptly be filed with the SEC and to promptly be disseminated to the Company’s stockholders, in each case as and to the extent required by applicable Law. Parent, HoldCo and Merger Sub shall use its reasonable best efforts to promptly furnish or otherwise make available to the Company or its legal counsel any information concerning Parent, HoldCo or Merger Sub that is required by the Exchange Act to be set forth in the Schedule

 

8



 

14D-9 or reasonably requested by the Company for inclusion in the Schedule 14D-9. Parent, HoldCo and their counsel shall be given reasonable opportunity to review and comment on the Schedule 14D-9 and any amendment thereto prior to the filing thereof with the SEC, and the Company shall give due consideration to the reasonable additions, deletions or changes suggested thereto by Parent, HoldCo, Merger Sub or their counsel. The Company shall provide Parent, HoldCo and their counsel with a copy of any written comments, and a written summary of any oral comments, the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments. The Company shall give Parent and its counsel a reasonable opportunity to review and comment on any proposed written responses to any comments of the SEC or its staff with respect to the Schedule 14D-9, except if the Company Board has properly made a Company Adverse Recommendation Change.

 

1.2.2                   In connection with the Offer, from time to time as requested by or on behalf of Parent, HoldCo or Merger Sub, the Company shall (or shall cause its transfer agent to) promptly furnish Parent with a list of its stockholders, non-objecting beneficial owners and any available listing or computer file containing the names and addresses of record or beneficial holders of shares of Company Common Stock and lists of securities positions of shares of Company Common Stock held in stock depositories as of the most recent practicable date, to the extent known by the Company, and shall provide to Parent such additional information (including updated lists of stockholders and lists of securities positions) and provide such other assistance as Parent, HoldCo or Merger Sub may reasonably request in communicating with the record and beneficial holders of shares of Company Common Stock. The date of the list used to determine the Persons to whom the Offer Documents and the Schedule 14D-9 are first disseminated is referred to as the “ Stockholder List Date ”. Parent, HoldCo and Merger Sub and their Representatives agree that the information contained in any such listings or files shall be considered “Information” as such term is defined in the Confidentiality Agreement.

 

1.2.3                   Subject to Section 5.2, the Company consents to the inclusion in the Offer Documents of a description of the Company Board Recommendation.

 

1.2.4                   Unless Parent and HoldCo otherwise consent in writing, the Company shall not, and shall not permit any of its Subsidiaries to, tender in the Offer any shares of Company Common Stock owned by the Company or any direct or indirect Subsidiary of the Company.

 

1.3                             The Merger

 

Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the provisions of the DGCL (including Section 251(h) of the DGCL), at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation in the Merger. The Company, as the surviving corporation after the Merger, is hereinafter referred to as the “ Surviving Corporation ”.

 

9



 

1.4                             Closing

 

The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m. (New York City time) as soon as practicable following (and in no event later than the Business Day following) the consummation (as defined in Section 251(h) of the DGCL) of the Offer, subject to the satisfaction or waiver of the conditions set forth in Section 6 hereof, at the offices of Linklaters LLP, 1345 Avenue of the Americas, New York, New York 10105, unless another date, time or place is agreed to in writing by Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”.

 

1.5                             Effective Time

 

Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger executed in accordance with, and in such form as is required by, the relevant provisions of the DGCL (the “ Certificate of Merger ”), and shall make all other filings, recordings or publications required under the DGCL to effectuate the Merger. The Merger shall become effective at the time that the Certificate of Merger is filed with the Secretary of State of the State of Delaware (the “ Secretary of State ”) or, to the extent permitted by applicable Law, at such later time as is agreed to by the parties hereto prior to the filing of such Certificate of Merger and specified in the Certificate of Merger (the time at which the Merger becomes effective is herein referred to as the “ Effective Time ”).

 

1.6                             Merger Without Meeting of Stockholders

 

The Merger shall be governed by and effected under Section 251(h) of the DGCL, without a vote of the stockholders of the Company. Parent, HoldCo, Merger Sub and the Company each agrees to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable following the consummation (within the meaning of Section 251(h) of the DGCL) of the Offer, without a vote of the stockholders of the Company in accordance with Section 251(h) of the DGCL.

 

1.7                             Effects of the Merger

 

The Merger shall have the effects provided in this Agreement and as set forth in the applicable provisions, including Section 259, of the DGCL.

 

1.8                             Certificate of Incorporation and Bylaws of the Surviving Corporation

 

At the Effective Time, the certificate of incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended and restated as of the Effective Time to be in the form of Exhibit A hereto and as so amended and restated shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided therein or by applicable Law (subject to Section 5.6 hereof). The parties hereto shall take all necessary action such that the bylaws of the Company, as in effect immediately prior to the Effective Time, shall be amended and restated as of the Effective Time to be in the form of the bylaws of Merger Sub (except with respect to the name of the Company), and such bylaws, as so amended and restated, shall be the bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable Law (subject to Section 5.6 hereof).

 

10



 

1.9                             Directors and Officers of the Surviving Corporation

 

1.9.1                   The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately following the Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

 

1.9.2                   The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

 

2                                       Effect of the Merger on Capital Stock; Exchange of Certificates; Equity-Based Awards

 

2.1                             Effect on Capital Stock

 

At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, HoldCo, Merger Sub or the Company’s stockholders or the holder of any shares of capital stock of Merger Sub:

 

2.1.1                   Capital Stock of Merger Sub

 

As of the Effective Time, each issued and outstanding share of capital stock of Merger Sub as of immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

 

2.1.2                   Cancellation of Certain Shares

 

(i)                                   As of the Effective Time, (i) all shares of Company Common Stock that are owned by the Company as treasury stock as of immediately prior to the Effective Time shall automatically be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor and (ii) all shares of Company Common Stock that were accepted for payment by Merger Sub in the Offer shall be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor.

 

(ii)                                Any shares of Company Common Stock owned by Parent or by a direct or indirect wholly-owned Subsidiary of Parent or the Company (other than those cancelled under Section 2.1.2(i)) shall not be cancelled and shall convert into a number of shares of common stock of the Surviving Corporation in connection with the Merger such that Parent and each such Subsidiary owns the same percentage of the outstanding capital stock of the Surviving Corporation immediately following the Effective Time as Parent and such Subsidiary owned in the Company immediately prior to the Effective Time.

 

11



 

2.1.3                   Conversion of Company Common Stock

 

As of the Effective Time, each issued and outstanding share of Company Common Stock (other than (i) Company Restricted Shares to be treated in accordance with Section 2.3, (ii) Appraisal Shares to be treated in accordance with Section 2.6, (iii) shares of Company Common Stock to be cancelled in accordance with Section 2.1.2(i) and (iv) any shares of Company Common Stock owned by Parent or a direct or indirect wholly-owned Subsidiary of Parent or the Company (other than those cancelled under Section 2.1.2(i)) to be treated in accordance with Section 2.1.2(ii)) shall be converted automatically into and shall thereafter represent only the right to receive the Offer Price in cash without interest (the “ Merger Consideration ”). As of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such shares of Company Common Stock (each, a “ Certificate ”) or non-certificated shares of Company Common Stock held in book entry form (each, a “ Book Entry Share ”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration to be paid in consideration therefor upon surrender of such Certificate or Book Entry Share in accordance with Section 2.2.2.

 

2.2                             Exchange of Certificates and Book Entry Shares

 

2.2.1                   Paying Agent

 

Prior to the Closing Date, HoldCo shall (and Parent shall cause HoldCo to) designate a bank or trust company reasonably acceptable to the Company to act as agent (the “ Paying Agent ”) for the payment of the Merger Consideration in accordance with this Section 2 and, in connection therewith, prior to the Closing Date shall enter into an agreement with the Paying Agent in a form reasonably acceptable to the Company. At or prior to the Closing, HoldCo shall (and Parent shall cause HoldCo to) deposit or cause to be deposited with the Paying Agent an amount in cash sufficient to pay the aggregate Merger Consideration (such cash being hereinafter referred to as the “ Exchange Fund ”). Pending its disbursement in accordance with this Section 2.2, the Exchange Fund shall be invested by the Paying Agent as directed by HoldCo in (i) short-term direct obligations of the United States of America, (ii) short-term obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii) short-term commercial paper rated the highest quality by either Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Services or (iv) certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion. Subject to Section 2.2.5, HoldCo shall (and Parent shall cause HoldCo to) cause the Surviving Corporation to promptly replace or restore the cash in the Exchange Fund, to the extent necessary, so that the Exchange Fund is maintained at a level sufficient for the Paying Agent to make any remaining payments of Merger Consideration in accordance herewith. No investment losses resulting from investment of the funds deposited with the Paying Agent shall diminish the rights of any of the Company’s stockholders to receive the Merger Consideration as provided herein.

 

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2.2.2                   Payment Procedures

 

Promptly after the Effective Time (but in no event more than three Business Days thereafter), Parent, HoldCo and the Surviving Corporation shall cause the Paying Agent to mail to each Person who was, at the Effective Time, a holder of record of Company Common Stock (other than the Company Common Stock to be cancelled or converted in accordance with Section 2.1) (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent, and which shall be in such form and shall have such other customary provisions (including customary provisions regarding delivery of an “agent’s message” with respect to Book Entry Shares) as Parent, HoldCo and the Company may reasonably agree prior to the Closing Date) and (ii) instructions for use in effecting the surrender of the Certificates or Book Entry Shares in exchange for payment of the Merger Consideration as provided in Section 2.1.3. Upon surrender of a Certificate or a Book Entry Share for cancellation to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with such letter’s instructions (and such other customary documents as may reasonably be required by the Paying Agent), the holder of such Certificate or Book Entry Share shall be entitled to receive in exchange therefor the Merger Consideration for each share of Company Common Stock formerly represented by such Certificate or Book Entry Share, and the Certificate or Book Entry Share so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Book Entry Share is registered, it shall be a condition of payment that (A) the Certificate or Book Entry Share so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer and (B) the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of such Certificate or Book Entry Share surrendered and shall have established to the reasonable satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate and Book Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration as contemplated by this Section 2.

 

2.2.3                   Transfer Books; No Further Ownership Rights in Company Stock

 

The Merger Consideration paid in respect of shares of Company Common Stock upon the surrender for exchange of Certificates or Book Entry Shares in accordance with the terms of this Section 2 shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock previously represented by such Certificates or Book Entry Shares, and at the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers on the stock transfer

 

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books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the holders of Certificates and Book Entry Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares, except as otherwise provided for herein or by applicable Law. Subject to the last sentence of Section 2.2.5, if, at any time after the Effective Time, Certificates and Book Entry Shares are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Section 2.

 

2.2.4                   Lost, Stolen or Destroyed Certificates

 

If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as HoldCo may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will pay, in exchange for such lost, stolen or destroyed Certificate, the applicable Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated by this Section 2.

 

2.2.5                   Termination of Exchange Fund

 

At any time following the six (6) month anniversary of the Closing Date, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any portion of the Exchange Fund (including any interest received with respect thereto) which has not been disbursed to holders of Certificates or Book Entry Shares, and thereafter such holders shall be entitled to look only to Parent, HoldCo and the Surviving Corporation for, and Parent, HoldCo and the Surviving Corporation shall remain liable for, payment of their claims for the Merger Consideration pursuant to the provisions of this Section 2. Any amounts remaining unclaimed by such holders at such time at which such amounts would otherwise escheat to or become property of any Governmental Authority shall become, to the extent permitted by applicable Law, the property of Parent or its designee, free and clear of all claims or interest of any Person previously entitled thereto.

 

2.2.6                   No Liability

 

Notwithstanding any provision of this Agreement to the contrary, none of the parties hereto, the Surviving Corporation or the Paying Agent shall be liable to any Person for Merger Consideration delivered to a public official pursuant to any applicable state, federal or other abandoned property, escheat or similar Law.

 

2.2.7                   Withholding Taxes

 

Parent, HoldCo, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the Merger Consideration such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. To the

 

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extent amounts are so withheld and (if required) paid over to the appropriate Governmental Authority, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

2.3                             Equity-Based Awards

 

Prior to the Offer Acceptance Time, the Company Board (or, if appropriate, any committee thereof administering the Company Stock Plan) shall adopt such resolutions to provide that:

 

2.3.1                   each option to purchase shares of Company Common Stock (each, a “ Company Stock Option ”), whether vested or unvested, shall, as of the Effective Time, be cancelled and the holder thereof shall then become entitled to receive solely, in full satisfaction of the rights of such holder with respect thereto, a lump-sum cash payment equal to the product of (i) the number of shares of Company Common Stock for which such Company Stock Option has not been exercised 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 Company Stock Option (and for the avoidance of doubt, any Company Stock Option that has an exercise price that is greater than or equal to the Merger Consideration shall be cancelled at the Effective Time for no consideration or payment); and

 

2.3.2                   each share of Company Common Stock subject to forfeiture conditions (each, a “ Company Restricted Share ”) outstanding, including unvested shares, immediately prior to the Effective Time shall be cancelled and converted into the right to receive an amount in cash equal to the Merger Consideration.

 

2.4                             Payments with Respect to Equity-Based Awards

 

Promptly after the Effective Time (but in any event, no later than the first payroll date after the Effective Time), Parent shall cause HoldCo to fund or cause to be funded and the Surviving Corporation shall pay through its payroll systems (or through an alternative method) the amounts due pursuant to Section 2.3 (less applicable deductions and tax withholdings, which withheld amounts, to the extent amounts are so withheld and (if required) paid over to the appropriate Governmental Authority, shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made).

 

2.5                             Adjustments

 

Without duplication of any adjustment made pursuant to Section 1.1.6, the Merger Consideration shall be adjusted appropriately and proportionately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Company Common Stock occurring on or after the date of this Agreement and at or prior to the Effective Time, and such adjustment to the Merger Consideration shall provide to the holders of shares of Company Common Stock the same economic effect as contemplated by this Agreement prior to such action; provided, however, that the Company may not effect such change except as expressly permitted by this Agreement.

 

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2.6                             Appraisal Rights

 

Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any Person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“ Appraisal Shares ”) shall not be converted into the right to receive the Merger Consideration as provided in Section 2.1.3, but instead shall be cancelled and shall represent the right to receive only those rights provided under Section 262 of the DGCL; provided , however , that if any such Person shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 of the DGCL, then the right of such Person to receive those rights under Section 262 of the DGCL shall cease and such Appraisal Shares shall be deemed to have been converted as of the Effective Time into, and shall represent only the right to receive, the Merger Consideration as provided in Section 2.1.3, without interest thereon. The Company shall give prompt notice to Parent and HoldCo of any demands received by the Company for appraisal of any shares of Company Common Stock, and Parent and HoldCo shall have the right to participate in, and after the Offer Acceptance Time, direct all negotiations and Actions with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent and HoldCo, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing. Prior to the Effective Time, HoldCo shall (and Parent shall cause HoldCo to) not, except with the prior written consent of the Company, require the Company to make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

 

3                                       Representations and Warranties of the Company

 

The Company represents and warrants to Parent and HoldCo that, except as (A) set forth in the corresponding section of the confidential disclosure letter delivered by the Company to Parent and HoldCo prior to the execution of this Agreement (the “ Company Disclosure Letter ”) (it being agreed that disclosure of any item in any section or subsection of the Company Disclosure Letter shall be deemed disclosure with respect to any other section or subsection to which the relevance of such item is reasonably apparent) or (B) disclosed in the Company’s  reports, schedules, forms, statements and other documents (including all exhibits and other information incorporated therein, amendments and supplements thereto), in each case as filed with, or furnished to, the SEC and publicly available from July 1, 2015 through the date of this Agreement (collectively, the “ Filed SEC Documents ”), to the extent that it is reasonably apparent that a disclosure therein is applicable to any particular representation or warranty set forth in this Agreement and other than any disclosures (other than statements of historical fact) in any such Filed SEC Document contained in the (x) “Risk Factors” or “Forward-Looking Statements” section thereof and (y) any other section relating to forward-looking statements to the extent they are generally cautionary, predictive or forward-looking in nature, it being understood that any matter disclosed in such Filed SEC Documents shall not be deemed disclosed for the purposes of Section 3.1 ( Organization; Standing ), Section 3.2 ( Capitalization ) and Section 3.3 ( Authority; Noncontravention ) of this Agreement:

 

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3.1                             Organization; Standing

 

3.1.1                   The Company is a corporation duly organized and validly existing under the laws of the State of Delaware, is in good standing with the Secretary of State and has all requisite corporate power and corporate authority necessary to carry on its business as it is now being conducted, except (other than with respect to the Company’s due organization and valid existence) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. True and complete copies of the Company Charter Documents are included in the Filed SEC Documents. Each of the Company Charter Documents are in full force and effect and the Company is not in violation of any provision of the Company Charter Documents in any material respect.

 

3.1.2                   Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the laws of the jurisdiction of its organization, except where the failure to be so organized, existing and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company’s Subsidiaries is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by them or the character or location of the properties and assets owned or leased by them makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.1.3                   The Company has made available the organizational or governing documents of each of the Company’s material Subsidiaries, as amended to date. Each of the foregoing documents is in full force and effect, and none of the Company’s Subsidiaries is in violation of any provision of the foregoing documents except for any violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.2                             Capitalization

 

3.2.1                   The authorized capital stock of the Company consists of 120,000,000 shares of Company Common Stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.001 per share (“ Company Preferred Stock ”). At the

 

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close of business on August 4, 2016 (the “ Capitalization Date ”), (i) 37,227,687 shares of Company Common Stock  (exclusive of the Company Restricted Shares referenced in the following clause (ii)) were issued and outstanding, (ii) 487,282 Company Restricted Shares were outstanding, (iii) 2,076,607 shares of Company Common Stock were reserved and available for issuance pursuant to the Company Stock Plan, (iv) 589,160 shares of Company Common Stock were subject to Company Stock Options, (v) no shares of the Company that were acquired by the Company in a taxable year beginning before July 12, 1995, were held by the Company as treasury stock, and (vi) no shares of Company Preferred Stock were issued or outstanding. Since the Capitalization Date through the date of this Agreement, neither the Company nor any of its Subsidiaries has (A) issued any Company Securities or incurred any obligation to make any payments based on the price or value of any Company Securities or (B) established a record date for, declared, set aside for payment or paid any dividend on, or made any other distribution in respect of, any shares of the Company’s capital stock, other than, in each case, pursuant to the grant of, or lapsing of forfeiture conditions with respect to, Company Restricted Shares, the exercise of Company Stock Options in accordance with their terms or the forfeiture or withholding of shares of Company Common Stock in respect of applicable taxes or the payment of the exercise price, as applicable, with respect to Company Stock Options or Company Restricted Shares.

 

3.2.2                   Except as described in this Section 3.2, as of the Capitalization Date, there were (i) no outstanding shares of capital stock of, or other equity or voting interests in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting interests in, the Company, (iii) no outstanding options, warrants, rights or other commitments or agreements to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interests in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interests in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests in, the Company (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as “ Company Securities ”) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. There are no outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities (other than Company Restricted Shares in accordance with their terms or pursuant to the cashless exercise of Company Stock Options in accordance with their terms or the forfeiture or withholding of shares of Company Common Stock in respect of applicable taxes or the payment of the exercise price, as applicable, with respect to Company Stock Options or Company Restricted Shares), or obligate the Company to grant, extend or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with

 

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respect to any Company Securities. No direct or indirect Subsidiary of the Company owns any Company Common Stock. None of the Company or any Subsidiary of the Company is a party to any stockholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. All outstanding shares of Company Common Stock and all Company Common Stock reserved for issuance as noted in this Section 3.2, when issued in accordance with the respective terms thereof, are or will be duly authorized, validly issued, fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-emptive or similar rights, purchase options, call or right of first refusal or similar right.

 

3.2.3                   All of the outstanding shares of capital stock of, or other equity or voting interests in, each Subsidiary of the Company are owned directly or indirectly, beneficially and of record, by the Company free and clear of all Liens and transfer restrictions, except for Permitted Liens and such Liens and transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “ Securities Act ”) or other applicable securities Laws (including any restriction on the right to vote, sell or otherwise dispose of such shares of capital stock or other equity or voting interests). Each outstanding share of capital stock of each Subsidiary of the Company, is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights, and there are no subscriptions, options, warrants, rights, calls, contracts or other commitments, understandings, restrictions or arrangements relating to the issuance, acquisition, redemption, repurchase or sale of any shares of capital stock or other equity or voting interests of any Subsidiary of the Company, including any right of conversion or exchange under any outstanding security, instrument or agreement, any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any securities of any Subsidiary.

 

3.3                             Authority; Noncontravention

 

3.3.1                   The Company has all necessary corporate power and corporate authority to execute and deliver this Agreement and to perform its obligations hereunder and, assuming the representations and warranties set forth in Section 4.7 are true and correct and that the Transactions are consummated in accordance with Section 251(h) of the DGCL, to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and, assuming the representations and warranties set forth in Section 4.7 are true and correct, the consummation by it of the Transactions, have been duly authorized by the Company Board and, assuming that the Transactions are consummated in accordance with Section 251(h) of the DGCL, except for filing the Certificate of Merger with the Secretary of State pursuant to the DGCL, no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the consummation by it of the Transactions. This Agreement has been duly executed

 

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and delivered by the Company and, assuming due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity (the “ Bankruptcy and Equity Exception ”).

 

3.3.2                   The Company Board, at a meeting duly called and held, adopted resolutions (i) determining that the Transactions are fair to and in the best interests of the Company and its stockholders, (ii) approving and declaring advisable the Merger and the execution, delivery and performance by the Company of this Agreement and the consummation of the Transactions, (iii) resolving that this Agreement and the Merger shall be governed by and effected under Section 251(h) of the DGCL, (iv) approving the Tender and Support Agreements and the Support Agreements and (v) recommending that the Company’s stockholders accept the Offer and tender their shares of Company Common Stock in the Offer (such recommendation, the “ Company Board Recommendation ”), which resolutions have not, except after the date of this Agreement as permitted by Section 5.2, been subsequently rescinded, modified in any non- de minimis respect or withdrawn.

 

3.3.3                   Neither the execution and delivery of this Agreement by the Company, nor the consummation by the Company of the Transactions, nor performance or compliance by the Company with any of the terms or provisions hereof, will (i) conflict with or violate any provision (A) of the Company Charter Documents or (B) of the similar organizational documents of any of the Company’s Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.4 are obtained prior to the Offer Acceptance Time or the Effective Time, as applicable, and the filings referred to in Section 3.4 are made and any waiting periods thereunder have terminated or expired prior to the Offer Acceptance Time or the Effective Time, as applicable, (A) violate any Law or Judgment applicable to the Company or any of its Subsidiaries, (B) result in a breach or violation, constitute a default or require a consent (with or without notice or lapse of time or both) or result in the loss of benefit under, or give rise to any right of termination, cancellation, amendment or acceleration under any of the terms or provisions of any loan or credit agreement, indenture, debenture, note, bond, mortgage, deed of trust, lease, sublease, license, contract or other agreement (each, a “ Contract ”) to which the Company or any of its Subsidiaries is a party or accelerate the Company’s or, if applicable, any of its Subsidiaries’ obligations under any such Contract or (C) result in the creation of any Lien (other than Permitted Liens) on any properties or assets of the Company or any of its Subsidiaries, except, in the case of clause (ii), as would not, individually or in the aggregate, (x) reasonably be expected to have a Material Adverse Effect or (y) prevent, impair or materially delay the consummation of the Transactions.

 

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3.4                             Governmental Approvals

 

Except for (a) compliance with the applicable requirements of the Exchange Act, including the filing with the SEC of the Schedule 14D-9, (b) compliance with the rules and regulations of the NASDAQ, (c) the filing of the Certificate of Merger with the Secretary of State pursuant to the DGCL and of appropriate documents with the relevant authorities of other jurisdictions in which the Company or any of its Subsidiaries is qualified to do business, (d) filings required under, and compliance with other applicable requirements of, the HSR Act, (e) compliance with any applicable state securities or blue sky laws and (f) any other actions or filings required solely by reason of the participation of Parent, HoldCo or Merger Sub in the transactions contemplated hereby, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder and the consummation by the Company of the Transactions, other than such other consents, approvals, filings, licenses, permits or authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, (A) reasonably be expected to have a Material Adverse Effect or (B) prevent, impair or materially delay the consummation of the Transactions.

 

3.5                             Company SEC Documents; Undisclosed Liabilities

 

3.5.1                   Since July 1, 2013 (the “ Applicable Date ”), the Company has filed or furnished, as applicable, with the SEC on a timely basis all reports, schedules, forms, statements and other documents (including all exhibits and other information incorporated therein, amendments and supplements thereto) required to be filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act (collectively, the “ Company SEC Documents ”). As of their respective effective dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates or, if amended prior to the date of this Agreement, the date of the filing of such amendment, with respect to the portions that are amended (in the case of all other Company SEC Documents), the Company SEC Documents complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents as of such respective dates (or, if amended prior to the date of this Agreement, the date of the filing of such amendment, with respect to the disclosures that are amended) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date of this Agreement, (i) there has been no material correspondence between the SEC and the Company since the Applicable Date that is not publicly available or that is not set forth or reflected in the Company SEC Documents, or that has not otherwise been disclosed to Parent prior to the date of this Agreement and (ii) the Company has not received written notice from the SEC since the Applicable Date that any of the Company SEC Documents is the subject of ongoing SEC review.

 

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3.5.2                   The consolidated financial statements of the Company (including all related notes or schedules) included or incorporated by reference in the Company SEC Documents, as of their respective dates of filing with the SEC (or, if such Company SEC Documents were amended prior to the date of this Agreement, the date of the filing of such amendment, with respect to the consolidated financial statements that are amended or restated therein), complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, have been prepared in all material respects in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except (i) as may be indicated in the notes thereto or (ii) as permitted by Regulation S-X) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited quarterly financial statements, to the lack of footnotes and normal year-end adjustments). Since the Applicable Date through the date of this Agreement, there has been no material change in the Company’s accounting methods or principles that would be required to be disclosed in the Company’s financial statements in accordance with GAAP, except as been so disclosed.

 

3.5.3                   Neither the Company nor any of its Subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise) that would be required under GAAP, as in effect on the date of this Agreement, to be reflected on a consolidated balance sheet of the Company (including the notes thereto) except liabilities (i) reflected or reserved against in the consolidated balance sheet (or the notes thereto) of the Company as of May 3, 2016 (the “ Balance Sheet Date ”) included in the Filed SEC Documents, (ii) incurred after the Balance Sheet Date in the ordinary course of business, (iii) as contemplated by this Agreement or otherwise incurred in connection with the Transactions, (iv) that have been discharged or paid prior to the date of this Agreement or (v) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any “off balance sheet arrangement” within the meaning of Item 303 of Regulation S-K promulgated under the Securities Act.

 

3.5.4                   The Company has established and maintains disclosure controls and procedures and a system of internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company and its Subsidiaries is reported within the time periods specified in the SEC’s rules and forms, and that all such information is communicated to the individuals responsible for the preparation of the Company’s filings with the SEC to allow timely decisions regarding required disclosure. Since the Applicable Date, neither the Company nor, to the Company’s Knowledge, the Company’s independent registered public accounting firm, has

 

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identified or been made aware of (A) any “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data or (B) any fraud or allegation of fraud, whether or not material, that involves (or involved) members of management of the Company or other employees who have (or had) a significant role in the Company’s internal controls over financial reporting.

 

3.6                             Absence of Certain Changes

 

Since February 2, 2016 through the date of this Agreement (a) except for the execution and performance of this Agreement and the discussions, negotiations and transactions related thereto and to any transaction of the type contemplated by this Agreement, the business of the Company and its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business; (b) the Company and its Subsidiaries have not taken any action that, if taken after the date of this Agreement, would require the consent of Parent or HoldCo pursuant to Sections 5.1.2(i) (other than as may have occurred in the ordinary course of business), 5.1.2(ii), (iii), (v), 5.1.2(vi) (other than as may have occurred in the ordinary course of business), (vii), (viii), (ix), (x), (xii), 5.1.2(xiii), (xiv) or (xv) or (xvi) (as it relates to the foregoing clauses); and (c) there has not been any event, change or occurrence that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

 

3.7                             Legal Proceedings

 

Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (and, with respect to any such matters relating to this Agreement or the transactions contemplated hereby, as of the date of this Agreement), there is no (a) pending or, to the Knowledge of the Company, threatened legal or administrative proceeding, suit, investigation, arbitration or action (an “ Action ”) against the Company or any of its Subsidiaries, (b) outstanding order, judgment, injunction, ruling, writ or decree of any Governmental Authority (a “ Judgment ”) imposed upon the Company or any of its Subsidiaries or their respective assets or properties, in each case, by or before any Governmental Authority or (c) inquiry, investigation or review in respect of which the Company has received written notice, pending or to the Knowledge of the Company threatened, by any Governmental Authority with respect to the Company or any of its Subsidiaries or their respective assets or properties. As of the date of this Agreement, there are no settlements of any Actions to which the Company or any of its Subsidiaries is a party or by which any of their assets or properties are bound that are material to the Company and its Subsidiaries, taken as a whole, and under which the Company or any of its Subsidiaries have material continuing obligations.

 

3.8                             Compliance with Laws; Permits

 

3.8.1                   The Company and each of its Subsidiaries are, and since the Applicable Date have been, in compliance with all laws, statutes, ordinances, codes, rules or regulations (“ Laws ”) or Judgments, applicable to the Company or any of its

 

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Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries hold all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities (collectively, “ Permits ”) necessary (i) for the lawful conduct of their respective businesses and (ii) to own, lease and operate their respective assets and properties as being conducted as of the date of this Agreement, except, in each case, where the failure to hold the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) all Permits are in full force and effect, (ii) no default (without notice or lapse of time or both) has occurred under any such Permit and (iii) neither the Company nor any of its Subsidiaries has received any written notice from any Governmental Authority threatening to suspend, revoke, withdraw or modify in an adverse manner any such Permit.

 

3.8.2                   The Company, each of its Subsidiaries and each of its and their directors, officers and employees acting in such capacity and, to the Knowledge of the Company, each of its and their other representatives and agents acting on its or their behalf, is, and since the Applicable Date has been, in compliance in all material respects with (i) the Foreign Corrupt Practices Act of 1977 and any rules and regulations promulgated thereunder and (ii) any other applicable Law that prohibits corruption or bribery.

 

3.8.3                   The Company, each of its Subsidiaries and each of its and their directors, officers and employees acting in such capacity and, to the Knowledge of the Company, each of its and their other representatives and agents acting on its or their behalf, is, or is owned or controlled by a person that is, (i) currently the subject or the target of any sanctions administered or enforced by the United States government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“ OFAC ”) or the U.S. Department of State, and including, without limitation, the designation by OFAC as a “Specially Designated National” or “Blocked Person”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or any other applicable sanctions authority (collectively, “ Sanctions ”), nor (ii) located, organized, or resident in a country or territory that is the subject or target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Sudan, Syria, or the Crimea region of Ukraine (each, a “ Sanctioned Country ”). To the Knowledge of the Company, since the Applicable Date, the Company and its Subsidiaries have not engaged in, and are not now engaged in, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

 

3.9                             Tax Matters

 

3.9.1                   The Company and each of its Subsidiaries has prepared (or caused to be prepared) and timely filed (or caused to be timely filed, taking into account valid extensions of time within which to file) all material Tax Returns required to be filed by or on behalf of any of them, and all such filed Tax Returns (taking into account all amendments thereto) are true, complete and accurate in all material respects.

 

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3.9.2                   All material Taxes required to be paid by the Company and each of its Subsidiaries (whether or not shown on any Tax Returns) have been timely paid, other than Taxes that are not yet due and payable that have been adequately provided for in the Company’s financial statements in accordance with GAAP.

 

3.9.3                   No claims have been made to the Company or any Subsidiary in writing, or to the Knowledge of the Company, by a Governmental Authority in a jurisdiction where the Company or that Subsidiary, as applicable, does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.

 

3.9.4                   No extension or waiver of the limitation period applicable to the filing of any material Tax Return with respect to the Company or any Subsidiary has been granted (by the Company or any other Person), and no such extension or waiver has been requested (formally or informally) by or from the Company or any of its Subsidiaries, in each case which waiver or extension is still effective and has not lapsed.

 

3.9.5                   The Company and each of its Subsidiaries has withheld and paid all material Taxes required by Law to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

3.9.6                   As of the date of this Agreement, neither the Company nor any of its Subsidiaries has received written notice or otherwise has Knowledge of any pending audits, examinations, investigations, proposed adjustments, claims or other proceedings in respect of any material Taxes of the Company or any of its Subsidiaries.

 

3.9.7                   There are no Liens for material Taxes on any of the assets of the Company or any of its Subsidiaries other than Permitted Liens.

 

3.9.8                   Neither the Company nor any of its Subsidiaries has been a “controlled corporation” or a “distributing corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in any distribution of stock occurring during the two-year period ending on the date of this Agreement that was purported or intended to qualify for tax-free treatment under Section 355 of the Code (or any similar provision of state, local or foreign Law).

 

3.9.9                   Within the period for which the relevant statute of limitations with respect to Taxes has not expired (or, if longer, the six taxable year period which includes the current taxable year and each of the five taxable years preceding the current taxable year), neither the Company nor any of its Subsidiaries has been a member of an affiliated group of corporations filing a consolidated federal income Tax Return (other than a group the common parent of which is the Company) or has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under U.S. Treasury Regulations Section 1.1502-6 (or any similar provision of any state, local or foreign law), as a transferee or successor, by contract or otherwise.

 

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3.9.10            Neither the Company nor any of its Subsidiaries is a party to, or bound by, or has any obligation under, any Tax allocation or sharing Contract other than (i) Contracts solely among the Company and its Subsidiaries and (ii) customary Tax indemnification provisions in Contracts the primary purpose of which does not relate to material Taxes.

 

3.9.11            Within the period for which the relevant statute of limitations with respect to Taxes has not expired (or, if longer, the six taxable year period which includes the current taxable year and each of the five taxable years preceding the current taxable year), neither the Company nor any of its Subsidiaries has participated in a “reportable transaction” within the meaning of U.S. Treasury Regulation Section 1.6011-4(b).

 

3.9.12            The Company has not been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code at any time during the five-year period ending on the date of this Agreement.

 

3.9.13            Neither the Company nor any of its Subsidiaries (A) is a “controlled foreign corporation” as defined in Section 957 of the Code, or (B) has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office or fixed place of business in a country outside the United States.

 

3.9.14            Neither the Company nor any Subsidiary will be required, as a result of a change in method of accounting for any period ending on or before or including the Closing Date, to include any adjustment under Section 481 of the Code (or any similar or corresponding provision or requirement under any other Tax law) in taxable income for any Taxable period (or portion thereof) beginning after the Closing Date. Neither the Company, any Subsidiary, nor the Surviving Corporation will be required to include in income, or exclude any item of deduction from, Taxable income for any taxable period (or portion thereof) beginning after the Closing Date, any material amount as a result of any (i) ‘’closing agreement’’ as described in Section 7121 of the Code (or any corresponding or similar provision of state, local, or foreign income Tax law) executed on or prior to the Closing Date; (ii) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local, or foreign income Tax law) entered into or arising prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) election under section 108(i) of the Code.

 

3.9.15            For purposes of this Agreement: (x) “ Tax ” shall mean any and all federal, state, local or foreign taxes, fees, levies, duties, tariffs, imposts and other similar assessments or liabilities (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority, each that is in the nature of a tax, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes, license, registration and documentation fees, and customs duties, tariffs, and

 

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similar charges, together with any interest or penalty, addition to tax or additional amount imposed by any Governmental Authority, whether disputed or not; and (y) “ Tax Returns ” shall mean returns, reports, claims for refund, declarations of estimated Taxes and information statements, including any schedule or attachment thereto or any amendment thereof, with respect to Taxes filed or required to be filed with any Governmental Authority, including consolidated, combined and unitary tax returns.

 

3.10                      Employee Benefits

 

3.10.1            Schedule 3.10.1 of the Company Disclosure Letter contains a true and complete list, as of the date of this Agreement, of each material Company Plan. For purposes of this Agreement, each plan, program, policy, agreement or arrangement described in clauses (ii) and (iii) of the definition of Company Plan shall be deemed to be a material Company Plan. With respect to each material Company Plan, the Company has made available to Parent true and complete copies (to the extent applicable) of (i) the plan document or a written description thereof (or, if appropriate, a form thereof), including any amendments thereto, other than any document that the Company or any of its Subsidiaries is prohibited from making available to Parent as the result of applicable Law relating to the safeguarding of data privacy, (ii) the most recent annual report on Form 5500 filed with the IRS or similar report required to be filed with any Governmental Authority and the most recent actuarial valuation or similar report, (iii) the most recent IRS determination or opinion letter received by the Company, (iv) the most recent summary plan description, and (v) each insurance contract, trust agreement or other funding vehicle.

 

3.10.2            Each Company Plan has been established, maintained, funded and administered in compliance with its terms and applicable Laws, including ERISA and the Code, as applicable, other than instances of noncompliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Company Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the IRS or is entitled to rely upon a favorable opinion issued by the IRS, and to the Knowledge of the Company, there are no existing circumstances or any events that have occurred that could reasonably be expected to cause the loss of any such qualified status of any such Company Plan. There are no pending, or, to the Knowledge of the Company, threatened claims (other than routine claims for benefits) by, on behalf of or against any Company Plan or any trust related thereto which could reasonably be expected to result in any material liability to the Company or its Subsidiaries taken as a whole and, as of the date of this Agreement, no audit by a Governmental Authority is pending, or to the Knowledge of the Company, threatened with respect to any Company Plan.

 

3.10.3            Neither the Company nor any Commonly Controlled Entity has any material liability (contingent or otherwise) with respect to any (i) pension plan that is subject to Title IV of ERISA or Section 412 of the Code or (ii) a “multiemployer plan” (as defined in Sections 3(37) or 4001(a)(3) of ERISA), (iii) a multiple employer plan within the meaning of Section 413(c) of the Code, (iv) a multiple employer welfare arrangement as defined in Section 3(40) of ERISA.

 

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3.10.4            No Company Plan provides benefits coverage in the nature of health, life or disability benefits following retirement or other termination of employment, other than benefits coverage required to be provided under Part 6 of Title I of ERISA or Section 4980(B)(f) of the Code, or any other applicable Law (and in each case, only to the extent required by such Law), conversion privileges under insurance policies or continuation of benefits coverage for any employee and his or her eligible beneficiaries through the last day of the calendar month in which the employee’s date of termination of employment occurs.

 

3.10.5            Except as contemplated by this Agreement, the consummation of the Transactions will not, either alone or in combination with another event, (i) accelerate the time of payment or vesting, or increase the amount of compensation due to any current or former director, officer, consultant or employee of the Company or any of its Subsidiaries under any Company Plan, (ii) cause the Company to transfer or set aside any assets to fund any benefits under any Company Plan or (iii) limit or restrict the Company’s right to amend or terminate any Company Plan on or following the Effective Time (other than Company Plans that are terminable on less than 90 days’ notice without material penalty). No payment or deemed payment by the Company or any Company Subsidiary will be made as a result (alone or in combination with any other event) of the execution, delivery and performance of this Agreement by the Company, or the consummation by the Company of the Transactions, that would not be deductible pursuant to Section 280G of the Code.

 

3.10.6            Neither the Company nor any of its subsidiaries is party to, or is otherwise obligated under, any plan, policy, agreement or arrangement that provides for the gross-up or reimbursement of Taxes imposed under Section 409A or 4999 of the Code.

 

3.11                      Labor Matters

 

3.11.1            Except as set forth on Schedule 3.11.1 of the Company Disclosure Letter, neither the Company nor any Subsidiary of the Company is a party to, or is bound by, any Collective Bargaining Agreement. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) to the Knowledge of the Company, there are no activities or proceedings of any labor union to organize any employees of the Company or any of its Subsidiaries and no demand for recognition as the exclusive bargaining representative of any employees has been made by or on behalf of any labor union, (ii) there is no pending or, to the Knowledge of the Company, threatened strike, lockout, slowdown, walk-out, picketing, work stoppage or concerted refusal to work overtime or other similar labor activity or material dispute by or with respect to the employees of the Company or any of its Subsidiaries and (iii) there is no unfair labor practice charge or complaint against the Company pending or, to the Knowledge of the Company, threatened, before the National Labor Relations Board.

 

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3.11.2            Since the Applicable Date, (i) the Company has been in compliance with all applicable Laws pertaining to employment and employment practices and standards to the extent they relate to employees of the Company and (ii) the Company has not received written notice of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an audit or investigation of the Company that has not been completed and, to the Knowledge of the Company, no such audit or investigation is in progress, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.12                      Environmental Matters

 

Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company and each of its Subsidiaries is and has been since the Applicable Date, in compliance with all applicable Environmental Laws, and the Company has not received any written notice since the Applicable Date alleging that the Company is in violation of or has liability under any Environmental Law, (b) the Company and its Subsidiaries possess and are in compliance with all Environmental Permits required under Environmental Laws for the operation of their respective businesses, (c) as of the date of this Agreement, there is no Action under or pursuant to any Environmental Law or Environmental Permit that is pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries, and (d) as of the date of this Agreement, neither the Company nor any of its Subsidiaries has become subject to any Judgment imposed by any Governmental Authority under which there are uncompleted, outstanding or unresolved obligations on the part of the Company or its Subsidiaries arising under Environmental Laws. Notwithstanding anything to the contrary contained in this Agreement, the representations and warranties contained in this Section 3.12 shall be the sole and exclusive representations and warranties made by the Company with respect to Environmental Laws or other environmental matters.

 

3.13                      Intellectual Property

 

3.13.1            Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries own all of the Company Owned Intellectual Property, free and clear of all Liens (other than Permitted Liens). Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all of the Registered Company Intellectual Property is subsisting and, to the Knowledge of the Company, valid and enforceable.

 

3.13.2            Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries own or have sufficient rights to use all Intellectual Property used in the conduct of the business of the Company and its Subsidiaries as currently conducted, provided that nothing in this Section 3.13.2 shall be interpreted or construed as a representation or warranty with respect to whether there is any infringement of any Intellectual Property, which is the subject of Section 3.13.4.

 

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3.13.3            Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, no claims are pending or, to the Knowledge of the Company, threatened in writing (i) challenging the ownership, validity or use by the Company or any of its Subsidiaries of any Company Owned Intellectual Property or (ii) alleging that the Company or any of its Subsidiaries is infringing, misappropriating or otherwise violating the Intellectual Property of any Person.

 

3.13.4            Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, to the Knowledge of the Company (i) no Person is infringing, misappropriating or otherwise violating the rights of the Company or any of its Subsidiaries with respect to any Intellectual Property owned by the Company or a Subsidiary of the Company and (ii) the operation of the business of the Company and its Subsidiaries as currently conducted does not violate, misappropriate or infringe the Intellectual Property of any other Person.

 

3.14                      No Rights Agreement; Anti-Takeover Provisions

 

3.14.1            As of the date of this Agreement, the Company is not party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan and the Company Board has not adopted or authorized the adoption of such an agreement or plan.

 

3.14.2            Assuming the accuracy of the representations and warranties set forth in Section 4.7, no “business combination”, “control share acquisition”, “fair price”, “moratorium” or other anti-takeover Laws (including, for the avoidance of doubt, Section 203 of the DGCL) (each, a “ Takeover Law ”) apply or will apply to the Company pursuant to this Agreement or the Transactions, and the restrictions on business combinations in the Company Charter Documents do not apply to this Agreement or the Transactions.

 

3.15                      Property

 

3.15.1            Schedule 3.15.1 of the Company Disclosure Letter lists all real property owned by the Company and its Subsidiaries as of the date of this Agreement (the “ Owned Real Property ”). The Company or one of its Subsidiaries has good and marketable title to the Owned Real Property, free and clear of all Liens (other than Permitted Encumbrances).

 

3.15.2            The Company or one of its Subsidiaries has a good and valid leasehold interest in each material Company Lease and each material Company Distribution Center Lease, in each case free and clear of all Liens (other than Permitted Encumbrances).

 

3.15.3            (a) Each material Company Lease and each material Company Distribution Center Lease is, in each case, in full force and effect, (b) neither the Company nor any of its Subsidiaries is in breach or default under, or has received written notice of any breach of or default under, any material Company Lease or any material Company Distribution Center Lease and (c) no event, development or condition has occurred which, with the giving of notice or lapse of time (or both), would constitute a breach of or default under any material Company Lease or any material Company Distribution Center Lease by the Company or any of its Subsidiaries, or to the Knowledge of the Company, any other party thereto.

 

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3.16                      Contracts

 

3.16.1            Except (w) for this Agreement, (x) for the Contracts filed prior to the date of this Agreement as exhibits to the Company SEC Documents, (y) for the Company Plans and (z) as set forth in Schedule 3.16.1 of the Company Disclosure Letter, as of the date of this Agreement neither the Company nor any of its Subsidiaries is party to or bound by any Contract that:

 

(i)                                   contains covenants that materially restrict the ability of the Company or any of its Subsidiaries to (a) engage in any business or compete in any business with any Person or (b) operate in any geographic area (other than franchise agreements);

 

(ii)                                is an indenture, credit agreement, loan agreement, security agreement, guarantee, bond, mortgage or similar Contract pursuant to which any indebtedness of the Company or any of its Subsidiaries, in each case in excess of $2,000,000, is outstanding or secured, other than any such Contract between or among any of the Company and any of its Subsidiaries or guaranties of lease agreements;

 

(iii)                             by its terms is reasonably expected to result in future payments to or by the Company in excess of $2,000,000 per annum, except for Contracts that are terminable on less than 90 days’ notice without material penalty;

 

(iv)                            is between the Company or any of its Subsidiaries, on the one hand, and any director or officer of the Company or any Person beneficially owning five percent or more of the outstanding Company Common Stock, on the other hand, except for any employment or similar agreements, confidentiality agreements, noncompetition agreements in favor of the Company or its Subsidiaries, indemnification agreements with directors and officers of the Company, Contracts in connection with Company Plans, or any other Contracts entered into on arm’s length terms in the ordinary course of business and except for material Company Plans; or

 

(v)                               would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K of the Securities Act or disclosed by the Company on a Current Report on Form 8-K that has not been filed or incorporated by reference in the Company SEC Documents.

 

3.16.2            Each Contract of the type described in Section 3.16.1(i) through 3.16.1(v), and any Contract that (i) contains “most favored nation” pricing provisions in favor of the Company or any of its subsidiaries with any third party or pursuant to which the Company or any of its subsidiaries is granted exclusive rights, rights of first refusal, rights of first negotiation or offer or similar rights, (ii) has a remaining term of at least 6 months and (iii) under which the Company and its Subsidiaries are expected to make payments of at least $2,000,000 over such 6 month period, is referred to herein as a “ Material Contract ”. For the purposes of Section 3.16.1, “ Contract ” shall mean a Contract or group or series of related Contracts.

 

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3.16.3            The Company has made available to Parent a true and complete copy of each Material Contract in effect as of the date of this Agreement. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each Material Contract is valid and binding on the Company and/or any of its Subsidiaries to the extent such Person is a party thereto, as applicable, and to the Knowledge of the Company, each other party thereto, and is in full force and effect, (ii) the Company and each of its Subsidiaries, and, to the Knowledge of the Company, any other party thereto, has performed all obligations required to be performed by it under each Material Contract, (iii) neither the Company nor any of its Subsidiaries has received, since July 1, 2015, written notice of the existence of any breach or default on the part of the Company or any of its Subsidiaries under any Material Contract that has not since been cured, (iv) to the Knowledge of the Company, there are no events or conditions which constitute, or, after notice or lapse of time or both, will constitute a default on the part of any counterparty under such Material Contract that has not since been cured, (v) to the Knowledge of the Company, no other party to a Material Contract is in breach of or default under such Material Contract, and (vi) as of the date of this Agreement and since July 1, 2015, the Company has not received any written notice in writing from any Person that such Person intends to terminate, or not renew, any Material Contract, or seek negotiation of terms of any “Material Contract”.

 

3.17                      Insurance

 

Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company and its Subsidiaries own or hold policies of insurance, or are self-insured, in such amounts and against such risks customarily insured against by companies in similar lines of business as the Company and its Subsidiaries, (b) all such insurance policies are in full force and effect and all premiums thereon have been timely paid in full or appropriately accrued, and (c) except for any expiration thereof in accordance with the terms thereof, no written notice of cancellation or modification has been received other than in connection with ordinary renewals, and there is no existing default or event which, with the giving of notice or lapse of time or both, would constitute a default, by any insured thereunder. To the Knowledge of the Company, as of the date of this Agreement, no policy limits applicable to any material insurance policies of the Company or any of its Subsidiaries covering a period which includes the date of this Agreement, have been exhausted or materially reduced. The Company has provided Parent copies of all material insurance policies held by the Company or any of its Subsidiaries as of the date of this Agreement.

 

3.18                      Privacy and Data Protection

 

Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) the Company and each of its Subsidiaries have adopted, and are, and since the Applicable Date have been, in compliance with, commercially

 

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reasonable policies and procedures that apply to the Company or each of its Subsidiaries with respect to privacy, data protection, security and the collection, storage, disposal and use of Personal Information gathered or accessed in the course of the operations of the Company and its Subsidiaries, (b) there has been no unauthorized access or use of any Personal Information maintained, collected, stored, disposed of or processed by or on behalf of the Company or any of its Subsidiaries, (c) the Company and each of its Subsidiaries, and each of their privacy policies, are, and since the Applicable Date have been, in compliance with all Data Protection Programs and all contractual commitments that they have entered into with respect to Personal Information.

 

3.19                      Opinion of Financial Advisor

 

The Company Board has received the written opinion (or oral opinion to be confirmed in writing) of Barclays Capital Inc., to the effect that as of the date of such opinion and subject to the limitations, qualifications and assumptions set forth therein, the Offer Price and the Merger Consideration to be paid to the Company’s stockholders (other than Parent and its Affiliates) are fair from a financial point of view to such holders. The Company shall make available to Parent a copy of the written opinion of Barclays Capital Inc. for informational purposes only reasonably promptly following receipt thereof by the Company; provided that it is agreed and understood that such opinion is for the benefit of the Company Board and may not be relied on by Parent, HoldCo or Merger Sub.

 

3.20                      Brokers and Other Advisors

 

Except for Barclays Capital Inc., the fees and expenses of which will be paid by the Company, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries. The Company has made available to Parent the engagement letter the Company has entered into with Barclays Capital Inc. in connection with the Transactions.

 

3.21                      Affiliate Transactions

 

No Company Related Party is a party to any Contract, transaction, arrangement or understanding with or binding upon the Company or its Subsidiaries (other than Company Plans, any employment or similar agreements, confidentiality agreements, noncompetition agreements in favor of the Company or its Subsidiaries, indemnification agreements with directors and officers of the Company, Contracts in connection with Company Plans, or commercial agreements entered into on arm’s length terms by the Company or its Subsidiaries in the ordinary course of business) or any of their respective properties or assets or has any material interest in any property used by the Company or its Subsidiaries or has engaged in any transaction with any of the foregoing since the Applicable Date, in each case that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act that has not been so disclosed.

 

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3.22                      No Other Representations or Warranties

 

Except for the representations and warranties made by the Company in this Section 3, neither the Company nor any other Person makes any other express or implied representations or warranty with respect to the Company or any of its Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise), and each of Parent, HoldCo and Merger Sub acknowledge the foregoing.

 

4                                       Representations and Warranties of Parent, HoldCo and Merger Sub

 

Parent, HoldCo and Merger Sub jointly and severally represent and warrant to the Company:

 

4.1                             Organization; Standing

 

Each of Parent, HoldCo and Merger Sub is a company duly organized and validly existing under the laws of its jurisdiction of organization and is in good standing in its jurisdiction of organization (where such concept is recognized under applicable Law). Parent has all requisite corporate power and corporate authority necessary to carry on its business as it is now being conducted and is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Since the date of its incorporation, each of HoldCo and Merger Sub has not engaged in any activities other than in connection with or as contemplated by this Agreement and the transactions contemplated thereby.

 

4.2                             Authority; Noncontravention

 

4.2.1                   Each of Parent, HoldCo and Merger Sub has all necessary corporate power and corporate authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The relevant governing board of Parent has adopted resolutions approving the execution, delivery and performance by Parent of this Agreement and the consummation of the Transactions, which resolutions have not been subsequently rescinded, modified in any non- de minimis respect or withdrawn. The board of directors of each of HoldCo and Merger Sub has adopted resolutions (i) unanimously approving the Merger and the execution, delivery and performance by Merger Sub of this Agreement and the consummation of the Transactions, (ii) declaring that the Merger is advisable and (iii) directing that the Merger be submitted for consideration by Merger Sub’s stockholder, which resolutions have not been subsequently rescinded, modified in any non- de minimis respect or withdrawn. Except as expressly set forth in this Section 4.2.1, no other corporate action (including any stockholder vote or other action) on the part of Parent, HoldCo or Merger Sub is necessary to authorize the execution, delivery and performance by Parent, HoldCo and Merger Sub of this Agreement and the consummation by Parent, HoldCo and Merger Sub of the Transactions. This Agreement has been duly executed and delivered by Parent, HoldCo and Merger Sub and, assuming

 

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due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of Parent, HoldCo and Merger Sub, enforceable against each in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

4.2.2                   Neither the execution and delivery of this Agreement by Parent, HoldCo and Merger Sub, nor the consummation by Parent, HoldCo and Merger Sub of the Transactions, nor performance or compliance by Parent, HoldCo or Merger Sub with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the articles of association or other comparable charter or organizational documents of Parent, HoldCo or Merger Sub or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.3 are obtained prior to the Offer Acceptance Time or the Effective Time, as applicable, and the filings referred to in Section 4.3 are made and any waiting periods with respect to such filings have terminated or expired prior to the Offer Acceptance Time, (A) violate any Law or Judgment applicable to Parent or any of its Subsidiaries, (B) result in a breach or violation, constitute a default or require a consent (with or without notice or lapse of time or both) or result in the loss of benefit under, or give rise to any right of termination, cancellation, amendment or acceleration under any of the terms or provisions of any Contract to which Parent or any of its Subsidiaries is a party or accelerate Parent’s or any of its Subsidiaries’, if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

 

4.3                             Governmental Approvals

 

Except for (a) compliance with the applicable requirements of the Exchange Act, including the filing with the SEC of the Offer Documents, (b) the filing of the Certificate of Merger with the Secretary of State pursuant to the DGCL and the filing of appropriate documents with the relevant authorities of other jurisdictions in which the Company or any of its Subsidiaries is qualified to do business and (c) filings required under, and compliance with other applicable requirements of, the HSR Act, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement by Parent, HoldCo and Merger Sub, the performance of Parent, HoldCo and Merger Sub of their obligations hereunder and the consummation by Parent, HoldCo and Merger Sub of the Transactions, other than such other consents, approvals, filings, licenses, permits or authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

 

4.4                             Certain Arrangements

 

As of the date of this Agreement, other than the Tender and Support Agreements and the Support Agreements, there are no Contracts or other arrangements or understandings (whether oral or written and whether or not legally binding) or commitments to enter into Contracts or other arrangements or understandings (whether oral or written and whether

 

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or not legally binding) (a) between Parent, HoldCo, Merger Sub or any of their respective Affiliates, on the one hand, and any member of the Company’s management or the Company Board or any beneficial owner of Company Common Stock, on the other hand, that relate in any way to the Company or any of its businesses or Subsidiaries (including those businesses and Subsidiaries following the Closing) or the Transactions (including as to continuing employment or equity roll-over) or (b) pursuant to which any stockholder of the Company would be entitled to receive value or consideration of a different amount or nature than the Offer Price or the Merger Consideration or pursuant to which any stockholder of the Company agrees to tender any shares of Company Common Stock in the Offer or agrees to vote against or otherwise oppose any Superior Proposal. Parent, HoldCo and Merger Sub shall promptly provide to the Company true and correct copies of the Tender and Support Agreements and the Support Agreements. Parent, HoldCo and Merger Sub shall not amend, supplement or otherwise modify the Tender and Support Agreements and the Support Agreements without the prior written consent of the Company. Parent, HoldCo and Merger Sub shall not, and shall cause their Affiliates to not, enter into any agreement or understanding described above in this Section 4.4 or otherwise in respect of the Transactions that would be reasonably likely to constitute a breach of a contracting party’s fiduciary duties to the Company; provided, however, that any such agreement or understanding shall provide that such agreement or understanding will terminate if this Agreement terminates.

 

4.5                             Brokers and Other Advisors

 

No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection with the Transactions based upon arrangements made by or on behalf of Parent, HoldCo, Merger Sub or any of their respective Subsidiaries, except for Persons, if any, whose fees and expenses will be paid by Parent.

 

4.6                             Legal Proceedings

 

Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, as of the date of this Agreement, there is no (a) pending or threatened Action against Parent, HoldCo, Merger Sub or any of their respective Affiliates or (b) Judgment imposed upon or affecting Parent, HoldCo, Merger Sub or any of their respective Affiliates, in each case, by or before any Governmental Authority.

 

4.7                             Ownership of Company Common Stock

 

Neither Parent, HoldCo, Merger Sub nor or any of their “affiliates” or “associates” is, or has been at any time during the last three years, an “interested stockholder” of the Company (in each case, as such quoted terms are defined under the Company Charter Documents). Neither Parent, HoldCo nor Merger Sub “own” any shares of Company Common Stock (as such quoted term is defined under the Company Charter Documents).

 

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4.8                             Financing

 

Parent has delivered to the Company a true and complete copy of the fully executed Facilities Agreement dated on or about the date of this Agreement (together with all exhibits, or contemplated by annexes and schedules attached thereto and as amended, modified, supplemented, replaced or extended from time to time after the date of this Agreement in compliance with this Agreement). As of the date of this Agreement, there are no side letters, understandings or other agreements or contracts of any kind, in each case to which Parent, HoldCo or Merger Sub is a party, relating to the Financing that could affect the availability of the Financing contemplated by the Facilities Agreement, other than as expressly set forth in or contemplated by the Facilities Agreement provided to the Company. The Facilities Agreement, in the form so delivered, is in full force and effect as of the date of this Agreement and is a legal, valid and binding obligation of HoldCo, Steinhoff Finance, Steinhoff Europe and Steinhoff Alpha and, to the Knowledge of Parent, the other parties thereto, subject to the Bankruptcy and Equity Exception. The obligations to make the Financing available to HoldCo, Steinhoff Finance and Steinhoff Alpha pursuant to the terms of the Facilities Agreement are not subject to any conditions other than the conditions expressly set forth in or contemplated by the Facilities Agreement. As of the date of


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