(g) Unclaimed Cash. Any portion of funds held by the Exchange Agent that has not been delivered to any holders of Certificates or Uncertificated Shares pursuant to this Article I within 12 months after the Effective Time shall promptly be paid to Parent, and thereafter each holder of a Certificate or Uncertificated Shares who has not theretofore complied with the exchange procedures set forth in and contemplated by Section 1.9(c) shall look only to Parent (subject to abandoned property, escheat and similar laws) for its claim, only as a general unsecured creditor thereof, to the cash payable to such holder pursuant to Section 1.8(a). Notwithstanding anything to the contrary herein, if any Certificate or Uncertificated Shares have not been surrendered immediately prior to the date on which the merger consideration contemplated by Section 1.8(a) in respect of such Certificate or Uncertificated Shares would otherwise escheat to or become the property of any Governmental Entity, any amounts payable in respect of such Certificate or Uncertificated Shares shall, to the extent permitted by Applicable Legal Requirements, become the property of Parent, free and clear of all claims or interests of any Person previously entitled thereto.
1.10. No Further Ownership Rights in Company Capital Stock. All cash paid or payable following the surrender for exchange of shares of Company Capital Stock in accordance with this Agreement shall be so paid or payable in full satisfaction of all rights pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Capital Stock that were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificate or Uncertificated Shares are presented to the Surviving Corporation for any reason, such Certificate or Uncertificated Shares shall be cancelled and exchanged as provided in this Article I.
1.11. Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such Certificate, following the making of an affidavit of that fact by the record holder thereof, such cash as may be required pursuant to Section 1.8(a) in respect of such Certificate; provided that Parent or the Exchange Agent may, in its respective reasonable discretion and as a condition precedent to the issuance thereof, require the record holder of such Certificate to deliver a customary bond in such reasonable sum as Parent or the Exchange Agent may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation, the Exchange Agent and/or any of their respective Representatives with respect to such Certificate.
1.12. Withholding Rights. Parent, the Surviving Corporation, their respective Subsidiaries and the Exchange Agent shall be entitled to deduct and withhold from the cash otherwise deliverable under this Agreement and from any other payments otherwise required pursuant to this Agreement, to any holder of any shares of Company Capital Stock, any Company Options, any Company RSUs, any Company PSUs, any Certificates or any Uncertificated Shares such amounts as any of Parent, the Surviving Corporation, their respective Subsidiaries or the Exchange Agent is required to deduct and withhold with respect to any such deliveries and payments under the Code or any other Applicable Legal Requirements and shall timely pay any such amount deducted or withheld to the appropriate Tax Authority. To the extent that amounts are so withheld and paid over to or credited by the relevant Tax Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to such holders in respect of which such deduction and withholding was made.
1.13. Tax Consequences. The parties hereto intend the Merger to be a taxable sale of the Company Capital Stock by the Company’s stockholders.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in (i) (w) the Company’s Proxy Statements on Form DEF 14A filed on May 9, 2023 and May 2, 2022, (x) the Company’s Annual Reports on Form 10-K filed on March 23, 2023 and March 24, 2022, (y) the Company’s quarterly report on Form 10-Q filed on August 23, 2023 and (z) any other Company SEC Reports publicly filed and available on the SEC’s Electronic Data Gathering and Retrieval System on or after February 1, 2021 and prior to the date that is at least two (2) Business Days prior to the Agreement Date (in each case, other than any disclosures contained under the caption “Risk Factors” or “Forward-Looking Statements” or under any similar precautionary sections or disclosures that are predictive, cautionary or forward-looking in nature) or (ii) the exceptions set forth in the disclosure letter of the Company delivered to Parent and Merger Sub concurrently with the execution of this Agreement (the “Company Disclosure Letter”) arranged in sections that correspond to the representations and warranties set forth in this Article II and such exceptions shall qualify (x) the Section and, if applicable, the Subsection of this Article II to which it corresponds and (y) the other Sections and Subsections of this
A-15
Article II (to the extent the relevance of such disclosure to other representations and warranties is reasonably apparent from the disclosed exception, in which case such disclosed exception shall be deemed so applicable to such other representations and warranties, whether or not an explicit reference or cross-reference is made), the Company represents and warrants to Parent and Merger Sub as follows:
(a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each Subsidiary of the Company is an entity that is duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of organization or formation (except, (i) in the case of good standing, any jurisdiction that does not recognize such concept and (ii) where the failure to be so organized, formed, existing or in good standing in any jurisdiction would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect). The Company and each of its Subsidiaries has the corporate or other applicable power to own its rights, assets and properties and to conduct the Business and is duly qualified to do business and is in good standing in each jurisdiction (to the extent the concept is recognized by such jurisdiction), except where the failure to be so qualified and in good standing, individually or in the aggregate with any such other failures, would not reasonably be expected to have a Material Adverse Effect. The Company is not in violation in any material respect of any of the provisions of its certificate of incorporation or bylaws.
(b) The Company has made available to Parent a true, correct and complete copy of the certificate of incorporation and bylaws or other equivalent organizational or governing documents, as applicable, of the Company and each of its Subsidiaries, in each case as amended to date. No Subsidiary of the Company is in violation of any of the provisions of its certificate of incorporation or bylaws or equivalent organizational or governing documents in any material respect. Schedule 2.1(b) of the Company Disclosure Letter sets forth a true, correct and complete list of the Subsidiaries of the Company and their respective jurisdictions of organization or formation. All of the issued and outstanding shares of capital stock of each Subsidiary of the Company are duly authorized, validly issued, fully paid and non-assessable (in any jurisdiction that recognizes such concepts), are owned by the Company or another Subsidiary of the Company free and clear of all Encumbrances other than Permitted Encumbrances, and are not subject to any preemptive right or right of first refusal, other than in favor of the Company or a Subsidiary of the Company, created by statute, the certificate of incorporation and bylaws or other equivalent organizational or governing documents, as applicable, of such Subsidiary or any Contract to which the Company or such Subsidiary is a party or by which it is bound. There are no outstanding subscriptions, options, warrants, “put” or “call” rights, exchangeable or convertible securities or other Contracts to which the Company or any of its Subsidiaries is party or by which the Company or any of its Subsidiaries is bound with respect to the issued or unissued capital stock or other securities of any Subsidiary of the Company, or otherwise obligating the Company or any of its Subsidiaries to issue, transfer, sell, purchase, redeem or otherwise acquire or sell any such securities. Other than its Subsidiaries, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any Person. There are no material outstanding obligations of the Company or any of its Subsidiaries under any Contract to which it is a party or by which it is bound to make any loan to, or any equity or other similar investment (in the form of a capital contribution or otherwise) in, any other Person (other than the Company or its Subsidiaries).
(a) The authorized capital stock of the Company consists solely of 1,000,000,000 shares of Company Common Stock and 20,000,000 shares of Company Preferred Stock. As of 5:00 p.m. (Pacific time) on September 18, 2023 (such time and date, the “Measurement Date”), a total of 168,521,028 shares of Company Common Stock were issued and outstanding and no shares of Company Preferred Stock were issued and outstanding. The Company has not designated, authorized or issued any other shares of capital stock. The Company holds no shares of Company Common Stock in its treasury as of the close of business on the Measurement Date. As of the Measurement Date, the Company has reserved (A) 22,072,398 shares reserved for issuance upon conversion of the Convertible Notes, 18,251,558 shares of Company Common Stock for issuance to employees, non-employee directors and consultants pursuant to the Company Equity Plans, of which 82,641 shares are subject to outstanding and unexercised Company Options, 9,918,524 shares are subject to outstanding Company RSUs, 671,920 shares are subject to outstanding Company PSUs assuming achievement of applicable performance goals at target levels (and 1,401,301 shares assuming achievement of applicable
A-16
performance goals at maximum levels) and 6,849,092 shares remain available for issuance thereunder and (B) 25,343,109 shares of Company Common Stock for issuance to employees pursuant to the Company ESPP (and the Company has received aggregate contributions of $21,022,685 for the current offering period pursuant to the Company ESPP). There are outstanding (a) $862,500,0000 aggregate principal amount of 2025 Convertible Notes (with a conversion rate as of the date hereof equal to 6.7433 Shares per thousand dollar principal amount, subject to adjustment as provided in the 2025 Convertible Notes Indenture), (b) $1,265,000,000 aggregate principal amount of 2027 Convertible Notes (with a conversion rate as of the date hereof equal to 3.9164 shares per thousand dollar principal amount, subject to adjustment as provided in the 2027 Convertible Notes Indenture) and (c) $1,000,000,000 aggregate principal amount of 2026 Convertible Notes (with a conversion rate as of the date hereof equal to 6.2500 shares per thousand dollar principal amount, subject to adjustment as provided in the 2026 Convertible Notes Indenture). All issued and outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are free of all Encumbrances, preemptive rights, rights of first refusal and “put” or “call” rights created by statute, the certificate of incorporation or bylaws of the Company or any Contract to which the Company is a party or by which it is bound. As of the Agreement Date, no shares of Company Capital Stock are subject to a right of repurchase or otherwise not fully vested under the terms of any Contract with the Company at the Effective Time (including any stock option agreement, stock option exercise agreement, restricted stock purchase agreement or restricted stock grant agreement. There is no liability for dividends accrued and unpaid by the Company or any of its Subsidiaries. As of the Agreement Date, there are no shares of Company Capital Stock that have become outstanding since the Measurement Date other than pursuant to the exercise of Company Options or the vesting of Company RSUs or Company PSUs outstanding on the Measurement Date and included in the amounts set forth above or granted in accordance with Section 4.2.
(b) The Company has no Company Options, Company RSUs or Company PSUs other than those granted pursuant to the Company Equity Plans. Schedule 2.2(b)-1 of the Company Disclosure Letter sets forth a true, correct and complete list as of the Measurement Date of all holders of any Unvested Company Shares (by grantee identification number), including the number and kind of shares of Company Capital Stock unvested as of the Measurement Date, the purchase price paid per share, the vesting schedule, including the vesting commencement date and the terms of any acceleration thereof in effect for such Unvested Company Shares, the repurchase price payable per unvested share and the length of the repurchase period following the holder’s termination of service. Schedule 2.2(b)-2 of the Company Disclosure Letter sets forth a true, correct and complete list as of the Measurement Date of all holders of outstanding Company Options (by grantee identification number), whether or not granted under the Company Equity Plans, including the number of shares of Company Common Stock subject to each such option, the date of grant, the exercise or vesting schedule (including identification of any Company Options that may be exercised in advance of vesting), the vesting commencement date and the terms of any acceleration thereof, the extent vested and unvested as of the Measurement Date, the exercise price per share, the Tax status of such option under Section 422 of the Code (or any intended applicable foreign tax scheme), the plan from which such Company Option was granted, the term of each such Company Option and the country of residence of each such holder. Schedule 2.2(b)-3 of the Company Disclosure Letter sets forth a true, correct and complete list as of the Measurement Date of all holders of Company RSUs and Company PSUs (by grantee identification number), including the number of shares of Company Common Stock remaining subject to issuance under such Company RSUs and Company PSUs (at both target and maximum performance levels), the performance metrics and vesting schedule, the vesting commencement date and the terms of any acceleration thereof, the plan from which such Company RSU or Company PSU was granted and the country of residence of each such holder. All issued and outstanding shares of Company Capital Stock and all outstanding Company Options, Company RSUs and Company PSUs were issued, and all repurchases of Company securities were made, in material compliance with all Applicable Legal Requirements and all requirements set forth in applicable Contracts. All shares that may be issued upon the exercise of Company Options, settlement of Company RSUs or Company PSUs will, if and when issued, be validly issued in material compliance with all Applicable Legal Requirements and all requirements set forth in applicable Contracts. The Company is not under any obligation to register under the Securities Act any of the presently outstanding securities of the Company or any of its Subsidiaries now outstanding or that may be subsequently issued.
(c) There is no indebtedness of the Company or its Subsidiaries for borrowed money or notes, bonds or other debt securities of the Company or its Subsidiaries, in each case, (i) having the right to vote on any matters
A-17
on which stockholders may vote (or which is convertible into, or exchangeable for, securities having such right) or (ii) the value of which is in any way based upon or derived from capital or voting stock of the Company (collectively, “Company Voting Debt”), issued or outstanding as of the Agreement Date.
(d) Schedule 2.2(d) of the Company Disclosure Letter sets forth a true, correct and complete list of individuals as of the Agreement Date who have been offered an opportunity to receive Company Options, Company RSUs or Company PSUs under an offer letter from, Contract with or other commitment from the Company or any of its Subsidiaries (which has not expired, been rescinded or rejected), but who have not been granted such Company Options, Company RSUs or Company PSUs, including the number of Company Options, Company RSUs or Company PSUs (at both target and maximum performance levels), the start date or anticipated start date of such individual, the vesting commencement date and vesting schedule described in the offer letter from, Contract with or other commitment as to the vesting schedule for each such listed individual.
(e) Except for (i) the Company’s right to repurchase any Unvested Company Shares listed on Schedule 2.2(b)-1 of the Company Disclosure Letter, (ii) the Company Options listed on Schedule 2.2(b)-2 of the Company Disclosure Letter, (iii) the Company RSUs and Company PSUs listed on Schedule 2.2(b) of the Company Disclosure Letter and (iv) the Company Options, Company RSUs or Company PSUs listed on Schedule 2.2(d) of the Company Disclosure Letter, as of the Agreement Date, there are no options, restricted stock units (including performance stock units), warrants, puts, calls, rights or Contracts of any character to which the Company is a party or by which it is bound obligating the Company to grant, issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of Company Capital Stock, any options, restricted stock units (including performance stock units) or warrants to purchase or acquire any Company Capital Stock or other securities of the Company, or any Company Voting Debt, or obligating the Company to grant, extend, accelerate the vesting and/or repurchase rights of, change the price of, or otherwise amend or enter into any such option, restricted stock unit (including performance stock unit), warrant, put, call, right or Contract. Except as expressly provided for in this Agreement, there are no Contracts relating to voting, purchase or sale of any Company Capital Stock (A) between or among the Company and any of the Company’s stockholders, other than written Contracts granting the Company the right to purchase Unvested Company Shares upon termination of employment or service or (B) to the Knowledge of the Company, between or among any of the Company’s stockholders. The terms of each of the Company Equity Plans and the applicable stock option agreements and restricted stock unit (including performance stock units) award agreements permit the treatment of each Company Option, Company RSU and Company PSU as provided in Section 1.8, without the consent or approval of the holders thereof, the Company’s stockholders or otherwise. No change in the exercise price, exercise period or other modifications (excluding, for this purpose, acceleration as disclosed on any sub-part of Schedule 2.2(b) of the Company Disclosure Letter or otherwise provided in accordance with the terms of a Company Employee Plan) in the terms of any Company Option, Company RSU, Company PSU will arise in connection with the Merger or any other transaction contemplated by this Agreement or upon termination of employment or service with the Company or any of its Subsidiaries, or with Parent or any of its Subsidiaries, following the Merger or otherwise.
(a) The Company has all requisite corporate power and authority to enter into this Agreement and, subject to obtaining the Company Stockholder Approval, to consummate the Merger and the other Transactions. The execution and delivery of this Agreement and, subject to obtaining the Company Stockholder Approval, the consummation of the Merger and the other Transactions, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery thereof by each of the other parties hereto, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (ii) Applicable Legal Requirements governing specific performance, injunctive relief and other equitable remedies (collectively, the “Enforceability Limitations”). The Company Board, by resolutions duly adopted prior to or on the Agreement Date (and, subject to Section 5.3, not thereafter modified or rescinded in a manner adverse to Parent or that would materially impair or delay the consummation of the Merger) by the unanimous vote of the full Company Board, has (i) approved this Agreement and the Merger, (ii) determined that the Merger and the terms and conditions of this Agreement are fair to, advisable and in the best interests of the Company and the Company’s stockholders and (iii) directed that the adoption of this Agreement be
A-18
submitted to the Company’s stockholders for consideration and recommended that all of the Company’s stockholders adopt this Agreement. Subject to the accuracy of the representation set forth in Section 3.4, the affirmative vote of the Company’s stockholders holding a majority of all shares of Company Common Stock issued and outstanding on the record date set for the determination of stockholders entitled to vote on such matter at the Company Stockholder Meeting (such affirmative vote, the “Company Stockholder Approval”) is the only vote of the Company’s stockholders necessary to adopt this Agreement under Applicable Legal Requirements and the Company’s certificate of incorporation and bylaws.
(b) The execution and delivery of this Agreement by the Company does not, and the consummation of the Merger and the other Transactions will not, (i) result in the creation of any Encumbrance (other than any Permitted Encumbrance) on any of the material rights, properties or assets of the Company and its Subsidiaries, taken as a whole, or (ii) conflict with, or result in any violation of or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under, or require any consent, approval or waiver from any Person pursuant to, (A) any provision of the certificate of incorporation or bylaws or other equivalent organizational or governing documents of the Company or any of its Subsidiaries, in each case as amended to date, (B) subject to obtaining the Company Stockholder Approval, the accuracy of Parent’s representations in Section 3.4 and compliance with the requirements set forth in Section 2.3(c), any Applicable Legal Requirement or Privacy Obligation or (C) any Material Contract, other than, in the case of clauses (B) and (C) of this Section 2.3(b), such conflicts, violations, defaults, Encumbrances, terminations, cancellations, accelerations, losses, consents, approvals or waivers as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) No consent, approval, order, authorization, release or waiver of, or registration, notification, declaration or filing with, any Governmental Entity is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the consummation of the Merger and the other Transactions, except for (i) the compliance with the applicable provisions of Delaware Law, (ii) the filing of the Certificate of Merger, as provided in Section 1.4, (iii) such filings and notifications as may be required under the HSR Act and the approvals or deemed approvals under any applicable foreign Antitrust Law and any applicable Foreign Investment Law and the expiration or early termination of applicable waiting periods under the HSR Act and any applicable foreign Antitrust Law and any applicable Foreign Investment Law, (iv) the filing of the Proxy Statement with the SEC and such reports and filings as may be required under the Exchange Act, (v) such other filings and notifications as may be required under federal, state or foreign securities laws or the rules and regulations of the Nasdaq Global Select Market and (vi) such other consents, approvals, orders, authorizations, releases, waivers, registrations, notifications, declarations or filings that, if not obtained or made, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(d) Subject to the accuracy of the representation set forth in Section 3.4, the approval of this Agreement and the Transactions referred to in Section 2.3(a) by the Company Board constitute all of the approvals that are necessary to render inapplicable to this Agreement, the Merger and the other Transactions the restrictions on “business combinations” with “interested stockholders” set forth in Section 203 of Delaware Law (as such terms are defined therein), and represent the only action necessary to ensure that the restrictions on business combinations set forth in Section 203 of Delaware Law does not and will not apply to the execution, delivery or performance of this Agreement or the consummation of the Merger or the other Transactions. No other takeover or similar statute or regulation is applicable to this Agreement, the Merger or the other Transactions.
(a) The Company has filed or furnished, as applicable, on a timely basis, all forms, statements, schedules, reports and documents (including items incorporated by reference) required to be so filed or furnished by the Company with the SEC since February 1, 2021. All such required forms, statements, schedules, reports and documents (including those that the Company may file following the Agreement Date) are referred to herein as the “Company SEC Reports.” As of their respective dates, the Company SEC Reports (i) as applicable, complied, or will comply in all material respects when filed, with the requirements of the Securities Act or the Exchange Act and the rules and regulations of the SEC thereunder applicable to such Company SEC Reports and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the Agreement Date, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
A-19
circumstances under which they were made, not misleading, except to the extent corrected (prior to the Agreement Date in the case of Company SEC Reports originally filed prior to the Agreement Date), revised, amended, modified or superseded by a subsequently filed Company SEC Report. None of the Company’s Subsidiaries is required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports (collectively, the “Financial Statements”), including each Company SEC Report filed after the Agreement Date until the Closing, at the time filed (i) complied (or, in the case of Financial Statements included in the Company SEC Reports filed after the Agreement Date, will comply) as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) were (or, in the case of Financial Statements included in Company SEC Reports filed after the Agreement Date, will be) prepared in accordance with GAAP (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly presented in all material respects (or, in the case of Financial Statements included in the Company SEC Reports filed after the Agreement Date, will fairly present in all material respects) the consolidated financial position of the Company and its Subsidiaries as of the respective dates therein indicated and the consolidated results of the Company’s and its Subsidiaries’ operations and cash flows for the periods therein specified (subject, in the case of unaudited interim period financial statements to the absence of footnotes and to normal recurring year-end audit adjustments, none of which individually or in the aggregate are material to the Company and its Subsidiaries, taken as a whole). The balance sheet of the Company as of January 31, 2023 (the “Company Balance Sheet Date”) contained in the Company SEC Reports is hereinafter referred to as the “Company Balance Sheet.” Neither the Company nor any of its Subsidiaries has any Liabilities except for: (i) Liabilities reflected on, accrued on or reserved against on the Company Balance Sheet in accordance with GAAP, (ii) Liabilities incurred since the Company Balance Sheet Date in the Ordinary Course of Business, (iii) Liabilities incurred under executory Contracts to which the Company is a party, other than as a result of a breach thereunder, (iv) the fees and expenses of investment bankers, attorneys, consultants and accountants incurred in connection with this Agreement, (v) Liabilities expressly required by or incurred pursuant to the terms of this Agreement and (vi) Liabilities incurred after the Agreement Date that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as reflected in the Financial Statements, neither the Company nor any of its Subsidiaries is a party to any material off-balance sheet arrangement (as defined in Item 303 of Regulation S-K promulgated under the Exchange Act (“Regulation S-K”)). All reserves that are set forth in or reflected in the Company Balance Sheet have been established in accordance with GAAP in all material respects. The Financial Statements comply in all material respects with the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) FASB ASC 606–Revenue Recognition. At the Company Balance Sheet Date, there were no material loss contingencies (as such term is used in FASB ASC 450–Contingencies) that are not adequately provided for in the Company Balance Sheet as required by FASB ASC Topic 450. The Company has not had any material dispute with any of its auditors regarding accounting matters or policies during any of its past three full fiscal years or during the current fiscal year. The books and records of the Company and each of its Subsidiaries have been, and are being, maintained in all material respects in accordance with Applicable Legal Requirements and applicable accounting requirements and the Financial Statements are consistent in all material respects with such books and records. There has been no material change in the Company’s accounting policies since February 1, 2021, except as described in the Financial Statements.
(c) The Company has made available to Parent a true, correct and complete copy of any amendments or modifications that have not yet been filed with the SEC but that are required to be so filed to agreements, documents or other instruments that were filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act, as well as any comment letters or similar correspondence received by the Company from the SEC for the Company’s three (3) most recently completed fiscal years and its current fiscal year. The SEC has not provided written comments to the Company in connection with any Company SEC Reports that to the Knowledge of the Company remain unresolved. To the Knowledge of the Company, no investigation by the SEC with respect to the Company or any of its Subsidiaries is pending or threatened.
(d) Schedule 2.4(d) of the Company Disclosure Letter accurately lists all indebtedness of the Company or its Subsidiaries for borrowed money and all notes, bonds and other debt securities of the Company or its Subsidiaries (other than indebtedness owed by the Company to any directly or indirectly wholly-owned Subsidiary thereof or by any directly or indirectly owed by the wholly-owned Subsidiary of the Company to the
A-20
Company or another directly or indirectly wholly-owned Subsidiary of the Company), each in excess of $10,000,000, as of the Agreement Date, including, for each item of such indebtedness, the Contract governing such indebtedness. All such indebtedness for borrowed money may be prepaid at the Closing without penalty under the terms of the agreements governing such indebtedness.
(e) The Company has established and maintains (i) a system of internal accounting controls that complies with Section 13(b)(2)(B) of the Exchange Act, (ii) “disclosure controls and procedures” required by Rule 13a-15 or Rule 15d-15 promulgated under the Exchange Act (as such term is defined therein) and such disclosure controls and procedures are designed to be effective for the purpose for which they were established and (iii) “internal control over financial reporting” (as defined in Rule 13a-15 or Rule 15d-15 promulgated under the Exchange Act) and such internal control over financial reporting is designed to be effective in providing reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Financial Statements in accordance with GAAP. Since February 1, 2021, each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (“SOXA”) and the rules and regulations promulgated thereunder with respect to the Company SEC Reports and the statements contained in such certifications were true and accurate in all material respects as of the date made. To the Knowledge of the Company, there are no “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls and procedures that could adversely affect the Company’s ability to record, process, summarize and report financial data. The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K, for senior financial, accounting and compliance officers and those performing similar functions. The Company has disclosed any material violation or waiver of such code of ethics, to the extent required by Section 406(b) of SOXA. To the Knowledge of the Company, there is no fraud or any material violation of the Company’s code of ethics that involves management or other employees who have a significant role in the Company’s internal controls and procedures.
(f) Since February 1, 2021, neither the Company nor any of its Subsidiaries nor, to Knowledge of the Company, any Company Representative has identified or been made aware of: (i) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by the Company, (ii) any illegal act or fraud, whether or not material, that involves the management or other employees of the Company, or any material complaint, allegation, assertion or claim, whether written or oral, in each case, regarding the foregoing, (iii) improper, wrongful or fraudulent accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls or (iv) any material inaccuracy in the Company’s Financial Statements. No attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported to the Company Board or any committee thereof or to any director or officer of the Company evidence of fraud or a material violation of securities laws or other Applicable Legal Requirements, breach of fiduciary duty or similar violation by the Company or any Company Representative.
(g) The Company is in compliance with the applicable criteria for continued listing of the Company Common Stock on the Nasdaq Global Select Market, including all applicable corporate governance rules and regulations.
(h) All Company Options, Company RSUs and Company PSUs granted by the Company have been duly and validly approved by (i) the Company Board, or by a duly constituted committee of the Company Board to which the administration of such awards under the applicable Company Equity Plan has been delegated, at a valid meeting of such Company Board or committee or pursuant to a valid unanimous written consent of the members of such Company Board or committee or (ii) the Chief Executive Officer of the Company in cases where such officer has been duly authorized by the Company Board to approve such awards. All grants of Company Options, Company RSUs and Company PSUs are in compliance in all material respects with the terms of the applicable Company Equity Plan under which such Company Options, Company RSUs and Company PSUs were granted.
2.5. Absence of Certain Changes. From the Company Balance Sheet Date to the Agreement Date: (i) the Company and its Subsidiaries have conducted the Business only in the Ordinary Course of Business (other than with respect to compliance with COVID-19 Measures) except in connection with the Transactions and the consideration
A-21
of other strategic alternatives to the Transactions that were not consummated, (ii) there has not occurred a Material Adverse Effect and (iii) neither the Company nor any of its Subsidiaries has done, caused or permitted any of the actions that, if taken after the Agreement Date, would be prohibited under Section 4.2 (other than Section 4.2(d), (f), (l), (m) and (o)(iii)).
2.6. Litigation. There is no Legal Proceeding pending, or to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective assets or properties or any of their respective directors, officers or supervisory employees (in their capacities as such or relating to their employment, services or relationship with the Company or any of its Subsidiaries) individually or in the aggregate that (i) would reasonably be expected to result in obligations or liabilities of the Company or any of its Subsidiaries in excess of $5,000,000, (ii) that seeks non-monetary or equitable relief or (iii) would otherwise reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. There is no Order against the Company or any of its Subsidiaries, any of their respective assets or properties, or, to the Knowledge of the Company, any of their respective directors, officers or supervisory employees (in their capacities as such or relating to their employment, services or relationship with the Company or any of its Subsidiaries). Neither the Company nor any of its Subsidiaries has a material Legal Proceeding pending against any other Person. There has not been since February 1, 2021, any material internal investigations or inquiries being conducted by the Company, the Company Board (or any committee thereof), any compliance officer of the Company or any third party at the request of any of the foregoing concerning any financial, accounting, conflict of interest, illegal activity or other fraudulent issues.
(a) The Company and each of its Subsidiaries, and all directors, officers, and to the Knowledge of the Company, employees, agents, or third parties, in each case, acting on behalf of the Company and its Subsidiaries have complied with, are not in violation of, and since February 1, 2021, have not received any written, or to the Knowledge of the Company, oral, notice regarding any default, violation or alleged violation with respect to, any Applicable Legal Requirement or Privacy Obligation with respect to the Business, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company and each of its Subsidiaries has obtained each material federal, state, county, local or foreign governmental consent, license, permit, registration or other authorization of a Governmental Entity (i) pursuant to which the Company or any of its Subsidiaries currently operates or holds any interest in any of its assets or properties or (ii) that is required for the operation of the Business or the holding of any such interest (all of the foregoing consents, licenses, permits, registrations, and other authorizations, collectively, the “Company Authorizations”), and all of the Company Authorizations are in full force and effect, except where the failure to obtain or maintain such Company Authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms of the Company Authorizations, except where the failure to obtain or maintain such Company Authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries, employees, agents, or third parties, in each case, acting on behalf of the Company and its Subsidiaries has received any written, or to the Knowledge of the Company, oral, notice from any Governmental Entity regarding (A) any violation of Applicable Legal Requirements or any Company Authorization, any audit, inquiry or investigation concerning compliance with Applicable Legal Requirements or any Company Authorization, or any failure to comply with any term or requirement of any Company Authorization or (B) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of, any Company Authorization, except, in each case, where failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the material Company Authorizations will be terminated or materially impaired, or will become terminable, in whole or in part, as a result of the Transactions.
2.8. Anti-Corruption. The Company, its Subsidiaries, and each of their respective directors, officers, and, to the Company’s Knowledge, their respective employees, and, to Company’s Knowledge, its agents, and representatives have at all times since February 1, 2020, complied in all material respects with the provisions of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the provisions of any other applicable domestic or foreign anti-corruption laws (collectively, “Anti-Corruption Laws”). Since February 1, 2020, neither the Company nor any of its Subsidiaries, nor any of their respective directors or officers, nor, to the Company’s Knowledge, their respective employees, agents, or representatives has offered or given anything of value to: (i) any Government Official, any political party or official thereof, or any candidate for foreign political office or (ii) any other Person, in any such case
A-22
while knowing, or having reason to know, that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, to any Government Official, any foreign political party or official thereof, or candidate for foreign political office, for the purpose of any of the following: (A) influencing any action or decision of such Person, in its, his or her official capacity, including a decision to fail to perform its, his or her official function, (B) inducing such Person to use its, his or her influence with a government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality or (C) where such payment would constitute a bribe, kickback or illegal or improper payment, in each case of clauses (A)-(C) to assist the Company or its Subsidiaries in obtaining or retaining business for, or with, or directing business to, any Person, or in securing any improper advantage. To the Company’s Knowledge, since February 1, 2020, there have been no false or fictitious entries made in the books or records of the Company or its Subsidiaries relating to any illegal payment or secret or unrecorded fund and the Company has not established or maintained a secret or unrecorded fund. The Company has implemented and maintains in effect policies and procedures reasonably designed to promote compliance by the Company and its Subsidiaries, and their respective directors, officers, employees, agents, and representatives with Anti-Corruption Laws, and to the Company’s Knowledge, no Governmental Entity is investigating or has since February 1, 2020, conducted, initiated or threatened any investigation of the Company or its Subsidiaries in connection with an alleged or potential violation of any Anti-Corruption Law.
(a) Each of the Company and each of its Subsidiaries has good and valid title to all of their respective material properties, interests in properties and assets reflected on the Company Balance Sheet or acquired after the Company Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since the Company Balance Sheet Date in the Ordinary Course of Business), or, with respect to leased properties and assets, valid leasehold interests in such material properties and assets that afford the Company or such Subsidiary leasehold possession of the properties and assets that are the subject of the leases, in each case, free and clear of all Encumbrances other than Permitted Encumbrances. The Company and its Subsidiaries have no material liability in respect of escheat and unclaimed property.
(b) Neither the Company nor any of its Subsidiaries owns any real property or interests in real property. Schedule 2.9(b) of the Company Disclosure Letter is a true, correct and complete list as of the Agreement Date of all real property and interests in real property leased by the Company or any Subsidiary that is material to the Company and any of its Subsidiaries, taken as a whole, in any such case involving annual base rent payments by the Company or any of its Subsidiaries in excess of $1,000,000 per annum (each such property or interest, “Leased Real Property”). With respect to Leased Real Property, neither the Company nor any of its Subsidiaries has (i) subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof or (ii) collaterally assigned or granted any other security interest in any such leasehold estate or any interest therein, in each case in a manner that would interfere in any material respect with the Company’s use of such Leased Real Property in the Ordinary Course of Business. The Company has made available to Parent true, correct and complete copies of all leases, subleases and other Contracts under which the Company and/or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any Leased Real Property, including all modifications, amendments and supplements thereto.
(c) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the plant, property and equipment of the Company and each of its Subsidiaries that are used in the operations of the Business are (i) suitable for the uses to which they are currently employed, (ii) in good operating condition and repair, subject to normal wear and tear, (iii) regularly and properly maintained substantially consistent with the practices of similarly situated companies in the industry in which the Company operates, (iv) not obsolete, dangerous or in need of renewal or replacement, except for renewal or replacement in the Ordinary Course of Business and (v) to the Knowledge of the Company, free from any material defects.
(a) As used in this Agreement, the following terms shall have the meanings indicated below:
(i) “Company Intellectual Property” means any and all Company-Owned Intellectual Property and any and all Third-Party Intellectual Property that is licensed by the Company or any of its Subsidiaries.
(ii) “Company Intellectual Property Agreements” means any material Contract (A) under which the Company or any of its Subsidiaries has granted or received an exclusive license to, exclusive rights in
A-23
or exclusive rights to use any Company-Owned Intellectual Property, (B) otherwise materially restricting the Company or any of its Subsidiaries’ ability to use, enforce, or disclose any Company-Owned Intellectual Property, (C) under which the Company or any of its Subsidiaries has the right to use any Third-Party Intellectual Property that is material to the Company and its Subsidiaries taken as a whole, (D) under which the Company or any of its Subsidiaries has granted a right to any Company-Owned Intellectual Property, which grant is material to the Company and its Subsidiaries taken as a whole or (E) under which the Company or any of its Subsidiaries has delivered, made available, licensed, or placed into escrow any source code owned by any of them that is material to the Company and its Subsidiaries taken as a whole, other than, with respect to each of (A) through (E), Standard Inbound IP Agreements, Standard Outbound IP Agreements, and maintenance and support and professional services contracts with the Company or any of its Subsidiaries.
(iii) “Company-Owned Intellectual Property” means any and all Intellectual Property Rights that are owned or purported to be owned by or exclusively licensed to the Company or any of its Subsidiaries.
(iv) “Company Products” means all products or services produced, marketed, licensed, sold, distributed or performed by or on behalf of the Company or any of its Subsidiaries.
(v) “Company Registered Intellectual Property” means all United States, international and foreign: (A) patents and patent applications (including provisional applications), (B) registered trademarks or service marks, applications to register trademarks or service marks, intent-to-use applications or other registrations or applications related to trademarks or service marks, (C) registered Internet domain names, (D) registered copyrights and applications for copyright registration and (E) any other Intellectual Property Rights that are the subject of an application, certificate, filing, registration or other document issued, filed with or recorded by any Governmental Entity owned by, registered or filed in the name of, the Company or any of its Subsidiaries.
(vi) “Company Source Code” means, collectively, any software source code, any material portion or aspect of software source code or any material proprietary information or algorithm contained in or relating to any of the foregoing for any Company-Owned Intellectual Property or Company Products.
(vii) “Intellectual Property Rights” means any and all forms of intellectual property, and all rights in, arising out of, or associated therewith, throughout the world, including all patents, utility models and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights in inventions and discoveries anywhere in the world, including invention disclosures, common law and statutory rights associated with trade secrets, confidential and proprietary information and know how, industrial designs and any registrations and applications therefor, all trade names, logos, trade dress, trademarks and service marks, trademark and service mark registrations, trademark and service mark applications, and any and all goodwill associated with and symbolized by the foregoing items, Internet domain name applications and registrations, Internet and World Wide Web URLs or addresses, all copyrights, copyright registrations and applications therefor (including copyrights in software), and all other rights corresponding thereto, all moral and economic rights of authors and inventors, however denominated, and any similar or equivalent rights to any of the foregoing.
(viii) “IT Systems” means all hardware, firmware, software, databases, websites, applications, code, systems, networks and other computer, communication and information technology assets and equipment.
(ix) “Personal Data” means any information, in any form or medium, that identifies, relates to, describes or is reasonably capable of being associated with an individual person or household, including any information that is defined as “personal information,” “personal data,” “personal health information,” “personally identifiable information,” “cardholder data” or similar terms under any Applicable Legal Requirement or Privacy Obligation.
(x) “Process” or “Processing” means, with respect to data (including Personal Data), the use, collection, creation, erasure, de-identification, pseudonymizing or anonymizing, receipt, processing, aggregation, maintenance, storage, recording, organization, adaption, alteration, enrichment, transfer, retrieval, consultation, disclosure, sharing, dissemination, transmission, destruction or combination of such
A-24
data, or any other operation or set of operations that is performed on data or on sets of data, in each case, whether or not by automated means, and any other form of processing, including as defined by or under any Applicable Legal Requirement or Privacy Obligation.
(xi) “Standard Inbound IP Agreements” means: (A) non-disclosure agreements entered into by the Company or any of its Subsidiaries in the Ordinary Course of Business or Company IAAs (each, a “Standard NDA”), (B) non-exclusive trademark licenses, (C) “shrink wrap” and other non-exclusive license agreements for generally commercially available software or for application service provider, “software as a service” or similar services, that is not redistributed with, bundled with, or integrated into the Company Products and for which the Company has paid no more than $5,000,000 in any year and (D) licenses for Open Source Materials.
(xii) “Standard Outbound IP Agreements” means: (A) Standard NDAs, (B) maintenance and support and professional services Contracts for Company Products entered into by the Company or any of its Subsidiaries and (C) non-exclusive object code licenses, sales or services agreements for Company Products entered into by the Company or any of its Subsidiaries, in each case of clauses (A) through (C) in the Ordinary Course of Business (I) substantially on the Company’s or any of its Subsidiaries’ standard form(s) of customer agreement (copies of which have been made available to Parent) or (II) on terms and conditions that do not materially deviate from such form(s).
(xiii) “Third-Party Intellectual Property” means any and all Intellectual Property Rights owned by a third party, excluding, for the avoidance of doubt, any Open Source Materials or rights therein.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries own or have the valid right or license to all Intellectual Property Rights used or incorporated into the Company Products or otherwise used in the conduct of the Business.
(c) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries own and have good and exclusive title to each item of owned Company-Owned Intellectual Property, free and clear of any Encumbrances (other than Permitted Encumbrances).
(d) Schedule 2.10(d) of the Company Disclosure Letter lists, as of the Agreement Date, all Company Registered Intellectual Property, including the jurisdictions in which each such Company Registered Intellectual Property has been issued or registered or in which any application for such issuance and registration has been filed, or in which any other filing or recordation has been made. Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) no Company Registered Intellectual Property (other than any applications for Company Registered Intellectual Property) has expired or been cancelled or abandoned except in accordance with the expiration of the term of such rights, (ii) all Company Intellectual Property is subsisting and (iii) to the Knowledge of the Company, all Company Registered Intellectual Property (other than any applications therefor) is valid and enforceable.
(e) Except as set forth in Schedule 2.10(e)(i) of the Company Disclosure Letter, the consummation of the Transactions will not result in the breach, modification, cancellation, termination, suspension of, or acceleration of any performance, benefit, remedy or payment with respect to any Company Intellectual Property Agreement (or Company IAA) that would constitute a Material Contract, or give any third party the right to do any of the foregoing or receive any such performance, benefit, remedy or payments, except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Except as set forth in Schedule 2.10(e)(ii) of the Company Disclosure Letter, none of the Company Intellectual Property Agreements (or Company IAA) grant any exclusive rights to or under any Company Intellectual Property to any third party, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. There are no pending material disputes between the Company, or any of its Subsidiaries, and any third party regarding the scope of any Company Intellectual Property Agreements (or any Company IAA) or performance under any Company Intellectual Property Agreements (or any Company IAA), including with respect to any payments to be made or received by the Company or any of its Subsidiaries thereunder, and neither the Company nor any of its Subsidiaries has any Liability for breach of any Company Intellectual Property Agreement (or any Company IAA), except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
A-25
(f) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, there are no royalties, honoraria, fees or other payments payable by the Company or any of its Subsidiaries to any Person (other than salaries, fees and other consideration payable to employees, consultants and independent contractors not contingent on or related to use of their work product) as a result of the ownership, use, possession, license-in, license-out, sale, marketing, advertising or disposition of any Intellectual Property Rights owned or used by the Company or any of its Subsidiaries.
(g) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) to the Knowledge of the Company, there is no unauthorized use, unauthorized disclosure, infringement or misappropriation of any Company-Owned Intellectual Property by any third party and (ii) neither the Company nor any of its Subsidiaries has brought any Legal Proceeding for infringement or misappropriation of any Company-Owned Intellectual Property or breach of any Company Intellectual Property Agreement (or any Company IAA).
(h) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) neither the Company nor any of its Subsidiaries has been subject to any Legal Proceeding (or received any written notice or, to the Knowledge of the Company, threat) that involves a claim of infringement, misappropriation or violation of any Third-Party Intellectual Property or that contests the validity, ownership or right of the Company or any of its Subsidiaries to exercise any Company Intellectual Property and (ii) neither the Company nor any of its Subsidiaries has received any written communication since February 1, 2021 (including cease and desist letters, offers to license or grant any other rights or immunities under any Third-Party Intellectual Property) that alleges that any Company Products, Company Intellectual Property or the conduct of the Business infringes, misappropriates, or violates any Third-Party Intellectual Property.
(i) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and its Subsidiaries have no material Liability for infringement, misappropriation or violation of any Third-Party Intellectual Property or for unfair competition or unfair trade practices under the laws of any jurisdiction, (ii) the operation of the Business, including (A) the design, development, manufacturing, reproduction, branding, marketing, advertising, promotion, licensing, sale, offer for sale, importation, distribution, provision and/or use of any Company Product and (B) the Company’s or any of its Subsidiary’s use of any product, device or process in the Company Products or the conduct of the Business, has not infringed, misappropriated or violated, does not and, when conducted in substantially the same manner following the Closing, will not infringe, misappropriate or violate any Third-Party Intellectual Property, and does not constitute unfair competition or unfair trade practices under the laws of any jurisdiction and (iii) as of the Agreement Date, neither the Company nor any of its Subsidiaries has received any written or oral opinion of counsel that any Company Product or the operation of the Business infringes, misappropriates or violates any Intellectual Property Right of a third party.
(j) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, as of the Agreement Date, no Company-Owned Intellectual Property is subject to any outstanding Order or “march in” right that restricts in any manner the use, transfer or licensing thereof by the Company or any of its Subsidiaries, or that affects the validity, use or enforceability of any such Company-Owned Intellectual Property.
(k) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) the Company and each of its Subsidiaries has secured from each of their founders, employees, consultants and independent contractors who independently or jointly contributed to or participated in the contribution, conception, reduction to practice, creation or development of any Intellectual Property Rights for the Company or any of its Subsidiaries (each, an “Author”) unencumbered, unrestricted and exclusive ownership of all of such Author’s Intellectual Property Rights in such contributions unless such Intellectual Property Rights already vest in the Company or in any of its Subsidiaries by operation of Applicable Legal Requirements, and has obtained a waiver from each such Author of non-assignable rights of such Author in such contributions and (ii) no such Author has retained any rights, licenses, claims or interest with respect to any Company-Owned Intellectual Property developed by such Author or the Company or any of its Subsidiaries.
(l) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) the Company and its Subsidiaries have taken commercially reasonable steps to protect and preserve the confidentiality of all confidential or trade secret information of the Company, including Company
A-26
Source Code, or provided by any third party to the Company (“Confidential Information”) and (ii) all current and former employees and contractors of the Company and its Subsidiaries and any third party having access to Confidential Information have executed and delivered to the Company a written agreement regarding the protection of such Confidential Information or are otherwise bound by obligations of confidentiality.
(m) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor any of its Subsidiaries has incorporated or linked Open Source Materials with or into, or combined or distributed Open Source Materials with, the Company Intellectual Property or Company Products, or otherwise used Open Source Materials, in such a way that creates, or purports to create obligations for the Company or such Subsidiary with respect to any Company-Owned Intellectual Property or grants, or purports to grant, to any third party, any rights or immunities under any Company-Owned Intellectual Property (including using any Open Source Materials that require, as a condition of use, modification and/or distribution or making available of such Open Source Materials, that other software incorporated into, derived from or distributed with such Open Source Materials be (i) disclosed or distributed in source code form, (ii) licensed for the purpose of making derivative works or (iii) redistributable at no charge).
(n) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) as of the Agreement Date, no (A) government funding, (B) facilities or resources of a university, college, other educational institution or research center or (C) funding from any Person (other than funds received in consideration for the Company Capital Stock or research and development tax credits that do not result in Encumbrances (other than Permitted Encumbrances) on any Company-Owned Intellectual Property) was used in the development of Company-Owned Intellectual Property, (ii) and no Governmental Entity, university, college, other educational institution or research center has any claim or right in or to any Company-Owned Intellectual Property and (iii) the Company and its Subsidiaries have complied with their policies governing Open Source Materials.
(o) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (i) neither the Company, any of its Subsidiaries, nor any other Person then acting on their behalf has disclosed, delivered or licensed to any Person, agreed or obligated itself to disclose, deliver or license to any Person, or permitted the disclosure or delivery to any escrow agent or other Person of, any Company Source Code, (ii) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, result in the disclosure, delivery or license by the Company or any of its Subsidiaries or any Person then acting on their behalf to any Person of any Company Source Code (other than as set forth on Schedule 2.10(o) of the Company Disclosure Letter, Company Source Code that the Company or its Subsidiaries have intentionally released as Open Source Materials to the extent required pursuant to the terms of the applicable licenses governing such Open Source Materials; provided that this parenthetical does not limit or modify the representations and warranties set forth in Section 2.10(m)) and (iii) without limiting the foregoing, neither the execution of this Agreement nor any of the Transactions will result in release from escrow or other delivery to a third party of any Company Source Code.
(p) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is now or has ever been a member or promoter of, or a contributor to, any industry standards body, patent pool, or any similar organization that could reasonably be expected to require or obligate the Company or any Subsidiary to grant or offer to any other Person any license or right to any Company-Owned Intellectual Property, (ii) if any Company-Owned Intellectual Property Rights were acquired from a Person other than an employee of or contractor to the Company or any of its Subsidiaries, then, to the Knowledge of the Company, such Person is not now nor has ever been a member or promoter of, or a contributor to, any industry standards body or any similar organization that could reasonably be expected to have required or obligated such Person to grant or offer to any other Person any license or right to such Company-Owned Intellectual Property and (iii) neither the Company nor any of its Subsidiaries has a present or contingent obligation to grant or offer to any other Person any license or right to any Company-Owned Intellectual Property by virtue of Company’s or any other Person’s membership in, promotion of or contributions to any industry standards body or any similar organization.
(q) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, since February 1, 2021, the Company and each of its Subsidiaries have complied in all material respects with all Applicable Legal Requirements, industry standards (including the Payment Card Industry Data Security Standards, contractual obligations and their respective privacy policies relating to (i) the
A-27
privacy of users of their products and services, including the customers of the Company and each of its Subsidiaries (“Company Customers”) and any employees and end-user or subscriber customers of Company Customers (“Company Customer End-Users”) and all Internet websites owned, maintained or operated by Company or any of its Subsidiaries and (ii) the security and Processing of any Personal Data by the Company or any of its Subsidiaries or by authorized third parties Processing the Personal Data of the Company or any of its Subsidiaries, including any Personal Data of Company Customers and Company Customer End-Users (collectively, “Privacy Obligations”). Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the execution, delivery and performance of this Agreement, and the provision of all Confidential Information and Personal Data to Parent in connection therewith, by the Company, will comply with all Privacy Obligations. Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, since February 1, 2021, neither the Company nor any of its Subsidiaries has received a complaint regarding the Company’s or its Subsidiaries’ Processing of Personal Data.
(r) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, since February 1, 2021, the Company and each of its Subsidiaries has implemented and maintains a comprehensive and reasonable security plan that (i) identifies internal and external risks to the security of IT Systems and Confidential Information, including Personal Data, (ii) implements, monitors and improves adequate and effective administrative, electronic and physical safeguards to control those risks, (iii) maintains notification procedures in compliance with Privacy Obligations in the case of any breach of security compromising data containing Personal Data or Confidential Information and (iv) complies with the obligations of the Company and its Subsidiaries in any Contracts to which the Company or any of its Subsidiaries is a party regarding the security of Confidential Information, including Personal Data or Confidential Information of Company Customers and Company Customer End-Users. Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, since February 1, 2021, neither the Company nor any of its Subsidiaries has experienced any breach of security or unauthorized use or access by third parties to material Company Products or material Confidential Information or Personal Data of the Company and its Subsidiaries, other than those that were resolved without material cost, liability or the duty to notify any Person. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the IT Systems used by the Company and its Subsidiaries do not contain any viruses, worms, trojan horses, bugs, faults or other errors, contaminants or vulnerabilities.
(s) Notwithstanding anything to the contrary in this agreement, this Section 2.10 and Section 2.3, Section 2.5, Section 2.6, Section 2.7(a) and Section 2.18 contain the only representations and warranties made by the Company with respect to Intellectual Property Rights, data privacy or security.
(a) As used in this Agreement, the following terms shall have the meanings indicated below:
(i) “Environmental and Safety Laws” means any Applicable Legal Requirements issued, promulgated or entered into by any Governmental Entity that are intended to assure the protection of the environment, or that classify, regulate, call for the remediation of, require reporting with respect to, or list or define air, water, groundwater, solid waste, hazardous or toxic substances, materials, wastes, pollutants or contaminants, or that are intended to assure the safety of employees, workers or other Persons, including the public.
(ii) “Facilities” means all buildings and improvements on the Property.
(iii) “Hazardous Materials” means any toxic or hazardous substance, chemical, material or waste or any pollutant or contaminant, or infectious or radioactive substance, material or waste, including those substances, materials and wastes defined or regulated as such under any Environmental and Safety Laws.
(iv) “Property” means all real property leased or owned by the Company or any of its Subsidiaries either currently or in the past.
(v) “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating into or through the indoor or outdoor environment.
A-28
(b) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since February 1, 2021, (i) neither the Company nor any of its Subsidiaries has received any notice (verbal or written) of any noncompliance of the Facilities or its past or present operations with Environmental and Safety Laws, (ii) no Legal Proceedings are pending or threatened against the Company or any of its Subsidiaries or any Property relating to an actual or alleged violation of any Environmental and Safety Laws, (iii) to the Knowledge of the Company, there have not been while the Company or any of its Subsidiaries have owned, operated, occupied or leased any Property, any Release of any Hazardous Material in, on, under, or affecting any of the Facilities or any Property reasonably likely to result in a Liability to the Company or any of its Subsidiaries, (iv) all Hazardous Materials and wastes have been disposed of by the Company and its Subsidiaries in accordance with Environmental and Safety Laws, (v) neither the Company nor any of its Subsidiaries is subject to any indemnity obligation or other Contract with any Person relating to Liabilities under Environmental and Safety Laws, other than customary indemnification provisions contained in real property leases entered into in the Ordinary Course of Business, (vi) there are no Legal Proceedings or, to the Knowledge of the Company, threatened Legal Proceedings (A) alleging noncompliance by the Company or any of its Subsidiaries with any Environmental and Safety Law or (B) seeking to impose any financial responsibility for any investigation, cleanup, removal or remediation pursuant to any Environmental and Safety Law or regarding Hazardous Materials and (vii) each of the Company and each of its Subsidiaries has all permits and licenses required to be issued under Environmental and Safety Laws necessary for the conduct of the Business and are in material compliance with the terms and conditions of such permits and licenses.
(a) The Company and each of its Subsidiaries have timely filed all material Tax Returns required to be filed by them (taking into account any extensions of time granted or obtained) and have timely paid all material Taxes required to have been paid by them, whether or not shown on any Tax Return. All such Tax Returns were complete and accurate in all material respects when filed and were prepared in compliance with all Applicable Legal Requirements. The Company has made available to Parent true, correct and complete copies of all material Tax Returns filed by the Company or any of its Subsidiaries for each of the preceding three (3) Taxable years.
(b) The Company Balance Sheet reflects all material Liability for unpaid Taxes of the Company and/or any of its Subsidiaries for periods (or portions of periods) through the Company Balance Sheet Date. Neither the Company nor any of its Subsidiaries has any material Liability for unpaid Taxes accruing after the Company Balance Sheet Date except for Taxes arising in connection with the transactions contemplated by this Agreement or in the Ordinary Course of Business subsequent to the Company Balance Sheet Date.
(c) Neither the Company nor any of its Subsidiaries has received in writing from any Tax Authority any (i) claim for Taxes being asserted against the Company or any of its Subsidiaries that has resulted in an Encumbrance against any properties or any assets of the Company or any of its Subsidiaries other than Permitted Encumbrances, (ii) notice of any audit or pending audit of, or Tax controversy associated with, any material Tax of the Company or any of its Subsidiaries being conducted by a Tax Authority that has not been resolved, (iii) extension of any statute of limitations on the assessment of any material Taxes, which extension is currently in effect and (iv) any extension of time for filing any material Tax Return of the Company or any of its Subsidiaries that has not been filed, which extension is currently in effect. Neither the Company nor any of its Subsidiaries has received any private letter ruling from the Internal Revenue Service (or any comparable ruling from any other Tax Authority) that will be in effect after the Closing. No material claim has ever been received in writing from any Tax Authority in a jurisdiction where the Company or any of its Subsidiaries does not file a specific type of Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation by, or required to file Tax Returns in, that jurisdiction, which claim has not been resolved.
(d) Neither the Company nor any of its Subsidiaries is a party to or bound by any agreement the primary purpose of which is Tax sharing, Tax indemnity or Tax allocation which would be in effect after the Closing, and neither the Company nor any of its Subsidiaries has any material Liability for Taxes to another Person under any such agreement.
A-29
(e) Neither the Company nor any of its Subsidiaries has participated in, and none of them are currently participating in, a “Listed Transaction” within the meaning of Section 6707A(c) of the Code or Section 1.6011-4(b)(2) of the Treasury Regulations or any transaction requiring disclosure under a corresponding or similar Applicable Legal Requirement.
(f) Neither the Company nor any of its Subsidiaries has ever been a member of an affiliated group filing a consolidated federal income Tax Return or any similar consolidated, combined, unitary or aggregate group of which the Company or any of its Subsidiaries was not the ultimate parent corporation.
(g) Neither the Company nor any of its Subsidiaries has any material Liability for the Taxes of any other Person (other than the Company or any of its Subsidiaries) under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or foreign Applicable Legal Requirements) as a transferee or successor of such Person or by Contract (other than Contracts the principal purpose of which does not relate to Taxes).
(h) Neither the Company nor any of its Subsidiaries is a party to any material joint venture, partnership or other Contract or arrangement that is treated by the Company or such Subsidiary as a partnership for U.S. federal income Tax purposes.
(i) Neither the Company nor any of its Subsidiaries is or has ever been required to include any material amount in income for any taxable year as a result of the application of Section 965 of the Code. The Company has not made any election(s) under Section 965 of the Code, including Section 965(h) of the Code. The Company has no liability or obligation to make any remaining payments of Tax pursuant to an election under Section 965(h) of the Code.
(j) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material 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 in which the year of change is a Taxable period ending on or prior to the Closing Date, (ii) “closing agreement” described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Applicable Legal Requirements) entered into on or prior to the Closing Date, (iii) intercompany transactions as described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Applicable Legal Requirements) occurring on or prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date or (v) prepaid amount received or accrued on or prior to the Closing Date (other than prepaid amounts received or accrued in the Ordinary Course of Business).
(k) The Company and each of its Subsidiaries is in compliance in all material respects with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company.
(l) The Company and each of its Subsidiaries has collected and remitted all material sales, use, value added, ad valorem, personal property and similar Taxes (“Sales Taxes”) with respect to sales made or services provided.
(m) The Company and its Subsidiaries are in compliance in all material respects with the requirements for applicable Tax holidays or incentives that are currently in effect and relate to a material amount of Tax.
(n) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for Tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to the Agreement Date or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.
(o) The Company and each of its Subsidiaries has withheld or collected and paid over to the appropriate Tax Authority all material Taxes required by Applicable Legal Requirement to be withheld or collected by it in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.
(p) Neither the Company nor any of its Subsidiaries has (i) applied for or received loans, deferred Taxes or claimed any Tax credits under the CARES Act and (ii) applied for or received loans, deferred Taxes or claimed any Tax credits, in each case, in a material amount, under any Applicable Legal Requirements,
A-30
regulation, order or directive issued by any Governmental Entity or public health agency in connection with the COVID-19 pandemic (other than the CARES Act), and, in any case, none of the foregoing actions under clauses (i) and (ii) are currently being pursued. The Company and each of its Subsidiaries is eligible for and has properly claimed any (i) Tax credits or Tax deferrals it has affirmatively applied for, filed for or otherwise claimed pursuant to the CARES Act and (ii) material Tax credits or Tax deferrals it has affirmatively applied for, filed for or otherwise claimed pursuant to any provision of state, local or foreign Tax law corresponding or similar to the CARES Act (other than the CARES Act). Schedule 2.12(p) of the Company Disclosure Letter is an accurate and complete listing of any (i) Tax credits or Tax deferrals the Company and each of its Subsidiaries has affirmatively applied for, filed for or otherwise claimed pursuant to the CARES Act and (ii) material Tax credits or Tax deferrals the Company and each of its Subsidiaries has affirmatively applied for, filed for or otherwise claimed pursuant to any provision of state, local or foreign Tax law corresponding or similar to the CARES Act (other than the CARES Act).
(q) The Company has timely filed all required Forms 3921 with the Internal Revenue Service, and has timely furnished all required Forms 3921 to the applicable employees (including with respect to disqualified dispositions on W-2), and the Company is not subject to any penalty under Section 6721 or Section 6722 of the Code.
(r) Notwithstanding any other provision of this Agreement, this Section 2.12 and Section 2.13, each only to the extent they relate to Taxes, shall contain the sole and exclusive representations and warranties of the Company with respect to Taxes.
(a) Schedule 2.13(a) of the Company Disclosure Letter lists, as of the Agreement Date, with respect to the Company, any of its Subsidiaries and any trade or business (whether or not incorporated) that is treated as a single employer with the Company (an “ERISA Affiliate”) within the meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all material employee benefit plans (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) each loan in excess of $1,000,000 to an employee, (iii) all material stock option, stock purchase, phantom stock, stock appreciation right, supplemental retirement, sabbatical, medical, dental, vision care, disability, employee relocation, cafeteria benefit (Section 125 of the Code), dependent care (Section 129 of the Code), life insurance or accident insurance plans, programs or arrangements, (iv) all material bonus, pension, profit sharing, savings, severance, retirement, deferred compensation or incentive plans, programs or arrangements, (v) all other material fringe or employee benefit plans, programs or arrangements that apply to senior management and that do not generally apply to all employees and (vi) any material employment or service agreements (except for offer letters providing for at-will employment that do not provide for severance, acceleration or post-termination benefits) compensation agreements, change in control agreements or severance agreements, written or otherwise, for the benefit of, or relating to, any present or former director, officer, employee or consultant and (vii) any other material written or oral arrangement for the benefit of any employee under which the Company or any ERISA Affiliate has or may have material liability, contingent or otherwise (all of the foregoing described in clauses (i) through (vii), but defined without regard to the materiality qualifiers herein, collectively, the “Company Employee Plans”).
(b) The Company has made available to Parent a true, correct and complete copy of each of the material Company Employee Plans (including copies of each Company Equity Plan for which Company Options, Company RSUs or Company PSUs are currently outstanding, including the standard form of award agreements and agreements relating to Company Options, Company RSUs or Company PSUs that differ in any material respect from the standard form award agreements), and all amendments thereto, and, to the extent applicable, (i) each current summary plan description and summary of material modifications thereto, (ii) the most recently filed annual report on IRS Form 5500 and (iii) the most recently received IRS determination or opinion letter. Any Company Employee Plan intended to be qualified under Section 401(a) of the Code has either obtained from the Internal Revenue Service a favorable determination letter as to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, or has applied (or has time remaining in which to apply) to the Internal Revenue Service for such a determination letter prior to the expiration of the requisite period under applicable Treasury Regulations or Internal Revenue Service pronouncements in which to apply for such determination letter and to make any amendments necessary to obtain a favorable determination or has been established under a prototype or volume submitter plan for which
A-31
an Internal Revenue Service opinion or advisory letter has been obtained by the plan sponsor and is valid as to the adopting employer, and, to the Knowledge of the Company, and nothing has occurred since the issuance of each such letter that would reasonably be expected to cause the loss of the Tax-qualified status of any Company Employee Plan subject to Section 401(a) of the Code.
(c) Except as would not reasonably be expected to have a Material Adverse Effect: (i) none of the Company Employee Plans promises or provides retiree medical or other retiree welfare benefits or post-termination benefits to any person other than as required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or similar state law, (ii) there has been no “prohibited transaction” (within the meaning of Section 406 of ERISA and Section 4975 of the Code and not exempt under Section 408 of ERISA and regulatory guidance thereunder) with respect to any Company Employee Plan, (iii) each Company Employee Plan has been established, maintained, funded and administered in accordance with its terms and in compliance with the requirements prescribed by any and all Applicable Legal Requirements (including ERISA and the Code), (iv) neither the Company nor any of its Subsidiaries or ERISA Affiliate is subject to any Liability or penalty under Sections 4976 through 4980, or 4980B through 4980I, of the Code or Title I of ERISA with respect to any of the Company Employee Plans, (v) all contributions required to be made by the Company, any of its Subsidiaries or any ERISA Affiliate to any Company Employee Plan have been made on or before their due dates and a reasonable amount has been accrued for contributions to each Company Employee Plan for the current plan year and (vi) no Legal Proceeding has been brought, or is threatened or anticipated, against or with respect to any such Company Employee Plan, including any audit or inquiry by the Internal Revenue Service or United States Department of Labor. There has been no amendment to, written interpretation or announcement (whether or not written) by the Company, any of its Subsidiaries or any ERISA Affiliate relating to, or change in participation or coverage under, any Company Employee Plan, in any such case that would materially increase the expense of maintaining such Company Employee Plan above the level of expense incurred with respect to such Company Employee Plan for the most recent fiscal year included in the Financial Statements.
(d) Neither the Company nor any of its Subsidiaries or current or former ERISA Affiliate currently maintains, sponsors, participates in or contributes to (or is obligated to contribute to), or has ever maintained, established, sponsored, participated in or contributed to, in each case within the past six (6) years, any “pension plan” (within the meaning of Section 3(2) of ERISA) that is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA, a “voluntary employees’ beneficiary association” within the meaning of Section 501(c)(9) of the Code, other funding arrangement for the provision of welfare benefits, nor any pension plan for the benefit of employees who perform services outside of the United States.
(e) Except as would not reasonably be expected to have a Company Material Adverse Effect, the actuarial present values of all (i) accrued deferred compensation entitlements (including entitlements under any executive compensation, supplemental retirement, or employment agreement) and (ii) all Liabilities associated with post-employment welfare benefits (including any retiree health benefits and life insurance) of employees and former employees of the Company, its Subsidiaries and the ERISA Affiliates and their respective beneficiaries, other than entitlements accrued pursuant to funded retirement plans subject to the provisions of Section 412 of the Code or Section 302 of ERISA, have been fully reflected on the Financial Statements to the extent required by and in accordance with GAAP.
(f) Neither the Company nor any of its Subsidiaries or ERISA Affiliate is a party to, or sponsors, maintains or contributes to (or is obligated to contribute to) or otherwise incurred any obligation within the past six (6) years under, any “multiemployer plan” as such term is defined in Section 3(37) of ERISA or any “multiple employer plan” as such term is defined in Section 413(c) of the Code.
(g) Except as would not reasonably be expected to have a Company Material Adverse Effect, the Company maintains accurate and complete Form I-9s with respect to its current employees in accordance with Applicable Legal Requirements concerning immigration and employment eligibility verification obligations.
(h) Except as would not reasonably be expected to have a Material Adverse Effect, each Company Employee Plan that is, in whole or in part, a “nonqualified deferred compensation plan” subject to Section 409A of the Code to which the Company or any of its Subsidiaries is a party complies with and has been maintained,
A-32
in each case, in all material respects, in accordance with the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and no amount under any such plan is or has been subject to the interest and additional tax set forth under Section 409A(a)(1)(B) of the Code.
(i) Each material Company Employee Plan or other material compensation and benefits plan maintained or contributed to by the Company or any of its Subsidiaries under the Applicable Legal Requirements or applicable custom or rule of the relevant jurisdiction outside of the United States (each such plan, but defined without regard to the materiality qualifiers herein, a “Foreign Plan”) is listed by jurisdiction in Schedule 2.13(i) of the Company Disclosure Letter. With respect to each Foreign Plan, (i) such Foreign Plan is in material compliance with the provisions of the Applicable Legal Requirements of each jurisdiction in which such Foreign Plan is maintained, to the extent those Applicable Legal Requirements are applicable to such Foreign Plan, (ii) except as would not reasonably be expected to result in a material Liability to the Company or its Subsidiaries, all contributions to, and material payments from, such Foreign Plan that were required to be made in accordance with the terms of such Foreign Plan, and, when applicable, the Applicable Legal Requirements of the jurisdiction in which such Foreign Plan is maintained, were timely made or shall be made by the Closing Date, and all such contributions to such Foreign Plan, and all payments under such Foreign Plan, for any period ending before the Closing Date that are not yet, but will be, required to be made, are reflected as an accrued liability on the Company Balance Sheet where required to be so reflected by GAAP, (iii) the Company, each of its Subsidiaries, and each ERISA Affiliate has materially complied with all applicable reporting and notice requirements, and such Foreign Plan has obtained from the Governmental Entity having jurisdiction with respect to such Foreign Plan any required determinations that such Foreign Plan is in compliance with the Applicable Legal Requirements of the relevant jurisdiction if such determinations are required in order to give effect to such Foreign Plan, (iv) such Foreign Plan has been administered in all material respects at all times in accordance with its terms and Applicable Legal Requirements, (v) no Foreign Plan is a defined benefit plan and (vi) no Foreign Plan has any material unfunded liabilities, nor are such material unfunded liabilities reasonably expected to arise in connection with the transactions contemplated by this Agreement.
(j) None of the execution and delivery of this Agreement, the consummation of the Merger or any other transaction contemplated by this Agreement (either alone or in combination with any other event) will:, (i) result in any material payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any current or former officers, employees and directors of the Company and its Subsidiaries, (ii) materially increase or otherwise enhance any benefits otherwise payable by the Company or any of its Subsidiaries, (iii) result in the acceleration of the time of payment or vesting of any such benefits, except as required under Section 411(d)(3) of the Code, (iv) materially increase the amount of compensation due to any current or former officers, employees and directors of the Company and its Subsidiaries, (v) result in the forgiveness in whole or in part of any outstanding loans made by the Company or any of its Subsidiaries to any Person or (vi) give rise to the payment of any amount by the Company or any of its Subsidiaries that would be non-deductible by reason of Section 280G of the Code. There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party by which it is required by its terms to compensate, gross-up, indemnify, or otherwise reimburse any current or former officers, employees and directors of the Company and its Subsidiaries for excise Taxes imposed pursuant to Section 4999 or Section 409A of the Code.
(k) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company and each of its Subsidiaries is in compliance with all Applicable Legal Requirements respecting employment, discrimination in employment, terms and conditions of employment, worker classification (including the proper classification of workers as independent contractors and consultants), wages, hours and occupational safety and health and employment practices, including the Immigration Reform and Control Act, and is not engaged in any unfair labor practice, and (ii) neither the Company nor any of its Subsidiaries is liable for any payment to any trust or other fund or to any Governmental Entity, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees (other than routine payments to be made in the Ordinary Course of Business). There are no Legal Proceedings pending or, to the Knowledge of the Company, threatened, between the Company or any of its Subsidiaries and any of their respective current or former employees, which controversies have or would reasonably be expected to have a Material Adverse Effect.
(l) In the past two years, to the Knowledge of the Company, (i) no formal or written allegations of sexual or racial harassment, sexual or racial misconduct or retaliation (in each case, whether or not meeting the legal
A-33
definition of actionable harassment) have been made against any employee of the Company or any of its Subsidiaries at the level of vice president or above and (ii) neither the Company nor any of its Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or sexual misconduct by any employee of the Company or any of its Subsidiaries at the level of vice president or above.
(m) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or other labor union Contract, no collective bargaining agreement is being negotiated by the Company or any of its Subsidiaries. To the Knowledge of the Company, there is no pending demand for recognition or any other request or demand from a labor organization for representative status with respect to any Person employed by the Company or any of its Subsidiaries. To the Knowledge of the Company, there are no activities or proceedings of any labor union or to organize the employees of the Company or any of its Subsidiaries. There is no labor dispute, strike or work stoppage against the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened that may materially interfere with the respective business activities of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has committed any unfair labor practice in connection with the operation of the Business, and there is no charge or complaint against the Company or any of its Subsidiaries by the National Labor Relations Board or any comparable Governmental Entity pending or to the Knowledge of the Company, threatened.
(n) Except as set forth on Schedule 2.13(n) of the Company Disclosure Letter, no officer of the Company or any of its Subsidiaries has given written notice to the Company or any of its Subsidiaries, and, to the Knowledge of the Company, no such officer intends to terminate his or her employment with the Company or any of its Subsidiaries.
(o) The Company and each of its Subsidiaries is in compliance, and, for the past two years has complied, in all material respects with the Worker Adjustment Retraining Notification Act of 1988, as amended, or any similar U.S. state Applicable Legal Requirements, (collectively, “WARN Act”). In the past two years, (i) the Company has not effectuated a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of its business and (ii) there has not occurred a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of the Company.
2.14. Interested Party Transactions. Except as disclosed in the Company’s definitive proxy statements included in the Company SEC Reports filed prior to the Agreement Date, no event has occurred since July 1, 2021 that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K.
2.15. Insurance. Schedule 2.15-1 of the Company Disclosure Letter lists, as of the Agreement Date, all material policies of insurance and bonds of the Company or any of its Subsidiaries that are currently in effect, true, correct and complete copies of which have been made available to Parent. Schedule 2.15-2 of the Company Disclosure Letter lists, as of the Agreement Date, each (i) insurance claim in excess of $5,000,000 made by the Company or its Subsidiaries since February 1, 2021 and (ii) reportable event (as defined in Medicare & Medicaid State Children’s Health Insurance Program Extension Act of 2007, as amended (“SCHIP”)). Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, there is no claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all premiums due and payable under all such policies and bonds have been timely paid and the Company and each of its Subsidiaries is otherwise in compliance with the terms of such policies and bonds. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all such policies and bonds remain in full force and effect, and neither the Company nor any of its Subsidiaries has received any written notice regarding any cancellation or invalidation of any material insurance policy other than in connection with ordinary renewals. All premiums due with respect to such material insurance policies have been paid in accordance with the terms thereof.
2.16. Brokers’ and Advisors’ Fees. Except for the Company’s obligations to Qatalyst Partners LP and Morgan Stanley & Co. LLC, neither the Company nor any of its Subsidiaries or Affiliate of the Company is obligated for the payment of any fees or expenses of any investment banker, broker or finder in connection with the origin, negotiation or execution of this Agreement or in connection with the Merger or any other transaction contemplated by this Agreement. The Company has made available to Parent a complete and accurate copy of all Contracts under which such fees and expenses are payable.
A-34
(a) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has any outstanding material dispute concerning its services and/or products with any Significant Customer. Each current customer who was one of the 20 largest sources of revenue on an annual recurring revenue basis for the Company and its Subsidiaries based on amounts paid or payable in the 12 months ended July 31, 2023 (“Significant Customer”) is listed on Schedule 2.17(a) of the Company Disclosure Letter. Since February 1, 2023, neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice from any Significant Customer to the effect that such customer intends to terminate its business relationship with the Company or any of its Subsidiaries (or the Surviving Corporation or Parent) after the Closing or that such customer intends to terminate or materially and adversely modify existing Contracts with the Company or any of its Subsidiaries (or the Surviving Corporation or Parent) or materially reduce the amount paid to the Company or any of its Subsidiaries (or the Surviving Corporation or Parent) for Company Products.
(b) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has any outstanding material dispute concerning products and/or services provided by any supplier or vendor who, in the fiscal year ended July 31, 2023, was one of the 20 largest suppliers of goods and/or services to the Company, based on amounts paid or payable during such periods (each, a “Significant Supplier”). Each Significant Supplier is listed on Schedule 2.17(b) of the Company Disclosure Letter. Since February 1, 2023, neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice of termination of any existing Contracts with any Significant Supplier.
(a) Except for this Agreement and the Contracts specifically identified on Schedule 2.18 of the Company Disclosure Letter (with each such Contract specifically identified under the applicable subsection(s) of such Schedule 2.18 of the Company Disclosure Letter), neither the Company nor any of its Subsidiaries is a party to or bound by any of the following Contracts (each, excluding any Company Employee Plan, a “Material Contract”) as of the Agreement Date:
(i) any Contract with any Significant Customer (other than any Contracts that do not relate to the customer relationship);
(ii) any Contract (A) with a Significant Supplier or (B) for the purchase, manufacture or license by the Company or any of its Subsidiaries of components, materials, supplies, equipment, parts, software, services, Intellectual Property Rights or other assets that are included in or used in connection with the provision of Company Products and that (x) are reasonably likely to require the Company or such Subsidiary to either recognize expense in accordance with GAAP, or make cash payments, in excess of $6,500,000 over the twelve (12) month period following the Agreement Date or (y) have required the Company or such Subsidiary to either recognize expense in accordance with GAAP, or make cash payments, in excess of $10,000,000 over the twelve (12) month period prior to the Agreement Date;
(iii) other than for any intercompany loans and capital contributions and accounts payable to trade creditors and accrued expenses in the Ordinary Course of Business, any trust indenture, mortgage, promissory note, loan agreement, credit agreement or other Contract for the borrowing of money, in an amount in excess of $10,000,000, or any currency exchange, interest rate, commodities or other hedging or derivative transaction or arrangement with a notational amount in excess of $10,000,000 or any leasing transaction of the type required to be classified as a finance lease in accordance with GAAP for which liabilities reflected in the Company’s balance sheet in connection therewith exceed $10,000,000;
(iv) any Contract providing for capital expenditures that (A) are reasonably expected to be in excess of $10,000,000 in the aggregate over the twelve (12) month period following the Agreement Date or (B) have been in excess of $10,000,000 in the aggregate in the twelve (12) month period prior to the Agreement Date;
(v) any Contract (identified under the applicable clause below): (A) limiting in a manner material to the Company and its Subsidiaries, taken as a whole, the freedom of the Company or any of its Subsidiaries (or, after giving effect to the Merger, Parent or any of its Affiliates) to engage or participate, or compete with any other Person, in any line of business, market or geographic area, (B) limiting in a manner material
A-35
to the Company and its Subsidiaries, taken as a whole, the freedom of the Company or any of its Subsidiaries (or, after giving effect to the Merger, Parent or any of its Affiliates) to make use of any Company-Owned Intellectual Property or Third-Party Intellectual Property not licensed under such Contract, (C) granting “most favored nation” pricing to any third party, (D) granting exclusive sales, distribution, marketing or other exclusive rights to any third party, (E) granting any rights of first or last refusal, right of first offer, rights of first negotiation or similar rights to any third party or (F) otherwise limiting in a manner that would be material to the Company and the Subsidiaries, taken as a whole, the right of the Company or any of its Subsidiaries (or, after giving effect to the Merger, Parent or any of its Affiliates) to sell, distribute or manufacture any Company Products outside the Ordinary Course of Business or to purchase or otherwise obtain, outside the Ordinary Course of Business, any components, materials, supplies, equipment, parts, software, Intellectual Property Rights or services;
(vi) any Contract for Leased Real Property;
(vii) any Contract pursuant to which the Company or any of its Subsidiaries agrees to act as a guarantor (including for indebtedness for borrowed money) of any other Person involving payments by the Company or any of its Subsidiaries in excess of $10,000,000 per annum;
(viii) any Company Intellectual Property Agreement;
(ix) (A) any partnership or joint venture Contract or any other Contract that involves a sharing of revenues or profits with any other Person or (B) any Contract that involves the payment of royalties to any other Person (excluding, in each case, annual or routine maintenance and license fees for Third-Party Intellectual Property that are not contingent on the manufacturing, sale or use of Company Products);
(x) any Contract (A) relating to the disposition or acquisition of more than $50,000,000 of assets by the Company or any of its Subsidiaries after the Agreement Date other than in the Ordinary Course of Business, (B) pursuant to which the Company or any of its Subsidiaries will acquire any ownership interest of more than $50,000,000 in any other Person or other business enterprise other than any Subsidiary of the Company or (C) that is an agreement with respect to any acquisition or divestiture of more than $50,000,000 pursuant to which the Company or any of its Subsidiaries has continuing indemnification, “earn-out” or other contingent payment obligations;
(xi) any material Contract with any Governmental Entity (a “Government Contract”) or any Company Authorization;
(xii) any litigation settlement that would require payments by the Company or any of its Subsidiaries in excess of $5,000,000 or would otherwise limit or adversely affect the operation of the business conducted by the Company and its Subsidiaries in any material respect after the Closing or currently effective litigation standstill or tolling agreement;
(xiii) any Contract not disclosed against another subsection of this Section 2.18 that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K);
(xiv) any Contract pursuant to which an Encumbrance (other than Permitted Encumbrances) is currently placed on any material asset of the Company or any of its Subsidiaries; or
(xv) any other Contract not listed in subsections (i)-(xv) (other than Contracts with suppliers, vendors or customers) that (A) individually provides for, or is reasonably expected to provide for, payments to or by the Company or its Subsidiaries in excess of $5,000,000 over the twelve (12) month period following the Agreement Date or (B) has required payments to or by the Company or its Subsidiaries in excess of $5,000,000 in the twelve (12) month period prior to the Agreement Date.
(b) All Material Contracts are in written form. Each of the Material Contracts (and any invention assignment agreement with present or former personnel of the Company or one of its Subsidiaries to which the Company or one of its Subsidiaries is a party or otherwise bound (“Company IAA”)) is, with respect to the Company or applicable Subsidiary that is a contracting party and, to the Knowledge of the Company, the other party, in full force and effect, subject to Enforceability Limitations, except for failures to be in full force and effect that would not, individually or in aggregate, reasonably be expected to have a Company Material Adverse Effect, and no Material Contract has been amended in any material respect except for such amendments that have been made available to Parent. There exists no default or event of default or event, occurrence, condition
A-36
or act, with respect to the Company or any of its Subsidiaries or, to the Knowledge of the Company, with respect to any other contracting party, that, with or without the giving of notice, the lapse of time or the happening of any other event or condition, would reasonably be expected to (i) become a default or event of default under any Material Contract or (ii) give any third party the right to (A) declare a default or exercise any remedy under any Material Contract or Company IAA, (B) a rebate, chargeback, refund, credit, penalty or change in delivery schedule under any Material Contract (other than in the Ordinary Course of Business), (C) accelerate the maturity or performance of any obligation of the Company or any of its Subsidiaries under any Material Contract or Company IAA or (D) cancel, terminate or adversely modify any Material Contract or Company IAA, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Since February 1, 2021, neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice regarding any material violation or breach of or threat of material violation or breach of, material default under, or intention to cancel or adversely modify any Material Contract or Company IAA. True, correct and complete copies of all Material Contracts have been made available to Parent.
(c) To the Knowledge of the Company, with respect to any Government Contract, there is no: (i) civil fraud or criminal investigation by any Governmental Entity, (ii) qui tam action brought against the Company or any of its Subsidiaries under the Civil False Claims Act, (iii) suspension or debarment proceeding (or equivalent proceeding) against the Company or any of its Subsidiaries, (iv) claim or request by a Governmental Entity for a contract price adjustment based on defective pricing, disallowance of cost or noncompliance with statute, regulation or contract or (v) threat of any of the items in the foregoing clauses (i)–(iv), except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(a) Since February 1, 2020, the Company and each of its Subsidiaries has conducted its respective businesses and any (re) export or import transactions in accordance in all material respects with Applicable Legal Requirements concerning (re) export or import controls and/or economic, trade or financial sanctions including, to the extent applicable, the following:
(i) U.S. export control legislation, such as the Export Administration Regulations and the International Traffic in Arms Regulations (“ITAR”) and other controls administered by the U.S. Department of Commerce and/or the U.S. Department of State;
(ii) European Union (“EU”) export control legislation, including Council Regulation (EC) No 2021/821;
(iii) any other export controls adopted by a Participating State of the Wassenaar Arrangement or by a country in which the Company or one of its Subsidiaries is located, has operations or must perform obligations imposed by any Contract; and
(iv) economic, trade and financial sanctions laws or regulations against governments, non-state entities and individuals imposed by the U.S., the EU or the United Kingdom; and
(v) any other (re) export or import control and/or sanctions laws or regulations in any other applicable jurisdiction.
(b) There are no pending or, to the Knowledge of the Company, threatened claims against the Company or any of its Subsidiaries in respect of compliance with Applicable Legal Requirements concerning (re) export or import controls and/or economic, trade or financial sanctions or any licenses, official approvals, authorizations or registrations required thereunder and, to the Knowledge of the Company, there are no actions, conditions or circumstances pertaining to the Company or any of its Subsidiaries that would reasonably be expected to give rise to any future administrative or criminal violations of export control and sanctions laws and regulations or other claims.
A-37
(a) The Company Board has received an opinion from Qatalyst Partners LP to the effect that, as of the date of such opinion, and based upon and subject to the various limitations, qualifications, assumptions and conditions set forth therein, the Per Share Cash Amount to be received pursuant to, and in accordance with, the terms of this Agreement by the holders of Company Common Stock (other than Parent or any Affiliate of Parent) is fair, from a financial point of view, to such holders.
(b) The Company Board has received an opinion from Morgan Stanley & Co. LLC to the effect that, as of the date of such opinion, and based upon and subject to the various limitations, qualifications, assumptions and other matters set forth therein, the Per Share Cash Amount to be received pursuant to this Agreement by the holders of Company Common Stock (other than Dissenting Shares and shares cancelled pursuant to Section 1.8(c)) is fair from a financial point of view to such holders.
2.21. Information Supplied. The preliminary and definitive proxy materials to be filed by the Company with the SEC in connection with the Merger (as may be amended or supplemented from time to time, the “Proxy Statement”) shall not, on each applicable filing date, on the date of mailing to the Company’s stockholders and at the time of the Company Stockholder Meeting, as applicable, (i) contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or (ii) omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Stockholder Meeting that has become misleading. The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act. Notwithstanding anything to the contrary in the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Merger Sub or any of their respective Affiliates that is contained in (or incorporated by reference in) the Proxy Statement.
(a) No Other Representations and Warranties. The Company, on behalf of itself and its Subsidiaries, acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III:
(i) neither Parent or Merger Sub nor any of their respective Subsidiaries (or any other Person) makes, or has made, any representation or warranty relating to Parent or Merger Sub, their respective Subsidiaries or any of their respective businesses, operations or otherwise in connection with this Agreement or the Merger;
(ii) no Person has been authorized by Parent or Merger Sub, any of their Subsidiaries or any of their respective Affiliates or Representatives to make any representation or warranty relating to Parent or Merger Sub, their respective Subsidiaries or any of their respective businesses or operations or otherwise in connection with this Agreement or the Merger, and if made, such representation or warranty must not be relied upon by the Company or any of its Affiliates or Representatives as having been authorized by Parent or Merger Sub, any of their respective Subsidiaries or any of their Affiliates or Representatives (or any other Person); and
(iii) the representations and warranties made by Parent or Merger Sub in this Agreement are in lieu of and are exclusive of all other representations and warranties, including any express or implied or as to merchantability or fitness for a particular purpose, and each of Parent and Merger Sub hereby disclaims any other or implied representations or warranties, notwithstanding the delivery or disclosure to the Company or any of its Affiliates or Representatives of any documentation or other information (including any financial information, supplemental data or financial projections or other forward-looking statements).
(b) No Reliance. The Company, on behalf of itself and its Subsidiaries, acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III, it is not acting (including, as applicable, by entering into this Agreement or consummating the Merger) in reliance on:
(i) any representation or warranty, express or implied;
(ii) any estimate, projection, prediction, data, financial information, memorandum, presentation or other materials or information provided or addressed to the Company or any of its Affiliates or Representatives, in connection with presentations by or discussions with Parent’s management whether prior to or after the date of this Agreement or in any other forum or setting; or
A-38
