You are here: Agreements > Shareholder Agreement > AGREEMENT AND PLAN OF MERGER BY AND AMONG ALERIS CORPORATION ZHONGWANG ALUMINUM CORPORATION, ZHONGWANG USA LLC AND OCM OPPORTUNITIES ALS HOLDINGS, L.P. (solely in its capacity as the Stockholders Representative under this Agreement) Dated as of August 29, 2016

SITE SEARCH
AGREEMENTS / CONTRACTS
(optional)
(optional)
Try our advanced search >>
CLAUSES Search Contract Clauses >>
Browse Contract Clause Library>>

Agreement And Plan Of Merger By And Among Aleris Corporation Zhongwang Aluminum Corporation, Zhongwang Usa Llc And Ocm Opportunities Als Holdings, L.p. (solely In Its Capacity As The Stockholders Representative Under This Agreement) Dated As Of August 29, 2016

Shareholder Agreement

Legal Documents
You are currently viewing:

 This Shareholder Agreement involves

ALERIS CORP | ALERIS CORPORATION | Corporation Service Company | Oaktree Fund GP, LLC | OCM OPPORTUNITIES ALS HOLDINGS, LP | Surviving Corporation | ZHONGWANG ALUMINUM CORPORATION | ZHONGWANG USA LLC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
 

Title: AGREEMENT AND PLAN OF MERGER BY AND AMONG ALERIS CORPORATION ZHONGWANG ALUMINUM CORPORATION, ZHONGWANG USA LLC AND OCM OPPORTUNITIES ALS HOLDINGS, L.P. (solely in its capacity as the Stockholders Representative under this Agreement) Dated as of August 29, 2016
Governing Law: Delaware     Date: 8/30/2016
Industry: Misc. Fabricated Products     Law Firm: Fried Frank;Paul Weiss     Sector: Basic Materials

join now
50 of the Top 250 law firms use our Products every day

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ALERIS CORPORATION

ZHONGWANG ALUMINUM CORPORATION,

ZHONGWANG USA LLC

AND

OCM OPPORTUNITIES ALS HOLDINGS, L.P.

(solely in its capacity as the Stockholders Representative under this Agreement)

Dated as of August 29, 2016


TABLE OF CONTENTS

 

 

 

 

  

Page

Article I.

DEFINITIONS

Section 1.1

 

Certain Definitions

  

1

Article II.

THE MERGER

Section 2.1

 

The Merger

  

11

Section 2.2

 

Effective Time

  

11

Section 2.3

 

Effect of the Merger

  

11

Section 2.4

 

Certificate of Incorporation and Bylaws

  

12

Section 2.5

 

Directors

  

12

Section 2.6

 

Officers

  

12

Article III.

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; PAYMENTS

Section 3.1

 

Capital Stock

  

12

Section 3.2

 

Payments

  

13

Section 3.3

 

No Further Ownership Rights in Common Stock

  

15

Section 3.4

 

Equity Awards

  

15

Section 3.5

 

Dissenting Stockholders

  

16

Section 3.6

 

Withholding Rights

  

16

Section 3.7

 

Circular 7 Filing

  

17

Section 3.8

 

Designated Purchaser

  

17

Article IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 4.1

 

Organization and Good Standing

  

18

Section 4.2

 

Authorization of Agreement

  

18

Section 4.3

 

Conflicts; Consents of Third Parties

  

19

Section 4.4

 

Capitalization

  

19

Section 4.5

 

Subsidiaries

  

20

Section 4.6

 

SEC Filings; Internal Controls and Procedures

  

20

Section 4.7

 

Financial Statements

  

21

Section 4.8

 

No Undisclosed Liabilities

  

22

Section 4.9

 

Absence of Certain Developments

  

22

Section 4.10

 

Taxes

  

22

 

i


Section 4.11

 

Assets; Real Property

  

24

Section 4.12

 

Intellectual Property

  

25

Section 4.13

 

Material Contracts

  

26

Section 4.14

 

Employee Benefits Plans

  

28

Section 4.15

 

Labor

  

32

Section 4.16

 

Litigation

  

33

Section 4.17

 

Compliance with Laws; Permits

  

33

Section 4.18

 

Environmental Matters

  

34

Section 4.19

 

Insurance

  

35

Section 4.20

 

Transactions with Affiliates

  

36

Section 4.21

 

Financial Advisors

  

36

Section 4.22

 

Customers and Suppliers

  

36

Section 4.23

 

State Takeover Laws

  

36

Section 4.24

 

No Brokers

  

37

Section 4.25

 

No Other Representations or Warranties; Disclosure Schedule

  

37

Article V.

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Section 5.1

 

Organization and Good Standing

  

38

Section 5.2

 

Authorization of Agreement

  

38

Section 5.3

 

Conflicts; Consents of Third Parties

  

38

Section 5.4

 

Litigation

  

39

Section 5.5

 

Investment Intention

  

39

Section 5.6

 

No Brokers

  

39

Section 5.7

 

Financial Capacity

  

39

Section 5.8

 

Solvency

  

39

Section 5.9

 

Condition of the Business

  

40

Section 5.10

 

Ownership

  

40

Section 5.11

 

No Other Representations and Warranties

  

40

Article VI.

COVENANTS

Section 6.1

 

Access to Information

  

41

Section 6.2

 

Conduct of the Business Pending the Closing

  

41

Section 6.3

 

Consents

  

44

Section 6.4

 

Regulatory Approvals

  

44

Section 6.5

 

Further Assurances

  

47

Section 6.6

 

Confidentiality

  

50

Section 6.7

 

Indemnification, Exculpation and Insurance

  

50

Section 6.8

 

Publicity

  

52

Section 6.9

 

Employment and Employee Benefits

  

52

Section 6.10

 

Control of Operations

  

53

Section 6.11

 

Takeover Statutes

  

53

 

ii


Section 6.12

 

Exchangeable Notes

  

53

Section 6.13

 

FIRPTA

  

54

Section 6.14

 

No Solicitation of Other Bids

  

54

Section 6.15

 

Parent Vote and Merger Sub

  

54

Section 6.16

 

Accounting for Closing Payments

  

54

Section 6.17

 

Notice to Stockholders

  

54

Section 6.18

 

Evidence of Drag Notice

  

55

Section 6.19

 

280G Shareholder Vote

  

55

Article VII.

CONDITIONS TO CLOSING

Section 7.1

 

Conditions Precedent to Obligations of Parent

  

55

Section 7.2

 

Conditions Precedent to Obligations of the Company

  

56

Section 7.3

 

Frustration of Closing Conditions

  

57

Article VIII.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS

Section 8.1

 

Survival

  

57

Section 8.2

 

Indemnification

  

57

Article IX.

CLOSING AND TERMINATION

Section 9.1

 

Closing Date

  

61

Section 9.2

 

Termination of Agreement

  

61

Section 9.3

 

Procedure Upon Termination

  

62

Section 9.4

 

Effect of Termination

  

62

Section 9.5

 

Parent Termination Fee Escrow Funds

  

63

Section 9.6

 

Termination Fees and Expenses

  

63

Article X.

MISCELLANEOUS

Section 10.1

 

Expenses

  

65

Section 10.2

 

Entire Agreement

  

65

Section 10.3

 

Amendments and Waivers

  

65

Section 10.4

 

Governing Law

  

65

Section 10.5

 

Dispute Resolution

  

66

Section 10.6

 

Notices

  

66

Section 10.7

 

Severability

  

68

Section 10.8

 

Binding Effect; Assignment; Third Party Beneficiaries

  

68

Section 10.9

 

Counterparts

  

68

 

iii


Section 10.10

 

Waiver of Jury Trial

  

68

Section 10.11

 

Representative

  

69

Section 10.12

 

Performance

  

70

 

iv


AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of August 29, 2016, is by and among (i) ZHONGWANG USA LLC, a Delaware limited liability company (“ Parent ”), (ii) ZHONGWANG ALUMINUM CORPORATION, a Delaware corporation and a direct, wholly owned Subsidiary of Parent (“ Merger Sub ”), (iii) ALERIS CORPORATION, a Delaware corporation (the “ Company ”), and (iv) OCM OPPORTUNITIES ALS HOLDINGS, L.P., a Delaware limited partnership, solely as representative for the Stockholders, the Optionholders and RSU Holders (the “ Stockholders Representative ”).

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have unanimously approved and declared advisable this Agreement and the merger of Merger Sub with and into the Company (the “ Merger ”), upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, the Company and the HK Escrow Agent have executed and delivered an escrow agreement (the “ HK Escrow Agreement ”), pursuant to which the HK Escrow Agent will administer the HK Escrow Account as contemplated by Section 9.6(a) hereof; and

WHEREAS, as an inducement to the Parent’s willingness to enter into this Agreement, immediately following the execution and delivery of this Agreement, the Company will obtain and deliver to Parent (i) the written consents of the Apollo Stockholders, the Oaktree Stockholders and the Sankaty Stockholders (each as defined in the Stockholders Agreement) (the Apollo Stockholders, Oaktree Stockholders and the Sankaty Stockholders, collectively, the “ Majority Stockholders ”) approving this Agreement, the Merger and the transactions contemplated by this Agreement (the “ Stockholder Consent ”) and (ii) an undertaking of such Majority Stockholders to issue a notice (the “ Drag Notice ”) to exercise their rights pursuant to Section 3.2(a) of that certain stockholders agreement dated June 1, 2010 (the “ Stockholders Agreement ”).

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements hereinafter contained, and intending to be legally bound hereby, the parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1 Certain Definitions .

(a) For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1 :

Additional Base Consideration ” means the product of (a) five percent (5%) of the Base Consideration, and (b) the number of calendar days that have elapsed through and including the calendar day immediately prior to the Closing Date from and including the date on which Parent delivers to the Company a Cut-off Date Notice divided by three hundred sixty five (365) days.

 

1


Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) 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.

Aggregate Exercise Amount ” means the aggregate amount of the per share exercise prices payable for all of the Options outstanding immediately prior to the Effective Time that have an exercise price that is less than the Per Share Merger Consideration.

Aggregate Shares ” means the sum of (i) the number of shares of Common Stock issued and outstanding immediately prior to the Effective Time (excluding the Excluded Shares), plus (ii) the aggregate number of shares of Common Stock for which Options outstanding immediately prior to the Effective Time and have an exercise price that is less than the Per Share Merger Consideration, plus (iii) the aggregate number of shares of Common Stock represented by all RSUs outstanding (including any RSUs that have vested but not yet settled) immediately prior to the Effective Time, plus (iv) the aggregate number of shares of Common Stock actually issued upon conversion of any Exchangeable Notes surrendered for conversion prior to the Effective Time.

Antitrust Law ” means the HSR Act, the Federal Trade Commission Act, as amended, the Sherman Act, as amended, the Clayton Act, as amended, and any applicable foreign Laws and all other applicable antitrust or competition Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

Base Consideration ” means an amount in cash equal to $1,110,000,000.

Business Day ” means any day of the year on which national banking institutions in New York, New York, and Hong Kong and Beijing, People’s Republic of China, are open to the public for conducting business and are not required or authorized to close.

Company Intellectual Property ” means all Intellectual Property owned or purported to be owned by the Company or any of its Subsidiaries.

CFIUS ” means the Committee on Foreign Investment in the United States.

CFIUS Clearance ” means Parent shall have received written confirmation from CFIUS that it has completed its review (or, if applicable) investigation under Exon-Florio and determined that there are no unresolved national security concerns with respect to the transactions contemplated by this Agreement.

Code ” means the Internal Revenue Code of 1986, as amended.

 

2


Common Stock ” means the common stock, par value $0.01 per share, of the Company.

Confidentiality Agreement ” means that certain Confidentiality Agreement entered into by the Company and Zhongwang International Group Limited, dated as of January 20, 2016.

Contract ” means any contract, indenture, note, bond, lease, license, binding commitment or instrument, or other agreement, and any amendments and supplements thereto.

DGCL ” means the General Corporation Law of the State of Delaware as in effect from time to time.

Environmental Law ” means all applicable Laws and Orders regarding pollution, protection of the environment, natural resources and/or human health and safety (to the extent relating to exposure to Hazardous Materials), including those protecting the quality of the indoor air, ambient air, soil, surface water or groundwater and those regarding the exposure to and/or Release, threatened Release, control, or cleanup of Hazardous Materials.

Equity Incentive Plan ” means the Aleris Corporation 2010 Equity Incentive Plan, as amended.

Exchangeable Notes ” means the 6% Senior Subordinated Exchangeable Notes due 2020 issued by Aleris International, Inc.

Exchangeable Notes Indenture ” means the Indenture, dated as of June 1, 2010, by and among the Company, Aleris International, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee, for the Exchangeable Notes.

Exon-Florio ” means the Exon-Florio Amendment to the Defense Production Act of 1950, 50 U.S.C. app. § 2170.

Force Majeure ” means acts of terrorism, fire, explosion, earthquake, storm, flood, wars, insurrection, riot, acts of God, any Order or any other change, event, circumstance or effect not reasonably within the control of the party claiming force majeure.

GAAP ” means generally accepted accounting principles in the United States in effect on the date hereof.

Governmental Body ” means any government, political subdivision, court, tribunal, arbitrator, department, commission, board, bureau, agency, authority, instrumentality, self-regulatory organization or other body exercising judicial, quasi-judicial, legislative, executive or other government powers, whether federal, state, local, foreign or otherwise (including, without limitation, national or supranational authorities that have jurisdiction to review the transactions contemplated by this Agreement).

Hazardous Material ” means all pollutants, contaminants, chemicals, compounds or industrial, toxic, hazardous or petroleum or petroleum-based substances or wastes, waste waters or byproducts, including lead-based paint, asbestos or polychlorinated biphenyls, and any other substances or wastes subject to regulation under any Environmental Law.

 

3


HK Escrow Agent ” means Bank of China (Hong Kong) Limited.

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

Intellectual Property ” means all U.S. and foreign: (i) patents and rights in inventions, (ii) trademarks and service marks, (iii) copyrights and (iv) rights in each of know-how and trade secrets; in each case, whether unregistered or registered (and including all applications for any of the foregoing).

IRS ” means the United States Internal Revenue Service.

IT Contract ” means any third-party Contract under which an IT System is licensed, leased, supplied, maintained or supported.

IT Systems ” means the information and communications technologies owned or licensed by the Company or any of its Subsidiaries, including hardware, software, and networks.

Knowledge of the Company ” means the actual knowledge of (i) Sean M. Stack, (ii) Eric M. Rychel, (iii) I. Timothy Trombetta, (iv) Chris Clegg, (v) Ken Willings, (vi) Pauline Moorman, (vii) Philippe Meyer, (viii) Scott McKinley, (ix) Ingo Kroepfl, (x) Roland Leder, (xi) Tamara Polmanteer, (xii) Mike Keown, (xiii) Steve Faas, (xiv) Eric van der Donk, (xv) Tonio Bahner, (xvi) Jack Govers, (xvii) John Zhu and (xviii) Robert Pence.

Law ” means any applicable foreign, federal, state or local law, statute, code, ordinance, rule, regulation, common law or Order, including any legally binding interpretation thereof, by any Governmental Body.

Lien ” means, with respect to any property or asset, any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal or easement of any kind or nature whatsoever.

Material Adverse Effect ” means any change, event, circumstance or effect that has, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on the results of operations, business or financial condition of the Company and its Subsidiaries (taken as a whole), or ability of the Company to consummate the transactions contemplated hereby, other than a change, event, circumstance or effect to the extent resulting from one or more of the following: (i) any change in the United States or foreign economies or capital, credit, financial or securities markets in general, including changes in interest or exchange rates; (ii) any change that generally affects any industry in which the Company or any of its Subsidiaries operates; (iii) any outbreak or change arising in connection with hostilities, acts of war (whether declared or not), sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; (iv) any action taken by Parent or its Affiliates with respect to the transactions contemplated by this Agreement or with respect to the

 

4


Company or its Subsidiaries; (v) any earthquakes, hurricanes, floods, tornadoes or other natural disasters; (vi) changes in applicable Laws, in applicable regulations of any Governmental Body, in GAAP or in applicable accounting standards, or any changes in the interpretation or enforcement of any of the foregoing, or any changes in general legal, regulatory or political conditions (including embargoes); (vii) the public announcement of this Agreement; (viii) compliance with the terms of this Agreement or the consummation of the transactions contemplated by this Agreement; (ix) any failure to meet any internal or public projections, budgets, forecasts or estimates of revenue, earnings cash flow or cash position (it being understood that the facts and circumstances giving rise or contributing to any such failure may, unless otherwise excluded by another clause in this definition of “Material Adverse Effect”, be taken into account in determining whether a “Material Adverse Effect” has occurred), (x) any change in the price of aluminum, as quoted on the London Metal Exchange (or the Midwest premium thereon), (xi) any changes in the price or availability of raw materials, including the type customarily purchased by the Company or its Subsidiaries, or (xii) any change or prospective change in credit ratings and in any analyst recommendations or ratings with respect to the Company or its Subsidiaries (it being understood that the facts and circumstances giving rise or contributing to any such failure may, unless otherwise excluded by another clause in this definition of “Material Adverse Effect”, be taken into account in determining whether a “Material Adverse Effect” has occurred); provided , that in the case of clauses (i), (ii), (iii), (v), (vi), (x) and (xi) above, any change, event, circumstance or effect may be taken into account in determining whether a Material Adverse Effect has occurred to the extent such change, event, circumstance or effect has a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industry in which the Company and its Subsidiaries operate (but only to the extent of such disproportionality).

New York Escrow Agent ” means a bank to be mutually agreed upon by Parent, the Company and the Stockholders Representative.

Option ” means the unexercised portion of each and every option to purchase Common Stock which is or will be outstanding as of immediately prior to the Effective Time, pursuant to the terms of the Equity Incentive Plan.

Optionholder ” means any holder of Options as of immediately prior to the Effective Time.

Order ” means any order, injunction, judgment, decree, ruling, writ, assessment, stipulation, determination or award entered by or with any Governmental Body or any arbitration award.

Ordinary Course of Business ” means the ordinary and usual course of business of the Company and its Subsidiaries, consistent with past practice.

Per Share Merger Consideration ” means (i) the sum of (a), the Base Consideration plus (b) the Additional Base Consideration, if any, plus (c) the Aggregate Exercise Amount less (d) the Transaction Expenses less (e) the Indemnity Escrow Amount, less (f) any amounts paid by the Company to redeem the principal amount of any Exchangeable Notes prior to Closing, divided by (ii) the Aggregate Shares.

 

5


Per Share Merger Option Consideration ” means, with respect to a share of Common Stock underlying an Option that has an exercise price that is less than the Per Share Merger Consideration, (i) the Per Share Merger Consideration less (ii) the exercise price for such Option.

Per Share Merger RSU Consideration ” means, with respect to each RSU, (i) the Per Share Merger Consideration, multiplied by (ii) the number of shares of Common Stock covered by such RSU.

Permits ” means any approvals, authorizations, consents, licenses, permits, registrations, and certificates obtained from a Governmental Body.

Permitted Exceptions ” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance made available to Parent; (ii) Liens for Taxes, assessments or other governmental charges not yet delinquent or the validity of which is being contested in good faith by appropriate proceedings (promptly instituted and conducted) and in either case, for which reserves have been established to the extent required by GAAP; (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business or that are being contested in good faith; (iv) zoning, entitlement and other similar land use regulations by any Governmental Body; (v) title of a lessor under a capital or operating lease; (vi) licenses granted in the Ordinary Course of Business; (vii) Liens that will be released prior to or as of the Closing; (viii) Liens arising under this Agreement; (ix) Liens created by or through Parent or Merger Sub, (x) Liens set forth on Schedule 1.1(a) ; and (xi) such other Liens, that, individually or in the aggregate, do not materially impair, and would not reasonably be expected to materially impair, the continued use and operation of the properties to which they relate in the conduct of the business of the Company and its Subsidiaries.

Person ” means any individual, corporation, limited or general partnership, firm, joint venture, limited liability company, limited liability partnership, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

PRC ” means the People’s Republic of China.

Proceeding ” means any action, suit, hearing, claim, investigation, arbitration or proceeding.

Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the environment.

Representative ” means, with respect to any Person, any officer, director, principal, partner, manager, member, attorney, accountant, agent, employee, consultant, financial advisor, or other authorized representative of such Person or any Affiliate of such Person.

RSU Holder ” means any holder of RSUs as of immediately prior to the Effective Time.

 

6


SEC ” means the United States Securities and Exchange Commission.

Stockholder ” means any holder of Common Stock that is issued and outstanding as of immediately prior to the Effective Time.

Subsidiary ” of any Person means any corporation or other Person of which securities or other interest having the power to elect a majority of that corporation’s or other Person’s Board of Directors or similar governing body, or otherwise having the power to direct or cause the direction of the business, management and policies of such corporation or other Person, are owned or controlled, directly or indirectly, by such first Person or one or more of the other Subsidiaries of such first Person or a combination thereof.

Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes and filed or required to be filed with any Taxing Authority, including any schedule or attachment thereto, and including any amendment thereof.

Taxes ” means any federal, state, local or non-U.S. income, gross income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, customs duty, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax or similar governmental fee, assessment or charge of any kind whatsoever, including any interest, penalty, or addition thereto and any interest in respect of such additions or penalties.

Taxing Authority ” means any Governmental Body having jurisdiction over the assessment, determination, collection, imposition or administration of any Tax.

Transaction Expenses ” means (x) all out of pocket fees and expenses incurred by the Company and any Subsidiary at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and any ancillary agreements, and the performance and consummation of the Merger and the other transactions contemplated hereby and thereby and (y) any amounts payable to any current or former officer, director, employee or consultant of the Company or any Subsidiary in the nature of any transaction bonuses, sale bonuses, phantom equity award payments, contingent payments, discretionary bonuses, “stay-put” payments, tax gross-ups, tax make-whole payments or other compensatory payments (including the employer portion of any payroll or other withholding Taxes payable in connection therewith), in each case payable as a result of the execution of this Agreement or the performance or consummation of the transactions contemplated hereby; provided, that in no event shall Transaction Expenses include any fees, expenses, premiums or penalties (prepayment or otherwise) or make whole payments payable in connection with (i) amounts outstanding under third party indebtedness of the Company or any Subsidiary, or (ii) any debt, equity or other financing facilities entered into in connection with the Merger and the transactions contemplated hereby at the request of Parent.

 

7


(b) For purposes of this Agreement, the following terms have meanings set forth in the Sections indicated:

 

Term

  

Section

280G Approval

  

Section 6.19

Acquisition Proposal

  

Section 6.14

Affiliate Contracts

  

Section 4.20

Agreement

  

Preamble

Antitrust Filings

  

Section 6.4(a)

Bankruptcy and Equity Exception

  

Section 4.2

Book-Entry Shares

  

Section 3.2(b)(i)

Certificate of Merger

  

Section 2.2

Certificates

  

Section 3.2(b)(i)

Circular 7

  

Section 3.7

Claim

  

Section 6.7(b)

Closing

  

Section 9.1

Closing Date

  

Section 9.1

Collective Agreements

  

Section 4.15(a)

Company

  

Preamble

Company 2016 Balance Sheet

  

Section 4.8

Company Benefit Plan

  

Section 4.14(a)

Company Documents

  

Section 4.2

Company Employees

  

Section 6.9(a)

Company Intellectual Property

  

Section 4.12(a)

Company Pension Plan

  

Section 4.14(c)

Company SEC Documents

  

Section 4.6(a)

Contingent Company Equity

  

Section 4.4(a)

Cut-off Date Notice

  

Section 9.1

Designated Purchaser

  

Section 3.8

Designation

  

Section 3.8

Disclosure Schedules

  

Introductory paragraph to Article IV

Dispute

  

Section 10.5(a)

Dissenting Shares

  

Section 3.5

Dissenting Stockholders

  

Section 3.5

DOJ

  

Section 6.4(a)

Drag Notice

  

Recitals

Effective Time

  

Section 2.2

End Date

  

Section 9.2(a)

Environmental Permits

  

Section 4.18(a)

ERISA

  

Section 4.14(a)

ERISA Affiliate

  

Section 4.14(f)

Exchange Act

  

Section 4.6(a)

Exchange Fund

  

Section 3.2(a)

Excluded Shares

  

Section 3.1(b)

Existing Debt Actions

  

Section 6.5(b)

FCPA

  

Section 4.17(d)

First Indemnifiable Matter

  

Section 8.2(b)

First Indemnity Escrow Account

  

Section 8.2(a)

FTC

  

Section 6.4(a)

 

8


Term

  

Section

HK Escrow Account

  

Section 9.5(a)

HK Escrow Agreement

  

Recitals

ICDR

  

Section 10.5(a)

ICDR Rules

  

Section 10.5(a)

Indemnifiable Matter

  

Section 8.2(b)

Indemnifiable Losses

  

Section 8.2(b)

Indemnitee(s)

  

Section 6.7(a)

Indemnity Escrow Account

  

Section 8.2(a)

Indemnity Escrow Agreement

  

Section 8.2(a)

Indemnity Escrow Amount

  

Section 8.2(a)

Lease

  

Section 4.11(b)(ii)

Leased Real Property

  

Section 4.11(b)(i)

Letter of Transmittal

  

Section 3.2(b)(i)

Majority Stockholders

  

Recitals

Material Contract(s)

  

Section 4.13(a)

Material Customers

  

Section 4.22(a)

Material Suppliers

  

Section 4.22(a)

Maximum Premium

  

Section 6.7(c)

Measurement Date

  

Section 4.4(a)

Merger

  

Recitals

Merger Sub

  

Preamble

Merger Sub Shareholder Approval

  

Section 6.15

Named Entities

  

Section 6.4(b)

New Debt Actions

  

Section 6.5(c)

Non-U.S. Benefit Plan

  

Section 4.14(a)

Option Cancellation Amount

  

Section 3.4(a)

Owned Real Property

  

Section 4.11(b)(i)

Parent

  

Preamble

Parent Documents

  

Section 5.2

Parent Indemnitee(s)

  

Section 8.2(b)

Parent Plan

  

Section 6.9(a)

Parent Termination Fee

  

Section 9.5(b)

Paying Agent

  

Section 3.2(a)

PRC Regulatory Filing

  

Section 6.4(a)

Preferred Stock

  

Section 4.4(a)

Real Property

  

Section 4.11(b)(i)

Resolution

  

Section 8.2(b)

RSU

  

Section 3.4(b)

RSU Payment Amount

  

Section 3.4(b)

Sanctions Law

  

Section 4.17(c)

Second Indemnifiable Matter

  

Section 8.2(b)

Second Indemnity Escrow Account

  

Section 8.2(a)

Securities Act

  

Section 4.6(a)

Stockholder Consent

  

Recitals

Stockholders Agreement

  

Recitals

 

9


Term

  

Section

Stockholders Representative

  

Preamble

Surviving Corporation

  

Section 2.1

U.S. Benefit Plans

  

Section 4.14(b)

Waived 280G Benefits

  

Section 6.19

(c) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

(i) Calculation of Time Period . When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

(ii) Dollars . Any reference in this Agreement to “$” means U.S. dollars. The specification of any dollar amount in the representations and warranties or otherwise in this Agreement or in the Disclosure Schedules is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of such amounts or items, nor shall the same be used in any dispute or controversy between the parties to determine whether any obligation, item or matter (whether or not described herein or included in any schedule) is or is not material for purposes of this Agreement.

(iii) Exhibits/Schedules . The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. References to the transactions contemplated by this Agreement include the transactions contemplated by the other Company Documents and Parent Documents.

(iv) Gender and Number . Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

(v) Headings . The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Article” or “Section” are to the corresponding Article or Section of this Agreement unless otherwise specified.

(vi) Herein . The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

 

10


(vii) Including . The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

(viii) Reflected On or Set Forth In . An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (i) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that related to the subject matter of such representation, (ii) such item is otherwise specifically set forth on the balance sheet or financial statements or (iii) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.

(ix) Joint Drafting . The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other agreements contemplated hereby and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II.

THE MERGER

Section 2.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company. Following the Effective Time, the separate corporate existence of Merger Sub will cease, and the Company will continue as the surviving corporation in the Merger (the “ Surviving Corporation ”) and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the DGCL.

Section 2.2 Effective Time . Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file with the Secretary of State of the State of Delaware a certificate of merger (the “ Certificate of Merger ”) executed in accordance with, and in such form as is required by, the relevant provisions of the DGCL and, as soon as practicable on or after the Closing Date, shall make all other filings and recordings required under the DGCL and Section 2.4 of this Agreement. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later time as Parent and the Company shall agree and shall specify in the Certificate of Merger (the date and time the Merger becomes effective is herein referred to as the “ Effective Time ”).

Section 2.3 Effect of the Merger . The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all the properties, rights, privileges, immunities, licenses, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

 

11


Section 2.4 Certificate of Incorporation and Bylaws .

(a) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, or the Company, the certificate of incorporation of the Company shall be amended to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, and as so amended, shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with the terms thereof or as provided by applicable Law (and subject to Section 6.7 ).

(b) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, or the Company, the bylaws of the Company shall be amended to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, and as so amended, shall be the bylaws of the Surviving Corporation until amended in accordance with the terms thereof or as provided by applicable Law (and subject to Section 6.7 ).

Section 2.5 Directors . From and after the Effective Time the directors of Merger Sub as of immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.

Section 2.6 Officers . From and after the Effective Time the officers of the Company as of immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

ARTICLE III.

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; PAYMENTS

Section 3.1 Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of Company, Parent or Merger Sub or the holder of any shares of capital stock or other securities of the Company, Parent or Merger Sub:

(a) Each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation, and such shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation as of the Effective Time.

(b) Each share of Common Stock issued and outstanding as of the Effective Time (other than (i) the shares to be canceled pursuant to Section 3.1(c) or Section 3.1(d) below (such shares, the “ Excluded Shares ”), or (ii) the Dissenting Shares) shall automatically be canceled and retired and shall cease to exist and be converted into the right to receive (x) the Per Share Merger Consideration and (y) the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof, in cash and without interest.

 

12


(c) Each share of Common Stock that is owned by the Company (as treasury stock or otherwise) or any of its Subsidiaries immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

(d) Each share of Common Stock that is owned by Parent or any of its Affiliates immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

(e) Each Dissenting Share shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefore, subject to the right of the holders thereof to receive the payment to which reference is made in Section 3.5 with respect to such Dissenting Shares.

Section 3.2 Payments .

(a) Paying Agent . Prior to the Closing Date, Parent shall appoint a bank or trust company that is reasonably acceptable to the Company to act as paying agent (the “ Paying Agent ”) for the payment of the Per Share Merger Consideration and the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof, and shall enter into an agreement relating to the Paying Agent’s responsibilities, which agreement shall be reasonably acceptable to the Company. On the Closing Date and prior to the filing of the Certificate of Merger, Parent shall deposit, or shall cause to be deposited, with the Paying Agent, for the benefit of the Stockholders, a cash amount in immediately available funds equal to (i) the Base Consideration plus the Additional Base Consideration, if any, less (ii) the product of (x) the Per Share Merger Consideration, multiplied by (y) the aggregate number of Dissenting Shares, less (iii) the Option Cancellation Amount, less (iv) the RSU Payment Amount, less (v) the Transaction Expenses, less (vi) any amounts paid by the Company to redeem the principal amount of any Exchangeable Notes prior to Closing, less (vii) the Indemnity Escrow Amount (such aggregate amount as deposited with the Paying Agent, the “ Exchange Fund ”).

(b) Payment Procedures .

(i) Letter of Transmittal . Prior to (and in any event, within two (2) Business Days after) the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each Stockholder a letter of transmittal, including instructions (in form and substance reasonably acceptable to the Company prior to the Effective Time) (a “ Letter of Transmittal ”) for the surrender of book-entry shares of Common Stock (“ Book-Entry Shares ”) or certificates representing shares of Common Stock (the “ Certificates ”), which will specify that delivery of Certificates shall be effected, and risk of loss and title shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably agree and include instructions for use in effecting the surrender of Book Entry Shares or Certificates (or affidavits of loss in lieu thereof) in exchange for the Per Share Merger Consideration, and the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof, with respect to the shares of Common Stock formerly represented thereby. If, after the Effective Time, a Dissenting Stockholder effectively withdraws its demand for, fails to perfect, or loses its,

 

13


appraisal rights pursuant to Section 262 of the DGCL with respect to any Dissenting Shares, Parent shall make available or cause to be made available to the Paying Agent additional funds in an amount equal to the product of (i) the number of Dissenting Shares for which such Dissenting Stockholder has withdrawn its demand for, failed to perfect, or lost its, appraisal rights pursuant to Section 262 of the DGCL and (ii) the applicable Per Share Merger Consideration. Notwithstanding anything herein to the contrary, the Company and Parent shall use commercially reasonable efforts to cause the Paying Agent to (i) deliver a Letter of Transmittal to the Stockholders of the Company at least five (5) Business Days prior to, and in any event within two (2) Business Days after, the Effective Time, and (ii) assuming delivery to the Paying Agent of a Letter of Transmittal and surrender of the related Book-Entry Shares or Certificates in accordance with this Section 3.2(b) by any such Stockholder prior to the Closing Date, pay to such Stockholder the Per Share Merger Consideration in respect of such Stockholder’s shares on the first (1 st ) Business Day following the Closing Date.

(ii) Payment for Shares . Upon delivery to the Paying Agent of a Letter of Transmittal by any Stockholder, duly completed and validly signed in accordance with its instructions, and surrender of Book-Entry Shares or Certificates (or affidavits of loss in lieu thereof) that immediately prior to the Effective Time represented such shares of Common Stock (or affidavits of loss in lieu thereof) (other than with respect to Excluded Shares), such Stockholder shall be entitled to receive the Per Share Merger Consideration, and the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof, in respect of such shares, and the Book-Entry Shares or Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares of Common Stock that is not registered in the transfer records of the Company, a check for any cash to be delivered upon compliance with the procedures described above, may be issued to the transferee if the Paying Agent receives documents reasonably required to evidence and effect such transfer and to evidence that any applicable transfer taxes have been paid or that transfer taxes are not applicable. All cash paid as Per Share Merger Consideration upon the surrender of Book-Entry Shares or Certificates in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the applicable shares of Common Stock. No interest will be paid or accrued on any amount payable as provided above.

(iii) Transaction Expenses . At the Effective Time, Parent shall cause the Company and its Subsidiaries to pay the Transaction Expenses to the applicable payees thereof.

(c) Termination of the Exchange Fund . Any portion of the Exchange Fund that remains unclaimed by the Stockholders for one (1) year after the Effective Time shall, to the extent permitted by applicable Law, be delivered by the Paying Agent to the Surviving Corporation. Any Stockholder (other than with respect to Excluded Shares) who has not theretofore complied with this Article III shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or similar Laws) for, and the Surviving Corporation shall remain liable for, payment of the applicable Per Share Merger Consideration, without any interest thereon, for such Stockholder’s shares of Common Stock upon surrender of its Book-Entry Shares or Certificates (or affidavits of loss in lieu thereof). Notwithstanding any provision of this Agreement to the contrary, neither the Surviving Corporation or the Paying Agent shall be liable to any Person in respect of shares of Common Stock (or dividends or distributions with respect thereto) delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws.

(d) Lost, Stolen or Destroyed Certificates . In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the posting by such Person of a bond in customary amount and upon such terms as may be required by Parent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Paying Agent will pay the aggregate Per Share Merger Consideration in respect of the number of shares of Common Stock formerly represented by such lost, stolen or destroyed Certificate.

 

14


Section 3.3 No Further Ownership Rights in Common Stock . 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 all shares of Common Stock (and all Options and all RSUs), and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Common Stock (or Options or RSUs) that were outstanding prior to the Effective Time. From and after the Effective Time, the Stockholders shall cease to have any rights with respect to shares of Common Stock, all Optionholders shall cease to have any rights with respect to Options and all RSU Holders shall cease to have any rights with respect to RSUs, except as otherwise provided for herein or by applicable Law. If, after the Effective Time, any Book-Entry Shares or Certificates that immediately prior to the Effective Time represented outstanding shares of Common Stock are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged for the merger consideration provided for, and in accordance with the procedures set forth in this Article III .

Section 3.4 Equity Awards .

(a) At the Effective Time, in accordance with the terms of the Equity Incentive Plan, each then outstanding Option that has an exercise price that is less than the Per Share Merger Consideration, whether or not exercisable or vested, shall be canceled and converted into the right receive (i) the Per Share Merger Option Consideration and (ii) the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof. Subject to delivery by each Option holder to the Surviving Corporation of an equity award surrender agreement that has been duly completed and validly signed (in form and substance to be provided by the Company prior to the Effective Time and to be reasonably acceptable to Parent) (the “ Equity Award Surrender Agreement ”), the Surviving Corporation shall pay to each holder of any such Option, immediately after the Effective Time, for each such Option canceled an amount in cash, without interest, equal to the Per Share Merger Option Consideration (the aggregate amount payable in respect of Options pursuant to this Section 3.4 , the “ Option Cancellation Amount ”), in each case, less required withholding Taxes. To the extent that any outstanding Option has an exercise price that is equal to or greater than the Per Share Merger Consideration, such Option shall be cancelled upon the Effective Time, without any consideration being paid to the applicable Optionholder whatsoever. Prior to the Effective Time, the Company shall take all actions necessary to effectuate the provisions of this Section 3.4(a) .

 

15


(b) At the Effective Time, in accordance with the terms of the Equity Incentive Plan, each then outstanding time-based vesting restricted stock unit award (including for the purpose of this Section 3.4(b) , any RSUs that are vested but have not yet been settled at the Effective Time) granted pursuant to the Equity Incentive Plan (each, an “ RSU ”) shall vest, be canceled and converted into the right receive (i) the Per Share Merger RSU Consideration (as defined below) and (ii) the payments, if any, set forth in Section 8.2 , in each case in accordance with the provisions hereof. Subject to each RSU holder’s delivery to the Surviving Corporation of an Equity Award Surrender Agreement that has been duly completed and validly signed, the Surviving Corporation shall pay, each holder of any such RSU, immediately after the Effective Time, for each such RSU an amount in cash, without interest, equal to the Per Share Merger RSU Consideration (the aggregate amount payable in respect of RSUs pursuant to this Section 3.4 , the “ RSU Payment Amount ”), in each case, less required withholding Taxes. Prior to the Effective Time, the Company shall take all actions necessary to effectuate the provisions of this Section 3.4(b) .

(c) On the Closing Date and prior to the filing of the Certificate of Merger, Parent shall deposit, or shall cause to be deposited, with the Company, for the benefit of the Optionholders and the RSU Holders, a cash amount equal to (i) the Option Cancellation Amount, plus (ii) the RSU Payment Amount.

Section 3.5 Dissenting Stockholders . Notwithstanding anything in this Agreement to the contrary, shares of Common Stock that are issued and outstanding immediately prior to the Effective Time and which are held by a Stockholder who did not vote in favor of the Merger (or consent thereto in writing) and who is entitled to demand and properly demands appraisal of such shares (the “ Dissenting Shares ”) pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (the “ Dissenting Stockholders ”) shall not be converted into or be exchangeable for the right to receive the Per Share Merger Consideration, but instead such holder shall be entitled to receive such consideration as may be determined to be due to such Dissenting Stockholder pursuant to Section 262 of the DGCL, unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost its right to appraisal under the DGCL. If any Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such right, such holder’s shares of Common Stock shall thereupon be treated as if they had been converted into and become exchangeable for the right to receive, as of the Effective Time, the Per Share Merger Consideration for each such share, in accordance with Section 3.1 , without interest. The Company shall give Parent prompt notice and a copy of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law that are received by the Company relating to Stockholders’ rights of appraisal, and, at Parent’s expense, Parent shall have the opportunity and right to direct all negotiations and proceedings with respect to demands for appraisal by Stockholders under the DGCL, so long as Parent does not create any pre-Closing obligations of the Company. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal of any such demands.

Section 3.6 Withholding Rights . Each of Parent, the Company, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from any amount otherwise payable under this Agreement any Tax required by Law to be deducted and withheld

 

16


therefrom, and shall timely remit such Tax to the applicable Taxing Authority. Upon becoming aware of any such withholding obligation, Parent, the Company, the Surviving Corporation or the Paying Agent, as the case may be, shall provide commercially reasonable notice to the Person with respect to which such withholding obligation applies, and shall reasonably cooperate with such Person to obtain any available reduction of or relief from such deduction or withholding. Any Tax withheld and remitted to the applicable Taxing Authority in accordance with this Section 3.6 shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such withholding was made.

Section 3.7 Circular 7 Filing . The Company undertakes (on behalf of the Stockholders) to comply with the reporting and tax filing obligations set forth in Circular 7 issued by State Administration of Taxation of PRC dated February 3, 2015 (including any amendment or supplement thereto) and any related PRC laws and regulations (together, “ Circular 7 ”) within 30 days from the date of this Agreement. The Company shall promptly provide Parent with a copy of all such reporting and tax filings once made with the relevant PRC tax authority and provide a receipt or similar document evidencing the completion of such reporting and filing requirements with the relevant PRC tax authority within five (5) Business Days of the date that the Company receives such document from the relevant PRC tax authority. The Parties agree that the Company (at the direction of the Stockholders) shall have the right to control the preparation of the information and documentation that may be submitted to the tax authority and all communications with the tax authority regarding same.

Section 3.8 Designated Purchaser . Parent may, upon written notice to the Company no later than thirty (30) Business Days’ prior to Closing, designate (a “ Designation ”) either one or more Affiliates of Parent, whether or not existing as of the date hereof, as a “Designated Purchaser” hereunder (each such Person, a “ Designated Purchaser ”); provided , that no such action or inaction will (i) alter, amend or modify Parent’s obligations hereunder in any respect; (ii) delay, restrict or impede the Closing or the consummation of the transactions contemplated hereby in any respect; or (iii) contribute or give rise to, or result in, the failure of any condition set forth in Section 7.1 or Section 7.2 to be true and correct as of Closing. The Designation shall set forth: (a) the name of the Designated Purchaser, (b) the jurisdiction of organization of the Designated Purchaser and (c) the Subsidiary that the Designated Purchaser shall acquire immediately prior to the Closing, and the Parent shall provide to the Company any other information reasonably requested by the Company in connection with such Designation. Following such Designation: (i) Parent shall be jointly and severally liable with each such Designated Purchaser (on the one hand) to the Company (on the other hand) for all such rights and obligations so assigned to such Designated Purchaser and (ii) Parent shall cause each Designated Purchaser to appoint either Parent or another Designated Purchaser (or in the event there is only one Designated Purchaser, such Designated Purchaser) as its agent in connection with the exercise of its rights and remedies under this Agreement. No such Designation shall relieve Parent of its obligations hereunder.

 

17


ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in the disclosure schedules (the “ Disclosure Schedules ”) delivered to Parent in connection with this Agreement or as set forth in any Company SEC Documents publicly available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or forward-looking in nature), the Company hereby represents and warrants to Parent that each statement contained in this Article IV is true and correct. The Disclosure Schedules have been arranged, for purposes of convenience only, in Sections corresponding to the Sections of this Article IV . Each Section of the Disclosure Schedules will be deemed to incorporate by reference all information disclosed in any other Section of the Disclosure Schedules to the extent reasonably apparent that such information applies to such other Section.

Section 4.1 Organization and Good Standing . Each of the Company and its Subsidiaries is an entity duly organized, validly existing and in good standing (where such concept is applicable) under the Laws of the jurisdiction of its incorporation or organization. Each of the Company and its Subsidiaries has all requisite company power, legal right and authority to own, operate and lease its properties and assets and to carry on its business as now conducted. Each of the Company and its Subsidiaries is duly qualified or licensed to do business as a foreign entity and is in good standing in each jurisdiction wherein the character of the properties and assets owned by it, or the nature of its business, makes such qualification or licensure necessary, except where the failure to effect or maintain such qualification or licensure or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect. The Company has made available to Parent complete and correct copies of the certificate of incorporation, bylaws or similar organizational documents of the Company and each of its Subsidiaries.

Section 4.2 Authorization of Agreement . The Company has all requisite corporate power and authority to execute and deliver this Agreement and the other agreements contemplated hereby or to be executed by the Company in connection with the consummation of the transactions contemplated by this Agreement (the “ Company Documents ”). This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming the receipt of the Stockholder Consent and the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Company Document when so executed and delivered will constitute, the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) (the “ Bankruptcy and Equity Exception ”). The Board of Directors of the Company has unanimously (i) determined that this Agreement and the Merger are fair to and in the best interests of the Stockholders, (ii) approved this Agreement and the

 

18


Merger, (iii) resolved to recommend that the Stockholders adopt this Agreement, and (iv) directed that this Agreement be submitted to the Stockholders for adoption at a meeting of the Stockholders (or through written consent in lieu of such meeting).

Section 4.3 Conflicts; Consents of Third Parties . Except as set forth on Schedule 4.3(a) , none of the execution, delivery and performance by the Company of this Agreement or the Company Documents, the consummation by the Company of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will (i) conflict with or violate any provision of the certificate of incorporation or bylaws or comparable organizational documents of the Company or any of its Subsidiaries, or (ii) (A) conflict with or violate any Law or Order applicable to the Company or any of its Subsidiaries or by which any of their respective properties or assets are bound, (B) require the Company or any of its Subsidiaries to procure any material authorization, consent or approval by, or to effect any material filing with or material notice to, any Governmental Body, except for (w) compliance with the applicable requirements of the HSR Act and the rules and regulations promulgated thereunder and any other applicable Antitrust Laws, (x) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware as required by the DGCL, or (y) such authorization, consent, approval, filing or notice requirements that become applicable solely as a result of the regulatory status of Parent or any of its Affiliates, (C) require the consent, notice or other action by the Company under, violate or conflict with, constitute a default under, result in the automatic termination or give rise to a right of termination or modification of, or accelerate the performance required by or create in any party the right to accelerate, the express terms of any Material Contract or Permit to which the Company or any of its Subsidiaries is a party or otherwise bound, except for such absences of such consent or notice, or such violations, conflicts, defaults, terminations, modifications or accelerations that would not, individually or in the aggregate, have a Material Adverse Effect, or (D) result in the creation of any Lien upon any of the material assets of the Company and its Subsidiaries (excluding any Permitted Exceptions) under any Material Contract or Permit.

Section 4.4 Capitalization .

(a) The authorized capital stock of the Company consists of (i) 625,000,000 shares of Common Stock and (ii) 100,000,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”). As of the close of business on August 17, 2016 (the “ Measurement Date ”), (A) 31,900,363 shares of Common Stock (excluding treasury shares) were issued and outstanding, all of which were duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive rights; (B) no shares of Preferred Stock were outstanding; (C) no shares of Common Stock were held by the Company in its treasury; (D) 2,030,517 shares of Common Stock were subject to issuance upon the exercise of Options then outstanding under the Equity Incentive Plan; (E) 182,368 shares of Common Stock were subject to issuance upon the vesting of RSUs then outstanding under the Equity Incentive Plan; and (F) 2,671,836 shares of Common Stock were subject to issuance upon the conversion of the Exchangeable Notes. Other than 2,448,700 shares of Common Stock reserved for issuance under the Equity Incentive Plan, the Company has no shares of Common Stock reserved for issuance in respect of equity awards.  Schedule 4.4(a) contains a correct and complete list, as of the Measurement Date, of RSUs and Options issued and outstanding under the Equity Incentive Plan, including the type of award, date of grant, exercise price and vesting and any acceleration

 

19


provisions with respect thereto. Except as set forth on Schedule 4.4(a) , as of the Measurement Date, there were no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, restricted stock units, redemption rights, repurchase rights, agreements, arrangements, calls or commitments that obligate the Company or any of its Subsidiaries to issue or sell or make payments based on the value of any shares of Common Stock or other equity securities of the Company or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any shares of Common Stock or other equity securities of the Company (“ Contingent Company Equity ”). From the Measurement Date through the date of this Agreement, neither the Company nor any of its Subsidiaries has issued any Contingent Company Equity or any shares of Common Stock, other than upon exercise, vesting or settlement of Options or RSUs or upon exchange of the Exchangeable Notes.

(b) Except as set forth on Schedule 4.4(b) , (i) neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or similar obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the Stockholders on any matter and (ii) there are no 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 the capital stock or other equity interests of the Company or any of its Subsidiaries, except in each case for such agreements and arrangements between Subsidiaries of the Company and the Company and other Subsidiaries of the Company or with respect to directors’ qualifying shares (or a nominal amount of shares held pursuant to similar requirements in various jurisdictions).

Section 4.5 SubsidiariesSchedule 4.5 sets forth a true and complete list of (i) each of the Company’s Subsidiaries and each such Subsidiary’s jurisdiction of incorporation, and (ii) each other Person (other than its Subsidiaries) in which the Company owns any shares of capital stock or other equity interests. Each of the outstanding shares of capital stock or other equity securities of each of the Company’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and, except for directors’ qualifying shares (or a nominal amount of shares held pursuant to similar requirements in various jurisdictions), owned by the Company or by a direct or indirect wholly owned Subsidiary of the Company, free and clear of any Liens, other than restrictions under applicable securities Laws and Permitted Exceptions. There are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, restricted stock units, redemption rights, repurchase rights, agreements, arrangements, calls or commitments that obligate the Company or any of its Subsidiaries to issue or sell or make payments based on the value of any shares of common stock or other equity securities of any of the Subsidiaries of the Company or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any equity securities of any Subsidiary of the Company.

Section 4.6 SEC Filings; Internal Controls and Procedures .

(a) Since January 1, 2014, the Company has filed with the SEC all forms, reports, schedules, statements, certificates and other documents required to be filed or furnished by it with the SEC under the Securities Act of 1933, as amended (the “ Securities Act ”) and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) (all such forms, reports,

 

20


schedules, statements, certificates, and other documents filed or furnished by the Company since January 1, 2014, the “ Company SEC Documents ”). As of the time of filing with the SEC: (i) each of the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act (as the case may be), and (ii) none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has made available to Parent correct and complete copies of all SEC comments received from January 1, 2014 to the date hereof and the Company’s responses thereto. There are no outstanding or unresolved comments in any comment letters from the staff of the SEC received from January 1, 2014 to the date hereof by the Company relating to the Company SEC Documents. As of the date hereof, none of the Company SEC Documents, to the Knowledge of the Company, is the subject of ongoing SEC review. None of the Company’s Subsidiaries is required to file or furnish any forms, reports or other documents with the SEC.

(b) The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are designed to provide reasonable assurances that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The Company’s management has completed an assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 2014, and such assessment concluded that such controls were effective. The Company has disclosed to Parent (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting, in each case, that was disclosed to the Company’s auditors or the audit committee of the Company Board of Directors in connection with its most recent evaluation of internal controls over financial reporting prior to the date hereof.

Section 4.7 Financial Statements . The consolidated financial statements of the Company and its Subsidiaries contained in the Company SEC Documents have been prepared in all material respects in accordance with GAAP applied on a consistent basis during the periods presented, except as otherwise noted therein and, subject, in the case of interim unaudited financial statements, to normal year-end adjustments which were not and will not be material, either individually or in the aggregate. Such consolidated financial statements fairly present, in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the results of their operations, their cash flow and changes in their stockholders equity for the periods reflected therein, except as otherwise noted therein and, subject, in the case of interim unaudited financial statements, to normal year-end adjustments

 

21


which will not be material, either individually or in the aggregate. Such consolidated financial statements complied, as of their respective dates of filing with the SEC, in all material respects with published rules and regulations of the SEC with respect thereto. Such consolidated financial statements have been prepared from, and are in accordance with, the books and records of the Company and its Subsidiaries.

Section 4.8 No Undisclosed Liabilities . Neither the Company nor any of its Subsidiaries has any liabilities, obligations or commitments of a nature (whether asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise) that would have been required to be reflected on the Company’s consolidated balance sheet in accordance with GAAP, other than (i) liabilities set forth on Schedule 4.8 , (ii) liabilities set forth or reflected or reserved against in the Company’s consolidated balance sheet as of March 31, 2016, including the notes thereto, included in the Company SEC Documents (the “ Company 2016 Balance Sheet ”), (iii) liabilities incurred in the Ordinary Course of Business since December 31, 2015, (iv) liabilities incurred in connection with the transactions contemplated hereby, (v) liabilities that have been discharged or paid in full prior to the date hereof in the Ordinary Course of Business, and (vi) any other liabilities that, in the aggregate, would not have a Material Adverse Effect.

Section 4.9 Absence of Certain Developments . Except as contemplated by this Agreement and except as set forth on Schedule 4.9 , since March 31, 2016, (i) the Company and its Subsidiaries have conducted their respective businesses in the Ordinary Course of Business in all material respects, (ii) neither the Company nor any of its Subsidiaries has taken any action that would have been prohibited by Section 6.2(b) had such action been taken after the date of this Agreement without Parent’s consent, and (iii) there has not been any event, condition or change that, individually or in the aggregate, constitutes a Material Adverse Effect.

Section 4.10 Taxes .

Except as set forth on Schedule 4.10 or would not have a Material Adverse Effect:

(a) Each of the Company and its Subsidiaries has timely filed or caused to be filed all Tax Returns required to be filed by it, and all such Tax Returns were correct and complete in all respects and were prepared in substantial compliance with all applicable laws and regulations.

(b) Each of the Company and its Subsidiaries has timely paid or caused to be paid all Taxes required to be paid by it (excluding any Taxes being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP).

(c) No jurisdiction in which the Company and its Subsidiaries do not file Tax Returns has made a claim in writing that any of the Company and its Subsidiaries is or may be subject to taxation by that jurisdiction or is or may be required to file Tax Returns in that jurisdiction.

(d) Each of the Company and its Subsidiaries has complied with all Laws relating to the withholding of Taxes.

 

22


(e) None of the Company and its Subsidiaries has received written notification that it is currently involved in any audit, examination, dispute or claim concerning Taxes.

(f) There are no outstanding waivers or extensions of the statutory period of limitations for an assessment or adjustment of Tax liabilities owed by any of the Company and its Subsidiaries.

(g) Since January 1, 2012, none of the Company and its Subsidiaries has been included in a consolidated, combined or unitary Tax Return filed by an “affiliated group” (within the meaning of Section 1504 of the Code or any similar or corresponding Law) other than an affiliated group the common parent of which was the Company or one of its Subsidiaries. None of the Company and its Subsidiaries has any liability for any Taxes of any Person (other than any of the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar or corresponding Law), as a transferee or successor, by contract, or otherwise.

(h) None of the Company and its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

(i) change in method of accounting for a taxable period ending on or prior to the Closing Date;

(ii) use of any improper method of accounting for a taxable period ending on or prior to the Closing Date;

(iii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income tax law) executed prior to the Closing;

(iv) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income tax law) that arose prior to the Closing;

(v) installment sale or open transaction disposition made prior to the Closing;

(vi) prepaid amount received prior to the Closing; or

(vii) election under Section 108(i) of the Code.

(i) None of the Company and its Subsidiaries has received, or currently has an application pending for, a private letter ruling from any Taxing Authority.

(j) None of the Company and its Subsidiaries is participating or has participated in any “listed transaction” within the meaning of Section 6707A(c)(2) of the Code.

 

23


(k) The Company is not and has not within the preceding five-year period been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code.

(l) There are no Liens (excluding Permitted Exceptions) for Taxes on any assets of any of the Company and its Subsidiaries.

Section 4.11 Assets; Real Property .

(a) Title . Except as would not be material to the Company and its Subsidiaries, taken as a whole, each of the Company and its Subsidiaries has good and valid title or right to use all of the assets used or held in connection with, or necessary for the conduct of, the business of the Company and its Subsidiaries, taken as a whole, including such owned assets reflected in the Company 2016 Balance Sheet (except for assets sold since the date of the Company 2016 Balance Sheet in the Ordinary Course of Business). Such owned assets are held free and clear of all Liens other than Permitted Exceptions.

(b) Real Property .

(i) Schedule 4.11(b) sets forth a list of (i) all real property owned by the Company or any of its Subsidiaries (the “ Owned Real Property ”) and (ii) all material real property leased by the Company or any of its Subsidiaries (the “ Leased Real Property ”, and together with the Owned Real Property, the “ Real Property ”). The Company or the relevant Subsidiary has good and marketable title to all Owned Real Property free and clear of all Liens except for Permitted Exceptions. The Company or one of its Subsidiaries has a valid and subsisting leasehold estate in all Leased Real Property.

(ii) Except as would not be material to the Company and its Subsidiaries, taken as a whole, (A) assuming the due authorization, execution and delivery thereof by the other party or parties thereto, each lease with respect to the Leased Real Property (a “ Lease ”) is in full force and effect and is a legal, valid and binding agreement that is enforceable against the Company or a Subsidiary of the Company (as applicable) and, to the Knowledge of the Company, the other party or parties thereto in accordance with its terms, subject to the Bankruptcy and Equity Exception; (B) the Company or one of its Subsidiaries (as applicable) and, to the Knowledge of the Company, each other party thereto are in compliance with all terms of each Lease; and (C) none of the Company or any of the Company’s Subsidiaries has received prior to the date hereof written notice of (x) default or noncompliance by the Company or its Subsidiaries under any Lease, (y) early termination of any Lease or (z) the intent of the counterparty to materially alter the provisions of any Lease.

(iii) Except as would not be material to the Company and its Subsidiaries, taken as a whole, (A) there are no leases, subleases, licenses, rights or other agreements granting any person the right to use or occupy any material portion of the Owned Real Property or the Leased Real Property that could reasonably be expected to adversely affect the existing use of such Owned Real Property or the Leased Real Property by the Company or its Subsidiaries in the operation of its business thereon, and (B) except for such arrangements solely among the Company and its Subsidiaries or among the Company’s Subsidiaries, there are no

 

24


outstanding options or rights of first refusal in favor of any other party to purchase any Owned Real Property or any portion thereof or interest therein that could reasonably be expected to adversely affect the existing use of the Owned Real Property by the Company in the operation of its business thereon.

(iv) Except as would not be material to the Company and its Subsidiaries, taken as a whole, to the Knowledge of the Company, the use and operation of the Real Property in the conduct of the Company’s or each Subsidiary’s business does not violate in any material respect any law, covenant, condition, restriction, easement, license, permit or agreement.

(v) Except as would not be material to the Company and its Subsidiaries, taken as a whole, to the Knowledge of the Company, there are no actions pending nor threatened against or affecting the Real Property or any portion thereof or interest therein in the nature of or in lieu of condemnation or eminent domain proceedings.

(vi) Except as would not be material to the Company and its Subsidiaries, taken as a whole, to the Knowledge of the Company, all manufacturing plants, production machinery and production equipment are (A) structurally sound and in good condition and repair (ordinary wear and tear excepted), (B) erected and used in compliance with applicable Laws and without violation of any third party rights; and (C) are not subject to any delinquent payments.

Section 4.12 Intellectual Property .

(a) Schedule 4.12(a) sets forth a list of all patents and patent applications, and trademark, service mark and copyright registrations and applications for registration, in each case, that are owned by the Company or any of its Subsidiaries (collectively, “ Company Intellectual Property ”) and other Intellectual Property.

(b) Except as would not be material to the Company and its Subsidiaries, taken as a whole, the Company or one of its Subsidiaries: is the owner of all right, title and interest in and to each item of Company Intellectual Property listed in Schedule 4.12(a) .

(c) Except as would not be material to the Company and its Subsidiaries, taken as a whole, or as provided in Schedule 4.12(c) , the Company Intellectual Property is not subject to any Lien (other than a Permitted Exception).

(d) Except as would not be material to the Company and its Subsidiaries, taken as a whole, or as provided in Schedule 4.12(d) , neither the Company nor any of its Subsidiaries have granted any licenses to any third party under any of the Company Intellectual Property.

(e) Except as provided in Schedule 4.12(e) , the Company and its Subsidiaries are not party to any Proceeding that is currently pending or, to the Knowledge of the Company, threatened in writing by any Person, alleging that the operation of the business by the Company or any of its Subsidiaries infringes, misappropriates or otherwise violates the Intellectual Property of a third party. Except as would not be material to the Company and its Subsidiaries,

 

25


taken as a whole, to the Knowledge of the Company, none of the Company and its Subsidiaries (i) currently infringes, misappropriates or otherwise violates the Intellectual Property of any Person or (ii) has infringed, misappropriated, or otherwise violated the Intellectual Property of any Person in the last six (6) years.

(f) (i) Except as would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor any of its Subsidiaries is party to any Proceeding that is currently pending or threatened in writing, nor does the Company or any of its Subsidiaries currently intend to commence any Proceeding against any Person involving an infringement, misappropriation, or other violation of any Company Intellectual Property and, (ii) to the Knowledge of the Company, no Person is engaging in any activity that infringes, misappropriates or otherwise violates any Company Intellectual Property, except as would not be material to the business of the Company and its Subsidiaries, taken as a whole.

(g) Except as would not be material to the Company and its Subsidiaries, taken as a whole, to the Knowledge of the Company, the Company Intellectual Property and the Intellectual Property used by the Company under license together comprise all the Intellectual Property material to the operation of the business as currently conducted or proposed to be conducted by the Company and its Subsidiaries, and there are no other items of Intellectual Property that are material to the operation of the business.

(h) Except as would not be material to the Company and its Subsidiaries, taken as a whole, the IT Systems are (i) owned by, or validly licensed, leased or supplied under IT Contracts to, the Company or one of its Subsidiaries (provided that the foregoing is not a representation as to the infringement of third party Intellectual Property which is solely the subject of Section 4.12(e) ), and (ii) sufficient to carry on the business as currently conducted of the Company and its Subsidiaries.

Section 4.13 Material Contracts .

(a) Schedule 4.13(a) sets forth all of the following Contracts (each a “Material Contract” and, collectively, the “ Material Contracts ”) to which the Company or any of its Subsidiaries is a party or by which any of them is bound (excluding any Contract covered by Section 4.12(a) ) and which:

(i) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Securities Act);

(ii) would be treated as a sale-leaseback arrangement under GAAP;

(iii) involves the lease of personal property by the Company or any of its Subsidiaries that provides for rent payable by the Company or any of its Subsidiaries in any twelve (12) month period in excess of $2,000,000 (and which cannot be terminated by the Company or any of its Subsidiaries without penalty on 180 days’ notice);

(iv) is with a Material Customer or a Material Supplier (or an applicable Affiliate or Subsidiary thereof) (excluding Contracts that are routine purchase orders and related releases occurring in the Ordinary Course of Business);

 

26


(v) relates to indebtedness for borrowed money of the Company or its Subsidiaries (other than indebtedness between the Company and its Subsidiaries or among the Company’s Subsidiaries) under which the principal amount outstanding thereunder payable by the Company or any of its Subsidiaries is in excess of $1,000,000;

(vi) contains any material outstanding obligation of the Company or any of its Subsidiaries with respect to an “earn out,” contingent purchase price, or similar contingent payment obligation or material indemnification obligation;

(vii) is a joint venture, partnership or similar agreement;

(viii) provides for any change of control bonuses and/or severance payments, in each case, that would become payable solely as a result of the transactions contemplated herein to any current or former “executive officers” (as defined under item 402(a)(3) of Regulation S-K under Rule 3b-7 promulgated under the Exchange Act) of the Company or any of its Subsidiaries;

(ix) relates to the services of any employee, director or officer of the Company or any Subsidiary who is entitled to gross annual base salary, if employed in the United States or China, of at least $225,000, and if employed in Europe, of at least €300,000;

(x) involves unpaid (as of the date hereof) commitments to make capital expenditures in excess of $2,000,000 individually or in the aggregate, by or on behalf of the Company or any of its Subsidiaries other than (i) Contracts between the Company and its Subsidiaries or among the Company’s Subsidiaries or (ii) commitments reflected in the capital expenditure budget of the Company and its Subsidiaries for the 2016 Fiscal Year and provided to Parent;

(xi) restricts in any material respect the ability of the Company or its Subsidiaries to compete in any business or geographic area or hire any individual or group of individuals;

(xii) is with (A) the U.S. Federal Government or any government in a nation-state of the European Union or (B) any other Governmental Body and in each case that involves payments to the Company or any of its Subsidiaries in any twelve (12) month period in excess of $5,000,000;

(xiii) is a license of any Intellectual Property to or from the Company (other than with respect to (i) IT Contracts, (ii) licenses of Intellectual Property between the Company and any of its Subsidiaries, and (iii) commercially available software products under standard end-user object code license agreements) and involves payments by the Company or any of its Subsidiaries in any twelve (12) month period in excess of $1,000,000;

(xiv) relates to the pending acquisition or sale of a business for a purchase price in excess of $5,000,000; or

 

27


(xv) constitutes a Contract for borrowed money under which a Person (other than the Company, any of its Subsidiaries or any of their respective customers) is advanced or loaned an amount exceeding $1,000,000; or

(xvi) contains any provision that requires the purchase of all of the Company’s (or any of its Subsidiaries’) requirements for a given product or service from a given third party, which product or service is material to the Company and its Subsidiaries, taken as a whole;

(b) The Company has made available to Parent a correct and complete copy of each Material Contract, including all amendments and supplements thereto. Except as would not have a Material Adverse Effect: (i) assuming the due authorization, execution and delivery thereof by the other party or parties thereto, each Material Contract is in full force and effect and is a legal, valid and binding agreement that is enforceable against the Company or a Subsidiary of the Company (as applicable) and, to the Knowledge of the Company, the other party or parties thereto in accordance with its terms, subject to the Bankruptcy and Equity Exception; (ii) the Company or one of its Subsidiaries (as applicable) and, to the Knowledge of the Company, each other party thereto are in compliance with all terms of each Material Contract; and (iii) none of the Company nor any of the Company’s Subsidiaries has received prior to the date hereof written notice of (x) default or noncompliance by the Company or its Subsidiaries under any Material Contract, (y) early termination of any Material Contract or (z) the intent of the counterparty to alter the provisions of any Material Contract.

Section 4.14 Employee Benefits Plans .

(a) Schedule 4.14(a) sets forth a correct and complete list of all material Company Benefit Plans, other than standard employee offer letters (a representative form of which in all material respects has been provided to Parent) with respect to Company Employees working outside the United States where such employee offer letters are required. For purposes hereof, “ Company Benefit Plan ” shall mean each “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and each other material executive compensation, change in control, retention, severance, bonus, golden parachute, stock option, other equity or equity-based compensation, stock purchase, incentive, pension, early retirement, deferred compensation, medical, dental, life insurance, disability, vacation, sick pay, fringe benefit or employee benefit plan, program, arrangement or agreement (including, without limitation, employment, consulting and collective bargaining agreements and works council agreements and individual agreements), insured or self-insured, (i) established, maintained, sponsored or contributed to (or with respect to which any obligation to contribute has been undertaken) by the Company or its Subsidiaries, or (ii) with respect to which the Company or its Subsidiaries has or could have any obligation or liability, in each case on behalf or in favor of any current or former employees, officers, directors, stockholders or other individual service providers of the Company or its Subsidiaries, or their beneficiaries, other than benefit plans or programs that are mandatory under applicable Law and maintained by a Governmental Body. “ Non-U.S. Benefit Plan ” means each Company Benefit Plan that is subject to the Laws of a jurisdiction outside of the United States and is maintained outside of the United States and is not subject to ERISA. The Company has made available to Parent correct and complete copies of (i) each Company Benefit Plan and all amendments thereto (or, in the case of

 

28


any such Company Benefit Plan that is unwritten, descriptions thereof), (ii) the most recent annual reports on Form 5500 required to be filed with the IRS with respect to each Company Benefit Plan (if any such report was required), (iii) the most recent summary plan description for each Company Benefit Plan for which such summary plan description is required, (iv) each trust agreement, insurance or group annuity contract and all other material written contracts relating to any Company Benefit Plan, and (v) the most recent actuarial reports (if applicable) for all Company Benefit Plans.

(b) Each Company Benefit Plan other than Non-U.S. Benefit Plans (collectively, “ U.S. Benefit Plans ”) is and has been maintained, operated and administered in compliance with its terms and the applicable provisions of ERISA, the Code and all other applicable Laws in all material respects.

(c) (i) All U.S. Benefit Plans that are “employee pension benefit plans” (as defined in Section 3(2) of ERISA) and that are intended to be tax qualified under Section 401(a) of the Code (each, a “ Company Pension Plan ”) are so qualified and (ii) to the Knowledge of the Company, no event has occurred since the date of the most recent determination letter or application therefor relating to any such Company Pension Plan that would adversely affect the qualification of such Company Pension Plan or result in the imposition of any material penalty or Tax liability. The Company has made available to Parent a correct and complete copy of the most recent determination letter received with respect to each Company Pension Plan, as well as a correct and complete copy of each pending application for a determination letter, if any.

(d) Except as set forth on Schedule 4.14(d) , none of the U.S. Benefit Plans provides retiree medical or other retiree welfare benefits to any Person, other than health continuation coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA or any other applicable Law.

(e) All contributions, premiums and benefit payments under or in connection with the Company Benefit Plans that are required to have been made or accrued as of the date hereof in accordance with the terms of the Company Benefit Plans, any collective bargaining agreements, works agreements or other agreements, or by Law, including for the avoidance of doubt, any payments and contributions to statutory insolvency protection systems, have been timely made in full on the due dates for such payments or properly accrued in accordance with GAAP or other applicable accounting standards, except as would not have a Material Adverse Effect.

(f) Except as set forth on Schedule 4.14(f) , no U.S. Benefit Plan is (i) an employee benefit plan subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 of the Code or (ii) a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA), and none of the Company, its Subsidiaries, or any other entity that would be deemed a “single employer” with the Company or its Subsidiaries under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (each, an “ ERISA Affiliate ”), or any of their respective predecessors, has ever contributed to, contributes to, has ever been required to contribute to, or otherwise participated in or participates in or in any way, directly or indirectly, has any liability with respect to any such plan. With respect to any Company Benefit Plan that is a plan subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 of the Code, as applicable: (i) no material

 

29


liability or contingent liability (including liability pursuant to Section 4069 of ERISA) under Title IV of ERISA (other than for the timely payment of premiums due in the ordinary course to the Pension Benefit Guaranty Corporation) has been incurred by the Company, any of its Subsidiaries or any ERISA Affiliate, and no condition or event currently exists that could reasonably be expected to subject the Company, any of its Subsidiaries or any ERISA Affiliate to any material liability under Title IV of ERISA or the imposition of any Lien under Title IV of ERISA; (ii) there does not now exist, nor do any circumstances exist that could reasonably be expected to result in, any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived, or any liability under Section 4971 of the Code; (iii) the financial status of any such plan has not materially changed from the status as reflected in the Company’s 2015 Form 10-K; and (iv) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred.

(g) With respect to each Non-U.S. Benefit Plan, except as would not have a Material Adverse Effect: (i) each Non-U.S. Benefit Plan is in compliance with the applicable provisions of Law, regulations and requirements regarding employee benefits, mandatory contributions and retirement plans of each jurisdiction in which each such Non-U.S. Benefit Plan is maintained, to the extent those Laws are applicable to such Non-U.S. Benefit Plan; (ii) each Non-U.S. Benefit Plan has been administered at all times in accordance with its terms and applicable provisions of Law; (iii) any changes, closures and/or replacements of Non-U.S. Benefit Plans have been legally effective and are valid; (iv) all material liabilities with respect to each Non-U.S. Benefit Plan have been funded in accordance with the terms of each such Non-U.S. Benefit Plan and applicable Law; and (v) the financial status of any such Non-U.S. Benefit Plan has not materially changed from the status as reflected in the Company’s 2015 Form 10-K.

(h) As of the date hereof, (i) there is no pending or, to the Knowledge of the Company, threatened or anticipated lawsuits, grievance, arbitration, action, claims or other proceedings related to any Company Benefit Plan, other than non-material routine claims for benefits, that could result in any material liability which is not accrued for in the financial statements of the Company or the relevant Subsidiary, Tax or penalty, (ii) no Company Benefit Plan is under, and neither the Company nor its Subsidiaries have received any notice of, an audit or investigation by the IRS, Department of Labor or any other Governmental Body, and no such completed audit, if any, has resulted in the imposition of any Tax or penalty, and (iii) no non-exempt “prohibited transaction,” within the meaning of Section 4975 of the Code and Section 406 of ERISA, has occurred or is reasonably expected to occur with respect to the Company Benefit Plans.

(i) Where relevant, the Company Benefit Plans are recognized for the purposes of the Tax regime under which they operate and, to the Knowledge of the Company, there is no reason why such recognition might be withdrawn or cease to apply.

(j) Except as would not be material to the Company and its Subsidiaries, taken as a whole, all obligations to adjust ongoing pensions under any Company Benefit Plans which are German pension plans have been duly made in accordance with Sec. 16 German Occupational Pensions Act ( BetrAVG ); none of the German Subsidiaries are obliged to make any retroactive pension adjustments ( nachträgliche Anpassung ) or to catch up any omitted pension adjustments ( nachholende Anpassung ).

 

30


(k) Neither the execution and delivery of this Agreement nor the consummation of transactions contemplated hereby will (either alone or in conjunction with any other event): (A) entitle any current or former employee, officer, director or independent contractor of the Company or any of its Subsidiaries to any payment or benefit (or result in the funding of any such payment or benefit) under any Company Benefit Plan; (B) increase the amount of any compensation, equity award or other benefits otherwise payable by the Company or any of its Subsidiaries under any Company Benefit Plan; (C) result in the acceleration of the time of payment, funding or vesting of any compensation, equity award or other benefits under any Company Benefit Plan; or (D) limit or restrict the right of the Company or any of its subsidiaries to merge, amend or terminate any Company Benefit Plan.

(l) After giving effect to the shareholder vote described in Section 6.15 , neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) result in any “excess parachute payment” (within the meaning of Section 280G of the Code) becoming due to any current or former employee, officer, director or independent contractor of the Company or any of its Subsidiaries.

(m) Each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) subject to Section 409A of the Code and the regulations and other guidance promulgated thereunder maintained or sponsored by the Company or its Subsidiaries has been maintained and administered in documentary and operational compliance in all material respects with Section 409A of the Code and the regulations promulgated thereunder, and no material payment or benefit under or with respect to any such plan to be made or provided thereunder has been or could reasonably be expected to be subject to interest, penalties or additional excise Tax under Section 409A of the Code or the regulations promulgated thereunder.

(n) Any individual who performs services for the Company or any of its Subsidiaries and who is not treated as an employee by the Company or its Subsidiaries, to the Knowledge of the Company, is not an employee under applicable Law or for any purpose including, without limitation, for Tax withholding purposes or Company Benefit Plan participation purposes. The Company and its Subsidiaries have no material liability by reason of an individual who performs or performed services for the Company or its Subsidiaries in any capacity being improperly excluded from participating in a Company Benefit Plan. To the Knowledge of the Company, each employee of the Company and its Subsidiaries has been properly classified as “exempt” or “non-exempt” under applicable Law.

(o) Each Option (i) has an exercise price at least equal to the fair market value of Common Stock, as determined by the Board of Directors of the Company or by the Compensation Committee of the Board of Directors of the Company, on a date no earlier than the date of the corporate action authorizing the grant, (ii) has not had its exercise date or grant date delayed or “back-dated,” and (iii) has been issued in compliance in all material respects with all applicable Laws and properly accounted for in all material respects in accordance with GAAP.

(p) This Section 4.14 represents the sole and exclusive representations and warranties of the Company regarding employee benefit matters.

 

31


Section 4.15 Labor .

(a) Except as set forth on Schedule 4.15(a) neither the Company nor any of its Subsidiaries is a party to any labor or collective bargaining agreement, works agreement, reconciliation of interest ( Interessenausgleich ), social plan ( Sozialplan ) or any material collective commitments ( Gesamtzusagen ) and occupational usages ( betriebliche Übungen ) (together the “ Collective Agreements ”). The Company has made available to Parent correct and complete copies of all Collective Agreements listed on Schedule 4.15(a) , together with all amendments, modifications or supplements thereto in effect as of the date of this Agreement.

(b) Except as would not be material to the Company and its Subsidiaries, taken as a whole, the execution, delivery and performance of this Agreement by the Company does not, and the consummation by the Company of the transactions contemplated hereby will not, constitute or result in a breach or violation of, a termination (or right of termination) or a default under, or the creation, increase, triggering or acceleration of any obligations or rights of any kind (including under any change of control type provisions or any employee or union notification or consent obligations and rights) or result in any material changes under, or increase in compensation paid under, any Collective Agreement or other Contract with any labor union or other representative of a group of employees of the Company or its Subsidiaries. To the extent that the Company or any of its Subsidiaries is required under any Collective Agreement or any applicable Law to inform or consult with any employee representative body regarding the transactions contemplated hereunder, the Company and its Subsidiaries have fully and timely complied with all such obligations.

(c) There are no and there have not been over the past three years, with respect to any ongoing operations at the Company or any of its Subsidiaries as of the date hereof (i) strikes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries or (ii) to the Knowledge of the Company, union organization campaigns with respect to employees of the Company or any of its Subsidiaries or disputes concerning representation of such employees exists. Except as would not be material to the Company and its Subsidiaries, taken as a whole, there are no (and there have not been over the past three years) written communications received by the Company or any of its Subsidiaries of the intent of any Governmental Body responsible for the enforcement of labor or employment Laws to conduct an investigation of or affecting the Company or any of its Subsidiaries and, to the Knowledge of the Company, no


continue to document