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Agreement And Plan Of Merger Among: Hewlett Packard Enterprise Company, A Delaware Corporation; Satellite Acquisition Sub , I Nc

Agreement and Plan of Merger

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SILICON GRAPHICS INTERNATIONAL CORP | Hewlett Packard Enterprise Company | SATELLITE ACQUISITION SUB, INC

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Title: AGREEMENT AND PLAN OF MERGER among: HEWLETT PACKARD ENTERPRISE COMPANY, a Delaware corporation; SATELLITE ACQUISITION SUB , I NC
Governing Law: Delaware     Date: 8/12/2016
Industry: Computer Hardware     Law Firm: Sidley Austin;Gibson Dunn     Sector: Technology

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Exhibit 2.1

EXECUTION VERSION

 

 

AGREEMENT AND PLAN OF MERGER

among:

H EWLETT P ACKARD E NTERPRISE C OMPANY ,

a Delaware corporation;

S ATELLITE A CQUISITION S UB , I NC .,

a Delaware corporation; and

S ILICON G RAPHICS I NTERNATIONAL C ORP .,

a Delaware corporation

 

 

Dated as of August 11, 2016

 

 

 

 


T ABLE OF C ONTENTS

 

 

    

 

  

Page

 

Section 1.

    

The Merger

  

 

2

  

1.1

    

Merger of Acquisition Sub into the Company

  

 

2

  

1.2

    

Effect of the Merger

  

 

2

  

1.3

    

Closing

  

 

2

  

1.4

    

Effective Time

  

 

2

  

1.5

    

Certificate of Incorporation and Bylaws; Directors and Officers

  

 

2

  

1.6

    

Conversion of Shares

  

 

3

  

1.7

    

Surrender of Certificates; Stock Transfer Books

  

 

4

  

1.8

    

Dissenting Shares

  

 

6

  

1.9

    

Further Action

  

 

6

  

Section 2.

    

Representations and Warranties of the Company

  

 

6

  

2.1

    

Subsidiaries; Due Organization; Etc.

  

 

6

  

2.2

    

Certificate of Incorporation and Bylaws

  

 

7

  

2.3

    

Capitalization, Etc.

  

 

7

  

2.4

    

SEC Filings; Financial Statements

  

 

9

  

2.5

    

Absence of Changes

  

 

11

  

2.6

    

Title to Assets

  

 

13

  

2.7

    

Loans; Accounts Receivable; Inventories

  

 

13

  

2.8

    

Real Property; Leasehold

  

 

14

  

2.9

    

Intellectual Property

  

 

14

  

2.10

    

Contracts

  

 

24

  

2.11

    

Sale of Products; Performance of Services; Customers and Suppliers

  

 

31

  

2.12

    

Liabilities

  

 

32

  

2.13

    

Compliance with Legal Requirements; Global Trade Laws

  

 

32

  

2.14

    

Compliance with Anti-Corruption Laws

  

 

34

  

2.15

    

Governmental Authorizations

  

 

35

  

2.16

    

Tax Matters

  

 

36

  

2.17

    

Employee and Labor Matters; Benefit Plans

  

 

38

  

2.18

    

Environmental Matters

  

 

43

  

2.19

    

Insurance

  

 

44

  

2.20

    

Transactions with Affiliates

  

 

45

  

2.21

    

Legal Proceedings; Orders

  

 

45

  

2.22

    

Authority; Binding Nature of Agreement

  

 

45

  

2.23

    

Inapplicability of Anti-takeover Statutes

  

 

46

  

2.24

    

No Discussions

  

 

46

  

2.25

    

Vote Required

  

 

46

  

2.26

    

Non-Contravention; Consents

  

 

46

  

2.27

    

Fairness Opinion

  

 

47

  

2.28

    

Financial Advisor

  

 

48

  

2.29

    

Information Supplied

  

 

48

  

2.30

    

No Other Representations or Warranties

  

 

48

  

 

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Section 3.

    

Representations and Warranties of Parent and Acquisition Sub

  

 

48

  

3.1

    

Valid Existence, Etc.

  

 

48

  

3.2

    

Authority; Binding Nature of Agreement

  

 

48

  

3.3

    

Non-Contravention

  

 

49

  

3.4

    

Information Supplied

  

 

49

  

3.5

    

Sufficiency of Funds

  

 

49

  

3.6

    

Financial Advisor

  

 

49

  

3.7

    

Acquisition Sub

  

 

50

  

3.8

    

Legal Proceedings

  

 

50

  

3.9

    

No Other Representations or Warranties

  

 

50

  

Section 4.

    

Certain Covenants of the Company

  

 

50

  

4.1

    

Access and Investigation

  

 

50

  

4.2

    

Operation of the Company’s Business

  

 

52

  

4.3

    

No Solicitation

  

 

57

  

4.4

    

Preparation of Proxy Statement; Stockholder Meeting

  

 

61

  

4.5

    

Stock Options and ESPP

  

 

62

  

4.6

    

FIRPTA

  

 

64

  

Section 5.

    

Additional Covenants of the Parties

  

 

64

  

5.1

    

Takeover Statutes

  

 

64

  

5.2

    

Regulatory Approvals; Consents

  

 

64

  

5.3

    

Employee Benefits

  

 

66

  

5.4

    

Indemnification of Officers and Directors

  

 

67

  

5.5

    

Public Announcement

  

 

68

  

5.6

    

Stockholder Litigation

  

 

69

  

5.7

    

Section 16 Matters

  

 

69

  

5.8

    

Resignation of Officers and Directors

  

 

69

  

5.9

    

Removal of All Encumbrances

  

 

69

  

5.10

    

Delisting

  

 

69

  

Section 6.

    

Conditions Precedent to the Merger

  

 

70

  

6.1

    

Conditions to Obligations of Each Party to Effect the Merger

  

 

70

  

6.2

    

Additional Conditions to Obligations of Parent and Acquisition Sub

  

 

70

  

6.3

    

Additional Conditions to Obligations of the Company

  

 

72

  

Section 7.

    

Termination

  

 

72

  

7.1

    

Termination

  

 

72

  

7.2

    

Effect of Termination

  

 

74

  

7.3

    

Expenses; Termination Fees

  

 

74

  

Section 8.

    

Miscellaneous Provisions

  

 

75

  

8.1

    

Amendment

  

 

75

  

8.2

    

Waiver

  

 

75

  

8.3

    

No Survival of Representations and Warranties

  

 

75

  

8.4

    

Entire Agreement; Counterparts

  

 

76

  

8.5

    

Applicable Law; Jurisdiction; Waiver of Jury Trial

  

 

76

  

 

ii


8.6

    

Disclosure Schedule

  

 

76

  

8.7

    

Attorneys’ Fees

  

 

77

  

8.8

    

Assignability

  

 

77

  

8.9

    

Notices

  

 

77

  

8.10

    

Severability

  

 

78

  

8.11

    

Enforcement

  

 

78

  

8.12

    

Construction

  

 

78

  

E XHIBITS

Exhibit A    -    Certain Definitions

 

iii


AGREEMENT AND PLAN OF MERGER

T HIS A GREEMENT AND P LAN OF M ERGER (this “ Agreement ”) is made and entered into as of August 11, 2016, by and among: Hewlett Packard Enterprise Company, a Delaware corporation (“ Parent ”); Satellite Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“ Acquisition Sub ”); and Silicon Graphics International Corp., a Delaware corporation (the “ Company ”). Certain capitalized terms used in this Agreement are defined in Exhibit A .

R ECITALS

W HEREAS , the respective boards of directors of Parent, Acquisition Sub and the Company have each approved the merger of Acquisition Sub with and into the Company (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), whereby each issued and outstanding share of Company Common Stock, other than the shares to be cancelled pursuant to this Agreement and the Dissenting Shares, will be converted into the right to receive the Merger Price in cash, without interest;

W HEREAS , the board of directors of Parent has determined that this Agreement and the Contemplated Transactions are advisable and in the best interests of Parent and has approved this Agreement and the Contemplated Transactions;

W HEREAS , the board of directors of Acquisition Sub has (a) determined that this Agreement and the Contemplated Transactions are in the best interests of Sub and its sole stockholder, (b) approved this Agreement and the Contemplated Transactions and (c) on the terms and subject to the conditions set forth in this Agreement, resolved to recommend that the sole stockholder of Acquisition Sub adopt this Agreement;

W HEREAS , Parent, as sole stockholder of Acquisition Sub, shall adopt this Agreement immediately following the execution and delivery of this Agreement;

W HEREAS , the board of directors of the Company has (a) determined that the Contemplated Transactions are in the best interests of the Company and its stockholders, (b) approved and declared advisable this Agreement and the consummation by the Company of the Contemplated Transactions, and (c) on the terms and subject to the conditions set forth in this Agreement, resolved to recommend that the stockholders of the Company vote to adopt this Agreement and approve the Merger (the “ Company Board Recommendation ”);

W HEREAS , in order to induce Parent and Acquisition Sub to enter into this Agreement and to consummate the Contemplated Transactions, concurrently with the execution and delivery of this Agreement, certain stockholders of the Company (including all directors and executive officers of the Company) are executing and delivering voting agreements in favor of Parent and Acquisition Sub (the “ Voting Agreements ”), and the Company’s board of directors has approved the Voting Agreements; and


W HEREAS , each of Parent, Acquisition Sub and the Company desires to make certain representations, warranties, covenants and agreements in connection with the Contemplated Transactions and also to prescribe various conditions to the Contemplated Transactions;

A GREEMENT

N OW , T HEREFORE , in consideration of the foregoing and the mutual representations, warranties and covenants and subject to the conditions set forth in this Agreement, the parties to this Agreement, intending to be legally bound, agree as follows:

Section 1. T HE M ERGER

1.1 Merger of Acquisition Sub into the Company . At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, Acquisition Sub shall be merged with and into the Company. Following the Merger, the Company shall continue as the surviving corporation (the “ Surviving Corporation ”), and the separate corporate existence of Acquisition Sub shall cease.

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

1.3 Closing . The consummation of the Merger (the “ Closing ”) shall take place at the offices of Sidley Austin LLP, 1001 Page Mill Road, Building 1, Palo Alto, California 94304, at 10:00 a.m. Pacific time on a date to be specified by the Company and Parent (the “ Closing Date ”), which date shall be as soon as practicable and in no event later than the second Business Day after the satisfaction or (to the extent permitted by applicable Legal Requirements) waiver of the last to be satisfied or waived of the conditions set forth in Section 6 (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by applicable Legal Requirements) waiver of those conditions), unless another place, time or date is agreed to in writing by the parties.

1.4 Effective Time . Subject to the provisions of this Agreement, a certificate of merger satisfying the applicable requirements of the DGCL shall be duly executed by the Company in connection with the Closing and, concurrently with or as soon as practicable following the Closing, filed with the Secretary of State of the State of Delaware. The Merger shall become effective upon the date and time of the filing of such certificate of merger with the Secretary of State of the State of Delaware, or at such later time as may be specified in such certificate of merger with the consent of Parent (the time as of which the Merger becomes effective being referred to as the “ Effective Time ”).

1.5 Certificate of Incorporation and Bylaws; Directors and Officers . Unless otherwise determined by Parent prior to the Effective Time:

(a) the certificate of incorporation of the Surviving Corporation shall be amended in its entirety pursuant to the Merger at the Effective Time or immediately thereafter to conform to the certificate of incorporation of Acquisition Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be “Silicon Graphics International Corp.” and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Legal Requirements;

 

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(b) the bylaws of the Surviving Corporation shall be amended and restated at the Effective Time or immediately thereafter to conform to the bylaws of Acquisition Sub as in effect immediately prior to the Effective Time, and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Legal Requirements; and

(c) the directors and officers of the Surviving Corporation immediately after the Effective Time shall be the respective individuals who are directors and officers of Acquisition Sub immediately prior to the Effective Time, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

1.6 Conversion of Shares .

(a) At the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Acquisition Sub, the Company or any stockholder of the Company:

(i) any shares of Company Common Stock then held by the Company (or held in the Company’s treasury) shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor;

(ii) any shares of Company Common Stock then held by any wholly owned Company Subsidiary shall remain issued and outstanding and no consideration shall be delivered in exchange therefor;

(iii) any shares of Company Common Stock then held by Parent, Acquisition Sub or any other wholly owned Subsidiary of Parent shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor;

(iv) except as provided in clauses “(i),” “(ii)” and “(iii)” above and subject to Section 1.7(b) , Section 1.7(c) and Section 1.8 , each share of Company Common Stock then outstanding shall be converted into the right to receive (upon the proper surrender of the certificate representing such share of Company Common Stock) $7.75 in cash (the “ Merger Price ”), without interest thereon and subject to any required Tax withholding in accordance with Section 1.7(e) ; and

(v) each share of the common stock, $0.01 par value per share, of Acquisition Sub then outstanding shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.001 per share, of the Surviving Corporation.

(b) If, during the Pre-Closing Period, the outstanding shares of Company Common Stock, as the case may be, are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, or if a record date with respect to any such event shall occur during such period, then the Merger Price shall be appropriately adjusted.

 

3


1.7 Surrender of Certificates; Stock Transfer Books .

(a) Prior to the Effective Time, Parent shall designate a bank or trust company (the “ Paying Agent ”) to receive the funds for purposes of effecting the payment and distribution of the Merger Price contemplated by Section 1.6(a)(iv) . Promptly after the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent cash in an amount sufficient to pay the aggregate Merger Price payable pursuant to Section 1.6(a)(iv) in exchange for outstanding shares of Company Common Stock. Such funds deposited with the Paying Agent are referred to herein as the “ Payment Fund .” The Payment Fund shall be invested by the Paying Agent as directed by Parent, in its sole discretion, pending payment thereof by the Paying Agent to the holders of the shares of Company Common Stock; provided, however , that no gain or loss thereon shall affect the amounts payable hereunder and Parent shall take all actions necessary to ensure that the Payment Fund includes cash sufficient to satisfy the Parent’s obligation to pay the Merger Price under this Agreement. In the event the Payment Fund is diminished below the level required for the Paying Agent to make prompt cash payments as required under Section 1.7(b) , the Parent shall, or shall cause the Surviving Corporation to, deposit additional cash into the Payment Fund in an amount equal to the deficiency in the amount required to make such payments. Earnings from such investments shall be the sole and exclusive property of Parent, and no part of such earnings shall accrue to the benefit of holders of shares of Company Common Stock. Parent or the Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, incurred by it in connection with the exchange of shares of Company Common Stock for the Merger Price and other amounts contemplated by this Agreement.

(b) As soon as reasonably practicable after the Effective Time, Parent will instruct the Paying Agent to mail to the Persons who, immediately prior to the Effective Time, were record holders of certificates representing shares of Company Common Stock (“ Stock Certificates ”) or non-certificated shares of Company Common Stock represented by book-entry (“ Book-Entry Shares ”): (i) a letter of transmittal in customary form and containing such provisions as Parent may reasonably specify (including a provision confirming that delivery of Stock Certificates shall be effected, and risk of loss and title to Stock Certificates shall pass, only upon delivery of such Stock Certificates to the Paying Agent); and (ii) instructions for use in effecting the surrender of Stock Certificates or Book-Entry Shares. Upon surrender of a Stock Certificate or a Book-Entry Share to the Paying Agent for exchange, together with a duly executed letter of transmittal and such other documents as may be reasonably required by the Paying Agent or Parent: (A) the holder of such Stock Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Price payable to such holder pursuant to Section 1.6(a)(iv) in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Stock Certificate or Book-Entry Share; and (B) the Stock Certificate or Book-Entry Share so surrendered shall be canceled. In the event of a transfer of ownership of any shares of Company Common Stock which are not registered in the transfer records of the Company, payment of the Merger Price may be made to a Person other than the holder in whose name the Stock Certificate so surrendered is registered, if any such Stock Certificate shall be properly endorsed or otherwise be in proper form for transfer, and such

 

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holder shall pay any fiduciary or surety bonds or any transfer or other similar Taxes or establish to the reasonable satisfaction of Parent that such Tax has been paid or is not applicable. Payment of the Merger Price with respect to Book-Entry Shares shall only be made to a Person in whose name such Book-Entry Shares are registered. Until surrendered as contemplated by this Section 1.7(b) , each Stock Certificate or Book-Entry Share shall be deemed, from and after the Effective Time, to represent solely the right to receive the Merger Price for each share of Company Common Stock formerly evidenced by such Stock Certificate or Book-Entry Share. If any Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its discretion and as a condition to the payment of any cash amount pursuant to Section 1.6(a)(iv) , require the owner of such lost, stolen or destroyed Stock Certificate to provide an appropriate affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as indemnity against any claim that may be made against the Paying Agent, Parent or the Surviving Corporation with respect to such Stock Certificate. No interest shall be paid or will accrue on any cash payable to holders of Stock Certificates pursuant to the provisions of this Section 1 .

(c) Any portion of the Payment Fund that remains undistributed to holders of Stock Certificates or Book-Entry Shares as of the date that is 12 months after the date on which the Merger becomes effective shall be delivered to Parent upon demand, and any holders of Stock Certificates who have not theretofore surrendered their Stock Certificates in accordance with this Section 1.7 shall thereafter look only to Parent for satisfaction of their claims for payment pursuant to Section 1.6(a)(iv) . None of Parent, Acquisition Sub, the Company, the Surviving Corporation and the Paying Agent shall be liable to any holder or former holder of Company Common Stock or to any other Person with respect to any cash amounts delivered to any public official pursuant to any applicable abandoned property law, escheat law or similar Legal Requirement.

(d) At the Effective Time, holders of Stock Certificates or Book-Entry Shares that were outstanding immediately prior to the Effective Time shall cease to have any rights as stockholders of the Company, and the stock transfer books of the Company shall be closed with respect to all shares of Company Common Stock outstanding immediately prior to the Effective Time. No further transfer of any such shares of Company Common Stock shall be made on such stock transfer books after the Effective Time. If, after the Effective Time, a valid Stock Certificate is presented to the Surviving Corporation or Parent, such Company Stock Certificate shall be canceled and shall be exchanged as provided in this Section 1.7 .

(e) The Paying Agent, Parent, Acquisition Sub and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to any holder or former holder of Company Common Stock pursuant to this Agreement such amounts as is required to be deducted or withheld therefrom under the Code or any provision of state, local or foreign Tax law. To the extent any such amounts are so deducted or withheld, and duly and timely deposited with the appropriate Governmental Body, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

 

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1.8 Dissenting Shares .

(a) Notwithstanding anything to the contrary in this Agreement, shares of Company Common Stock held by a holder who has made a proper demand for appraisal of such shares of Company Common Stock in accordance with Section 262 of the DGCL and who has otherwise complied with all applicable provisions of Section 262 of the DGCL (any such shares being referred to as “ Dissenting Shares ” until such time as such holder fails to perfect or otherwise loses such holder’s appraisal rights under Section 262 of the DGCL with respect to such shares) shall not be converted into or represent the right to receive the Merger Price in accordance with Section 1.6(a)(iv) , but shall be entitled only to such rights as are granted by the DGCL to a holder of Dissenting Shares.

(b) If any Dissenting Shares shall lose their status as such (through failure to perfect or otherwise), then such shares shall be deemed automatically to have been converted into, as of the Effective Time, and to represent only, the right to receive the Merger Price in accordance with Section 1.6(a)(iv) , without interest thereon, upon surrender of a Stock Certificate or Book-Entry Share representing such shares in accordance with Section 1.7 , and Parent shall promptly deposit (or cause to be deposited) in the Payment Fund additional cash in an amount sufficient to pay the Merger Price in respect of such shares of Company Common Stock that are no longer Dissenting Shares.

(c) During the Pre-Closing Period, the Company shall give Parent: (i) prompt notice of any demand for appraisal received by the Company prior to the Effective Time pursuant to the DGCL, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the DGCL; and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to any such demand, notice or instrument. The Company shall not make any payment or settlement offer prior to the Effective Time with respect to any such demand, notice or instrument unless Parent shall have given its prior written consent to such payment or settlement offer.

1.9 Further Action . If, at any time after the Effective Time, any further action is determined by Parent to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with full right, title and possession of and to all rights and property of Acquisition Sub and the Company, the officers and directors of the Surviving Corporation and Parent shall be fully authorized (in the name of Acquisition Sub, in the name of the Company and otherwise) to take such action.

Section 2. R EPRESENTATIONS AND W ARRANTIES OF THE C OMPANY

Except as disclosed in any Company SEC Document filed with the SEC on or after June 26, 2015 and prior to the date of this Agreement and publicly available on EDGAR (excluding any disclosures set forth in any section of any Company SEC Document entitled “Risk Factors” or “Forward-Looking Statements” or any other disclosures included in such document that are general cautionary, predictive or forward-looking in nature) or as set forth in the Disclosure Schedule, the Company represents and warrants to Parent and Acquisition Sub as follows:

2.1 Subsidiaries; Due Organization; Etc.

(a) The Company has no Subsidiaries except for the Company Subsidiaries, and neither the Company nor any of the Company Subsidiaries owns any capital stock of, or any

 

6


equity interest of any nature in, any other Entity, other than the Entities identified in Part 2.1(a) of the Disclosure Schedule. None of the Acquired Corporations has agreed or is obligated to make, or is bound by any Contract under which it is or may become obligated to make, any future investment in or capital contribution to any other Entity. None of the Acquired Corporations is a general partner of, or is otherwise liable for any of the debts or other obligations of, any general partnership, limited partnership or other Entity.

(b) The Company is a corporation duly organized, validly existing and in good standing under the DGCL. Each of the Company Subsidiaries is a corporation duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its incorporation, except where the failure to be in good standing would not reasonably be expected to result in a Company Material Adverse Effect.

(c) Each of the Acquired Corporations has all necessary corporate power and authority to: (i) conduct its business in the manner in which its business is currently being conducted; (ii) own and use its assets in the manner in which its assets are currently owned and used; and (iii) enter into, and perform its obligations under, Contracts.

(d) Each of the Acquired Corporations is qualified to do business as a foreign corporation, and is in good standing (with respect to jurisdictions that recognize the concept of good standing), under the laws of all jurisdictions where the nature of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to result in a Company Material Adverse Effect.

2.2 Certificate of Incorporation and Bylaws.  The Company has Made Available to Parent accurate and complete copies of the certificate of incorporation, bylaws and other charter and organizational documents of the respective Acquired Corporations, including all amendments thereto. The Company is not in violation of its certificate of incorporation.

2.3 Capitalization, Etc.

(a) The authorized capital stock of the Company consists of: (i) 120,000,000 shares of Company Common Stock, and (ii) 12,000,000 shares of Company Preferred Stock, par value $0.001 per share, of which no shares have been issued or are outstanding. As of the close of business on August 9, 2016 (the “ Measurement Date ”), the Company held 2,315,036 shares of Company Common Stock in its treasury, 38,752,915 shares have been issued and are outstanding, 1,103,903 shares of Company Common Stock are subject to issuance pursuant to Company Options (whether granted and outstanding under the Company Equity Plans or otherwise), 1,755,925 shares of Company Common Stock are subject to issuance pursuant to RSUs (whether performance or time based and whether granted under the Company Equity Plans or otherwise) and 1,340,017 shares of Company Common Stock are reserved for future issuance pursuant to the Company’s 2005 Employee Stock Purchase Plan, as amended (the “ ESPP ”). As of the Measurement Date, the Company had no shares of Company Restricted Stock outstanding. None of the Company Subsidiaries holds or has held any shares of the Company’s capital stock. All of the outstanding shares of Company Common Stock have been duly authorized and validly issued, and are fully paid and non-assessable. None of the outstanding shares of Company

 

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Common Stock is entitled or subject to any preemptive right. None of the outstanding shares of Company Common Stock is subject to any right of first refusal in favor of the Company. None of the Company and the Company Subsidiaries are parties to any Contracts relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of Company Common Stock or equity interests in any Company Subsidiary. Except as set forth in Part 2.3(a) of the Disclosure Schedule, between the Measurement Date and the execution of this Agreement, the Company has not sold or issued any shares of its capital stock, option, award of restricted stock, restricted stock unit, warrant, interest or right (whether or not exercisable, convertible or exchangeable) to acquire any shares of or interest in capital stock or other securities of the Company.

(b) Part 2.3(b)(i) of the Disclosure Schedule sets forth a report generated by the Company’s internal systems as of the Measurement Date, which includes each Company Option outstanding as of the Measurement Date, and is an accurate and complete report that includes the following information: (A) the particular Company Equity Plan or non-plan arrangement pursuant to which such Company Option was granted, if applicable; (B) the name of the optionee; (C) the number of shares of Company Common Stock subject to such Company Option; (D) the exercise price of such Company Option; (E) the date on which such Company Option was granted; (F) whether the Company Option is intended to qualify as an “incentive stock option” under section 422 of the Code; and (G) the extent to which such Company Option is vested and exercisable as of the date of this Agreement. Each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective (the “ Grant Date ”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, each such grant was made in accordance with the terms of the applicable compensation plan or arrangement of the Company and all other applicable Legal Requirements, the per share exercise price of each Company Option was equal to the fair market value of a share of Company Common Stock on the applicable Grant Date and each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company. The Company has Made Available to Parent accurate and complete copies of all stock option and equity-based compensation plans pursuant to which any stock options, restricted stock, restricted stock units or other forms of equity-based compensation (whether payable in equity, cash or otherwise) were granted and are outstanding as of the Measurement Date, and the forms of all equity-based award agreements evidencing such options, restricted stock, restricted stock units or other forms of equity-based compensation (whether payable in equity, cash or otherwise).  Part 2.3(b)(ii) of the Disclosure Schedule sets forth a report generated by the Company’s internal systems as of the Measurement Date, which includes each share of Company Restricted Stock outstanding as of the Measurement Date, and is an accurate and complete report that includes the following information: (1) the particular Company Equity Plan or non-plan arrangement pursuant to which such share of Company Restricted Stock was issued, if applicable; (2) the name of the holder thereof; (3) the number of shares of Company Restricted Stock held by such holder; (4) the date on which such Company Restricted Stock was issued; and (5) the extent to which such Company Restricted Stock is vested as of the date of this Agreement.  Part 2.3(b)(iii) of the Disclosure Schedule sets forth a

 

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report generated by the Company’s internal systems as of the Measurement Date, which includes each Company RSU outstanding as of the Measurement Date, and is an accurate and complete report that includes the following information: (v) an identifying grant number; (w) the number of shares of Company Common Stock covered under such outstanding Company RSU held by such holder; (x) the date on which such Company RSU was granted; and (y) the applicable vesting schedule, and the extent to which such Company RSU is vested.

(c) Other than as set forth in Sections 2.3(a) and 2.3(b) , there is no: (i) outstanding equity-based compensation award, subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of any of the Acquired Corporations; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of any of the Acquired Corporations; (iii) stockholder rights plan (or similar plan commonly referred to as a “poison pill”) or Contract under which any of the Acquired Corporations is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities; or (iv) none of the Acquired Corporations has committed itself or made any agreements with any Acquired Corporation Service Provider for any future grant of capital stock or other equity securities of any Acquired Corporation.

(d) All outstanding shares of Company Common Stock, Company Options, Company RSUs and other equity-based compensation awards (whether payable in equity, cash or otherwise) and other securities of the Acquired Corporations have been issued and granted in compliance with: (i) all applicable securities laws, the Code and all other applicable Legal Requirements; and (ii) all requirements set forth in applicable Contracts.

(e) All of the outstanding shares of capital stock of each of the Company’s Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and free of preemptive rights, and are owned beneficially and of record by the Company, free and clear of any Encumbrances.

2.4 SEC Filings; Financial Statements .

(a) The Company has Made Available to Parent (to the extent not available on EDGAR) accurate and complete copies of all Company SEC Documents filed since June 29, 2012, as well as all comment letters received by the Company from the SEC and all responses to such comment letters provided to the SEC by or on behalf of the Company since such date. All statements, reports, schedules, forms and other documents required to have been filed by the Company or its officers with the SEC since June 29, 2012 have been so filed on a timely basis. None of the Company Subsidiaries is required to file any documents with the SEC. As of the time it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (A) each of the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act (as the case may be) and the Sarbanes Oxley Act; and (B) none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As used in this Agreement, the term “ file ” and variations thereof, when used in reference to the SEC, shall be broadly construed to include any manner in which a document or information is filed, furnished, supplied or otherwise made available to the SEC.

 

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(b) The Company maintains a system of “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which is effective in providing reasonable assurances: (i) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP; and (ii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Acquired Corporations’ asset that would have an adverse effect on the consolidated financial statements of the Company. The Company maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) reasonably designed to ensure that all material information concerning the Acquired Corporations is made known on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents, and otherwise to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules.  Part 2.4(b) of the Disclosure Schedule lists, and the Company has Made Available to Parent copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.

(c) The financial statements (including any related notes) contained (or incorporated by reference) in the Company SEC Documents filed on or after June 29, 2012, including the Company Financial Statements: (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto as of their respective dates; (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC); and (iii) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof and the respective consolidated results of operations and cash flows of the Company and its Subsidiaries for the periods covered thereby (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments that were not, or are not expected to be, material in amount). The financial and accounting books and records of the Company and its Subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP (to the extent applicable) and any other applicable legal and accounting requirements and reflect only actual transactions. To the extent required by applicable Legal Requirement or securities exchange listing requirements, all financial statements of the Company and its Subsidiaries have been prepared in accordance with generally accepted accounting principles in the jurisdictions in which they are formed or conduct business.

(d) The Company has Made Available to Parent (to the extent not available on EDGAR) accurate and complete copies of the Company Financial Statements.

(e) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including any Contract relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the

 

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other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the Securities Act)), where the result, purpose or effect of such Contract is to avoid disclosure of any material transaction involving, or material Liabilities of, the Company or any of its Subsidiaries in the Company’s or its Subsidiaries’ published financial statements or any of the Company SEC Documents.

(f) Since June 29, 2012, none of the Acquired Corporations, the board of directors or audit committee of the board of directors of the Company, or any officer of the Company, or, to the Company’s knowledge, the Company’s independent accountants, has received: (i) any oral or written notification of any: (A) “significant deficiency” in the internal controls over financial reporting of the Company; (B) “material weakness” in the internal controls over financial reporting of the Company; or (C) fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the internal controls over financial reporting of the Company; or (ii) any material complaint, allegation, assertion or claim alleging, asserting or claiming that the accounting or auditing practices, procedures, methodologies or methods of the Company, any Company Subsidiary or their respective internal accounting controls fail to comply in all material respects with generally accepted accounting principles in the jurisdictions in which they are formed or conduct business, generally accepted auditing standards or applicable Legal Requirements. For purposes of this Agreement, the terms “significant deficiency” and “material weakness” shall have the meanings assigned to them by the Public Company Accounting Oversight Board in Auditing Standard No. 2.

(g) Since June 29, 2012, no attorney representing any of the Acquired Corporations, whether or not employed thereby, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the board of directors of the Company or any committee thereof or to the General Counsel of the Company.

(h) As of the date of this Agreement, there are no outstanding or unresolved comments in the comment letters received from the SEC staff with respect to the Company SEC Documents. To the knowledge of the Company, as of the date of this Agreement, none of the Company SEC Documents is subject to ongoing review or outstanding SEC comment or investigation.

2.5 Absence of Changes.  Since the date of the Most Recent Balance Sheet and through the date of this Agreement:

(a) there has not been any Company Material Adverse Effect, and no event has occurred that, in combination with any other events or circumstances, would reasonably be expected to have or result in a Company Material Adverse Effect;

(b) there has not been any material loss, damage or destruction to, or any material interruption in the use of, any of the assets of any of the Acquired Corporations (whether or not covered by insurance) that has had or would reasonably be expected to have or result in a Company Material Adverse Effect;

 

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(c) none of the Acquired Corporations has: (i) declared, accrued, set aside or paid any dividend or made any other distribution (whether in cash, stock or otherwise) in respect of any shares of capital stock (other than consolidated cash management transfers among the Acquired Corporations, the net effect of which does not change the consolidated cash balance of the Acquired Corporations); or (ii) repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities;

(d) none of the Acquired Corporations has sold, issued or granted, or authorized the issuance of: (i) any capital stock or other security (except for Company Common Stock issued upon the valid exercise of outstanding Company Options); (ii) any option, warrant or right to acquire any capital stock or any other security (except for shares of Company Restricted Stock and Company Options identified in Part 2.3(b) of the Disclosure Schedule); or (iii) any instrument convertible into or exchangeable for any capital stock or other security;

(e) the Company has not amended or waived any of its rights under, or permitted the acceleration of vesting under any provision of any Employee Plan;

(f) none of the Acquired Corporations has made any capital expenditure which, when added to all other capital expenditures made on behalf of the Acquired Corporations since the date of the Most Recent Balance Sheet, exceeds $500,000 individually or $2,000,000 in the aggregate;

(g) none of the Acquired Corporations has: (i) acquired, leased or licensed any material right or other material asset from any other Person; (ii) sold or otherwise disposed of, or leased or licensed, any material right or other material asset to any other Person; or (iii) waived or relinquished any material right, except in each case for rights or other assets acquired, leased, licensed or disposed of in the ordinary course of business and consistent with past practices;

(h) none of the Acquired Corporations has written off as uncollectible, or established any extraordinary reserve with respect to, any material account receivable or other indebtedness;

(i) none of the Acquired Corporations has made any pledge of any of its assets or otherwise permitted any of its assets to become subject to any Encumbrance, except as such pledges and encumbrances relate to immaterial assets made in the ordinary course of business and consistent with past practices;

(j) none of the Acquired Corporations has: (i) adopted, established or entered into any Employee Plan; (ii) caused or permitted any Employee Plan to be amended in any material respect or terminated; or (iii) paid any bonus or made any profit-sharing or similar payment to, or materially increased the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, or granted any rights to receive severance, termination, retention or tax gross-up compensation or benefits to, any of its current or former directors, officers or employees;

(k) none of the Acquired Corporations has changed any of its methods of accounting or accounting practices or internal controls (including internal controls over financial reporting) in any material respect;

 

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(l) to the extent that it would have a materially adverse impact relating to Taxes of any Acquired Corporation for any taxable year or period beginning after the Closing, none of the Acquired Corporations has made, changed or rescinded any election relating to Taxes, settled or compromised any claim relating to Taxes, filed any amended Tax Return, knowingly surrendered any claim for a refund of Taxes or filed any Tax Return other than one prepared in accordance with past practice;

(m) none of the Acquired Corporations has commenced or settled any Legal Proceeding; and

(n) none of the Acquired Corporations has agreed or committed to take any of the actions referred to in clauses “(c)” through “(n)” above.

2.6 Title to Assets . The Acquired Corporations own, and have good and valid title to or a valid leasehold interest in, all material assets and properties purported to be owned or used by them, including: (a) all assets reflected on the Most Recent Balance Sheet (except for inventory or used or obsolete equipment sold or otherwise disposed of in the ordinary course of business since March 25, 2016) or acquired after the date thereof; and (b) all other material assets and properties reflected in the books and records of the Acquired Corporations as being owned by the Acquired Corporations. All of said assets and properties which are owned by the Acquired Corporations, are owned by them free and clear of any Encumbrances, except for: (i) any lien for current taxes not yet due and payable; (ii) minor liens that have arisen in the ordinary course of business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of any of the Acquired Corporations; and (iii) liens described in Part 2.6 of the Disclosure Schedule.

2.7 Loans; Accounts Receivable; Inventories .

(a) There are no outstanding loans or advances owed by any of the Acquired Corporations to any employee, director, consultant, independent contractor or Acquired Corporation other than routine travel advances made to employees in the ordinary course of business.

(b) All existing accounts receivable of the Acquired Corporations (including those accounts receivable reflected on the Most Recent Balance Sheet that have not yet been collected and those accounts receivable that have arisen since March 25, 2016 and have not yet been collected): (i) represent valid obligations of customers of the Acquired Corporations arising from bona fide transactions entered into in the ordinary course of business; and (ii) to the knowledge of the Company, are not subject to any counterclaim or set off.

(c) The inventory of the Acquired Corporations, whether reflected on the Most Recent Balance Sheet or subsequently acquired, (i) is free of any material defect or deficiency, (ii) is in good, usable and currently marketable condition consistent with past practice in the ordinary course of business of the Acquired Corporations (subject, in the case of raw materials and work-in-process, to the completion of the production process), (iii) is salable at customary gross margins and with customary markdowns consistent with past practice in the ordinary course of business and (iv) is properly reflected in the books and records of the

 

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Acquired Corporations at the lesser of cost and fair market value, with adequate obsolescence reserves, all as determined in accordance with GAAP. Since March 25, 2016, there have not been any write-downs of the value of, or establishment of any reserves against, any inventory of the Acquired Corporations except for write-downs and reserves in the ordinary course of business.

2.8 Real Property; Leasehold.

(a) Part 2.8(a) of the Disclosure Schedule contains a complete and accurate list of (i) each parcel of real property owned by any Acquired Corporation (the “ Owned Real Property ”) and (ii) each option held by any Acquired Corporation to acquire any real property. Each Acquired Corporation has fulfilled and performed in all material respects all its obligations, and all obligations binding upon any Owned Real Property, under each of the Encumbrances to which any Owned Real Property is subject, and neither any Acquired Corporation nor any Owned Real Property is in breach or default under, or in violation of or noncompliance with, any such Encumbrances, and no event has occurred and no condition or state of facts exists which, with the passage of time or the giving of notice or both, would constitute a material breach, default, violation or noncompliance. The consummation of the Contemplated Transactions will not result in any breach or violation of, default under or noncompliance with, or any forfeiture or impairment of any rights under, any Encumbrance to which any Owned Real Property is subject, or require any consent, approval or act of, or the making of any filing with, any Person party to or benefited by or possessing the power or authority to exercise rights or remedies under or with respect to any such Encumbrance.

(b) Part 2.8(b) of the Disclosure Schedule sets forth an accurate and complete list of each lease, sublease or other agreement (the “ Company Leases ”) pursuant to which any of the Acquired Corporations leases real property from any other Person. (All real property leased to the Acquired Corporations, including all buildings, structures, fixtures and other improvements leased to the Acquired Corporations, are referred to as the “ Leased Real Property ”). There are no subleases, licenses, occupancy agreements or other contractual obligations that grant the right of use or occupancy of any of the Leased Real Property to any Person other than the Acquired Corporations, and there is no Person in possession of any of the Leased Real Property other than the Acquired Corporations. Each of the Acquired Corporations has complied in all material respects with the terms of all leases (to which they are parties) relating to the Leased Real Property, and all such leases are in full force and effect in all material respects.

2.9 Intellectual Property .

(a) Part 2.9(a) of the Disclosure Schedule accurately identifies each Acquired Corporation Product that is material to the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted.

(b) Part 2.9(b) of the Disclosure Schedule accurately identifies: (i) each item of Registered IP (1) in which any of the Acquired Corporations has an ownership interest of any nature (whether exclusively, jointly with another Person or otherwise) (collectively, the “ Owned Registered IP ”) and (2) that are trademarks and not registered in the name of any Acquired

 

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Corporations but may be used in the business of the Acquired Corporations as currently conducted (“ Other Registered IP ”); (ii) the jurisdiction in which such item of the Owned Registered IP or Other Registered IP has been registered or filed and the applicable application, registration or serial number; and (iii) the application or filing date, the status of any such application or registration, and, where applicable, the date of registration of such item of Owned Registered IP or Other Registered IP. The Company has Made Available to Parent: (A) copies of all applications for Owned Registered IP that have not yet been made publicly available; (B) all material correspondence with any Governmental Body with respect to such applications referenced in (A); and (C) to the extent it is in Company’s possession and not subject to attorney-client or work product privileges, other material documents that have not yet been made publicly available related to each such application identified, or required to be identified, in Part 2.9(b)(i)(1) of the Disclosure Schedule and such copies are complete and accurate to Company’s knowledge.  Part 2.9(b)(i)(1) of the Disclosure Schedule identifies each action, filing, and payment that must be taken or made on or before the date that is 120 days after the date of this Agreement in order to maintain each item of the Owned Registered IP that is identified, or required to be identified, in Part 2.9(b)(i)(1) of the Disclosure Schedule. To Company’s knowledge, no Acquired Corporation has engaged in any manner of false patent marking.

(c) Part 2.9(c) of the Disclosure Schedule accurately identifies:

(i) in Part 2.9(c)(i) of the Disclosure Schedule: (A) each Contract pursuant to which any material Intellectual Property Rights or material Technology is licensed (for purposes hereof, a covenant not to sue or not to assert infringement claims shall be deemed to be equivalent to a license) to any Acquired Corporation (excluding Contracts for which such licenses have expired and do not otherwise survive by their terms, and excluding licenses to commercial off-the-shelf software that are generally available to the public on standard terms at an annual cost of less than $100,000 (“ COTS Software ”)); (B) each Contract pursuant to which any Acquired Corporation receives a license or rights to any Patent that is material to the conduct of the business of the Acquired Corporations; and (C) whether the foregoing licenses are exclusive or non-exclusive;

(ii) in Part 2.9(c)(ii) of the Disclosure Schedule: (A) each Contract pursuant to which any Person is granted any license under, or otherwise receives or acquires any right (whether or not currently exercisable) or interest in, any material Company Intellectual Property (excluding (w) those nonexclusive licenses granted to channel partners or resellers pursuant to Contracts that do not materially deviate from the Company’s standard form of reseller agreement that have already been identified by being Made Available to Parent, (x) Contracts for which such license or other right has expired and which does not otherwise survive by its terms, (y) those nonexclusive licenses typically granted to customers in the ordinary course of business pursuant to Contracts that do not obligate the Acquired Corporations to indemnify, defend, hold harmless or reimburse such customer with respect to any Intellectual Property Rights infringement, misappropriation or similar claim, other than to the top eighteen (18) customers of the Company, and (z) those nonexclusive licenses of the binary, executable code forms of Acquired Corporation Products granted to end user customers in the ordinary course of business on the Company’s standard form for such licenses, pursuant

 

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to which both: (1) the licensee is permitted only to use the Acquired Corporation Products internally for its own business and not to distribute or otherwise make available any Acquired Corporation Product to any third party; and (2) the total compensation payable to the Company is less than $100,000 in any 12-month period (each a “ Standard User License ”)); and (B) whether these licenses, rights and interests are exclusive or non-exclusive;

(iii) in Part 2.9(c)(iii) of the Disclosure Schedule, each Contract obligating any Acquired Corporation to pay to any other Person royalties, fees, commissions, or other amounts (excluding sales commissions payable to employees according to the applicable Acquired Corporation’s standard commissions plan) in excess of $100,000 annually or in the aggregate upon or for any Acquired Corporation’s use of any Intellectual Property Rights (excluding COTS Software) or upon the sale, lease, license, distribution, provision, or other disposition of any Acquired Corporation Product; and

(iv) in Part 2.9(c)(iv) of the Disclosure Schedule, a list of Company’s customers since January 1, 2014.

(d) The Company has Made Available to Parent a complete and accurate copy of each standard form of Company IP Contract used by any Acquired Corporation since January 1, 2010, including each standard form of the following: (i) terms and conditions for the sale, lease, license or provisioning of any Acquired Corporation Product (including any quotations, purchase orders, purchase order acknowledgments, invoices or otherwise); (ii) agreement for the sale, lease, license or provisioning by any Acquired Corporation of any Acquired Corporation Product; (iii) purchase, supply or manufacturing agreement for the sale or license to any Acquired Corporation of any part or component of any Acquired Corporation Product; (iv) employee agreement containing any assignment or license of Technology or Intellectual Property Rights or any confidentiality provision; (v) consulting or independent contractor agreement containing any assignment or license of Technology or Intellectual Property Rights or any confidentiality provision; or (vi) confidentiality or nondisclosure agreement. To Company’s knowledge, Part 2.9(d) of the Disclosure Schedule accurately identifies each Company IP Contract that deviates in any material respect from the corresponding standard form described above (except for clause (vi)), including any Company IP Contract with any employee, consultant, or independent contractor in which the employee, consultant, or independent contractor expressly reserved or retained any Technology or Intellectual Property Rights that are related to any Acquired Corporation’s current or currently contemplated business, research, or development or that are used in or pertain to an Acquired Corporation Product.

(e) Except as identified in Part 2.9(e) of the Disclosure Schedule, the Acquired Corporations either: (A) exclusively own all right, title and interest to and in the Owned Registered IP and all Company Intellectual Property (other than Intellectual Property Rights or Technology licensed to the Company, as identified in Part 2.9(c)(i) of the Disclosure Schedule, and other than COTS Software) free and clear of any Encumbrances (other than nonexclusive licenses granted pursuant to the Contracts listed in Part 2.9(c)(ii) of the Disclosure Schedule and Standard User Licenses); or (B) are parties to an enforceable Contract that grants a

 

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license or right to use all Company Intellectual Property as currently used or contemplated to be used by the Company. Without limiting the generality of the foregoing:

(i) to the Company’s knowledge, all documents and instruments necessary to establish, perfect, and maintain the rights of the Acquired Corporations in the owned or purported to be owned Company Intellectual Property have been validly executed, delivered and filed in a timely manner with the appropriate Governmental Body;

(ii) each Company Associate who is or was involved in the creation or development of any owned or purported to be owned Company Intellectual Property or Acquired Corporation Product has signed a valid and enforceable agreement containing an irrevocable present assignment of Intellectual Property Rights to the Acquired Corporation for which such Company Associate is or was an employee or independent contractor and, to Company’s knowledge, confidentiality provisions protecting such Company Intellectual Property;

(iii) no Company Associate has any ownership or other interest and no other third party has any ownership interest (including the right to compensation) to or in any owned or purported to be owned Company Intellectual Property or Acquired Corporation Product;

(iv) except for the licenses granted in Contracts identified in Part 2.9(c)(ii) of the Disclosure Schedule as being exclusive licenses, none of the Acquired Corporations is bound by, and no owned or purported to be owned Company Intellectual Property is subject to, any Contract that limits or restricts in any material respect the ability of any Acquired Corporation to use, exploit, assert or enforce any owned Company Intellectual Property;

(v) no funding, facilities or personnel of any Governmental Body or any public or private university, college, research institute or other educational institution were used, directly or indirectly, to develop or create, in whole or in part, any owned Company Intellectual Property or Acquired Corporation Product, and no Governmental Body or public or private university, college, research institute or other educational institution an ownership interest or license right in any owned or purported to be owned Company Intellectual Property or Acquired Corporation Product (other than nonexclusive licenses granted pursuant to the Contracts listed in Part 2.9(c)(ii) of the Disclosure Schedule and Standard User Licenses);

(vi) except for Contracts listed in Part 2.9(e)(vi) of the Disclosure Schedule, each Acquired Corporation has, to Company’s knowledge: (A) timely made all required disclosures regarding any Patents or patentable inventions resulting from or conceived during the development of any portion of any owned or purported to be owned Company Intellectual Property or Acquired Corporation Product developed under a Contract with any Governmental Body such that the Governmental Body does not have the right to take or claim title to such Patents or patentable inventions; and (B) timely made all required disclosures (on the appropriate Governmental Body schedule) of all

 

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technical data and technical information resulting from the development of any portion of any owned Company Intellectual Property or Acquired Corporation Product developed under any Contract with any Governmental Body in which the Governmental Body has unlimited, limited, restricted, government purpose or specifically negotiated rights;

(vii) except for Contracts listed in Part 2.9(e)(vii) of the Disclosure Schedule, each Acquired Corporation has, to Company’s knowledge, marked the technical data, computer software and other proprietary information that it has provided to the U.S. government in material compliance with all applicable Legal Requirements, and for each contract or subcontract with a Governmental Body containing a patents rights clause, the Acquired Corporation has reported and elected to retain the title to all patentable inventions that were conceived or reduced to practice under any such contract or subcontract in accordance with the requirements of the applicable patent rights clause. No contractual right exists for any customer that is a Governmental Body of the United States (a “ Customer ”) to take title to any owned Company Intellectual Property, nor has any Customer communicated to an Acquired Corporation the Customer’s intent to take title to or actual transfer of title to any owned Company Intellectual Property. No Customer has communicated in any other manner the Customer’s intent to take title to or actual transfer of title to any owned or purported to be owned Company Intellectual Property;

(viii) except for Contracts listed in Part 2.9(e)(viii) of the Disclosure Schedule, each Acquired Corporation has taken all reasonable steps to maintain the confidentiality of and otherwise protect and enforce its rights in all owned or purported to be owned Company Intellectual Property, including all proprietary information held by any of the Acquired Corporations, or purported to be held by any of the Acquired Corporations, as a Trade Secret;

(ix) except for Contracts listed in Part 2.9(e)(ix) of the Disclosure Schedule, none of the Acquired Corporations is now or has ever been a member or promoter of, or a contributor to, or made any commitments to or agreements with any patent pool, industry standards body, standards setting organization, industry or other trade association, or any similar organization that could require or obligate any of the Acquired Corporations to grant or offer to any other Person any license or right to any owned or purported to be owned Company Intellectual Property or any Technology or Intellectual Property developed, conceived, made or reduced to practice by any Acquired Corporation or an Affiliate of an Acquired Corporation after the Closing Date;

(x) except for Contracts listed in Part 2.9(e)(x) of the Disclosure Schedule, none of the Acquired Corporations have any duty or obligation to deliver or license the source code for any Acquired Corporation Product to any escrow agent for the benefit of any other Person. Except for source code for Open Source Code distributed pursuant to the licenses for such Open Source Code identified in Part 2.9(l) of the Disclosure Schedule, no event has occurred that will, or could reasonably be expected to, result in the delivery or license of any source code for any Acquired Corporation Product to any other Person who is not, as of the date of this Agreement, a Company Associate. Except for source code for Open Source Code distributed pursuant to the licenses for

 

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such Open Source Code identified in Part 2.9(l) of the Disclosure Schedule, no source code for any Acquired Corporation Product has been delivered, licensed or made available to any escrow agent or other Person (other than employees of the Acquired Corporations);

(xi) the Acquired Corporations own or otherwise have, and upon the Closing the Surviving Corporation will continue to have, all material Technology and material Intellectual Property Rights needed to conduct the business of the Acquired Corporations in a manner that is substantially similar in all material respects to the conduct of the business immediately prior to Closing and as currently contemplated by the Company to be conducted; and

(xii) the execution, delivery or performance of this Agreement or any ancillary agreement specified herein, the consummation of the Contemplated Transactions and the satisfaction of any Closing condition set forth herein will not contravene, conflict with or result in any termination of or new or additional limitations on the Parent’s right, title or interest in or to the material Company Intellectual Property, nor will it cause: (A) any Acquired Corporation to grant to any other Person any right in or with respect to any Company Intellectual Property; or (B) any Acquired Corporation to be obligated to pay any royalties or other fees or consideration with respect to Intellectual Property of any Person in excess of those payable by them in the absence of this Agreement or the Contemplated Transactions.

(f) Except as identified in Part 2.9(f) of the Disclosure Schedule, all owned or purported to be owned Company Intellectual Property is, to Company’s knowledge, valid, subsisting and enforceable (each, to the extent such term “valid, subsisting or enforceable” is applicable under law to the specific form of Intellectual Property Rights). Without limiting the generality of the foregoing:

(i) all filings, payments and other actions required to be made or taken to maintain each item of Company Intellectual Property that is Owned Registered IP in full force and effect have been made by the applicable deadline and no Owned Registered IP as disclosed or required to be disclosed in Part 2.9(b)(i)(1) of the Disclosure Schedule has been abandoned or allowed to lapse;

(ii) all documents shown in the records of a Governmental Body applicable to any Owned Registered IP are, to Company’s knowledge, current and accurate in all material respects (including change of ownership and assignments);

(iii) to the Company’s knowledge, no Trademark (whether registered or unregistered) owned, used, or applied for by any of the Acquired Corporations conflicts or interferes with any Trademark (whether registered or unregistered) owned, used or applied for by any other Person and each Acquired Corporation has taken commercially reasonable steps to review conflicts or interferences it becomes aware of and, when so aware, to enforce its material Trademarks in its reasonable business judgment;

 

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(iv) no interference, opposition, reissue, reexamination or other Legal Proceeding of any nature is pending, or to the knowledge of the Company threatened, in which the scope, validity or enforceability of any owned Company Intellectual Property is being, has been or could reasonably be expected to be contested or challenged; and

(v) to Company’s knowledge, there is no basis for a claim that could reasonably be expected to result in a ruling, judgment or determination by any Governmental Body that any owned Company Intellectual Property that is material to the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted is invalid or unenforceable.

(g) [Reserved.]

(h) To the knowledge of the Company, no Person has infringed, misappropriated, or otherwise violated, and no Person is currently infringing, misappropriating or otherwise violating, any owned or purported to be owned Company Intellectual Property.  Part 2.9(h) of the Disclosure Schedule accurately identifies (and the Company has Made Available to Parent a complete and accurate copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of the Acquired Corporations or any Representative of any of the Acquired Corporations since January 1, 2010 regarding any actual, alleged or suspected infringement or misappropriation of any owned Company Intellectual Property and provides a brief description of the current status of the matter referred to in such letter, communication or correspondence.

(i) Except as identified in Part 2.9(i) of the Disclosure Schedule, none of the Acquired Corporations and none of the Acquired Corporation Products has, since January 1, 2010, infringed (directly, contributorily, by inducement or otherwise), misappropriated or otherwise violated, and is not currently infringing, misappropriating or otherwise violating, (A) to Company’s knowledge, any Patent or Trademark of any other Person, or (B) any other Intellectual Property Right of any other Person. Without limiting the generality of the foregoing:

(i) no infringement, misappropriation or similar claim or Legal Proceeding is pending or, to the knowledge of the Company, could reasonably be expected to be threatened against any Acquired Corporation;

(ii) since January 1, 2010, none of the Acquired Corporations has received any written notice or other written communication asserting that any Acquired Corporation Product infringes, misappropriates or violates any Intellectual Property Right of another Person, or suggesting or offering that any Acquired Corporation obtain a license to any Intellectual Property Right of another Person because of actual, alleged, or suspected infringement, misappropriation, or violation of any Intellectual Property Right of another Person;

(iii) except as expressly set forth in the standard form of terms and conditions or agreements referred to in clauses “(i)” or “(ii)” of Section 2.9(d) , none of the Acquired Corporations is bound by any Contract to indemnify, defend, hold harmless or reimburse any other Person with respect to any Intellectual Property Rights

 

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infringement, misappropriation or similar claim and none of the Acquired Corporations has ever assumed, or agreed to discharge or otherwise take responsibility for, any existing or potential Liability of another Person for infringement, misappropriation or violation of any Intellectual Property Right; and;

(iv) no claim or Legal Proceeding involving any Technology or Intellectual Property Right licensed to any Acquired Corporation that is material to the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted is pending or, to the Company’s knowledge, has been threatened, except for any such claim or Legal Proceeding that, if adversely determined, would not adversely affect: (A) the use or exploitation of such Technology or Intellectual Property Right by any of the Acquired Corporations; or (B) the manufacturing, distribution, export, sale or support of any Acquired Corporation Product.

(j) No customer or other licensee has given notice to the Company stating that, and the Company does not otherwise have knowledge that, any Acquired Corporation Product: (i) contains any bug, defect or error (including any bug, defect or error relating to or resulting from the display, manipulation, processing, storage, transmission or use of date data) that materially and adversely affects the use, functionality or performance of such Acquired Corporation Product; or (ii) fails to comply in any material respect with any applicable warranty or other contractual commitment made by any Acquired Corporation relating to the use, functionality or performance of such Acquired Corporation Product. Each Acquired Corporation Product has been manufactured, assembled, sold, installed, repaired and otherwise made available in material compliance with all applicable Legal Requirements. Company has not received from any Person a written notice or claim or written threat to assert any claim against an Acquired Corporation under or based on any contractual obligation or warranty provided by or on behalf of an Acquired Corporation or under or based on any other warranty relating to an Acquired Corporation Product.

(k) To Company’s knowledge, at the time it is provided to a customer or other licensee, none of the Acquired Corporation Product Software contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing, any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed; or (ii) damaging or destroying any data or file without the user’s consent (collectively, “ Viruses ”). The Acquired Corporations have implemented commercially reasonable internal controls and procedures to prevent the introduction and proliferation of any Viruses within the Acquired Corporation Product Software and, if notified of the existence of Viruses, use commercially reasonable efforts to remove such Viruses from the Acquired Corporation Product Software.

(l) Part 2.9(l) of the Disclosure Schedule accurately identifies: (i) the RPM that identifies Open Source Code that is currently distributed with, provided to any Person as a service, provided via a network as a service or application, or otherwise made available with, any Acquired Corporation Product Software, identified by version number (if applicable) and (ii) the applicable license and permissions for the Open Source Code identified in such RPM.

 

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(m) To the Company’s knowledge, each Acquired Corporation’s use, marketing, distribution, licensing, and sale of Acquired Corporation Product Software does not violate any license terms applicable to any item of Open Source Code distributed with or as a part of any Acquired Corporation Product Software and any licenses listed in part 3.9(l) of the Disclosure Schedule.

(n) Except as expressly stated in Part 2.9(n) of the Disclosure Schedule, to the Company’s knowledge, no Acquired Corporation Product Software contains, is derived from, is distributed with or is being or was developed using Open Source Code in a manner that obligates any Acquired Corporation to grant a license under its Patent rights or do the following with respect to any Acquired Corporation Product Software or part thereof: (A) disclose or distribute it in source code form, (B) license it for the purpose of making modifications or derivative works, or (C) redistribute it at no charge.

(o) Except as identified in Part 2.9(o) of the Disclosure Schedule, no Acquired Corporation nor any Company Associate have contributed any Acquired Corporation Product or Technology to Open Source Code or any Open Source Code project, and no contributions made by any of the Acquired Corporation or any Company Associates of Acquired Corporation Product or Technology to Open Source Code or any Open Source Code project, if any, (i) were made in breach of confidentiality, Intellectual Property Rights or other obligations under any Contract to which an Acquired Corporation or the contributing employee is a party, (ii) breach the terms of any agreement under which they were contributed or released.

(p) The source code for material and owned Acquired Corporation Product Software contains annotations and programmer’s comments consistent with customary code annotation conventions and customary practices in the software industry.

(q) Part 2.9(q) of the Disclosure Schedule contains each Acquired Corporation Privacy Policy in effect since August 11, 2011.

(r) Each Acquired Corporation has complied at all times with all of the Acquired Corporation Privacy Policies and has used commercially reasonable efforts to comply with all applicable Legal Requirements pertaining to privacy and data security of User Data and Personal Data processed, collected, stored or transferred by an Acquired Corporation including in connection with the Acquired Corporation Website, Acquired Corporation Products, Acquired Corporation Software and marketing activity and to require the same of third parties acting on behalf of the Acquired Corporation. To Company’s knowledge, the Acquired Corporations have materially complied with the applicable cybersecurity, and data security requirements and with applicable contractual obligations, public statements made by any Acquired Corporation regarding their privacy policies or practices, third party privacy policies which any Acquired Corporation has been contractually obligated to comply with, and any rules of applicable self-regulatory or other organizations in which any Acquired Corporation is or has been a member and to which they are required to comply. To Company’s knowledge and belief, neither the execution, delivery or performance of this Agreement or any of the other material agreements referred to in this Agreement nor the consummation of any of the transactions contemplated by this Agreement, nor the receipt, possession or use by Parent or any Affiliate of Parent of the User Data or Personal Data of any Acquired Corporation Service Provider or any other similar

 

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data or information in the Acquired Corporation Databases, will likely result in any violation of any Acquired Corporation Privacy Policy, any Acquired Corporation Contract, Company Contract or any applicable Legal Requirement pertaining to privacy, User Data, Personal Data, cybersecurity, or data security requirements.

(s) To Company’s knowledge, Part 2.9(s) of the Disclosure Schedule identifies and describes each distinct electronic database containing (in whole or in part) Personal Data or User Data maintained by or for any Acquired Corporation (the “ Acquired Corporation Databases ”), the geographic location of such database, the types of Personal Data or User Data in each such database, and the security policies that have been adopted and maintained with respect to each such database. To Company’s knowledge, each Acquired Corporation Database that is required to be registered under any applicable Legal Requirement has been duly registered and maintained in all material respects. To Company’s knowledge, each Acquired Corporation and each third party acting on behalf of an Acquired Corporation has acquired, collected, transferred and used all Personal Data and User Data in accordance with the terms of, valid and enforceable Contracts. To the Company’s knowledge, since August 11, 2011 all Contracts with any third party acting on behalf of an Acquired Corporation as a processor or sub-processor of Personal Data have contained, at a minimum, terms which require the third party to process Personal Data on the instructions of the Acquired Corporation, implement appropriate technical and organizational security measures to protect the data, and address cross border transfers of Personal Data and User Data in accordance with applicable Legal Requirements. To Company’s knowledge, no Acquired Corporation has obtained, collected, transferred or used any Personal Data or User Data, or possessed any data that is not publicly available, in violation or breach of any Contract or applicable Legal Requirement. There is no known complaint to or any audit, Legal Proceeding, investigation or claim currently pending against any Acquired Corporation by any private party or Governmental Body in respect of Personal Data or User Data.

(t) The Acquired Corporations have established and are in compliance with a written information security program that: (i) includes organizational, administrative, technical and physical safeguards designed to safeguard the security, confidentiality, and integrity of transactions and to protect Personal Data and User Data processed by the Acquired Corporations; (ii) is designed to protect against unauthorized access to, and use, alteration, disclosure or distribution of, the Acquired Corporation IT Systems or Acquired Corporation Data and the systems of any third party service providers that have access to Acquired Corporation Data or Acquired Corporation IT Systems; and (iii) where deemed appropriate, uses reasonable encryption methods for transmission of information across wireless and wired networks and storage of Personal Data and User Data according to its sensitivity and proportional to the risk that the inappropriate use or disclosure of that information could cause financial, physical, or reputational harm to an individual. Except as disclosed in Part 2.9(t) of the Disclosure Schedule, (i) the Acquired Corporations have not suffered any security breach which has resulted in the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access, or illegal use of any of the Acquired Corporation Data, Personal Data or User Data, (ii) no breach or violation of any security program described above has occurred or, to the knowledge of any Acquired Corporation, is threatened, and (iii) there has been no unauthorized or illegal use of or access to any Acquired Corporation Data, and none of the Acquired Corporations has notified, or been required to notify, any Person or Governmental Body of any information security breach involving Personal Data or other Acquired Corporation Data.

 

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(u) Each Acquired Corporation: (i) has taken commercially reasonable measures designed to preserve and maintain the performance and security of the IT Systems; and (ii) to the Company’s knowledge maintains commercially reasonable documentation regarding the IT Systems and their support and maintenance. The IT Systems are in such a condition as to effectively perform all information technology operations necessary to conduct the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted. During the three-year period prior to the date of this Agreement, (A) there has been no material disruption to, or material interruption in, the conduct of business of the Acquired Corporations as currently conducted attributable to a defect, bug, breakdown or other deficiency or failure with respect to any IT Systems, and (B) to the knowledge of the Company, there has been no unauthorized access to or use of any IT Systems by a third party, in each case that has had a Company Material Adverse Effect. Each Acquired Corporation has taken commercially reasonable measures to provide for the back-up and recovery of the data and information necessary to the conduct of the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted without material disruption to, or material interruption in, the conduct of the business of the Acquired Corporations as currently conducted and currently contemplated by the Company to be conducted.

2.10 Contracts.

(a) Part 2.10(a) of the Disclosure Schedule identifies each Company Contract that constitutes a “Material Contract.” For purposes of this Agreement, each of the following shall be deemed to constitute a “ Material Contract ”:

(i) any Contract that would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of the Regulation S-K under the Securities Act or disclosed by the Company on a Current Report on Form 8-K;

(ii) any Contract: (A) relating to the employment of, or the performance of services by, any employee or consultant (other than offer letters with employees providing for “at will” employment terminable on 10 days’ notice or less in substantially the form(s) used by the Company in the ordinary course of business, or such longer period of time as may be required by applicable Legal Requirement; (B) pursuant to which any of the Acquired Corporations is or may become obligated to make or provide any severance, termination, change in control or similar payment or benefit to any Company Associate; or (C) pursuant to which any of the Acquired Corporations is or may become obligated to make any bonus or similar payment (other than payments constituting base salary) in excess of $250,000 to any Company Associate;

(iii) any collective bargaining, union, works council or similar agreements;

 

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(iv) any Contract: (A) identified or required to be identified in Part 2.9 of the Disclosure Schedule; or (B) relating to the acquisition, development, sale or disposition of any business unit, product line or Company Intellectual Property (other than COTS Software, Standard User Licenses and licenses for Open Source Code);

(v) any Contract that provides for indemnification of any Company Associate; in each case relating to amounts reasonably expected to be in excess of $250,000;

(vi) any Contract imposing any restriction in any material respect on the right or ability of any Acquired Corporation: (A) to compete with any other Person or in any line of business or in any geographic area; (B) to acquire any product or other asset or any services from any other Person; (C) to solicit, hire or retain any Person as an employee, consultant or independent contractor, other than non-solicitation provisions restricting the hiring of employees of the counterparty contained in non-material vendor, outsourcing or supply agreements entered into in the ordinary course of business; (D) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any other Person; (E) to perform services for any other Person; or (F) to transact business or deal in any other manner with any other Person;

(vii) any Contract containing any “most favored nation” or “most favored customer” or similar provision in favor of the other party thereto;

(viii) any Contract (other than Contracts evidencing Company Options and Company Restricted Stock, in each case in the in the form or forms used by the Company in the ordinary course of business and Made Available to Parent): (A) relating to the acquisition, issuance, voting, registration, sale or transfer of any securities; (B) providing any Person with any preemptive right, right of participation, right of maintenance or similar right with respect to any securities; or (C) providing any of the Acquired Corporations with any right of first refusal with respect to, or right to repurchase or redeem, any securities;

(ix) any Contract incorporating or relating to any guaranty, any warranty, any sharing of Liabilities or any indemnity or similar obligation involving a reasonable expectation of an actual claim against an Acquired Corporation, in each case relating to amounts reasonably expected to be in excess of $250,000, except for Contracts for the sale of Acquired Corporation Products entered into in the ordinary course of business;

(x) any Contract with respect to the formation, creation, operation, management or control of a joint venture, partnership entity, limited liability entity or other similar entity, other than solely among the Company and its Subsidiaries;

(xi) any Contract relating to Indebtedness and having an outstanding principal amount in excess of $250,000, other than solely among the Company and its Subsidiaries;

 

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(xii) any Contract pursuant to which the Company or any of its Subsidiaries has continuing indemnification (other than indemnification provisions entered into in the ordinary course of business and consistent with past practices), “earn-out” or other contingent payment obligations, in each case owed to a third Person in connection with the acquisition or disposition of any business (whether through any merger, stock acquisition, asset acquisition, or similar transaction), that could result in payments in excess of $250,000;

(xiii) any Contract with any supplier that provides the counterparty with the right to serve as the sole or exclusive provider of goods or services to any Acquired Corporation;

(xiv) any Contract relating to any currency hedging;

(xv) any Contract relating to the ownership or lease of real property;

(xvi) any Contract requiring that any of the Acquired Corporations give any notice or provide any information to any Person prior to considering or accepting any Acquisition Proposal or similar proposal, or prior to entering into any discussions, agreement, arrangement or understanding relating to any Acquisition Transaction or similar transaction;

(xvii) any Contract that contemplates or involves the payment or delivery of cash or other consideration (by or to any Acquired Corporation) in an amount or having a value in excess of $1,000,000 in the aggregate, or contemplates or involves the performance of services (by or for any Acquired Corporation) having a value in excess of $1,000,000 in the aggregate (but excluding any supply contracts, leases, employment agreements or other contracts required to be disclosed elsewhere on Part 2.10(a) of the Disclosure Schedule);

(xviii) any Company Government Contract or Company Government Subcontract, direct as a prime contractor, or indirect as a subcontractor through a third-party prime contractor, including through a reseller, distributor or similar third party pursuant to a master agreement with annual aggregate payments of $5,000,000 or more to the Company and its Subsidiaries under such master agreement, and any subcontract issued to a third party under a Company Government Contract;

(xix) any Contract with any commercial agents, channel partners, distributors, resellers, consultant, or other third-party sales intermediaries that relates to sales outside of the U.S.;

(xx) any Contract with any university or similar academic institution pursuant to which the Company or any of its Subsidiaries has utilized or will utilize any funding, personnel or facility or other resources of such Person in connection with any research or development activities;

(xxi) any Contract with a Top Customer or Top Supplier, in each case relating to amounts reasonably expected to be in excess of $250,000 ( provided, however, that each Contract with any Top Customer or Top Supplier, regardless of the dollar amount, shall constitute a “Material Contract” for purposes of this Agreement); and

 

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(xxii) any other Contract, if a breach or termination of such Contract would reasonably be expected to have or result in a Company Material Adverse Effect.

The Company has Made Available to Parent an accurate and complete copy of each Company Contract that constitutes a Material Contract.

(b) Each Company Contract that constitutes a Material Contract is valid and enforceable against the Company and, to the Company’s knowledge, is in full force and effect, and is enforceable in accordance with its terms, subject to the Enforceability Exceptions, except where the failure to be valid, in full force and effect and enforceable, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

(c) None of the Acquired Corporations has materially violated or breached, or committed any material default under, any Material Contract, except where any violation, breach or commitment of a default has not had and would not reasonably be expected to have, individually or in the aggregate, an adverse material impact on the Acquired Corporations. To the knowledge of the Company, no other Person has materially violated or breached, or committed any material default under, any Material Contract, except where any violation, breach or commitment of a material default has not had and would not reasonably be expected to have, individually or in the aggregate, an adverse material impact on the Acquired Corporations. To the knowledge of the Company, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) would reasonably be expected to: (i) result in a material violation or breach of any of the provisions of any Material Contract; (ii) give any Person the right to declare a material default or exercise any remedy under any Material Contract; (iii) give any Person the right to receive or require a material rebate, chargeback, penalty or change in delivery schedule under any Material Contract; (iv) give any Person the right to accelerate the maturity or performance of any Material Contract that constitutes a Material Contract; or (v) give any Person the right to cancel, terminate or modify any Company Contract that constitutes a Material Contract, except, in each case, as would not reasonably be expected to, individually or in the aggregate, result in an adverse material impact on the Acquired Corporations.

(d) Government Contracts .

(i) With respect to each Contract between the Company or any of its Subsidiaries, on the one hand, and any Governmental Body, on the other hand, for which performance is ongoing as of the date of this Agreement or which has not been formally closed out as of the date of this Agreement, and each bid, quotation or proposal by the Company or any of its Subsidiaries that is outstanding as of the date of this Agreement (each, a “ Bid ”) that if accepted or awarded could lead to a Contract between the Company or any of its Subsidiaries, on the one hand, and any Governmental Body, on the other hand (each such Contract or Bid, a “ Company Government Contract ”), and each Contract between the Company or any of its Subsidiaries, on the one hand, and any prime contractor or upper-tier subcontractor, on the other hand, relating to a Contract between

 

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such Person and any Governmental Body for which performance is ongoing as of the date of this Agreement or which has not been formally closed out as of the date of this Agreement, and each outstanding Bid that if accepted or awarded could lead to a Contract between the Company or any of its Subsidiaries, on the one hand, and a prime contractor or upper-tier subcontractor, on the other hand, relating to a Contract between such Person and any Governmental Body (each such Contract or Bid, a “ Company Government Subcontract ”):

(A) each Company Government Contract or Company Government Subcontract was legally awarded, is binding on the parties thereto, and is in full force and effect in accordance with their terms; provided, that for purposes of this clause “(A),” the terms Company Government Contract and Company Government Subcontract shall not include any Bids;

(B) each of the Company and its Subsidiaries has maintained sufficient records, which records have been delivered or made available to Parent, to demonstrate compliance with the terms and conditions of each Company Government Contract or Company Government Subcontract;

(C) no reasonable basis exists to give rise to a material claim by a Governmental Body for any breach or violation in any material respect of any Legal Requirement, contract, purchase order, task order, delivery order, certification, representation, clause, provision or requirement pertaining to any Company Government Contract or Company Government Subcontract, including mischarging, overcharging, defective pricing, fraud, bid rigging, or price fixing (as such concepts are defined under the state or federal laws of the United States) in connection with any Company Government Contract or Company Government Subcontract;

(D) since June 1, 2006, neither any Governmental Body nor any prime contractor, subcontractor or other Person or entity has notified the Company, in writing, or, to the knowledge of the Company, orally, that the Company has, or may have, breached or violated in any material respect any Legal Requirement, certification, representation, clause, provision or requirement pertaining to any Company Government Contract or Company Government Subcontract, including mischarging, overcharging, defective pricing, fraud, bid rigging, or price fixing (as such concepts are defined under the state or federal laws of the United States) in connection with any Company Government Contract or Company Government Subcontract;

(E) since June 1, 2006, all facts set forth in or acknowledged by any representations, claims or certifications submitted by or on behalf of the Company or any of its Subsidiaries in connection with any Company Government Contract or Company Government Subcontract were current, accurate and complete as of their effective dates;

 

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(F) none of the Company and its Subsidiaries has received any written notice of termination, “show cause” or cure notice pertaining to any Company Government Contract or Company Government Subcontract; provided that this clause “(F)” shall not apply to any notice received more than ten years prior to the date hereof, which notice is related to a Company Government Contract and Company Government Subcontract that is no longer ongoing and has been formally closed out as of the date hereof, provided, further, that for purposes of this clause “(F),” the terms Company Government Contract and Company Government Subcontract shall not include any Bids;

(G) since June 1, 2006, no cost in excess of $50,000 incurred by the Company or any of its Subsidiaries pertaining to a Company Government Contract or Company Government Subcontract has been questioned in writing provided to the Company or any of its Subsidiaries by any Governmental Body, to Company’s knowledge, is the subject of any audit (other than routine audits and similar inquiries) or is under investigation or has been disallowed by any Governmental Body; provided, that for purposes of this clause “(G),” the terms Company Government Contract and Company Government Subcontract shall not include any Bids;

(H) since June 1, 2006, no payment in excess of $50,000 due to the Company or any of its Subsidiaries pertaining to any Company Government Contract or Company Government Subcontract has been withheld or set off, and the Company is entitled to all progress or other payments received to date with respect thereto; provided, that for purposes of this clause “(H),” the terms Company Government Contract and Company Government Subcontract shall not include any Bids;

(I) each of the Company and its Subsidiaries has complied with (i) all requirements relating to the safeguarding of, and access to, classified information under each Company Government Contract or Company Government Subcontract and (ii) any Legal Requirement relating to the safeguarding of, and access to, classified information (or, in the case of Contracts governed by Legal Requirements other than the state or federal laws of the United States, the functional equivalent thereof, if any); and all violations thereof have been reported to the appropriate Governmental Body and contracting parties as required by any Company Government Contracts or Company Government Subcontracts or any Legal Requirement relating to the safeguarding of, and access to, classified information;

(J) with respect to any ongoing Company Government Contract or Company Government Subcontract or completed Company Government Contract or Company Government Subcontract, under which final payment was received by the Company or any of its Subsidiaries

 

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within ten years prior to the date of this Agreement, the Company and its Subsidiaries do not have credible evidence that a Principal, Employee, Agent, or Subcontractor (as such terms are defined by Federal Acquisition Regulation (“ FAR ”) 52.203-13(a)) of the Company or any of its Subsidiaries has committed a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act, and the Company and its Subsidiaries have not conducted and are not conducting an investigation to determine whether credible evidence exists that a Principal, Employee, Agent, or Subcontractor (as such terms are defined by FAR 52.203-13(a)) of the Company or any of its Subsidiaries has committed a violation of Federal criminal law involving a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act; and

(K) with respect to any ongoing Company Government Contract or Company Government Subcontract or completed Company Government Contract or Company Government Subcontract under which final payment was received by the Company or any of its Subsidiaries within ten years prior to the date of this Agreement, the Company and its Subsidiaries do not have credible evidence of any significant overpayment(s) on such Company Government Contract or Company Government Subcontract, other than overpayments resulting from contract financing payment as defined in FAR 32.001, and the Company and its Subsidiaries have not conducted and are not conducting an investigation to determine whether credible evidence exists of any significant overpayment(s) on such Company Government Contract or Company Government Subcontract, other than overpayments resulting from contract financing payment as defined in FAR 32.001; provided, that for purposes of this clause “(K),” the terms Company Government Contract and Company Government Subcontract shall not include any Bids.

(ii) The Company and its Subsidiaries are not, nor have any of them ever been, suspended or debarred from doing business with a Governmental Body or, to the knowledge of the Company, proposed for suspension or debarment by a Governmental Body, and, to the knowledge of the Company, have not been the subject of a finding of non-responsibility or ineligibility for contracting with a Governmental Body.

(iii) (A) Neither the Company, its Subsidiaries, nor any of their respective directors or officers or Principals (as such term is defined by FAR 52.209-5(a)(2)) is, or since January 1, 2010 has been, under indictment with respect to any alleged irregularity, misstatement or omission arising under or relating to any Company Government Contract or Company Government Subcontract with a Governmental Body and (B) since January 1, 2010, the Company and its Subsidiaries have not entered into any consent order or administrative agreement relating directly or indirectly to any such Company Government Contract or Company Government Subcontract with a Governmental Body.

 

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(iv) All sales representatives who assist the Company and its Subsidiaries in soliciting or obtaining a Company Government Contract are bona fide employees or bona fide agencies as defined in FAR 52.203.5.

(v) To the knowledge of the Company the past performance evaluations received by the Company or its Subsidiaries since January 1, 2010 from a Governmental Body in relation to a Company Government Contract have been satisfactory or better; provided, that for purposes of this clause “(v),” the term Company Government Contract shall not include any Bids.

(vi) The Company and each of its Subsidiaries have the capacity, facilities and personnel necessary to deliver, in a timely fashion and in accordance with the Defense Priorities and Allocations System regulations, all outstanding defense rated orders received under a Company Government Contract or Company Government Subcontract.

(vii) To the knowledge of the Company no Company employee formerly employed by a Governmental Body in the past ten years (“ Former Government Employee ”) participated personally and substantially in any procurement decisions by such Governmental Body, and the Company and all Former Government Employees are in material compliance with all Legal Requirements regarding post-employment conflict of interest restrictions applicable to such Former Government Employees.]

2.11 Sale of Products; Performance of Services; Customers and Suppliers .

(a) No Acquired Corporation is obligated to: (i) provide any recipient of any Acquired Corporation Product (or any other Person) with any upgrade, improvement or enhancement of an Acquired Corporation Product, except under standard support contracts entered into in the ordinary course of business consistent with past practice; or (ii) design or develop a new product, or a customized, improved or new version of an Acquired Corporation Product, for any other Person.

(b) Since January 1, 2014, no customer has asserted or threatened to assert any material claim against any of the Acquired Corporations: (i) under or based upon any warranty provided by or on behalf of any of the Acquired Corporations; (ii) alleging injury from use of any Acquired Corporation Product; or (iii) based upon any services performed by any of the Acquired Corporations. No event has occurred, and no condition or circumstance exists, that could reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the assertion of any such material claim.

(c) Part 2.11(c) of the Disclosure Schedule sets forth a true, correct and complete list of the top twenty customers (whether end customers, distributors or resellers) of the Company, as measured by recognized revenue for the twelve months ended June 24, 2016 (the “ Top Customers ”). No Top Customer has cancelled or otherwise terminated or, to the knowledge of the Company, threatened to cancel, terminate or otherwise materially and

 

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adversely alter the terms of its business relationship with the Company. Neither the Company nor any of its Subsidiaries is involved in any material dispute with any such customer of the Company or has been notified by or has notified any such customer of any material breach or violation of any contract or agreement with any such customer.

(d) Part 2.11(d) of the Disclosure Schedule sets forth a true, correct and complete list of the top twenty suppliers (the “ Top Suppliers ”) by the aggregate amounts paid by the Company and its Subsidiaries during the twelve months ended June 24, 2016. Since June 24, 2016, (i) there has been no termination of the business relationship of the Company or its Subsidiaries with any Top Supplier, (ii) there has been no material change in the material terms of its business relationship with any Top Supplier adverse to the Company or its Subsidiaries and (iii) no Top Supplier has notified the Company or any of its Subsidiaries that it intends to terminate its business relationship with the Company or its Subsidiaries or change the pricing or other terms of its business in any material respect adverse to the Company or its Subsidiaries. Except for letters of credit for outstanding purchase orders, none of the Company or any of its Subsidiaries is required to provide any material bonding or other material financial security arrangements in connection with any transactions with any supplier in the ordinary course of its business. Neither the Company nor any of its Subsidiaries is involved in any material dispute with any Top Supplier or has been notified by or has notified any Top Supplier, in writing, of any material breach or violation of any contract or agreement with any Top Supplier.

2.12 Liabilities . None of the Acquired Corporations has any accrued, contingent or other Liabilities of any nature, either matured or unmatured, except for: (a) liabilities identified in the Most Recent Balance Sheet (including the notes thereto); (b) normal and recurring current liabilities that have been incurred by the Acquired Corporations since March 25, 2016 in the ordinary course of business and consistent with past practices; and (c) liabilities or obligations incurred in connection with the Contemplated Transactions.

2.13 Compliance with Legal Requirements; Global Trade Laws.

(a) Each of the Acquired Corporations is, and has at all times since June 24, 2011 been, in compliance with all applicable Legal Requirements, in all material respects except as disclosed on Part 2.13(a) of the Disclosure Schedule. None of the Acquired Corporations has received since June 24, 2011 any written notice or, to the Company’s knowledge, other communication from any Governmental Body or other Person regarding any actual or possible material violation of, or material failure to comply with, any Legal Requirement. Each of the Acquired Corporation Products complies with and has complied in all material respects with all applicable Legal Requirements in each of the jurisdictions in which such Acquired Corporation Product is or has been sold directly or indirectly by or on behalf of the Acquired Corporations.

(b) Since June 24, 2011, each of the Acquired Corporations has at all times conducted its transactions in accordance in all material respects with: (i) all applicable U.S. export and re-export controls, including the Export Administration Regulations and the International Traffic in Arms Regulations; the sanctions and embargoes administered by the Office of Foreign Assets Control (OFAC); and (ii) all other applicable import, customs, export control or other Legal Requirements that arise in countries in which any Acquired Corporation conducts business or which otherwise have jurisdiction over the Acquired Corporation’s operations.

 

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(c) Without limiting Section 2.13(b) :

(i) each of the Acquired Corporations has obtained all Consents, orders and declarations from, provided all notices to, and made all filings with, all Governmental Bodies required for: (A) the export, import and re-export of its products, services, software and technologies; and (B) releases of technologies and software to foreign nationals located in the United States and abroad (the “ Export Approvals ”);

(ii) each of the Acquired Corporations is in compliance in all material respects with the terms of all Export Approvals;

(iii) there are no pending or, to the Company’s knowledge, threatened, claims, investigations, examinations or other administrative or judicial proceedings against the Acquired Corporations with respect to such Export Approvals;

(iv) each of the Acquired Corporations has filed with the Bureau of Industry and Security and any other Governmental Body that regulates exports all reports that are required under applicable Legal Requirements;

(v) each Acquired Corporation is and has been in compliance with all applicable Legal Requirements pertaining to customs, including tariffs, taxes and duties;

(vi) none of the Acquired Corporations does business or has done business, directly or indirectly, in, or is aware of its products being sold, shipped to or otherwise transferred to, directly or indirectly, now or previously to a country subject to an embargo under OFAC rules and regulations;

(vii) none of the Acquired Corporations has done business or provided any services to any Person on any of the relevant U.S. Government lists of Prohibited Persons, including the Department of Treasury’s Specially Designated Nationals and Blocked Persons List and the Department of Commerce’s Denied Persons List and Entity List;

(viii) the Acquired Corporations have in place adequate controls and systems reasonably designed to ensure compliance with applicable Legal Requirements pertaining to sanctions and import and export control in each of the jurisdictions in which the Acquired Corporations do business, either directly or indirectly;

(ix) since January 1, 2010, none of the Acquired Corporations has been the subject of any investigations, inspections or visits form any Governmental Body pertaining to export and import control or customs Legal Requirements; and

(x) Part 2.13(c)(x) of the Disclosure Schedule sets forth the true, accurate and complete export control classifications applicable to the Acquired Corporations’ products, services, software and technologies.

 

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2.14 Compliance with Anti-Corruption Laws .

(a) The Acquired Corporations and their Affiliates (and their respective directors, officers, executives, employees, representatives, agents, consultants, distributors, resellers, and any persons acting on behalf of any of the Acquired Corporations) have at all times complied with, and are currently in compliance with, (i) the Foreign Corrupt Practices Act of 1977, as amended (“ FCPA ”), and (ii) the U.K. Bribery Act, and any similar applicable law of any non-U.S. jurisdiction, or any applicable law that prohibits offering or providing a thing of value to improperly influence government officials or other persons (collectively with the FCPA, the “ Anti-Corruption Laws ”).

(b) Neither the Acquired Corporations or their Affiliates, nor their respective directors, officers, executives, employees, representatives, agents, consultants, distributors or resellers, nor any person acting on behalf of any of the Acquired Corporations or their Affiliates, has taken, or failed to take any action, either directly or indirectly, that constituted a violation of the Anti-Corruption Laws. Neither the Acquired Corporations nor, their directors, officers, executives, employees, representatives, agents, consultants, distributors or resellers, nor any person acting on behalf of any of the Acquired Corporations or their Affiliates, has made, offered, authorized, promised, accepted, or solicited, either directly or indirectly, any payment, contribution, gift, entertainment, bribe, rebate, kickback or any other thing of value, regardless of form or amount, to or from: (i) any official, employee or representative of a Governmental Body, any political party or official thereof, any candidate for political office, or any other persons; (ii) any director, officer, executive, employee or person affiliated with an entity owned or controlled by a Governmental Body, political party, or candidate for political office; or (iii) any director, officer, executive or employee of a public international organization, or other persons, to obtain or retain a competitive advantage, to receive favorable treatment in obtaining or retaining business or compensate for favorable treatment already secured, or to influence any action, inaction or decision.

(c) There have been no false, fictitious or misleading entries made in the books, records or accounts of any of the Acquired Corporations or their Affiliates, and none of the Acquired Corporations and their Affiliates has established or maintained an unlawful or unrecorded fund. Each of the Acquired Corporations and their Affiliates has at all times made and kept, and currently make and keep, books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the respective assets of the Acquired Corporations and Affiliates.

(d) The Acquired Corporations and their Affiliates have in place adequate controls and systems designed to reasonably ensure: (i) compliance with the Anti-Corruption Laws; (ii) transactions are executed in accordance with management’s general or specific authorization; (iii) transactions are recorded as necessary to: (A) permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and (B) maintain accountability for assets; (iv) access to assets is permitted only in accordance with management’s general or specific authorization; and (v) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

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(e) None of the Acquired Corporations or their Affiliates (or, any of their respective representatives, agents, consultants, distributors, resellers, or other persons acting on behalf of any of the Company, Acquired Corporations or their Affiliates) (i) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenditures, (ii) has used or is using any corporate funds for any direct or indirect unlawful payments to any official, employee or representative of a Governmental Body, any political party or official thereof, any candidate for political office, or any other person, (iii) has violated or is violating any provision of Anti-Corruption Laws, (iv) has established or maintained, or is maintaining, any illegal or unrecorded fund of corporate monies or other properties or (v) has engaged or is engaged in any activity that would constitute any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

(f) Neither the Acquired Corporations or their Affiliates, nor any of their respective directors, officers, executives, employees, representatives, agents, consultants, distributors, resellers, or other person acting on behalf of any of the Acquired Corporations or their Affiliates, is, or has been, under administrative, civil, or criminal investigation, indictment, information, suspension, debarment, or audit (other than a routine contract audit) by any party, under internal investigation by any party, or the subject of any inquiry or allegations of any kind, in connection with alleged or possible violations of the Anti-Corruption Laws or has received a whistleblower report of alleged or possible violations of the Anti-Corruption Laws. Neither the Acquired Corporations or their Affiliates, nor any of their respective directors, officers, executives, employees, representatives, agents, consultants, distributors, resellers, or other persons acting on behalf of any of the Acquired Corporations or their Affiliates, has received notice from, or made a voluntary disclosure to, the U.S. Department of Justice, U.S. Securities and Exchange Commission or other criminal, civil or administrative enforcement agency of any non-U.S. jurisdiction.

2.15 Governmental Authorizations .

(a) Each of the Acquired Corporations holds all material Governmental Authorizations necessary to enable such Acquired Corporation to conduct its business in the manner in which such business is currently conducted by such Acquired Corporation, and all such Governmental Authorizations are valid and in full force and effect in all material respects. Each of the Acquired Corporations is, and has been for the past five years, in compliance in all material respects with the terms and requirements of such Governmental Authorizations. None of the Acquired Corporations has received any communication from any Governmental Body regarding any asserted failure by it to have obtained any such Governmental Authorization, or any past and unremedied failure to obtain any such Governmental Authorizations. None of the Acquired Corporations has knowledge of any circumstances regarding any actual or possible material violation of or material failure to comply with any term or requirement of any Governmental Authorization, or any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any Governmental Authorization.

(b) Part 2.15(b) of the Disclosure Schedule describes the terms of each grant, incentive or subsidy provided or made available directly to any of the Acquired Corporations by any Governmental Body in an amount in excess of $250,000, with continuing obligations or which grants any ownership interest in the Acquired Corporations’ products or assets, or which

 

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was granted since January 1, 2011. Each of the Acquired Corporations is in compliance in all material respects with all of the terms and requirements of each such grant, incentive or subsidy. Neither the execution, delivery or performance of this Agreement, nor the consummation of the Merger or any of the other Contemplated Transactions, will (with or without notice or lapse of time) give any Person the right to revoke, withdraw, suspend, cancel, terminate or modify any material grant, incentive or subsidy identified or required to be identified in Part 2.15(b) of the Disclosure Schedule.

2.16 Tax Matters .

(a) Each of the material Tax Returns required to be filed by or on behalf of each respective Acquired Corporation: (i) has been duly and timely filed (after giving effect to any validly obtained extensions of time in which to make such filing); and (ii) are true, correct and complete in all material respects. All material Taxes due and payable (whether or not shown on such Tax Returns) have been timely paid in full to the appropriate Governmental Body. There are no jurisdictions in which any Acquired Corporation is required to file a material Tax Return or may be subject to a material Tax other than the jurisdictions in which such Acquired Corporation has filed Tax Returns or paid Taxes. No claim has ever been made in writing by any Governmental Body in a jurisdiction where an Acquired Corporation does not file a Tax Return that it is or may be subject to a material Tax by that jurisdiction.

(b) The Most Recent Balance Sheet fully accrues for unpaid Taxes of the Acquired Corporations with respect to all periods through the date of the Most Recent Balance Sheet in accordance with GAAP. The Acquired Corporations will establish, in the ordinary course of business and consistent with their past practices, reserves on their financial statements adequate, in accordance with GAAP, for the payment of all Taxes of the Acquired Corporations for the period from the date of the Most Recent Balance Sheet through the Closing Date. No Acquired Corporation has incurred any material Taxes since the date of the Most Recent Balance Sheet other than in the ordinary course of business of the Acquired Corporations. There are no Encumbrances on any of the assets, rights or properties of the Acquired Corporation with respect to material Taxes except for Permitted Encumbrances.

(c) Each Acquired Corporation has complied in all respects with all applicable Legal Requirements relating to the payment, collection and withholding of material Taxes (including the withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code and similar provisions under any other state, local or foreign law). Each Acquired Corporation has complied in all material respects with all information reporting and record retention requirements related to such Taxes (including, to the extent necessary to claim any exemption from sales Tax collection, maintaining adequate and current resale certificates to support any such claimed exemptions). The Acquired Corporations have complied in all material respects with the Foreign Account Tax Compliance Act (FATCA), codified in Sections 1471 through 1474 of the Code, including all regulations issued by the U.S. Department of Treasury and/or the Internal Revenue Service pursuant thereto, and all intergovernmental agreements and other agreements entered into pursuant to Section 1471(b) of the Code.

(d) No Acquired Corporation or any other Person on its behalf has granted: (i) an extension or waiver of the limitation period that is currently in effect for (A) assessment or

 

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collection applicable with respect to any material Tax to which any Acquired Corporation may be subject or (B) the time within which to file a material Tax Return of any Acquired Corporation; or (ii) a power of attorney that is currently in force with respect to any Tax matter.

(e) No Legal Proceeding is pending, or to the knowledge of the Company has been threatened in writing, against or with respect to any Acquired Corporation in respect of any Tax matter. All deficiencies and assessments received by any Acquired Corporation from any Governmental Body with respect to any Tax have been paid in full or compromised.

(f) (i) No Acquired Corporation is a party to or is bound by, or will have any material Liability pursuant to or as a result of, any Tax allocation, Tax indemnity or Tax sharing agreement other than agreements the primary purpose of which are not the sharing of Taxes, including agreements for the (A) purchase, sale or rental of goods, (B) provision of services, (C) borrowing or lending of money, (D) rental of real property, or (E) purchase or sale of assets; (ii) since December 31, 2009, none of the Acquired Corporations has ever been a member of an Affiliated Group other than the Affiliated Group of which it is presently a member; and (iii) none of the Acquired Corporations has any Liability for the Taxes of any other Person (other than an Acquired Corporation) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Legal Requirements), as a transferee or successor, by Contract (other than a Contract the primary purpose of which is not the sharing of Taxes, including Contracts for the (A) purchase, sale or rental of goods, (B) provision of services, (C) borrowing or lending of money, (D) rental of real property, or (E) purchase or sale of assets), or otherwise.

(g) No Acquired Corporation has been a party to, or the subject of, any transaction treated by the parties thereto as one to which Section 355 or Section 361 of the Code (or any similar provision of state, local or foreign Legal Requirements) applied.

(h) The Company has made available to Parent: (i) true, correct and complete copies of all income, franchise and other material Tax Returns of the Acquired Corporations relating to taxable periods ending on or after December 31, 2011; and (ii) any audit reports, letter rulings, technical advice memoranda and similar documents issued to any Acquired Corporation within the last three years by a Governmental Body relating to income, franchise and other material Taxes of any Acquired Corporation.

(i) No Acquired Corporation has participated in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b).

(j) No Acquired Corporation: (i) is a “controlled foreign corporation” (within the meaning of Section 957 of the Code) that is not listed on an IRS Form 5471 attached to the Company’s U.S. federal income tax return for the taxable year ending on June 27, 2014; or (ii) has, or has had, (A) a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country, or (B) an office or fixed place of business, in either case in a country other than the country in which it is organized.

(k) None of the Acquired Corporations will be required to include any material item of income or gain in, or exclude any material item of deduction or loss from,

 

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taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of accounting under Section 481 of the Code (or any other provision of federal, state, local or foreign law) made prior to the Closing Date; (ii) any closing agreement, advance pricing agreement or other agreement with any Governmental Body relating to Taxes, installment sale or open transaction entered into prior to the Closing Date; (iii) any election under Section 108(i) of the Code (or any similar provision of state, local or foreign law) made prior to the Closing Date; or (iv) any prepaid amount received prior to the Closing Date. There are no Tax rulings issued to, or requests for rulings by, any Acquired Corporation relating to any material Taxes for which any Acquired Corporation may be liable that could affect any Acquired Corporation’s Liability for any material Taxes for any taxable period ending after the Closing Date.

(l) The Acquired Corporations have properly and in a timely manner documented, their respective transfer pricing methodologies in compliance with Section 482 of the Code and the Treasury Regulations thereunder and any comparable provisions of any state, local or foreign Legal Requirements.

(m) No Acquired Corporation has taken a position on a Tax Return that, if not sustained, would be reasonably likely to give rise to a penalty for substantial understatement of Tax under Section 6662 of the Code (or any similar provision of state, local or foreign Legal Requirements), regardless of disclosure related thereto.

(n) Except as set forth in Part 2.16(n) of the Disclosure Schedule, since December 31, 2009, no Acquired Corporation currently owns or has ever owned an interest in any (i) domestic international sales corporation; or (ii) foreign sales corporation, as each such term is defined in the Code.

All references to the Acquired Corporations in this Section 2.16 shall include references to any Person that merged with and into or liquidated into any Acquired Corporation.

Notwithstanding anything in this Agreement to the contrary, (i) the representations and warranties set forth in (A) this Section 2.16 , and (B) Sections 2.1(a) , 2.3 , 2.5(l) , 2.6 and 2.17 to the extent they relate to Taxes, shall be the only representations and warranties of the Company in this Agreement with respect to Taxes, and (ii) nothing in this Section 2.16 or otherwise in this Agreement shall be construed as a representation or warranty of the Company with respect to the existence, amount or availability in a taxable period (or portion thereof) beginning after the Closing Date of any net operating loss, capital loss, or Tax credit carryover arising in or in respect of a taxable period (or portion thereof) ending on or before the Closing Date.

2.17 Employee and Labor Matters; Benefit Plans .

(a) Part 2.17(a) of the Disclosure Schedule identifies each material employment, consulting, salary, bonus, commission, other remuneration, vacation, deferred compensation, incentive compensation, stock purchase, stock option or other material equity-based, severance, termination, retention, change-in-control, deferred compensation, death and disability benefits, hospitalization, medical, life or other insurance, flexible benefits, supplemental unemployment benefits, other material welfare or material fringe benefits, profit-

 

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sharing, pension or retirement plan, program, practice agreement or commitment and each other material employee benefit plan or arrangement, whether written, unwritten or otherwise, funded or unfunded, including each Foreign Plan and each “employee benefit plan,” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) (whether or not ERISA applies) which is sponsored, maintained, contributed to or required to be contributed to by any of the Acquired Corporations for the benefit of any current or former employee, consultant or director of any of the Acquired Corporations or the dependent or beneficiary of any of them or with respect to which any of the Acquired Corporations has or may have any Liability or obligation (collectively, the “ Employee Plans ”). In addition, Part 2.17(a) of the Disclosure Schedule (i) specifies the country(ies) to which each Employee Plan applies and (ii) notes if any such Employee Plan is (A) an employee pension benefit plan (as defined in Section 3(2) of ERISA), or any similar pension benefit plan that is a Foreign Plan, whether or not excluded from coverage under specific Titles or Subtitles of ERISA or (B) an employee welfare benefit plan (as defined in Section 3(1) of ERISA) or any similar welfare benefit plan that is a Foreign Plan, whether or not excluded from coverage under specific Titles or Subtitles of ERISA.

(b) With respect to each Employee Plan, the Company has Made Available to Parent to the extent applicable: (i) an accurate, current and complete copy of such Employee Plan (including all amendments thereto); (ii) an accurate and complete copy of the annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code, with respect to such Employee Plan for the three most recent plan years; (iii) if Employee Plan is subject to the minimum funding standards of ERISA Section 302 or, in the case of any Foreign Plan providing for deferred compensation or retirement benefits, any statutory funding requirement having a similar purpose, the most recent annual and periodic accounting of Employee Plan assets and the most recent actuarial report; (iv) an accurate and complete copy of the most recent summary plan description, together with each summary of material modifications, if any; (v) if such Employee Plan is funded through a trust or any third party funding vehicle, an accurate and complete copy of the trust or other funding agreement (including all amendments thereto) and accurate and complete copies of the most recent financial statements thereof; (vi) all correspondence, if any, to or from any governmental agency relating to such Employee Plan in the past two (2) years; (vii) the most recent determination letters (or opinion letters, if applicable) received from the Internal Revenue Service with respect to each Employee Plan intended to be qualified under Section 401(a) of the Code; (viii) all government and regulatory approvals received from any foreign Governmental Body with respect to Foreign Plans; and (ix) all registration statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with each Employee Plan in the past two (2) years.

(c) No Acquired Corporation maintains, sponsors or contributes to, or has any contingent or direct liability with respect to, any: (i) Employee Plan subject to Title IV of ERISA or Section 412 of the Code; (ii) “multiemployer plan” within the meaning of Section (3)(37) of ERISA; (iii) “multiple employer plan” (within the meaning of Section 413(c) of the Code); (iv) Employee Plan in which stock of any of the Acquired Corporations is or was held as a plan asset, or (v) a “funded welfare plan” within the meaning of Section 419 of the Code. Except as set forth in Part 2.17(c) of the Disclosure Schedule, no Employee Plan provides health benefits that are not fully insured through an insurance contract.

 

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(d) None of the Acquired Corporations has any plan or commitment to create or adopt any additional Employee Plan, or to modify, change or terminate any existing Employee Plan (other than to comply with applicable Legal Requirements, in each case as previously disclosed to Parent in writing, or as required by this Agreement) in a manner that would affect any Company Associate, other than any routine changes that do not involve a material additional costs (such as changes to health benefits in connection with forthcoming open enrollment periods).

(e) No Employee Plan provides (except at no cost to the Acquired Corporations), or reflects or represents any Liability of any of the Acquired Corporations to provide, retiree life insurance, retiree health benefits or other retiree employee welfare benefits to any Person for any reason, except as may be required by COBRA or other applicable Legal Requirements. Each of the Employee Plans is and has been established, operated and administered in all material respects in accordance with its terms and with applicable Legal Requirements, including ERISA, the Code, applicable U.S. and non-U.S. securities laws and regulations and applicable foreign Legal Requirements. The Acquired Corporations have performed in all material respects all obligations required to be performed by them under, are not in material default or violation of, and have no knowledge of either any material default or violation by any other party to, or any circumstances that exist that are reasonably be expected to result in a material default or violation of, the terms of any Employee Plan. Each Employee Plan intended to be qualified under Section 401(a) of the Code and each trust intended to be qualified under Section 501(a) of the Code has obtained a favorable determination letter (or opinion letter, if applicable) as to its qualified status under the Code, incorporates or has been amended to incorporate all provisions required to comply currently applicable legislation, and to the Company’s knowledge, there has been no event, condition or circumstance that has resulted, or would reasonably be expected to result in disqualification under the Code (or in the case of a Foreign Plan, the equivalent of disqualification under any applicable foreign Legal Requirement). There are no material actions, suits or claims pending, threatened, or to the Company’s knowledge, reasonably anticipated (other than routine claims for benefits) against any Employee Plan or against the assets of any Employee Plan. No breach of fiduciary duty has occurred as a result of which any of the Acquired Corporations would reasonably be expected to incur material Liability. No Employee Plan is under audit, investigation or other Legal Proceeding by the Company, the Internal Revenue Service, Department of Labor, or any other Governmental Body, nor is any such audit, investigation or Legal Proceeding pending or, to the Company’s knowledge, threatened. No material “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Employee Plan that could involve liability for any of the Acquired Corporations. No material Encumbrance exists in respect of any Employee Plan imposed under the Code, ERISA or any foreign Legal Requirement exists.

(f) Neither the execution, delivery or performance of this Agreement, nor the consummation of the Merger or any of the other Contemplated Transactions (either alone or in combination with another event, whether contingent or otherwise) will: (i) result in any bonus, severance, change in control or other payment or benefit to any current or former employee, consultant or director of any of the Acquired Corporations (whether or not under any Employee Plan); (ii) materially increase the benefits payable or provided to, or result in a forgiveness of indebtedness for, any such employee, consultant or director; (iii) accelerate the vesting, funding

 

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or time of payment of any compensation, equity award or other similar benefit; (iv) cause the application of an accelerated or additional tax under Section 409A of the Code. The Company has provided Parent with a list of individuals who are “disqualified individuals” within the meaning of Section 280G of the Code with respect to the Merger or any of the other Contemplated Transactions.

(g) For each Foreign Plan required to be funded by applicable law, the fair market value of the assets of such funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient in all material respects to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to and obligations under such Foreign Plan. Neither the execution of this Agreement nor the consummation of the Contemplated Transactions shall cause any the assets or insurance obligations to be less than the benefit obligations under such Employee Plan or Foreign Plan.

(h) Except for the Company Equity Plans and as set forth in Part 2.17(h) of the Disclosure Schedule, none of the Acquired Corporations maintains any plan, program or arrangement or is a party to any contract that provides any material benefits or provides for material payments to any Person in, based on or measured by the value of any equity security of, or interest in, the Acquired Corporations.

(i) No Acquired Corporation has undertaken any option re-pricing or option exchange program with respect to Company Options in the past three (3) years.

(j) The Company has made available to Parent a list of all employees of each of the Acquired Corporations as of the date of this Agreement, and correctly reflects, in all material respects, their wage or salary, any other compensation payable to them (including compensation payable pursuant to bonus, deferred compensation, commission or severance arrangements), their dates of employment and their positions, work locations and current leave status.

(k) None of the Acquired Corporations is a party to, or has a duty to bargain for, any collective bargaining agreement or other Contract with a labor organization or works council representing any of its employees and, to the Company’s knowledge, there are no labor organizations or works councils representing, purporting to represent or seeking to represent any employees of any of the Acquired Corporations. During the three years prior to the date of this Agreement, none of the Acquired Corporations has had any material strike, slowdown, work stoppage, lockout, job action, or threat thereof, or question concerning representation, by or with respect to any of its employees. Except as otherwise required by applicable Legal Requirements, all of the employees of the Acquired Corporations are “at will” employees. Except as would not, individually or in the aggregate, be reasonably expected to have a material adverse effect on the Acquired Corporations taken as a whole, each of the Acquired Corporations: (i) is in compliance with all applicable Legal Requirements and any order, ruling, decree, judgment or arbitration award of any court,


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