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 This Agreement and Plan of Merger involves

SKULLCANDY, INC. | Cancelled Company Shares and Dissenting Company | Incipio, LLC | MRSK Hold Co | MRSL MERGER CO | Powder Merger Sub, Inc | Skullcandy, Inc

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Title: AGREEMENT AND PLAN OF MERGER by and among
Governing Law: Delaware     Date: 8/24/2016
Industry: Audio and Video Equipment     Law Firm: Foley Hoag;Latham Watkins     Sector: Consumer Cyclical

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Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

by and among

MRSK HOLD CO.,

MRSL MERGER CO.

and

SKULLCANDY, INC.

Dated as of August 23, 2016


TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS & INTERPRETATIONS

  

 

2

  

Section 1.1. Certain Definitions

  

 

2

  

Section 1.2. Additional Definitions

  

 

11

  

Section 1.3. Certain Interpretations

  

 

13

  

ARTICLE II THE OFFER

  

 

14

  

Section 2.1. The Offer

  

 

14

  

Section 2.2. Company Actions

  

 

18

  

ARTICLE III THE MERGER

  

 

20

  

Section 3.1. The Merger

  

 

20

  

Section 3.2. The Effective Time

  

 

20

  

Section 3.3. The Closing

  

 

20

  

Section 3.4. Effect of the Merger

  

 

20

  

Section 3.5. Certificate of Incorporation and Bylaws

  

 

20

  

Section 3.6. Directors and Officers

  

 

21

  

Section 3.7. Effect on Capital Stock

  

 

21

  

Section 3.8. Exchange of Certificates

  

 

23

  

Section 3.9. No Further Ownership Rights in Company Common Stock

  

 

26

  

Section 3.10. Lost, Stolen or Destroyed Certificates

  

 

26

  

Section 3.11. Necessary Further Actions

  

 

26

  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  

 

26

  

Section 4.1. Organization and Qualification

  

 

26

  

Section 4.2. Capitalization

  

 

27

  

Section 4.3. Subsidiaries

  

 

29

  

Section 4.4. Corporate Power; Enforceability

  

 

29

  

 

i


Section 4.5. Stockholder Approval

  

 

29

  

Section 4.6. Consents and Approvals; No Violation

  

 

29

  

Section 4.7. Reports; Financial Statements

  

 

30

  

Section 4.8. Absence of Certain Changes; Undisclosed Liabilities

  

 

31

  

Section 4.9. Schedule TO; Schedule 14D-9

  

 

32

  

Section 4.10. Brokers; Certain Expenses

  

 

32

  

Section 4.11. Employee Benefit Matters/Employees

  

 

32

  

Section 4.12. Litigation

  

 

36

  

Section 4.13. Tax Matters

  

 

36

  

Section 4.14. Compliance with Law; No Default; Permits

  

 

37

  

Section 4.15. Environmental Matters

  

 

38

  

Section 4.16. Intellectual Property

  

 

38

  

Section 4.17. Real Property; Assets

  

 

41

  

Section 4.18. Material Contracts

  

 

42

  

Section 4.19. Insurance

  

 

43

  

Section 4.20. Questionable Payments

  

 

44

  

Section 4.21. Related Party Transactions

  

 

44

  

Section 4.22. Trade Compliance Laws

  

 

45

  

Section 4.23. Opinion of Financial Advisor of the Company

  

 

46

  

Section 4.24. State Takeover Statutes; Rights Agreement; Incipio Merger Agreement

  

 

46

  

Section 4.25. No Other Representations or Warranties

  

 

47

  

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB

  

 

47

  

Section 5.1. Organization and Qualification

  

 

47

  

Section 5.2. Authority for this Agreement

  

 

47

  

Section 5.3. Schedule TO; Schedule 14D-9

  

 

48

  

 

- ii -


Section 5.4. Consents and Approvals; No Violation

  

 

48

  

Section 5.5. Litigation

  

 

48

  

Section 5.6. Interested Stockholder

  

 

49

  

Section 5.7. Sufficient Funds

  

 

49

  

Section 5.8. Brokers

  

 

49

  

Section 5.9. Solvency

  

 

49

  

Section 5.10. Absence of Certain Arrangements

  

 

50

  

Section 5.11. Acquisition Sub

  

 

50

  

Section 5.12. Disclaimer of Other Representations and Warranties

  

 

50

  

ARTICLE VI COVENANTS OF THE COMPANY

  

 

50

  

Section 6.1. Conduct of Business of the Company

  

 

50

  

Section 6.2. No Solicitation; Adverse Recommendation Change

  

 

53

  

ARTICLE VII ADDITIONAL COVENANTS

  

 

57

  

Section 7.1. Reasonable Best Efforts to Complete

  

 

57

  

Section 7.2. Antitrust Filings

  

 

58

  

Section 7.3. Merger

  

 

59

  

Section 7.4. Public Statements and Disclosure

  

 

60

  

Section 7.5. Anti-Takeover Laws

  

 

60

  

Section 7.6. Access

  

 

60

  

Section 7.7. Section 16(b) Exemption

  

 

61

  

Section 7.8. Directors’ and Officers’ Indemnification and Insurance

  

 

61

  

Section 7.9. Employee Matters

  

 

63

  

Section 7.10. Obligations of Acquisition Sub

  

 

65

  

Section 7.11. Notification of Certain Matters

  

 

65

  

Section 7.12. Certain Litigation

  

 

66

  

 

- iii -


Section 7.13. Rule 14d-10(d) Exemption

  

 

66

  

Section 7.14. De-Listing

  

 

66

  

Section 7.15. Financing

  

 

66

  

Section 7.16. Debt Financing Remedies

  

 

66

  

Section 7.17. Amendment to Rights Agreement

  

 

66

  

ARTICLE VIII CONDITIONS TO THE MERGER

  

 

67

  

Section 8.1. Conditions

  

 

67

  

ARTICLE IX TERMINATION, AMENDMENT AND WAIVER

  

 

67

  

Section 9.1. Termination Prior to the Acceptance Time

  

 

67

  

Section 9.2. Termination Before or After Acceptance Time and Prior to Effective Time

  

 

68

  

Section 9.3. Notice of Termination; Effect of Termination

  

 

68

  

Section 9.4. Fees and Expenses

  

 

69

  

Section 9.5. Amendment

  

 

70

  

Section 9.6. Extension; Waiver

  

 

70

  

ARTICLE X GENERAL PROVISIONS

  

 

71

  

Section 10.1. Survival of Representations, Warranties and Covenants

  

 

71

  

Section 10.2. Notices

  

 

71

  

Section 10.3. Assignment

  

 

72

  

Section 10.4. Confidentiality

  

 

72

  

Section 10.5. Entire Agreement

  

 

72

  

Section 10.6. Third Party Beneficiaries

  

 

73

  

Section 10.7. Severability

  

 

73

  

Section 10.8. Remedies

  

 

73

  

Section 10.9. Governing Law; Jurisdiction; Waiver of Jury Trial

  

 

74

  

Section 10.10. No Presumption Against Drafting Party

  

 

76

  

 

- iv -


Section 10.11. Counterparts

  

 

76

  

 

- v -


AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of August 23, 2016 by and among MRSK Hold Co., a Delaware corporation (“ Parent ”), MRSL Merger Co., a Delaware corporation and a direct wholly owned subsidiary of Parent (“ Acquisition Sub ”), and Skullcandy, Inc., a Delaware corporation (the “ Company ”).

W I T N E S S E T H:

WHEREAS, (a) immediately prior to entering into this Agreement, the Company terminated the Agreement and Plan of Merger dated as of June 23, 2016, by and among Incipio, LLC, a Delaware limited liability company (“ Incipio ”), Powder Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Incipio, and the Company (as amended, the “ Incipio Merger Agreement ”) in accordance with Section 9.1(e) of the Incipio Merger Agreement, and (b) following the termination of the Incipio Merger Agreement, the Company shall pay to Incipio an amount equal to $6,601,237, which represents the Termination Fee (as defined in the Incipio Merger Agreement), pursuant to the terms of the Incipio Merger Agreement;

WHEREAS, it is proposed that Acquisition Sub shall commence a tender offer (the “ Offer ”) to acquire all of the outstanding shares (the “ Company Shares ”) of Common Stock, par value $0.0001 per share, of the Company (the “ Company Common Stock ”), at a price of $6.35 per Company Share, net to the holder thereof, subject to reduction for any applicable withholding Taxes pursuant to Section 3.8(e) , in cash (such amount, or any higher amount per Company Share that may be paid pursuant to the Offer, being hereinafter referred to as the “ Offer Price ”), all upon the terms and subject to the conditions set forth herein;

WHEREAS, it is also proposed that, as soon as practicable following the consummation of the Offer, Acquisition Sub will merge with and into the Company (the “ Merger ”) in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”) and each Company Share that is not tendered and accepted pursuant to the Offer (other than Cancelled Company Shares and Dissenting Company Shares) will thereupon be cancelled and converted into the right to receive cash in an amount equal to the Offer Price, and the Company will survive the Merger as a wholly owned subsidiary of Parent, all upon the terms and subject to the conditions set forth herein;

WHEREAS, the parties intend for the Merger to be effected under Section 251(h) of the DGCL pursuant to the terms and subject to the conditions of this Agreement;

WHEREAS, prior to or concurrently with the execution of this Agreement, and as a condition to the willingness of, and material inducement to, the Company to enter into this Agreement, Mill Road Capital II, L.P., a Delaware limited partnership, delivered to the Company a sponsor guarantee in favor of the Company;

WHEREAS, the Company Board has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements contained herein and the consummation of the Offer

 

1


and the Merger upon the terms and subject to the conditions contained herein, and (iii) resolved, subject to the terms and conditions set forth in this Agreement, to recommend that the holders of Company Shares accept the Offer and tender their Company Shares to Acquisition Sub pursuant to the Offer;

WHEREAS, the Board of Directors of each of Parent and Acquisition Sub have (i) declared it advisable to enter into this Agreement, and (ii) approved the execution and delivery by Parent and Acquisition Sub, respectively, of this Agreement, the performance by Parent and Acquisition Sub, respectively, of their respective covenants and agreements contained herein and the consummation of the Offer and the Merger upon the terms and subject to the conditions contained herein; and

WHEREAS, Parent, Acquisition Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement and the transactions contemplated hereby to prescribe certain conditions with respect to the consummation of the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Parent, Acquisition Sub and the Company hereby agree as follows:

ARTICLE I

DEFINITIONS & INTERPRETATIONS

Section 1.1. Certain Definitions . For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:

Acceptance Time ” shall mean the date and time of the initial acceptance for payment by Acquisition Sub of Company Shares pursuant to and subject to the conditions of the Offer.

Affiliate ” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by Contract or otherwise.

Antitrust Law ” shall mean the Sherman Antitrust Act of 1890, as amended, the Clayton Act of 1914, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or the creation or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the transactions contemplated by this Agreement.

 

- 2 -


Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or required by applicable Law to be closed.

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Company Board ” shall mean the Board of Directors of the Company.

Company Intellectual Property Rights ” shall mean Intellectual Property Rights owned by or purported to be owned by, or exclusively licensed to, the Company or any of its Subsidiaries.

Company Material Adverse Effect ” shall mean (a) any change, effect, event, circumstance or development (each a “ Change ”, and collectively, “ Changes ”), individually or in the aggregate, that has had or would reasonably be expected to have a material adverse effect on the business, assets, Liabilities, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that no Change resulting from, attributable to or arising out of any of the following (whether by itself or when aggregated or taken together with any and all other such Changes) shall be deemed to be or constitute a “Company Material Adverse Effect,” and no Change resulting from, attributable to or arising out of any of the following (by itself or when aggregated or taken together with any and all other such Changes) shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred, to the extent such Changes do not disproportionately affect the Company and its Subsidiaries in any material respect relative to other companies operating in any industry or industries in which the Company operates in the events of (i) through (vi):

(i) general economic conditions (or changes in such conditions) in the United States or any other country or region in the world, or conditions in the global economy generally;

(ii) conditions (or changes in such conditions) in the securities markets, capital markets, credit markets, currency markets or other financial markets in the United States or any other country or region in the world, including (A) changes in interest rates in the United States or any other country or region in the world and changes in exchange rates for the currencies of any countries and (B) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world;

(iii) conditions (or changes in such conditions) in the industries in which the Company and its Subsidiaries conduct business;

(iv) political conditions (or changes in such conditions) in the United States or any other country or region in the world or, acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region in the world;

(v) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions and other force majeure events in the United States or any other country or region in the world;

 

- 3 -


(vi) changes in Law or other legal or regulatory conditions (or the interpretation thereof) or changes in GAAP or other accounting standards (or the interpretation thereof);

(vii) the announcement of, or the compliance with, this Agreement or the pendency or consummation of the transactions contemplated hereby, including (A) the identity of Parent, Acquisition Sub, or their Affiliates (B) the termination or potential termination of (or the failure or potential failure to renew or enter into) any Contracts with customers, suppliers, distributors or other business partners, and (C) any other negative development (or potential negative development) in the Company’s relationships with any of its customers, suppliers, distributors or other business partners;

(viii) any actions taken or failure to take action, in each case, by Parent or any of its controlled Affiliates, or to which Parent has consented, or which Parent has requested or approved, or the taking of any action required by this Agreement, or the failure to take any action prohibited by this Agreement;

(ix) any departure or termination of any officers (other than the Chief Executive Officer and the Chief Financial Officer), directors, employees or independent contractors of the Company or its Subsidiaries;

(x) changes in the Company’s stock price or the trading volume of the Company’s stock, in and of itself, or any failure by the Company to meet any estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet any internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (but not, in each case, the underlying cause of such changes or failures, unless the underlying cause of such changes or failures would otherwise be excepted from this definition); or

(xi) any Legal Proceedings made or brought by any of the current or former stockholders of the Company (on their own behalf or on behalf of the Company and only in their capacities as current or former stockholders of the Company) against the Company arising out of the Merger or in connection with any other transactions contemplated by this Agreement; or

(xii) any matters set forth on Section 4.12 of the Company Disclosure Letter; provided, however, if the facts and circumstances as set forth on Section 4.12 of the Company Disclosure Letter materially change then any matter set forth on Section 4.12 of the Company Disclosure Letter in which the facts and circumstances materially changed shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred; or

(b) a Change that would prevent the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement.

Company Options ” shall mean any options to purchase Company Shares outstanding under the Company Stock Plans.

 

- 4 -


Company Preferred Stock ” shall mean the Preferred Stock, par value $0.0001 per share, of the Company.

Company Registered Intellectual Property Rights ” shall mean all of the Registered Intellectual Property Rights owned by the Company or any of its Subsidiaries.

Company RSU Award ” shall mean any award of restricted stock units or performance stock units outstanding under the Company Stock Plans.

Company Stock Awards ” shall mean the Company Options and the Company RSU Awards.

Company Stock Plans ” shall mean the Company’s 2005 Stock Plan, the Company’s 2008 Equity Incentive Plan, the Company’s 2011 Incentive Award Plan, that certain Nonqualified Inducement Stock Option Grant Notice and Stock Option Agreement dated May 8, 2013, between the Company and Hoby Darling, and that certain Inducement Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement dated May 10, 2013, between the Company and Hoby Darling.

Company Stockholders ” shall mean holders of Company Shares in their respective capacities as such.

Continuing Employees ” shall mean all employees of the Company or any of its Subsidiaries who, as of the Closing, continue their employment with the Company or any of its Subsidiaries.

Contract ” shall mean any legally binding contract, subcontract, note, bond, mortgage, indenture, deed of trust, franchise, lease, sublease, loan, credit agreement or other instrument.

Debt Financing ” means the loans to be provided by the Financing Sources, the proceeds of which shall be used to consummate the transactions contemplated by this Agreement.

Debt Financing Documents ” means the agreements, documents and certificates contemplated by the Debt Financing, including: (a) all credit agreements, loan documents, purchase agreements, underwriting agreements, indentures, debentures, notes, intercreditor agreements and security documents pursuant to which the Debt Financing will be governed; (b) all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act; and (c) all agreements, documents or certificates that facilitate the creation, perfection or enforcement of liens securing the Debt Financing (including original copies of all certificated securities (with transfer powers executed in blank), control agreements, surveys, title insurance, landlord consent and access letters) as are reasonably requested by Parent, Acquisition Sub or the Financing Sources.

Delaware Law ” shall mean the DGCL and any other applicable Law (including common law) of the State of Delaware.

 

- 5 -


DOJ ” shall mean the United States Department of Justice or any successor thereto.

Domain Names ” shall mean domain names and uniform resource locators.

Environmental Law ” shall mean all Laws relating in any way to the environment, preservation or reclamation of natural resources, the presence, management or Release of, or exposure to, Hazardous Substances, or to human health and safety, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), each of their state and local counterparts or equivalents, each of their foreign and international equivalents, and any transfer of ownership notification or approval statute, as each has been amended and the regulations promulgated pursuant thereto.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

ERISA Affiliate ” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

Financing Sources ” means those certain lenders (together with the Affiliates, advisors and agents thereof) that are to provide Parent and/or Acquisition Sub with loans, the proceeds of which shall be used to consummate the transactions contemplated hereby.

FTC ” shall mean the United States Federal Trade Commission or any successor thereto.

GAAP ” shall mean generally accepted accounting principles, as applied in the United States.

Governmental Authority ” shall mean (i) any government, (ii) any governmental or regulatory entity, body, department, commission, subdivision, board, administrative agency or instrumentality, including any state-owned or state controlled instrumentality, (iii) any court, tribunal, judicial body, an arbitrator or arbitration panel or a mediator or mediation panel, (iv) any non-governmental self-regulatory agency, securities exchange, commission or authority, in

 

- 6 -


each of (i) through (iv) whether supranational, national, federal, state, county, municipal, provincial, and whether local or foreign, or (v) solely for purposes of Section 4.20 , any public international organizations such as the United Nations or the World Bank, and any political party.

Government Official ” means any current or former employee, official, or representative of any Governmental Authority or a political party, political party official or candidate for political office.

Hazardous Substance ” shall mean any material, substance or waste that is defined, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous”, “toxic”, a “pollutant”, a “contaminant”, “radioactive” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation, silica, chlorofluorocarbons, and all other ozone-depleting substances.

HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

Intellectual Property ” shall mean all intellectual property or other similar proprietary rights in any jurisdiction worldwide, regardless of form, including: (i) published and unpublished works of authorship, including motion pictures and other audiovisual works, collective works, computer programs, compilations, databases, derivative works, literary works, mask works, software, sound recordings, musical works, dramatic works, pantomimes and choreographic works, pictorial, graphic and structural works, and architectural works (“ Works of Authorship ”); (ii) inventions and discoveries, including articles of manufacture, business methods, compositions of matter, improvements, machines, methods, and processes and new uses for any of the preceding items (“ Inventions ”); (iii) words, names, symbols, devices, designs, and other designations, and combinations of the preceding items, used to identify or distinguish a business, good, group, product, or service or to indicate a form of certification, including logos, product designs, and product features (“ Trademarks ”); (iv) improvements, derivatives, modifications, enhancements, revisions and releases relating to any of the foregoing; (v) instantiations of any of the foregoing in any form and embodied in any media; and (vi) Domain Names.

Intellectual Property Rights ” shall mean all U.S. and foreign common law and statutory rights in, arising out of, or associated with Intellectual Property in any jurisdiction, including (i) rights in, arising out of, or associated with Works of Authorship, including rights granted under the U.S. Copyright Act or analogous foreign common law or statutory regime (including all copyrights, design, design registration, and all registrations, applications for registration, and renewals for any of the foregoing) and any “moral” rights; (ii) rights in, arising out of, or associated with Inventions, including rights granted under the U.S. Patent Act or analogous foreign common law or statutory regime, including patents, utility models and inventors’ certificates and all disclosures, applications reissues, divisionals, re-examinations, renewals, substitutions, revisions, extensions, provisionals, continuations and continuations-in-part thereof (“ Patent Rights ”); (iii) rights in, arising out of, or associated with Trademarks, including rights

 

- 7 -


granted under the Lanham Act or analogous foreign common law or statutory regime (including all trademarks, service marks, trade names, business names, logos, trade dress, certification marks and other indicia of commercial source or origin together with all goodwill associated with the foregoing, and all registrations, applications and renewals of any of the foregoing); (iv) rights in, arising out of, or associated with trade secrets and business, technical and know-how information, databases, data collections and other confidential and proprietary information, whether granted under the Uniform Trade Secrets Act or the Defend Trade Secrets Act of 2016 or analogous foreign common law or statutory regime; and (v) all U.S. and foreign common law and statutory rights to sue or recover and retain damages, costs or attorneys’ fees for past, present or future infringement, misappropriation or other violation of any of the foregoing. For the avoidance of doubt, Intellectual Property Rights include Registered Intellectual Property Rights.

IRS ” shall mean the United States Internal Revenue Service or any successor thereto.

Knowledge ” of the Company, with respect to any matter in question, shall mean the actual knowledge of any of the individuals listed on Section 1.1(i) of the Company Disclosure Letter.

Law ” shall mean any and all applicable federal, state, local, municipal, foreign, international, multinational or other law, statute, constitution, treaty, principle of common law, ordinance, code, rule, regulation, ruling or other legal requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

Legal Proceeding ” shall mean any (i) civil, criminal, administrative or investigative actions, suits, claims or charges, or (ii) litigations, alternative dispute resolutions or other proceedings, in each of (i) and (ii) before any Governmental Authority and whether in law or in equity.

Liabilities ” shall mean any liability, obligation or commitment of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet prepared in accordance with GAAP).

Lien ” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, option, right of first or last offer, right of first or last refusal, preemptive right or other restriction of similar nature (including any restriction on the transfer or voting of any security or any restriction on the transfer of any other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

NASDAQ ” shall mean The NASDAQ Global Market.

Order ” shall mean any order, judgment, conciliation agreement, award, decision, decree, injunction, ruling, writ or assessment of any Governmental Authority (whether temporary, preliminary or permanent) that is binding on any Person or its property under applicable Law.

 

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Permit ” means franchises, grants, authorizations, establishment registrations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority.

Permitted Liens ” shall mean any of the following: (i) Liens for Taxes, assessments and governmental charges or levies either not yet due and payable or which are being contested in good faith by appropriate proceedings and for which an adequate reserve has been provided on the Financial Statements; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s, landlords’ or other Liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default or that are being contested in good faith by appropriate proceedings and for which an adequate reserve has been provided on the Financial Statements to the extent required by GAAP; (iii) easements, covenants and rights of way (unrecorded and of record) and other similar restrictions, zoning, entitlements, conservation, building and other land use and environmental restrictions or regulations promulgated by Governmental Authorities, in each case that do not materially and adversely impact the current use of the affected property or materially impair the value of such property; (iv) Liens the existence of which are disclosed in the notes to the consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 or the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2016; (v) all exceptions, restrictions, imperfections of title, charges and other Liens that do not materially and adversely interfere with the present use of the assets of the Company or any of its Subsidiaries, taken as a whole, or materially impair the value of such assets; (vi) Liens arising under any lines of credit or other credit facilities or arrangements of the Company or its Subsidiaries in effect on the date hereof as disclosed in the Company Disclosure Letter or the Company SEC Reports (or any replacement facilities thereto permitted pursuant to Section 6.1 ); (vii) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; (viii) with respect to leased or licensed personal property or Intellectual Property, the terms and conditions of the lease or license applicable thereto; and (ix) Liens described in Section 1.1(b) of the Company Disclosure Letter.

Person ” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Authority.

Personal Information ” shall mean, in addition to any definition provided by the Company for any similar term (e.g., “personally identifiable information” or “PII”) in any Company privacy policy or other public-facing statement, all information that identifies, allows identification of or is otherwise identifiable with an individual, including name, physical address, telephone number, email address, financial account number or government-issued identifier (including Social Security number and driver’s license number), date of birth, and any other data used or intended to be used to identify, contact or precisely locate an individual (e.g., geolocation data), together with other information to the extent collected and associated by the Company with such individual, as so associated, which may include (to the extent collected and associated by the Company with such individual, as so associated): (i) information that is created,

 

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maintained, or accessed by an individual (e.g., videos, audio or individual contact information); (ii) any data regarding an individual’s activities online or on a mobile device or other application (e.g., searches conducted, web pages or content visited or viewed); and (iii) Internet Protocol addresses, unique device identifiers or other persistent identifiers. Personal Information may relate to any individual, including a current, prospective or former customer or employee of any Person. Personal Information includes the foregoing information in any form, including paper, electronic and other forms.

Privacy Laws ” shall mean all Laws governing the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security, disclosure, disposal or transfer of Personal Information.

Private Sector Counterparty ” means any employee or agent of a private entity with which the Company or any of its Subsidiaries or Affiliates does, or seeks to do, business.

Registered Intellectual Property Rights ” shall mean all Intellectual Property Rights that are the subject of an application, certificate, filing, registration, or other document issued by, filed with, or recorded by, any Governmental Authority in any jurisdiction.

Release ” shall mean release, spill, emission, discharge, leaking, pouring, dumping or emptying, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including soil, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property.

Representatives ” shall mean the directors, officers or other employees, controlled Affiliates, or any investment banker, accountant, consultant, attorney or other authorized agent or representative retained by any applicable Person.

Rights Agreement ” shall mean that certain Rights Agreement, dated as of June 27, 2016, between the Company and Computershare Trust Company, N.A., as rights agent, as amended from time to time.

Sarbanes-Oxley Act ” shall mean the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.

SEC ” shall mean the United States Securities and Exchange Commission or any successor thereto.

Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.

Subsidiary ” of any Person shall mean (i) a corporation more than fifty percent (50%) of the combined voting power of the outstanding voting stock entitled generally to vote in the election of directors of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof,

 

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(ii) a partnership of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership, (iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member or has at least a majority of the equity interests having by their terms ordinary voting power to elect a majority of the governing body of such limited liability company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority of the equity interests having by their terms ordinary voting power to elect a majority of the governing body of such Person.

Tax ” shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever imposed by any Governmental Authority, including any interest, penalty or addition to tax imposed by any Governmental Authority, whether disputed or not.

Tax Return ” shall mean any report, declaration, return, information return, claim for refund, election, certificate, estimated tax filing or statement required to be filed or actually filed with any Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any amendments thereof.

Termination Fee ” shall mean a cash amount equal to $6,881,952.

Section 1.2. Additional Definitions . The following capitalized terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each of the capitalized terms below:

 

Term

  

Section Reference

Acceptable Confidentiality Agreement

  

Section 6.2(e)(iii)

Acquisition Proposal

  

Section 6.2(e)(i)

Acquisition Sub

  

Preamble

Adverse Recommendation Change

  

Section 6.2(c)(i)

Agreement

  

Preamble

Alternative Acquisition Agreement

  

Section 6.2(c)(ii)

Antiboycott Rules

  

Section 4.22(a)

Board Recommendation

  

Section 2.2(b)

Cancelled Company Shares

  

Section 3.7(a)(ii)

Certificate of Merger

  

Section 3.2

Certificates

  

Section 3.8(c)

Changes

  

Section 1.1

Closing

  

Section 3.3

Closing Date

  

Section 3.3

 

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COBRA

  

Section 4.11(d)

Company

  

Preamble

Company Common Stock

  

Recitals

Company Disclosure Letter

  

Article IV

Company License-In Agreements

  

Section 4.16(g)

Company License-Out Agreements

  

Section 4.16(h)

Company Financial Advisor

  

Section 4.10

Company SEC Reports

  

Section 4.7(a)

Company Securities

  

Section 4.2(a)

Company Shares

  

Recitals

Confidentiality Agreement

  

Section 10.4

Current Company D&O Insurance

  

Section 7.8(c)

Customs Laws

  

Section 4.22(a)

Debt Financing Dispute

  

Section 10.9(a)

DGCL

  

Recitals

Dissenting Company Shares

  

Section 3.7(c)(i)

EAR

  

Section 4.22(a)

Effective Time

  

Section 3.2

Enforceability Exceptions

  

Section 4.4

Environmental Permits

  

Section 4.15(b)

Exchange Fund

  

Section 3.8(b)

Expiration Time

  

Section 2.1(d)(i)

Financial Statements

Incipio

Incipio Merger Agreement

  

Section 4.7(b)

Recitals

Recitals

Indemnified Persons

  

Section 7.8(a)

Inventions

  

Section 1.1

Material Contract

  

Section 4.18(a)

Maximum Annual Premium

  

Section 7.8(c)

Merger

  

Recitals

Merger Consideration

  

Section 3.7(a)(i)

Minimum Condition

  

Section 2.1(a)(i)

Multiemployer Plan

  

Section 4.11(c)

Offer

  

Recitals

Offer Documents

  

Section 2.1(g)(i)

Offer Price

  

Recitals

Offer to Purchase

  

Section 2.1(a)

Option Consideration

  

Section 3.7(d)

Parent

  

Preamble

Patent Rights

  

Section 1.1

Payment Agent

  

Section 3.8(a)

Plans

  

Section 4.11(a)

Real Property Leases

  

Section 4.17(b)

Restraint

  

Section 8.1(b)

Restricted Territories

  

Section 4.22(a)(i)

 

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RSU Consideration

  

Section 3.7(e)

Sanctions Laws

  

Section 4.22(a)

Schedule 14D-9

  

Section 2.2(b)

Schedule TO

  

Section 2.1(g)(i)

Subsidiary Securities

  

Section 4.2(b)

Superior Proposal

  

Section 6.2(e)(ii)

Surviving Corporation

  

Section 3.1

Termination Date

  

Section 9.1(b)

Termination Fee

  

Section 1.1

Trade Compliance Laws

  

Section 4.22(a)

Trademarks

  

Section 1.1

Uncertificated Shares

  

Section 3.8(c)

Works of Authorship

  

Section 1.1

Section 1.3. Certain Interpretations .

(a) Unless otherwise indicated, all references herein to Articles, Sections, Annexes, Exhibits or Schedules, shall be deemed to refer to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

(b) Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”

(c) The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.

(d) Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.

(e) Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

(f) References to “$” and “dollars” are to the currency of the United States of America.

(g) Any dollar or percentage thresholds set forth herein shall not be determinative in and of themselves of what is or is not “material” or a “Company Material Adverse Effect” under this Agreement.

(h) When used herein, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not simply mean “if.”

 

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(i) The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

ARTICLE II

THE OFFER

Section 2.1. The Offer .

(a) Terms and Conditions of the Offer . Provided that this Agreement shall not have been terminated pursuant to Article IX , as promptly as practicable after the date hereof (but in no event more than seven (7) Business Days thereafter), Acquisition Sub shall (and Parent shall cause Acquisition Sub to) commence (within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer to purchase any and all of the Company Shares at a price per Company Share, subject to the terms of Section 2.1(c) , equal to the Offer Price. The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that is disseminated to all of the Company Stockholders and contains the terms and conditions set forth in this Agreement and in Annex A . Each of Parent and Acquisition Sub shall use its reasonable best efforts to consummate the Offer, subject to the terms and conditions hereof and thereof. The Offer shall be subject only to:

(i) the condition (the “ Minimum Condition ”) that, prior to the expiration of the Offer, there be validly tendered and not withdrawn in accordance with the terms of the Offer a number of Company Shares that, together with the Company Shares then owned by Parent, Acquisition Sub and their respective Affiliates (if any), represents at least a majority of all then outstanding Company Shares (not including Company Shares tendered pursuant to guaranteed delivery procedures that have not been “received,” as such term is defined in Section 251(h) of the DGCL, by the depository of the Offer); and

(ii) the other conditions set forth in Annex A .

(b) Waiver of Conditions . Acquisition Sub expressly reserves the right to waive any of the conditions to the Offer and to make, in its sole and absolute discretion, any change in the terms of or conditions to the Offer; provided, however, that notwithstanding the foregoing or anything to the contrary set forth herein, without the prior written consent of the Company in its sole and absolute discretion, Acquisition Sub may not (and Parent shall not permit Acquisition Sub to) (i) waive the Minimum Condition or the condition set forth in clause (C)(1) of Annex A or (ii) make any change in the terms of or conditions to the Offer that (A) changes the form of consideration to be paid in the Offer, (B) decreases the Offer Price or the number of Company Shares sought in the Offer, (C) extends the Offer, other than in a manner required by the provisions of Section 2.1(d) , (D) imposes conditions to the Offer other than those set forth in Annex A , or (E) amends any other term or condition of the Offer (including those set forth in Annex A ) in any manner that is adverse to the Company Stockholders.

(c) Adjustments to the Offer Price . The Offer Price shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including

 

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any dividend or other distribution of securities convertible into Company Common Stock), reclassification, combination, exchange of shares or other like change with respect to Company Common Stock occurring on or after the date hereof and prior to Acquisition Sub’s acceptance for payment of, and payment for, Company Shares that are tendered pursuant to the Offer.

(d) Expiration and Extension of the Offer .

(i) Unless the Offer is extended pursuant to and in accordance with this Agreement, the Offer shall expire at midnight, New York Time, on the date that is twenty (20) Business Days after the date the Offer is first commenced (within the meaning of Rule 14d-2 promulgated under the Exchange Act) (as such date and time may be extended, the “ Expiration Time ”). In the event that the Offer is extended pursuant to and in accordance with this Agreement, then the Offer shall expire on the date and at the time to which the Offer has been so extended.

(ii) Notwithstanding the provisions of Section 2.1(d)(i) or anything to the contrary set forth in this Agreement:

(A) Acquisition Sub shall extend the Offer for any period required by any Law or Order, or any rule, regulation, interpretation or position of the SEC or its staff or NASDAQ, in any such case that is applicable to the Offer;

(B) in the event that any of the conditions to the Offer set forth on Annex A , other than the Minimum Condition, are not satisfied or waived (if permitted hereunder) as of any then scheduled expiration of the Offer, Acquisition Sub shall extend the Offer for successive extension periods of ten (10) Business Days each (or any longer period as may be approved in advance by the Company) in order to permit the satisfaction of all of the conditions to the Offer; and

(C) in the event that all of the conditions to the Offer set forth on Annex A have been satisfied or waived (if permitted hereunder), except that the Minimum Condition has not been satisfied, as of any then scheduled expiration of the Offer, Acquisition Sub shall extend the Offer for an extension period of ten (10) Business Days (or any longer period as may be approved in advance by the Company), it being understood and agreed that Acquisition Sub shall not be required to extend the Offer pursuant to this clause (C) on more than two (2) occasions, but may, in its sole discretion, elect to do so;

provided, however, that the foregoing clauses (A), (B) or (C) of this Section 2.1(d)(ii) shall not be deemed to impair, limit or otherwise restrict in any manner the right of the parties to terminate this Agreement pursuant to the terms of Article IX , and in no event shall Acquisition Sub be required to extend the Offer beyond the Termination Date.

(iii) Neither Parent nor Acquisition Sub shall extend the Offer in any manner other than pursuant to and in accordance with the provisions of Section 2.1(d)(ii) without the prior written consent of the Company.

 

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(iv) Neither Parent nor Acquisition Sub shall terminate or withdraw the Offer prior to the then scheduled expiration of the Offer unless this Agreement is validly terminated in accordance with Article IX , in which case Acquisition Sub shall (and Parent shall cause Acquisition Sub to) irrevocably and unconditionally terminate the Offer promptly (but in no event more than one (1) Business Day) after such termination of this Agreement.

(e) Payment for Company Shares . On the terms and subject to the conditions set forth in this Agreement and the Offer, Acquisition Sub shall (and Parent shall cause Acquisition Sub to) accept for payment, and pay for, all Company Shares that are validly tendered and not withdrawn pursuant to the Offer promptly (within the meaning of Section 14e-1(c) promulgated under the Exchange Act) after the expiration of the Offer (as it may be extended in accordance with Section 2.1(d)(ii) ). Without limiting the generality of the foregoing, Parent shall provide or cause to be provided to Acquisition Sub on a timely basis the funds necessary to pay for any Company Shares that Acquisition Sub becomes obligated to purchase pursuant to the Offer; provided, however, that, without the prior written consent of the Company, Acquisition Sub shall not accept for payment or pay for any Company Shares if, immediately thereafter, Acquisition Sub would own less than the number of Company Shares necessary to satisfy the Minimum Condition. The Offer Price payable in respect of each Company Share validly tendered and not withdrawn pursuant to the Offer shall be paid net to the holder thereof in cash, subject to reduction for any withholding Taxes pursuant to Section 3.8(e) .

(f) Subsequent Offering Period . Subject to the last sentence of this Section 2.1(f) , Acquisition Sub may (but shall not be required to), and the Offer to Purchase shall reserve the right to, provide for a “subsequent offering period” (within the meaning of Rule 14d-11 promulgated under the Exchange Act) of not less than three (3) nor more than twenty (20) Business Days immediately following the expiration of the Offer. Subject to the terms and conditions of this Agreement and the Offer, Acquisition Sub shall (and Parent shall cause Acquisition Sub to) accept for payment, and pay for, all Company Shares that are validly tendered during the “subsequent offering period” promptly (within the meaning of Section 14e-1(c) promulgated under the Exchange Act) after any such Company Shares are validly tendered during the “subsequent offering period.” Without limiting the generality of the foregoing, Parent shall provide or cause to be provided to Acquisition Sub on a timely basis the funds necessary to pay for any Company Shares that Acquisition Sub becomes obligated to purchase during such “subsequent offering period.” The Offer Price payable in respect of each Company Share that is validly tendered during the “subsequent offering period” shall be paid net to the holder thereof in cash, subject to reduction for any withholding Taxes pursuant to Section 3.8(e) . Notwithstanding anything to the contrary set forth in this Agreement, Acquisition Sub shall not (and Parent shall cause Acquisition Sub not to) commence any “subsequent offering period” after the Acceptance Time if the Merger can be effected pursuant to Section 251(h) of the DGCL.

(g) Schedule TO; Offer Documents . As soon as practicable on the date the Offer is first commenced (within the meaning of Rule 14d-2 promulgated under the Exchange Act), Acquisition Sub shall:

(i) prepare and file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, and including all exhibits thereto, the “ Schedule TO ”) with respect to the Offer in accordance with Rule 14d-3(a)

 

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promulgated under the Exchange Act, which Schedule TO shall contain as an exhibit the Offer to Purchase and forms of the letter of transmittal and summary advertisement, if any, and other required or customary ancillary documents, in each case, in respect of the Offer (together with any supplements or amendments thereto, the “ Offer Documents ”);

(ii) deliver a copy of the Schedule TO, including all exhibits thereto, to the Company at its principal executive offices in accordance with Rule 14d-3(a) promulgated under the Exchange Act;

(iii) give telephonic notice of the information required by Rule 14d-3 promulgated under the Exchange Act, and mail by means of first class mail a copy of the Schedule TO, to NASDAQ in accordance with Rule 14d-3(a) promulgated under the Exchange Act; and

(iv) cause the Offer Documents to be disseminated to all Company Stockholders as and to the extent required by applicable Law (including the Exchange Act).

(h) Parent and Acquisition Sub shall cause the Schedule TO and the other Offer Documents to comply as to form in all material respects with the requirements of applicable Law. Subject to the provisions of Section 6.2 , the Schedule TO and the other Offer Documents may include a description of the determinations, approvals and recommendations of the Company Board set forth in Section 2.2(a) that relate to the Offer. The Company shall furnish in writing to Parent and Acquisition Sub all information concerning the Company, its Subsidiaries and the Company Stockholders that is required by applicable Law to be included in the Schedule TO or the other Offer Documents so as to enable Parent and Acquisition Sub to comply with their obligations under this Section 2.1(h) . Parent, Acquisition Sub and the Company shall cooperate in good faith to determine the information regarding the Company that is necessary to include in the Schedule TO and the other Offer Documents in order to satisfy applicable Laws. Each of Parent, Acquisition Sub and the Company shall promptly correct any information provided by it or any of its respective directors, officers, employees, Affiliates, agents or other Representatives for use in the Schedule TO or the other Offer Documents if and to the extent such information shall have become false or misleading in any material respect. Parent and Acquisition Sub shall take all steps necessary to cause the Schedule TO and the other Offer Documents, as so corrected, to be filed with the SEC and the Offer Documents, as so corrected, to be disseminated to the Company Stockholders, in each case as and to the extent required by applicable Laws, or by the SEC or its staff or NASDAQ. Parent and Acquisition Sub shall provide the Company and its counsel a reasonable opportunity to review and comment on the Schedule TO and the other Offer Documents prior to the filing thereof with the SEC, and Parent and Acquisition Sub shall give reasonable and good faith consideration to any comments made by the Company and its counsel (it being understood that the Company and its counsel shall provide any comments thereon as soon as reasonably practicable). Parent and Acquisition Sub shall provide in writing to the Company and its counsel any and all comments or other communications, whether written or oral, that Parent, Acquisition Sub or their counsel may receive from the SEC or any other Governmental Authority or its staff with respect to the Schedule TO and the other Offer Documents promptly after such receipt, and Parent and Acquisition Sub shall provide the Company and its counsel a reasonable opportunity to participate in the formulation of any response to any such comments of the SEC or any other

 

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Governmental Authority or its staff (including by providing a reasonable opportunity for the Company and its counsel to review and comment on any such response, which comments Parent and Acquisition Sub shall consider reasonably and in good faith).

Section 2.2. Company Actions .

(a) Company Determinations, Approvals and Recommendations . The Company hereby approves and consents to the Offer and represents and warrants to Parent and Acquisition Sub that, at a meeting duly called and held prior to the date hereof, the Company Board has, upon the terms and subject to the conditions set forth herein:

(i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement;

(ii) based on written representations and warranties made by Parent and Acquisition Sub, determined that neither Parent nor Acquisition Sub nor any of their respective “affiliates” and “associates” (as such terms are defined in Section 203 of the DGCL) is an “interested stockholder” of the Company or has been an “interested stockholder” of the Company at any time during the last three (3) years (as such term is defined in Section 203(c) of the DGCL);

(iii) adopted resolutions approving this Agreement, the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements contained herein and the consummation of the Offer and the Merger upon the terms and subject to the conditions contained herein; and

(iv) resolved to recommend that the Company Stockholders accept the Offer and tender their Company Shares to Acquisition Sub pursuant to the Offer; provided, however, that such recommendation may be withheld, withdrawn, amended or modified only in accordance with the terms of this Agreement.

The Company hereby consents to the inclusion of the foregoing determinations and approvals in the Offer Documents and, to the extent that the foregoing recommendation of the Company Board is not withheld, withdrawn, amended or modified in accordance with this Agreement, the Company hereby consents to the inclusion of such recommendation in the Offer Documents.

(b) Schedule 14D-9 . The Company shall (i) file with the SEC, as promptly as reasonably practicable, but in no event more than one (1) Business Day after the filing by Parent and Acquisition Sub of the Schedule TO and the other Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, and including all exhibits thereto, the “ Schedule 14D-9 ”) containing, (A) except as provided in Section 6.2 , the Company Board recommendation that the Company Stockholders accept the Offer and tender their Company Shares to Acquisition Sub pursuant to the Offer (the “ Board Recommendation ”) and (B) notice to the Company Stockholders informing such holders of their rights of appraisal in respect of the Company Shares in accordance with Section 262 of the DGCL, and (ii) take all steps necessary to disseminate the Schedule 14D-9 to the Company Stockholders as and to the extent required by Rule 14d-9 promulgated under the

 

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Exchange Act and any other applicable United States federal securities Laws. If requested by the Company, Parent shall cause the Schedule 14D-9 to be mailed or otherwise disseminated to the Company Stockholders together with the Offer Documents. Each of Parent and Acquisition Sub shall furnish in writing to the Company all information concerning Parent and Acquisition Sub that is required by applicable Laws to be included in the Schedule 14D-9 so as to enable the Company to comply with its obligations under this Section 2.2(b) . Parent, Acquisition Sub and the Company shall cooperate in good faith to determine the information regarding the Company that is necessary to include in the Schedule 14D-9 in order to satisfy applicable Laws. Each of the Company, Parent and Acquisition Sub shall promptly correct any information provided by it or any of its respective directors, officers, employees, Affiliates, agents or other Representatives for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect. The Company shall take all steps necessary to cause the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to the Company Stockholders, in each case as and to the extent required by applicable Laws or by the SEC or its staff or NASDAQ. Unless the Company Board has effected an Adverse Recommendation Change in accordance with Section 6.2 , the Company shall provide Parent, Acquisition Sub and their counsel a reasonable opportunity to review and comment on the Schedule 14D-9 prior to the filing thereof with the SEC, and the Company shall give reasonable and good faith consideration to any comments made by Parent, Acquisition Sub and their counsel (it being understood that Parent, Acquisition Sub and their counsel shall provide any comments thereon as soon as reasonably practicable). Unless the Company Board has effected an Adverse Recommendation Change in accordance with Section 6.2 , the Company shall provide in writing to Parent, Acquisition Sub and their counsel any comments or other communications, whether written or oral, the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after such receipt, and unless the Company Board has effected an Adverse Recommendation Change in accordance with Section 6.2 , the Company shall provide Parent, Acquisition Sub and their counsel a reasonable opportunity to participate in the formulation of any response to any such comments of the SEC or its staff (including by providing a reasonable opportunity for Parent, Acquisition Sub and their counsel to review and comment on any such response, which comments the Company shall consider reasonably and in good faith).

(c) Company Information . In connection with the Offer, the Company shall, or shall cause its transfer agent to, furnish Parent and Acquisition Sub with such assistance and such information as Parent or its agents may reasonably request in order to disseminate and otherwise communicate the Offer to the record and beneficial Company Stockholders, including a list, as of the most recent practicable date, of the Company Stockholders, mailing labels and any available listing or computer files containing the names and addresses of all record and beneficial Company Stockholders, and lists of security positions of Company Shares held in stock depositories (including updated lists of stockholders, mailing labels, listings or files of securities positions). Subject to applicable Laws, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent and Acquisition Sub (and their respective agents) shall:

(i) hold in confidence the information contained in any such lists of stockholders, mailing labels and listings or files of securities positions;

 

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(ii) use such information only in connection with the Offer and the Merger and only in the manner provided in this Agreement; and

(iii) if (A) this Agreement shall be terminated pursuant to Article IX , and (B) Parent and Acquisition Sub shall withdraw the Offer, promptly return (and shall use their respective reasonable efforts to cause their agents to deliver) to the Company any and all copies and any extracts or summaries from such information then in their possession or control.

ARTICLE III

THE MERGER

Section 3.1. The Merger . Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of the DGCL, at the Effective Time, Acquisition Sub shall be merged with and into the Company, the separate corporate existence of Acquisition Sub shall thereupon cease and the Company shall continue as the surviving corporation of the Merger. The Merger shall be effected under Section 251(h) of the DGCL as soon as practicable following the Acceptance Time. The Company, as the surviving corporation of the Merger, is sometimes referred to herein as the “ Surviving Corporation .”

Section 3.2. The Effective Time . Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date the Company shall cause the Merger to be consummated under the DGCL by filing a certificate of merger in such form as required by, and executed in accordance with, the DGCL (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware (the time and day of such filing and acceptance by the Secretary of State of the State of Delaware, or such later time and day as may be agreed in writing by Parent, Acquisition Sub and the Company and specified in the Certificate of Merger, being referred to herein as the “ Effective Time ”).

Section 3.3. The Closing . The consummation of the Merger shall take place at a closing (the “ Closing ”) to occur at the offices of Latham & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626, as promptly as practicable following the Acceptance Time, and in any case no later than the second (2nd) Business Day after the satisfaction of the last to be satisfied of the conditions set forth in Article VIII (other than those conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction (or waiver, if permitted by applicable Law) of those conditions), or at such other location, date and time as Parent, Acquisition Sub and the Company shall mutually agree upon in writing. The date upon which the Closing shall actually occur pursuant hereto is referred to herein as the “ Closing Date .”

Section 3.4. Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all of the property, rights, privileges, powers and franchises of the Company and Acquisition Sub shall vest in the Surviving Corporation, and all debts, Liabilities and duties of the Company and Acquisition Sub shall become the debts, Liabilities and duties of the Surviving Corporation.

Section 3.5. Certificate of Incorporation and Bylaws .

 

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(a) Certificate of Incorporation . At the Effective Time, subject to the provisions of Section 7.8(a) , the certificate of incorporation of the Company shall be amended and restated so as to read in its entirety in the form attached as Exhibit A hereto, and such amended and restated certificate of incorporation shall become the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation (subject to the provisions of Section 7.8(a) ).

(b) Bylaws . At the Effective Time, subject to the provisions of Section 7.8(a) , the bylaws of Acquisition Sub, as in effect immediately prior to the Effective Time, shall become the bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws (subject to the provisions of Section 7.8(a) ).

Section 3.6. Directors and Officers .

(a) Directors . At the Effective Time, the directors of the Company shall resign and immediately prior to the Effective Time the directors of Acquisition Sub immediately prior to the Effective Time shall become the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

(b) Officers . At the Effective Time, the officers of the Company immediately prior to the Effective Time shall become the officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation and any resolutions of the board of directors of the Surviving Corporation.

Section 3.7. Effect on Capital Stock .

(a) Capital Stock . Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Acquisition Sub, the Company, or the holders of any of the following securities, the following shall occur:

(i) Company Common Stock . Each share of Company Common Stock that is outstanding immediately prior to the Effective Time (excluding (A) Cancelled Company Shares, and (B) any Dissenting Company Shares) shall be canceled and extinguished and automatically converted into the right to receive cash in an amount equal to the Offer Price (the “ Merger Consideration ”), without interest thereon, which shall be payable upon the surrender of the certificate evidencing such share of Company Common Stock in the manner provided in Section 3.8 (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit in the manner provided in Section 3.10 ).

(ii) Excluded Company Common Stock . Each share of Company Common Stock owned by Parent, Acquisition Sub or the Company, or by any direct or indirect wholly owned Subsidiary of Parent, Acquisition Sub or the Company, in each case immediately prior to the Effective Time (“ Cancelled Company Shares ”), shall be cancelled and extinguished without any conversion thereof or consideration paid therefor.

 

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(iii) Capital Stock of Acquisition Sub . Each share of common stock, par value $0.0001 per share, of Acquisition Sub that is outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. Each certificate evidencing ownership of such shares of common stock of Acquisition Sub shall thereafter evidence ownership of shares of common stock of the Surviving Corporation.

(b) Adjustment to the Merger Consideration . The Merger Consideration shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Common Stock), reclassification, combination, exchange of shares or other like change with respect to Company Common Stock occurring on or after the consummation of the Offer and prior to the Effective Time.

(c) Statutory Rights of Appraisal .

(i) Notwithstanding anything to the contrary set forth in this Agreement, all Company Shares that are issued and outstanding immediately prior to the Effective Time and held by Company Stockholders who shall have neither voted in favor of the Merger nor consented thereto in writing and who shall have properly and validly perfected their statutory rights of appraisal in respect of such Company Shares in accordance with Section 262 of the DGCL (collectively, “ Dissenting Company Shares ”) shall not be converted into, or represent the right to receive, the Merger Consideration pursuant to Section 3.7(a) . Such Company Stockholders shall be entitled to receive payment of the fair value of such Dissenting Company Shares in accordance with the provisions of Section 262 of the DGCL, except that all Dissenting Company Shares held by Company Stockholders who shall have failed to perfect or who shall have effectively withdrawn or lost their rights to appraisal of such Dissenting Company Shares under such Section 262 of the DGCL shall no longer be considered to be Dissenting Company Shares and shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without interest thereon, upon surrender of the certificate or certificates that formerly evidenced such Company Shares in the manner provided in Section 3.8 .

(ii) The Company shall give Parent (A) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands, and any other instruments served pursuant to Delaware Law and received by the Company in respect of Dissenting Company Shares and (B) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under Delaware Law in respect of Dissenting Company Shares. The Company shall not, except with the prior written consent of Parent (such consent not to be unreasonably withheld), voluntarily make any payment with respect to any demands for appraisal, or settle or offer to settle any such demands for payment, in respect of Dissenting Company Shares.

(d) Company Options . Effective as of immediately prior to the Effective Time, (i) the vesting of each Company Option that remains outstanding as of immediately prior to the Effective Time shall be accelerated in full, (ii) each Company Option that remains outstanding as of immediately prior to the Effective Time shall be cancelled and terminated as of

 

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the Effective Time and (iii) each holder of each such Company Option shall be paid by the Surviving Corporation promptly after the Effective Time, subject to Section 3.8(e) , an amount in cash (without interest), if any, equal to the product obtained by multiplying (x) the aggregate number of Company Shares underlying such Company Option immediately prior to the Effective Time, by (y) an amount equal to (A) the Offer Price, less (B) the per share exercise price of such Company Option (the “ Option Consideration ”) (it being understood and agreed that such exercise price shall not actually be paid to the Surviving Corporation by the holder of a Company Option). Within three (3) Business Days after the Closing, Parent shall pay by wire transfer of immediately available funds to the Surviving Corporation, and Parent shall cause the Surviving Corporation to pay to each of the holders of Company Options, the applicable Option Consideration (less any applicable withholding Taxes pursuant to Section 3.8(e) ) as promptly as practicable (and in no event later than the next regular payroll date) thereafter.

(e) Company RSU Awards . Effective as of immediately prior to the Effective Time, (i) the vesting of each Company RSU Award that remains outstanding as of immediately prior to the Effective Time shall be accelerated in full (which, in the case of a Company RSU Award that vests in whole or in part on the basis of achievement of performance goals, shall be determined as if performance were at 100% of targeted performance), (ii) each Company RSU Award that remains outstanding as of immediately prior to the Effective Time shall be cancelled and terminated as of the Effective Time and (iii) each holder of each such Company RSU Award shall be entitled to be paid by the Surviving Corporation promptly after the Effective Time, subject to Section 3.8(e) , an amount in cash (without interest), if any, equal to the product obtained by multiplying (x) the aggregate number of Company Shares underlying such Company RSU Award immediately prior to the Effective Time, by (y) the Offer Price (the “ RSU Consideration ”). Within three (3) Business Days after the Closing, Parent shall pay by wire transfer of immediately available funds to the Surviving Corporation, and Parent shall cause the Surviving Corporation to pay to each of the holders of Company RSU Awards, the applicable RSU Consideration (less any applicable withholding Taxes pursuant to Section 3.8(e) ) as promptly as practicable (and in no event later than the next regular payroll date) thereafter.

(f) The Company, the Company Board and any applicable committee thereof shall take all requisite action to effectuate the provisions of Section 3.7(d) and Section 3.7(e) , above.

Section 3.8. Exchange of Certificates .

(a) Payment Agent . Prior to the Acceptance Time, Parent shall select a bank or trust company reasonably acceptable to the Company to act as the payment agent for the Merger (the “ Payment Agent ”).

(b) Exchange Fund . At the Closing, Parent shall deposit (or cause to be deposited) with the Payment Agent, for payment to the Company Stockholders pursuant to the provisions of this Article III , an amount of cash equal to the aggregate consideration to which holders of Company Common Stock are entitled under this Article III (which, for the avoidance of doubt, shall not include the Option Consideration or the RSU Consideration). Until disbursed in accordance with the terms and conditions of this Agreement, such funds shall be invested by the Payment Agent, as directed by Parent or the Surviving Corporation, in obligations of or

 

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guaranteed by the United States of America or obligations of an agency of the United States of America which are backed by the full faith and credit of the United States of America (such cash amount being referred to herein as the “ Exchange Fund ”). Any interest and other income resulting from such investments shall be paid to Parent. No investment or losses thereon shall affect the consideration to which holders of Company Common Stock are entitled under this Article III and to the extent that there are any losses with respect to any investments of the Exchange Fund, or the Exchange Fund diminishes for any reason below the amount required to promptly pay in full the cash amounts contemplated by this Article III , Parent shall, or shall cause the Surviving Corporation to, promptly replace or restore the cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times maintained at a level sufficient to make in full such payments contemplated by this Article III .

(c) Payment Procedures . Promptly following the Effective Time, Parent and the Surviving Corporation shall cause the Payment Agent to mail to each holder of record (as of immediately prior to the Effective Time) of (i) a certificate or certificates (the “ Certificates ”) which immediately prior to the Effective Time evidenced outstanding Company Shares and (ii) uncertificated Company Shares (the “ Uncertificated Shares ”), in each case, whose Company Shares were converted into the right to receive the Merger Consideration pursuant to Section 3.7 (A) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Payment Agent), and (B) instructions for use in effecting the surrender of the Certificates and Uncertificated Shares in exchange for the Merger Consideration payable in respect thereof pursuant to the provisions of this Article III . Upon surrender of Certificates for cancellation to the Payment Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates shall be entitled to receive in exchange therefor an amount in cash equal to the product obtained by multiplying (x) the aggregate number of Company Shares represented by such Certificate that were converted into the right to receive the Merger Consideration pursuant to Section 3.7 , by (y) the Merger Consideration (less any applicable withholding Tax pursuant to Section 3.8(e) ), and the Certificates so surrendered shall forthwith be canceled. Upon receipt of an “agent’s message” by the Payment Agent (or such other evidence, if any, of transfer as the Payment Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, the holders of such Uncertificated Shares shall be entitled to receive in exchange therefor an amount in cash equal to the product obtained by multiplying (x) the aggregate number of Company Shares represented by such holder’s transferred Uncertificated Shares that were converted into the right to receive the Merger Consideration pursuant to Section 3.7 , by (y) the Merger Consideration (less any applicable withholding Tax pursuant to Section 3.8(e) ), and the transferred Uncertificated Shares so surrendered shall forthwith be canceled. The Payment Agent shall accept such Certificates and transferred Uncertificated Shares upon compliance with such reasonable terms and conditions as the Payment Agent may impose to effect an orderly exchange thereof in accordance with normal and reasonable exchange practices. No interest shall be paid or accrued for the benefit of holders of the Certificates and Uncertificated Shares on the Merger Consideration payable upon the surrender of such Certificates and Uncertificated Shares pursuant to this Section 3.8 . Until so surrendered, outstanding Certificates and Uncertificated Shares shall be deemed, from and after the Effective Time, to evidence only the right to receive the Merger Consideration, without interest thereon, payable in respect thereof pursuant to the provisions of this Article III .

 

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(d) Transfers of Ownership . In the event that a transfer of ownership of Company Shares is not registered in the stock transfer books or ledger of the Company, or if the Merger Consideration is to be paid in a name other than that in which the Certificates or Uncertificated Shares surrendered in exchange therefor are registered in the stock transfer books or ledger of the Company, the Merger Consideration may be paid to a Person other than the Person in whose name the Certificate or Uncertificated Share so surrendered is registered in the stock transfer books or ledger of the Company only if such Certificate or Uncertificated Shares is properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer or other similar Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of such Certificate or Uncertificated Shares, or established to the reasonable satisfaction of Parent (or any agent designated by Parent) that such Taxes have been paid or are otherwise not payable.

(e) Required Withholding . Each of the Payment Agent, Parent, Acquisition Sub and the Surviving Corporation shall be entitled to deduct and withhold from any cash amounts payable pursuant to this Agreement to any holder or former holder of Company Shares, Company Options and Company RSU Awards such amounts as are required to be deducted or withheld therefrom under applicable Tax Laws; provided, however, that before making any such deduction or withholding, Parent shall use commercially reasonable efforts to provide to the Company, a reasonable period of time prior to Closing, notice of any applicable payor’s intention to make such deduction or withholding and, in reasonable detail, the authority, basis and method of calculation for the proposed deduction or withholding, and provide the Company with a reasonable opportunity to obtain reduction of or relief from such deduction or withholding from the applicable Governmental Authority and/or execute and deliver to or file with such Governmental Authority and/or Parent such affidavits, certificates and other documents as may reasonably be expected to afford to the Company and its stockholders reduction of or relief from such deduction or withholding. Parent shall reasonably cooperate with the Company to obtain such reduction of or relief from such deduction or withholding. To the extent that such amounts are so deducted, withheld and remitted to the applicable Governmental Authority, 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.

(f) No Liability . Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the Surviving Corporation or any other party hereto shall be liable to a Company Stockholder for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g) Distribution of Exchange Fund to Parent . Any portion of the Exchange Fund that remains undistributed to the holders of the Certificates or Uncertificated Shares on the date that is twelve (12) months after the Effective Time shall be delivered to Parent upon demand, and any Company Stockholder who has not theretofore surrendered his, her or its Certificates or Uncertificated Shares evidencing such Company Shares for exchange pursuant to the provisions of this Section 3.8 shall thereafter look for payment of the Merger Consideration payable in respect of the Company Shares represented by such Certificates or Uncertificated Shares solely to Parent (subject to abandoned property, escheat or similar Laws), as general

 

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creditors thereof, for any claim to the applicable Merger Consideration to which such holders may be entitled pursuant to the provisions of this Article III .

Section 3.9. No Further Ownership Rights in Company Common Stock . From and after the Effective Time, all Company Shares shall no longer be outstanding and shall automatically be cancelled and cease to exist, and each holder of a Certificate or Uncertificated Shares theretofore representing any Company Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration payable therefor upon the surrender thereof in accordance with the provisions of Section 3.8 . The Merger Consideration paid in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of the Company Common Stock. From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Corporation of Company Shares that were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article III .

Section 3.10. Lost, Stolen or Destroyed Certificates . In the event that any Certificates shall have been lost, stolen or destroyed, the Payment Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, in the form and substance as reasonably requested by the Payment Agent, and the posting by such holders of a bond in customary and reasonable amount and upon such terms as may reasonably be required by Parent as indemnity against any claim that may be made against it with respect to such Certificate, the Merger Consideration payable in respect thereof pursuant to Section 3.7 .

Section 3.11. Necessary Further Actions . As of the Effective Time, the officers and directors of Parent and the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company and Acquisition Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company and Acquisition Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (i) as disclosed in the letter delivered by the Company to Parent on the date of this Agreement (the “ Company Disclosure Letter ”), or (ii) as disclosed in any Company SEC Reports filed with or furnished to the SEC after January 1, 2015, but prior to the date hereof (other than in any “risk factor” disclosure or any other forward looking statements set forth therein), the Company hereby represents and warrants to Parent and Acquisition Sub as follows:

Section 4.1. Organization and Qualification .

 

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(a) Each of the Company and each of its Subsidiaries is duly organized and validly existing and in good standing (to the extent such concepts are recognized in the applicable jurisdiction) under the Laws of its jurisdiction of incorporation, with all corporate power and authority to own its properties and conduct its business as currently conducted, except for such failures to be in good standing or have such power that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Each of the Company and each of its Subsidiaries is duly qualified and in good standing as a foreign corporation authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes such qualification necessary, except for such failures to be so qualified and in good standing that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b) The Company has heretofore made available to Parent true, correct and complete copies of the certificate of incorporation and bylaws (or equivalent governing documents) as currently in effect for the Company and each of its Subsidiaries. Each of the Company and each of its Subsidiaries is in compliance in all material respects with the terms of its certificate of incorporation and bylaws (or equivalent governing documents). Neither the Company nor any of its Subsidiaries, directly or indirectly, owns any interest in any Person, or has any obligation to acquire any such interest, or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any Person, other than the Company’s Subsidiaries.

Section 4.2. Capitalization .

(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock and 10,000,000 shares of Company Preferred Stock. At the close of business on July 26, 2016, (i) 28,746,664 shares of Company Common Stock were issued and outstanding; (ii) no shares of Company Preferred Stock were issued and outstanding; (iii) 4,826,402 Company Shares were held by the Company in its treasury; (iv) an aggregate of 4,390,772 shares of Company Stock were reserved for issuance pursuant to outstanding awards and rights under the Company Stock Plans and (v) under the Company Stock Plans, there were outstanding Company Options to purchase 2,576,792 shares of Company Common Stock, and outstanding Company RSU Awards with respect to 1,813,980 shares of Company Stock. From such date until the date hereof, neither the Company nor any of its Subsidiaries has issued any shares of its capital stock, has granted any options, restricted stock, stock appreciation rights, warrants or rights or entered into any other agreements or commitments to issue any shares of its capital stock, or granted any other awards in respect of any shares of its capital stock or has split, combined, subdivided or reclassified any of its shares of capital stock. All of the outstanding Company Shares have been, and all shares of Company Common Stock that may be issued pursuant to the exercise of outstanding Company Stock Awards or vesting of Company RSU Awards will be (when issued in accordance with the terms thereof), duly authorized and validly issued and are fully paid and nonassessable and are free of preemptive rights. Section 4.2(a) of the Company Disclosure Letter contains a true, correct and complete list, as of the date hereof, of all Company Stock Awards, indicating as applicable, with respect to each Company Stock Award then outstanding, the type of Company Stock Award granted, the number of shares of Company Common Stock subject to such Company Stock Award, the date of grant, exercise or

 

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purchase price and expiration thereof. Except for the Company Stock Awards, there are on the date hereof no outstanding (A) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities or ownership interests in the Company, (B) options, warrants, calls, pre-emptive rights, subscriptions, rights or other agreements or commitments requiring the Company to issue, or other obligations of the Company to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock or voting securities or other ownership interests in) the Company (or, in each case, the economic equivalent thereof), (C) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in the Company (the items in clauses (A), (B) and (C), together with the capital stock of the Company, being referred to collectively as “ Company Securities ”) or (D) obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of the shares of Company Common Stock. There are on the date hereof no outstanding obligations of the Company or any of its Subsidiaries to purchase, redeem or otherwise acquire any Company Securities. There are no bonds, debentures, notes or other indebtedness having voting rights (or convertible into securities having such rights) with respect to the Company or any Company Subsidiary issued and outstanding. There are no (i) voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of capital stock of the Company or (ii) outstanding contractual obligations to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in the Company or any of its Subsidiaries in exchange for ownership of Common Stock or any other equity interest in the Company or such Subsidiary. All outstanding securities of the Company have been offered and issued in compliance in all material respects with all applicable securities laws, including the Securities Act and “blue sky” laws.

(b) The Company or another of its Subsidiaries is the record and beneficial owner of all the issued and outstanding shares of capital stock of each Subsidiary of the Company, free and clear of any Lien (other than Permitted Liens), and there are no proxies with respect to any such shares. There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary of the Company, (ii) options, restricted stock, warrants, rights or other agreements or commitments to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in (or securities convertible into or exchangeable for capital stock or voting securities or other ownership interests in) any Subsidiary of the Company, (iii) obligations of the Company or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in any Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the capital stock of such Subsidiaries, being referred to collectively as “ Subsidiary Securities ”) or (iv) obligations of the Company or any of its Subsidiaries to make any payment based on the value of any shares of any Subsidiary of the Company. There are no outstanding obligations of the Company or any of its Subsidiaries to purchase, redeem or otherwise acquire any outstanding Subsidiary Securities. All of the outstanding shares of capital stock of the Subsidiaries of the Company have been duly authorized and validly issued and are fully paid and nonassessable and are free of preemptive rights. Except for Subsidiary Securities, neither the Company nor any of

 

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its Subsidiaries owns directly or indirectly any equity interests in any Person, or has any obligation to acquire any such equity interests, or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of the Company or any other Person. There are not outstanding obligations to which the Company or any of its Subsidiaries is a party restricting the transfer of, or limiting the exercise of voting rights with respect to, any Subsidiaries Securities.

Section 4.3. Subsidiaries . Section 4.3 of the Company Disclosure Letter sets forth a true and complete list of each Subsidiary of the Company, including its jurisdiction of incorporation or formation. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any equity, membership interest, partnership interest, joint venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable for any of the foregoing, any Person.

Section 4.4. Corporate Power; Enforceability . Assuming the accuracy of the representation set forth in the first sentence of Section 5.6 , the Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its covenants and obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, and no additional corporate proceedings or actions on the part of the Company are necessary to authorize the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and obligations hereunder or the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Acquisition Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to creditors’ rights generally, and (b) is subject to general principles of equity, whether considered in a proceeding at law or in equity (collectively, the “ Enforceability Exceptions ”).

Section 4.5. Stockholder Approval . The affirmative vote of the holders of a majority of the outstanding Company Shares is the only vote of the holders of any class or series of the Company’s capital stock that, absent Section 251(h) of the DGCL, would have been necessary under applicable Law and the Company’s certificate of incorporation and bylaws to adopt, approve or authorize this Agreement and consummate the Merger and other transactions contemplated hereby in their capacity as Company Stockholders.

Section 4.6. Consents and Approvals; No Violation . None of the execution, delivery or performance of this Agreement by the Company, nor the consummation of the transactions contemplated hereby, do or will (a) violate or conflict with or result in any breach of any provision of the respective certificate of incorporation or bylaws (or equivalent governing documents) of the Company or any of its Subsidiaries, (b) require any Permit of, or filing with or notification to, any Governmental Authority except (i) as may be required under the HSR Act and any other applicable Antitrust Laws, (ii) the applicable requirements of any federal or state

 

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securities Laws, including compliance with the Exchange Act and the rules and regulations promulgated thereunder, (iii) the filing of the Certificate of Merger as required by the DGCL or (iv) the applicable requirements of NASDAQ, (c) modify, violate, conflict with, or result in a breach of any provisions of, or require any consent, waiver or approval or result in a default (or give rise to any right of termination, cancellation, modification or acceleration or any event that, with the giving of notice, the passage of time or otherwise, would constitute a default or give rise to any such right) under any of the terms, conditions or provisions of any Material Contract or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets may be bound, (d) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries (other than Permitted Liens or one created by Parent or Acquisition Sub) or (e) violate any Law or Order applicable to the Company or any of its Subsidiaries or by which any of their respective assets are bound, except as, in the case of clauses (b) through (e), would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 4.7. Reports; Financial Statements .

(a) Since January 1, 2014, the Company has timely filed or furnished all reports, schedules, forms, statements, prospectuses and other documents required to be filed or furnished by it with the SEC (the “ Company SEC Reports ”), all of which have complied as of their respective filing dates or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing made at least two (2) Business Days prior to the date hereof, in all material respects with all applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act and, in each case, the rules and regulations of the SEC promulgated thereunder. No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any Company SEC Report. None of the Company SEC Reports filed or furnished by the Company with the SEC since January 1, 2014, including any financial statements or schedules included or incorporated by reference therein, at the time filed or, if amended or superseded by a subsequent filing, as of the date of the last such amendment or superseding filing made at least two (2) Business Days prior to the date hereof, contained (or, with respect to Company SEC Reports filed after the date hereof, will contain) any untrue statement of a material fact or omitted (or, with respect to Company SEC Reports filed after the date hereof, will omit) to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation is made as to the accuracy of any financial projections or forward-looking statements or the completeness of any information filed or furnished by the Company to the SEC solely for the purposes of complying with Regulation FD promulgated under the Exchange Act. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to the Company SEC Reports. As of the date of this Agreement, the Company has not received any written or, to the Company’s Knowledge, oral notice from the SEC that any of the Company SEC Reports is the subject of any ongoing investigation. To the Knowledge of the Company, as of the date of this Agreement, there are no SEC inquiries or investigations, other government inquiries or investigations or material internal investigations pending or threatened, in each case regarding any accounting practices of the Company. None of the Company’s Subsidiaries is required to file periodic reports with the SEC pursuant to the Exchange Act.

 

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(b) The audited and unaudited consolidated financial statements (including, as applicable, the related notes thereto) of the Company included (or incorporated by reference) in the Company SEC Reports (i) have been prepared from, are in accordance with, and accurately reflect the books and records of the Company and its Subsidiaries, (ii) have been prepared in accordance with GAAP (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC, the “ Financial Statements ”) applied on a consistent basis throughout the periods involved, (iii) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of their respective dates, and the consolidated income, stockholders equity, results of operations and changes in consolidated financial position or cash flows for the periods presented therein (subject, in the case of the unaudited financial statements, to the absence of footnotes and normal year-end audit adjustments) and (iv) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.

(c) The Company has designed and maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Since January 1, 2014, to the Knowledge of the Company, neither the Company nor the Company’s auditor have, identified or been made aware of (i) any existing “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) not otherwise remedied in the design or operation of the internal control over financial reporting or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company has designed and maintains disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act) sufficient to provide reasonable assurance that information required to be disclosed by the Company in the Company SEC 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 and forms.

(d) To the Knowledge of the Company, since January 1, 2014, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law enforcement agency regarding the violation of any applicable Law of the type described in Section 806 of the Sarbanes-Oxley Act. Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, employee or agent of the Company or any of its Subsidiaries, has discharged, demoted or suspended an employee of the Company or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

Section 4.8. Absence of Certain Changes; Undisclosed Liabilities .

(a) Since March 31, 2016, (i) no fact, change, event, development or circumstance exists or has occurred, which has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (ii) the Company and its Subsidiaries have conducted their respective businesses in the ordinary course of business in all material respects and in a manner consistent with past practice in all material respects, except for the negotiation, execution, delivery and performance of this Agreement, and (iii) neither the

 

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Company nor any of its Subsidiaries has taken any action that, if taken during the period from the date of this Agreement through the Effective Time without Parent’s consent, would constitute a breach of any of Section 6.1(c) , Section 6.1(d) , Section 6.1(h) , Section 6.1(j) , or Section 6.1(o) (exclusively with respect to such actions listed in Section 6.1(c) , Section 6.1(d) , Section 6.1(h) or Section 6.1(j) ).

(b) Except (i) as reflected or otherwise reserved against in the Company’s consolidated balance sheet included in its Annual Report on Form 10-K for the year ended December 31, 2015, (ii) for Liabilities incurred since January 1, 2016 in the ordinary course of business consistent with past practice, (iii) for Liabilities incurred in accordance with this Agreement or in connection with the transactions contemplated hereby, and (iv) for Liabilities incurred in accordance with the terms of any Material Contract (other than Liabilities due to breaches thereunder), neither the Company nor any of its Subsidiaries has incurred any Liabilities of a nature required to be reflected or reserved against on a balance sheet prepared in accordance with GAAP, other than as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.9. Schedule TO; Schedule 14D-9 . Any information provided in writing by the Company or any of its directors, officers, employees, Affiliates, agents or other Representatives for inclusion or incorporation by reference in the Schedule TO or the Offer Documents (and in any amendment thereof or supplement thereto) shall not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Schedule 14D-9 (and in any amendment thereof or supplement thereto) will, when filed with the SEC, on the date first published, sent or given to the Company Stockholders, and at the time of consummation of the Offer, comply as to form in all material respects with the applicable requirements of the Exchange Act and all other applicable Laws. The Schedule 14D-9, when filed with the SEC, on the date first published, sent or given to the Company Stockholders, and at the time of consummation of the Offer, shall not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made by the Company with respect to (i) statements included or incorporated by reference in the Schedule 14D-9 based on information supplied by or on behalf of Parent or Acquisition Sub or any of their directors, officers, employees, Affiliates, agents or other Representatives, or (ii) any financial projections or forward-looking statements.

Section 4.10. Brokers; Certain Expenses . No broker, finder, investment banker or financial advisor (other than Peter J. Solomon Company (the “ Company Financial Advisor ”), whose fees and expenses shall be paid by the Company) is or shall be entitled to receive any brokerage, finder’s, financial advisor’s, transaction or other fee or commission in connection with this Agreement or the transactions contemplated hereby based upon agreements made by or on behalf of the Company, any of its Subsidiaries or any of their respective officers, directors or employees.

Section 4.11. Employee Benefit Matters/Employees .

 

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(a) Section 4.11(a) of the Company Disclosure Letter sets forth a complete list, as of the date hereof, of each material (i) “employee benefit plan” as that term is defined in Section 3(3) of ERISA (whether or not subject to ERISA), (ii) employment, consulting, pension, retirement, superannuation, profit sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, termination indemnity, redundancy pay, sick pay, vacation, thirteenth month, seniority premium, bonus or other incentive plans, programs, policies or agreements and (iii) medical, vision, dental or other health plans, life insurance plans, or fringe benefit plans, programs, policies or agreements, in each case, whether oral or written, maintained or contributed to by the Company or any of its Subsidiaries, or required to be maintained or contributed to by the Company of its Subsidiaries or otherwise providing for payments or benefits for or to any current or former employees, directors, officers or consultants of the Company or any of its Subsidiaries and/or their dependents, regardless of whether it is mandated under local Law, voluntary, private, funded, unfunded, financed by the purchase of insurance, contributory or noncontributory (collectively, the “ Plans ”); provided that any governmental plan or program requiring the mandatory payment of social insurance taxes or similar contributions to a governmental fund with respect to the wages of an employee will not be considered a “Plan” for these purposes. With respect to the Plans listed on Section 4.11(a) of the Company Disclosure Letter, to the extent applicable, correct and complete copies or summaries of the following have been made available to Parent by the Company: (A) all Plans, including amendments thereto; (B) the most recent annual report on Form 5500 filed with respect to each Plan (if required by applicable Law) and the most recent actuarial report prepared in respect of any Plan, if applicable; (C) the most recent summary plan description for each Plan for which a summary plan description is required by applicable Law and all related summaries of material modifications; (D) the most recent IRS determination, notification, or opinion letter, if any, received with respect to any applicable Plan; (E) each trust agreement relating to any Plan (as applicable); and (F) all insurance policies purchased by or to provide benefits under any Plan.

(b) Each Plan that is intended to be qualified under Section 401(a) of the Code either has received a favorable determination letter from the IRS or may rely upon a favorable prototype opinion letter from the IRS as to its qualified status, and, to the Knowledge of the Company, nothing has occurred since the date of the latest favorable determination letter or prototype opinion letter, as applicable, that would reasonably be expected to adversely affect the qualification of any such Plan in any way that would reasonably be likely to have a Company Material Adverse Effect. To the Knowledge of the Company, each Plan and any related trust complies with, has been maintained and administered in compliance with, and qualifies for the expected Tax preferential treatment under, ERISA, the Code and other applicable Laws. Except as set forth on Section 4.11(b) of the Company Disclosure Letter or in the Financial Statements, each Plan is fully funded to the extent required by applicable Laws or applicable agreements, and neither the Company nor its Subsidiaries has, or is reasonably expected to have, any undisclosed material liability with respect to, or as a result of, offering, sponsoring, maintaining or contributing to any Plan. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, other than routine claims for benefits, there are no suits, claims, proceedings, actions, governmental audits or investigations that are pending or, to the Knowledge of the Company, threatened against or involving any Plan or any fiduciaries thereof with respect to their duties to the Plans, or asserting any rights to or claims for benefits under any Plan.

 

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(c) No Plan is (i) a “multiemployer plan” (as defined in Section 3(37) or 4001(a)(3) of ERISA), (ii) a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (together, a “ Multiemployer Plan ”), or (iii) another pension plan, including a pension plan subject to Title IV of ERISA or Section 412 of the Code, and neither the Company nor any of its ERISA Affiliates sponsors, maintains or contributes to, or has, sponsored, maintained or contributed to, a Multiemployer Plan or other pension plan su


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