WHEREAS, the respective boards of directors of each of Buyer, Merger Sub and the Company believe it is advisable and in the best interests of each corporation and
its respective shareholders that Buyer acquire the Company through the statutory merger of Merger Sub with and into the Company (the “Merger”) and, in furtherance thereof, have approved this Agreement, the Merger and the other transactions
contemplated hereby.
WHEREAS, as a condition and inducement to Buyer’s willingness to enter into this Agreement, concurrently herewith, Buyer, the Company, the Securityholder
Representative and the Escrow Agent named therein are entering into an Escrow Agreement in the form attached hereto as Exhibit A (the “Escrow Agreement”), which will be effective only upon the Closing, pursuant to which a portion of
the merger consideration payable hereunder will be withheld and placed in an escrow fund as collateral security for certain indemnification obligations hereunder.
WHEREAS, as a condition and inducement to Buyer’s willingness to enter into this Agreement, concurrently herewith, each of the Key Employees is entering into a
Holdback Agreement with Buyer (each a “Holdback Agreement” and collectively, the “Holdback Agreements”).
WHEREAS, as a condition and inducement to Buyer’s willingness to enter into this Agreement, concurrently herewith, each of the Key Employees is entering into an
employment agreement (including an inventions and proprietary rights assignment agreements) and a Non-Competition and Non-Solicitation Agreement with Buyer, each of which will be effective only upon the Closing (each a “Non-Competition and
Non-Solicitation Agreement” and collectively, the “Non-Competition and Non-Solicitation Agreements”).
WHEREAS, as a condition and inducement to Buyer’s willingness to enter into this Agreement, as promptly as practicable following the execution and delivery of this
Agreement, each of the Company Shareholders listed on Schedule A will (i) execute and deliver a written consent in the form attached hereto as Exhibit B (the “Shareholder Consent”), which consents will collectively constitute
the Requisite Shareholder Approval and (ii) execute and deliver a joinder agreement in the form attached hereto as Exhibit C (the “Joinder Agreement”).
WHEREAS, Buyer, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements, as more fully set forth herein, in
connection with the Merger and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set forth herein, the mutual benefits to be gained by the performance
thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) The Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the
DGCL, at the Closing, Buyer and the Company shall cause Merger Sub to be merged with and into the Company, whereupon the separate corporate existence of Merger Sub will cease and the Company will continue as the surviving corporation in the
Merger (the “Surviving Corporation”) and as a wholly owned subsidiary of Buyer. At the Closing, Buyer and the Company shall cause the Merger to be consummated by filing a certificate of merger in customary form and substance (the “Certificate
of Merger”) with the Secretary of State of the State of Delaware pursuant to Section 251 of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is accepted by the Delaware Secretary of State or at such
later time as Buyer and the Company mutually agree in writing and as set forth in the Certificate of Merger (such date and time as the Merger becomes effective, the “Effective Time”).
(b) The Surviving Corporation.
(i) Certificate of Incorporation and Bylaws.
(A) Certificate of Incorporation. Unless otherwise determined by Buyer prior to the Effective Time, the certificate of
incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, until thereafter amended
in accordance with Delaware Law and as provided in such certificate of incorporation; provided, however, that at the Effective Time, Article I of the certificate of incorporation of the Surviving
Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is Shape Security, Inc.”
(B) Bylaws. Unless otherwise determined by Buyer prior to the Effective Time, the bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation as of the Effective Time until thereafter amended in accordance with Delaware Law and as provided in the certificate of incorporation of the Surviving Corporation and
such bylaws.
(ii) Directors and Officers.
(A) Directors. Unless otherwise determined by Buyer prior to the Effective Time, the directors of Merger Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Delaware Law and the
certificate of incorporation and bylaws of the Surviving Corporation until his or her successors is duly elected and qualified.
(B) Officers. Unless otherwise determined by Buyer prior to the Effective Time, the officers of Merger Sub immediately prior to
the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.
1.2 General Effects of Merger. At the Effective Time, the effects of the Merger shall be as provided in this Agreement and the Certificate of Merger
and the applicable provisions of DGCL (including Section 259(a)). Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the
assets (including property), rights, privileges, powers and franchises of a public and private nature of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.3 Effects of Merger on Securities of Merging Corporations.
(a) Merger Sub Shares. At the Effective Time, by virtue of the Merger and without any action on the part of Buyer, Merger Sub, the Company, the
Company Securityholders or any other Person, each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into one validly issued, fully
paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. Each share certificate of Merger Sub evidencing ownership of any such shares shall thereupon evidence ownership only of such shares of the
Surviving Corporation.
(b) Company Shares.
(i) Generally. At the Effective Time, by virtue of the Merger and without any action on the part of Buyer, Merger Sub, the Company,
the Company Securityholders or any other Person, each Company Share (excluding Company Restricted Stock, which shall be treated in the manner set forth in Section 1.3(b)(ii), Cancelled Shares, which shall be treated in the manner set
forth in Section 1.3(b)(iii), and Dissenting Shares, which shall be treated in the manner set forth in Section 1.3(b)(iv)), that is issued and outstanding as of immediately prior to the Effective Time shall be cancelled and
converted automatically into the right to receive (A) an amount in cash, without interest, equal to the Closing Payment Per Share (the aggregate amount to be received by a Company Securityholder pursuant to this Section 1.3(b)(i), a “Company
Share Closing Payment”), and (B) any distributions of cash to be made with respect to such Company Share pursuant to Section 2.4(b)(ii), Section 7.6(g), Section 9.4(b), Section 9.4(d) and Section 10.3.
At and after the Effective Time, each Company Shareholder shall cease to have any rights as a stockholder of the Company, except as otherwise required by applicable Law and except for the right of each Company Shareholder to surrender his or
her certificate in respect of Company Shares or affidavit of lost common certificate, as applicable, in exchange for the payments described in this Section 1.3(b)(i) and no transfer of Company Shares shall be made on the stock transfer
books of the Surviving Corporation. At the close of business on the day of the Effective Time, the stock ledger of Company with respect to Company Shares shall be closed. For purposes of calculating the aggregate amount payable to each
Company Shareholder pursuant to this Section 1.3(b)(i), (x) all shares of the Company Shares held by each such Company Shareholder shall be aggregated and (y) the amount of cash to be paid to each Company Shareholder for each Company
Share of such Company Shareholder shall be rounded down to the nearest whole cent.
(ii) Company Restricted Stock.
(A) Held by Continuing Employees. At the Effective Time, by virtue of the Merger and without any action on the part of Buyer,
Merger Sub, the Company, any Company Securityholder or any other Person, each share of Company Restricted Stock held by each Continuing Employee that is outstanding as of immediately prior to the Effective Time shall be cancelled and converted
automatically into the right of the holder to receive (A) an amount in cash, without interest, equal to the Closing Payment Per Share (the aggregate amount to be received by a Company Securityholder pursuant to this Section 1.3(b)(ii)(A),
a “Restricted Stock Closing Payment”), payable subject to and in accordance with the vesting schedule applicable to the award of such Company Restricted Stock as in effect immediately prior to the Effective Time, provided that such
payments may be made within fifteen (15) Business Days following an applicable vesting date, except in the case of the Key Employees, in which case such amounts shall be subject to such treatment as is provided in the Holdback Agreement, and
(B) any distributions of cash to be made with respect to such Company Restricted Stock pursuant to Section 2.4(b)(ii), Section 7.6(g), Section 9.4(b), Section 9.4(d) and Section 10.3, payable subject to and
in accordance with the vesting schedule applicable to the award of such Company Restricted Stock as in effect immediately prior to the Effective Time, provided that such payments may be made within fifteen (15) Business Days following an
applicable vesting date, except in the case of the Key Employees, in which case such amounts shall be subject to such treatment as is provided in the Holdback Agreement. Such payments shall be reduced by any income or employment Tax
withholding required under the Code or any provision of applicable state, local or foreign Tax law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of such
Company Restricted Stock.
(B) Held by Non-Continuing Employees. Immediately prior to the Effective Time, the Company shall repurchase each share of Company
Restricted Stock that is held by a Non-Continuing Employee at the cost such Non-Continuing Employee paid for such share of Company Restricted Stock, if any, and, as a result, Closing Cash will exclude any payments by the Company to repurchase
such Company Restricted Stock and Total Outstanding Shares shall exclude all such repurchased Company Restricted Stock.
(iii) Cancelled Shares. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company,
Company Securityholders or any other Person, each share of Company Shares that is issued and outstanding and held by the Company or any Subsidiary of the Company as of immediately prior to the Effective Time (“Cancelled Shares”) shall be
cancelled without any consideration paid therefor.
(iv) Dissenting Shares. Upon the giving of a notice of election to dissent pursuant to Section 262 of the DGCL, each holder of
Dissenting Shares shall cease to have any rights of a shareholder of the Company except the right to be paid the fair value of his shares as shall be determined in accordance with the provisions of Section 262 of the DGCL. If any Company
Securityholder (other than a Company Securityholder who consented in writing to the Requisite Shareholder Approval) fails to give written notice of its election to dissent from the Merger under Section 262 of the DGCL, then the rights of such
Company Securityholder under Section 262 of the DGCL shall cease to exist, and the underlying Company Shares shall be cancelled in accordance with Section 1.3(b)(i), and thereupon entitle the holder thereof only to receive the
consideration contemplated by such Section 1.3(b)(i), as applicable. The Company shall give Buyer prompt notice, and in any event notice within one (1) Business Day, of any notice or purported notice received by the Company of any
Company Securityholder’s intent to exercise and/or exercise of rights pursuant to Section 262 of the DGCL, the withdrawal of any such notice and any other documents served upon the Company pursuant to or in connection with Section 262 of the
DGCL or a Company Securityholder’s dissent or appraisal rights and Buyer shall have the right to direct on behalf of the Company all negotiations and proceedings with respect to such demands for appraisal or dissent. Prior to the Effective
Time, the Company shall not, except with the prior written consent of Buyer (not to be unreasonably withheld) or as otherwise required by an order, decree, ruling or injunction of a court of competent jurisdiction, make or offer to make any
payment with respect to any such exercise of dissenter’s rights or offer to settle or settle any such rights. The payout of consideration under this Agreement to the Company Securityholders in accordance with this Section 1.3 (other
than to holders of Dissenting Shares who shall be treated as provided in this Section 1.3(b)(iv) and under the applicable terms of the DGCL) shall not be affected by the exercise or potential exercise of appraisal or dissenters’ rights
by any other Company Securityholder.
(c) Company Options.
(i) Vested Company Options. Except as set forth in Section 1.3 of the Disclosure Schedule, at the Effective Time, by
virtue of the Merger and without any action on the part of Buyer, Merger Sub, the Company, any Company Securityholder or any other Person, each Vested Company Option that is outstanding and unexercised as of immediately prior to the Effective
Time shall be cancelled and converted automatically into the right to receive (A) an amount in cash, without interest, equal to (x) the excess of the Closing Payment Per Share, less the per share
exercise price of such Vested Company Option, multiplied by (y) the aggregate number of shares of Company Common Shares issuable upon the exercise of such Vested Company Option (the aggregate amount to
be received by a Company Securityholder pursuant to this Section 1.3(c)(i)(A), a “Company Option Closing Payment”), and (B) any distributions of cash to be made with respect to such Vested Company Option pursuant to Section
2.4(b)(ii), Section 7.6(g), Section 9.4(b), Section 9.4(d) and Section 10.3. Such payments shall be reduced by any income or employment Tax withholding required under the Code or any provision of applicable
state, local or foreign Tax law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of such Vested Company Options.
(ii) Unvested Company Options.
(A) Held by Continuing Employees. Except as set forth in Section 1.3 of the Disclosure Schedule, effective as of the
Effective Time, by virtue of the Merger and without any action on the part of Buyer, Merger Sub, the Company, any Company Securityholder or any other Person, each Unvested Company Option that is outstanding as of immediately prior to the
Effective Time and held by a Continuing Employee shall be assumed by Buyer and thereupon become a Buyer Option. Except as otherwise set forth in this Agreement, each Unvested Company Option so assumed by Buyer shall continue to have, and be
subject to, the same terms and conditions (including vesting terms and any accelerated vesting provisions that may be applicable thereto) as in effect immediately prior to the Effective Time, except that (x) such assumed Unvested Company Option
shall be exercisable for that number of whole shares of Buyer Common Stock equal to the product of the number of Company Common Shares that were issuable upon exercise of such Unvested Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, with the result rounded down to the nearest whole number of shares of Buyer Common Stock and (y) the per share exercise price for the shares of Buyer Common Stock issuable
upon exercise of such assumed Unvested Company Option shall be equal to the quotient obtained by dividing the exercise price per share of Company Common Share at which such assumed Unvested Company Option was exercisable immediately Effective
Time by the Exchange Ratio, with the result rounded up to the nearest whole cent. Notwithstanding anything herein to the contrary, the exercise price of the Buyer Option, the number of shares purchasable pursuant to such Buyer Option and the
terms and conditions of exercise of such Buyer Option shall in all events be determined in order to comply with Section 409A of the Code, and in the case of any Unvested Company Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, Section 424 of the Code.
(B) Held by Non-Continuing Employees. Effective as of the Effective Time, by virtue of the Merger and without any action on the
part of Buyer, Merger Sub, the Company, any Company Securityholder or any other Person, each Unvested Company Option that is outstanding as of immediately prior to the Effective Time and held by a Non-Continuing Employee shall be cancelled
without any consideration paid therefor (the “Cancelled Unvested Options”).
(C) Necessary Company Actions. Prior to the Effective Time, and subject to the prior review and approval of Buyer, the Company
shall take all actions reasonably necessary to effect the transactions contemplated by Section 1.3(b) and 1.3(c), including delivering evidence reasonably satisfactory to Buyer that all necessary determinations by the Company’s
board of directors or applicable committee of the Company’s board of directors to cash out, cancel or provide for the assumption of Company Options, in accordance with Section 1.3(c) have been made.
(d) S-8 Registration. Within fifteen (15) Business Days after the Closing Date, Buyer shall file with the SEC a registration statement on Form S-8,
if available for use by Buyer, registering that number of shares of Buyer Common Stock equal to the number of shares of Buyer Common Stock issuable upon the exercise of all Unvested Company Options that are assumed by Buyer pursuant to Section
1.3(c) and are eligible to be registered on Form S-8.
1.4 Calculation of the Total Closing Consideration.
(a) Definitions. For all purposes of and under this Agreement, the following terms shall have the following respective meanings.
(i) “Aggregate Exercise Price” shall mean the aggregate exercise price of all Vested Company Options and Unvested Company Options
(other than Cancelled Unvested Options).
(ii) “Cash” shall mean (x) cash, cash equivalents and marketable securities, whether on hand or in deposit, checking, brokerage or other accounts of, or in any safety deposit box or other physical storage device provided by, a financial institution, in each case to the extent constituting
“cash and cash equivalents” or “marketable securities” under GAAP applied on a basis consistent with its preparation of the Financials, plus (y) the aggregate amount of all un-cleared deposits, minus (z) the aggregate amount of cash needed to fund checks, drafts, draws and any electronic disbursements written or ordered but not cleared prior to the Effective Time (including in respect of any
repayment of Closing Indebtedness or payment of Third-Party Expense to be made by the Company and its Subsidiaries prior to the Closing); provided, however,
that Cash shall not include any cash or cash equivalents subject to any legal or contractual restriction on the ability to transfer or use such cash or cash equivalents for any lawful purpose, including security deposits, collateral reserve
accounts, escrow accounts, custodial accounts, and other similar restricted cash or cash equivalents.
(iii) “Closing Cash” shall mean the aggregate amount of all Cash held by the Company and its Subsidiaries as of immediately prior to
the Effective Time.
(iv) “Closing Indebtedness” shall mean the aggregate amount of all outstanding Indebtedness of the Company and its Subsidiaries as
of immediately prior to the Effective Time, including any termination, pre-payment, balloon or similar fees or payments (including penalties) that would be associated with the full repayment and retirement of such Indebtedness (whether prior to
or following the Effective Time).
(v) “Closing Net Working Capital” shall mean the Net Working Capital of the Company and its Subsidiaries as of immediately prior
to the Effective Time (and without giving effect to the Closing), calculated using the Accounting Principles.
(vi) “Deferred Revenue” shall mean the current and long-term deferred revenue of the Company and its Subsidiaries, calculated in
accordance with ASC 605 issued by the Financial Accounting Standards Board.
(vii) “Escrow Amount” shall mean Seventy-Nine Million and Four Hundred Thousand Dollars ($79,400,000).
(viii) “Indebtedness” shall mean, without duplication, (i) all liabilities for borrowed money, whether current or funded, secured or
unsecured, all obligations evidenced by notes, bonds, debentures or similar instruments, and all liabilities in respect of mandatorily redeemable or purchasable share capital or securities convertible into share capital, (ii) all liabilities
for the deferred purchase price of property or services that are required to be classified and accounted for under GAAP as liabilities (for clarity, excluding deferred rent and ordinary course trade payables), (iii) all liabilities in respect
of any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which are, and to the extent, required to be classified and accounted for under GAAP as capital leases, (iv) all liabilities
for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction securing obligations of a type described in clauses (i), (ii) or (iii) above to the extent of the obligation secured and drawn upon
(excluding for the avoidance of doubt Lease Security Deposits), and (v) all guarantees of any liabilities of a third party of a nature similar to the types of liabilities described in clauses (i), (ii), (iii) or (iv) above, to the extent of the
obligation guaranteed; provided, however, that Indebtedness shall not include any undrawn amounts under any revolving credit facility.
(ix) “Net Working Capital” shall mean (a) the sum of all of the current assets (each as defined by and determined in accordance with
the Accounting Principles), net of any applicable allowances or reserves, excluding all (1) cash and cash equivalents (including Closing Cash), (2)Tax assets (other than prepaid Taxes), (3) unbilled accounts receivable, and (4) capitalized
commission costs classified as current assets, minus (b) the sum of all current liabilities (each as defined by and determined in accordance with the Accounting Principles), including Deferred Revenue
(both current and long-term) and known Pre-Closing Taxes not reflected in Third-Party Expenses but excluding all Closing Indebtedness and Third-Party Expenses. For the avoidance of doubt, a sample working capital statement calculating the Net
Working Capital is attached here as Schedule B.
(x) “Net Working Capital Shortfall” shall mean the amount (if any) by which the Closing Net Working Capital is less than the lowest
number within the Target Net Working Capital Range (it being understood that if the Closing Net Working Capital is greater than or equal to the lowest number within the Target Net Working Capital Range, the Net Working Capital Shortfall shall
be $0).
(xi) “Net Working Capital Surplus” shall mean the amount (if any) by which the Closing Net Working Capital is greater than the
greatest number within the Target Net Working Capital Range (it being understood that if the Closing Net Working Capital is less than or equal to the greatest number within the Target Net Working Capital Range, the Net Working Capital Surplus
shall be $0).
(xii) “Target Net Working Capital Range” shall mean a dollar range from and including negative thirty-two million dollars
(-$32,000,000) to and including negative twenty-six million dollars (-$26,000,000).
(xiii) “Third-Party Expenses” shall have the meaning set forth in Section 7.9(a).
(xiv) “Total Closing Consideration” shall mean an amount in cash equal to One Billion and Twenty-Eight Million Dollars
($1,028,000,000), plus the Total Closing Consideration Adjustment Amount (which may be a negative number).
(xv) “Total Closing Consideration Adjustment Amount” means, without duplication, an amount of cash equal to (i) the Aggregate
Exercise Price, plus (ii) Closing Cash, minus (iii) Closing Indebtedness, minus (iv) unpaid Third-Party Expenses, plus (v) the Net Working Capital Surplus (if any) or minus (vi) the Net Working Capital Shortfall (if any).
(xvi) “Total Consideration” shall mean (x) the Total Closing Consideration, plus (y) the
Positive Adjustment Amount, if any, or minus (z) the Negative Adjustment Amount, if any.
(xvii) “Total Outstanding Shares” shall mean (without duplication) (i) the aggregate number of Company Shares issued and outstanding
immediately prior to the Effective Time, counted on an as converted to Company Common Share basis (excluding any Cancelled Shares and Company Restricted Stock repurchased by the Company prior to Effective Time pursuant to Section
1.3(b)(ii)(B)), plus (ii) the aggregate number of Company Common Shares issuable upon the exercise of all Vested Company Options that remain unexercised and outstanding immediately prior to the
Effective Time, plus (iii) the aggregate number of Company Common Shares issuable upon the exercise of all Unvested Company Options that remain unexercised and outstanding immediately prior to the
Effective Time (excluding any Company Common Shares subject to Cancelled Unvested Options but including all Company Common Shares issuable upon the exercise of all Company Options granted by the Company pursuant to Section 7.5(g)) plus (iv) the aggregate number of Company Common Shares issuable upon settlement of all Company Warrants that remain outstanding immediately prior to the Effective Time.
(b) Preparation and Delivery of Pre-Closing Statement. No later than three (3) Business Days prior to the Closing Date, the Company shall prepare and
deliver to Buyer a statement (the “Pre-Closing Statement”), in a form and substance reasonably satisfactory to Buyer, setting forth the Company’s good faith estimate of each component of the Total Closing Consideration Adjustment Amount
(including an itemized list of each asset and liability reflected in the Closing Net Working Capital), together with a calculation of the Total Closing Consideration based on the foregoing amount (the amount so calculated being referred to
herein as the “Estimated Total Closing Consideration”). The Pre-Closing Statement shall be prepared in accordance with the Accounting Principles.
(c) Preparation and Delivery of Post-Closing Statement. As soon as reasonably practicable following the Closing, but in no event later than sixty
(60) calendar days after the Closing Date, Buyer shall prepare and deliver, or cause to be prepared and delivered, to the Securityholder Representative a certificate (the “Post-Closing Statement”), setting forth Buyer’s good faith
calculation of each component of the Total Closing Consideration Adjustment Amount as of the Closing (including an itemized list of each asset and liability reflected in the Closing Net Working Capital), together with a calculation of what
Total Closing Consideration would have been at the Closing had such amount been calculated based on the foregoing amounts. The Post-Closing Statement shall be prepared using the Accounting Principles. Any component of the Pre-Closing Statement
that is not expressly disputed in the Post-Closing Statement shall be final and binding on the parties hereto and not subject to appeal.
(d) Review of Post-Closing Statement. Buyer shall provide the Securityholder Representative with reasonable access, during normal business hours and
upon reasonable advance written notice, to supporting documentation in order to review the Post-Closing Statement. The Securityholder Representative shall have thirty (30) days following Buyer’s delivery of the Post-Closing Statement (the “Review
Period”) to review the same together with information requested in accordance with this Section 1.4(d). Prior to the expiration of the Review Period, the Securityholder Representative shall deliver to Buyer a written statement
accepting or disputing the Post-Closing Statement. In the event that the Securityholder Representative shall dispute the Post-Closing Statement, such statement shall include a detailed itemization of the Securityholder Representative’s
objections and the reasons therefor (such statement, a “Dispute Statement”), as well as the Securityholder Representative’s calculations of the applicable items in the Dispute Statement. Any component of the Post-Closing Statement that
is not expressly disputed in a Dispute Statement shall be final and binding on the parties hereto and not subject to appeal. If the Securityholder Representative does not deliver a Dispute Statement to Buyer within the Review Period or delivers
a statement accepting the Post-Closing Statement, the Post-Closing Statement shall be final and binding on the parties hereto and not subject to appeal.
(e) Dispute Resolution. If the Securityholder Representative delivers a Dispute Statement during the Review Period, Buyer and the Securityholder
Representative shall promptly meet and attempt in good faith to resolve their differences with respect to the disputed items set forth in the Dispute Statement during the thirty (30) calendar days immediately following Buyer’s receipt of the
Dispute Statement, or such longer period as Buyer and the Securityholder Representative may mutually agree (the “Resolution Period”). Any such disputed items that are resolved by Buyer and the Securityholder Representative during the
Resolution Period shall be final and binding on the parties hereto and not subject to appeal. If Buyer and the Securityholder Representative do not resolve all such disputed items by the end of the Resolution Period, Buyer and the
Securityholder Representative shall submit all items remaining in dispute with respect to the Dispute Statement to a nationally recognized independent accounting firm upon which Buyer and the Securityholder Representative shall reasonably agree
(the “Accounting Firm”) for review and resolution, provided that if Buyer and the Securityholder Representative cannot agree during the five (5) calendar days immediately following the end of
the Resolution Period, or such longer period as Buyer and the Securityholder Representative may mutually agree, the Accounting Firm shall be Ernst & Young LLP. The Accounting Firm shall act as an expert and not an arbitrator. The Accounting
Firm shall make all calculations in accordance with the Accounting Principles, shall determine only those items remaining in dispute between Buyer and the Securityholder Representative, and shall only be permitted or authorized to determine an
amount with respect to any such disputed item that is either the amount of such disputed item as proposed by Buyer in the Post-Closing Statement or the amount of such disputed item as proposed by the Securityholder Representative in the Dispute
Statement. Each of Buyer and the Securityholder Representative shall (i) enter into a customary engagement letter with the Accounting Firm at the time such dispute is submitted to the Accounting Firm and otherwise cooperate with the Accounting
Firm, (ii) have the opportunity to submit a written statement in support of their respective positions with respect to such disputed items, to provide supporting material to the Accounting Firm in defense of their respective positions with
respect to such disputed items and to submit a written statement responding to the other party’s position with respect to such disputed items and (iii) subject to customary confidentiality and indemnity agreements, provide the Accounting Firm
with access to their respective books, records, personnel and Representatives and such other information as the Accounting Firm may require in order to render its determination. The Accounting Firm shall be instructed to deliver to Buyer and
the Securityholder Representative a written determination (such determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Accounting
Firm by Buyer and the Securityholder Representative) of the disputed items within thirty (30) calendar days of receipt of the disputed items, which determination shall be final and binding on the parties hereto and not subject to appeal. All
fees and expenses relating to the work, if any, to be performed by the Accounting Firm will be allocated between Buyer, on the one hand, and the Securityholder Representative (on behalf of the Indemnifying Parties, first out of the Expense
Fund, and only after the Expense Fund is exhausted, then from the Indemnifying Parties directly), on the other hand, in the same proportion that the aggregate amount of the disputed items so submitted to the Accounting Firm that is
unsuccessfully disputed by each such party (as finally determined by the Accounting Firm) bears to the total disputed amount of such items so submitted.
(f) Final Total Closing Consideration. The Total Closing Consideration, calculated based on Total Closing Consideration Adjustment Amount as deemed
final and binding on the parties hereto pursuant to this Section 1.4, is referred to herein as the “Final Total Closing Consideration.”
1.5 Further Action. If at any time from and after the Effective Time, any further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, Buyer, Merger Sub, and the officers and directors of the Company, Buyer and
Merger Sub, are fully authorized in the name of their respective corporations or otherwise to take, and shall take, all such lawful and necessary action.
ARTICLE II
CLOSING AND CLOSING PAYMENTS
2.1 The Closing. Unless this Agreement is validly terminated pursuant to Section 8.1, Buyer, Merger Sub and the Company shall consummate the
Merger at a closing (the “Closing”) within five (5) Business Days following satisfaction or waiver (if permissible hereunder) of the conditions set forth in Section 2.2 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to satisfaction or waiver (if permissible hereunder) of those conditions at the Closing) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 525 University Avenue, California 94301, unless
another time or place is mutually agreed upon in writing by Buyer and the Company. The date upon which the Closing occurs hereunder shall be referred to herein as the “Closing Date.”
2.2 Closing Conditions.
(a) Mutual Conditions. The respective obligations of Buyer, Merger Sub and the Company to effect the Merger shall be subject to the satisfaction, at
or prior to the Effective Time, of the following conditions:
(i) Shareholder Approval. The Requisite Shareholder Approval shall have been obtained.
(ii) Regulatory Approvals. All waiting periods (and extensions thereof) applicable to the
Merger and the other transactions contemplated hereby under the HSR Act shall have expired or been terminated without any conditions thereto other than conditions which Buyer shall have accepted in its sole and absolute discretion and which do
not have any negative impact on the Company Securityholders.
(iii) No Legal Restraints. No Law or Order (whether temporary, preliminary or permanent)
promulgated, issued or granted by a Governmental Entity of competent jurisdiction shall be in effect which has the effect of making the Merger or any other transaction contemplated hereby illegal or otherwise prohibiting or preventing
consummation of the Merger or any other transaction contemplated hereby in accordance with the terms hereof.
(iv) Escrow Agreement. The Escrow Agreement shall have been duly executed and delivered by
the Escrow Agent.
(b) Additional Buyer and Merger Sub Conditions. The obligations of Buyer and Merger Sub to effect the Merger shall be subject to the satisfaction at
or prior to the Effective Time of each of the following additional conditions, any of which may be waived in writing exclusively by Buyer:
(i) Company Covenants. The Company shall have performed and complied in all material
respects with the covenants and obligations under this Agreement and the Related Agreements required to be performed or complied with by the Company prior to the Closing.
(ii) Company Representations and Warranties.
(A) Each of the Fundamental Representations of the Company shall have been true and correct in all material respects (without giving effect
to any limitations as to “materiality” set for therein) as of the Agreement Date and shall be true and correct in all material respects (without giving effect to any limitation as to “materiality” set forth therein) on and as of the Closing
Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall have been true and correct in all material respects
(without giving effect to any limitations as to “materiality” set forth therein) as of such date).
(B) Each of the representations and warranties of the Company (other than the Fundamental Representations) shall have been true and
correct in all respects as of the Agreement Date and shall be true and correct in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and
warranties of the Company made only as of a specified date which shall have been true and correct in all respects as of such date), except, in each case, where the failure to be so true and correct, individually or in the aggregate, has not had
and would not be reasonably be expected to have a Company Material Adverse Effect.
(iii) Company Material Adverse Effect. No Company Material Adverse Effect shall have occurred that is continuing.
(iv) No Governmental Actions. There shall be no Action of any kind or nature brought or initiated by any Governmental Entity against
Buyer or any of its Subsidiaries, or against the Company or any of its Subsidiaries, that seeks (A) any restraint preventing or prohibiting the transactions contemplated by this Agreement or (B) material damages in connection with the
transactions contemplated by this Agreement.
(v) Appraisal Claims and Rights. Company Shareholders holding no more than two and a half percent (2.5%) of the Company Shares
outstanding immediately prior to the Effective Time (determined on an as converted to Company Common Share basis) shall have exercised (or have a continuing right to exercise) appraisal, dissenters’ or similar rights under the DGCL or other
applicable Law with respect to the Merger or any other transactions contemplated by this Agreement.
(vi) Joinder Agreements. Buyer shall have received executed Joinder Agreements from Indemnifying Parties representing, in the
aggregate, at least 95% of all issued Company Shares and the shares of Company Shares issuable upon the exercise of each Vested Company Option.
(vii) 280G Waivers and Shareholder Approval. Buyer shall have received (i) executed 280G Waivers from each of the 280G Persons that
delivered an executed 280G Waiver to the Company in accordance with Section 7.1(b) and (ii) with respect to all “parachute payments” pursuant to which each such 280G Waiver was obtained, evidence that either (A) the 280G Approval was
obtained in respect of such “parachute payments” or (B) that the 280G Approval was not obtained and as a consequence, such “parachute payments” shall not be made or provided pursuant to such 280G Waiver.
(viii) Holdback Agreements. Each of the Holdback Agreements, executed concurrently with this Agreement shall be in full force and
effect shall not have been revoked, rescinded, or otherwise repudiated by the respective signatories thereto (not including Buyer).
(ix) Non-Competition and Non-Solicitation Agreements. Each of the Non-Competition and Non-Solicitation Agreements executed
concurrently with this Agreement shall be in full force and effect shall not have been revoked, rescinded, or otherwise repudiated by the respective signatories thereto (not including Buyer).
(x) New Employment Arrangements.
(A) Each of the employment agreements executed by each of the Key Employees concurrently with this Agreement shall be in full force and
effect and shall not have been revoked, rescinded or otherwise repudiated by such Key Employee, and no Key Employee shall have terminated his or her employment with the Company (or one of its Subsidiaries, as applicable), or taken action
towards terminating (including notifying any Person affiliated with Buyer, the Company or any of its Subsidiaries of his or her intent to terminate) his or her employment with the Company (or one of its Subsidiaries, as applicable) at or prior
to the Closing or with the Surviving Corporation or Buyer following the Closing. All of the Key Employees (1) shall have executed Buyer’s Inventions and Proprietary Rights Assignment Agreement and Code of Conduct in the form attached to Schedule
2.2(b)(x)(A) and (2) if currently working in the United States, shall be eligible to work in the United States.
(B) At least ninety percent (90%) of the Other Employees who have received an offer of employment pursuant to Section 7.5(c) at
least fifteen (15) Business Days prior to the Closing with equivalent or greater base compensation and bonus opportunity (if applicable) than those currently provided (1) shall have signed an Offer Letter substantially in the form attached to Schedule
2.2(b)(x)(B), in each case effective immediately following the Closing, (2) shall not have terminated his or her employment with the Company (or one of its Subsidiaries or a PEO, as applicable), or notified any Person affiliated with
Buyer, the Company or any of its Subsidiaries of his or her intent to terminate his or her employment with the Company (or one of its Subsidiaries or a PEO, as applicable) at or prior to the Closing or with the Surviving Corporation or Buyer
following the Closing, (3) shall have satisfied Buyer’s customary employee background investigations (provided that if Buyer elects not to retain any person on the basis of such background check, such person will be disregarded for purposes of
determining whether this condition has been satisfied), (4) shall have executed Buyer’s Inventions and Proprietary Rights Assignment Agreement and Code of Conduct in the form attached to Schedule 2.2(b)(x)(A), and (5) if currently
working in the United States, shall be eligible to work in the United States.
(xi) Termination of Shareholder Agreements. All of the Shareholder Agreements set forth on Schedule 2.2(b)(xi) shall have
been terminated.
(xii) Termination of Employee Plans. Unless requested otherwise by Buyer, in accordance with Section 7.5(b), the 401(k)
Plans shall have been terminated.
(xiii) Required Financial Statements.
(A) Buyer shall have received from the Company the Required Financial Statements.
(B) Buyer shall have received from the Company all audited and unaudited financial statements of the Company and its Subsidiaries that are
required to be filed on (or as an exhibit to) a Current Report on Form 8-K in connection with the Merger pursuant to applicable Law, including the rules and regulations of the SEC (including Regulation S-X and Rule 3-05 thereunder), excluding
any required pro forma financial statements (even if such financial statements (and related pro forma financial statements) are not required to be so filed prior to or at the Closing).
(xiv) Payoff Documents. Buyer shall have received duly and validly executed Payoff Letters and Closing Expense Invoices.
(xv) Pre-Closing Statement. Buyer shall have received the Pre-Closing Statement, certified as complete and correct on behalf of the
Company by the Chief Executive Officer of the Company.
(xvi) Payment Spreadsheet. Buyer shall have received the Payment Spreadsheet, certified as complete and correct on behalf of the
Company by the Chief Executive Officer of the Company.
(xvii) Company Closing Certificates.
(A) Officer’s Certificate. Buyer shall have received a certificate from the Company (the “Officer’s Certificate”), validly
executed by the Chief Executive Officer of the Company for and on the Company’s behalf, to the effect that, as of the Closing the conditions set forth in Sections 2.2(b)(i), 2.2(b)(ii), 2.2(b)(iii), 2.2(b)(xi)
and 2.2(b)(xii), have been satisfied.
(B) Secretary’s Certificate. Buyer shall have received a certificate from the Company, validly executed by the Secretary of the
Company for and on the Company’s behalf, certifying (i) as to the terms and effectiveness of the Governing Documents, (ii) as to the valid adoption of resolutions of the Company’s board of directors (whereby the Merger and the transactions
contemplated hereunder were unanimously approved by the Company’s board of directors) and (iii) that the Requisite Shareholder Approval has been obtained.
(C) FIRPTA Certificate. Buyer shall have received a FIRPTA Compliance Certificate in a form reasonably acceptable to Buyer for
purposes of satisfying Buyer’s obligations under Treasury Regulation Section 1.1445-2(c)(3), validly executed by a duly authorized officer of the Company, together with a notice to the U.S. Internal Revenue Service in accordance with the
provisions of Treasury Regulation Section 1.897-2(h)(2) and authorization for Buyer to deliver such notice to the U.S. Internal Revenue Service after the Effective Time.
(xviii) Certificates of Good Standing. Buyer shall have received a certificate of good standing from the Secretary of State of the
State of Delaware which is dated within five (5) Business Days prior to Closing with respect to the Company.
(c) Additional Company Conditions. The obligations of the Company to effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any of which may be waived in writing exclusively by the Company:
(i) Buyer Covenants. Buyer and Merger Sub shall have performed and complied in all material respects with the covenants and
obligations under this Agreement required to be performed or complied with by them prior to the Closing.
(ii) Buyer Representations and Warranties. Each of the representations and warranties of Buyer and Merger Sub in this Agreement
shall have been true and correct in all material respects (without giving effect to any limitation as to “materiality” set forth therein) as of the Agreement Date and shall be true and correct in all material respects (without giving effect to
any limitation as to “materiality” set forth therein) on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than such representations and warranties of Buyer and Merger Sub as of a
specified date, which shall be true and correct in all material respects (without giving effect to any limitation as to “materiality” set forth therein) as of such date).
(iii) Officer’s Certificate. The Company shall have received a certificate from Buyer, validly executed by a duly authorized officer
of Buyer for an on Buyer’s behalf, to the effect that, as of the Closing the conditions set forth in Sections 2.2(c)(i) and 2.2(c)(ii) have been satisfied.
2.3 Payment of Total Closing Consideration.
(a) Closing Payment Spreadsheet. At least three (3) Business Days prior to the Closing, the Company shall deliver to Buyer the “Closing Payment
Spreadsheet” in a form and substance reasonably satisfactory to Buyer and accompanied by documentation reasonably satisfactory to Buyer in support of the information set forth therein. The Closing Payment Spreadsheet shall set forth the
following information in reasonable detail (other than as to the Key Employees, as to which only clause (iv) will apply):
(i) with respect to each Company Shareholder: (A) the name, address, social security number (or tax identification number, as applicable,
and as permitted under governing data privacy law) (if available), jurisdiction of Tax residence (if available) and email address (if available) of such Person and an indication as to whether such Person is a Continuing Employee or a
Non-Continuing Employee; (B) the number, class, and series of shares of Company Shares held by such Person; (C) the date of acquisition of such Company Shares; (D) the amount of Taxes that are to be withheld from the Company Share Closing
Payment that such Person is entitled to receive on account of such Company Shares (other than U.S. federal backup withholding Taxes that could result from failure to submit a Form W-9 or Form W-8BEN or comparable withholding documentation); (E)
the Company Share Closing Payment that such Person is entitled to receive on account of such Company Shares; (F) bank account and other wire transfer information and instructions of such Person and an address to which any check should be mailed
to such Person (solely with respect to Company Shareholders who have submitted Exchange Documents to the Company in advance); and (G) such Person’s Loan Repayment Amount, if any;
(ii) with respect to each holder of Company Restricted Stock: (A) the name, address, social security number (or tax identification number,
as applicable, and as permitted under governing data privacy law) (if available), jurisdiction of Tax residence (if available), and email address (if available) of such Person, and an indication as to whether such Person is a Continuing
Employee, Non-Continuing Employee or non-employee advisor to the Company; (B) whether such Person is an Employee, consultant or director of the Company; (C) the grant date of each award of Company Restricted Stock held by such Person; (D) the
name of such Company Employee Plan under which the award of Company Restricted Stock was granted; (E) the vesting schedule (including all acceleration provisions) applicable to each such Company Restricted Stock; (F) the number of Company
Shares subject to each award of Company Restricted Stock; (G) the Restricted Stock Closing Payment that such Person is entitled to receive, if any, on account of all shares of Company Restricted Stock; and (H) such Person’s Loan Repayment
Amount, if any.
(iii) with respect to each Company Optionholder: (A) the name, address, social security number (or tax identification number, as applicable,
and as permitted under governing data privacy law) (if available), jurisdiction of Tax residence (if available), and email address (if available) of such Person, and an indication as to whether such Person is a Continuing Employee,
Non-Continuing Employee or non-employee advisor to the Company; (B) whether such Person is an Employee, consultant or director of the Company; (C) the grant date of each Company Option held by such Person and expiration date of each such
Company Option (if applicable); (D) the name of the Company Employee Plan under which the Company Option was granted; (E) the vesting schedule (including all acceleration provisions) applicable to each such Company Option and the extent to
which each such Company Option is vested as of immediately prior to the Effective Time; (F) the exercise price per share and the number, class, status as book-entry and series of shares of Company Shares underlying each such Company Option; (G)
the Company Option Closing Payment that such Person is entitled to receive, if any, on account of all Vested Company Options and the number of shares of Buyer Common Stock to be subject to the Buyer Option that such Person is entitled to
receive, if any, on account of all Unvested Company Options; (H) whether payment to such Person can and should be made through the Company’s normal payroll processes and, if not, bank account and other wire transfer information and instructions
of such Person and an address to which any check should be mailed to such Person (solely with respect to Company Optionholders who have submitted Exchange Documents to the Company in advance); and (I) such Person’s Loan Repayment Amount, if
any; and
(iv) with respect to each Key Employee: (A) the aggregate portion of the Total Closing Consideration to be paid to such Person; (B) the
Holdback Consideration Amount to be held back from such Person; and (C) such Person’s Loan Repayment Amount, if any.
(b) Closing Payments.
(i) Retention of Holdback Consideration. Notwithstanding anything in this Agreement to the contrary, at the Closing, Buyer will
retain the Holdback Consideration Amount from the aggregate Total Closing Consideration payable to each Key Employee in respect of such Person’s Company Shares and/or Vested Company Options pursuant to the terms set forth in the applicable
Holdback Agreement. Each Key Employee shall be entitled to receive the Holdback Consideration Amount payable to such Key Employee in accordance with the terms set forth in such Key Employee’s Holdback Agreement. The parties intend that any
Holdback Consideration Amount (other than any Holdback Consideration Amount attributable to any Vested Company Options) that is paid to any Key Employee shall be treated as deferred contingent purchase price eligible for installment sale
treatment under Section 453 of the Code and any corresponding provision of foreign, state or local Law, as appropriate, unless otherwise required pursuant to a final non-appealable, determination of an applicable Governmental Entity.
(ii) Payment Fund Deposit. At the Closing, Buyer shall transfer or cause to be transferred to the Payment Agent an amount of cash
equal to (i) that portion of the Total Closing Consideration to be paid in cash to the Company Securityholders at the Effective Time pursuant to Section 1.3, less (ii) the Escrow Amount, less (iii) the Expense Cash, less (iv) the aggregate Holdback Consideration Amount for all Key Employees, less (v) that portion of the Total Closing Consideration that it reasonably determines appropriate to be paid through payroll distributions of the Surviving Corporation, Buyer, or other Person, in
accordance with the terms of this Agreement (such funds deposited with the Payment Agent, the “Payment Fund”). At any time following the last day of the twelfth (12th) month following the Effective Time, Buyer shall be entitled to require the Payment Agent to deliver to Buyer or its designated successor or assign all cash amounts that have been deposited with the Payment Agent pursuant
to this Section 2.3(b)(ii), and any and all interest thereon or other income or proceeds thereof, not disbursed to the owners of Company Shares pursuant to Section 2.3(c), and thereafter the owners Company Shares shall be
entitled to look only to Buyer only as general creditors thereof with respect to any and all cash amounts that may be payable to such owners of Company Shares pursuant to Section 1.3 upon the cancellation of such Company Shares and duly
executed Exchange Documents in the manner set forth in Section 2.3(c). No interest shall be payable for the cash amounts delivered to Buyer pursuant to the provisions of this Section 2.3(b)(ii) and which are subsequently
delivered to the owners of Company Shares.
(iii) Payroll Deposit. At the Closing, Buyer shall transfer or cause to be transferred through the payroll service of Buyer or the
Surviving Corporation or the Payment Agent, as determined by Buyer, that portion of the Total Closing Consideration to be paid to the Company Optionholders with respect to their Vested Company Options pursuant to Section 1.3(c)(i).
Notwithstanding anything herein to the contrary, Buyer shall be permitted to cause any portion of the Total Closing Consideration payable to an Employee to be paid by the Surviving Corporation or Buyer (or such other entity employing such
Employee) through a payroll distribution and subject to applicable Tax withholdings, and Buyer shall cause each such payment to be made as soon as reasonably practicable (but in any event no later than ten (10) Business Days) following the date
such cash amount becomes payable in accordance with the terms and conditions of this Agreement. In furtherance of the foregoing, the Company shall take such actions and, upon Buyer’s reasonable request, provide such information that may be
necessary or appropriate prior to the Closing Date to facilitate the making of any payroll distribution referenced in this Section 2.3(b)(iii).
(iv) Escrow Fund Deposit. At the Closing, Buyer shall transfer the Escrow Amount to the Escrow Agent to hold in trust as an escrow
fund (the “Escrow Fund”) under the terms of this Agreement, the Escrow Agreement and each Key Employee’s respective Holdback Agreement. The parties hereto agree that Buyer shall be treated as the owner of the cash and any other assets in
the Escrow Fund for all Tax purposes until such funds are disbursed pursuant to this Agreement and the Escrow Agreement and that all interest on or other taxable income, if any, earned from the investment of such cash in the Escrow Fund
pursuant to this Agreement shall be treated for Tax purposes as earned by Buyer until such amounts are disbursed pursuant to this Agreement and the Escrow Agreement. The parties intend the Escrow Amount to qualify for installment sale
reporting under Section 453 of the Code (except for Escrow Amount attributable to any Company Restricted Stock or Vested Company Option that is taxed as compensation to the respective holder thereof). In the event the Key Employee forfeits the
First Payment and the Second Payment (each as defined in such Key Employee’s Holdback Agreement) in accordance with the terms of such Key Employee’s Holdback Agreement, the Escrow Agent shall, subject to the terms of, and procedures set forth
in, the Escrow Agreement, disburse such forfeited amount that would otherwise have been distributed to such Key Employee from the Escrow Amount to Buyer and Buyer may unilaterally instruct the Escrow Agent to make such disbursement.
(v) Expense Fund Deposit. At the Closing, Buyer shall transfer the Expense Cash to the Securityholder Representative to hold in
trust under the terms of this Agreement as the Expense Fund. The parties agree that for income Tax purposes, the Expense Fund shall be treated in accordance with the terms of Section 10.3(e).
(vi) Debt Payoff. At the Closing, Buyer shall pay (or cause to be paid) the amount specified in each Payoff Letter to the extent
not paid prior to the Closing.
(vii) Expense Payoff. At the Closing, Buyer shall pay (or cause to be paid) the amount specified in each Closing Expense Invoice to
the extent not paid prior to the Closing.
(c) Payment Procedures.
(i) Prior to the Closing, Buyer, the Company and the Payment Agent shall agree upon a form of letter of transmittal. The Company may
distribute letters of transmittal in the form agreed upon by Buyer, the Company and the Payment Agent (each, a “Letter of Transmittal”) to certain Company Shareholders prior to the Closing. As soon as reasonably practicable following
the Closing, Buyer or the Payment Agent shall distribute Letters of Transmittal, to each Company Shareholder that has not already returned to the Payment Agent a Letter of Transmittal distributed by the Company, at the address or email address
set forth opposite each such Person’s name on the Closing Payment Spreadsheet.
(ii) After receipt by the Payment Agent of a letter of transmittal and any other documents (including applicable tax forms) that Buyer or
the Payment Agent may reasonably require in connection therewith (the “Exchange Documents”), duly completed and validly executed in accordance with the instructions thereto, Buyer shall cause the Payment Agent to pay to the holder of
such Company Shares in exchange therefor the Total Closing Consideration payable in respect thereto pursuant to Section 1.3. No portion of the Total Closing Consideration shall be paid or payable to the holder of any Company Shares
until the holder of such Company Shares and delivered validly executed Exchange Documents in accordance with the terms and conditions hereof. Notwithstanding the foregoing, Buyer shall cause the Payment Agent to pay to each Company Shareholder
that has returned a Letter of Transmittal at least three (3) Business Days prior to the Closing Date and whose Company Share Closing Payment amounts to at least $10,000,000 in the aggregate, the Company Share Closing Payment payable in respect
of such Company Shareholder’s Company Shares pursuant to Section 1.3 at the Closing.
(iii) In the event that any Person entitled to consideration hereunder has outstanding loans from the Company or any Subsidiary as of the
Effective Time, the consideration payable to such Person pursuant to Section 1.3 shall be reduced by an amount equal to the outstanding principal plus accrued interest, if any, of such Person’s
loans as of the Effective Time, plus any other amounts owed by such Person to the Company or any Subsidiary (collectively, such Person’s “Loan Repayment Amount”). Such loans shall be satisfied as
to the amount by which the consideration is reduced pursuant to this Section 2.3(c)(iii). To the extent the consideration payable to such Person is so reduced, such amount shall be treated for all purposes under this Agreement as having
been paid to such Person.
(iv) The cash amounts paid in respect of the cancellation of Company Shares in accordance with the terms of this Agreement shall be deemed
to be full satisfaction of all rights pertaining to such Company Shares, and there shall be no further registration of transfers on the records of the Surviving Corporation of Company Shares which were outstanding immediately prior to the
Effective Time.
(v) Notwithstanding anything to the contrary in this Section 2.3, none of Buyer, the Payment Agent, the Surviving Corporation, nor
any party hereto shall be liable to any Person for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
2.4 Payment of Post-Closing Adjustment to Total Closing Consideration.
(a) Post-Closing Payment Spreadsheet. The Securityholder Representative shall deliver to Buyer an updated version of the Closing Payment Spreadsheet
(the “Post-Closing Payment Spreadsheet”) within five (5) Business Days after the determination of the Final Total Closing Consideration in a form and substance reasonably satisfactory to Buyer and accompanied by documentation reasonably
satisfactory to Buyer in support of the information set forth therein. The Closing Payment Spreadsheet shall set forth the following information in reasonable detail:
(i) all information specified in Sections 2.3(a)(i)-(iv) inclusive, as updated to reflect the Final Total Closing Consideration;
and
(ii) if any amounts are due from Buyer to the Company Securityholders pursuant to Section 2.4(b), the amount of any portion of the
Positive Adjustment Amount payable to each Company Securityholder in accordance with the terms of the Governing Documents.
(b) Positive Adjustment.
(i) If the amount of the Final Total Closing Consideration plus the Lease Security Deposit
Amount (if any) exceeds the amount of the Estimated Total Closing Consideration (such excess amount, the “Positive Adjustment Amount”), then within five (5) Business Days after the delivery of the Post-Closing Payment Spreadsheet, Buyer
shall deposit or cause to be deposited in the Payment Fund held by the Payment Agent, by wire transfer of immediately available funds, an amount in cash equal to the Positive Adjustment Amount, if any.
(ii) As soon as reasonably practicable following delivery of the Positive Adjustment Amount pursuant to Section 2.4(b)(i), Buyer
shall deliver or cause to be delivered to the Company Securityholders the Positive Adjustment Amount in accordance with the Post-Closing Payment Spreadsheet. For the avoidance of doubt, Buyer may choose to route the foregoing payments through
the Payment Agent or, in the case of any payments in respect of Vested Company Options, through the Surviving Corporation’s payroll system in order to effectuate all applicable Tax withholding obligations on such payments.
(c) Negative or No Adjustment. If the amount of the Estimated Total Closing Consideration exceeds the amount of the Final Total Closing
Consideration plus the Lease Security Deposit Amount (if any) (such excess amount, the “Negative Adjustment Amount”), then within five (5) Business Days after the delivery of the Post-Closing
Payment Spreadsheet, Buyer and the Securityholder Representative shall provide joint written instructions to the Escrow Agent to promptly deliver to Buyer from the Escrow Fund, in immediately available funds by wire transfer to an account
designated by Buyer in writing, an amount in cash equal to the Negative Adjustment Amount.
(d) Tax Treatment. Any payment made under this Section 2.4 to the maximum extent permitted by applicable Law, shall be treated for all Tax
purposes as an adjustment to the Total Closing Consideration.
2.5 Withholding Taxes. The Company, the Payment Agent, the Escrow Agent, Buyer and the Surviving Corporation and their agents and Affiliates (each,
as applicable, a “Withholding Agent”) shall be entitled to deduct and withhold from any amounts payable or otherwise deliverable pursuant to this Agreement any amounts required to be deducted or withheld therefrom under any provision of
federal, local or foreign Tax law or under any Laws or Orders; provided, however, that Buyer will give the Company, with respect to payments made on or about
the Closing, or the Securityholder Representative, with respect to payments made after the Closing, written notice at least three (3) Business Days prior to any such withholding that is not specified in a Payment Spreadsheet (such notice to
include reasonable detail and the authority and method of calculation for the proposed deduction or withholding) and (a) Buyer and/or the applicable Withholding Agent shall consider in good faith any claim by the Company or the Securityholder
Representative, as applicable, that such withholding is not required or should be imposed at a reduced rate and (b) Buyer and/or the applicable Withholding Agent shall cooperate with the Company or the Securityholder Representative, as
applicable, in good faith to minimize, to the extent permissible under applicable Law, the amount of any such deduction or withholding, the submission of any certificates or forms to establish an exemption from, reduction in, or refund of any
such deduction or withholding. Upon reasonable request by the applicable Withholding Agent, any Person entitled to receive payments pursuant to this Agreement shall provide any necessary Tax forms, including a valid IRS Form W-9 or the
appropriate version of IRS Form W-8, as applicable, and any similar information, including any information for U.S. federal, state or local or non-U.S. Tax purposes. Any amounts so deducted or withheld shall be timely paid to the appropriate
Governmental Entity and to the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid. To the
extent that any payment to any Person is not reduced by such deductions or withholdings, such Person shall indemnify Buyer and its Affiliates (including, after the Effective Time, the Surviving Corporation) for any amounts imposed by and paid
over to a Governmental Entity with respect to any such Taxes, together with any costs and expenses relating thereto (including reasonable attorneys’ fees and costs of investigation) except for any such Taxes, costs or expenses resulting from
the gross negligence or willful misconduct of Buyer or its Affiliates (including the Surviving Corporation).
2.6 Reliance. Notwithstanding anything to the contrary in this Agreement or any investigation or examination conducted, or any knowledge possessed or
acquired, by or on behalf of Buyer or Merger Sub or their respective Representatives, or any disclosure made by or on behalf of the Company, (i) it is expressly acknowledged and agreed that Buyer, the Payment Agent and their respective
Affiliates and Representatives shall be entitled to rely on the Pre-Closing Statement and the Payment Spreadsheets without any obligation to investigate or verify the accuracy or correctness thereof, and to make payments in accordance
therewith, and (ii) in no event shall Buyer, the Payment Agent or any of their respective Affiliates and Representatives have any Liability to any Person (including the Securityholder Representative and Company Securityholders) for any alleged
inaccuracy or miscalculations in, or otherwise relating to, the preparation of the Pre-Closing Statement or the Payment Spreadsheets and the allocation set forth therein, or payments made by any Person (including Buyer, the Company, the Payment
Agent and their respective Affiliates and Representatives) in accordance with the Pre-Closing Statement or the Payment Spreadsheets. Nothing in this Section 2.6, or the fact that Buyer may provide comments or request changes to any
draft Pre-Closing Statement, draft Payment Spreadsheets or that Buyer and the Company may agree to changes to the information or amounts on the Pre-Closing Statement or Payment Spreadsheets, shall in any way limit the right of any Person under
Article IX.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to such exceptions as are specifically set forth in the appropriate section, subsection or subclause of the disclosure schedule supplied by the Company to
Buyer on the Agreement Date (the “Disclosure Schedule”) or in any other section, subsection or subclause of the Disclosure Schedule solely if and to the extent that it is readily apparent on the face of such disclosure, without reference
to the underlying documents referenced therein and without independent knowledge of the matters described therein that such disclosure would also constitute an exception to such other section, subsection or sub-clause of this Article III,
the Company hereby represents and warrants to Buyer and Merger Sub as follows:
3.1 Organization and Good Standing.
(a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company has the
requisite corporate power to own, lease and operate its assets and properties and to carry on its business as currently conducted and as currently contemplated to be conducted. The Company is duly qualified or licensed to do business and is in
good standing as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualification or license materially
necessary, except where the failure to be so qualified or to obtain such licenses would not, individually or in the aggregate, have a Company Material Adverse Effect.
(b) The Company has Made Available true, correct and complete copies of its Certificate of Incorporation, as amended through the Agreement Date (collectively,
the “Governing Documents”). The board of directors of the Company has not approved or proposed, nor has any Person proposed, any amendment to any of the Governing Documents.
(c) Section 3.1(c) of the Disclosure Schedule lists the directors and officers of the Company as of the Agreement Date.
(d) Section 3.1(d) of the Disclosure Schedule lists every jurisdiction in which the Company has Employees or facilities or otherwise conducts its
business as of the Agreement Date.
3.2 Authority and Enforceability.
(a) The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the
Merger and the other transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and the consummation of the Merger and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company (including the unanimous approval of the board of directors of the Company) and no further corporate or other action is
required on the part of the Company to authorize this Agreement and any Related Agreements to which the Company is a party or to consummate the Merger or any other transactions contemplated hereby and thereby in accordance with the terms
hereof, other than the adoption of this Agreement and approval of the Merger by Company Shareholders representing the Requisite Shareholder Approval.
(b) The Requisite Shareholder Approval is the only vote of the Company Shareholders required under applicable Law, the DGCL, the Governing Documents and all
Contracts to which the Company or any Subsidiary is a party to legally adopt this Agreement and approve the Merger and the other transactions contemplated hereby.
(c) This Agreement and each of the Related Agreements to which the Company is a party have been duly executed and delivered by the Company and assuming the
due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms , subject to (x) Laws of general
application relating to bankruptcy, insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general, and (y) rules of law governing specific performance, injunctive relief, other equitable remedies and other
general principles of equity.
3.3 Governmental Approvals. No consent, notice, waiver, approval, Order or authorization of, or registration, declaration or filing with any
Governmental Entity, is required by, or with respect to, the Company or any Subsidiary in connection with the execution and delivery of this Agreement and any Related Agreement to which the Company or any Subsidiary is a party or the
consummation of the Merger or any other transactions contemplated hereby and thereby, except for (a) such consents, notices, waivers, approvals, Orders, authorizations, registrations, declarations and filings as may be required under applicable
securities laws and state “blue sky” laws, (b) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (c) such filings as may be required in connection with any Transfer Taxes, and (d) the HSR Filing and
any required filing under non-U.S. antitrust, competition, or merger control laws.
3.4 Conflicts. The execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and the
consummation of the transactions contemplated hereby and thereby, will not 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,
modification or acceleration of any obligation or loss of any benefit under (any such event, a “Conflict”) (a) any provision of the Governing Documents or the organizational documents of any Subsidiary, as amended, (b) any Material
Contract, or (c) assuming compliance with the Laws contemplated by Section 3.3, any Law or Order applicable to the Company or any Subsidiary or any of their respective properties or assets (whether tangible or intangible). Section 3.4
of the Disclosure Schedule sets forth all necessary consents, notices, waivers and approvals of parties to any Material Contracts as are required thereunder in connection with the Merger, or for any such Material Contract to remain in full
force and effect without limitation, modification or alteration after the Effective Time so as to preserve all rights of, and benefits to, the Company and its Subsidiaries, as the case may be, under such Material Contracts from and after the
Effective Time. Following the Effective Time, the Surviving Corporation and each of its Subsidiaries will be permitted to exercise all of its rights under all Material Contracts, without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which the Company or any Subsidiary, as the case may be, would otherwise be required to pay pursuant to the terms of such Material Contracts had the transactions contemplated by this Agreement not
occurred.
3.5 Company Capital Structure.
(a) The Company is authorized to issue a maximum of 285,000,000 Company Common Shares, of which 73,857,832 are issued and outstanding as of the Agreement Date,
and 153,497,084 Company Preferred Shares, of which 153,365,844 are issued and outstanding as of the Agreement Date, of which (i) 37,733,410 are designated “Series A Preferred Shares,” 37,733,410 shares of which are issued and outstanding
as of the Agreement Date, (ii) 36,818,852 are designated “Series B Preferred Shares,” 36,818,852 shares of which are issued and outstanding as of the Agreement Date, (iii) 27,440,594 are designated “Series C Preferred Shares,”
27,440,594 shares of which are issued and outstanding as of the Agreement Date, (iv) 24,648,748 are designated “Series D Preferred Shares,” 24,648,748 shares of which are issued and outstanding as of the Agreement Date, (v) 13,780,240
are designated “Series E Preferred Shares,” 13,649,000 shares of which are issued and outstanding as of the Agreement Date, and (vi) 13,075,240 are designated “Series F Preferred Shares,” 13,075,240 shares of which are issued and
outstanding as of the Agreement Date . There are no treasury shares outstanding. Each Company Preferred Share is convertible on a one-share-for-one-share basis into a Company Common Share. As of the Agreement Date, all the Company Shares are
held by the Persons and in the amounts set forth in Section 3.5(a) of the Disclosure Schedule which further sets forth for each such Person the number of shares held, class and/or series of such shares and the domicile addresses of
record of such Persons. Section 3.5(a) of the Disclosure Schedule shall be updated to reflect any exercises of Company Options or transfers of Company Shares occurring between the Agreement Date and the Closing Date. All outstanding
shares of Company Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by applicable Law, statute, the Governing Documents, or any agreement to which the Company is a party
or by which it is bound.
(b) All outstanding Company Shares, shares of Company Restricted Stock and Company Options have been issued or repurchased (in the case of shares that were
outstanding and repurchased by the Company) in material compliance with all applicable Laws, and were issued, transferred and repurchased (in the case of shares that were outstanding and repurchased by the Company) in accordance with any right
of first refusal or similar right or limitation. No Company Shareholder has exercised any right of redemption, if any, provided in the Governing Documents with respect to the Company Preferred Shares, and the Company has not received notice
that any Company Shareholder intends to exercise such rights. There are no declared or accrued but unpaid dividends with respect to any shares of Company Shares. Other than the Company Shares set forth in Section 3.5(a) of the
Disclosure Schedule (as it may be updated pursuant to Section 3.5(a)), the Company has no other shares authorized, issued or outstanding.
(c) Except for the Company Equity Plans, neither the Company nor any Subsidiary has ever adopted, sponsored or maintained any stock option plan or any other
plan or agreement providing for equity-related compensation to any person (whether payable in shares, cash or otherwise). The Company Equity Plans have been duly authorized, approved and adopted by the Company’s board of directors and the
Company Shareholders and is in full force and effect. The Company has reserved 63,972,869 Company Common Shares for issuance upon the issuance of shares or the exercise of options granted under the Company Equity Plans, of which, as of the
Agreement Date (i) 33,464,408 shares are issuable upon the exercise of outstanding, unexercised options granted under the Company Equity Plans, (ii) 2,535,334 shares have been issued upon the exercise of options or purchase of shares of Company
Restricted Stock granted under the Company Equity Plans and remain outstanding and (iii) 6,349,835 shares remain available for future grant. Section 3.5(c) of the Disclosure Schedule sets forth as of the Agreement Date for each
outstanding Company Option and award of Company Restricted Stock, (i) the name of the holder and the location of such holder, (iii) whether such holder is an Employee of the Company, (iv) the number of Company Common Shares subject to such
Company Option or award of Company Restricted Stock, (v) the date of grant, (vi) the exercise price (if any), (vii) the vesting schedule, including the extent vested to date and whether such vesting is subject to acceleration as a result of the
transactions contemplated by this Agreement or any other events, and, (viii) for any Company Option, whether such option is a nonstatutory option or intended to qualify as an incentive stock option as defined in Section 422 of the Code. No
Company Option has been granted with an exercise price less than the fair market value of a Company Common Share on the date of grant. Complete copies of the forms of all agreements and instruments relating to or issued under the Company Equity
Plans have been Made Available and such agreements and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement such agreements or instruments from the forms thereof Made Available.
No holder of Company Options has the ability to early exercise any Company Options for shares of Company Restricted Stock under the Company Equity Plans or any other Contract relating to such Company Options. All Company Options and awards of
Company Restricted Stock have been granted under the Company Equity Plans.
(d) Section 3.5(d) of the Disclosure Schedule sets forth, as of the Agreement Date, all Indebtedness of the Company and each Subsidiary, including
the amount of such Indebtedness, a breakdown of the following components of such Indebtedness: the principal, accrued interest, any prepayment premiums, penalties, breakage costs, “make whole amounts,” costs, expenses and other payment
obligations that would arise if any or all of such Indebtedness were prepaid, extinguished, unwound and settled in full prior to maturity, a description of any assets securing such Indebtedness, and Person to whom such Indebtedness is owed,
and, other than as set forth therein, the Company and the Subsidiaries have no outstanding Indebtedness. No such Indebtedness is subject to any restriction upon the prepayment of any such Indebtedness. With respect to each such item of
Indebtedness, neither the Company nor any Subsidiary is in default and no payments are past due. There are no outstanding loans or Indebtedness involving, on the one hand, the Company and on the other hand, any of the Company Securityholders.
As of the Agreement Date, all Contracts relating to Indebtedness of the Company and its Subsidiaries have been Made Available to the Buyer.
(e) No bonds, debentures, notes or other indebtedness of the Company or any Subsidiary (i) having the right to vote on any matters on which the Company
Shareholders 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 shares of the Company, are issued or outstanding as of
the Agreement Date.
(f) As of the Agreement Date, except for the Company Options and the shares of Company Restricted Stock, there are no options, warrants, calls, rights,
convertible securities, commitments or agreements of any character, written or oral, to which the Company or any Subsidiary is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. There are no outstanding or authorized share appreciation, phantom share, profit participation, or other similar rights with respect to the Company or any Subsidiary (whether payable in shares, cash or
otherwise). Except as contemplated hereby, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting shares of the Company or any Subsidiary to which the Company or any Subsidiary is a party, and
there are no agreements to which the Company or any Subsidiary is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Shares. As
a result of the Merger, the Buyer will be the sole record and beneficial holder of all issued and outstanding Company Shares and all rights to acquire or receive any shares of Company Shares, whether or not such shares of Company Shares are
outstanding.
(g) Other than the Company Shares listed on Section 3.5(a) of the Disclosure Schedule and the Company Options listed on Section 3.5(c) of the
Disclosure Schedule, as of the Agreement Date, there are no Company Securities authorized, issued or outstanding, and there are no promises, obligation or agreements (whether or not enforceable, written or oral) to issue any Company Securities.
(h) The allocation of the Total Closing Consideration set forth in Article I and contribution to, and distributions from, the Escrow Fund, and the
Expense Fund set forth throughout this Agreement, is consistent with, and do not violate, the Governing Documents, any Company Employee Plan, any Contract applicable to any Company Securities to which the Company is a party.
3.6 Company Subsidiaries.
(a) Section 3.6(a) of the Disclosure Schedule lists each corporation, limited liability company, partnership, association, joint venture or other
business entity of which the Company owns or has owned, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of the members of the board of directors or similar governing body (each, a “Subsidiary”).
Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. Each Subsidiary has the corporate power to own its assets and properties and to
carry on its business as currently conducted, except where the failure to have such corporate power would not, individually or in the aggregate, have a Company Material Adverse Effect. Each Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications or licenses necessary, except where
the failure to be so qualified or licensed would not, individually or in the aggregate, have a Company Material Adverse Effect. A true, correct and complete copy of each Subsidiary’s charter documents and bylaws, each as amended to date and in
full force and effect on the Agreement Date, has been Made Available. The Company is the sole direct and indirect beneficial and record owner of all outstanding shares of capital stock or other equity interests of each Subsidiary. All
outstanding shares of capital stock or other equity interests of each Subsidiary are duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by statute, the charter documents or bylaws of such
Subsidiary, or any agreement to which such Subsidiary is a party or by which it is bound, and have been issued in compliance with all applicable Laws. There are no options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which any Subsidiary is a party or by which any Subsidiary is bound obligating the Subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be issued, sold, repurchased or redeemed, any shares of the capital
stock of such Subsidiary or obligating such Subsidiary to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call right, commitment or agreement. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to any of the Subsidiaries. Section 3.6(a) of the Disclosure Schedule lists the directors and officers of each Subsidiary as of the
Agreement Date.
(b) Section 3.6(b) of the Disclosure Schedule lists each corporation, limited liability company, partnership, association, joint venture or other
business entity (other than the Subsidiaries listed in Section 3.6(a) of the Disclosure Schedule) in which the Company owns any shares or any interest. Neither the Company nor any Subsidiary has agreed or is obligated to make any future
investment in or capital contribution to any Person (other than a Subsidiary).
3.7 Company Financial Statements; Internal Financial Controls.
(a) Section 3.7(a) of the Disclosure Schedule sets forth the Company’s (i) audited consolidated balance sheets as of January 31, 2019 and December
31, 2017, and the related consolidated statements of operations, cash flow and changes in shareholders’ equity for the 12-month period then ended (the “Year-End Financials”), and (ii) unaudited consolidated balance sheet as of October
31, 2019 (the “Balance Sheet Date”), and the related unaudited consolidated statements of operations, cash flow and changes in shareholders’ equity for the nine months then ended (the “Interim Financials”). The Year-End Financials
and the Interim Financials (collectively referred to as the “Financials”) have been prepared in accordance with GAAP consistently applied on a consistent basis throughout the periods indicated and consistent with each other (except that
the Interim Financials do not contain footnotes and other presentation items that may be required by GAAP). The Financials present fairly in all material respects the Company’s consolidated financial condition, operating results and cash flows
as of the dates and during the periods indicated therein, subject in the case of the Interim Financials to normal year-end adjustments, which are not material in amount or significance in any individual case or in the aggregate. The Company’s
unaudited consolidated balance sheet as of the Balance Sheet Date is referred to hereinafter as the “Current Balance Sheet.” The books and records of the Company and each Subsidiary have been, and are being, maintained in all material
respects in accordance with applicable legal and accounting requirements and the Financials are consistent with such books and records.
(b) The Company has Made Available an aging schedule with respect to the billed accounts receivable of the Company and its Subsidiaries as of the Balance
Sheet Date indicating a range of days elapsed since invoice. All of the accounts receivable, whether billed or unbilled, of the Company and its Subsidiaries arose in the ordinary course of business, are carried at values determined in
accordance with GAAP consistently applied, are not subject to any set-off or counterclaim, do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis and are not subject to any other repurchase or
return arrangement. No Person has any Lien on any accounts receivable of the Company or any Subsidiary and no request or agreement for deduction or discount has been made with respect to any accounts receivable of the Company or any Subsidiary.
(c) The Company and each Subsidiary has established and maintains, adheres to and enforces a system of internal accounting controls which are designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements (including the Financials), in accordance with GAAP, including policies and procedures that (i) require the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries, (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of management and the board of directors of
the Company and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. To the Knowledge of the Company, there have not been
(i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company or any Subsidiary, (ii) any fraud, whether or not material, that involves the Company’s management or other Employees who
have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or any Subsidiary or (iii) any claim or allegation regarding any of the foregoing.
(d) Neither the Company nor any of its Subsidiaries has any off balance sheet liability of any nature to, or any financial interest in, any third party or
entities, the purpose or effect of which is to defer, postpone, reduce or otherwise avoid or adjust the recording of debt expenses incurred by the Company or any of its Subsidiaries.
3.8 No Undisclosed Liabilities. The Company nor any Subsidiary has any Liability, indebtedness, obligation, expense, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with GAAP), except for those which (a) have been reflected in the Current
Balance Sheet, (b) have arisen in the ordinary course of business consistent with past practices since the Balance Sheet Date, that do not exceed $1,000,000 in the aggregate (excluding deferred revenue), (c) are liabilities under Contracts of
the Company and Subsidiaries that have been Made Available, if required to have been Made Available pursuant to other provisions of this Agreement, that are set forth in and identifiable by reference to the text of such Contracts (excluding,
for the avoidance of doubt, liabilities arising out of any breach or non-compliance with the terms thereof), or (d) are liabilities for Third-Party Expenses.
3.9 No Changes. Since the Balance Sheet Date through the Agreement Date, (a) no Company Material Adverse Effect has occurred or arisen, and (b)
neither the Company nor any Subsidiary has taken any action that would be prohibited by Section 5.2 if proposed to be taken after the Agreement Date.
3.10 Tax Matters.
(a) Tax Returns and Payments. Each income and other material Tax Return required to be filed by or on behalf of the Company or any Subsidiary with
any Governmental Entity: (i) has been filed on or before the applicable due date (including any valid extensions of such due date); and (ii) has been accurately and completely prepared in all material respects and in compliance with all
applicable Laws. All Taxes required to be paid by the Company and its Subsidiaries (whether or not shown as due on any Tax Return) have been timely paid. The Company has delivered or Made Available to Buyer accurate and complete copies of all
income and other material Tax Returns filed for which the statute of limitations have not expired, other than immaterial information Tax Returns (e.g., IRS Forms W-2 and 1099).
(b) Reserves for Payment of Taxes. The Financials fully accrue all liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. The Company and its Subsidiaries, as the case may be have had reserves adequate for the payment of all Taxes for the period from the date of the Balance Sheet Date through the Agreement Date, and Section 3.10(b) of
the Disclosure Schedule sets forth the dollar amount of the Company’s current reserves for Taxes. Neither the Company nor any Subsidiary has incurred any liability for Taxes since the Balance Sheet Date outside of the ordinary course of
business.
(c) Audits; Claims. No Tax Return has ever been examined or audited by any Governmental Entity. Neither the Company nor any Subsidiary has received
from any Governmental Entity any: (i) written notice indicating an intent to open an audit or other review; (ii) written request for information related to Tax matters; or (iii) written notice of deficiency or proposed Tax adjustment. No
extension or waiver of the limitation period applicable to any Tax Returns of the Company or any Subsidiary has been granted by or requested from the Company or any Subsidiary. No claim or legal proceeding is pending or threatened in writing
against the Company or any Subsidiary in respect of any Tax. There are no liens for Taxes upon any of the assets of the Company or any Subsidiary except liens for current Taxes not yet due and payable or which are being contested in good faith
by appropriate proceedings (and, in each case, for which there are adequate accruals, in accordance with GAAP).
(d) Legal Proceedings; Etc. There are no unsatisfied liabilities for Taxes in connection with any written notice of Tax deficiency or similar
document received by the Company or any Subsidiary (other than liabilities for Taxes asserted under any such notice of deficiency or similar document which are being contested in good faith by the Company or a Subsidiary and with respect to
which adequate reserves for payment have been established).
(e) Distributed Stock. Neither the Company nor any Subsidiary has distributed stock of another Person, and neither the Company nor any Subsidiary
has had its stock distributed by another Person, within the last two (2) years in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
(f) Adjustment in Taxable Income. Neither the Company nor any Subsidiary is currently, and neither the Company nor any Subsidiary for any period for
which a Tax Return has not been filed will be, required to include any adjustment in taxable income for any taxable period (or portion thereof) pursuant to Section 481 or 263A of the Code (or any comparable provision under state, local or
non-U.S. Tax laws) as a result of transactions, events or accounting methods employed prior to the Merger.
(g) 280G Matters. Except as set forth on Section 3.10(g) of the Disclosure Schedule, there is no agreement, plan, arrangement or other
Contract covering any Employee or any other “disqualified individual” (as defined in Code Section 280G and the regulations promulgated thereunder) (excluding any agreement, plan, arrangement or other Contract entered into or adopted at the
direction of Buyer or any of its Affiliates) that, considered individually or considered collectively with any other such Contracts, will, or could reasonably be expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Code Section 280G or that would be characterized as a “parachute payment” within the meaning of Section 280G(b)(2) of the Code. There is no Contract to which the Company is a party or Company Employee Plan or
Employee Agreement, covering any Employee, which would require the Company or any Subsidiary to pay any Tax “gross-up” or similar “make-whole” payment to any Employee for Tax-related payments under Section 4999 of the Code. Neither the Company
nor any Subsidiary currently is, or has ever been, a party to or bound by any Tax indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar Contract.
(h) Consolidated Tax Returns; Tax Indemnity Agreements; etc. Neither the Company nor any Subsidiary has: (i) ever been a party
to any Tax sharing, indemnification, allocation or similar agreement or arrangement (other than Contracts entered into in the ordinary course of business consistent with past practices on customary commercial terms the principal purpose of
which is not Taxes (“Ordinary Course Contracts”)), nor does the Company or any of its Subsidiaries owe any amount under such an agreement or arrangement, (ii) any liability for the Taxes of any other Person under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, local or non-U.S. Law (including any arrangement for group or consortium relief or similar arrangement)) as a transferee or successor, by operation of Law or otherwise, (iii) incurred a
dual consolidated loss within the meaning of Section 1503 of the Code, or (iv) ever been a party to any joint venture, partnership or other arrangement that is reasonably likely to be treated as a partnership for Tax purposes. Neither the
Company nor any Subsidiary has ever been a member of an affiliated group (within the meaning of Section 1504(a) of the Code or any analogous combined, consolidated or unitary group defined under state, local or non-U.S. income Tax law) filing a
consolidated federal income Tax Return (other than a group the common parent of which was the Company).
(i) FIRPTA. Neither the Company nor any Subsidiary is or has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(j) No Other Jurisdictions for Filing Tax Returns. There are no jurisdictions in which the Company or any Subsidiary is
required to file a material Tax Return other than the jurisdictions in which the Company or such Subsidiary has filed such Tax Returns. Neither the Company nor any Subsidiary is subject to Tax in any country other than its country of
incorporation or formation by virtue of having a permanent establishment, place of business, or business operations in that other country. No claim has ever been made by a Governmental Entity in a jurisdiction where the Company or a Subsidiary
does not file Tax Returns that the Company or a Subsidiary, as applicable, is or may be subject to taxation by that jurisdiction.
(k) Tax Rulings. Neither the Company nor any Subsidiary has entered into any arrangement (including “rulings”) with any Tax
authority outside of the ordinary course of business. Neither the Company nor any Subsidiary has made any material U.S. Tax election except as disclosed in the Tax Returns filed. Section 3.10(k) of the Disclosure Schedule describes the
terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order of other special regime with regard to the payment of Taxes applicable to the Company or any of its Subsidiaries (“Tax Incentive”). Copies
of any material documents relating to any such Tax Incentives have been Made Available to Buyer. The Company and each Subsidiary are in compliance in all material respects with the terms and conditions of any such Tax Incentive, and the
consummation of the transactions contemplated by this Agreement is not reasonably expected to have any adverse effect on the continued validity and effectiveness of any such Tax Incentive. Buyer and its Affiliates will not be liable to any
Governmental Entity after the Closing for any amounts benefiting the Company or any Subsidiary before the Closing under or with respect to any such Tax Incentives (including as a result of a termination thereof or disqualification therefrom) as
a result of the transactions contemplated by this Agreement.
(l) Transfer Pricing. The Company and each of its subsidiaries is in compliance in all material respects with all applicable
transfer pricing laws, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practice and methodology. The prices for any property or services (or for the use of any property) provided by
or to the Company or any Subsidiary are arm’s-length prices for purposes of the relevant transfer pricing laws, including Treasury Regulations promulgated under Section 482 of the Code.
(m) Tax Shelters; Listed Transactions. Neither the Company nor any Subsidiary has consummated or participated in, nor is the
Company or any Subsidiary currently participating in, any transaction which was or is a “tax shelter” transaction as defined in Sections 6662 or 6111 of the Code or the Treasury Regulations promulgated thereunder. Neither the Company nor any
Subsidiary has ever participated in, nor is currently participating in, a “listed transaction” or a “reportable transaction” within the meaning of Section 6707A(c) of the Code or Treasury Regulation Section 1.6011-4(b), or any transaction
requiring disclosure under a corresponding or similar provision of state, local, or non-U.S. Laws. The Company and each Subsidiary has disclosed on its Tax Returns any Tax reporting position taken in any Tax Return which could result in the
imposition of penalties under Section 6662 of the Code (or any comparable provisions of state, local or non-U.S. law).
(n) Withholding. Each of the Company and its Subsidiaries: (i) has complied in material respects with all applicable Laws
relating to the payment, reporting and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445 and 1446 of the Code or similar provisions under any non-U.S. Law); (ii) has, within the time and in the manner
prescribed by applicable Laws, withheld or collected from each payment made to its Employees, Former Employees, service providers and other third parties, and timely paid over to the proper Governmental Entities (or is properly holding for such
timely payment), all amounts required to be so withheld and paid over under all applicable Laws, including U.S. federal and state income and employment Taxes, Federal Insurance Contribution Act, Medicare, Federal Unemployment Tax Act, and
relevant non-U.S. income and employment Tax withholding Laws; and (iii) has timely filed all withholding Tax Returns, for all periods.
(o) Change in Accounting Methods; Closing Agreements. Neither the Company nor any Subsidiary will be required to include any
item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting made prior to the Closing Date; (ii)
closing agreement as described in Section 7121 (or any corresponding or similar provision of state, local, or non-U.S. Tax law) executed prior to the Closing Date; (iii) intercompany transactions or excess loss accounts described in Treasury
Regulations under Section 1502 of the Code (or any similar provision of state, local, or non-U.S. Tax Law) consummated on or prior to the Closing Date; (iv) installment sale or open transaction disposition made on or prior to the Closing Date;
(v) prepaid amount received outside of the ordinary course of business on or prior to the Closing Date; (vi) application of Section 965 of the Code; or (vii) election under Section 108(i) of the Code (or any similar provision of applicable Law)
made prior to the Closing Date. Neither the Company nor any Subsidiary has made an election under Section 965(h) of the Code.
(p) Tax Accounting. The Company uses the accrual method of accounting for Tax purposes.
(q) Controlled Foreign Corporation; Passive Foreign Investment Company. Neither the Company nor any Subsidiary other than Shape
Security Limited is a “controlled foreign corporation” within the meaning of Section 957(a) of the Code or a “passive foreign investment company” within the meaning of Section 1297(a) of the Code.
(r) Section 409A Matters.
(i) Each Company Employee Plan or Employee Agreement that is a “nonqualified deferred compensation plan” (as such
term is defined in Section 409A(d)(1) of the Code) subject to Section 409A of the Code (“Section 409A”) has been in material documentary and operational compliance with Section 409A. To the extent required, the Company and each
Subsidiary has properly reported and/or withheld and remitted on amounts deferred under any Company nonqualified deferred compensation plan subject to Section 409A of the Code. There is no Contract, agreement, plan or arrangement to which the
Company or any Subsidiary is a party covering any Employee, which individually or collectively could reasonably be expected to require the Company or any of its Subsidiaries to pay a Tax gross up payment to, or otherwise indemnify or reimburse,
any Employee for Tax-related payments under Section 409A.
(ii) No Company Option or other stock right (as defined in the U.S. Treasury Department Regulation 1.409A 1(1)) (A)
has an exercise price that is less than the fair market value of the underlying equity as of the date such option or right was granted, (B) has any feature for the deferral of compensation other than the deferral of recognition of income until
the later of exercise or disposition of such option or rights, or (C) has been granted after December 31, 2004, with respect to any class of shares of the Company that is not “service recipient stock” (within the meaning of applicable
regulations under Section 409A).
3.11 Real Property. None of the Company nor any Subsidiary owns any real property, nor has the Company or any Subsidiary ever
owned any real property. Section 3.11 of the Disclosure Schedule sets forth a list as of the Agreement Date of all real property currently leased, subleased or licensed by or from the Company or any Subsidiary or otherwise used or
occupied by the Company or any Subsidiary (the “Leased Real Property”). Section 3.11 of the Disclosure Schedule sets forth a list as of the Agreement Date of all leases, lease guaranties, subleases, agreements for the leasing,
use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property, including the name of the lessor, licensor, sublessor, master lessor and/or lessee the date and term of the lease, license, sublease or other
occupancy right, the aggregate annual rental payable thereunder and all amendments, terminations and modifications thereof (the “Lease Agreements”). The Company or any Subsidiary currently occupies all of the Leased Real Property for the
operation of its business. There are no other parties occupying, or with a right to occupy, the Leased Real Property. Neither the Company nor any Subsidiary owes brokerage commissions or finders’ fees with respect to any such Leased Real
Property or would owe any such fees if any existing Lease Agreement were renewed pursuant to any renewal options contained in such Lease Agreements. The Company and each of its Subsidiaries has performed all of its obligations under any
termination agreements pursuant to which it has terminated any leases, subleases, licenses or other occupancy agreements for real property that are no longer in effect and has no continuing liability with respect to such terminated agreements.
To the Company’s Knowledge, the Leased Real Property is in good operating condition and repair, free from structural, physical and mechanical defects, is maintained in a manner consistent with standards generally followed with respect to
similar properties, and is structurally sufficient and otherwise suitable for the conduct of the Company’s business. Neither the operation of the Company or any Subsidiary on the Leased Real Property nor, to the Company’s Knowledge, such Leased
Real Property, including the improvements thereon, violate any applicable building code, zoning requirement or statute relating to such property or operations thereon, and any such non-violation is not dependent on so-called non-conforming use
exceptions.
3.12 Tangible Property. The Company and each of its Subsidiaries has good and valid title to, or, in the case of leased
properties and tangible assets, valid leasehold interests in, all of its tangible properties and tangible assets used or held for use in its business, free and clear of any Liens, except (a) as reflected in the Current Balance Sheet, and (b)
Permitted Liens. The tangible properties and tangible assets owned or leased by the Company or any Subsidiary (i) constitute all tangible properties and tangible assets necessary for the conduct of the business of the Company and its
Subsidiaries as currently conducted and as currently contemplated to be conducted, and (ii) in good operating condition, regularly and properly maintained, subject to normal wear and tear.
3.13 Intellectual Property.
(a) Disclosures. The Disclosure Schedule contains a complete and accurate list of:
(i) in Section 3.13(a)(i) of the Disclosure Schedule, each Company Product;
(ii) in Section 3.13(a)(ii) of the Disclosure Schedule: (A) each item of Registered IP that is Company IP or
that is Licensed exclusively to the Company or any Subsidiary (“Company Registered IP”); (B) the name of the record owner of such item of Company Registered IP; (C) the jurisdiction in which such item of Registered IP has been registered
or filed (or, for domain names, the applicable registrar); (D) the applicable application, registration or serial number of such item of Company Registered IP; (E) the filing date and issuance/registration/grant date of such item of Company
Registered IP; (F) the prosecution status of such item of Company Registered IP; (G) any actions that must be taken by the Company or any Subsidiary with any applicable Governmental Entity within one hundred eighty (180) days after the
Agreement Date with respect to such item of Company Registered IP, including the payment of any registration, maintenance or renewal fees or the filing of any documents, applications or certificates; and (H) a list of any Actions before any
court or tribunal (including the United States Patent and Trademark Office or equivalent authority anywhere in the world) to which the Company or any Subsidiary is a party or in which claims are raised relating to the validity, enforceability,
scope, ownership or Infringement of such item of Company Registered IP;
(iii) in Section 3.13(a)(iii) of the Disclosure Schedule, (A) all Licensed IP Contracts (other than Open
Source Licenses; Licensed IP Contracts for any non-customized Software or software-as-a-service solution that: (1) is licensed or made available to the Company or any Subsidiary solely in executable or object code form pursuant to a
nonexclusive, internal use software license or service agreement; (2) is not incorporated into any Company Products; and (3) is generally available on standard terms for less than $25,000 per year; Licensed IP Contracts on the Standard Form IP
Contracts; and Licensed IP Contracts that are Incidental Licenses); (B) whether the License or Licenses granted to the Company or such Subsidiary, as the case may be, in such Licensed IP Contract is or are exclusive or nonexclusive; and (C)
each Company Product in which such Licensed IP is incorporated or for which such Licensed IP is currently used in the production environment; and
(iv) in Section 3.13(a)(iv) of the Disclosure Schedule, each Company IP Contract, other than Licensed IP
Contracts, Contracts on the Standard Form IP Contracts and Incidental Licenses.
(b) Standard Form IP Agreements. The Company has Made Available a true, correct and complete copy of each Standard Form IP
Contract.
(c) Ownership Free and Clear. The Company or the Subsidiaries exclusively own all right, title and interest in and to the
Company IP free and clear of any Liens (other than Permitted Liens). Without limiting the generality of the foregoing:
(i) each Person who is an Employee or a Former Employee or is or was an independent contractor of the Company or any
Subsidiary and who is or was involved in the creation or development of any Company IP (including any Person who has contributed to any Open Source Software on behalf of the Company or any Subsidiary) (each, a “Contributor”) has signed a
valid and enforceable agreement containing an irrevocable, effective assignment of Intellectual Property Rights in the Company IP to the Company or a Subsidiary, a waiver of moral rights in the Company IP and confidentiality provisions
protecting the Company IP, in each case substantially in the Company’s Standard Form IP Contract for Employees (a copy of which is attached to Section 3.13(c)(i)-A of the Disclosure Schedule (the “Employee Proprietary Information
Agreement”)) or substantially in the Company’s Standard Form IP Contract for independent contractors (a copy of which is attached to Section 3.13(c)(i)-B of the Disclosure Schedule (the “Consultant Proprietary Information
Agreement”)), as the case may be, that provides for the Company or a Subsidiary to have complete and exclusive ownership of such Company IP without the exclusion or reservation by the Contributor of any Intellectual Property or
Intellectual Property Right;
(ii) no Contributor or, to the Knowledge of the Company, former employer of any Contributor has any claim, right or
interest to or in any Company IP;
(iii) to the Knowledge of the Company, no Contributor is in breach of any Contract with any former employer or other
Person concerning Intellectual Property Rights or confidentiality that, as a result of such breach, would affect the Company’s or any Subsidiary’s right or interest in or to any Company IP;
(iv) no funding, facilities or personnel of any Governmental Entity or of any university, college, other educational
institution, or any multi-national, bi-national or international organization or research center were used to develop or create any Company IP;
(v) the Company and each Subsidiary has taken reasonable steps to maintain the confidentiality of all proprietary
information held by such entity, or purported to be held by such entity, as a Trade Secret, and has applied appropriate access levels to Trade Secrets to personnel based on a need to have access basis, including any such information of a third
party provided to the Company or any Subsidiary with obligations of confidentiality;
(vi) neither the Company nor any Subsidiary has permitted the rights of the Company or any Subsidiary in any Company
IP to enter into the public domain;
(vii) no Company IP is subject to any proceeding or outstanding decree, order, judgment or settlement agreement, or
stipulation that restricts in any manner the use, exploitation, transfer or Licensing thereof by the Company or any Subsidiary;
(viii) neither the Company nor any Subsidiary has assigned or otherwise transferred ownership of or granted an exclusive
License to, or agreed to assign or otherwise transfer ownership of or grant an exclusive License to, any (A) Patents or (B) any Intellectual Property Right (other than Patents) that is or was (at the time of such assignment or transfer of
ownership or the granting of such exclusive License) material to the business of the Company or any Subsidiary, to any other Person;
(ix) neither the Company nor any Subsidiary is currently or has been a member or promoter of, or a Contributor to, any
industry standards body or similar organization that could require or obligate the Company or any Subsidiary to grant or offer to any other Person any License or right to any Company IP (or that could, following the Effective Time, require or
obligate Buyer or any of its Affiliates to grant or offer to any other Person any License or right to any Intellectual Property or Intellectual Property Right);
(x) none of the Patents included in the Company IP are subject to any declaration that obligates the Company or any
of the Subsidiaries to grant a License thereunder on a royalty-free basis or on reasonable and non-discriminatory (RAND) or fair reasonable and non-discriminatory (FRAND) terms; and
(xi) the Company and each Subsidiary owns or otherwise has, and after the Closing will continue to have, all
Intellectual Property Rights and Intellectual Property needed to conduct the business of such entity as currently conducted and, to the Knowledge of the Company, needed to commercialize any Development Product.
(d) Valid and Enforceable. The Company or one of the Subsidiaries is listed at the appropriate Governmental Entity as the sole
owner of all Company Registered IP (excluding Company Registered IP that is exclusively Licensed to the Company or one of the Subsidiaries) and there are no gaps in chain-of-title documents filed with the applicable Governmental Entity with
respect thereto. All necessary registration, maintenance and renewal fees with respect to the Company Registered IP have been paid, and all necessary affidavits, responses, recordations, certificates, releases and other documents have been
filed, in each case for the purposes of obtaining, maintaining, perfecting, preserving and renewing all such Company Registered IP and the ownership rights of the Company or one of the Subsidiaries with respect thereto. To the Knowledge of the
Company, there is no basis for a claim that any Company Registered IP, except for pending applications, is invalid or unenforceable. Without limiting the generality of the foregoing, no Trademark (whether registered or unregistered) or domain
name that is Company IP is confusingly similar to or otherwise violates any Trademark (whether registered or unregistered) or domain name owned, used or applied for by any third party. None of the goodwill associated with or inherent in any
Trademark (whether registered or unregistered) in which the Company or any Subsidiary has or purports to have an ownership interest has been impaired.
(e) Effects of This Transaction. Neither the execution, delivery or performance of this Agreement or any Related Agreements,
nor the consummation of any of the transactions contemplated by this Agreement or any Related Agreement will, with or without notice or the lapse of time, result in or give any other Person the right or option to cause or declare: (i) a loss of
(including any incremental loss of rights with respect to), or Lien on, any Company IP or, pursuant to the terms of any Company IP Contract, a loss of the Company’s or any Subsidiary’s rights to any Licensed IP; (ii) a breach of any Licensed IP
Contract or Company IP Contract; (iii) the Company or any Subsidiary (or, pursuant to the terms of any Company IP Contract, Buyer or its Affiliates) becoming bound by or subject to any non-compete or other restriction on the operation or scope
of their respective businesses; (iv) the release, disclosure or delivery of any Company IP by or to any escrow agent or other Person; (v) the Company or any Subsidiary becoming obligated to pay any royalties or other fees or amounts with
respect to Intellectual Property of any third party in excess of those payable by the Company and each of the Subsidiaries in the absence of this Agreement or the transactions contemplated hereby; or (vi) the grant, assignment or transfer to
any other Person of any License under any of the Company IP or, pursuant to the terms of any Company IP Contract, under any Intellectual Property or Intellectual Property Rights of the Buyer or any of its Affiliates. Neither the Company nor any
Subsidiary has claimed any status in the application for or registration of any Company Registered IP, including “small business status,” that would be invalid or inaccurate following the consummation of the transactions contemplated by this
Agreement or any Related Agreement.
(f) No Third-Party Infringement of Company IP. To the Knowledge of the Company, no third party has Infringed, and no third
party is currently Infringing, any Company IP. Section 3.13(f) of the Disclosure Schedule accurately identifies (and the Company has Made Available a true, correct and complete copy of) each letter or other written or electronic
communication or correspondence that has been sent or otherwise delivered by or to the Company or any Subsidiary or any of their respective representatives regarding any actual, alleged or suspected Infringement of any Company IP.
(g) Use of Licensed IP. The Company and the Subsidiaries have valid written licenses to use, reproduce, incorporate,
distribute, license, sublicense and provide access to customers in respect of all Licensed IP in the manner and to the extent undertaken by the Company and the Subsidiaries in the conduct of their businesses as presently conducted, and no
consents are required to be obtained by the Company and the Subsidiaries with respect to any of the foregoing activities that have not been obtained. To the Knowledge of the Company, the Company and the Subsidiaries have valid written licenses
to use, reproduce, incorporate, distribute, license, sublicense and provide access to customers in respect of all Licensed IP to the extent needed to commercialize any Development Product and, to the Knowledge of the Company, no consents are
required to be obtained by the Company and the Subsidiaries with respect to any of the foregoing activities that have not been obtained. The Licensed IP Contracts provide the Company and the Subsidiaries with the right, with respect to any
Licensed IP, to (i) distribute and make available Company Products to their customers and potential customers in the manner the Company or any Subsidiary currently makes Company Products available and (ii) authorize their customers and
potential customers to use such Company Products in the manner authorized by the Company and the Subsidiaries. No third party that has Licensed any Licensed IP to the Company or any Subsidiary that is used by the Company or any Subsidiary in
the production environment for any Company Product or that is otherwise necessary to the operation of any Company Product has retained or been assigned an ownership interest in or any exclusive License to any Intellectual Property or
Intellectual Property Rights in any improvements, modifications or derivative works to such Licensed IP made solely or jointly by the Company or any Subsidiary.
(h) No Infringement of Third-Party IP Rights. Neither the Company nor any Subsidiary is Infringing, or has ever Infringed,
misappropriated or otherwise violated, any Intellectual Property Right of any other Person. The conduct of the businesses of the Company and the Subsidiaries has not Infringed any Intellectual Property Right of any other Person and, to the
Knowledge of the Company, there is no reasonable basis for any such claim. Without limiting the generality of the foregoing: (i) no Company Product has ever Infringed any Intellectual Property Right of any third party; (ii) no Infringement,
misappropriation or similar Action, or any Action alleging unfair competition or trade practices, is pending or has been threatened in writing (or, to the Knowledge of the Company, by any non-written means of communication) against the Company
or any Subsidiary or against any other Person who may be entitled to be indemnified, defended, held harmless or reimbursed by the Company or any Subsidiary with respect to such Action; (iii) neither the Company nor any Subsidiary has received
any written notice or other written communication (or, to the Knowledge of the Company, any non-written notice or other non-written communication) relating to any actual, alleged or suspected Infringement by the Company or any Subsidiary of any
Intellectual Property Right of any third party, or any actual, alleged or suspected engagement by the Company or any Subsidiary in unfair competition or trade practices under the Laws of any jurisdiction; and (iv) neither the Company nor any
Subsidiary is bound by any Contract to indemnify, defend, hold harmless or reimburse any other Person with respect to any Infringement of any Intellectual Property Right (other than as set forth in Section 3.13(h) of the Disclosure
Schedule or in any Standard Form IP Contract). Neither the Company nor any Subsidiary has ever sought or obtained an opinion of counsel regarding any possible Infringement of any third party’s Intellectual Property Rights.
(i) Bugs. None of the Company Technology fails to materially comply with any applicable warranty or other contractual
commitment made by or on behalf of the Company or any Subsidiary relating to the use, functionality or performance of, or any product or system containing or used in conjunction with, such Company Technology. The Company has Made Available a
true, correct and complete copy of its list as of the Agreement Date of all known bugs, defects and errors in each version and component of the Company Technology that is currently being supported and adversely and materially affects the
performance of such Company Technology and has not been remedied as of the Agreement Date.
(j) No Contaminants. None of the Company Technology that is Company IP (and, to the Knowledge of the Company, none of the
Company Technology that is Licensed IP) contains any Contaminants. The Company and each Subsidiary uses industry standard measures, which measures are no less than reasonable, to prevent the introduction of Contaminants into Company Technology.
(k) Use of Open Source Code.
(i) On October 28, 2019, the Company provided a complete and accurate copy to Flexera Software LLC (“Flexera”)
for Flexera’s review, of the most recent version of all Software that forms a part of the current version of each Launched Product.
(ii) Neither the Company nor any Subsidiary has used, modified, or distributed any Open Source Software in a manner
that, based on the conduct of the businesses of the Company and each Subsidiary as currently conducted: (A) requires the disclosure, Licensing or distribution of any source code for any Company IP; (B) imposes any restriction on the
consideration to be charged for the distribution of any Company IP; (C) creates, or purports to create, obligations for the Company or any Subsidiary with respect to the Company IP other than those set forth in the applicable Open Source
License, or grants, or purports to grant, to any third party, any rights or immunities under any Company IP; or (D) other than any attribution or notice requirement, imposes any other limitation, restriction or condition on the right or ability
of the Company or any Subsidiary to use or distribute any Company IP. The Company and each Subsidiary has complied with all of the terms and conditions of each applicable Open Source License, including all requirements pertaining to attribution
and copyright notices. The Company has Made Available all of the Company’s and its Subsidiaries’ internal policies and guidelines related to use of or contributions to Open Source Software, and there have been no instances of material
non-compliance with respect thereto. The Company has not received any requests from any third parties for source code copies of any Open Source Software.
(l) Company Source Code. The Company and each Subsidiary has taken actions customary in the software industry to document the
Software that is Company IP and its operation, such that such Software, including its source code and documentation, have been written in a professional manner so that they may be understood, modified and maintained in an efficient manner by
reasonably competent programmers. No source code for any Company IP has been delivered, Licensed or made available to any escrow agent or other Person who was not, as of the time thereof, an Employee or contractor of the Company or any
Subsidiary, including under any Open Source License. Neither the Company nor any Subsidiary has any duty or obligation (whether present, contingent or otherwise) to deliver, License or make available the source code for any Company IP to any
escrow agent or other Person. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, License or disclosure of any source
code for any Company IP to any other Person who is not, as of the Agreement Date, an Employee or contractor of the Company or any Subsidiary. Section 3.13(l) of the Disclosure Schedule sets forth a complete and accurate list of each
contractor that has invented, conceived or developed any Company IP or had access to the source code of the Company or any Subsidiary.
(m) Private Data. The Company, each Subsidiary, the Company Sites and the Company Products, and all third parties acting on
behalf of the Company or any Subsidiary or that have access to Private Data collected by or on behalf of the Company or any Subsidiary comply, and have at all times since December 31, 2016 complied, with all applicable Privacy Obligations,
including those relating to (i) the privacy of users of Company Sites and Company Products, (ii) the privacy of individuals whose Private Data is Processed by Company Products, or (iii) the collection or other Processing of any Private Data
collected or otherwise Processed by or on behalf of the Company or any Subsidiary, or by third parties having access to such Private Data. Neither the execution, delivery and performance of this Agreement or any Related Agreement nor the
subsequent transfer of all of the Company’s and each of the Subsidiaries’ databases and other information relating to its customers and all non-customer end users of the Company Sites and the Company Products or to other individuals whose
Private Data is Processed by a Company Product, including all Private Data, from the Company or the Subsidiaries to the Surviving Corporation will cause, constitute, or result in a breach or violation of any Privacy Obligation by any party to
this Agreement (or any of their Affiliates), or cause, constitute, or result in a violation of any representations with regard to Private Data made by Company or any Subsidiary, including any Company Privacy Policy. Copies of all Company
Privacy Policies have been Made Available. Company Privacy Policies have at all times made all disclosures to users or customers required by all Privacy Obligations, and Company and each Subsidiary has obtained all consents from users required
by all Privacy Obligations. None of the disclosures made or contained in the Company Privacy Policies, and no other representation with regard to Private Data made by Company or any Subsidiary, has been materially inaccurate, misleading or
deceptive or in violation of any Privacy Obligations (including containing any material omission). There is no Action (including any informal investigation) currently pending against, the Company, any Subsidiary, or to the Knowledge of the
Company, any of their respective customers (relating to any of the Company Sites or Company Products) by (i) any private party or (ii) the Federal Trade Commission, any state attorney general or similar state official, or any other Governmental
Entity, foreign or domestic, with respect to the collection or other Processing of Private Data.
(n) Security Measures. At all times since December 31, 2016, the Company and each Subsidiary has taken all steps and procedures
required to comply with all applicable Laws relating to the security of information technology assets, Private Data, confidential information, and other data, information, and Company IP to which the Company, any Subsidiary or any third party
acting on any of their behalves has access or otherwise Processes. Company and each Subsidiary have implemented, maintained, and monitored reasonable measures with respect to technical, administrative, and physical security to preserve and
protect the confidentiality, availability, security, and integrity of the Company IT Systems, Private Data, confidential information, and other data, information, and Company IP Processed by the Company, any Subsidiary or any third party acting
on their behalves (including protecting the Company IT Systems from infection by Contaminants, access by unauthorized Persons, or access by authorized Persons that exceeds the Person’s authorization). Neither the Company nor any Subsidiary has
made materially false or misleading public statements regarding the Company’s or any of the Subsidiaries’ information security practices. The Company’s and each Subsidiary’s information security practices conform, and at all times since
December 31, 2016 have conformed, to all of the Company’s and the Subsidiaries’ contractual commitments and Company Privacy Policies. Without limiting the generality of the foregoing, the Company and each Subsidiary has implemented the disaster
recovery and security plans, procedures and facilities for the Company IT Systems specified in Section 3.13(n) of the Disclosure Schedule. There is no Action (including any informal investigation) currently pending against, the Company,
any Subsidiary or, to the Knowledge of the Company, any of their customers, suppliers or service providers (in each case, relating to the Company Products) by (i) any private party or (ii) the Federal Trade Commission, any state attorney
general or similar state official, or any other Governmental Entity, foreign or domestic, with respect to the security, confidentiality, availability, or integrity of the Company IT Systems, Private Data, confidential information, or other
data, information or Company IP. To the Knowledge of the Company, there have been no intrusions or breaches of the security of the Company IT Systems, Private Data, confidential information, or other data, information or Company IP Processed by
the Company or any Subsidiary. All Private Data is encrypted in accordance with Company’s and each of the Subsidiaries’ contractual commitments and representations made in the Company Privacy Policies and in accordance with industry practices
regarding encryption technologies and key management practices.
(o) Systems. Company IT Systems are reasonably sufficient for the existing and currently anticipated future needs of the
Company and the Subsidiaries. Company IT Systems are in good working condition to effectively perform all computing, information technology and data processing operations necessary for the operation of the businesses of the Company and the
Subsidiaries. There have been no internal or external audits of the Company IT Systems or privacy or security practices in which material exceptions or deficiencies were noted. The Company and the Subsidiaries have taken commercially reasonable
steps and implemented commercially reasonable safeguards to ensure that the Company IT Systems are substantially free from Contaminants. From and after the Closing, the Surviving Corporation or its applicable Subsidiaries will have and be
permitted to exercise the same rights (whether ownership, License or otherwise) with respect to the Company IT Systems as the Company or one of the Subsidiaries would have had and been able to exercise had the Merger not occurred, without the
payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or one of the Subsidiaries would otherwise have been required to pay.
(p) Section 3.13(p) of the Disclosure Schedule contains a complete and accurate list of all material software-as-a-service,
platform-as-a-service, infrastructure-as-a- service or similar products used by the Company and the Subsidiaries in connection with the operation of their businesses and Company Products.
3.14 Material Contracts.
(a) Section 3.14(a) of the Disclosure Schedule identifies, in each subpart that corresponds to the subsection listed below, any
Contract (other than any Company Employee Plan or Employee Agreement, including any written Contracts related thereto, that have been Made Available to Buyer) in effect as of the Agreement Date, (x) to which the Company or any Subsidiary is a
party, (y) by which the Company or any Subsidiary or any of their assets is or may become bound or under which the Company or any Subsidiary has, or may become subject to, any obligation, or (z) under which the Company or any Subsidiary has or
may acquire any right or interest (together with the Company IP Contracts required to be listed in Section 3.13(a)(iv) of the Disclosure Schedule and the Licensed IP Contracts required to be listed in Section 3.13(a)(iii) of the
Disclosure Schedule, the “Material Contracts”):
(i) that is with a Top Customer or Top Supplier, other than any sales orders or purchase orders entered into in the
ordinary course of business;
(ii) pursuant to which the Company or any Subsidiary has been appointed a sales referral partner, reseller or
distributor;
(iii) pursuant to which the Company or any Subsidiary has appointed a third party as a sales referral partner,
reseller, or distributor;
(iv) pursuant to which the Company or any Subsidiary is bound to or has committed to provide any Company Product to
any third party on a most-favored-nation basis or similar terms;
(v) pursuant to which the Company or any Subsidiary is bound to or has committed to provide or License any Company
Product or other Intellectual Property to any third party on an exclusive basis or to acquire or License any product, service or Intellectual Property on an exclusive basis from a third party;
(vi) imposing any restriction on the right or ability of the Company or any Subsidiary (or that would purport to limit
the freedom of the Buyer or any of its Affiliates): (A) to compete with any other Person or to engage in any line of business, market or geographic area, or to sell, License, manufacture or otherwise distribute or provide any of the Company
Products or the Company Technology, or from providing services, to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market; (B) to solicit the employment of,
or hire, any service providers of any Top Customer or Top Supplier; (C) to acquire any product, property or other asset (tangible or intangible), or any services, from any other Person; or (D) to develop or distribute any Intellectual Property
or Intellectual Property Rights;
(vii) set forth or required to be set forth in Section 3.13(h) of the Disclosure Schedule;
(viii) providing for the development of any Intellectual Property, independently or jointly, by or for the Company or
any Subsidiary, other than any Contracts with Contributors in the form of the Employee Proprietary Information Agreement or the Consultant Proprietary Information Agreement;
(ix) requiring source code for any Company IP to be delivered, Licensed or made available to any escrow agent or other Person;
(x) relating to (A) any facility not operated by the Company where the Company IT Systems or any other computer
equipment used to operate or provide Company Products is located or (B) the lease, license or rental of any Company IT Systems to the Company or any of the Subsidiaries;
(xi) any Contract for the purchase, lease, license or rental of equipment in excess of $250,000 on a one-time or
annual basis;
(xii) that is a collectively bargained agreement or similar Contract, including any Contract with any union, works
council or similar labor entity;
(xiii) that is a Lease Agreement;
(xiv) relating to capital expenditures and involving future payments in excess of $250,000 individually or $1,000,000
in the aggregate;
(xv) relating to the settlement of any Action;
(xvi) relating to the disposition or acquisition of material assets or any interest in any Person or business
enterprise;
(xvii) relating to any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other
Contracts or instruments relating to Indebtedness or extension of credit or the creation of any Lien (other than a Permitted Lien) with respect to any asset of the Company or any Subsidiary;
(xviii) involving or incorporating any guaranty, pledge, performance bond or completion bond, or surety arrangement;
(xix) creating or relating to any partnership or joint venture or any sharing of revenues, profits, losses, costs or
liabilities;
(xx) relating to the purchase or sale of any product or other asset by or to, or the performance of any services by or
for, any Interested Party;
(xxi) constituting or relating to any (A) prime contract, subcontract, letter contract, purchase order or delivery order
executed or submitted to or on behalf of any Governmental Entity or any prime contractor or higher-tier subcontractor, or under which any Governmental Entity or any such prime contractor or subcontractor otherwise has or may acquire any right
or interest, or (B) quotation, bid or proposal submitted to any Governmental Entity or any proposed prime contractor or higher-tier subcontractor of any Governmental Entity;
(xxii) that is a hedging, futures, options or other derivative Contract;
(xxiii) that contemplates or involves: (A) the payment or delivery of cash or other consideration in an amount in excess
of $500,000 in the aggregate; or (B) the performance of services having a value in excess of $500,000 in the aggregate, in each case following the Agreement Date.
(b) The Company has Made Available true, correct and complete copies of all written Material Contracts, including all amendments
thereto. Section 3.14(b) of the Disclosure Schedule provides an accurate description of the terms of each Material Contract that is not in written form. Each Material Contract is valid and in full force and effect and is enforceable by
the Company in accordance with its terms, subject to Laws of general application relating to bankruptcy, insolvency and the relief of debtors; and rules of law governing specific performance, injunctive relief and other equitable remedies.
Neither the Company nor any Subsidiary has violated or breached, or committed any default under, any Material Contract, and, to the Knowledge of the Company, no other Person has violated or breached, or committed any default under, any such
Contract. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to: (i) result in a violation or breach of any of the provisions of any Material
Contract by the Company or any Subsidiary; (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract against the Company or any Subsidiary; (iii) give any Person the right to accelerate the maturity
or performance of any Material Contract by the Company or any Subsidiary; or (iv) give any Person the right to cancel, terminate or modify any Material Contract against the Company or any Subsidiary. Neither the Company nor any Subsidiary has
received any written notice or other communication regarding any actual or possible violation or breach of, or default under, any Material Contract. Neither the Company nor any Subsidiary has waived any of its rights under any Material
Contract. No Person is renegotiating, or has a right to renegotiate, in each case pursuant to the terms of any Material Contract, any amount paid or payable to the Company or any Subsidiary under any Material Contract or any other material term
or provision of any Material Contract. No Person has threatened in writing to terminate or refuse to perform its obligations under any Material Contract (regardless of whether such Person has the right to do so under such Contract).
3.15 Employee Benefit Plans.
(a) Schedule.
(i) Section 3.15(a)(i) of the Disclosure Schedule contains an accurate and complete list of each material
Company Employee Plan and each Employee Agreement as of the Agreement Date. No Person, other than an Employee (or a dependent or beneficiary thereof), Former Employee (or a dependent or beneficiary thereof) or a current or former shareholder of
the Company or any ERISA Affiliate, is or was a member or former member of any Company Employee Plan. Neither the Company nor any Subsidiary has made any plan or commitment to establish any new Company Employee Plan or Employee Agreement, to
modify any Company Employee Plan or Employee Agreement (except to the extent required by Law or to conform any such Company Employee Plan or Employee Agreement to the requirements of any applicable Law, in each case as previously disclosed to
the Buyer in writing, or as required by this Agreement), or to enter into any Company Employee Plan or Employee Agreement.
(ii) Section 3.15(a)(ii) of the Disclosure Schedule sets forth a table setting forth the name or (where
required by applicable Law) employee ID, employing entity, hiring date, title supervisor, location, exempt or non-exempt status, annual salary or base wages, commissions, bonus target for the current year and accrued but unpaid vacation
balances of each Employee as of the Agreement Date, including with respect to any such Employees on a leave of absence, the date the leave commenced and the expected date of return to work of such Employee, and with respect to any such
Employees who are foreign nationals, visa category and expiration date. To the Knowledge of the Company, no Employee listed on Section 3.15(a)(ii) of the Disclosure Schedule has provided written notice of an intent to terminate his or
her employment for any reason, other than in accordance with any employment arrangements as may be provided for in this Agreement.
(iii) Section 3.15(a)(iii) of the Disclosure Schedule contains an accurate and complete list of all natural
persons that have a consulting or advisory relationship with the Company or any Subsidiary as of the Agreement Date, including with respect to independent contractors, the engagement date, nature of services provided, and the expected duration
of such services.
(b) Documents. The Company and each of its Subsidiaries has Made Available, if applicable, (i) correct and complete copies of
all plan documents embodying each material Company Employee Plan and each Employee Agreement including all amendments thereto and all related trust documents, (ii) the three most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Employee Plan, (iii) if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee
Plan assets, (iv) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Company Employee Plan, (v) all written agreements and contracts
relating to each material Company Employee Plan, including administrative service agreements and group insurance contracts, (vi) all material correspondence to or from any governmental agency relating to any Company Employee Plan within the
past three years, (vii) all nondiscrimination test reports for each Company Employee Plan for the three most recent plan years, and (viii) the most recent IRS determination, opinion, notification or advisory letters issued with respect to each
Company Employee Plan. No verbal promises or representations have been made to any Employees to increase their compensation or continue their employment for any specific duration.
(c) Employee Plan Compliance. The Company and each of its Subsidiaries has, in all material respects, performed all obligations
required to be performed by them under, is not in material default or violation of, any Company Employee Plan or Employee Agreement, and each Company Employee Plan and Employee Agreement has been established and maintained in material
compliance with its terms and all applicable Laws, including ERISA or the Code. Any Company Employee Plan intended to be qualified under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code has either
applied for, prior to the expiration of the requisite period under applicable Treasury Regulations or IRS pronouncements, obtained or is entitled to rely on a favorable determination, advisory and/or opinion letter, as applicable, as to its
qualified status from the IRS or still has a remaining period of time under applicable Treasury Regulations or IRS pronouncements in which to apply for such letter and to make any amendments necessary to obtain a favorable determination, and,
to the Company’s Knowledge, there has been no event, condition or circumstance that has adversely affected or would be reasonably likely to adversely affect such qualified status. No “prohibited transaction,” within the meaning of Section 4975
of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Company Employee Plan that would reasonably be expected to result in material liability to the Company or its
Subsidiary. There are no material actions, suits or claims pending or, to the Knowledge of the Company, threatened or reasonably anticipated (other than routine claims for benefits) against any Company Employee Plan or against the assets of any
Company Employee Plan. There are no audits, inquiries or proceedings pending or, to the Knowledge of the Company, threatened by the IRS, DOL, or any other Governmental Entity with respect to any Company Employee Plan. None of the Company nor
any Subsidiary is subject to any material penalty or Tax with respect to any Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. The Company and each of its Subsidiaries have timely made all
contributions and other payments required by and due under the terms of each Company Employee Plan or applicable Law to be made to a Company Employee Plan.
(d) No Pension, Multiemployer and Multiple-Employer Plan, Funded Welfare Plans and MEWAs. Neither the Company nor any ERISA
Affiliate has ever maintained, established, sponsored, participated in, contributed to, or agreed or been required to maintain, establish, sponsor, participate in or to contribute to, (i) any “employee benefit pension plan” (as defined in
Section 3(2) of ERISA) subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code; (ii) any multiemployer plan (as defined in Sections 3(37) and 4001(a)(3) of ERISA); or (iii) any multiple employer plan or
plan described in Section 413 of the Code. Neither the Company nor any Subsidiary maintains, sponsors, participates in, contributes to, and has not agreed to maintain, establish, sponsor, participate in or contribute to, and has no actual or
contingent liability with respect to (i) any “funded welfare plan” within the meaning of Section 419 of the Code; (ii) any self-funded plan that provides group health benefits to Employees (other than any such plan pursuant to which a stop-loss
policy or contract applies), but excluding any Code Section 125, 127 or 129 plan; or (iii) any multiple employer welfare arrangement, as defined under Section 3(40)(A) of ERISA.
(e) International Employee Plan. Each International Employee Plan has been established, maintained and administered in all
material respects in compliance with its terms and conditions and applicable Law. Furthermore, no International Employee Plan has material unfunded liabilities, that as of the Effective Time, would not reasonably be expected to be offset by
insurance or which are not fully accrued. Each International Employee Plan that is intended to qualify for tax-preferential treatment under applicable Laws so qualifies, except as could not reasonably be expected to result in a material
liability to the Company or any Subsidiary and each International Employee Plan required to be registered has been so registered.
(f) No Post-Employment Obligations. No Company Employee Plan or Employee Agreement provides, or reflects or represents any
liability to provide, post-termination or retiree or post-employment life insurance, health or other employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable Law or during the severance
period set forth in the applicable Employee Agreement, and neither the Company nor any ERISA Affiliate has any obligation to any Employee or Former Employee (either individually or to Employees or Former Employees as a group) or any other
person that such Employee(s), Former Employees or other person would be provided with post-termination or retiree or post-employment life insurance, health or other employee welfare benefits, except to the extent required by Law.
(g) Effect of Transaction. Neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby (alone or in connection with additional or subsequent events, any termination of employment or service in connection therewith) will (i) result in any payment (including severance, golden parachute, bonus or otherwise),
becoming due to any Employee, (ii) result in any forgiveness of indebtedness due to any Employee, (iii) increase any payment or benefit otherwise payable by the Company or any Subsidiary under any Company Employee Plan or Employee Agreement,
(iv) result in the acceleration of the time of payment or vesting, or require the funding, of any payment or benefit otherwise payable by the Company or any Subsidiary under any Company Employee Plan or Employee Agreement referenced in clause
(iii), or (v) increase the cost to the Company or any Subsidiary under any Company Employee Plan.
3.16 Employment Matters.
(a) Compliance with Employment Laws. The Company and each of its Subsidiaries is and since December 31, 2016 has been in
material compliance with all applicable Laws respecting employment, employment practices, and terms and conditions of employment, including, without limitation, all Laws respecting worker classification, tax withholding, workers’ compensation,
unemployment insurance, prohibited discrimination or harassment, employee leave issues, affirmative action, disability rights or benefits, plant closures and layoffs, equal employment, fair employment practices, meal and rest periods,
immigration, employee safety and health, wages (including overtime wages), compensation, and hours of work, pay equity, labor relation and background checks. The Company and each of its Subsidiaries, where applicable, has been in compliance
with Executive Order 11246 and all other applicable Laws requiring affirmative action or other employment-related actions for government contractors or subcontractors. In each case, with respect to Employees, Former Employees or current or
former directors, officers, advisors, independent contractors or consultants, the Company and each of its Subsidiaries: (i) has withheld and reported in all material respects all amounts required by Law or by Contract to be withheld and
reported with respect to wages, salaries and other payments to such persons, (ii) is not liable for any material arrears of wages, severance pay or any Taxes or any penalty for failure to comply with any of the foregoing, and (iii) is not
liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity, with respect to unemployment compensation benefits, social security or other benefits or obligations for such persons (other
than routine payments to be made in the normal course of business and consistent with past practice). There are, and since December 31, 2016, there have been, no Actions or administrative matters pending, threatened or reasonably anticipated
against the Company, any Subsidiary, or any of their Employees or Former Employees relating to any Employee, Former Employee, Employee Agreement, or current or former directors, officers, advisors, independent contractors or consultants. There
are no pending or threatened or reasonably anticipated Actions against the Company, any Subsidiary, any Company trustee or any trustee of any Subsidiary under any worker’s compensation policy. Neither the Company nor any Subsidiary is party to
a conciliation agreement, consent decree or other agreement or order with any Governmental Entity with respect to employment practices. Neither the Company nor any Subsidiary has direct or indirect liability with respect to any
misclassification of any person as an independent contractor rather than as an employee, with respect to any employee leased from another employer or with respect to any Employee or Former Employee currently or formerly classified as exempt
from overtime wages. None of the Company or its Subsidiaries is party to a settlement agreement with an Employee, Former Employee, or current or former director, officer, advisor, independent contractor or consultant that involves allegations
relating to sexual harassment. To the Knowledge of the Company, in the last five (5) years, no allegations of sexual harassment or other misconduct have been made against (x) any Key Employee, (y) any officer of the Company or its Subsidiaries
or (z) an Employee, and no such harassment or misconduct has occurred during the such period (whether or not allegations have been made).
(b) Labor. There have been no actual or threatened strikes, lockouts, labor disputes, slowdowns, concerted refusals to work, or
work stoppages against the Company or any Subsidiary. To the Company’s Knowledge, there have been no activities or proceedings of any labor union to organize any Employees, Former Employees or current or former independent contractor or
consultant. No labor or trade union, labor organization, works council, or group of Employees, Former Employees or current or former independent contractor or consultant has made a demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a representation proceeding presently pending or, to the Company’s Knowledge, threatened to be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. There are, and since December 31, 2016 there have been, no Actions or labor disputes pending or, to the Company’s Knowledge, threatened relating to any labor matters involving any Employee, Former Employee or
current or former independent contractor or consultant, including charges of unfair labor practices. Neither the Company nor any Subsidiary has engaged in any unfair labor practices within the meaning of the National Labor Relations Act or
similar Law. Neither the Company nor any Subsidiary is presently, nor has it been in the past, a party to, or bound by, any labor agreement, collective bargaining agreement or any other labor-related Contract with any labor or trade union,
labor organization, works council or group of employees and no such Contract is being negotiated by the Company or any Subsidiary.
(c) No Interference or Conflict. To the Knowledge of the Company, no Employee, independent contractor or consultant is
obligated under any Contract, subject to any judgment, decree, or order of any court, arbitrator or administrative agency that would interfere with such person’s efforts to promote the interests of the Company or any Subsidiary or that would
interfere with the Company’s businesses. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s businesses as presently conducted or proposed to be conducted nor any activity of such Employees, independent
contractors or consultants in connection with the carrying on of the Company’s businesses or any Subsidiary’s businesses as presently conducted or proposed to be conducted will, to the Knowledge of the Company, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute a default under, any Contract under which any of such Employees is now bound. To the Knowledge of the Company, no Employee of the Company or any Subsidiary is in violation of any
term of any Employment Agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other obligation (i) to the Company or any Subsidiary or (ii) to a former employer
of any such employee relating (A) to the right of any such employee to be employed by the Company or any Subsidiary or (B) to the knowledge or use of trade secrets or proprietary information.
3.17 Governmental Authorizations. Each consent, license, permit, grant or other authorization (a) pursuant to which the Company
or any Subsidiary currently operates or holds any interest in any of their respective properties, or (b) which is required for the operation of the Company’s or any Subsidiary’s businesses as currently conducted or the holding of any such
interest (collectively, “Company Authorizations”) has been issued or granted to the Company or any Subsidiary, as the case may be. The Company Authorizations are in full force and effect and constitute all Company Authorizations required
to permit the Company and its Subsidiaries to operate or conduct their respective businesses or hold any interest in their respective properties or assets and none of the Company Authorizations is subject to any term, provision, condition or
limitation which may adversely change or terminate such Company Authorizations by virtue of the completion of the transaction contemplated by this Agreement or any Related Agreement. The Company has been and is in material compliance with the
terms and conditions of the Company Authorizations.
3.18 Litigation. There is no Action of any kind or nature pending, or to the Knowledge of the Company, threatened, against the
Company, any Subsidiary, any of their respective properties or assets (tangible or intangible) or any of their respective officers or directors (in their capacities as such), nor is there any basis for the foregoing. No Governmental Entity has
at any time challenged or questioned the legal right of the Company or any Subsidiary to conduct their respective operations as presently or previously conducted or as currently contemplated to be conducted.
3.19 Insurance. Section 3.19 of the Disclosure Schedule lists all insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, Employees, officers and directors of the Company or any Subsidiary (excluding any insurance policy in connection with a Company Employee Plan), including the type of coverage, the carrier,
the amount of coverage, the term and the annual premiums of such policies. There is no claim by the Company or any Subsidiary pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed. In addition,
there is no pending claim of which its total value (inclusive of defense expenses) would reasonably be expected to exceed the policy limits. All premiums due and payable under all such policies and bonds have been paid, (or if installment
payments are due, will be paid if incurred prior to the Closing Date) and the Company and its Subsidiaries are otherwise in material compliance with the terms of such policies and bonds. Each such policy and bond (or other policies and bonds
providing substantially similar coverage) has been in effect since its inception and remains in full force and effect. The Company does not have any Knowledge of threatened termination of, or premium increase with respect to, any of such
policies.
3.20 Compliance with Laws.
(a) General. The Company and each Subsidiary has materially complied with, and is not in material violation of, any Law.
Neither the Company nor any Subsidiary has received any written notices of suspected, potential or actual violation with respect to, any Law.
(b) Export Control Laws. During the past three (3) years, the Company and each Subsidiary has at all times conducted its export
and re-export transactions materially in accordance with all applicable import/export controls in all countries in which the Company conducts business. Without limiting the foregoing, (i) the Company and each of its Subsidiaries has obtained
all material export and import licenses, license exceptions and other authorizations from any Governmental Entity required for (A) the sale, export, re-export, transfer and import of products, services, Software and other Intellectual Property
and (B) releases of Software and other Intellectual Property to foreign nationals located in the United States and abroad (the “Export Approvals”); (ii) the Company and each of its Subsidiaries is in compliance with the terms of all
applicable Export Approvals; (iii) there are no pending or, to the Company’s Knowledge, threatened claims against the Company or any Subsidiary with respect to such Export Approvals or export or re-export transactions; and (iv) no Export
Approvals for the transfer of export licenses or other export-related approvals to Buyer or the Surviving Corporation are required, or if required, such Export Approvals can be obtained expeditiously without material cost; and (v) Section 3.20(b)
of the Disclosure Schedule sets forth the true, correct and complete export control classifications applicable to the Company’s products, services, Software and other Intellectual Property.
(c) Sanctions. Neither the Company nor any Subsidiary (including any of their officers, directors, agents, distributors,
Employees or other Person acting on their behalf) is currently the target of any trade prohibition, embargo or restriction administered by the Office of Foreign Assets Control of the U.S. Treasury Department or other relevant trade sanctions
authority in the United States or any other jurisdiction where the Company operates (the “Sanctions”). Neither the Company nor any Subsidiary (including any of their officers, directors, agents, distributors, Employees or other Person
associated with or acting on their behalf) is owned or controlled by any natural person or entity that is currently target of any Sanctions, nor is located, organized or resident in a country or territory that is the target of Sanctions (a “Sanctioned
Country”), nor are they designated as a ‘designated person,’ ‘specially designated national,’ ‘blocked person’ or any other such term used in Sanctions to designate a natural person or entity subject to Sanctions. Neither the Company nor
any Subsidiary (including any of their officers, directors, agents, distributors, Employees or other Person acting on their behalf) has engaged during the past three (3) years in, and are not now engaged in, any funding, dealings, or
transactions with any Person, or with the property of any Person, that, at the time of the funding, dealing or transaction, would violate any Sanctions, including because that Person or property is or was the subject or target of Sanctions, or
was located in any Sanctioned Country (including Cuba, Iran, North Korea, Sudan, Syria, and the Crimea region of Ukraine).
(d) Anti-Corruption and Anti-Bribery Laws. Neither the Company nor any Subsidiary (including any of their officers, directors,
agents, distributors, Employees or other Person associated with or acting on their behalf) has, directly or indirectly, (i) taken any action which would cause it to be in violation of the Anti-Corruption and Anti-Bribery Laws, or (ii) used any
corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made, offered or authorized any unlawful payment to foreign or domestic government officials or employees, whether
directly or indirectly, or made, offered or authorized any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment, whether directly or indirectly. The Company maintains internal controls and compliance programs
designed to detect and prevent violations of the Anti-Corruption and Anti-Bribery Laws and ensure its Books and Records are accurately maintained, and track any payments made to third parties and foreign government officials, and has Made
Available all documentation concerning such internal controls and compliance programs. None of the Company, its Subsidiaries, or any of their respective directors, officers, Employees, distributors, resellers, consultants, agents or other third
parties acting on behalf of the Company or such Subsidiary have received any allegation or conducted any internal or government-initiated investigation, or made a voluntary, directed, or involuntary disclosure to any Governmental Entity or
similar agency with respect to the Anti-Corruption and Anti-Bribery Laws.
(e) Environmental Laws. Neither the Company nor any Subsidiary has released any amount of any Hazardous Material. No Hazardous
Materials are present in, on or under any property, including the land and the improvements, ground water and surface water thereof, that the Company or any Subsidiary has at any time owned, operated, occupied or leased. Neither the Company nor
any Subsidiary has transported, stored, used, manufactured, disposed of, released or exposed their Employees or others to Hazardous Materials in violation of any Law or in a manner that would result in liability to the Company or any
Subsidiary, nor has the Company or any Subsidiary disposed of, transported, sold, or manufactured any product containing a Hazardous Material (any or all of the foregoing being collectively referred to herein as “Hazardous Material Activity”)
in violation of any rule, regulation, treaty or statute promulgated by any Governmental Entity to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.
3.21 Top Customers and Suppliers.
(a) Section 3.21(a) of the Disclosure Schedule contains a true and correct list of the top twenty-five (25) currently active
distributors, licensees or other customers of Company Products by revenues generated in connection with such customers for the calendar year ending December 31, 2018 (each such customer, a “Top Customer”). Neither the Company nor its
Subsidiaries have received written notice, nor does the Company have any Knowledge, that any Top Customer (i) intends to cancel, or otherwise materially and adversely modify its relationship with the Company or any Subsidiary (whether related
to payment, price or otherwise) on account of the transactions contemplated by this Agreement or otherwise, or (ii) is threatened with bankruptcy or insolvency, or is otherwise unable to purchase goods or services from the Company or any
Subsidiary consistent with past custom and practice.
(b) Section 3.21(b) of the Disclosure Schedule contains a true and correct list of the top twenty-five (25) currently active
suppliers of the Company and its Subsidiaries, whether of products, services, Intellectual Property or otherwise, by dollar volume of sales and purchases, respectively, for the calendar year ending December 31, 2018 (each such supplier, a “Top
Supplier”). The Company nor its Subsidiaries have received written notice, nor does the Company have Knowledge, that any Top Supplier (i) intends to cancel, or otherwise materially and adversely modify its relationship with the Company or
any Subsidiary (whether related to payment, price or otherwise) on account of the transactions contemplated by this Agreement or otherwise, or (ii) is threatened with bankruptcy or insolvency or is otherwise unable to supply goods or services
to the Company or any Subsidiary consistent with past custom and practice.
3.22 Interested Party Transactions. No officer, director or, to the Knowledge of the Company, any other shareholder of the
Company or any Subsidiary (nor any immediate family member of any of such Persons, or any trust, partnership or corporation in which any of such Persons has or has had an interest) (each, an “Interested Party”), has or has had, directly
or indirectly, (i) any interest in any Person which furnished or sold, or furnishes or sells, services, products, technology or Intellectual Property Rights that the Company or any Subsidiary furnishes or sells, or proposes to furnish or sell,
or (ii) any interest in any Person that purchases from or sells or furnishes to the Company or any Subsidiary, any goods or services, or (iii) any interest in, or is a party to, any Contract (other than an Employee Agreement) to which the
Company or any Subsidiary is a party; provided, however, that ownership of no more than two percent (2%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed to be an “interest in any Person” for purposes of this Section 3.22. To the Company’s Knowledge, there are no Contracts with regard to contribution or indemnification between or among any of the Company
Shareholders. For clarity, no disclosure will be required under this Section 3.22 as to the portfolio companies of any venture capital, private equity or angel investor in Company.
3.23 Books and Records. The minute books of the Company and each of its Subsidiaries through September 10, 2019 have been Made
Available are complete and current as of such date and have been maintained in accordance with sound and prudent business practice. The minutes of the Company and each of its Subsidiaries contain true, correct and complete records of all
actions taken, and summaries of all meetings held, by the respective shareholders and the board of directors of the Company and each of its Subsidiaries (and any committees thereof) since the time of incorporation of the Company and each of its
Subsidiaries, as the case may be. The Company and each of its Subsidiaries has made and kept business records, financial books and records, personnel records, ledgers, sales accounting records, Tax records and related work papers and other
books and records (collectively, the “Books and Records”) that are true, correct and complete in all material respects and accurately and fairly reflect, in all material respects, the business activities of the Company and each of its
Subsidiaries. The Company and each of its Subsidiaries has not engaged in any material transaction, maintained any bank account or used any corporate funds except as reflected in its normally maintained Books and Records. At the Closing, the
minute books and other Books and Records will be in the possession of the Company and its Subsidiaries.
3.24 Brokers. Neither the Company nor any Subsidiary has incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with the Agreement or any transaction contemplated hereby, nor will Buyer or the Surviving
Corporation incur, directly or indirectly, any such liability based on arrangements made by or on behalf of the Company. Section 3.24 of the Disclosure Schedule sets forth the principal terms and conditions of any agreement, written or
oral, with respect to such fees unless such agreement was Made Available. Other than as set forth on Section 3.24 of the Disclosure Schedule, there is no Contract between the Company and any investment banker, broker, finder, or
similar party that would obligate Buyer, the Surviving Corporation or any of their respective Affiliates to retain such party for investment banking, brokerage, finder or similar services after the Closing.
3.25 Banking Relationships. Section 3.25 of the Disclosure Schedule sets forth a complete and accurate list of the name
and location of each bank, brokerage or investment firm, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account, safe deposit box or other arrangement, the account numbers, account
balances of the most recent account statements prior to the Agreement Date, and the names of all Persons authorized to draw on or who have access to such accounts, safe deposit boxes or other arrangements. There are no outstanding powers of
attorney executed by or on behalf of the Company or any of its Subsidiaries.
3.26 Information Statement. The Information Statement will not contain, at or prior to the Effective Time, any untrue statement of
a material fact, and will not omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which made not misleading; provided, however, that no representation or warranty is made herein with respect to any information provided by Buyer for inclusion in, or to be appended as an exhibit or other annex to, the Information Statement.
3.27 No Other Representations. Except as expressly set forth in Article III of this Agreement, the Disclosure Schedule
and the Officer’s Certificate, neither the Company nor any of the Company’s Representatives have made, nor are any of them making any representation or warranty, written or oral, express or implied, in respect of the Company or the Company’s
business. Each of the Company and the Company’s Representatives expressly acknowledge and agree that neither the Company nor any of its Representatives is relying on any other representation or warranty of Buyer or Merger Sub or any of their
respective Representatives, whether written or oral, express or implied other than the representations and warranties set forth in Article IV. Notwithstanding the foregoing or anything to the contrary set forth in this Agreement,
nothing set forth in this Section 3.27 or elsewhere in this Agreement will limit, restrict, impair or otherwise effect, operate as a release of, or be used in any way as a defense against, any rights, remedies or recourse available to
the Company or the Company’s Representatives under applicable Law in the event of fraud arising in connection with the transactions contemplated by this Agreement (whether based on this Agreement or otherwise).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Each of Buyer and Merger Sub hereby represents and warrants to the Company as follows:
4.1 Organization and Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of
the State of Washington. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
4.2 Authority and Enforceability.
(a) Each of Buyer and Merger Sub has all requisite corporate power and authority to enter into this Agreement and any Related
Agreements to which it is a party and to consummate the Merger and the other transactions contemplated hereby and thereby. The execution and delivery by each of Buyer and Merger Sub of this Agreement and any Related Agreements to which it is a
party and the consummation of the Merger and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate and other action on the part of Buyer and Merger Sub.
(b) This Agreement and any Related Agreements to which Buyer and Merger Sub are parties have been duly executed and delivered by Buyer
and Merger Sub and constitute the valid and binding obligations of Buyer and Merger Sub, enforceable against each of Buyer and Merger Sub in accordance with their terms, subject to (a) Laws of general application relating to bankruptcy,
insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general, and (b) rules of law governing specific performance, injunctive relief, other equitable remedies and other general principles of equity.
(c) The Buyer Common Stock subject to Unvested Company Options assumed by Buyer when issued pursuant to and in accordance with the
terms hereof, will be validly issued, fully paid and non-assessable.
4.3 Governmental Approvals. No consent, waiver, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Buyer or Merger Sub in connection with the execution and delivery of this Agreement and any Related Agreements to which Buyer or Merger Sub is a party or the consummation of the
Merger and the other transactions contemplated hereby and thereby, except for the HSR Filing and any required filing under non-U.S. antitrust, competition, or merger control laws.
4.4 Financing. Buyer has delivered to the Company a true and correct copy of an executed debt commitment letter (the “Commitment
Letter”) pursuant to which the lenders named therein (the “Lenders”) have committed, subject to the terms and conditions set forth therein, to lend Buyer the amounts set forth therein (the “Financing”) for the purpose of
funding the transactions contemplated by this Agreement. Buyer has also delivered to the Company a true and complete (other than the redactions referenced herein) copy of any fee letter related to the Commitment Letter (it being understood that
any such fee letter provided to the Company shall be redacted in a customary manner solely with respect to the fees, pricing caps and certain economic terms (including economic flex terms), which redacted information does not adversely affect
the amount, availability or conditionality of the funding of the Financing) (any such fee letter, a “Fee Letter”). As of the Agreement Date, the Commitment Letter and the Fee Letters (i) are in full force and effect and (ii) have not
been withdrawn or terminated or otherwise amended or modified in any respect and, as of the Agreement, to the knowledge of Buyer, no such withdrawal, termination or amendment is contemplated. As of the Agreement Date, each Fee Letter and the
Commitment Letter is a legal, valid and binding obligation of Buyer and, to the knowledge of Buyer, the other parties thereto, except as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors’
rights generally and by general principles of equity. As of the Agreement Date, there are no other agreements or side letters relating to the Commitment Letter or Fee Letters to which Buyer or any of its Subsidiaries is a party that would
affect the availability of the Financing (other than the Commitment Letter and the Fee Letters). As of the Agreement Date, no event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the
part of Buyer under any term or condition of the Commitment Letter or Fee Letters. There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as expressly set forth in the
Commitment Letter. Buyer has (or has caused to be) fully paid any and all commitment fees or other fees required by the Commitment Letter or Fee Letters to be paid by it on or prior to the Agreement Date. As of the Agreement Date, assuming the
accuracy of the representations and warranties set forth in Article III, the performance by the Company of its obligations under Article VII and the satisfaction of the conditions set forth in Section 2.2(a) and Section
2.2(b), Buyer is not aware of any fact or occurrence that, with or without notice, lapse of time or both, would reasonably be expected to (i) result in any of the conditions in the Commitment Letter not being satisfied, or (ii) otherwise
result in the Financing not being available on a timely basis in order to consummate the transactions contemplated by this Agreement. The net proceeds from the Financing, together with cash on hand of Buyer and its Subsidiaries, will be
sufficient to consummate the transactions contemplated by this Agreement. Buyer confirms that it is not a condition to Closing or any of its other obligations under this Agreement that Buyer obtain financing for or in connection with the
transactions contemplated by this Agreement.
4.5 Non-Reliance. Except as expressly set forth in Article IV of this Agreement, or the Buyer’s officer’s certificate
delivered pursuant to Section 2.2(c)(iii), neither Buyer or Merger Sub nor any of their respective Representatives have made, nor are any of them making any representation or warranty, written or oral, express or implied. Buyer and
Merger Sub expressly acknowledge and agree that neither they, nor any of their respective Representatives is relying on any other representation or warranty of the Company or any of its Representatives, whether written or oral, express or
implied other than the representations and warranties set forth in Article III. Notwithstanding the foregoing or anything to the contrary set forth in this Agreement but subject to the immediately following sentence, nothing set forth
in this Section 4.5 or elsewhere in this Agreement will limit, restrict, impair or otherwise effect, operate as a release of, or be used in any way as a defense against, any rights, remedies or recourse available to Buyer or Merger Sub
or any of their respective Representatives under applicable Law in the event of fraud arising in connection with the transactions contemplated by this Agreement (whether based on this Agreement or otherwise). Notwithstanding the foregoing or
anything to the contrary set forth in this Agreement, Buyer and Merger Sub understand and hereby acknowledge and agree that neither Buyer or Merger Sub nor any of their respective Representatives shall have any right to bring (and hereby
expressly waives to the fullest extent allowable under applicable Law the right to file, bring or make) any indemnification claim pursuant to Article IX, or any lawsuit or other claims against the Company or any of its stockholders,
Affiliates or Representatives under this Agreement or otherwise arising out of any financial projections or forecasts provided by the Company or its Representatives in connection with the transactions contemplated hereby.
4.6 Solvency. Immediately after giving effect to the consummation of the transactions contemplated this Agreement, including
any debt financing being entered into in connection therewith), including the consummation of the Financing and the satisfaction of Buyer’s obligations under Section 2.3(b), and assuming that the representations and warranties of the
Company and its Subsidiaries set forth herein are true and correct in all material respects as of the Closing, Buyer and its Subsidiaries (including Merger Sub), taken as a whole, shall be Solvent. For the purpose of this Section 4.6,
the term “Solvent” when used with respect to any Person, means that, as of any date of determination: (i) the amount of the “fair saleable value” of the assets of such Person shall, as of such date, exceed: (A) the value of all
“liabilities of such Person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable Laws governing determinations of the insolvency of debtors; and (B) the
amount that shall be required to pay the probable liabilities of such Person on its existing debts (including contingent liabilities) as such debts become absolute and matured; (ii) such Person shall not have, as of such date, an unreasonably
small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date; and (iii) such Person shall be able to pay its liabilities, including contingent and other liabilities, as they
mature. For the purpose of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and
other liabilities, as they mature” means that such Person shall be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due. No transfer of property
is being made by Buyer or Merger Sub, and no obligation is being incurred by Buyer or Merger Sub, in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors
of Buyer or any of its Subsidiaries.
ARTICLE V
CONDUCT OF COMPANY BUSINESS
5.1 Conduct of Company Business. During the period from the Agreement Date and continuing until the earlier of the termination
of this Agreement or the Effective Time except as expressly contemplated by this Agreement or expressly required by applicable Law due to a change in such applicable Law after the Agreement Date, except as expressly set forth in Section 5.1
or Section 5.2 of the Disclosure Schedule, and except to the extent that Buyer shall otherwise consent in writing, the Company shall (a) (i) conduct the businesses of Company and its Subsidiaries in the ordinary course and in
substantially the same manner as heretofore conducted, (ii) pay all Taxes of the Company and its Subsidiaries when due (subject to the provisions of Section 7.6), (iii) pay or perform all other obligations of the Company and its
Subsidiaries in a commercially reasonable manner consistent with past practice (including the timely withholding, collecting, remitting and payment of all Taxes required under Law), and (b) use its commercially reasonable efforts to (i)
preserve intact the present business organizations of the Company and its Subsidiaries, (ii) keep available the services of the Employees, (iii) preserve the assets (including intangible assets) and properties of the Company and its
Subsidiaries, and (iv) preserve the relationships of the Company and its Subsidiaries with customers, suppliers, distributors, licensors, licensees, and others having material business dealings with them, all with the goal of preserving
unimpaired the goodwill and ongoing businesses of the Company and its Subsidiaries at the Effective Time.
5.2 Restrictions on Company Activities. During the period from the Agreement Date and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as expressly contemplated by this Agreement or expressly required by applicable Law due to a change in such applicable Law after the Agreement Date, and except as expressly set forth
in Section 5.2 of the Disclosure Schedule, the Company shall not (and shall ensure that no Subsidiary shall), without the prior written consent of Buyer (which consent, with respect to Sections 5.2(n)-(p) and Section 5.2(v),
shall not be unreasonably withheld, conditioned or delayed):
(a) cause or permit any modifications, amendments or changes to the Governing Documents or the organizational documents of any
Subsidiary;
(b) declare, set aside, or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any
Company Shares or the capital stock of any Subsidiary, or split, combine or reclassify any Company Shares or the capital stock of any Subsidiary or issue or authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Shares or the capital stock of any Subsidiary, or directly or indirectly repurchase, redeem or otherwise acquire any shares of Company Shares or the capital stock of any Subsidiary (or options, warrants or
other rights convertible into, exercisable or exchangeable for Company Shares or the shares or equity interests of any Subsidiary) except in accordance with the agreements evidencing Company Options or Company Restricted Stock outstanding as of
the Agreement Date;
(c) issue, grant, deliver or sell or authorize or propose the issuance, grant, delivery or sale of, or purchase or propose the
purchase of, any Company Shares or equity-based awards (whether payable in cash, share or otherwise) or the capital stock of any Subsidiary or any securities convertible into, exercisable or exchangeable for, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character obligating any of them to issue or purchase any such shares or other convertible securities or amend, accelerate the vesting of or adjust or modify any Company Shares,
except for the issuance of Company Shares pursuant to the exercise of Company Options, the repurchase of Company Restricted Stock or the conversion into Company Common Shares of Company Preferred Shares, in each case to the extent outstanding
as of the Agreement Date;
(d) form, or enter into any binding commitment to form, a subsidiary, or acquire, or enter into any binding commitment to acquire, an
interest in any corporation, association, joint venture, partnership or other business entity or division thereof;
(e) make or agree to make any capital expenditure or commitment exceeding $250,000 individually or $1,000,000 in the aggregate;
(f) acquire or agree to acquire or dispose or agree to dispose of any material assets of the Company or any Subsidiary or any business
enterprise or division thereof outside the ordinary course of the businesses of the Company or any Subsidiary, as the case may be, and consistent with past practice;
(g) (i) sell, exclusively License or assign to any Person (or enter into any Contract to sell, exclusively License or assign to any
Person) any rights to any Company IP; (ii) buy or License any Intellectual Property or Intellectual Property Right of any third party (other than pursuant to Contracts with Employees, contractors or other Contributors substantially in the form
of the applicable Standard Form IP Contract or pursuant to a Permitted Agreement); (iii) License any Company Products or Company IP to third parties, other than substantially in the form of the applicable Standard Form IP Contract (and other
than pursuant to a Permitted Agreement); (iv) enter into any distributor, reseller, sales representative, marketing, or similar Contract (and other than pursuant to a Permitted Agreement); (v) amend, modify, or extend any agreement for the
License, sale, or other distribution of Company Products or Company IP (other than with respect to Contracts that constitute Permitted Agreements prior to and after such amendment, modification or extension); (vi) enter into any Contract with
respect to the development of any Intellectual Property or Intellectual Property Right on behalf of the Company or any Subsidiary with a third party (other than Contracts with Employees, contractors or other Contributors substantially in the
form of the applicable Standard Form IP Contract); (vii) change practices related to pricing or royalties charged by the Company or any Subsidiary to, or the compensation or other amounts payable to, the Company’s or any of the Subsidiaries’
distributors, resellers, sales representatives, customers or licensees, or the pricing or royalties set or charged by Persons who have Licensed Intellectual Property or Intellectual Property Rights to the Company or any of the Subsidiaries
(other than pursuant to a Permitted Agreement); (viii) abandon, withdraw or dispose of any Company Registered IP; or (ix) make available any Company IP under an Open Source License (other than any Open Source License to which such Company IP is
already subject consistent with past practices and under the same license terms);
(h) incur any Indebtedness for borrowed money (other than the obligation to reimburse Employees for travel and business expenses in the
ordinary course of the Company’s businesses consistent with past practices), issue or sell any debt securities, or create a Lien (other than a Permitted Lien) over any asset of the Company or any Subsidiary or amend the terms of any outstanding
loan agreement in a manner that would prevent the repayment thereof upon the Closing;
(i) make any loan to any Person (except for advances to Employees for reasonable business travel and expenses in the ordinary course
of business consistent with past practice), or purchase debt securities of any Person;
(j) commence or settle any Action or threat of any Action by or against the Company or any Subsidiary or relating to any of their
businesses, properties or assets (other than routine collection proceedings);
(k) pay, discharge, release, waive or satisfy any claims, rights or Liabilities, other than the payment, discharge or satisfaction in
the ordinary course of business of Liabilities reflected on the Current Balance Sheet or incurred in the ordinary course of business after the Balance Sheet Date and the payment, discharge or satisfaction of Third-Party Expenses;
(l) adopt or change accounting methods or practices (including any change in depreciation or amortization policies or rates or any
change to practices that would impact the methodology for recognizing revenue) other than as required by GAAP;
(m) make or change any material Tax election, adopt or change any Tax accounting method, change a Tax year, enter into any agreement in
respect of Taxes, settle any Tax claim or assessment, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, make or request any Tax ruling, enter into any Tax sharing or similar agreement or
arrangement (other than Ordinary Course Contracts), enter into any transactions outside of the ordinary course of business giving rise to deferred gain or loss, amend any Tax Return or file any income or other material Tax Return including any
estimated Tax Return, except in accordance with Section 7.6;
(n) except as required by Law, enter into, adopt, amend or terminate any Company Employee Plan (or any plan, program, agreement or
arrangement that would be a Company Employee Plan if it had been in existence on the Agreement Date) or enter into or amend any Employee Agreement other than entry into offer letters on terms substantially similar to the Company’s (or any
Subsidiary’s) form offer letter with new hires who are terminable at-will, in the ordinary course of the Company’s business consistent with past practice;
(o) increase or make any change to employment status or title or increase or make any other change that would result in increased cost
to the Company to the salary, wage rate, fee, or other compensation (including equity based compensation whether payable in cash, Company Shares or other property) payable or to become payable by the Company or any Subsidiary to any Employee or
terminate any Employee (other than for cause);
(p) make any declaration, payment, commitment or obligation of any kind for the payment (whether in cash, equity or otherwise) of any
severance payment or other change in control payment, termination payment, bonus, special remuneration or other additional salary or compensation (including equity based compensation) to any Employee, except payments made pursuant to agreements
or promises existing on the Agreement Date;
(q) take any action to accelerate or otherwise modify the terms of any of the outstanding Company Options or shares of Company
Restricted Stock or otherwise accelerate the payment of any compensation or benefit to any employee;
(r) make any representations or issue any written communications to Employees that are inconsistent with this Agreement or the
transactions contemplated thereby, including any representations regarding offers of employment from Buyer that are inconsistent with this Agreement;
(s) except as required by Law, (i) modify, extend, or enter into any labor agreement, collective bargaining agreement or any other
labor-related Contract with any labor or trade union, labor organization or works council, or (ii) recognize or certify any labor or trade union, labor organization, works council, or group of Employees as the bargaining representative for any
Employees;
(t) (i) enter into, participate in, establish or join any new standards-setting organization, collaborative effort with a university
or industry body or consortium or other multi-party special interest group or activity or (ii) subject any Patent in the Company IP to any obligation to grant a License thereunder on a royalty-free basis or on reasonable and non-discriminatory
(RAND) or fair reasonable and non-discriminatory (FRAND) terms;
(u) cancel, amend (other than in connection with the addition of customers and suppliers to such insurance policies from time to time in
the ordinary course of business consistent with past practices) or fail to renew (on substantially similar terms) any insurance policy of the Company or any Subsidiary (other than an insurance policy relating to any Company Employee Plan);
(v) (i) amend, waive or modify any Material Contract (provided that the Company may amend, waive or modify a Permitted Agreement in a
manner such that it remains a Permitted Agreement), (ii) terminate any Material Contract (other than expiration at the end of a scheduled term), or (iii) enter into any Contract which would have constituted a Material Contract had such Contract
been entered into prior to the Agreement Date (provided that the Company may enter into Permitted Agreements and that the Company may enter into Contracts with new customers with expected annual recurring revenues of no more than $1,500,000
individually); or
(w) take, commit, or agree in writing or otherwise to take, any of the actions described clause (a) – (v) of this Section 5.2,
or any other action that would (i) prevent the Company from performing, or cause the Company not to perform, its covenants or agreements hereunder, or (ii) that the Person taking such action actually knows, or, with respect to the Company’s
officers and members of the Company’s board of directors, should reasonably be expected to know, will cause or result in a breach of or inaccuracy in any representation or warranty of the Company herein as of the Closing.
The Buyer acknowledges and agrees that: (i) nothing contained in this Agreement shall give the Buyer, directly or indirectly, the right to control or direct the
Company’s operations prior to the Closing, and (ii) prior to the Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.
ARTICLE VI
COMPANY NON-SOLICITATION AGREEMENT
6.1 Termination of Discussions. The Company shall immediately cease and cause to be terminated any such negotiations and
discussions with third parties (other than Buyer) regarding (i) any acquisition of all or any portion of the business, properties, assets or technologies of the Company or any of its Subsidiaries, or any amount of Company Shares or equity
interests in any Subsidiary (whether or not outstanding) (whether through primary or secondary sale of equity, but excluding any exercises of Company Options or conversions of Company Preferred Shares to Company Common Shares), in any case
whether by merger, consolidation, amalgamation, purchase of assets or shares, tender or exchange offer, license or otherwise (other than the sale of products and services in the ordinary course of business consistent with past practice or the
Licensing of intellectual property in connection therewith), (ii) any partnership, development agreement, joint venture or other strategic investment in or involving the Company or any of its Subsidiaries (other than an ongoing commercial or
strategic relationship in the ordinary course of business consistent with past practice), including any new financing, investment round or recapitalization of the Company, or (iii) any similar transaction that is not in the ordinary course of
business consistent with past practice (each of the transactions described in the preceding clauses (i), (ii) and (iii) being referred to herein as an “Alternative Transaction”). The Company shall and shall direct its Subsidiaries and
their respective Representatives to request the return or destruction of any due diligence materials provided to any Person other than Buyer and its Affiliates and Representatives in connection with a potential Alternative Transaction.
6.2 No Solicitation. Commencing on the Agreement Date and continuing at all times until the earlier to occur of the Effective
Time and the valid termination of this Agreement pursuant to the provisions of Section 8.1, the Company shall not, nor shall the Company permit any of its Subsidiaries or its or their respective directors, officers, Employees, agents,
advisors (including commercial and investment banking, attorneys, accountants and other advisors) and other representatives (“Representatives”) to, directly or indirectly:
(a) solicit, initiate, seek, continue, knowingly encourage, consider, assist, respond to or support any inquiry, proposal or offer
from, furnish any information to, or participate in any discussions or negotiations or otherwise cooperate with, any third party regarding any Alternative Transactions;
(b) disclose any information not customarily disclosed to any person concerning the business, properties, assets or technologies of the
Company or any of its Subsidiaries, or afford to any Person access to their respective properties, assets, technologies, books or records, not customarily afforded such access;
(c) assist or cooperate with any person to make any inquiry, offer, proposal or indication of interest regarding any Alternative
Transaction; or
(d) enter into any Contract with any person providing for an Alternative Transaction.
6.3 Notice of Alternative Transaction Proposals. In the event that the Company or any of its Representatives shall receive,
prior to the Effective Time or the termination of this Agreement in accordance with Section 8.1, any inquiry offer, proposal or indication of interest regarding a potential Alternative Transaction, or any request for disclosure of
information or access of the type referenced in Section 6.2(b), the Company or such Affiliate or Representative shall promptly (and in any event, within forty-eight hours) notify Buyer thereof, which notice shall include the identity of
the party making any such inquiry, offer, proposal, indication of interest or request, and the material and specific terms (including all price-related terms) of such inquiry, offer, proposal, indication or request, as the case may be
(including a copy of any written material and electronic communications received from such third party), and such other information related thereto as Buyer may reasonably request.
6.4 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that the provisions of this
Article VI were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties hereto that Buyer shall be entitled to an immediate injunction or injunctions, without the
necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Article VI and to enforce specifically the terms and
provisions of this Agreement in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which Buyer may be entitled at law or in equity. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth above by any Representative of the Company shall be deemed to be a breach of this Agreement by the Company.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Shareholder Approvals.
(a) Requisite Shareholder Approval. Within three (3) hours of the execution of this Agreement, the Company shall deliver to
Buyer the Shareholder Consent from Company Shareholders that are sufficient to fully and irrevocably deliver the Requisite Shareholder Approval. Promptly, and in any event within ten (10) Business Days, following the execution of this
Agreement, the Company shall solicit Shareholder Consents from all of its remaining Company Shareholders by delivery of an Information Statement (the “Information Statement”). The Company shall promptly deliver to Buyer a copy of each
executed Shareholder Consent upon receipt thereof from any Company Shareholder pursuant to such solicitation. Following receipt of the Requisite Shareholder Approval, the Company shall promptly deliver notice to each Company Shareholder whose
consent was not obtained prior to the Company’s receipt of the Requisite Shareholder Approval, which notice shall include the notice to shareholders required by the Certificate of Incorporation and the DGCL of the approval of the Merger. The
Company shall (i) give the Buyer a reasonable opportunity to review and comment on all materials to be submitted to the Company Shareholders, including the Information Statement, and (ii) consider in good faith, and incorporate therein, all
comments reasonably proposed by Buyer. The board of directors of the Company shall not alter, modify, change or revoke its unanimous approval of this Agreement, the Merger and the other transactions contemplated hereby, nor its unanimous
recommendation to the Company Shareholders to vote in favor of adoption of this Agreement and approval of the Merger and the other transactions contemplated hereby.
(b) 280G Approvals. The Company shall solicit (and use its commercially reasonable efforts to obtain) a written 280G waiver,
each in a form reasonably acceptable to Buyer (the “280G Waiver”), from each “disqualified individual” (within the meaning of Section 280G of the Code) who otherwise would reasonably be expected to receive any payments and/or benefits in
connection with the Merger that may constitute “parachute payments” (within the meaning of Section 280G of the Code) (collectively, the “280G Persons”). The Company, prior to the Effective Time, shall submit to the Company Shareholders
for approval (in a form and manner reasonably satisfactory to Buyer), by such number of Company Shareholders as is required by the terms of Section 280G(b)(5)(B) of the Code, any payments and/or benefits to be paid or provided to any
“disqualified individual” that previously executed a 280G Waiver that may separately or in the aggregate, constitute “parachute payments” (which determination shall be made by the Company and shall be subject to reasonable review and approval
(which approval shall not be unreasonably withheld, conditioned or delayed) by Buyer), such that such payments and benefits shall not be deemed to be “parachute payments” under Section 280G of the Code. Prior to the Effective Time the Company
shall deliver to Buyer evidence reasonably satisfactory to Buyer that (i) a Company Shareholder vote was solicited in conformance with Section 280G and the regulations promulgated thereunder and the requisite Company Shareholders approval was
obtained with respect to any payments and/or benefits that were subject to the Company Shareholder vote (the “280G Approval”), or (ii) that the 280G Approval was not obtained and as a consequence, that any such “parachute payments”
pursuant to which a 280G Waiver was executed shall not be made or provided, pursuant to such 280G Waiver. The form and substance of all Company Shareholder approval documents contemplated by this Section 7.1(b), including the 280G
Waivers, shall be submitted to Buyer at least three (3) days before submission to the disqualified individuals or stockholders, as applicable, for review and reasonable approval of Buyer, which will not be unreasonably withheld, conditioned or
delayed.
7.2 Governmental Approvals.
(a) In furtherance and not in limitation of the terms of Section 7.4, each of the Company, any Subsidiary and Buyer shall file
with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice a Notification and Report Form relating to the Agreement and the transactions contemplated hereby as required by the HSR Act
within ten (10) Business Days of the Agreement Date (the “HSR Filing”). Notwithstanding the foregoing, Buyer shall be responsible for making, with the Company’s reasonable assistance, all filings or notifications as may be required under
non-U.S. antitrust, competition, or merger control laws. Each of the Company and Buyer shall use its reasonable best efforts to obtain all such authorizations, approvals and consents. To the extent permitted by applicable Laws, each of the
Company and Buyer shall promptly inform the other of any substantive communication between the Company or Buyer (as applicable) and any Governmental Entity regarding the transactions contemplated hereby. If the Company or Buyer or any Affiliate
thereof shall receive any formal or informal request for supplemental information or documentary material from any Governmental Entity with respect to the transactions contemplated hereby, then the Company or Buyer (as applicable) shall make,
or cause to be made, as soon as reasonably practicable, a reasonable response in compliance with such request, and shall consider in good faith the views of the other in the making of such response. Without limiting the generality of the
foregoing, each party shall provide to the other (or the other’s respective advisors) upon request copies of all correspondence between such party and any Governmental Entity relating to the transactions contemplated by this Agreement, provided
that the parties may, as they deem advisable and necessary, designate any competitively sensitive materials provided to the other under this Section 7.2 as “outside counsel only.” Such materials and the information contained therein
shall be given only to outside counsel of the recipient and will not be disclosed by such outside counsel to employees, officers, or directors of the recipient without the advance written consent of the party providing such materials. In
addition, to the extent reasonably practicable, all discussions, telephone calls, and meetings with a Governmental Entity regarding the transactions contemplated by this Agreement shall include representatives of all parties. Subject to
applicable Law, the parties will consult and cooperate with each other in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, and proposals made or submitted to any Governmental Entity regarding the
transactions contemplated by this Agreement by or on behalf of any party.
(b) Notwithstanding the foregoing or anything to the contrary set forth in this Agreement, it is expressly understood and agreed that
neither Buyer nor Merger Sub shall have any obligation to litigate any administrative or judicial action or proceeding that may be brought in connection with the transactions contemplated by this Agreement, neither Buyer nor any Affiliate of
Buyer shall be required to agree to any license, sale or other disposition or holding separate (through the establishment of a trust or otherwise), of shares of capital stock or of any business, assets or property of Buyer, the Company or any
of their respective Affiliates, or the imposition of any limitation or restriction on the ability of any of them to conduct their businesses or to own or exercise control of such assets, properties and stock and the Company and its Subsidiaries
shall not have to agree to take or take any such actions unless conditioned on the Closing.
(c) Notwithstanding the foregoing or anything to the contrary set forth in this Agreement, it is expressly understood and agreed that
Buyer shall, in consultation with the Company and subject to Section 7.2(a) and Section 7.2(b), determine strategy, lead all proceedings and coordinate all activities with respect to seeking any actions, consents, approvals or
waivers of any Governmental Entity as contemplated hereby, and the Company and its Subsidiaries will take such actions as reasonably requested by Buyer in connection with obtaining such consents, approvals or waivers. Notwithstanding Buyer’s
rights to lead all proceedings as provided in the prior sentence, Buyer shall not require the Company to, and the Company shall not be required to, take any action with respect to any applicable antitrust or anti-competition Law which would
bind the Company or its Subsidiaries irrespective of whether the Merger occurs.
7.3 Third-Party Contracts. The Company shall use commercially reasonable efforts to obtain all necessary consents, waivers and
approvals of any third parties to any Material Contract (including all of the Contracts set forth in Section 2.3 of the Disclosure Schedule) and any other Contract of the Company or its Subsidiaries as may be identified by Buyer, in
each case as are required thereunder in connection with the Merger in order for such Contract to remain in full force and effect following the Merger, with the understanding that the Company shall not be required to pay any consent fee or
similar payment or agree to any accommodation in each case to the extent not required pursuant to the express terms of such Material Contract or other Contract. Such consents, modifications, waivers and approvals shall be in a form reasonably
acceptable to Buyer. In the event the Merger does not close for any reason, neither Buyer nor Merger Sub shall have any liability to the Company, the Company Securityholders or any other Person for any costs, claims, Liabilities or damages
resulting from the Company seeking to obtain such consents, modifications, waivers and approvals.
7.4 Reasonable Best Efforts to Close. Subject to the terms and conditions provided in this Agreement, each of the parties
hereto (other than the Securityholder Representative) shall use reasonable best efforts to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly, all things necessary or advisable under
applicable Laws to consummate and make effective the Merger and the other transactions contemplated hereby as promptly as practicable, including by using reasonable best efforts to take all action necessary to satisfy all of the conditions to
the obligations of the other party or parties hereto to effect the Merger set forth in Article VII, to obtain all necessary waivers, consents, approvals and other documents required to be delivered hereunder and to effect all necessary
registrations and filings and to remove any injunctions or other impediments or delays, legal or otherwise, in each case in order to consummate and make effective the Merger and the other transactions contemplated by this Agreement by or before
the End Date for the purpose of securing to the parties hereto the benefits contemplated by this Agreement.
7.5 Employee Matters.
(a) Specified IP Contributors. Prior to the Closing, the Company shall use reasonable efforts to cause each Employee, Former
Employee and contractor identified in Schedule 7.5(a) (each, a “Specified IP Contributor”) to enter into and deliver to the Company an agreement, in form and substance reasonably satisfactory to Buyer, pursuant to which such
Specified IP Contributor irrevocably assigns to the Company all Intellectual Property Rights in and to all Intellectual Property created or developed prior to the Closing by such Specified IP Contributor in connection with such Specified IP
Contributor’s employment with, or rendering of services to, the Company or any Subsidiary.
(b) Termination of 401(k) Plans. Unless Buyer provides written notice instructing otherwise at least five (5) Business Days
prior to the Closing Date, effective as of no later than the day immediately preceding the Closing Date, the Company shall terminate any and all Company Employee Plans intended to include a Code Section 401(k) arrangement (each, a “401(k)
Plan”). The Company shall provide Buyer with evidence that any such 401(k) has been terminated pursuant to resolutions of the board of directors (or similar body) of the Company or any Subsidiary, as the case may be. The form and
substance of such resolutions shall be subject to reasonable review and approval of Buyer (which approval shall not be unreasonably withheld, conditioned or delayed). In the event the Company 401(k) Plan is terminated, the Company and Buyer
shall take any and all actions as may be required, including amendments to the 401(k) Plan or Buyer’s applicable 401(k) plan (the “Buyer 401(k) Plan”), to (i) provide that Continuing Employees (except for any PEO Employee for so long as
such Employee remains employed by a PEO following the Closing) shall be eligible to participate in the Buyer 401(k) Plan, effective as soon as practicable following the Effective Time, and (ii) permit the Continuing Employees (except for any
PEO Employee for so long as such Employee remains employed by a PEO following the Closing) who are then actively employed to make rollover contributions, in cash, of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of
the Code) other than outstanding participant loans from the 401(k) Plan to the Buyer 401(k) Plan.
(c) New Employment Arrangements.
(i) Buyer shall use its reasonable best efforts to cause the Company to, and the Company shall use its reasonable
best efforts to, extend an offer of continued employment with the Company, a Subsidiary or Buyer or a designated Affiliate to each Other Employee as soon as practicable following the Agreement Date on customary terms and conditions applicable
to similarly situated employees of Buyer with equivalent or greater base compensation and cash bonus opportunity (if applicable) than those currently provided by the Company immediately prior to the Closing substantially similar to the form
attached hereto (an “Offer Letter”), each such offer of employment to become effective immediately following the Closing. The Company and its Subsidiaries, as applicable, shall cooperate with and provide reasonable assistance to Buyer in
preparing and delivering the Offer Letters to the Other Employees and ensuring the continuation of services of the PEO Employees.
(ii) Buyer agrees that, promptly following the commencement of continuing employment of the Continuing Employees
pursuant to Offer Letters, such Continuing Employees (other than any PEO Employee for so long as such Employee remains employed by a PEO following the Closing) shall be eligible to participate in Buyer’s standard benefit plans and be offered
employee benefits at least as favorable to such Continuing Employees as that offered to similarly situated employees of Buyer; provided, however, that Buyer
shall not be obligated under the terms of this Agreement to cause the continuation of any employment relationship with any Continuing Employee for any specific period of time. Each such Continuing Employee who elects to participate in Buyer’s
benefit plans shall, subject to applicable Law and applicable Tax qualification requirements, be given credit for purposes of eligibility to participate and vesting for his or her years of service with the Company or any Subsidiary; provided that the foregoing shall not apply with respect to benefit accrual under any defined benefit pension plan or to the extent that its application would result in a duplication of benefits.
(d) Non-Continuing Employees. Prior to the Closing, the Company shall terminate the employment of, or shall cause the
termination of employment of, each natural person who is a Non-Continuing Employee, effective as of no later than immediately prior to the Closing. Buyer shall notify the Company of any Employee that will be a Non-Continuing Employee no later
than three (3) Business Days prior to the Closing.
(e) Retention Program. Prior to the Closing, Buyer shall adopt an equity retention program with an aggregate value of fifty
million dollars ($50,000,000) for the benefit of certain Continuing Employees (the “Retention Program”). Buyer shall grant equity awards under such Retention Program to the Continuing Employees (other than any PEO Employee for so long
as such Employee remains employed by a PEO), in accordance with Buyer’s standard terms and conditions for similar such grants. Prior to Closing, Buyer shall discuss in good faith with the Company the allocation of the Retention Program amounts
to Continuing Employees.
(f) No Employment Commitment or Plan Amendments. No provision of this Agreement is intended, or shall be interpreted, to
provide nor create any third party beneficiary rights or any other rights of any kind or nature whatsoever in any Company Securityholder, Employee, Former Employee, current or former consultant, contractor or any other Person, including any
rights of employment or engagement for any specified period and/or any benefits, in favor of any Person, union, association, Employee, Former Employee, current or former consultant or contractor or any other Person, other than the parties
hereto and their respective successors and permitted assigns, and all provisions of this Agreement will be personal solely among the parties to this Agreement. In addition, no provision of this Agreement is intended, or shall be interpreted, to
amend any term or condition of any Company Employee Plan or Employee Agreement.
(g) New Option Grants. Prior to the Closing, the Company shall grant Company Options to those individuals, and subject to the
terms and conditions, set forth on Schedule 7.5(g) and any other individuals approved by Buyer in writing and on the terms approved by Buyer in writing. Any Company Options issued from the Agreement Date to the Closing shall be issued
in accordance with the terms of the applicable Company Equity Plan and at fair market value with a strike price no lower than the price per Company Common Share implied by the transactions contemplated by this Agreement.
7.6 Tax Matters.
(a) Pre-Closing Tax Returns. The Company will prepare or cause to be prepared and timely file (taking into account all
extensions properly obtained) or cause to be filed all Tax Returns of the Company and its Subsidiaries required to be filed prior to the Closing Date. Such Tax Returns shall be prepared in accordance with applicable Law and in a manner
consistent with past practices (unless otherwise required by applicable Law). Any such income or other material Tax Return shall be provided to Buyer for review and comment a reasonable period prior to filing (which shall be at least thirty
(30) days with respect to any such Tax Return relating to income Taxes), and the Company shall consider in good faith reasonable comments from Buyer and shall not file such Tax Returns without Buyer’s prior written consent (not to be
unreasonably withheld, conditioned or delayed); provided that any dispute between the Company and Buyer with respect to such Tax Returns shall be resolved by the Accounting Firm in accordance with the
dispute resolution mechanics described in Section 1.4(e) (to the extent applicable).
(b) Post-Closing Tax Returns. Buyer shall prepare or cause to be prepared and timely file (taking into account all extensions
properly obtained) or cause to be filed all Tax Returns of the Company and its Subsidiaries that include any Pre-Closing Tax Period and that are filed or required to be filed on or after the Closing Date. Such Tax Returns shall be prepared in
accordance with applicable Law and in a manner consistent with past practices (unless otherwise required by applicable Law). Any such income or other material Tax Return shall be provided to the Securityholder Representative for review and
comment a reasonable period prior to filing (which shall be at least thirty (30) days with respect to any such Tax Return relating to income Taxes), and the Company shall consider in good faith reasonable comments from the Securityholder
Representative; provided, however, Buyer shall not file such Tax Returns without the Securityholder Representative’s prior written consent (not to be unreasonably withheld, conditioned or delayed) if such Tax Returns would result in Pre-Closing
Taxes with respect to which the Indemnified Parties would be entitled to indemnification pursuant to Section 9.2(a)(iv); provided, further, that any dispute between Buyer and the Securityholder
Representative with respect to such Tax Returns shall be resolved by the Accounting Firm in accordance with the dispute resolution mechanics described in Section 1.4(e) (to the extent applicable).
(c) Post- Closing Actions. Buyer shall not (and shall not cause or permit the Surviving Corporation or any of its Subsidiaries
to) file, amend, re-file or otherwise modify any material Tax Return or Tax election relating in whole or in part to the Company or any of its Subsidiaries or agree to the waiver or any extension of the statute of limitations, with respect to
any Pre-Closing Tax Period, without the prior written consent of the Securityholder Representative (which consent shall not be unreasonably withheld, conditioned or delayed) unless such action is (i) required by applicable Law or (ii) related
to obtaining an increased tax benefit on account of any research and development expenditures, including any adjustments resulting therefrom (e.g. any adjustments or credits resulting therefrom), which, for the avoidance of doubt, does not
increase Pre-Closing Taxes; provided that Buyer shall notify the Securityholder Representative no later than ten (10) days before taking any action pursuant to the foregoing clause (i) or (ii)).
(d) Tax Sharing Agreements. In Buyer’s sole discretion, any Tax sharing, indemnification or allocation agreement, arrangement,
practice or policy to which the Company or any Subsidiary is a party or by which it is bound shall be terminated as of the Closing Date, and none of the Company or any Subsidiary shall have any liability or obligation pursuant thereto.
(e) Cooperation. In connection with the preparation of Tax Returns, audit examinations, and any proceedings relating to the
liabilities for Taxes of the Company or any of its Subsidiaries, Buyer and the Company, on the one hand, and the Securityholder Representative and the Indemnifying Parties, on the other hand, shall cooperate fully, as and to the extent
reasonably requested by the other party, with each other, including by furnishing or making available during normal business hours the records, personnel (as reasonably required), books of account, powers of attorney or other materials
necessary or helpful for the preparation of such Tax Returns, the conduct of audit examinations or the defense of claims relating to such Taxes and by maintaining such records, books, powers and materials for a reasonable period of time which
will not be less than the latest date on which any relevant statute of limitations remains open, including any extensions.
(f) Tax Contests. Buyer or the Surviving Corporation shall give prompt notice to the Securityholder Representative of any
claim, or the commencement of any audit, suit, action or proceeding with respect to the Taxes of the Company or any of its Subsidiaries (a “Tax Contest”) with respect to any Pre-Closing Tax Period or Pre-Closing Taxes. The Securityholder
Representative shall have the right to control the conduct, through counsel of its own choosing, of any such Tax Contest, provided that (i) it shall give prompt notice to Buyer of its intention to control such Tax Contest, (ii) it shall provide
periodic updates of the status of such Tax Contest to Buyer, (iii) Buyer may, at its own expense, participate in (but not control) such Tax Contest, and (iv) the Securityholder Representative shall not settle or otherwise resolve any such Tax
Contest without Buyer’s written consent (not to be unreasonably withheld, conditioned or delayed). Buyer shall control the defense of all other Tax Contests.
(g) Tax Refunds.
(i) If after the Closing Date, Buyer or any of its Affiliates (including the Surviving Corporation) actually
receives or realizes any refund, or a credit in lieu of a refund, of any Tax that is attributable to a Pre-Closing Tax Period or of any Pre-Closing Taxes, and such Tax was paid or deemed paid (including amounts included in the calculation of
Net Working Capital and Third-Party Expenses) by (i) the Indemnifying Parties on or after the Closing Date or (ii) the Company or any of its Subsidiaries prior to the Closing Date, then Buyer promptly shall pay or cause to be paid to the
Securityholder Representative the amount of any such refund or credit (except to the extent that the right to such refund or credit was treated as a current asset that increased Net Working Capital), net of any Taxes imposed on Buyer or any of
its Affiliates (including the Surviving Corporation) with respect thereto, and net of any costs of Buyer or the Surviving Corporation that are reasonably associated with obtaining such refund or credit (“Net Tax Refund”), but only if the
aggregate amount of all such Net Tax Refunds exceeds $250,000 (the “Basket Amount”). If the aggregate amount of all such Net Tax Refunds exceeds the Basket Amount, then the entire amount of such aggregate Net Tax Refunds shall be paid to
the Payment Agent for distribution to each of the Indemnifying Parties in accordance with the Tax Refund Payment Spreadsheet.
(ii) Within five (5) Business Days of the Buyer paying a Net Tax Refund to the Payment Agent, the Securityholder
Representative shall prepare an updated version of the Closing Payment Spreadsheet (the “Tax Refund Payment Spreadsheet”). The Tax Refund Payment Spreadsheet shall set forth the following information in reasonable detail:
(A) all information specified in Sections 2.3(a)(i)-(iv) inclusive, as updated to reflect the payment of the
Net Tax Refund; and
(B) the amount of any portion of the Net Tax Refund, payable to each Company Securityholder in accordance with the
terms of the Governing Documents.
7.7 Certain Taxes and Fees. All Transfer Taxes shall be borne 50% by the Indemnifying Parties and 50% by Buyer. The
Indemnifying Parties and Buyer will cooperate to timely file all necessary Tax Returns and other documentation with respect to such Transfer Taxes and the Indemnifying Parties, on the one hand, and Buyer, on the other, shall each bear 50% of
all related expenses.
7.8 Payoff Letters and Release of Liens.
(a) Closing Indebtedness Payoff Letters. No later than three (3) Business Days prior to the Closing Date, the Company shall
obtain from each creditor of the Company or any Subsidiary (or an agent on behalf of such creditor) set forth on Schedule 7.8(a), and deliver to Buyer, an executed payoff letter, in customary form and substance, setting forth: (i) the
amounts required to pay off in full on the Closing Date, the Indebtedness owing to such creditor (including the outstanding principal, accrued and unpaid interest and prepayment and other penalties) and wire transfer information for such
payment; (ii) upon payment of such amounts, a customary release of the Company and its Subsidiaries, including the automatic release of any and all Liens securing such Indebtedness (subject to obligations which by their terms expressly survive
such termination); and (iii) the commitment of the creditor (or an agent on behalf of such creditor) to execute and deliver documents that can be filed of record (or delivered to third parties) evidencing the release all Liens, if any, that the
creditor (or an agent on behalf of such creditor) may hold on any of the assets of the Company or any Subsidiary prior to the Closing Date upon the receipt of amounts described in clause (i) owing to such creditor (each, a “Payoff Letter”).
(b) Release of Liens. On or prior to the Closing, the Company shall use commercially reasonable efforts to obtain all customary
agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Buyer, that are necessary or appropriate to effect the release of all Liens (other than Permitted Liens), including those Liens set
forth in Schedule 7.8(b).
7.9 Third-Party Expenses.
(a) Whether or not the Merger is consummated, except as expressly set forth herein, each party shall be responsible for its own
expenses and costs that it incurs (and whether paid prior to, at or after the Effective Time) with respect to the negotiation, execution, delivery and performance of this Agreement. Without limiting or expanding the foregoing, “Third-Party
Expenses” means, and the Company shall be responsible for all fees and expenses incurred by or on behalf of the Company or any Subsidiary prior to the Effective Time (and whether paid prior to, at or after the Effective Time) in
connection with this Agreement, the Related Agreements, the Merger and the other transactions contemplated hereby that consist of the following: (i) all legal, accounting, financial advisory, consulting, finders and all other fees and expenses
of third parties providing services in connection with this Agreement and the transactions contemplated hereby that are incurred by the Company or any Subsidiary in connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby; (ii) any “single trigger” bonus, severance, change-in-control payments or similar payment obligations of the Company or any Subsidiary to Employees resulting from, or in connection with,
the transactions contemplated hereby; (iii) the maximum amount of premiums, Taxes, costs, fees or payments payable to brokers, finders, financial advisors, investment bankers, and insurers, or similar Persons notwithstanding any escrows or
other contingencies in connection with the transactions contemplated hereby, including in connection with the Company D&O Tail Policy; and (iv) 50% of any filings fees in connection with the transactions contemplated by this Agreement or
any Related Agreement, including under the HSR Act; provided, however, Third-Party Expenses shall exclude (A) all retention payments payable or equity awards
granted by Buyer pursuant to the terms of any Offer Letter or other post-Closing employment arrangement with Buyer (or its designated Affiliate), (B) all fees and expenses of third parties incurred by Buyer and Merger Sub in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby (excluding the filing fee under the HSR Act), (C) any severance payments payable to any Non-Continuing Employees who did not
receive an offer of employment from Buyer within fifteen (15) Business Days of the Agreement Date, (D) any compensation, benefits or compensatory payments made to any Continuing Employees post-Closing pursuant to their respective employment
arrangements with Buyer (or its designated Affiliate) or at Buyer’s (or its designated Affiliate’s) direction, (E) any compensation pursuant to “double-trigger” arrangements triggered by actions of Buyer after the Closing Date, (F) all
Transaction Payroll Taxes and (G) 50% of any filings fees in connection with the transactions contemplated by this Agreement or any Related Agreement, including under the HSR Act. For the avoidance of doubt, no fees and expenses shall be double
counted when calculating Third-Party Expenses.
(b) At least three (3) Business Days prior to the Closing, the Company shall provide Buyer with a statement, in a form reasonably
satisfactory to Buyer, setting forth all unpaid Third-Party Expenses incurred by or on behalf of the Company or any Subsidiary as of the Closing Date, or anticipated to be incurred or payable by or on behalf of the Company or any Subsidiary
after the Closing (the “Statement of Expenses”). The Company shall obtain and deliver to Buyer a final invoice of all outstanding and unpaid fees, costs and expenses from each professional advisor listed on the Statement of Expenses
(each, a “Closing Expense Invoice”). No Subsidiary shall incur any Third-Party Expenses that remain unpaid as of the Closing.
7.10 Preparation and Delivery of Required Financial Statements.
(a) As promptly as reasonably practicable, and in any event within thirty (30) days following the end of each fiscal quarter (other
than the fourth fiscal quarter) ending on or after the Agreement Date, the Company shall prepare and deliver to Buyer an unaudited consolidated balance sheet of the Company as of the last day of each such fiscal quarter, and an unaudited
statement of stockholders’ equity, income and cash flow for such fiscal quarter, as well as an unaudited consolidated balance sheet of the Company and a statement of shareholders’ equity, income and cash flow for the corresponding periods for
the prior fiscal year (the “Required Financial Statements”), which Required Financial Statements shall (x) be prepared in accordance with GAAP (and calculated in accordance with ASC 606 issued by the Financial Accounting Standards
Board), applied on a consistent basis throughout the periods indicated, and (y) not, for the avoidance of doubt, contain normal year-end adjustments.
(b) The Company shall (x) cooperate promptly with, and to use its commercially reasonable efforts to cause its Affiliates and its and
their Representatives to cooperate promptly with, Buyer and its Representatives in connection with the preparation of the Required Financial Statements and to consider in good faith all of Buyer’s reasonable comments in connection therewith
(but shall be under no compulsion to accept the same), (y) assist promptly, and use its reasonable best efforts to cause its Representatives to assist promptly, Buyer and its Representatives in connection with the preparation of any filings,
documents, or other materials, including any pro forma financial statements, that may be required in connection with the Merger and the other transactions contemplated hereby, or otherwise in connection with Buyer’s reporting obligations or
public offerings under applicable federal securities Laws, including all applicable requirements of the Exchange Act and Regulation S-X, and (z) supply promptly and further furnish promptly, and use its reasonable best efforts to cause its
Representatives to supply and furnish promptly, any and all information, documents, and records as Buyer may reasonably request, and provide reasonable access to the Company’s personnel and facilities, in connection with the matters
contemplated by this Section 7.10. The Company agrees that the Required Financial Statements will comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, as in effect as
of the respective dates thereof and applicable to the Company, subject to the Required Financial Statements being calculated in accordance with ASC 606.
7.11 Access to Information. At all times prior to the Effective Time or the termination of this Agreement in accordance with its
terms, during normal business hours and upon reasonable advance notice and to the extent consistent with applicable Laws and for the purposes of the investigation of the Company or the transition of ownership thereof to Buyer, the Company shall
afford Buyer, its Representatives and financing sources reasonable access to (i) all of the assets, properties, Books and Records and Contracts of the Company and its Subsidiaries, (ii) all other information concerning the business, assets,
properties and personnel of the Company and its Subsidiaries as Buyer may reasonably request, and (iii) all Employees of the Company and its Subsidiaries as identified by Buyer. Notwithstanding the foregoing, the Company shall not be required
to provide such access to the extent it could jeopardize any applicable attorney client or would result in breach of a Material Contract to which the Company is a party or is otherwise bound; provided,
however, that, in the event the Company withholds or prevents any such access, it shall use commercially reasonable efforts to provide Buyer, its Representatives
and its financing sources such requested or sought information or data pursuant to a reasonable alternative accommodation. The Company agrees to provide to Buyer and its accountants, counsel, financing sources and other Representatives copies
of internal financial statements (including Tax Returns and supporting documentation) promptly upon request. No information or knowledge obtained in any investigation conducted pursuant to this Section 7.11 or otherwise shall affect or
be deemed to qualify, limit, modify, amend or supplement any representation or warranty contained herein or in the Disclosure Schedule, the conditions to the obligations of the parties to consummate the Merger in accordance with the terms and
provisions of this Agreement, or the rights of Buyer or any Indemnified Party under or arising out of a breach of this Agreement.
7.12 Notification of Certain Matters. The Company shall give prompt notice to Buyer after obtaining Knowledge of: (a) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is likely to cause any representation or warranty of the Company contained in this Agreement or any Related Agreement to be untrue or inaccurate at or prior to
the Effective Time, and (b) any failure of the Company to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.12 shall not (a) limit or otherwise affect any remedies available to the party receiving such notice or (b) constitute an
acknowledgment or admission of a breach of this Agreement. No disclosure by the Company pursuant to this Section 7.12, however, shall affect or be deemed to qualify, limit, modify, amend or supplement any representation or warranty
contained herein or in the Disclosure Schedule, the conditions to the obligations of the parties to consummate the Merger in accordance with the terms and provisions of this Agreement, or the rights of Buyer or any Indemnified Party under or
arising out of a breach of this Agreement. For clarity, unintentional failure to give notice under this Section 7.12 shall not be deemed to be a breach of covenant under this Section 7.12 and shall constitute only a breach of
the underlying representation, warranty, covenant, agreement or condition, as the case may be.
7.13 Director and Officer Insurance and Indemnification.
(a) Prior to the Closing, the Company shall obtain at its expense a fully prepaid “tail” directors’ and officers’ liability insurance
policy, which (i) has an effective term of six (6) years from the Effective Time, (ii) covers only those persons who are currently covered by the Company’s existing directors’ and officers’ liability insurance policy in effect as of the
Agreement Date and only for matters occurring at or prior to the Effective Time, and (iii) contains coverage terms comparable to those applicable to the current directors and officers of the Company (the “Company D&O Tail Policy”).
The Surviving Corporation (following the Effective Time) and the Buyer shall not cancel (or permit to be cancelled) the Company D&O Tail Policy during its term.
(b) From and after the Effective Time, and until the sixth (6th) anniversary of the Effective Time, Buyer shall cause the Surviving
Corporation (and, to the extent applicable, any successor or assign of the Surviving Corporation) to fulfill and honor in all material respects the obligations of the Company to Persons who on or prior to the Effective Time are or were
directors and/or officers of the Company or any Subsidiary (the “Company Indemnified Parties”) pursuant to any indemnification provisions under the Company’s Certificate of Incorporation or Bylaws or such Subsidiary’s organizational
documents as in effect on the Agreement Date and pursuant to any indemnification agreements between the Company and such Company Indemnified Parties existing as of the Agreement Date, in each case which have been disclosed on the Disclosure
Schedule and true and complete copies of which have been made available to the Buyer (the “Company Indemnification Provisions”), with respect to claims arising out of matters occurring at or prior to the Effective Time; provided, however, that (i) the foregoing obligations shall be subject to any limitation imposed by applicable Law, and (ii) no Company Indemnified Party shall have
any right of contribution, indemnification or right of advancement from the Surviving Corporation or its successor with respect to any Losses claimed by any of the Indemnified Parties against such Company Indemnified Party in his or her
capacity as an Indemnifying Party pursuant to this Agreement.
(c) Subject to the other express terms of this Agreement, Buyer shall be under no obligation to maintain the existence of the Surviving
Corporation for any specified period following the Effective Time.
(d) The obligations of Buyer, the Surviving Corporation, and its successors under this Section 7.13 shall not be terminated,
amended, or otherwise modified in such a manner as to adversely affect any Company Indemnified Party (or his or her heirs, personal representatives, successors, or assigns) without the prior written consent of such Company Indemnified Party (or
his or her heirs, personal representatives, successors, or assigns, as applicable).
7.14 Financing Cooperation.
(a) Prior to the Closing, the Company shall use, and shall cause its Subsidiaries to use, and shall use its commercially reasonable
efforts to cause the respective Representatives of the Company and its Subsidiaries to use, in each case, commercially reasonable efforts to provide to Buyer, all cooperation reasonably requested by Buyer in connection with the arrangement of
the Financing, including the following:
(i) furnishing Buyer and the Financing Sources the Required Financial Statements and such other pertinent information
regarding the Company and its Subsidiaries as is reasonably requested by Buyer or its Financing Sources to consummate the Financing (it being understood that no financial statements shall be required other than the Required Financial
Statements);
(ii) assisting with the preparation of materials for any rating agency presentations, bank information memoranda and
similar documents required in connection with the Financing;
(iii) executing and providing documents as may be reasonably requested by Buyer, including if reasonably requested in
writing at least ten (10) Business Days prior to Closing, providing at least five (5) Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know-your-customer” and
anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001);
(iv) reasonably cooperating with the marketing efforts of Buyer and the Financing Sources for all or any portion of the
Financing;
(v) using commercially reasonable efforts to satisfy the conditions precedent set forth in the Commitment Letter or any
definitive documentation relating to the Financing to the extent the satisfaction of such conditions requires the cooperation of or is within the control of the Company or any of the Subsidiaries of the Company; and
(vi) using commercially reasonable efforts to cooperate with the due diligence investigation of the Financing Sources, to
the extent customary and reasonable and not unreasonably interfering with the businesses of the Company or any of its Subsidiaries;
provided that nothing herein shall require such cooperation
to the extent it would interfere unreasonably with the businesses or operations of the Company or its Subsidiaries; and provided, further, that neither the
Company nor any of its Subsidiaries or their respective Representatives shall (1) be required to pay any commitment or other similar fee or incur any other cost or expense that is not reimbursed by Buyer in connection with the Financing
pursuant to below or to pass resolutions or consents to approve or authorize the execution of the Financing (other than any continuing officers or directors that will remain after the Closing Date), (2) have any liability or obligation under
any document, agreement or certificate related to the Financing unless and until the Closing occurs, (3) be required to prepare or provide (x) projections, pro forma financial statements or pro forma financial adjustments related to the
Financing or (y) any information that is not readily available to the Company based on its current method of recordkeeping (it being understood that the Company will provide the Required Financial Statements), (4) be required to take any
action which would cause it to (x) violate any Contract to which it is a party (including this Agreement), (y) violate any Law applicable to it or (z) fail to satisfy any condition precedent set forth in Section 2.2(a) or 2.2(b);
or (5) be required to execute and deliver any authorization letter, solvency certificate or statement of beneficial ownership. For the avoidance of doubt, any cooperation provided under this Section 7.14 shall be at the sole expense
of Buyer.
(b) Buyer shall, promptly upon request by the Company, reimburse the Company for all reasonable and documented out-of-pocket costs
(including reasonable and documented attorney’s fees and expenses) incurred by the Company or its Subsidiaries in connection with the cooperation described above in Section 7.14(a). Buyer shall indemnify and hold harmless the Company
and its Subsidiaries and their respective Representatives from and against any and all liabilities or losses suffered or incurred by them in connection with the arrangement of the Financing and any information utilized in connection therewith
(other than information provided by the Company or its Subsidiaries), in each case, except to the extent such liabilities or losses are suffered or incurred directly as a result of the bad faith, gross negligence, or willful misconduct by the
Company or any of its Subsidiaries or, in each case, their respective Representatives.
(c) The Company hereby consents to the use of the logos of the Company and its Subsidiaries in connection with the Financing and
authorizes the Financing Sources to download copies of such logos from its website for such purposes; provided, that such logos are used solely in a manner that is not intended to nor reasonably likely
to harm or disparage the Company or any of its Subsidiaries or the reputation or goodwill of the Company or any of its Subsidiaries and its or their marks.
7.15 Buyer Financing. Buyer agrees that it shall:
(a) pay, as and when due, the fees due and owing under each Fee Letter to the extent the same are payable prior to the Closing; and
(b) notify the Company within three (3) Business Days after obtaining knowledge of (x) any material breach or default by any party
related to the Financing, (y) any termination of the Commitment Letter or (z) any written communication from any party to the Commitment Letter with respect to any actual or potential breach, default, withdrawal, repudiation or termination of
the Commitment Letter; provided that in no event will Buyer be under any obligation to disclose any information that is subject to attorney client or similar privilege if Buyer shall have used its commercially reasonable efforts to disclose
such information in a way that would not waive such privilege.
ARTICLE VIII
PRE-CLOSING TERMINATION OF AGREEMENT
8.1 Termination. Except as provided in Section 8.2, this Agreement may be terminated and the Merger abandoned at any
time prior to the Closing only:
(a) by mutual agreement of the Company and Buyer;
(b) by Buyer if the Requisite Shareholder Approval shall not have been obtained by the Company and delivered to Buyer within three (3)
hours after the execution and delivery of this Agreement by Buyer, Merger Sub and the Company;
(c) by Buyer or the Company if the Closing Date shall not have occurred by April 15, 2020 (the “End Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(c) shall not be available to any party whose action or failure to act
has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes breach of this Agreement;
(d) by Buyer or the Company if any Law shall be in effect which has the effect of making the Merger illegal or otherwise prohibits
consummation of the Merger;
(e) by Buyer or the Company if a Governmental Entity of competent jurisdiction shall have promulgated or issued a final, non-appealable
Order which is in effect and which has the effect of making the Merger or any other transaction contemplated hereby illegal or otherwise prohibiting or preventing consummation of the Merger or any other transaction contemplated hereby in
accordance with the terms hereof;
(f) by Buyer if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy in
any representation, warranty, covenant or agreement of the Company contained in this Agreement such that the conditions set forth in Sections 2.2(b)(i) and 2.2(b)(ii) would not be satisfied as of the time of such breach or
inaccuracy and such breach or inaccuracy has not been cured within twenty (20) calendar days after written notice thereof to the Company; provided, however,
that no cure period shall be required for a breach or inaccuracy which by its nature cannot be cured; or
(g) by the Company if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy
in any representation, warranty, covenant or agreement of Buyer contained in this Agreement such that the conditions set forth in Sections 2.2(c)(i) and 2.2(c)(ii) would not be satisfied as of the time of such breach or
inaccuracy and such breach or inaccuracy has not been cured within twenty (20) calendar days after written notice thereof to Buyer; provided, however, that no
cure period shall be required for a breach or inaccuracy which by its nature cannot be cured.
8.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 8.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the part of Buyer, Merger Sub or the Company, or their respective officers, directors or shareholders, if applicable; provided,
however, that each party hereto and each Person shall remain liable for any Willful Breaches of this Agreement, Related Agreements or in any certificate or other instruments delivered pursuant to this
Agreement prior to its termination; provided, further, however, that, the provisions of Section 7.9
(Third-Party Expenses), Section 10.2 (Exculpation and Indemnification of the Securityholder Representative), Article XI (General Provisions) and this Section 8.2 shall remain in full force and effect and survive any
termination of this Agreement pursuant to the terms of this Article VIII.
ARTICLE IX
POST-CLOSING INDEMNIFICATION
9.1 Survival of Representations and Warranties.
(a) Company Representations and Warranties. The representations and warranties of the Company set forth in this Agreement or in
the Officer’s Certificate shall survive until 11:59 p.m. (Pacific time) on the date that is eighteen (18) months after the Closing Date (the date of expiration of such eighteen-month (18) period, the “Expiration Date”); provided, however, that (i) the Fundamental Representations shall survive until 11:59 p.m. (Pacific time) on the date that is sixty (60) days following the date
after any Person could, under applicable statutes of limitation (giving effect to any extensions or waivers thereof), bring an Action against Buyer, the Company, or any of their respective Affiliates (including the Surviving Corporation) in
connection with such matters, and (ii) the Tax Representations shall survive until 11:59 p.m. (Pacific time) on the date that is sixty (60) days following the expiration of the statute of limitations (giving effect to any extensions or waivers
thereof) applicable to the Taxes that are the subject of such Tax Representations; provided, further, that in the event of fraud with respect to a representation
or warranty, such representation or warranty shall survive until the resolution of any claims relating thereto; provided, further, that all representations and warranties of the Company shall survive beyond the Expiration Date or other survival periods specified above with respect to any inaccuracy therein or breach thereof if a claim is made hereunder
prior to the expiration of the survival period for such representation and warranty, in which case such representation and warranty shall survive as to such claim until such claim has been finally resolved.
(b) Buyer Representations and Warranties. The representations and warranties of Buyer and Merger Sub contained in this
Agreement or in any certificate or other instrument delivered pursuant to this Agreement shall terminate at the Closing (other than those in Section 4.5, which shall survive until the expiration of the applicable statute of
limitations).
(c) Contract Supersedes Statutes. For the avoidance of doubt, it is the intention of the parties hereto that the foregoing
respective survival periods and termination dates in Sections 9.1(a)-(b) supersede any applicable statutes of limitations that would otherwise apply to such representations and warranties.
9.2 Indemnification.
(a) From and after and by virtue of the Merger, and except as set forth on Schedule 9.2(a), the Company Shareholders and
holders of Vested Company Options (together, the “Indemnifying Parties”) shall (first from the Escrow Fund, and thereafter on a several and not joint basis according to their respective Indemnification Pro Rata Portions), indemnify and
hold harmless Buyer and its Subsidiaries and its and their respective officers, directors, employees, agents and representatives, including the Surviving Corporation (the “Indemnified Parties”), from and against all Losses paid,
incurred, suffered or sustained by the Indemnified Parties, or any of them (including the Surviving Corporation) (regardless of whether or not such Losses relate to any third-party claims), directly or indirectly, resulting from, arising out
of, or relating to any of the following:
(i) any breach of or inaccuracy in, as of the Agreement Date or as of the Effective Time, a representation or
warranty of the Company contained in this Agreement or the Officer’s Certificate, without giving effect to (A) any qualifications based on the word “material” or similar phrases (including “Company Material Adverse Effect”) limiting the scope
of such representation or warranty (provided that the operation of this clause (A) shall not be deemed to render references to “Company Material Adverse Effect” to “Effect” or references to “Material
Contract” to “Contract” and shall not apply to (x) the third to last sentence of Section 3.7(a), (y) clause (i) of the last sentence in Section 3.7(c)) or (z) Section 3.9, or (B) any update of or modification to the
Disclosure Schedule made or purported to have been made on or after the Agreement Date (except solely with respect to, and as required by, the second to last sentence of Section 3.5(a));
(ii) any failure by the Company to perform or comply with any of its covenants or agreements set forth in this
Agreement or any Related Agreement;
(iii) regardless of the disclosure of any matter set forth in the Disclosure Schedule, any inaccuracy in any
information, or breach of any representation or warranty, set forth in the Payment Spreadsheets, Pre-Closing Statement or Statement of Expenses (including any unpaid Third-Party Expenses);
(iv) regardless of the disclosure of any matter set forth in the Disclosure Schedule, any unpaid Pre-Closing Taxes not
reflected in Third-Party Expenses or as a liability in Net Working Capital in the determination of Final Total Closing Consideration;
(v) regardless of the disclosure of any matter set forth in the Disclosure Schedule, any Equityholder Matters;
(vi) regardless of the disclosure of any matter set forth in the Disclosure Schedule, but subject to Section 4.5,
any fraud on the part of the Company or any Subsidiary, or by any Company Securityholder or any Representative of any of the foregoing in connection with this Agreement, the Merger or the other transactions contemplated hereby (solely with
respect to matters involving the Company or any Subsidiary (and not matters personal to such Company Securityholder or Representative)); and
(vii) any Dissenting Shares (excluding payments for such shares) that have not been paid by the Company prior to the
Closing in excess of the amount of cash that otherwise would have been owed in respect of such shares in accordance with this Agreement.
(b) For all purposes of and under this Agreement, “Loss” or “Losses” shall mean any and all losses, liabilities, damages,
deficiencies, Taxes, costs, interest, awards, judgments, penalties and expenses of any kind or nature (including reasonable attorneys’ and consultants’ fees and expenses incurred in connection with investigating, defending against or settling
any of the matters set forth in Section 9.2(a)). For the avoidance of doubt, “Losses” shall include incidental damages and indirect or other consequential damages, but shall not include punitive or exemplary damages unless punitive or
exemplary damages are awarded to a third party in any Action against an Indemnified Party.
(c) The Indemnifying Parties (including any officer or director of the Company) shall not have any right of contribution,
indemnification or right of advancement from the Surviving Corporation or Buyer with respect to any Loss claimed by an Indemnified Party payable by any of them in their capacity as an Indemnifying Party.
(d) Any payments made to an Indemnified Party pursuant to any indemnification obligations under this Article IX will be treated
as adjustments to the Total Consideration for Tax purposes, unless otherwise required by applicable Laws.
(e) The rights of the Indemnified Parties to indemnification, compensation or reimbursement, payment of Losses or any other remedy
under this Agreement shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any representation, warranty, covenant or agreement made by the Company or any other matter. The waiver of any condition based on the accuracy of any such representation or
warranty, or on the performance of or compliance with any such covenant or agreement, will not affect the right to indemnification, compensation or reimbursement, payment of Losses, or any other remedy based on any such representation,
warranty, covenant or agreement. No Indemnified Party shall be required to show reliance on any representation, warranty, certificate or other agreement in order for such Indemnified Party to be entitled to indemnification, compensation or
reimbursement hereunder.
9.3 Limitations on Indemnification.
(a) Except in the case of fraud or indemnification claims for breaches of or inaccuracies in the Fundamental Representations or Tax
Representations, the Indemnified Parties may not recover any Losses pursuant to an indemnification claim under Section 9.2(a)(i) unless and until the amount of the indemnifiable Qualifying Losses thereunder exceeds one million dollars
($1,000,000) (the “Basket”) in which case the Indemnified Parties shall be entitled to recover all Losses, including the amount of the Basket paid, incurred, suffered or sustained by the Indemnified Parties. For the avoidance of doubt,
the limitations set forth in this Section 9.3(a) shall not apply to indemnification claims under clauses (ii) – (vii) of Section 9.2(a), inclusive.
(b) Except in the case of fraud or indemnification claims for breaches of or inaccuracies in the Fundamental Representations or Tax
Representations the Indemnifying Parties shall only be liable for any Loss relating to a single claim (or series of claims arising from the same or substantially similar facts or circumstances) in excess of twenty-five thousand dollars
($25,000) (such Loss or Losses, a “Qualifying Loss”). For the avoidance of doubt, the limitations set forth in this Section 9.3(b) shall not apply to indemnification claims under clauses (ii) – (vii) of Section 9.2(a),
inclusive.
(c) Subject to Section 9.3(e), recourse by the Indemnified Parties to the Escrow Fund shall be the Indemnified Parties’ sole
and exclusive remedy under this Agreement for Losses resulting from the matters referred to in Section 9.2(a)(i). The limitation set forth in Section 9.3(a) shall not apply to indemnification claims (and shall not limit the
indemnification or other obligations of such Indemnifying Party): (i) for inaccuracies in or breaches of any of the Fundamental Representations or Tax Representations; or (ii) under clauses (ii) – (vii) of Section 9.2(a),
inclusive. To the extent that the Indemnifying Parties are entitled to recovery under this Article IX in excess of the Escrow Fund, the Indemnified Parties shall not be entitled to recover amounts directly from an Indemnifying Party
under this Article IX in respect of its, his or her indemnification obligations until such time as the Escrow Fund has been fully exhausted or the amounts contained in the Escrow Fund are otherwise allocated to cover existing,
unresolved indemnification, compensation or reimbursement claims that have been set forth in Indemnification Claim Notices delivered pursuant to Section 9.5(a). Any amounts recovered by the Indemnified Parties from the Escrow Fund
pursuant to Section 9.2(a) with respect to breaches of the Fundamental Representations or Tax Representations, or pursuant to any of the matters referred to in clauses (ii) – (vii) of Section 9.2(a), inclusive,
shall not count towards or reduce the amount that the Indemnified Parties may recover with respect to claims for indemnification, compensation or reimbursement pursuant to Sections 9.2(a)(i) for all other matters (it being understood
that, in the case of such recovery from the Escrow Fund with respect to Losses arising from breaches of the Fundamental Representations or Tax Representations, or pursuant to any of the matters referred to in clauses (ii) – (vii)
of Section 9.2(a), inclusive, or Section 2.4(c) the Indemnified Parties shall be entitled to recover indemnifiable Losses directly against the Indemnifying Parties up to the amount of any Losses recovered from the Escrow Fund in
respect of such Losses arising from breaches of the Fundamental Representations or Tax Representations, or pursuant to any of the matters referred to in clauses (ii) – (vii) of Section 9.2(a), inclusive or Section
2.4(c)).
(d) Subject to Section 9.3(e), the total amount of indemnification payments that each Indemnifying Party can be required to
make to the Indemnified Parties pursuant to Section 9.2 (in excess of the amount, if any, paid to the Indemnified Parties out of the Escrow Fund) shall be limited to the portion of the Total Closing Consideration actually paid to such
Indemnifying Party pursuant to Section 1.3 and Section 2.3 (without regard to any Taxes deducted or to be deducted). For the avoidance of doubt, to the extent any part of the Escrow Amount is paid in to the Escrow Fund on behalf
of a Key Employee but is subsequently paid back to Buyer in accordance with the terms of such Key Employee’s Holdback Agreement and the Escrow Agreement, Buyer shall have no recourse, in respect of such Key Employee’s liabilities resulting from
the matters referred to in Section 9.2(a)(i) for all other matters, against any amounts withheld from other Indemnifying Parties and paid in (and released to) the Escrow Fund.
(e) Nothing in this Agreement shall limit the liability of, or the Indemnified Parties’ remedies against, any Person who perpetrates,
or who has actual knowledge of (without a duty to investigate), fraud in relation to the transactions contemplated hereby.
(f) Notwithstanding any other provision of this Agreement to the contrary, the indemnification rights set forth in this Article IX
shall be the sole and exclusive remedy of the Indemnified Parties from and after the Effective Time for monetary damages in connection with the matters described in Section 9.2(a) (which means that the survival periods and liability
limits set forth in this Article IX shall control notwithstanding any statutory or common law provisions or principles to the contrary); provided, however,
that nothing in this Agreement shall limit the Indemnified Parties’ ability to pursue (i) specific performance or injunctive relief or other non-monetary equitable remedies, (ii) remedies under any Related Agreements (other than the
certificates and documents to be delivered by the Company pursuant to Section 2.2(b)(xvii) against the parties thereto, and (iii) remedies against any Person who perpetrates, or who has actual knowledge of (without a duty to
investigate), fraud in relation to the transactions contemplated hereby.
(g) To the extent the Indemnified Parties are entitled to recover indemnifiable Losses in respect of amounts which are indemnifiable
pursuant to Section 2.5 by a particular Person who had received amounts pursuant to this Agreement, Buyer shall first use reasonable best efforts to recover such indemnifiable Losses from such Person prior to seeking recourse against
the Escrow Fund pursuant to the terms of this Article IX.
(h) The amount of any Losses recoverable by any Indemnified Party under Section 9.2(a) shall be calculated net of any insurance
proceeds actually received by, and/or any indemnification or contribution payments actually paid by any third party to, such Indemnified Party in respect of such Losses in, each case net all costs of recovery, including reasonably anticipated
increases in insurance premiums; provided, however, that in no event shall any Indemnified Party be required to seek or obtain any such insurance proceeds or
third-party indemnification or contribution. If an Indemnified Party receives any amounts under applicable insurance policies or third-party indemnification or contribution payments subsequent to its receipt of an indemnification payment by the
Indemnifying Parties (including from the Escrow Fund), then such Indemnified Party will, without duplication, promptly reimburse the Indemnifying Parties (including via replenishing the Escrow Fund, if applicable) for any payment made by such
Indemnifying Parties up to the amount received by the Indemnified Party; provided that the aggregate amount of reimbursement payments to the Indemnifying Parties will not in any event exceed the
aggregate indemnification payment received by the Indemnified Party from the Indemnifying Parties. For clarity, nothing in this Section 9.3(h) will be deemed to prejudice the ability of any Indemnified Party to seek recourse against the
Escrow Fund at any time according to the other terms and conditions of this Article IX, but rather this Section 9.3(h) is intended solely to prevent multiple recoveries by any Indemnified Party for the same Losses.
(i) Notwithstanding any other provision of this Agreement, the Indemnifying Parties shall not have any liability or indemnification
obligation for (i) any Taxes of the Company or any Subsidiary resulting from any action taken by the Company after the Closing on the Closing Date outside of the ordinary course of business, or (ii) the inability of Buyer, the Surviving
Corporation or any of their Affiliates to utilize to any extent any Tax asset or attribute (e.g., net operating loss carryforward or Tax credit carryforward) in any Tax period or portion thereof (including any Straddle Tax Period) beginning on
or after the Closing Date.
(j) Any claim for indemnification under this Article IX, and any offer to compromise or settle such claim, must be made on a
pro rata basis to all Indemnifying Parties (based on their respective Indemnification Pro Rata Portions).
(k) Any liability for indemnification under this Article IX shall be determined without duplication of recovery by reason of
the state of facts giving rise to such liability constituting a breach or other violation of more than one representation, warranty, covenant, agreement, certificate or certification. In addition, if and solely to the extent that an amount of
Losses in connection with an indemnifiable matter was already taken into account in connection with calculation of the Final Total Closing Consideration, the same amount of such Losses may not be recovered under this Article IX.
(l) Notwithstanding any other provision of this Agreement, in no event will any Indemnifying Party be liable for any other
Indemnifying Party’s breach of such other Indemnifying Party’s representations, warranties, covenants, or agreements contained in any Holdback Agreement, Joinder Agreement, Non-Competition and Non-Solicitation Agreements or other ancillary
agreement hereto to which such other Indemnifying Party is a party.
9.4 Escrow Fund.
(a) The Escrow Fund shall be available to compensate the Indemnified Parties for any claims by such parties for any Losses suffered or
incurred by them and for which they are entitled to recovery under this Article IX. Except as set forth below, the period during which claims for Losses to be recovered from the Escrow Fund may be made under this Agreement shall
commence at the Closing and terminate on the date that is eighteen (18) months after the Closing Date (the “Escrow Period”).
(b) No later than five (5) Business Days after the end of the Escrow Period or the date a Subsequent Escrow Release Amount is due to the
Indemnifying Parties pursuant to Section 9.5(c), the Securityholder Representative shall deliver to Buyer an updated version of the Closing Payment Spreadsheet (each, an “Escrow Release Payment Spreadsheet”) within five (5)
Business Days after such date in a form and substance reasonably satisfactory to Buyer and accompanied by documentation reasonably satisfactory to Buyer in support of the information set forth therein. The Escrow Release Payment Spreadsheet
shall set forth the following information in reasonable detail:
(i) all information specified in Sections 2.3(a)(i)-(iv) inclusive, as updated to reflect the release of
the Initial Escrow Release Amount or Subsequent Escrow Release Amount, as applicable; and
(ii) the amount of any portion of the Initial Escrow Release Amount or Subsequent Escrow Release Amount, as
applicable, payable to each Company Securityholder in accordance with the terms of the Governing Documents.
(c) No later than five (5) Business Days after Buyer receives the Escrow Release Payment Spreadsheet, the remaining portion of the
Escrow Amount, less any amount of actual Losses or Losses estimated in good faith, if possible, in respect of any resolved claims that have yet to be satisfied or any unresolved and pending claims specified in any Officer’s Certificate (the “Unresolved
Claims”) delivered to the Escrow Agent and the Securityholder Representative in accordance with Section 9.5 on or prior to the end of the Escrow Period (the “Initial Escrow Release Amount”), shall be
distributed to the Indemnifying Parties in accordance with the terms of the Escrow Agreement and the Escrow Release Payment Spreadsheet.
(d) In the event that there exist Unresolved Claims as of the expiration of the Escrow Period, as soon as each such Unresolved Claims
has been resolved, the Escrow Agent shall promptly, and in any event within five (5) Business Days following the after Buyer receives the Escrow Release Payment Spreadsheet, deliver to the Indemnifying Parties in accordance with the terms of
the Escrow Agreement, the portion of the Escrow Fund, if any, that was retained for purposes of satisfying such claim that was not needed to satisfy such claim (each a “Subsequent Escrow Release Amount”) in accordance with the Escrow
Release Payment Spreadsheet.
9.5 Indemnification Claim Procedures.
(a) Subject to the limitations set forth in Section 9.3, if an Indemnified Party wishes to make an indemnification claim under
this Article IX, such Indemnified Party shall deliver a written notice (an “Indemnification Claim Notice”) to the Securityholder Representative (with a copy to the Escrow Agent) (i) stating that an Indemnified Party has paid,
incurred, suffered or sustained, or reasonably anticipates that it may pay, incur, suffer or sustain Losses, and (ii) specifying such Losses in reasonable detail (to the extent available), the date (if available) that each such Loss was paid,
incurred, suffered or sustained, or the basis for such anticipated liability, and, if applicable, the nature of the misrepresentation, breach of warranty or covenant to which such item is related. Buyer may update an Indemnification Claim
Notice from time to time to reflect any change in circumstances following the date thereof; provided that the update relates to the underlying facts and circumstances described in the initial
Indemnification Claim Notice.
(b) If the Securityholder Representative on behalf of the Indemnifying Parties (or the Indemnifying Party in the event that
indemnification is being sought hereunder directly from such Indemnifying Party) shall not object in writing within the thirty-day (30) period after receipt of an Indemnification Claim Notice by delivery of a written notice of objection
containing a reasonably detailed description of the facts and circumstances supporting an objection to the applicable indemnification claim (an “Indemnification Claim Objection Notice”), such failure to so object shall be an irrevocable
acknowledgment by the Securityholder Representative on behalf of the Indemnifying Parties (or the applicable Indemnifying Party) that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in such Indemnification
Claim Notice. In such event, the Escrow Agent shall promptly release from the Escrow Fund cash with an aggregate value equal to the Losses set forth in such Indemnification Claim Notice.
(c) In the event that the Securityholder Representative shall deliver an Indemnification Claim Objection Notice in accordance with Section 9.5(b)
(or in the event that indemnification is being sought hereunder directly from an Indemnifying Party, if such Indemnifying Party shall object to any claim or claims made in any Indemnification Claim Notice to recover claims directly from such
Indemnifying Party within thirty (30) days after delivery of such Indemnification Claim Notice), the Securityholder Representative (or such objecting Indemnifying Party) and Buyer shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the Securityholder Representative (or such objecting Indemnifying Party) and Buyer should so agree, a memorandum setting forth such agreement shall be prepared and signed by both
parties and, in the case of an indemnification claim to be recovered from the Escrow Fund, shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum and make distributions from the Escrow Fund in
accordance with the terms thereof. In such event, the Escrow Agent shall promptly release from the Escrow Fund cash with an aggregate value equal to the Losses set forth in such Indemnification Claim Notice.
(d) If no such agreement can be reached after good faith negotiation and prior to thirty (30) days after delivery of an Indemnification
Claim Objection Notice, Buyer may file suit with respect to the matter in any court having jurisdiction.
9.6 Defense of Third Party Claims. In the event of the assertion or commencement by any Person of any claim or Action (whether
against the Surviving Corporation, Buyer or any other Person) with respect to which the Indemnifying Parties may become obligated to hold harmless, indemnify, compensate or reimburse any Indemnified Party pursuant to this Article IX,
Buyer shall have the right, at its election, to proceed with the defense of such claim or Action on its own with counsel reasonably satisfactory to the Securityholder Representative, and the Securityholder Representative shall be entitled, at
the Indemnifying Parties’ expense, to participate in, but not determine or conduct, the defense of such claim or Action and Buyer shall keep the Securityholder Representative reasonably apprised of any material development in such Action, and
promptly provide to the Securityholder Representative copies of all pleadings, notices and communications with respect to such claim or Action to the extent that receipt of such documents does not waive any privilege. If Buyer so proceeds with
the defense of any such claim or Action:
(a) subject to the other provisions of this Article IX, all reasonable expenses relating to the defense of such claim or
Action (and all amounts due pursuant to any settlement, adjustment or compromise of such claim or Action) shall be borne and paid exclusively by the Indemnifying Parties to the extent that either (i) it is determined according to the procedures
in this Article IX that such claim or Action (or the matters underlying such claim or Action) constitutes an indemnifiable matter under Section 9.2 or (ii) Buyer and the Securityholder Representative otherwise agree in writing
that such costs and expenses shall constitute indemnifiable Losses; provided, that the absence of a final determination (including by a Governmental Entity or an arbitrator) with respect to such claim
or Action shall not prejudice or otherwise affect the determination as to whether such claim or Action arose out of, resulted from, or was in connection with a matter listed in Section 9.2; and
(b) Buyer shall have the right to settle, adjust or compromise such claim or Action without the consent of the Securityholder
Representative (it being understood that if Buyer requests that the Securityholder Representative consent to a settlement, adjustment or compromise, the Securityholder Representative shall not
unreasonably withhold or delay such consent; provided, that the Securityholder Representative may withhold consent to any requested settlement, adjustment or compromise if the Securityholder
Representative believes in good faith that there is not any underlying basis for indemnification under this Article IX with respect to such settlement, adjustment or compromise); provided, however, that if Buyer settles, adjusts or compromises any such claim or Action without the consent of the Securityholder Representative, then such settlement, adjustment or compromise shall not be
conclusive evidence of the amount of Losses incurred by the Indemnified Party in connection with such claim or Action or that such Losses are indemnifiable hereunder.
If Buyer does not elect to proceed with the defense of any such claim or Action, the Securityholder Representative may proceed with the defense of such claim or
Action with counsel reasonably satisfactory to Buyer; provided, however, that the Securityholder Representative may not settle, adjust or compromise any such claim or Action without the prior written
consent of Buyer (which consent may not be unreasonably withheld or delayed) unless (i) such judgment, settlement or compromise includes an unconditional release from all liability with respect to the claim in favor of the Indemnified Parties
or (ii) the sole relief provided in connection with such judgment, settlement or compromise is monetary damages that are paid in full by the Indemnifying Parties (including from the Escrow Fund) or any other relief that is enforceable only
against the Indemnifying Parties. Buyer shall give the Securityholder Representative prompt notice of the commencement of any such Action against Buyer, Merger Sub or the Company; provided, however,
that any failure on the part of Buyer to so notify the Securityholder Representative shall not limit any of the obligations of the Indemnifying Parties under this Article IX (except to the extent such failure materially prejudices the
defense of such Action).
ARTICLE X
SECURITYHOLDER REPRESENTATIVE
10.1 Appointment and Authority of Securityholder Representative.
(a) By virtue of the execution and delivery of a Joinder Agreement, the adoption of this Agreement and approval of the Merger by the
Company Shareholders or participating in the Merger and receiving the benefits thereof, including the right to receive the consideration payable in connection with the Merger, each of the Indemnifying Parties shall be deemed to have agreed to
appoint Shareholder Representative Services LLC as its exclusive representative, agent, proxy, and attorney-in-fact (with full power of substitution), as the Securityholder Representative for and on behalf of the Indemnifying Parties for all
purposes in connection with this Agreement, the Escrow Agreement, and the agreements ancillary hereto, including (a) to give and receive notices and communications in respect of all Relevant Matters, including claims under this Agreement, (b)
to authorize, consent or object to any claims hereunder and authorize payment to any Indemnified Party from the Escrow Fund, in satisfaction of any claims hereunder by any Indemnified Party, or in satisfaction of the provisions of Section
2.4, (c) to object to such payments, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to any Relevant Matter, including any
claim for indemnification pursuant to this Agreement by any Indemnified Party hereunder against any Indemnifying Party or by any such Indemnifying Party against any Indemnified Party or any dispute between any Indemnified Party and any such
Indemnifying Party, in each case relating to this Agreement or the transactions contemplated hereby, (d) consent or agree to any amendment to this Agreement, (e) grant any extension or waiver under or in connection with this Agreement, and (e)
and to take all other actions that are either (i) necessary or appropriate in the judgment of the Securityholder Representative in connection with this Agreement, the Escrow Agreement and the Securityholder Representative Engagement Agreement
or (ii) specifically mandated, permitted, or contemplated by the terms of this Agreement, the Escrow Agreement or the Securityholder Representative Engagement Agreement. Notwithstanding the foregoing, the Securityholder Representative shall
have no obligation to act on behalf of the Indemnifying Parties except as expressly provided herein, in the Escrow Agreement and in the Securityholder Representative Engagement Agreement, and for purposes of clarity, there are no obligations of
the Securityholder Representative to the Indemnifying Parties in any ancillary agreement, schedule, exhibit or the Disclosure Schedule. All actions taken by the Securityholder Representative under this Agreement, the Escrow Agreement, or the
Securityholder Representative Engagement Agreement shall be binding upon each Indemnifying Party and such Indemnifying Party’s successors as if expressly confirmed and ratified in writing by such Indemnifying Party, and all defenses which may
be available to any Indemnifying Party to contest, negate, or disaffirm the action of the Securityholder Representative taken in good faith under this Agreement, the Escrow Agreement or the Securityholder Representative Engagement Agreement are
waived. The Securityholder Representative may resign at any time. Such agency may be changed by the Indemnifying Parties from time to time upon not less than thirty (30) days prior written notice to Buyer; provided,
however, that the Securityholder Representative may not be removed unless holders representing an aggregate Deemed Pro Rata Portion of two-thirds (2/3) agree to such removal and to the identity of the
substituted agent. Notwithstanding the foregoing, a vacancy in the position of Securityholder Representative may be filled by the holders representing an aggregate Deemed Pro Rata Portion of greater than one-half (1/2). The immunities and
rights to indemnification hereunder shall survive the resignation or removal of the Securityholder Representative or any member of the Advisory Group, and the Closing and/or any termination of this Agreement or the Escrow Agreement. No bond
shall be required of the Securityholder Representative. Notices or communications to or from the Securityholder Representative shall constitute notice to or from the Indemnifying Parties. The powers, immunities, and rights to indemnification
granted to the Securityholder Representative Group hereunder: (i) are coupled with an interest and shall be irrevocable and binding on any successor thereto, and (ii) shall survive the delivery of an assignment by any Indemnifying Party of the
whole or any fraction of his, her, or its interest in the Escrow Fund.
(b) The Securityholder Representative (x) shall receive a copy in electronic format of the contents of the electronic dataroom in
connection with the Closing and (y) shall have reasonable access to information about the Surviving Corporation and the reasonable assistance of the Company’s former officers and employees for to the extent reasonably necessary for purposes of
performing its duties and exercising its rights hereunder; provided that the Securityholder Representative shall treat confidentially and not use or disclose the terms of this Agreement or any
nonpublic information from or about Buyer or any of its Affiliates, including the Surviving Corporation, to anyone (except to the Indemnifying Parties or the Securityholder Representative’s employees, attorneys, accountants, financial advisors
or authorized representatives on a need to know basis, in each case, who agree to treat such information confidentially); provided, however, that none of Buyer
nor any of its Affiliates, including the Surviving Corporation, shall be obligated to provide any such access or information if it determines, in its reasonable judgment, that: (i) it is prohibited from doing so pursuant to the terms of a
confidentiality agreement with a third party; (ii) the access or disclosure would violate applicable Law; (iii) the access or disclosure would cause the loss of or jeopardize any attorney-client, attorney work product or other privilege; (iv)
the access or disclosure would result in the disclosure of a Trade Secret or other highly confidential, competitive, or sensitive information; or (v) access or disclosure to a requested Contract would violate or cause a default under, or give a
third party the right to terminate or accelerate any rights under such Contract. The Securityholder Representative shall enter into a separate customary confidentiality agreement prior to being provided access to such information if reasonably
requested by Buyer.
10.2 Exculpation and Indemnification of Shareholder Representation. Neither the Securityholder Representative nor its members,
managers, directors, officers, contractors, agents or employees or any member of the Advisory Group (collectively, the “Securityholder Representative Group”) shall be liable to any Indemnifying Party for any act done or omitted hereunder
as Securityholder Representative while acting in good faith and without gross negligence or willful misconduct. The Securityholder Representative shall not be liable for any action or omission pursuant to the advice of counsel. The Indemnifying
Parties on whose behalf the Escrow Amount was contributed to the Escrow Fund shall indemnify the Securityholder Representative Group and hold the Securityholder Representative Group harmless against any loss, liability, claim, damage, fee,
cost, judgment, fine, amount paid in settlement or expense incurred or suffered, arising out of or in connection with the acceptance or administration of the Securityholder Representative’s duties hereunder, including the reasonable fees and
expenses of any legal counsel or other professionals retained by the Securityholder Representative and costs incurred in connection with seeking recovery from insurers (“Securityholder Representative Expenses”); provided, that in the
event that any such Securityholder Representative Expenses are finally adjudicated to have been directly caused by the gross negligence, bad faith, or willful misconduct of the Securityholder Representative, the Securityholder Representative
will reimburse the Indemnifying Parties the amount of such indemnified Securityholder Representative Expenses to the extent attributable to such gross negligence, bad faith or willful misconduct. If not paid directly to the Securityholder
Representative by the Indemnifying Parties, any such Securityholder Representative Expenses may be recovered by the Securityholder Representative from (i) the funds in the Expense Fund or (ii) following the expiration of each Escrow Period from
the Escrow Amount otherwise distributable to or for the benefit of the Indemnifying Parties only at the time of distribution of such amounts (and not distributed or distributable to an Indemnified Party or subject to a pending indemnification
claim of an Indemnified Party) pursuant to the terms hereof and of the Escrow Agreement; provided, that while this section allows the Securityholder Representative to be paid from the aforementioned sources of funds, this does not relieve the
Indemnifying Parties from their obligation to promptly pay such Securityholder Representative Expenses as they are suffered or incurred, nor does it prevent the Securityholder Representative from seeking any remedies available to it at law or
otherwise. Notwithstanding anything in this Agreement to the contrary, any restrictions or limitations on liability or indemnification obligations of, or provisions limiting the recourse against non-parties otherwise applicable to, the
Indemnifying Parties set forth elsewhere in this Agreement are not intended to be applicable to the indemnities provided to the Securityholder Representative under this section. A decision, act, consent or instruction of the Securityholder
Representative, including an amendment, extension or waiver of this Agreement pursuant to Section 11.5 or Section 11.6, shall constitute a decision of the Indemnifying Parties and shall be final, conclusive and binding upon
Indemnifying Parties; and the Escrow Agent and Buyer may rely upon any such decision, act, consent or instruction of the Securityholder Representative as being the decision, act, consent or instruction of the Indemnifying Parties. The Escrow
Agent and Buyer are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of the Securityholder Representative. Certain Indemnifying Parties (the “Advisory
Group”) have concurrently herewith entered into a letter agreement with the Securityholder Representative (the “Securityholder Representative Engagement Agreement”) regarding direction to be provided by the Advisory Group to the
Securityholder Representative under this Agreement, the Escrow Agreement and the Securityholder Representative Engagement Agreement. The Advisory Group shall incur no liability to the Indemnifying Parties for any liability incurred by the
members of the Advisory Group while acting in good faith and arising out of or in connection with the acceptance or administration of their duties (it being understood that any act done or omitted pursuant to the advice of counsel shall be
conclusive evidence of such good faith), even if such act or omission constitutes negligence on the part of the Advisory Group or one of its members. The Indemnifying Parties agree that the Securityholder Representative shall be entitled to:
(i) rely upon the Payment Spreadsheets, (ii) rely upon any signature believed by it to be genuine, and (iii) reasonably assume that a signatory has proper authorization to sign on behalf of the applicable Indemnifying Party or other party. This
indemnification shall survive the Closing, the resignation or removal of the Securityholder Representative, termination of this Agreement or the Escrow Agreement.
10.3 Expense Cash.
(a) The Expense Cash shall be deposited with the Securityholder Representative, to constitute an expense fund (the “Expense Fund”)
and to be governed by the provisions set forth herein. The Expense Cash shall be available to pay directly or reimburse the Securityholder Representative for any Securityholder Representative Expenses or other third-party expenses reasonably
and actually incurred by the Securityholder Representative, or to satisfy any claims against the Indemnifying Parties hereunder if the Securityholder Representative shall determine there are sufficient funds for such purpose, and shall be
released to the Indemnifying Parties and the Securityholder Representative, as the case may be, pursuant to the terms of this Section 10.3. As soon as reasonably determined by the Securityholder Representative that the Expense Cash is
no longer required to be withheld, the Securityholder Representative shall:
(b) prepare an updated version of the Closing Payment Spreadsheet (the “Expense Cash Release Payment Spreadsheet”). The Expense
Cash Release Payment Spreadsheet shall set forth the following information in reasonable detail:
(i) All information specified in Sections 2.3(a)(i)-(iv) inclusive, as updated to reflect the release of
the Remaining Expense Fund Amount; and
(ii) the amount of any portion of the Remaining Expense Fund Amount, payable to each Company Securityholder in accordance with the terms
of the Governing Documents,
(c) deposit the remaining balance of the Expense Cash (if any) (the “Remaining Expense Fund Amount”) with the Payment Agent for
further distribution to the Indemnifying Parties in accordance with the Expense Cash Release Payment Spreadsheet.; provided, that, if there are any pending but
unresolved indemnification claims of any Indemnified Parties, then all amounts shall remain in escrow and remain available for release to the Securityholder Representative until all indemnification claims have been finally resolved and the
Securityholder Representative has been reimbursed in full for all Securityholder Representative Expenses reasonably and actually incurred and thereafter any remaining Expense Cash shall be released to the respective Indemnifying Parties (by the
Surviving Corporation or the Payment Agent, as applicable) in accordance with the Expense Cash Release Payment Spreadsheet.
(d) The Indemnifying Parties agree that no provision of this Agreement, the Escrow Agreement or any agreements ancillary hereto shall
require the Securityholder Representative to expend or risk its own funds or otherwise incur any financial liability in the exercise or performance of any of its powers, rights, duties or privileges under this Agreement, the Escrow Agreement or
any agreements ancillary hereto. For clarity, no Indemnified Party shall have any liability with respect to the Expense Cash, including with respect to the distribution, investment, holding and disposition thereof.
(e) The Securityholder Representative is not providing any investment supervision, recommendations or advice and shall have no
responsibility or liability to the Indemnifying Parties for any loss of principal of the Expense Cash other than as a result of its gross negligence or willful misconduct. The Securityholder Representative will hold these funds separate from
its corporate funds, will not use these funds for its operating expenses or any other corporate purposes and will not voluntarily make these funds available to its creditors in the event of bankruptcy. The Securityholder Representative is not
acting as a withholding agent or in any similar capacity in connection with the Expense Cash, and has no tax reporting or income distribution obligations. The Indemnifying Parties will not receive any interest or earnings on the Expense Cash
and irrevocably transfer and assign to the Securityholder Representative any such interest or earnings. The Securityholder Representative may contribute funds to the Expense Fund from any consideration otherwise distributable to the
Indemnifying Parties.
For income Tax purposes, the Expense Cash shall be treated as having been received and voluntarily set aside by the Indemnifying Parties on the Closing Date, and
any Tax withholding required with respect to an Indemnifying Party’s deemed receipt of its Deemed Pro Rata Portion of the Expense Cash on the Closing Date shall be satisfied from any amounts payable or otherwise deliverable pursuant to this
Agreement to such Indemnifying Party, consistent with Section 2.5.
ARTICLE XI
GENERAL PROVISIONS
11.1 Certain Interpretations. When a reference is made in this Agreement to an Annex, Exhibit or Schedule, such reference shall be to an Annex,
Schedule or Exhibit to this Agreement unless otherwise indicated.
(a) When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The word “or” is used in the inclusive sense of “and/or.” The terms “or,” “any” and “either” are not exclusive. When used herein,
the phrase “to the extent” shall be deemed to be followed by the words “but only to the extent.” The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply
“if.” The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”
(c) The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such
term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.
(e) All references in this Agreement to a legal entity (including the Company) shall be deemed to refer to such entity and its
Subsidiaries unless the context otherwise requires.
(f) All references in this Agreement to the Subsidiaries of a legal entity shall be deemed to include all direct and indirect
Subsidiaries of such entity.
(g) A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted
assigns.
(h) A reference to any specific legislation or to any provision of any legislation shall include any amendment to, and any modification
or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.
(i) References to “$” are to U.S. dollars.
(j) No summary of this Agreement or any Exhibit or Section delivered herewith prepared by or on behalf of any party will affect the
meaning or interpretation of this Agreement or any such Exhibit or Section.
(k) The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
(l) All times and dates referenced in this Agreement shall be Pacific time, unless otherwise specified.
(m) References to “fraud” in this Agreement shall exclude theories of negligent fraud, innocent fraud or equitable fraud.
11.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered
personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent via electronic transmission (return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice or, if specifically provided for elsewhere in this Agreement, by email); provided, however, that
notices sent by mail will not be deemed given until received:
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(a)
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if to Buyer or Merger Sub, to:
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F5 Networks Inc.
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801 5th Avenue
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Seattle, WA 98104
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Attn:
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Scot Rogers
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Email:
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S.Rogers@F5.com
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with a copy (which shall not constitute notice) to:
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Skadden, Arps, Slate, Meagher & Flom LLP
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525 University Avenue
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Palo Alto, California 94301
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Attention:
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Mike Ringler
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Email:
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mike.ringler@skadden.com
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(b)
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if to the Company (prior to the Closing), to:
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Shape Security, Inc.
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2755 Augustine Drive, 8th Floor
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Santa Clara, California 95054
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Attention:
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Derek Smith
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Email:
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derek@shapesecurity.com
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with a copy (which shall not constitute notice) to:
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Sidley Austin, LLP
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1001 Page Mill Rd. Building 1
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Palo Alto, California 94304
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Attention:
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Jen Fitchen; Hank Barry
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Email:
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jfitchen@sidley.com; hbarry@sidley.com
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(c)
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if to the Securityholder Representative, to:
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Shareholder Representative Services LLC
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950 17th Street, Suite 1400
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Denver, CO 80202
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Attention:
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Managing Director
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Email:
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deals@srsacquiom.com
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with a copy (which shall not constitute notice) to:
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Sidley Austin, LLP
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1001 Page Mill Rd. Building 1
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Palo Alto, California 94304
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Attention:
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Jen Fitchen; Hank Barry
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Email:
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jfitchen@sidley.com; hbarry@sidley.com
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11.3 Confidentiality. Each of the parties hereto hereby agrees that the information obtained in any investigation pursuant to Section 7.11
or any information obtained pursuant to the notice requirements of Section 7.12, or otherwise pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated hereby, shall be governed by
the terms of the Non-Disclosure Agreement, dated July 26, 2019 (the “Confidential Disclosure Agreement”), between the Company and Buyer. Notwithstanding the foregoing provisions of this Section 11.3, neither this Section
11.3 nor any other provision of this Agreement or the Confidential Disclosure Agreement shall be deemed to limit any customary disclosure (subject to customary “click-through” confidentiality agreements) made by Buyer, Merger Sub and
their Affiliates and/or Representatives to the Financing Sources, the Financing Source Related Parties or rating agencies in connection with the Financing.
11.4 Public Disclosure. Neither the Company nor any of its Representatives shall issue any statement or communication to any
third party (other than its agents that are bound by confidentiality restrictions and other than to a Governmental Entity to the extent required in the making of any filing or notification required in connection with the transactions described
herein or to respond to any request for information or documents made by a Governmental Entity investigating the transactions described herein) regarding the subject matter of this Agreement or the transactions contemplated hereby, including,
if applicable, the termination of this Agreement and the reasons therefor, without the consent of Buyer; provided, however, that in the event that any party hereto alleges a breach of this Agreement, the Company and its Representatives may make
disclosures as needed to prosecute or defend against such allegations to persons involved in dispute resolution proceedings (e.g., courts, attorneys, witnesses).
11.5 Amendment. This Agreement may be amended, modified, altered or supplemented by the parties hereto at any time by execution
of an instrument in writing signed on behalf of the party against whom enforcement is sough; provided, that neither any provision with respect to which any Financing Source is a third-party beneficiary
hereunder (nor the definitions of the terms “Financing Sources” and “Financing Source Related Parties” or any other definition set forth in, or any other provision of, this Agreement to the extent that an amendment, modification, alteration,
supplementation, discharge or waiver thereof would amend, modify , alter, supplement, discharge or waive the substance of any provision with respect to which any Financing Source is a third party beneficiary hereunder or the definitions of the
terms “Financing Sources” or “Financing Source Related Parties”) shall be amended, modified, altered, supplemented, discharged or waived in a manner materially adverse to such Financing Source without the prior written consent of such Financing
Source (and any such amendment, modification, alteration, supplement, discharge or waiver without such prior written consent shall be null and void). For purposes of this Section 11.5, the Company Securityholders are deemed to have
agreed that any amendment, modification, alteration, or supplement of this Agreement signed by the Securityholder Representative shall be binding upon and effective against the Company Securityholders whether or not they have signed such any
amendment, modification, alteration or supplement.
11.6 Extension and Waiver. At any time prior to the Closing, Buyer, on the one hand, and before the Closing the Company and after
the Closing the Securityholder Representative, on the other hand, may, to the extent legally allowed and subject to the proviso set forth in Section 11.5, (a) extend the time for the performance of any of the obligations of the other
party hereto, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the covenants, agreements or conditions for
the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. For purposes of this Section 11.6,
the Company Securityholders are deemed to have agreed that any extension or waiver signed by the Company (if prior to Closing) or the Securityholder Representative (if after the Closing) shall be binding upon and effective against all Company
Securityholders whether or not they have signed such extension or waiver.
11.7 Assignment. This Agreement shall not be assigned by operation of law or otherwise, except that Buyer may assign its rights
and delegate its obligations hereunder to its Affiliates as long as Buyer remains ultimately liable for all of Buyer’s obligations hereunder.
11.8 Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a
court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.9 Specific Performance and Other Remedies.
(a) The parties to this Agreement agree that, in the event of any breach or threatened breach by the other party or parties hereto, any
Company Securityholder or the Securityholder Representative of any covenant, obligation or other agreement set forth in this Agreement, (i) each party shall be entitled, without any proof of actual damages (and in addition to any other remedy
that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or
threatened breach, and (ii) no party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding.
(b) Except as expressly set forth herein, any and all remedies herein expressly conferred herein upon a party hereto shall be deemed to
be cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or in equity upon such party, and the exercise by a party hereto of any one remedy will not preclude the exercise of any other remedy. However, following the
Closing, the rights to indemnification, compensation and reimbursement set forth in Article IX shall be the sole and exclusive monetary remedy of the Indemnified Parties with respect to any breach of this Agreement.
(c) The liability of any Person under Article IX will be in addition to, and not exclusive of, any other liability that such
Person may have at law or in equity based on such Person’s fraudulent acts or omissions. Notwithstanding anything to the contrary contained in this Agreement, none of the provisions set forth in this Agreement, including the provisions set
forth in Article IX, shall be deemed a waiver by any party to this Agreement of any right or remedy which such party may have at law or in equity based on any Person’s fraudulent acts or omissions, against such Person, nor will any such
provisions limit, or be deemed to limit (i) the amounts of recovery sought or awarded in any such claim for fraud, (ii) the time period during which a claim for fraud may be brought or (iii) the recourse which any such party may seek against
any Person with respect to a claim for fraud by such Person.
11.10 Governing Law. This Agreement and all claims, causes of action (whether in contract, tort or statute) or other matter that
may result from, arise out of, be in connection with or relating to this Agreement, or the negotiation, administration, performance, or enforcement of this Agreement, including any claim or cause of action resulting from, arising out of, in
connection with, or relating to any representation or warranty made in or in connection with this Agreement (the “Relevant Matters”), shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of laws thereof ; provided that each of the Company (on behalf of itself and on behalf of each of its Subsidiaries), Buyer
(on behalf of itself and on behalf of each of its Subsidiaries) and Securityholder Representative (on behalf of itself and the Company Shareholders and other Indemnifying Parties) agrees (for the avoidance of doubt, without affecting the
provisions of Section 11.17) that any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Source or
any Financing Source Related Party in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Financing or the performance thereof, shall
be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, except as otherwise expressly provided in the
Commitment Letter; provided further that the references in this Section 11.10 to any Financing Source and its Financing Source Related Parties shall be
to such Financing Source in its capacity as a provider or arranger of the Financing and not in any other capacity.
11.11 Exclusive Jurisdiction. Any legal suit, action or proceeding arising out of or in connection with any Relevant Matter shall
be instituted first in, and each party hereby irrevocably consents to the jurisdiction and venue of, the Court of Chancery within New Castle County in the State of Delaware (and any appellate court thereof located within such county) and to the
extent such Court of Chancery (or appellate court thereof located within such county) lacks jurisdiction over the matter, the federal courts of the United States of America located within New Castle County in the State of Delaware, and each
party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such party’s address set forth herein shall be effective service of
process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and
agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding anything to the contrary in this Agreement, each of the Company (on
behalf of itself and on behalf of each of its Subsidiaries), Buyer (on behalf of itself and on behalf of each of its Subsidiaries) and Security Representative (on behalf of itself and the Company Shareholders and other Indemnifying Parties)
agrees (for the avoidance of doubt, without affecting the provisions of Section 11.17) that it will not bring or support any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or
in equity, whether in contract or in tort or otherwise, against any Financing Source or any Financing Source Related Party in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute
arising out of or relating in any way to the Financing or the performance thereof, in any forum other than the United States District Court for the Southern District of New York Federal or, if that court does not have subject matter
jurisdiction, the Supreme Court of the State of New York, County of New York (and appellate courts thereof).
11.12 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO (A) ANY RELEVANT MATTER OR (B) ANY ACTION, CAUSE OF ACTION, CLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM OF ANY KIND OR DESCRIPTION, WHETHER IN
LAW OR IN EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANY FINANCING SOURCE OR ANY FINANCING SOURCE RELATED PARTY IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY
DISPUTE ARISING OUT OF OR RELATING IN ANY WAY TO THE FINANCING OR THE PERFORMANCE THEREOF; PROVIDED HOWEVER, THAT THE REFERENCES IN THIS SECTION 11.12 TO ANY FINANCING SOURCE AND ITS FINANCING
SOURCE RELATED PARTIES SHALL BE TO SUCH FINANCING SOURCE IN ITS CAPACITY AS A PROVIDER OR ARRANGER OF THE FINANCING AND NOT IN ANY OTHER CAPACITY.
11.13 USA Patriot Act Compliance. To help the government fight the funding of terrorism and money laundering activities, federal
law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-natural Person such as a business entity, a charity, a trust or other legal entity the Escrow Agent
will ask for documentation to verify its formation and existence as a legal entity. The Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from natural persons claiming authority to
represent the entity or other relevant documentation. The parties each agree to provide all such information and documentation as to themselves as requested by Escrow Agent to ensure compliance with federal law.
11.14 Entire Agreement. This Agreement, Annex A hereto, the Exhibits and Schedules hereto, the Disclosure Schedule, the
Related Agreements, and the documents and instruments and other agreements among the parties hereto referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement and supersede
all prior agreements and understandings both written and oral, among the parties with respect to the subject matter of this Agreement, and are not intended to confer upon any other person any rights or remedies hereunder, except that (x) the
Indemnified Parties are intended third-party beneficiaries of Article IX and (y) the Financing Sources and the Financing Source Related Parties shall be express third-party beneficiaries of, and shall be entitled to rely on, the proviso
in the first sentence of Section 11.5 (and the reference thereto in Section 11.6), the proviso in Section 11.10 the last sentence of Section 11.11, Section 11.12, Section 11.17 and this Section
11.14.
11.15 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. The exchange of a fully
executed Agreement (in counterparts or otherwise) by electronic transmission in .PDF format shall be sufficient to bind the parties to the terms and conditions of this Agreement.
11.16 Consent to Representation; Conflict of Interest.
(a) If the Securityholder Representative so desires, acting on behalf of the Company Securityholders and without the need for any
consent or waiver by the Company, Buyer, or Merger Sub, Sidley Austin LLP (“Sidley”) shall be permitted to represent the Company Securityholders after the Closing in connection with any matter, including any matter related to the
transactions contemplated by this Agreement, any other agreements referenced herein or any disagreement or dispute relating thereto. Without limiting the generality of the foregoing, after the Closing, Sidley shall be permitted to represent
the Company Securityholders, any of their agents and Affiliates, or any one or more of them, in connection with any negotiation, transaction or dispute (including any litigation, arbitration or other adversary proceeding) with Buyer, the
Surviving Corporation, or any of their agents or Affiliates under or relating to this Agreement, any transaction contemplated by this Agreement, and any related matter, such as claims or disputes arising under other agreements entered into in
connection with this Agreement, including with respect to any indemnification claims. Any representation of the Surviving Corporation or any of its Affiliates after the Closing shall not affect the foregoing provisions hereof.
(b) After the Effective Time, Buyer shall not, and shall cause each of its Affiliates (including the Surviving Corporation) not to use
any legal advice provided by Sidley to the Company, the Securityholder Representative or any Company Securityholder, relating to the transactions contemplated by this Agreement (“Sidley Legal Advice”) in connection with any
indemnification claim dispute hereunder or any other legal proceeding or potential legal proceeding against, with or involving Buyer, the Surviving Corporation or any of their Affiliates or agents. After the Effective Time, the Securityholder
Representative shall be permitted to access and use Sidley Legal Advice in connection with any indemnification claim dispute hereunder or any other legal proceeding or potential legal proceeding against, with or involving Buyer, the Surviving
Corporation or any of their Affiliates or agents; and Sidley, the Securityholder Representative and any Company Securityholder may make any such Sidley Legal Advice available to Sidley or the Securityholder Representative, as the case may be.
For the avoidance of doubt, Buyer, the Surviving Corporation and any of their Affiliates and agents may access and use for any purpose facts, data and any other information contained in any communications between Sidley, on the one hand, and
the Company, the Securityholder Representative or any Company Securityholder, on the other hand, to the extent such communications belong to the Surviving Corporation even if such communication also contains Sidley Legal Advice, including as
evidence in any indemnification claim dispute or any other legal proceeding or potential legal proceeding involving the Securityholder Representative or any Company Securityholder, but for the avoidance of doubt, excluding the Sidley Legal
Advice contained in such communications. For the avoidance of doubt, nothing in this Section 11.16 or in this Agreement shall be deemed to be a waiver of any applicable privileges or protections that can or may be asserted to prevent
disclosure of any client communications to any third party.
11.17 Financing Sources. Each of the Company (on behalf of itself and on behalf of each of its Subsidiaries) and Security
Representative (on behalf of itself and the Company Shareholders and other Indemnifying Parties) agrees that none of the Financing Sources or the Financing Source Related Parties have or will have any liability to the Company, any of its
Subsidiaries, the Security Representative, any Company Shareholders or any other Indemnifying Party, and that none of the Company, any of its Subsidiaries, the Security Representative, any Company Shareholders or any other Indemnifying Party
shall have any right or claim against any Financing Source or any Financing Source Related Party, in each case, of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Source
or any Financing Source Related Party in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Financing or the performance thereof; provided that nothing in this Section 11.17 shall limit the liability or obligations of the Financing Sources to Buyer (and its successors and assigns) under the Commitment Letter (or any fee letters
referred to therein or definitive financing agreements with respect to the Financing); provided further that the references in this Section 11.17 to any
Financing Source and its Financing Source Related Parties shall be to such Financing Source in its capacity as a provider or arranger of the Financing and not in any other capacity.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, Buyer, Merger Sub, the Company and the Securityholder Representative have caused this Agreement to be executed as of the date first written
above.
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F5 NETWORKS, INC.
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By:
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/s/ François Locoh-Donou
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Name:
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François Locoh-Donou
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Title:
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CEO
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[Signature Page to Merger Agreement]
IN WITNESS WHEREOF, Buyer, Merger Sub, the Company and the Securityholder Representative have caused this Agreement to be executed as of the date first written
above.
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SILHOUETTE MERGER SUB, INC.
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By:
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/s/ Scot Rogers
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Name:
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Scot Rogers
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Title:
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President
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[Signature Page to Merger Agreement]
IN WITNESS WHEREOF, Buyer, Merger Sub, the Company and the Securityholder Representative have caused this Agreement to be executed as of the date first written
above.
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SHAPE SECURITY, INC.
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By:
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/s/ Derek Smith
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Name:
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Derek Smith
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Title:
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Chief Executive Officer
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[Signature Page to Merger Agreement]
IN WITNESS WHEREOF, Buyer, Merger Sub, the Company and the Securityholder Representative have caused this Agreement to be executed as of the date first written
above.
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SECURITYHOLDER REPRESENTATIVE
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SHAREHOLDER REPRESENTATIVE SERVICES LLC, solely in its capacity as the Securityholder Representative
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By:
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/s/ Kip Wallen
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Name:
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Kip Wallen
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Title:
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Director
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[Signature Page to Merger Agreement]
ANNEX A
CERTAIN DEFINED TERMS
“280G Approval” shall have the meaning set forth in Section 7.1(b).
“280G Persons” shall have the meaning set forth in Section 7.1(b).
“280G Waivers” shall have the meaning set forth in Section 7.1(b).
“401(k) Plan” shall have the meaning set forth in Section 7.5(b).
“409A Valuation” shall have the meaning set forth in Section 7.5(h)(i).
“Accounting Firm” shall have the meaning set forth in Section 1.4(e).
“Accounting Principles” shall mean a determination in accordance with GAAP and using the same accounting principles, practices, procedures, policies and
methods, with consistent classifications, judgments, inclusions, exclusions and valuation and estimation methodologies that were employed in the preparation of the Company Financials (for clarity, taking into account the timing of implemented
changes in methodology dictated by GAAP (e.g., ASC 605)).
“Action” shall mean any action, suit, claim, charge, complaint, litigation, grievance, investigation, audit, proceeding, arbitration or other similar
dispute by or before a Governmental Entity.
“Advisory Group” shall have the meaning set forth in Section 10.2.
“Affiliate” of any Person shall mean another Person that directly or indirectly through one of more intermediaries controls, is controlled by or is under
common control with, such first Person.
“Aggregate Exercise Price” shall have the meaning set forth in Section 1.4(a)(i).
“Agreement” shall have the meaning set forth in the preamble.
“Alternative Transaction” shall have the meaning set forth in Section 6.1.
“Anti-Corruption and Anti-Bribery Laws” shall mean the Foreign Corrupt Practices Act of 1977, as amended, any rules or regulations thereunder, Travel Act,
United Kingdom Bribery Act of 2010, or any other applicable United States, UK, or foreign anti-corruption or anti-bribery laws or regulations.
“Balance Sheet Date” shall have the meaning set forth in Section 3.7(a).
“Basket” shall have the meaning set forth in Section 9.3(a).
“Basket Amount” shall have the meaning set forth in Section 7.6(g)(i).
“Behavioral Data” shall mean data collected from an IP address, web beacon, pixel tag, ad tag, cookie, JavaScript, local storage, Software, or by any other
means, or from a particular computer, Web browser, mobile telephone, or other device or application, where such data is or may be used to identify or contact a natural person, household, device, or application (including by means of an
advertisement or other content), to develop a profile or record of the activities of a natural person, household. device, or application across multiple websites or online services, to predict or infer the preferences, interests, or other
characteristics of an individual, device, or application, or a user thereof, or to target advertisements or other content to an individual, device, or application.
“Books and Records” shall have the meaning set forth in Section 3.23.
“Business Day” shall mean each day that is not a Saturday, Sunday or other day on which banking institutions located in Seattle, Washington or San
Francisco, California are authorized or obligated by law or executive order to close.
“Buyer” shall have the meaning set forth in the preamble.
“Buyer 401(k) Plan” shall have the meaning set forth in Section 7.5(b).
“Buyer Common Stock” shall mean shares of common stock, no par value, of Buyer.
“Buyer Option” shall mean any option to purchase shares of Buyer Common Stock issued pursuant to Section 1.3(c)(i) in connection with the assumption
of an Unvested Company Option.
“Buyer Trading Price” shall mean the volume-weighted average closing sale price of one share of Buyer Common Stock as reported on the Nasdaq Global Select
Market for the twenty (20) consecutive trading days ending on the date that is two (2) trading days immediately preceding the Closing Date (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations,
reclassifications or similar events).
“Cancelled Shares” shall have the meaning set forth in Section 1.3(b)(iii).
“Cancelled Unvested Options” shall have the meaning set forth in Section 1.3(c)(ii)(B).
“Certificate of Merger” shall have the meaning set forth in Section 1.1(a).
“Client Communications” shall have the meaning set forth in Section 11.16(b).
“Closing” shall have the meaning set forth in Section 2.1.
“Closing Cash” shall have the meaning set forth in Section 1.4(a)(iii).
“Closing Date” shall have the meaning set forth in Section 2.1.
“Closing Expense Invoice” shall have the meaning set forth in Section 7.9(b).
“Closing Indebtedness” shall have the meaning set forth in Section 1.4(a)(iv).
“Closing Net Working Capital” shall have the meaning set forth in Section 1.4(a)(v).
“Closing Payment Per Share” means an amount equal to the Estimated Total Closing Consideration less the Escrow
Amount less the Expense Fund as allocated to a Company Share (or, in the case of a Company Option, a Company Share issuable on the exercise of such Company Option) in accordance with the provisions of
the Governing Documents.
“Closing Payment Spreadsheet” shall have the meaning set forth in Section 2.3(a).
“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Commitment Letter” shall have the meaning set forth in Section 4.4.
“Company” shall have the meaning set forth in the preamble.
“Company Authorizations” shall have the meaning set forth in Section 3.17.
“Company Common Shares” shall mean the shares of common stock of the Company, par value $0.001 per share.
“Company D&O Tail Policy” shall have the meaning set forth in Section 7.13(a).
“Company Employee Plan” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance,
change of control, termination pay, deferred compensation, performance awards, incentive compensation, equity or equity-related awards, phantom stock or bonus awards, welfare benefits, retirement benefits, fringe benefits or other employee
benefits or remuneration of any kind (other than an Employee Agreement), whether written or unwritten, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any Subsidiary for the benefit of any Employee, or with respect to which the Company or any Subsidiary has or would reasonably be expected to have any liability or obligation,
including any International Employee Plan.
“Company Equity Plans” shall mean the Shape Security, Inc. 2011 Stock Plan.
“Company Indemnification Provisions” shall have the meaning set forth in Section 7.13(b).
“Company Indemnified Parties” shall have the meaning set forth in Section 7.13(b).
“Company IP” shall mean, collectively, all Intellectual Property Rights and Intellectual Property that are owned by, or purported to be owned by, the
Company or any Subsidiary.
“Company IP Contract” shall mean any Contract to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound, that
contains any assignment or License of any Intellectual Property or Intellectual Property Rights (including any Company IP).
“Company IT Systems” shall mean all information technology and computer systems (including Software, platforms, information technology and telecommunication
hardware and other equipment), facilities and services relating to the Processing of data and information whether or not in electronic format, owned, used in or necessary to the conduct of the businesses of the Company and each of the
Subsidiaries.
“Company Material Adverse Effect” shall mean any fact, change, development, event, violation, inaccuracy, circumstance or effect (any such item, an “Effect”)
individually or when taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, that (i) materially impedes the ability of the Company to consummate the
transactions contemplated by this Agreement in accordance with the terms of this Agreement and applicable Laws, or (ii) has a material adverse effect on the business, operations, financial condition, assets and liabilities (considered
collectively) or results of operations of the Company and its Subsidiaries taken as a whole; provided, however, that no such Effect shall be deemed to constitute,
in and of itself, or be taken into account in determining whether there has been or will be a Company Material Adverse Effect to the extent resulting from any of the following: (a) changes in United States or foreign business, economic or
political conditions or conditions in financial markets generally, in each case to the extent that such conditions have not had a disproportionate impact on the Company relative to other companies in the industry in which the Company operates,
(b) changes in the general business or economic conditions in the industry in which the Company operates, in each case to the extent that such changes in the economic conditions have not had a disproportionate impact on the Company relative to
other companies in the industry in which the Company operates, (c) acts of war, armed hostility, sabotage, cyber-attacks, terrorism or military action, in each case to the extent that such conditions have not had a disproportionate impact on the
Company relative to other similarly situated companies, (d) acts of God, calamities or natural disasters, in each case to the extent that such conditions have not had a disproportionate impact on the Company relative to other similarly situated
companies, (e) the announcement of this Agreement or the pendency of the transactions contemplated hereby (other than any Conflict with (x) any provision of any Governing Documents or (y) any Contract to which the Company or its Subsidiaries is a
party or by which the Company’s or its Subsidiaries’ properties or assets are bound), (f) changes after the Agreement Date in applicable Law or accounting rules (including GAAP), (g) compliance by the Company with its express obligations under
this Agreement, (h) any action taken, or failed to be taken, by the Company at the request of Buyer, and (i) the failure in and of itself of the Company to meet any financial projections, budgets or forecasts; provided,
however, that the underlying causes thereof may be considered and taken into account in determining whether a Company Material Adverse Effect has occurred.
“Company Option Closing Payment” shall have the meaning set forth in Section 1.3(c)(i).
“Company Options” shall mean all issued and outstanding options (including commitments to grant options) to purchase or otherwise acquire Company Shares
(whether or not vested) held by any Person.
“Company Optionholder” shall mean any holder of Company Options as of immediately prior to the Effective Time.
“Company Preferred Shares” shall mean the Series A Preferred Shares, the Series B Preferred Shares, the Series C Preferred Shares, the Series D Preferred
Shares, the Series E Preferred Shares and the Series F Preferred Shares.
“Company Privacy Policy” shall mean each external or internal, past or present written privacy policy or privacy- or security-related representation,
obligation or promise of the Company or any Subsidiary, including any policy, written representation, written obligation, or written promise relating to: (i) the privacy or security of users of any Company Product or any website or service
operated by or on behalf of the Company or any Subsidiary; (ii) the Processing or security of any Private Data; or (iii) the protection of information about natural persons who are employees, contractors or are associated with Persons with which
the Company or any of its Subsidiaries has a Contract.
“Company Product” shall mean each product or service of the Company or any Subsidiary that: (i) has been marketed, Licensed, supported, distributed, sold or
otherwise commercialized by the Company or any Subsidiary at any time on or before the Agreement Date (each, a “Launched Product”); and (ii) that is not a Launched Product and is under development by the Company or any Subsidiary as of the
Agreement Date (each, a “Development Product”).
“Company Registered IP” shall have the meaning set forth in Section 3.13(a)(ii).
“Company Restricted Stock” shall mean all issued and outstanding restricted stock awards covering Company Common Shares as of immediately prior to the
Effective Time that are unvested.
“Company Restricted Stock Holder” shall mean any Person holding an award of Company Restricted Stock as of immediately prior to the Effective Time.
“Company Securities” shall mean the Company Shares, Company Restricted Stock, the Company Options, and any other securities of the Company, taken together.
“Company Securityholder” shall mean, collectively, any holder of any Company Securities.
“Company Share Closing Payment” shall have the meaning set forth in Section 1.3(b)(i).
“Company Shareholder” shall mean any holder of any Company Shares as of immediately prior to the Effective Time.
“Company Shares” shall mean the Company Common Shares, the Company Preferred Shares and any other shares, if any, of the Company, taken together.
“Company Sites” means all Internet websites owned, maintained or operated by the Company or any Subsidiary.
“Company Technology” shall mean any Intellectual Property (including Intellectual Property that is Licensed IP), that is embedded in, or used in the
development, delivery, hosting, provision, or distribution of, any Company Products, including any such Intellectual Property that is used to collect or otherwise Process Private Data.
“Company Warrants” shall mean all issued and outstanding warrants covering the Company Common Shares.
“Confidential Disclosure Agreement” shall have the meaning set forth in Section 11.3.
“Conflict” shall have the meaning set forth in Section 3.4.
“Consultant Proprietary Information Agreement” shall have the meaning set forth in Section 3.13(c)(i).
“Contaminant” shall mean any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the
software industry) or any other code, Software routines, or hardware components designed or intended to have any of the following functions: (i) collect data, including Private Data, stored on or transmitted by the system, network, or device
without the knowledge of the owner or any authorized user of the system, network, or device; (ii) interfere with the owner’s or an authorized user’s control of the system, network, or device; (iii) change or interfere with settings or preferences
of, or commands installed or stored on, the system, network, or device without the knowledge of the owner or an authorized user of the system, network, or device; (iv) change or interfere with data that is stored on or transmitted by the computer
system, network, or device in a manner that obstructs, interrupts or interferes with lawful access to or use of that data by the owner or an authorized user of the system, network, or device; (v) cause the system or device to communicate with
another system or device without the authorization of the owner or an authorized user of the system or device; (vi) install a computer program or code that may be activated without the knowledge of the owner or an authorized user of the system,
network, or device.
“Continuing Employees” shall mean the Employees who are both employed by the Company or any of its Subsidiaries or a PEO as of the Closing Date and continue
their employment with the Company or a designated Affiliate or a PEO immediately following the Closing.
“Contract” shall mean any contract, mortgage, indenture, lease, license, covenant, plan, insurance policy or other agreement, instrument, arrangement,
understanding or commitment, permit, concession, franchise or license that is legally binding.
“Contributor” shall have the meaning set forth in Section 3.13(c)(i).
“Current Balance Sheet” shall have the meaning set forth in Section 3.7(a).
“Deemed Pro Rata Portion” shall mean, with respect to each Person, an amount equal to the quotient obtained by dividing (x)
the cash that would be payable to such Person pursuant to Sections 9.4(b) and 10.3, assuming distribution in full of the Escrow Amount and Escrow Cash after the Closing without any reduction for adjustments, claims or
Securityholder Representative Expenses by (y) the sum of (I) the Escrow Amount, and (II) the Escrow Cash.
“Deferred Revenue” shall have the meaning set forth in Section 1.4(a)(vi).
“DGCL” shall mean the Delaware General Corporation Law, as amended.
“Disclosure Schedule” shall have the meaning set forth in Article III.
“Dispute Statement” shall have the meaning set forth in Section 1.4(d).
“Dissenting Share Payments” shall have the meaning set forth in Section 1.3(b)(iv).
“Dissenting Shares” means Company Shares with respect to which holders thereof have duly and validly exercised their right of dissent in relation to the
Merger and in accordance with the provisions of Section 262 of the DGCL.
“DOL” shall mean the United States Department of Labor.
“Effective Time” shall have the meaning set forth in Section 1.1(a).
“Employee” shall mean any employee of the Company or any Subsidiary , including, for the avoidance of doubt, any PEO Employee.
“Employee Agreement” shall mean each management, employment, severance, separation, settlement, consulting, contractor, relocation, change of control,
retention, bonus, repatriation, expatriation, loan, visa, work permit or other agreement, or contract (including, any offer letter or any agreement providing for acceleration of Company Options or shares of Company Restricted Stock, or any other
agreement providing for compensation or benefits) between the Company or any Subsidiary and any Employee.
“Employee Proprietary Information Agreement” shall have the meaning set forth in Section 3.13(c)(i).
“End Date” shall have the meaning set forth in Section 8.1(c).
“Equityholder Matters” shall mean all claims (A) by any holder or alleged holder of Company Securities relating to or arising out of the transactions
contemplated hereby, including the allocation of the Total Closing Consideration, or (B) alleging or seeking to assert any right with respect to the Company Securities or any similar rights with respect to any Subsidiary of the Company (together,
“Company and Subsidiary Securities”) by any Person who is or who alleges to be a current or former holder of Company and Subsidiary Securities in its capacity as such, including any claim asserted, based upon or related to (1) the
ownership or rights to ownership of any Company and Subsidiary Securities, (2) any rights of a security holder or creditor of the Company or any of its Subsidiaries, including any rights to securities, preemptive rights, rights to notice or to
vote securities, (3) any rights under the Governing Documents or organizational documents of any of its Subsidiaries and (4) any claim that such Person’s equity securities were wrongfully repurchased by the Company or any of its Subsidiaries;
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Company or any Subsidiary, would reasonably be
expected to be deemed a “single employer” within the meaning of Section 4001(b)(1) of ERISA or within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.
“Escrow Agent” shall mean the escrow agent designated under the Escrow Agreement or another institution reasonably acceptable to Buyer and the
Securityholder Representative, and any successor escrow agent appointed pursuant to the Escrow Agreement.
“Escrow Agreement” shall mean the Escrow Agreement executed and delivered concurrently herewith and attached hereto as Exhibit A.
“Escrow Amount” shall have the meaning set forth in Section 1.4(a)(vii).
“Escrow Fund” shall have the meaning set forth in Section 2.3(b)(iv).
“Escrow Period” shall have the meaning set forth in Section 9.4(a).
“Escrow Release Payment Spreadsheet” shall have the meaning set forth in Section 9.4(b).
“Estimated Total Closing Consideration” shall have the meaning set forth in Section 1.4(b).
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Documents” shall have the meaning set forth in Section 2.3(c)(ii).
“Exchange Ratio” shall mean a fraction (a) the numerator of which is the Closing Payment Per Share applicable to a Company Common Share, and (b) the
denominator of which is the Buyer Trading Price, rounded to four decimal places (with amounts 0.00005 and above rounded up).
“Expense Cash” shall mean an amount equal to $500,000.
“Expense Cash Release Payment Spreadsheet” shall have the meaning set forth in Section 10.3(b).
“Expense Fund” shall have the meaning set forth in Section 10.3(a).
“Export Approvals” shall have the meaning set forth in Section 3.20(b).
“Expiration Date” shall have the meaning set forth in Section 9.1(a).
“Fee Letter” shall have the meaning set forth in Section 4.4.
“Final Total Closing Consideration” shall have the meaning set forth in Section 1.4(f).
“Financials” shall have the meaning set forth in Section 3.7(a).
“Financing” shall have the meaning set forth in Section 4.4.
“Financing Source Related Parties” shall mean, with respect to any Financing Source, any of its Affiliates and of its and its Affiliates’ respective
officers, directors, employees, trustees, partners, agents or representatives.
“Financing Sources” shall mean the Lenders and the other Persons (other than Buyer or Merger Sub) that have committed to provide or arrange all or any part
of the Financing, as parties (other than Buyer or Merger Sub) to the Commitment Letter or any joinder agreements, or credit agreements entered into in connection therewith.
“Flexera” shall have the meaning set forth in Section 3.13(k)(i).
“Former Employee” shall mean any former employee of the Company or any Subsidiary, including, for the avoidance of doubt, any PEO Employee.
“Fundamental Representations” shall mean the representations and warranties of the Company contained in Section 3.1(a) and 3.1(b)
(Organization and Good Standing); Section 3.2 (Authority and Enforceability); Section 3.4 (Conflicts) (but excluding that portion of such representation and warranty that addressed Material Contracts); Section 3.5 (Company
Capital Structure) and Section 3.24 (Brokers); provided, however, that for purposes of Section 2.2(b)(ii), “Fundamental Representations”
shall mean the representations and warranties of the Company contained in Section 3.1(a) and 3.1(b) (Organization and Good Standing); Section 3.2 (Authority and Enforceability); Section 3.4 (Conflicts) (but
excluding that portion of such representation and warranty that addressed Material Contracts); Section 3.5 (Company Capital Structure) (but excluding Section 3.5(c) other than the first three sentences thereof)1 and Section 3.24 (Brokers).
“GAAP” shall mean United States generally accepted accounting principles consistently applied.
“GDPR” shall mean the General Data Protection Regulation (EU) 2016/679.
“Governing Documents” shall have the meaning set forth in Section 3.1(b).
“Governmental Entity” shall mean any arbitrator, court, administrative agency or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission.
“Hazardous Material” shall mean any substance that has been designated by any Governmental Entity or by applicable Law to be radioactive, toxic, hazardous
or otherwise a danger to health, reproduction or the environment, including PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws.
“Hazardous Materials Activities” shall have the meaning set forth in Section 3.20(e).
“Holdback Agreement” shall have the meaning set forth in the recitals hereto.
“Holdback Consideration Amount” shall mean, with respect to each Key Employee, an amount in cash equal to such Person’s Holdback Consideration (as such term
is defined in such Person’s Holdback Agreement), as may be reduced in accordance with the terms of such Person’s Holdback Agreement.
“HSR Act” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“HSR Filing” shall have the meaning set forth in Section 7.2(a).
“Incidental License” shall mean: (i) a sales or marketing or similar Contract that includes, as the sole License to any Company IP granted by the Company or
any Subsidiary thereunder, a license to use the Trademarks of the Company or any of the Subsidiaries for the purposes of promoting any Company Products; (ii) a vendor Contract that includes, as the sole License to any Company IP granted by the
Company or any Subsidiary thereunder, permission for the vendor to identify the Company or any of the Subsidiaries as a customer of the vendor; or(iii) a Contract to purchase or lease equipment, such as a photocopier, computer, or mobile phone,
that also contains an inbound, non-exclusive license of Intellectual Property or Intellectual Property Rights.
“Indemnification Claim Notice” shall have the meaning set forth in Section 9.5(a).
“Indemnification Claim Objection Notice” shall have the meaning set forth in Section 9.5(b).
“Indemnification Pro Rata Portion” shall mean, with respect to each Person, an amount equal to the quotient obtained by dividing (x) the aggregate amount of Company Shares held by such Person and the aggregate amount of Company Shares underlying Vested Company Options held by such person, in either case immediately prior to the Effective Time on
an as converted to Company Common Share basis, by (y) the sum of (A) the aggregate number of Company Shares issued and outstanding immediately prior to the Effective Time, counted on an as converted to
Company Common Share basis (excluding any Cancelled Shares and Company Restricted Stock repurchased by the Company prior to Effective Time pursuant to Section 1.3(b)(ii)(B)), plus (B) the
aggregate number of Company Common Shares issuable upon the exercise of all Vested Company Options that remain unexercised and outstanding immediately prior to the Effective Time.
“Indemnified Parties” shall have the meaning set forth in Section 9.2(a).
“Indemnifying Parties” shall have the meaning set forth in Section 9.2(a).
“Information Statement” shall have the meaning set forth in Section 7.1(a).
“Infringement” or “Infringe” shall mean that a given item or activity directly or indirectly (including secondarily, contributorily, by inducement or
otherwise) infringes, misappropriates, dilutes, constitutes unauthorized use of, or otherwise violates the Intellectual Property Rights of, any Person.
“Initial Escrow Release Amount” shall have the meaning set forth in Section 9.4(b).
“Intellectual Property” shall mean algorithms, databases, data collections, diagrams, formulae, inventions (whether or not patentable), know-how, marks
(including brand names, product names, logos, and slogans), methods, network configurations and architectures, processes, confidential information, proprietary information, protocols, schematics, specifications, Software (in any form, including
source code and executable or object code), subroutines, techniques, user interfaces, URLs, websites, works of authorship (including written, audio and visual materials) and other forms of technology (whether or not embodied in any tangible form,
and including all tangible embodiments of the foregoing).
“Intellectual Property Rights” shall mean all intellectual or industrial property rights relating to Intellectual Property, which may exist or be created
under the Laws of any jurisdiction in the world, including: (a) rights associated with works of authorship, including exclusive exploitation rights, copyrights and moral rights; (b) rights associated with Trademarks and domain names; (c) Trade
Secret rights; (d) Patent and industrial property rights; (e) rights of publicity and privacy and other rights to use the name, likeness, image, photograph, voice, identity and Personal Data; (f) rights in data, data compilations and databases;
and (g) rights in or relating to registrations, renewals, extensions, combinations, divisions and reissues of, and applications for, any of the rights referred to in clauses “(a)” through “(d)” above.
“Interested Party” shall have the meaning set forth in Section 3.22.
“Interim Financials” shall have the meaning set forth in Section 3.7(a).
“International Employee Plan” shall mean each Company Employee Plan or Employee Agreement that has been adopted or maintained by the Company or any
Subsidiary, whether formally or informally, or with respect to which the Company or any Subsidiary has or would reasonably be expected to have any liability, with respect to Employees who perform services outside the United States and which is
subject to the laws of a jurisdiction other than the United States or any state, country or city located therein.
“IRS” shall mean the United States Internal Revenue Service.
“Joinder Agreement” shall have the meaning set forth in the recitals.
“Key Employees” shall mean the Employees of the Company listed on Schedule C.
“Knowledge” shall mean, with respect to the Company, the actual knowledge of each person listed on Schedule D and any knowledge that such person
would reasonably be expected to have while performing his or her duties and exercising reasonable care in connection therewith.
“Law” shall mean any applicable U.S. or non-U.S. federal, state, local or other constitution, law, statute, ordinance, rule, regulation, published
administrative position, policy or principle of common law issued, enacted, adopted, promulgated, implemented or otherwise put into legal effect by or under the authority of any Governmental Entity.
“Lease Agreements” shall have the meaning set forth in Section 3.11.
“Lease Security Deposit Amount” shall mean any Cash received by the Company from any Lease Security Deposits released to the Company from the Effective Time
to the date that is sixty (60) days following the Effective Time.
“Lease Security Deposits” shall mean deposits of cash or cash equivalents with landlords or with the issuers of letters of credit provided to landlords, in
each case to secure the obligations of the Company or its Subsidiaries under any leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property.
“Leased Real Property” shall have the meaning set forth in Section 3.11.
“Lenders” shall have the meaning set forth in Section 4.4.
“Letter of Transmittal” has the meaning set forth in Section 2.3(c)(i).
“Liabilities” shall mean obligations, losses, damages, costs, expenses and other liabilities, whether absolute, accrued, matured, contingent, known or
unknown, fixed or otherwise.
“License” (and its cognates) shall mean, with respect to any Intellectual Property or Intellectual Property Right, the grant of a license, covenant not to
sue or enjoin, covenant to sue or enjoin last, immunity or other right with respect to such Intellectual Property or Intellectual Property Right.
“Licensed IP” shall mean (i) all Intellectual Property Rights and Intellectual Property incorporated into, or used in the development, delivery, hosting or
distribution of, the Company Products; and (ii) all other Intellectual Property Rights and Intellectual Property used in the conduct of the businesses of the Company and any of the Subsidiaries as currently conducted, in each case excluding the
Company IP.
“Licensed IP Contract” shall mean any Company IP Contract pursuant to which the Company or any Subsidiary is granted a License with respect to Licensed IP.
“Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any kind or character whatsoever.
“Loan Repayment Amount” shall have the meaning set forth in Section 2.3(c)(iii).
“Loss” shall have the meaning set forth in Section 9.2(b).
“Made Available” shall mean that the Company has posted such materials to the “Silhouette” virtual data room managed by Merrill DatasiteOne and made
available to Buyer and its representatives during the negotiation of this Agreement, but only if so posted and made available on or prior to 11:59 p.m. (Pacific time) on the day prior to the Agreement Date.
“Material Contracts” shall have the meaning set forth in Section 3.14(a).
“Merger” shall have the meaning set forth in the recitals.
“Merger Sub” shall have the meaning set forth in the preamble.
“Negative Adjustment Amount” shall have the meaning set forth in Section 2.4(c).
“Net Tax Refund” shall have the meaning set forth in Section 7.6(g)(i).
“Net Working Capital” shall have the meaning set forth in Section 1.4(a)(ix).
“Net Working Capital Shortfall” shall have the meaning set forth in Section 1.4(a)(x).
“Net Working Capital Surplus” shall have the meaning set forth in Section 1.4(a)(xi).
“Non-Competition and Non-Solicitation Agreements” shall mean the Non-Competition and Non-Solicitation Agreements shall have the meaning set forth in the
recitals hereto.
“Non-Continuing Employees” shall mean all Employees other than Continuing Employees.
“Offer Letter” shall have the meaning set forth in Section 7.5(c)(i).
“Officer’s Certificate” shall have the meaning set forth in Section 2.2(b)(xvii)(A).
“Open Source License” means the GNU General Public License, the Affero General Public License, the GNU Lesser General Public License, the Eclipse Public
License, the Common Public License, the Mozilla Public License, any other license identified as an open source license by the Open Source Initiative (www.opensource.org), or any substantially similar license.
“Open Source Software” means any Software Licensed under an Open Source License.
“Order” shall mean any order, judgment, injunction, ruling, edict, or other decree, whether temporary, preliminary or permanent, enacted, issued,
promulgated, enforced or entered by any Governmental Entity.
“Ordinary Course Contracts” shall have the meaning set forth in Section 3.10(h).
“Other Employees” shall mean the Employees who receive an Offer Letter other than the Key Employees.
“Patent” means any patent (including utility, utility model, plant and design patent, or certificate of invention), patent application (including
substitution, provisional, national, regional and international application, as well as any continuation, continuation-in-part, divisional, continued prosecution application, reissue, or re-examination application), and any term extension or
other governmental action which provides rights beyond the original expiration date of any of the foregoing.
“Payment Agent” shall mean PNC Bank, National Association or another Person selected by Buyer.
“Payment Fund” shall have the meaning set forth in Section 2.3(b)(ii).
“Payment Spreadsheets” shall mean the Closing Payment Spreadsheet, the Post-Closing Payment Spreadsheet, the Expense Cash Release Payment Spreadsheet and
all Escrow Release Payment Spreadsheets.
“Payoff Letter” shall have the meaning set forth in Section 7.8(a).
“PEO” shall mean Chronos International Inc., 10380008 Canada Inc. (dba Mobsquad), Vistra International Expansion Limited, TIGER Consulting or any of their
respective Affiliates or any other professional employer organization, staffing agency or similar employee leasing company who contracts workers to provide services to the Company or any Subsidiary.
“PEO Employees” shall mean workers who are directly employed by a PEO and are contracted by such PEO to provide services to the Company or any Subsidiary.
“Permitted Agreement” shall mean a Contract that does not include any of the provisions described in, or that is not otherwise described by, any of the
following Sections of this Agreement: Sections 3.14(a)(i) (except that renewals of Contracts with Top Customers or Top Suppliers on the same terms will be deemed Permitted Agreements), 3.14(a)(iv), 3.14(a)(v), 3.14(a)(vi),
3.14(a)(ix), 3.14(a)(xiv), 3.14(a)(xvi), 3.14(a)(xvii), 3.14(a)(xviii) (except that Contracts constituting non-exclusive licenses to Company Products that contain an indemnification obligation of the
Company, which indemnification is granted by the Company in the ordinary course of business, consistent with past practice, will be deemed Permitted Agreements), 3.14(a)(xix), and 3.14(a)(xx).
“Permitted Liens” shall mean (a) statutory liens for current Taxes not yet due and payable or that are being contested in good faith and for which adequate
reserves are being maintained, (b) conditional sales or similar security interests granted in connection with the purchase of equipment or supplies in the ordinary course of business, (c) statutory liens to secure obligations to landlords,
lessors, or renters under leases or rental agreements, (d) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, or similar programs mandated by applicable Law, (e) statutory liens in
favor of carriers, warehousemen, mechanics, and materialmen to secure claims for labor, materials, or supplies and other like liens, (f) with respect to Company Securities, any restrictions on transfer imposed by applicable federal and state
securities laws, (g) such imperfections of title and encumbrances, if any, which are not material in character, amount or extent, and which do not materially detract from the value, or materially interfere with the present use, of the property
subject thereto or affected thereby, (h) non-exclusive licenses with respect to Intellectual Property Rights to which the Company or any Subsidiaries is a party entered into in the ordinary course of business, consistent with past practice, (i)
liens which will be released pursuant to the Payoff Letters on the Closing Date, and (j) Liens imposed by Buyer in connection with the Financing.
“Person” shall mean a natural person or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency, or political subdivision thereof).
“Personal Data” shall mean data or information that (i) identifies, relates to, describes, , is reasonably capable of being associated with, or could
reasonably be linked with a particular individual, device or household; (ii) is defined as “personal data” pursuant to the GDPR; or (iii) is defined as “personal information” under the California Consumer Privacy Act of 2018 (AB-375) (“CCPA”),
regardless of whether the GDPR or CCPA applies to such data or information.
“Positive Adjustment Amount” shall have the meaning set forth in Section 2.4(b)(i).
“Post-Closing Payment Spreadsheet” shall have the meaning set forth in Section 2.4(a).
“Post-Closing Statement” shall have the meaning set forth in Section 1.4(c).
“Pre-Closing Statement” shall have the meaning set forth in Section 1.4(b).
“Pre-Closing Tax Period” shall mean any taxable period (or portion thereof, including the portion of any Straddle Tax Period) ending on or before the
Closing Date.
“Pre-Closing Taxes” shall mean, without duplication, (i) any Taxes of the Company or any of its Subsidiaries relating or attributable to any Pre-Closing Tax
Period (determined as if the Company and its Subsidiaries used the accrual method of Tax accounting throughout such period, and treating any advance payments, deferred revenue (to the extent constituting prepaid amounts) or other prepaid amounts
received or arising in any Pre-Closing Tax Period as subject to Tax in such period, regardless of when actually recognized for income Tax purposes, including Taxes that are not yet due and payable; (ii) any Taxes arising as a result of the
transactions contemplated by this Agreement or any ancillary agreement, including any withholding Taxes for which Buyer and its Affiliates have not been indemnified pursuant to Section 2.5, but excluding Transaction Payroll Taxes (which
shall not be included in Pre-Closing Taxes for any purpose of this Agreement); (iii) any adjustment to the taxable income of the Company (for example, pursuant to Section 481 of the Code and/or applicable IRS procedures, or any comparable
provision under state, local or foreign Tax Laws) with respect to any change in accounting methods or change in tax year requested, initiated or required to be made prior to the Closing); (iv) any Liability of the Company or any of its
Subsidiaries for the Taxes of any other Person (other than the Company and its Subsidiaries) (A) as a result of the Company or any of its Subsidiaries being or having been on or prior to the Closing Date a member of an affiliated, consolidated,
combined, unitary, aggregate or similar group (including any arrangement for group or consortium relief or similar arrangement); (B) as a transferee or successor, by Contract (other than Ordinary Course Contracts) or otherwise, in each case, as a
result of any transaction occurring on or prior to the Closing Date; or (C) as a result of an express or implied obligation arising on or prior to Closing Date to indemnify or otherwise assume or succeed to the Taxes of any other Person (other
than pursuant to an Ordinary Course Contract); and (v) The Indemnifying Parties’ share of any Transfer Taxes pursuant to Section 7.7. For purposes of this definition, in the case of Taxes based on income, sales, proceeds, profits,
receipts, wages, compensation or similar items and all other Taxes that are not imposed on a periodic basis, the amount of such Taxes that have accrued through the Closing Date for a Straddle Tax Period shall be deemed to be the amount that would
be payable if the taxable year or period ended at the end of the day on the Closing Date based on an interim closing of the books, except that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and
amortization deductions), other than with respect to property placed in service after the Closing, shall be allocated on a daily basis. In the case of any Taxes that are imposed on a periodic basis for a Straddle Tax Period, the amount of such
Taxes that have accrued through the Closing Date shall be the amount of such Taxes for the relevant period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction the numerator of which shall be the number of calendar days from the beginning of the period up to and including the Closing Date and the denominator of which shall be the number of
calendar days in the entire period.
“Privacy Obligations” shall mean, collectively, all: (a) Laws or Orders; (b) the EU-U.S. and Swiss-U.S. Privacy Shield programs administered by the
Department of Commerce, the GDPR and the CCPA; (c) any applicable published industry best practices or other standards with which the Company is required to comply (including, as applicable, the PCI Data Security Standard and the Digital
Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising and Multi-Site Data Collection, respectively); (d) written policies or terms of use of the Company or any of the Subsidiaries (including Company Privacy
Policies); or (e) contractual requirements or obligations, as each may be amended from time to time, that in each case: (i) pertains to (A) privacy or restrictions or obligations related to the collection or other Processing of Private Data or
(B) direct marketing to consumers or consumer protection and (ii) applies in any country in which (A) the Company or any Subsidiary collects or otherwise Processes Private Data, (B) the customers of the Company and the Subsidiaries Process
Private Data to which the Company and the Subsidiaries have access, (C) any Person to which Company or any Subsidiary discloses or provides access to Private Data resides, or (D) any natural person whose Private Data has been collected or
otherwise Processed by the Company or any Subsidiary (including Employees) resides.
“Private Data” shall mean, collectively, Personal Data, Behavioral Data and Technical Data.
“Processing” shall have the meaning set forth in the GDPR.
“Qualifying Loss” shall have the meaning set forth in Section 9.3(b).
“Registered IP” shall mean all Intellectual Property Rights that are registered, filed, or issued under the authority of, with or by any Governmental
Entity, including all Patents, registered copyrights, and registered Trademarks and domain names and all applications for any of the foregoing.
“Related Agreements” shall mean the Confidential Disclosure Agreement, the Holdback Agreement, the Escrow Agreement, the Joinder Agreements, the
Non-Competition and Non-Solicitation Agreements and all other agreements and certificates entered into by the Company or any of the Company Shareholders in connection with the transactions contemplated herein.
“Relevant Matters” shall have the meaning set forth in Section 11.10.
“Remaining Expense Fund Amount” shall have the meaning set forth in Section 10.3(c).
“Representatives” shall have the meaning set forth in Section 6.2.
“Required Financial Statements” shall have the meaning set forth in Section 7.10(b).
“Requisite Shareholder Approval” shall mean the approval of the holders of a majority of the votes attached to all of the Company Shares voting together as
one class, and the approval of the holders of at least fifty percent (50%) of the Company Preferred Shares voting together as one class.
“Resolution Period” shall have the meaning set forth in Section 1.4(e).
“Restricted Stock Closing Payment” shall have the meaning set forth in Section 1.3(b)(ii)(A).
“Retention Program” shall have the meaning set forth in Section 7.5(d).
“Review Period” shall have the meaning set forth in Section 1.4(d).
“Sanctioned Country” shall have the meaning set forth in Section 3.20(c).
“Sanctions” shall have the meaning set forth in Section 3.20(c).
“SEC” shall mean the United States Securities and Exchange Commission.
“Section 409A” shall have the meaning set forth in Section 3.10(r)(i).
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Securityholder Representative” shall have the meaning set forth in the preamble.
“Securityholder Representative Engagement
Agreement” shall have the meaning set forth in Section 10.2.
“Securityholder Representative Expenses” shall have the meaning set forth in Section 10.2.
“Securityholder Representative Group” shall have the meaning set forth in Section 10.2.
“Series A Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Series B Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Series C Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Series D Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Series E Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Series F Preferred Shares” shall have the meaning set forth in Section 3.5(a).
“Shareholder Agreements” shall mean agreements or other arrangements between the Company and one or more Securityholders relating to the Company.
“Shareholder Consent” shall have the meaning set forth in the recitals.
“Sidley” shall have the meaning set forth in Section 11.16(a).
“Software” shall mean (a) computer programs and other software, including firmware and microcode, and including software implementations of algorithms,
models, and methodologies, whether in source code, object code or other form, including libraries, frameworks, software development kits, application programming interfaces, subroutines and other components thereof and (b) documentation,
including programmers’ annotation, notes, documentation, product user manuals, training materials and other work product used to design, plan, organize, maintain, support or develop any of the foregoing, irrespective of the media on which it is
recorded.
“Solvent” shall have the meaning set forth in Section 4.6.
“Specified IP Contributor” shall have the meaning set forth in Section 7.5(a).
“Standard Form IP Contract” means a standard form of Contract used by the Company or any Subsidiary for one of the following purposes and in each case that
have been Made Available to Buyer: (i) non-exclusive end-user license agreement; (ii) customer agreement; (iii) employee or independent contractor agreement containing any assignment, license or waiver of rights with respect to Intellectual
Property or Intellectual Property Rights or any confidentiality provision; (iv) confidentiality or nondisclosure agreement; and (v) terms of use and privacy policy for any Company Site.
“Statement of Expenses” shall have the meaning set forth in Section 7.9(b).
“Straddle Tax Period” shall mean any taxable period that includes, but does not end on, the Closing Date.
“Subsequent Escrow Release Amount” shall have the meaning set forth in Section 9.4(d).
“Subsidiary” shall have the meaning set forth in Section 3.6(a).
“Surviving Corporation” shall have the meaning set forth in Section 1.1(a).
“Target Net Working Capital Range” shall have the meaning set forth in Section 1.4(a)(xii).
“Tax” (and, with correlative meaning, “Taxes”) shall mean (i) any income, alternative or add-on minimum tax, gross income, estimated, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, capital stock, profits, license, registration, withholding, payroll, social security (or equivalent), employment, unemployment, disability, excise, severance, stamp, occupation, premium,
property (real, tangible or intangible), environmental or windfall profit tax, custom duty or other tax, governmental fee or other like assessment or charge in the nature of tax, together with any interest or any penalty, addition to tax or
additional amount (whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign), (ii) any Liability for the payment of any amounts of the type described in clause (i) of this
sentence as a result of being a member of an affiliated, consolidated, combined, unitary, aggregate or similar group for any taxable period, and (iii) any Liability for the payment of any amounts of the type described in clause (i) or (ii) of
this sentence as a result of being a transferee of or successor to any Person or as a result of any express or implied obligation to assume such Taxes or to indemnify any other Person, including by operation of Law.
“Tax Contest” shall have the meaning set forth in Section 7.6(f).
“Tax Incentive” shall have the meaning set forth in Section 3.10(k).
“Tax Refund Payment Spreadsheet” shall have the meaning set forth in Section 7.6(g)(ii).
“Tax Representations” shall mean the representations and warranties of the Company contained in Section 3.10.
“Tax Return” shall mean any return, statement, report or form (including estimated Tax returns and reports, withholding Tax returns and reports, any
schedule or attachment, and information returns and reports) filed or required to be filed with respect to Taxes.
“Technical Data” shall mean, collectively, any information relating to a browser, application, or communication, or to a device of any kind (e.g., mobile
device, laptop, desktop, or server).
“Third-Party Expenses” shall have the meaning set forth in Section 7.9(a).
“Top Customer” shall have the meaning set forth in Section 3.21(a).
“Top Supplier” shall have the meaning set forth in Section 3.21(b).
“Total Closing Consideration” shall have the meaning set forth in Section 1.4(a)(xiv).
“Total Closing Consideration Adjustment Amount” shall have the meaning set forth in Section 1.4(a)(xv).
“Total Consideration” shall have the meaning set forth in Section 1.4(a)(xvi).
“Total Outstanding Shares” shall have the meaning set forth in Section 1.4(a)(xvii).
“Trade Secret” shall mean any confidential and proprietary information that is a trade secret (as defined in the Uniform Trade Secrets Act, the Defend Trade
Secrets Act or under corresponding applicable domestic or foreign Law).
“Trademark” shall mean any trademark, service mark, trade dress, logo or trade name, or any similar symbol or indication of source or origin, and the
goodwill associated with any of the foregoing.
“Transaction Payroll Taxes” shall mean all employer portion payroll or employment Taxes incurred in connection with any bonuses, option cash outs or other
compensatory payments made in connection with the transactions contemplated by this Agreement and paid before or substantially contemporaneously with the Closing Date or upon release of the Escrow Fund; provided,
however, that, notwithstanding anything to the contrary, Transaction Payroll Taxes shall not include such Taxes relating to (x) any severance owed to Non-Continuing Employees, or (y) any compensation
pursuant to “double-trigger” arrangements triggered by actions of Buyer after the Closing Date.
“Transfer Taxes” shall mean all sales, use, transfer, valued added, goods and services, gross receipts, excise, conveyance, documentary, stamp, recording,
registration and similar Taxes and fees incurred in connection with the transactions contemplated by this Agreement.
“Unresolved Claims” shall have the meaning set forth in Section 9.4(c).
“Unvested Company Option” shall mean any Company Option (or portion thereof) that is not a Vested Company Option.
“Vested Company Option” shall mean any Company Option (or portion thereof) that is vested and outstanding immediately prior to the Effective Time, after
taking into account any Company Option (or portion thereof) that, as a result of the Merger will accelerate in full and no longer be subject to any further vesting, right of repurchase, risk of forfeiture or other such conditions.
“Willful Breach” means with respect to any agreement or covenant, any intentional or deliberate action or omission that constitutes a breach of such
agreement or covenant and that the breaching party actually knows or should reasonably be expected to know at the time is or would constitute a breach of such agreement or covenant.
“Withholding Agent” shall have the meaning set forth in Section 2.5.
“Year-End Financials” shall have the meaning set forth in Section 3.7(a).
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