PURCHASE AGREEMENT
among
WEB.COM GROUP, INC.,
NET SOL HOLDINGS LLC
and
GA-NET SOL PARENT LLC
Dated as of August 3, 2011
Table of Contents
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Page
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DEFINITIONS
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1
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Section 1.01
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Certain Defined Terms
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1
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Section 1.02
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Definitions
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12
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Section 1.03
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Interpretation and Rules of Construction
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14
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ARTICLE II
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PURCHASE AND SALE
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16
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Section 2.01
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Purchase and Sale of the Company Member Interests
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16
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Section 2.02
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Purchase Price
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16
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Section 2.03
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Closing
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16
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Section 2.04
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Payments at Closing
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16
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Section 2.05
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Closing Deliveries by the Seller
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17
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Section 2.06
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Closing Deliveries by the Purchaser
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18
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Section 2.07
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Closing Deliveries by the Company
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18
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Section 2.08
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Withholding
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18
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Section 2.09
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Treatment of Phantom Units; Certain Transaction Incentive Letter Payments
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19
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ARTICLE III
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REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
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19
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Section 3.01
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Organization, Authority and Qualification of the Company
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19
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Section 3.02
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Subsidiaries; Capitalization
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20
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Section 3.03
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No Conflict
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21
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Section 3.04
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Governmental Consents and Approvals
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22
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Section 3.05
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Financial Information
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22
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Section 3.06
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Absence of Changes
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23
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Section 3.07
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Absence of Undisclosed Material Liabilities
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25
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Section 3.08
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Litigation
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25
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Section 3.09
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Compliance with Laws
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25
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Section 3.10
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Intellectual Property
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25
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Section 3.11
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Real Property
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27
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Section 3.12
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Employee Benefit Plans
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28
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Section 3.13
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Labor and Employment Matters
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31
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Section 3.14
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Taxes
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33
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Section 3.15
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Material Contracts
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35
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Section 3.16
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Environmental Matters
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36
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Section 3.17
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Insurance
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37
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Section 3.18
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Certain Business Relationships with Affiliates
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37
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Section 3.19
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Brokers
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37
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Section 3.20
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Disclosure
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38
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Section 3.21
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Disclaimer of the Company
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38
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Table of Contents
(continued)
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES RELATING TO SELLER
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39
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Section 4.01
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Organization, Authority and Qualification of Seller
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39
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Section 4.02
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Capitalization; Ownership of Interests
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39
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Section 4.03
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No Conflict
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40
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Section 4.04
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Governmental Consents and Approvals
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40
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Section 4.05
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Disclaimer of Seller
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41
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ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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41
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Section 5.01
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Organization, Authority and Qualification of the Purchaser
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41
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Section 5.02
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Subsidiaries; Capitalization
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42
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Section 5.03
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No Conflict
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44
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Section 5.04
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Governmental Consents and Approvals
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44
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Section 5.05
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SEC Filings; Financial Statements
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45
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Section 5.06
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Investment Purpose
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47
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Section 5.07
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Financing
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47
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Section 5.08
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Absence of Changes
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48
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Section 5.09
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Absence of Undisclosed Material Liabilities
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50
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Section 5.10
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Litigation
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50
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Section 5.11
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Compliance with Laws
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51
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Section 5.12
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Intellectual Property
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51
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Section 5.13
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Real Property
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53
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Section 5.14
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Employee Benefit Plans
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53
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Section 5.15
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Labor and Employment Matters
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56
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Section 5.16
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Taxes
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59
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Section 5.17
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Purchaser Contracts
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61
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Section 5.18
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Environmental Matters
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62
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Section 5.19
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Insurance
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63
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Section 5.20
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Certain Business Relationships with Affiliates
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63
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Section 5.21
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Brokers
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63
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Section 5.22
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Required Vote
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63
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Section 5.23
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Disclosure
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64
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Section 5.24
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Independent Investigation; Representations
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64
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ARTICLE VI
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ADDITIONAL AGREEMENTS
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65
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Section 6.01
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Seller and Company Conduct of Business Prior to the Closing
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65
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Section 6.02
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Purchaser Conduct of Business Prior to the Closing
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68
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Section 6.03
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Registration Statement; Proxy Statement
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70
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Section 6.04
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Purchaser Stockholders’ Meeting
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71
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Section 6.05
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Access to Information
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73
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Section 6.06
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Confidentiality
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75
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Section 6.07
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Regulatory and Other Authorizations; Notices and Consents
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75
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Section 6.08
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Updates
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77
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Section 6.09
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Further Action
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78
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Table of Contents
(continued)
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Section 6.10
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No Solicitation or Negotiation
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78
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Section 6.11
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Intercompany Arrangements
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81
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Section 6.12
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Indemnification; Directors’ and Officers’ Insurance
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81
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Section 6.13
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Financing
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83
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Section 6.14
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Name Changes
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87
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Section 6.15
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Transaction Litigation
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87
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Section 6.16
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Confirmatory Assignment
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88
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ARTICLE VII
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EMPLOYEE MATTERS
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88
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Section 7.01
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Employee Benefits
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88
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Section 7.02
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401(k) Plan
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89
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Section 7.03
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Employment Arrangements
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89
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ARTICLE VIII
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TAX MATTERS
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90
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Section 8.01
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Tax Cooperation and Exchange of Information
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90
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Section 8.02
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Conveyance Taxes
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90
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Section 8.03
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Preparation of Tax Returns and Payment of Taxes
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91
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Section 8.04
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Refunds
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92
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Section 8.05
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Tax Elections
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92
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ARTICLE IX
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CONDITIONS TO CLOSING
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92
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Section 9.01
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Conditions to Obligations of the Company and Seller
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92
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Section 9.02
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Conditions to Obligations of the Purchaser
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93
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Section 9.03
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Frustration of Closing Conditions
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95
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ARTICLE X
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NO SURVIVAL; TAX INDEMNIFICATION
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95
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Section 10.01
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No Survival of Representations, Warranties and Covenants
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95
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Section 10.02
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Pre-Closing Tax Indemnification by Seller
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95
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Section 10.03
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Limits on Indemnification
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95
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Section 10.04
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Notice of Loss; Third Party Claims
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97
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Section 10.05
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Remedies
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97
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Section 10.06
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Distributions of Retained Shares
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98
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ARTICLE XI
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TERMINATION
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99
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Section 11.01
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Termination
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99
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Section 11.02
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Effect of Termination
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100
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Section 11.03
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Termination Fees
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100
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ARTICLE XII
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GENERAL PROVISIONS
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101
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Section 12.01
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Expenses
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101
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Section 12.02
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Notices
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101
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Section 12.03
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Public Announcements
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103
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Section 12.04
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Severability
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103
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Table of Contents
(continued)
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Page
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Section 12.05
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Entire Agreement
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103
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Section 12.06
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Assignment
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104
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Section 12.07
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Amendment
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104
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Section 12.08
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Waiver
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104
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Section 12.09
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No Third Party Beneficiaries
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104
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Section 12.10
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Specific Performance Remedies
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105
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Section 12.11
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Governing Law
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106
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Section 12.12
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Waiver of Jury Trial
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106
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Section 12.13
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Release
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106
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Section 12.14
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Waiver of Conflicts (Seller)
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108
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Section 12.15
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Waiver of Conflicts (Purchaser)
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108
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Section 12.16
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Counterparts
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109
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EXHIBITS
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1.01
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Stockholder Agreement
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PURCHASE AGREEMENT
This
Purchase Agreement
, dated as of August 3, 2011, among Web.com Group, Inc., a Delaware corporation (the “
Purchaser
”), Net Sol Holdings LLC, a Delaware limited liability company (“
Seller
”), and GA-Net Sol Parent LLC, a Delaware limited liability company and a wholly-owned subsidiary of Seller (the “
Company
”).
WHEREAS, Seller is the sole member (“
Member
”) of the Company;
WHEREAS, Seller wishes to sell its Member interest in the Company to the Purchaser, and the Purchaser wishes to purchase such Member interest from Seller, upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Certain Defined Terms
. For purposes of this Agreement:
“
Action
” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.
“
Affiliate
” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person;
provided
, that no portfolio company of any Person that owns equity interests in Seller or any portfolio company of any Affiliate of such Person shall be deemed to be an Affiliate of Seller or the Company.
“
Agreement
” or “
this Agreement
” means this Purchase Agreement among the parties hereto (including the Exhibits hereto, the Disclosure Schedule and the Purchaser Disclosure Schedule) and all amendments hereto made in accordance with the provisions of Section 12.07.
“
Business
” means the business conducted by the Company Entities as of the date hereof or immediately prior to the Closing, as applicable.
“
Business Day
” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in The City of New York.
“
Cash Consideration Election
” means Purchaser’s right, if it elects in Purchaser’s sole discretion, to sell up to 14,000,000 shares of Purchaser Common Stock (as adjusted for any stock splits, reverse stock splits, stock dividends, stock distributions, recapitalization, reclassification or similar transaction after the date hereof) in an underwritten public offering prior to the Closing for net (after deducting fees and expenses incurred by the Purchaser in such public offering) per share proceeds of no less than $11.47 (as adjusted for any stock splits, reverse stock splits, stock dividends, stock distributions, recapitalizations, reclassifications or similar transactions after the date hereof) and use the net proceeds of such public offering to increase the Closing Cash Payment and reduce the Closing Shares Payment;
provided
, that Purchaser may, in its sole discretion, use less than all of the shares sold in such public offering, but not less than fifty percent (50%) of such shares sold, to increase the Closing Cash Payment and reduce the Closing Shares Payment.
“
Cash Consideration Election Proceeds
” means, with respect to the shares of Purchaser Common Stock sold upon exercise of the Cash Consideration Election that Purchaser determines to use to reduce the Closing Shares Payment in accordance with the definition of “Cash Consideration Election,” $11.47 per share plus (a) all of the net (after deducting fees and expenses incurred by the Purchaser in the Cash Consideration Election) per share proceeds of such issuance and sale in excess of $11.47 per share but less than $12.00 per share, plus (b) 70% of the net (after deducting fees and expenses incurred by the Purchaser in the Cash Consideration Election) per share proceeds of such issuances in excess of $11.99 per share (in each case, as such dollar amounts shall be adjusted for any stock splits, reverse stock splits, stock dividends, stock distributions, recapitalization, reclassification or similar transaction after the date hereof).
“
Closing Cash Payment
” means (a) $405,000,000, plus (b) if Purchaser exercises its Cash Consideration Election, an amount equal to the Cash Consideration Election Proceeds, less (c) without duplication, the amount, if any, by which the sum of all Transaction Expenses of the Company Entities, other than any Specified Employee Amount, exceeds $11,000,000.
“
Closing Shares Payment
” means 18,000,000 shares of Purchaser Common Stock (as adjusted for any stock splits, reverse stock splits, stock dividends, stock distributions, recapitalization, reclassification or similar transaction after the date hereof) less, if Purchaser exercises its Cash Consideration Election, the number of shares Purchaser determines to use to apply to the Cash Consideration Election Proceeds in accordance with the definition of “Cash Consideration Election”.
“
Code
” means the Internal Revenue Code of 1986, as amended from time to time.
“
Combined Companies
” means the Purchaser, the Company and their respective subsidiaries on a consolidated basis.
“
Company Closing Indebtedness
” means the sum of all Company Indebtedness, together with any interest, prepayment penalties or fees, premiums, breakage amounts, termination amounts, expense reimbursements, indemnities or other amounts payable in connection with prepayment thereof, as of the Closing.
“
Company Employees
” means each current or former employee, officer, director, general partner and member of any executive committee of any of the Company Entities.
“Company Entity
” means the Company and each Subsidiary of the Company.
“
Company Indebtedness
” means the Indebtedness of the Company Entities as of the date of this Agreement.
“
Company Intellectual Property
” means all Intellectual Property owned, or purported to be owned, by the Company or any Company Entity, whether or not material to the business of the Company and its Subsidiaries as currently conducted.
“
Company IP Agreements
” means all licenses of Intellectual Property (a) from the Company or any Subsidiary of the Company to any third party, excluding licenses to customers and end users granted in the ordinary course of business, and (b) to the Company or any Subsidiary of the Company from any third party, excluding Shrink-Wrap Agreements.
“
Company’s Knowledge
” or similar terms used in this Agreement means the knowledge of the Persons set forth on Section 1.01(a) of the Disclosure Schedule after reasonable inquiry.
“
Company LLC Agreement
” means the Limited Liability Company Agreement of the Company, dated as of January 30, 2007.
“
Company Member Interests
” means all of the ownership, equity, member and/or other interests that evidence ownership of the Company.
“
Company Predecessor Entity
” means any company or entity to which the Company is a successor.
“
Control
” (including the terms “
control
,”
“
controlled by
” and “
under common control with
”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, or as trustee, personal representative, executor, general partner or managing member, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative, executor, general partner or managing member, by contract or otherwise.
“
Conveyance Taxes
” means any sales, use, transfer, conveyance, ad valorem, stamp, stamp duty, recording or other similar tax, fee or charge imposed by any Governmental Authority upon the sale, transfer or assignment, direct or indirect, of real, personal, tangible or intangible property or any interest therein, or upon the recording of any such sale, transfer or assignment, together with any interest, additions or penalties in respect thereof.
“
Data Room
” means the electronic data room maintained by Seller in connection with the transactions contemplated by this Agreement.
“
Debt Financing Sources
” shall mean each Lender or each other Person (including each agent and arranger) that have committed to provide commitments under, or otherwise entered into, the Financing Agreements or other financings in connection with the transactions contemplated hereby, together with each Affiliate, officer, director, employee, partner, controlling Person, advisor, attorney, agent and representative of each such Lender or other Person.
“
Debt Payoff Amount
” means the sum of all principal and accrued interest as of the Closing owed by the Company Entities under (a) the Credit Agreement, dated as of April 17, 2007, between GA Net Sol Parent LLC and Woodbridge Penzugyi Szolgaltato KFT, Branch Office Zug, and (b) the First Lien Credit Agreement, dated as of March 7, 2007, as amended on April 17, 2007, among GA Net Sol LLC, GA Net Sol Parent LLC, the lenders from time to time party thereto and Deutsche Bank Trust Company Americas, as administrative agent, and all prepayment penalties or fees, premiums, breakage amounts, termination amounts, expense reimbursements, or other amounts payable in connection with prepayment as of the Closing (if any) set forth in the Material Contracts on Section 3.15(a)(iv) of the Disclosure Schedule.
“
Disclosure Schedule
” means the Disclosure Schedule attached hereto, dated as of the date of this Agreement, delivered by the Company to the Purchaser in connection with this Agreement.
“
Encumbrance
” means any security interest, pledge, hypothecation, mortgage, charge, lien, license, encumbrance, encroachment, option, restrictive covenant, condition or restriction, including any restriction on the use, voting, transfer, receipt of income or other attributes of ownership, other than any license of, option to license, or covenant not to assert claims of infringement, misappropriation or other violation with respect to, Intellectual Property.
“
Environmental Laws
” means all Laws, now or hereafter in effect and as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, health, safety, natural resources or Hazardous Materials, including CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq.
“
Environmental Permits
” means all permits, approvals, identification numbers, licenses and other authorizations required under or issued pursuant to any applicable Environmental Law.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Foreign Benefit Plan
” means Company Benefit Plans that are not subject to United States law or for which benefits are primarily for employees outside of the United States.
“
Form S-3 Registration Statement
” means the registration statement on Form S-3 to be filed with the SEC by Purchaser in connection with the issuance and sale of Purchaser Common Stock after Purchaser’s exercise of the Cash Consideration Election in accordance with the definition of “Cash Consideration Election” and the Closing Shares Payment, as said registration statement may be amended prior to the time it is declared effective by the SEC.
“
Fraud
” means reckless or intentional fraud with respect to the making of any representation or warranty in Article III, Article IV or Article V or the certification as to compliance with any covenant in Section 6.01 or 6.02, as applicable, which shall only be deemed to exist if the Person making such representation or warranty had actual knowledge (or reckless disregard) that such representation or warranty (as qualified by the Disclosure Schedule or Purchaser Disclosure Schedule, as applicable) was inaccurate or untrue when made or actual knowledge (or reckless disregard) at Closing that such covenant (as qualified by the Disclosure Schedule or Purchaser Disclosure Schedule, as applicable) was not complied with in any material respect;
provided
, that (a) with respect to the Company, the Person making any representation or warranty in Article III or certifying as to compliance with any covenant in Section 6.01 shall be deemed to refer to the individuals identified on Section 1.01(a) of the Disclosure Schedule, (b) with respect to Seller, the Person making any representation or warranty in Article IV or certifying as to compliance with any covenant in Section 6.01 shall be deemed to refer to the individuals identified on Section 1.01(b) of the Disclosure Schedule and (c) with respect to the Purchaser, the Person making any representation or warranty in Article V or certifying as to compliance with any covenant in Section 6.02 shall be deemed to refer to the individuals identified on Section 1.01(a) of the Purchaser Disclosure Schedule.
“
GAAP
” means United States generally accepted accounting principles and practices in effect from time to time applied consistently throughout the periods involved.
“
General Atlantic
” means GA-Net Sol Investor LLC, a Delaware limited liability company.
“
Governmental Authority
” means any United States or non-United States federal, national, supranational, state, provincial, local or other government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body of competent jurisdiction, as well as of any of their officials acting in their official capacity.
“
Governmental Order
” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“
Hazardous Material
” means (a) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials and polychlorinated biphenyls and (b) any other chemicals, materials or substances defined or regulated as toxic or hazardous or as a pollutant or contaminant under any applicable Environmental Law, in each case at a location and in a concentration such that an affirmative management obligation is created.
“
HSR Act
” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“
Indebtedness
” means, with respect to any Person, without duplication: (a) the principal of and any premium in respect of indebtedness for borrowed money, including any accrued interest and any cost or penalty associated with prepaying any such indebtedness, and including any such obligations evidenced by bonds, debentures, notes or similar obligations or any guarantee of the foregoing (but excluding the endorsement of checks or other negotiable instruments for deposit or collection), (b) all capitalized lease obligations that are classified as a balance sheet liability in accordance with GAAP, (c) overdrafts, (d) any accrued and unpaid purchase price obligations related to acquisitions of property or services (other than trade liabilities incurred in the ordinary course of business), and (e) any obligations to guarantee any of the foregoing types of obligations on behalf of any Person other than such Person or any of its Subsidiaries.
“
Indemnifying Party
” means Seller pursuant to Section 10.02.
“
Intellectual Property”
means algorithms, databases, formulae, inventions (whether or not patentable), know-how, logos, marks (including brand names, product names, logos, and slogans), methods, processes, protocols, specifications, software, software code (in any form, including source code and executable or object code), subroutines, URLs, works of authorship and other forms of industrial property and intellectual property (whether or not embodied in any tangible form) and all past, present, and future rights of the following types, which may exist or be created under the laws of any jurisdiction in the world, with respect to the items described above: (a) patents and patent applications, (b) trademark, service mark, trade name, trade dress and domain name rights, to the extent that the domain names incorporate trademarks, together with the goodwill associated exclusively therewith, (c) copyrights (including copyrights in computer software), (d) confidential and proprietary information rights, including trade secret and know-how rights, (e) other legally recognized proprietary rights in items described in this definition and (f) registrations, renewals, extensions, combinations, divisions, and reissues of, and applications for registration of, the foregoing.
“
Internal Revenue Service
” means the Internal Revenue Service of the United States.
“
Law
” means any United States or non-United States federal, national, supranational, state, provincial, local or administrative statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).
“
Liabilities
” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any contract, lease, agreement, arrangement, commitment or undertaking (excluding liabilities with respect to Taxes).
“
Licensed Intellectual Property
” means Intellectual Property licensed to any Company Entity.
“
Material Adverse Effect
” means, with respect to the Company or Purchaser, as applicable, any event, circumstance, change in or effect on such Person that is materially adverse to the results of operations or the financial condition of such Person and its Subsidiaries, taken as a whole;
provided, however
, that none of the following, either alone or in combination, shall be considered in determining whether there has been a “Material Adverse Effect” or a breach of a representation, warranty, covenant or agreement that is qualified by the term “Material Adverse Effect”: (a) events, circumstances, changes or effects that generally affect the industries or segments thereof in which such Person or any of its Subsidiaries operates (including changes in legal and regulatory conditions), except to the extent that any such event, circumstance, change or effect adversely affects such Person and its Subsidiaries, taken as a whole, in a manner that is materially disproportionate to its effect on other companies operating in the same industries or segments as such Person, (b) events, circumstances, changes or effects affecting or changes in the national, international or any regional economy in general, the financial, credit, securities or banking markets or conditions in general (including any disruption thereof), interest rates, currency or exchange rates or the price of any commodity, security or market index, (c) any national, international or regional political or social conditions, including any event, circumstance, change or effect caused by acts of terrorism, sabotage or war (whether or not declared), military actions or the escalation thereof or other force majeure events, (d) changes or modifications, or proposed changes or modifications, in GAAP or applicable Law or interpretations thereof, (e) the announcement, performance or existence of this Agreement, the identity of the parties to this Agreement or any of their respective Affiliates, representatives or financing sources, or the pendency of the transactions contemplated hereby, including any actual or potential impairment of any contract, agreement, binding commitment or other written arrangement or loss of any current or prospective licensors, licensees, customers, employees, vendors or other business relations of such Person due to any of the foregoing in this clause (e), (f) any failure by such Person or any of its Subsidiaries to meet any projections, budgets, forecasts or revenue or earnings predictions for any period (it being understood that the underlying causes of such failure may, if they are not otherwise excluded from the definition of “Material Adverse Effect,” be taken into account in determining whether a “Material Adverse Effect” has occurred), or (g) any event, circumstance, change or effect to the extent set forth on the Disclosure Schedule or Purchaser Disclosure Schedule, as applicable (provided that any future development or change with respect to any of the actions set forth in Schedule 3.08 of the Disclosure Schedule shall not be deemed to be set forth on the Disclosure Schedule for purposes of this clause (g)).
“
Permitted Encumbrances
” means each of the following: (a) Encumbrances for Taxes not yet due and payable or which may be paid without penalties or which are being contested in good faith through proper proceedings, (b) materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other similar liens arising in the ordinary course of business securing obligations as to which there is no default on the part of the applicable Person or the validity or amount of which is being contested in good faith by appropriate proceedings, (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations, (d) Encumbrances imposed or promulgated by Laws with respect to real property and improvements, including zoning regulations, (e) such non-monetary Encumbrances or other imperfections of title, if any, that are not materially adverse to the applicable Person or its Subsidiaries, including (i) any supplemental Taxes or assessments not shown by the public records and (ii) easements whether or not shown by the public records, overlaps, encroachments and any matters not of record which would be disclosed by an accurate survey or a personal inspection of the property, (f) any Encumbrances affecting title to which the fee interest, or any underlying leasehold interest, in the Leased Real Property is subject, (g) Encumbrances that secure obligations reflected as liabilities on the Financial Statements and (h) other Encumbrances that would not be material to the party subject to such Encumbrance.
“
Person
” means any individual, partnership, firm, corporation, Governmental Authority, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.
“
Personal Information
” means any customer information that is personal to and identifies the Person to whom such information pertains.
“
Phantom Payment Amount
” means the aggregate amount to be paid by the Company in settlement of all Phantom Units granted under the Phantom Plan.
“
Phantom Plan
” means the GA-Net Sol Parent, LLC 2007 Phantom Equity Incentive Plan.
“
Phantom Units
” means the phantom units issued to certain individuals pursuant to the Phantom Plan.
“
Pre-Closing Tax Period
” means any Tax period of a Company Entity that ends on or prior to the Closing Date.
“
Pre-Closing Taxes
” means (a) all Taxes (or the non-payment thereof) of any Company Entity for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date and (b) all payroll, employee withholding, unemployment, social security or any such similar Taxes incurred by a Company Entity in connection with any compensatory payment made under this Agreement or otherwise in connection with the transactions contemplated hereby. For purposes of this Agreement, in the case of any Taxable period that commences on or prior to and includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income or receipts of all Company Entities for the portion of such Straddle Period through the end of the Closing Date shall be determined based on an interim closing of the books as of the close of business on the Closing Date and the amount of other Taxes of the Company Entities for a Straddle Period which relate to the portion of such Straddle Period through the end of the Closing Date shall be deemed to be the amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period for the portion thereof ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.
“
Profits Interests
” means the Class A-1, Class A-2 and Class A-3 Units of Seller issued to certain individuals, whether pursuant to the Net Sol Holdings LLC Executive Equity Incentive Plan or otherwise.
“
Proxy Statement
” means the proxy statement to be sent to Purchaser’s stockholders in connection with the Purchaser Stockholders’ Meeting.
“
Purchaser Benefit Plan
” means each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of section 3(1) of ERISA); each profit-sharing, stock bonus or other “pension” plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained, contributed to or required to be contributed to by the Purchaser, or to which the Purchaser or any of its Subsidiaries is party, whether written or oral, for the benefit of any Purchaser Employee.
“
Purchaser Board
” means the Board of Directors of the Purchaser.
“
Purchaser Business
” means the business conducted by the Purchaser and its Subsidiaries as of the date hereof or immediately prior to the Closing, as applicable.
“
Purchaser Common Stock
” means common stock of the Purchaser, par value $0.001 per share.
“
Purchaser Disclosure Schedule
” means the Purchaser Disclosure Schedule attached hereto, dated as of the date of this Agreement, delivered by the Purchaser to the Company in connection with this Agreement.
“
Purchaser Employees
” means each current or former employee, officer, director, general partner and member of any executive committee of the Purchaser or any of its Subsidiaries.
“
Purchaser Foreign Benefit Plan
” means Purchaser Benefit Plans that are not subject to United States law or for which benefits are primarily for employees outside of the United States.
“
Purchaser Intellectual Property
” means all Intellectual Property owned, or purported to be owned, by the Purchaser, whether or not material to the Purchaser Business as currently conducted.
“
Purchaser IP Agreements
” means all licenses of Intellectual Property (a) from the Purchaser or any Subsidiary of the Purchaser to any third party, excluding licenses to customers and end users granted in the ordinary course of business, and (b) to the Purchaser or any Subsidiary of the Purchaser from any third party, excluding Shrink-Wrap Agreements.
“
Purchaser Licensed Intellectual Property
” means Intellectual Property licensed to the Purchaser or any Subsidiary of the Purchaser.
“
Purchaser Option Plans
” means the plans or programs set forth under the heading “Purchaser Option Plans” on Section 1.01(b) of the Purchaser Disclosure Schedule.
“
Purchaser Stock Plans
” means the plans or programs set forth under the heading “Purchaser Stock Plans” on Section 1.01(b) of the Purchaser Disclosure Schedule.
“
Purchaser Superior Offer
” means a bona fide written Purchaser Acquisition Proposal made by a third party that requires termination of the transactions contemplated by this Agreement, that is determined by the Purchaser Board, in its good faith judgment, after consulting with a financial advisor of nationally recognized reputation and outside legal counsel, and after taking into account all legal, regulatory, financial and other aspects of the proposal and the identity of the Person making the proposal, to be (a) more favorable from a financial point of view to Purchaser’s stockholders than the Purchase determined on a basis of long-term value (taking into account the likelihood and anticipated timing of consummation and after giving effect to all adjustments which may be offered by Seller and the Company pursuant to Section 6.04(c) and the payment of the Purchaser Termination Fee hereunder and any break-up fees and expense reimbursement provisions thereof) and (b) reasonably likely to be consummated (if accepted) on a timely basis in accordance with its terms;
provided, however
, that for purposes of this definition of “Purchaser Superior Offer,” the defined term “Purchaser Acquisition Proposal” shall have the meaning assigned to such term herein, except that all references to “10%” contained in the definition of “Purchaser Acquisition Proposal” shall be deemed to be a reference to “50%.”
“
Purchaser’s Knowledge
” or similar terms used in this Agreement means the knowledge of the Persons set forth on Section 1.01(c) of the Purchaser Disclosure Schedule, after reasonable inquiry.
“
Registered
” means issued by, registered or filed with, renewed by or the subject of a pending application before any Governmental Authority or Internet domain name registrar.
“
Release
” means disposing, discharging, injecting, spilling, leaking, pumping, pouring, leaching, dumping, emitting, escaping or emptying into or upon any soil, sediment, subsurface strata, surface water or groundwater.
“
Remedial Action
” means any action required to investigate, clean up, remove or remediate, or conduct remedial or corrective actions with respect to, Hazardous Materials in the environment.
“
RSUs
” means an aggregate of 5,358,873 restricted stock units tied to the value of Class A Units of Seller issued to Tim Kelly and Miles Ready pursuant to the Restricted Stock Unit Award Agreements dated March 23, 2010 and December 10, 2010.
“
SEC
” means the U.S. Securities and Exchange Commission.
“
Securities Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Shrink-Wrap Agreements
” means “
shrink-wrap
” and “
click-wrap
” licenses and licenses concerning generally commercially available software.
“
Specified Employee Amount
” means any payments in respect of (a) any cash severance or retention amounts that may become payable in connection with or following the Closing Date, (b) any employee bonuses accrued through the Closing, (c) any amounts that may become payable under the Transaction Incentive Letter Agreement, (d) the Phantom Units, (e) the RSUs and (f) the Profits Interests.
“
Stockholder Agreement
” means the Stockholder Agreement to be entered into among Purchaser, Seller and General Atlantic and to be effective as of the Closing, substantially in the form of Exhibit 1.01.
“
Subsidiaries
” means any corporation, association, business entity, partnership, limited liability company or other Person of which the applicable entity, either alone or together with one or more Subsidiaries or by one or more other Subsidiaries (a) directly or indirectly owns or controls securities or other interests representing more than 50% of the voting power of such Person, or (b) is entitled, by contract or otherwise, to elect, appoint or designate directors constituting a majority of the members of such Person’s board of directors or other governing body.
“
Tax
” or “
Taxes
” means (a) all taxes of any kind whatsoever, including all income, capital gain, gross receipts, value added, windfall profits, severance, property, production, ad valorem, sales, use, transfer, conveyance, stamp, recording, license, excise, net worth, franchise, capital, employment, withholding, social security contributions, Medicare taxes and other taxes, duties and similar imposts, however denominated, together with any interest, additions or penalties in respect thereof, imposed by any Governmental Authority; (b) any liability for the payment of any amounts of the type described in clause (a) of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group for any Taxable period, and (c) any liability for the payment of any amounts of the type described in clause (a) or (b) 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.
“
Tax Returns
” means any and all returns, reports and forms (including elections, declarations, amendments, schedules, information returns or attachments thereto) required to be filed with a Governmental Authority with respect to Taxes.
“
Transaction Documents
” means the Stockholder Agreement and any certificates or other written agreements to be delivered by Seller, the Company and/or the Purchaser relating to this Agreement, and any exhibits or schedules relating to the foregoing.
“
Transaction Incentive Letter Agreements
” means the letter agreements between Network Solutions, LLC and certain individuals dated on or about May 9, 2011 and listed in Section 1.01(c) of the Disclosure Schedule.
SECTION 1.02
Definitions
. The following terms have the meanings set forth in the Sections set forth below:
|
|
Section
|
“280G Approval”
|
|
6.07(e)
|
“Alternate Transaction Fee”
|
|
6.13(c)
|
“Alternative Fee Letter(s)”
|
|
6.13(b)
|
“Alternative Financing”
|
|
6.13(b)
|
“Alternative Financing Agreements”
|
|
6.13(b)
|
“Alternative Financing Commitment Letter”
|
|
6.13(b)
|
“Balance Sheets”
|
|
3.05(a)
|
“Board Transaction Resolutions”
|
|
5.01(b)
|
“Closing”
|
|
2.03
|
“Closing Date”
|
|
2.03
|
“Company”
|
|
Preamble
|
“Company 401(k) Plan”
|
|
7.02
|
Term
|
|
Section
|
“Company Acquisition Proposal”
|
|
6.10(a)
|
“Company Benefit Plan”
|
|
3.12(a)
|
“Company Participants”
|
|
7.01
|
“Company Representatives”
|
|
6.10(a)
|
“Company Website”
|
|
3.10(f)
|
“Company Welfare Plan”
|
|
7.01
|
“Confidentiality Agreement”
|
|
6.06
|
“Continuing Employees”
|
|
7.01
|
“Cooley”
|
|
12.15
|
“Covered Persons”
|
|
6.12(a)
|
“Debt Payoff Recipient”
|
|
2.04(b)(i)
|
“Disclosed Conditions”
|
|
5.07(c)
|
“DOJ”
|
|
6.07(a)
|
“ERISA Affiliate”
|
|
3.12(a)
|
“Fee Letter”
|
|
5.07(b)
|
“file”
|
|
5.05(a)
|
“Financial Statements”
|
|
3.05(a)
|
“Financing”
|
|
6.13(c)
|
“Financing Agreements”
|
|
6.13(a)
|
“Financing Commitment Letter”
|
|
5.07(b)
|
“FTC”
|
|
6.07(a)
|
“Group”
|
|
6.10(a)
|
“Incentive Amounts”
|
|
2.04
|
“Indemnified Party”
|
|
10.02
|
“Indemnity Reduction Amounts”
|
|
10.03(b)
|
“Leased Real Property”
|
|
3.11(b)
|
“Lenders”
|
|
5.07(b)
|
“Loss”
|
|
10.02
|
“Material Contracts”
|
|
3.15(a)
|
“Member”
|
|
Recitals
|
“New Financing”
|
|
5.07(b)
|
“Notified Transaction Expenses”
|
|
2.04(a)(ii)
|
“Post Closing Covenants”
|
|
10.01
|
“Purchase”
|
|
2.01
|
“Purchaser”
|
|
Preamble
|
“Purchaser 401(k) Plan”
|
|
7.02
|
“Purchaser Acquisition Proposal”
|
|
6.10(b)
|
“Purchaser Benefit Plan”
|
|
5.14(a)
|
“Purchaser Board Recommendation”
|
|
6.04(b)
|
“Purchaser Certifications”
|
|
5.05(a)
|
“Purchaser Change in Recommendation”
|
|
6.04(b)
|
“Purchaser Contracts”
|
|
5.17(b)
|
“Purchaser Intervening Event”
|
|
6.04(c)(ii)
|
“Purchaser Leased Real Property”
|
|
5.13(b)
|
“Purchaser Option”
|
|
5.02(d)
|
Term
|
|
Section
|
“Purchaser Owned Real Property”
|
|
5.13(a)
|
“Purchaser Preferred Stock”
|
|
5.02(d)
|
“Purchaser Proposal”
|
|
6.04(a)
|
“Purchaser Representatives”
|
|
6.10(b)
|
“Purchaser SEC Documents”
|
|
5.05(a)
|
“Purchaser Stock Award”
|
|
5.02(d)
|
“Purchaser Stockholders’ Meeting”
|
|
6.04(a)
|
“Purchaser Termination Fee”
|
|
11.03(a)
|
“Purchaser Website”
|
|
5.12(f)
|
“Purchaser Welfare Plan”
|
|
7.01
|
“Reference Balance Sheet”
|
|
3.05(a)
|
“Reference Balance Sheet Date”
|
|
3.06
|
“Released Matters”
|
|
12.13(a)
|
“Released Parties”
|
|
12.13(a)
|
“Releasing Parties”
|
|
12.13(a)
|
“Required Purchaser Stockholder Vote”
|
|
5.22
|
“Retained Share Fund”
|
|
10.06
|
“Section 280G Payments”
|
|
6.07(e)
|
“Seller”
|
|
Preamble
|
“Sellers Counsel”
|
|
12.14
|
“Straddle Returns”
|
|
8.03(a)
|
“Subsidiary Interests”
|
|
3.02(b)
|
“Substitute Fee Letter(s)”
|
|
6.13(c)
|
“Substitute Financing”
|
|
6.13(c)
|
“Substitute Financing Agreements”
|
|
6.13(c)
|
“Substitute Financing Commitment Letter”
|
|
6.13(c)
|
“Survival Date”
|
|
10.01
|
“Taxing Authority”
|
|
2.08
|
“Termination Date”
|
|
11.01(a)
|
“Third Party Claim”
|
|
10.04(b)
|
“Threshold Amount”
|
|
10.03(c)
|
“Transaction Expenses”
|
|
12.01
|
“Transaction Litigation”
|
|
6.15
|
“WARN Act”
|
|
3.13(g)
|
SECTION 1.03
Interpretation and Rules of Construction
(a) In this Agreement, except to the extent otherwise provided or that the context otherwise requires:
(i) when a reference is made in this Agreement to an Article, Section or Exhibit, such reference is to an Article or Section of, or an Exhibit to, this Agreement;
(ii) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;
(iii) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;
(iv) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;
(v) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;
(vi) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;
(vii) no rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by competent counsel and embodies the justifiable expectations of sophisticated parties derived from arms’ length negotiations;
(viii) references to a Person are also to its successors and permitted assigns;
(ix) the use of “or” is not intended to be exclusive unless expressly indicated otherwise; and
(x) references to sums of money are expressed in lawful currency of the United States of America, and “$” refers to U.S. dollars.
(b) Notwithstanding anything to the contrary contained in the Disclosure Schedule, the Purchaser Disclosure Schedule or in this Agreement, the information and disclosures contained in any Section of the Disclosure Schedule or the Purchaser Disclosure Schedule (whether or not an explicit cross-reference appears) shall be deemed to be disclosed and incorporated by reference in any other Section of the Disclosure Schedule or the Purchaser Disclosure Schedule, respectively, as though fully set forth in such other section to the extent the relevance of such information to such other Section is reasonably inferable.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01
Purchase and Sale of the Company Member Interests
. Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell to the Purchaser, and the Purchaser shall purchase from Seller, all of Seller’s Company Member Interests (the “
Purchase
”).
SECTION 2.02
Purchase Price
. The aggregate purchase price for the Company Member Interests shall be comprised of (a) the Closing Cash Payment, and (b) the Closing Shares Payment. For the avoidance of doubt, at and after the Closing and by virtue of the Purchase, Purchaser shall assume the obligation to pay (i) the Company Closing Indebtedness, and (ii) the unpaid Transaction Expenses of the Company Entities.
SECTION 2.03
Closing
. Subject to the terms and conditions of this Agreement, the sale and purchase of the Company Member Interests contemplated by this Agreement shall take place at a closing (the “
Closing
”) to be held at the offices of Cooley LLP, 3175 Hanover Street, Palo Alto, California at 10:00 a.m. Pacific time on the second Business Day following the satisfaction or waiver of the conditions to the obligations of the parties hereto set forth in Article IX (other than conditions that by their nature are to be satisfied at Closing, and subject to the satisfaction or waiver of such conditions) (the day on which the Closing takes place being the “
Closing Date
”).
SECTION 2.04
Payments at Closing
.
(a)
Payments by the Purchaser
. At the Closing, the Purchaser shall pay the following amounts, with each cash payment to be made by wire transfer of immediately available funds unless otherwise designated in writing by the payee thereof:
(i) to Seller, to one or more accounts designated in writing by Seller at least two Business Days prior to the Closing, (A) an aggregate amount equal to the Closing Cash Payment
less
the Phantom Payment Amount, and (B) an aggregate number of shares of Purchaser Common Stock equal to the Closing Shares Payment; and
(ii) to the Company, without duplication, (A) the Debt Payoff Amount, (B) the Transaction Expenses of the Company Entities for which written notices of amounts thereof were received at least one Business Day prior to the Closing (“
Notified Transaction Expenses
”), and (C) the Phantom Payment Amount. Notwithstanding the foregoing, the Purchaser may advise the Company that it wishes to use all or a portion of any unrestricted cash of the Company or any Subsidiary of the Company on hand immediately prior to the Closing towards payment of any of the items set forth in this Section 2.04(a)(ii), in which event the aggregate amount that the Purchaser shall be obligated to pay pursuant to this Section 2.04(a)(ii) shall be correspondingly reduced but (y) such reduction shall not affect any required payments by the Company or any Subsidiary of the Company pursuant to Section 2.04(b) and (z) the respective dollar amounts set forth in this Section 2.04(a)(ii) shall not be reduced for purposes of any other calculation required by this Agreement, including the calculation of the Closing Cash Payment.
(b)
Payments by the Company
. On the Closing Date, upon its receipt of the payment pursuant to Section 2.04(a)(ii) above, the Company shall pay, and the Purchaser shall cause the Company to pay, the following amounts, with each payment to be made by wire transfer of immediately available funds unless otherwise designated in writing by the payee thereof:
(i) to each Person to whom any portion of the Debt Payoff Amount is owed (each, a “
Debt Payoff Recipient
”), to one or more accounts designated in writing by such Debt Payoff Recipient at least one Business Day prior to the Closing, an aggregate amount equal to the Debt Payoff Amount owing to such Debt Payoff Recipient;
(ii) to the account of each Person to whom Notified Transaction Expenses are owed, an amount equal to the Notified Transaction Expenses owing to such Person; and
(iii) to the account of each holder of Phantom Units, an amount owing to such Person pursuant to the terms and conditions of such Person’s award of Phantom Units under the Phantom Plan. In addition, the parties shall reasonably cooperate to effect such other payments to employees of the Company Entities as may be required to be made by Seller through the payroll service provider for the Company Entities.
To the extent permitted by applicable Laws, Purchaser shall be entitled to deduct its payment of the Transaction Expenses of the Company Entities and the payment of the amounts payable under Section 3 of the Transaction Incentive Letter Agreements (the “
Incentive Amounts
”), and for Tax purposes such deductions shall be deemed to relate to the period after the Pre-Closing Tax Period. To the extent that applicable Law does not permit such deductions to be claimed in such a later period and such deductions are instead available to the Company in a Pre-Closing Period, then, notwithstanding any other provision of this Agreement to the contrary, Seller shall pay Purchaser an amount equal to the reduction (if any) in the amount payable by Seller pursuant to Section 8.03(a) as a result of the availability of such deductions in the Pre-Closing Tax Period instead of in such a later period, and any such payment by Seller shall be treated as a reduction of the purchase price payable under this Agreement.
SECTION 2.05
Closing Deliveries by the Seller
. At the Closing, Seller shall deliver or cause to be delivered to the Purchaser:
(a) an instrument in the form reasonably agreed upon by the parties hereto transferring Seller’s Company Member Interests to the Purchaser and originals or copies of each certificate or other instrument (if any) evidencing any such Company Member Interests;
(b) a receipt from Seller acknowledging receipt of the amount paid to Seller pursuant to Section 2.04(a)(i);
(c) the certificate referenced in Section 9.02(b)(iii);
(d) the Stockholder Agreement, executed by Seller and the other stockholder(s) party thereto, including General Atlantic; and
(e) documentation evidencing the resignation of Seller as the sole Member of the Company.
SECTION 2.06
Closing Deliveries by the Purchaser
. In addition to its obligations set forth in Section 2.04, at the Closing, the Purchaser shall deliver to Seller:
(a) a true and complete copy, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Purchaser, of the Board Transaction Resolutions duly and validly adopted by the Purchaser Board;
(b) the certificate referenced in Section 9.01(a)(iii); and
(c) the Stockholder Agreement, executed by Purchaser.
SECTION 2.07
Closing Deliveries by the Company
. At the Closing, the Company shall deliver or cause to be delivered to the Purchaser:
(a) all stock certificates and other similar evidences (if any) of ownership by the Company of all Company Entities other than the Company substantially in the form previously made available to the Purchaser;
(b) resignations from each officer (if any) of the Company and, if requested by Purchaser, each officer of each other Company Entity effective as of the Closing;
(c) a certificate satisfying the requirements of Treasury Regulations Section 1.1445-11T(d)(2)(i) that the Company is not a United States Real Property holding corporation (within the meaning of Section 897 of the Code); and
(d) the certificate referenced in Section 9.02(a)(iii).
SECTION 2.08
Withholding
. Purchaser, the Company and their respective representatives and agents shall be entitled to withhold from the consideration otherwise payable to any Person, or other payment otherwise payable pursuant to this Agreement, such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of applicable Tax Law. To the extent that any amounts are required to be withheld and deducted for Taxes, the Purchaser, the Company and their respective representatives and agents, as applicable, shall promptly remit (or cause to be remitted) the amounts withheld to the applicable taxing authority or agency (“
Taxing Authority
”), and such amounts shall be treated for all purposes of this Agreement as having been paid to the payee in respect of which such deduction or withholding was made.
SECTION 2.09
Treatment of Phantom Units; Certain Transaction Incentive Letter Payments
.
(a) At the Closing, each vested and unvested Phantom Unit outstanding immediately prior to the Closing shall be cancelled in exchange for a payment equal to such holder’s allocable portion of the Closing Cash Payment in respect of each vested Phantom Unit. On and after the Closing, all vested and unvested Phantom Units shall terminate and cease to be outstanding. Without limiting the Company’s obligations pursuant to Section 2.04(b)(iv), the Purchaser’s sole obligation with respect to the Phantom Units shall be the payment of the portion of the Closing Cash Payment which represents the Phantom Payment Amount as provided in Section 2.04(a)(ii) above. As soon as practicable following the date of this Agreement, Seller and the Company shall take all steps necessary prior to the Closing to cause the Phantom Units to be treated as set forth in this Section 2.09(a). For purposes of clarity, except as provided in this Section 2.09(a), the Purchaser shall not assume, and shall have no obligation whatsoever in respect of, (a) the Profits Interests, (b) the RSUs or (c) any options, warrants, convertible or exchangeable securities, subscriptions, stock or unit appreciation rights, phantom equity rights, stock equivalents, or similar partnership or membership interest-based awards, issued by the Company, any Company Entity or Seller to any Company Employee that are outstanding immediately prior to the Closing.
(b) Seller agrees that at the Closing, Seller shall assume the obligation to pay all amounts that may become payable pursuant to Section 3 of the Transaction Incentive Letter Agreements. For purposes of clarity, the Purchaser shall not assume, and shall have no obligations whatsoever in respect of, Section 3 of the Transaction Incentive Letter Agreements.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANY
Subject to such exceptions as are disclosed in writing in the Disclosure Schedule, the Company hereby represents and warrants to the Purchaser, as follows:
SECTION 3.01
Organization, Authority and Qualification of the Company
.
(a) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, and the Company has all necessary limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. The Company is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect on the Company.
(b) The execution and delivery by the Company of this Agreement and each Transaction Document to which it is a party, the performance by the Company of its obligations hereunder and thereunder, and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited liability company action on the part of the Company. The Company has all necessary limited liability company power and authority to enter into this Agreement and each Transaction Document to which it is a party, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and upon their execution each of the Transaction Documents to which the Company is a party shall have been, duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and upon their execution (assuming due authorization, execution and delivery by the other parties thereto) each of the Transaction Documents to which the Company is a party shall constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).
SECTION 3.02
Subsidiaries; Capitalization
.
(a) Each Subsidiary of the Company is a legal entity duly organized, validly existing and (where applicable) in good standing under the Laws of the jurisdiction of its organization. Each Subsidiary of the Company is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect on the Company.
(b) Section 3.02(b) of the Disclosure Schedule sets forth a true and complete list of all of the Subsidiaries of the Company, listing for each Subsidiary of the Company its name, type of entity, the jurisdiction and date of its incorporation or organization, its authorized capital stock, partnership capital or equivalent, the number and type of its issued and outstanding shares of capital stock, partnership interests or similar ownership interests (the “
Subsidiary Interests
”) and the current ownership of such Subsidiary Interests. All of the Subsidiary Interests of the Company (i) are owned of record or beneficially, directly or indirectly, by the Company as set forth in Section 3.02(b) of the Disclosure Schedule and (ii) have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights. There are no options, warrants, convertible or exchangeable securities, subscriptions, stock appreciation rights, phantom stock rights or stock equivalents, pre-emptive rights, rights of first refusal or other similar rights, agreements, arrangements or commitments relating to the Subsidiary Interests of the Company or obligating the Company or any Subsidiary of the Company to issue or sell any shares of capital stock of, or any other ownership or voting interest in, any Company Entity, or that give any Person the right to receive any economic benefit or right based on or derived from the economic benefits and rights accruing to holders of capital stock of, or other equity or voting interests in, any Company Entity.
(c) Other than the Subsidiaries of the Company, there are no other corporations, partnerships, joint ventures, associations or other entities in which any Company Entity owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the same, or through which any part of the Business is conducted.
(d) As of the Closing the outstanding equity of the Company will consist solely of the Company Member Interests owned by Seller, as set forth on Section 3.02(d) of the Disclosure Schedule. The Company Member Interests have been duly authorized and validly issued and were not issued in violation of any preemptive rights. There are no options, warrants, convertible securities, pre-emptive rights, rights of first refusal or other similar rights, agreements, arrangements or commitments relating to the Company Member Interests or obligating the Company to issue or sell any shares of capital stock of, or any other ownership interest in the Company. The Company has provided the Purchaser with a true and complete copy of the Company LLC Agreement as in effect as of the date hereof.
SECTION 3.03
No Conflict
. Assuming compliance with the pre-merger notification and waiting period requirements of the HSR Act and the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 3.04, and, except as may result from any facts or circumstances relating solely to the Purchaser or its Affiliates and assuming the accuracy of the representations and warranties of the Purchaser contained in Section 5.03, the execution, delivery and performance of this Agreement and each Transaction Document to which the Company is a party by the Company does not and will not (a) violate, conflict with or result in the breach of the certificate of incorporation or bylaws (or similar organizational documents) of any Company Entity, (b) conflict in any material respect with or violate in any material respect any material Law or material Governmental Order applicable to any Company Entity or (c) conflict in any material respect with, result in any material breach of, constitute a material default (or event which with the giving of notice or lapse of time, or both, would become a material default) under, require any consent under, or give to others any rights of termination, acceleration or cancellation of, any Material Contract.
SECTION 3.04
Governmental Consents and Approvals
. Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 5.04, the execution, delivery and performance of this Agreement and each Transaction Document to which the Company is a party by the Company does not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to any Governmental Authority, other than (a) compliance with, and filings required under, the HSR Act, (b) any additional consents, approvals, authorizations, filings and notifications under any other applicable antitrust, competition, or trade regulation Law, (c) the filing with the SEC of the Proxy Statement and (if the Purchaser exercises its Cash Consideration Election) the Form S-3 Registration Statement, and any other filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Exchange Act, (d) compliance with the rules and regulations of NASDAQ Global Market and (e) any filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under state securities Laws or “blue sky” Laws, except (i) where the failure to obtain any such consent, approval, authorization or action, or to make any such filing or notification, would not have a Material Adverse Effect on the Company or (ii) as may be necessary as a result of any facts or circumstances relating solely to the Purchaser or any of its Affiliates.
SECTION 3.05
Financial Information
.
(a) True and complete copies of each of (i) the audited consolidated balance sheets of Seller and its Subsidiaries as of the fiscal years ended December 31, 2010, 2009 and 2008 and unaudited consolidated balance sheet of Seller and its Subsidiaries for the period ended June 30, 2011 (the June 30, 2011 balance sheet, the “
Reference Balance Sheet
” and together with the other balance sheets, collectively, the “
Balance Sheets
”), and the related audited consolidated statements of operations, statements of cash flows and changes in members’ equity of Seller and its Subsidiaries for the years ended as of those dates and the unaudited consolidated statements of operations, statements of cash flows and changes in members’ equity for the six month period ended June 30, 2011 (the Balance Sheets, together with such other financial statements collectively, the “
Financial Statements
”) have been made available by the Company to the Purchaser and are set forth on Section 3.05(a) of the Disclosure Schedule.
(b) The Financial Statements (i) were prepared in accordance with the books of account and other financial records of Seller and its Subsidiaries (except as may be indicated in the notes thereto), (ii) present fairly in all material respects the consolidated financial position and consolidated results of operations and cash flows of Seller and its Subsidiaries as of the dates thereof or for the periods covered thereby and (iii) were prepared in accordance with GAAP (except as may be indicated in the notes thereto), in each case, with respect to the unaudited Financial Statements, except for the absence of footnotes and subject to year-end adjustments.
(c) To the Company’s Knowledge, the Company (on behalf of itself and the Company’s Subsidiaries) has, for the three years prior to the date hereof, maintained, enforced and complied with internal accounting controls that have provided, in all material respects, reasonable assurance that (A) transactions are (and have been) executed in accordance with management’s authorization, (B) transactions are (and have been) recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets, (C) access to its assets is (and has been) permitted only in accordance with management’s authorization, (D) all material information related to such controls are (and has been) reported or otherwise made known to the applicable chief executive officer and chief financial officer, and (E) all material information concerning the Company Entities is (and has been) recorded, processed, summarized and timely reported to the appropriate members of the applicable Company Entity’s management, including its chief executive officer and chief financial officer.
SECTION 3.06
Absence of Changes
. Since June 30, 2011 (the “
Reference Balance Sheet Date
”) to the date of this Agreement:
(a) there has not occurred any Material Adverse Effect on the Company and no event has occurred or circumstance arisen that would reasonably be expected to have a Material Adverse Effect on the Company;
(b) the Company Entities have conducted their businesses in the ordinary course of business;
(c) none of the Company Entities has declared, accrued, set aside or paid any dividend or made any other distribution in respect of any equity interest, other than dividends or distributions from wholly-owned Subsidiaries of any Company Entity;
(d) none of the Company Entities has issued or sold, or authorized the issuance or sale of, any equity interests, phantom equity interests, convertible notes, convertible bonds or other securities convertible into any equity interest of any Company Entity (or any option, warrant or other right to acquire the same) or repurchased, redeemed or otherwise reacquired any equity interest of any Company Entity (in each case, other than pursuant to the vesting or repurchase of any equity based award pursuant to a Company Benefit Plan in effect as of the date hereof or in connection with new arrangements entered into with new employees hired following the date hereof permitted under clause (j) below);
(e) there has been no amendment or restatement of the certificate of incorporation or bylaws (or similar organizational documents) of any of the Company Entities;
(f) none of the Company Entities has effected or been a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(g) none of the Company Entities has formed any Subsidiary or acquired (by merger or stock or asset purchase or otherwise) any interest in any corporation, partnership, other business organization or any business or division thereof that is material to the Company and its Subsidiaries, taken as a whole;
(h) none of the Company Entities has made any capital expenditure which, together with all other capital expenditures made on behalf of the Company Entities between the Reference Balance Sheet Date and the date of this Agreement, was in excess of the Company’s capital expenditure plan previously provided to the Purchaser;
(i) none of the Company Entities has incurred, created, assumed or otherwise become liable for any Indebtedness (including drawdowns under any existing revolver facility of the Company or its Subsidiaries), except for any accrual of unpaid interest on any Indebtedness or any Indebtedness that will be repaid or cancelled prior to the open of business on the Closing Date;
(j) none of the Company Entities has (i) materially increased any salaries, wages, commissions, bonuses or other compensation or benefits payable by any Company Entity to any Company Employee with an annual base salary or annualized compensation in excess of $100,000 or to all Company Employees collectively that resulted in an increase of more than $500,000 in the aggregate on an annualized basis, (ii) amended or waived any of its rights under, or accelerated the vesting under, any provision of any of the Company Benefit Plans (except to conform any such Company Benefit Plan to the requirements of any applicable Laws or as provided in this Agreement), or (iii) except with respect to new arrangements entered into with new employees hired following the date hereof, created, entered into, adopted, established, amended, modified or terminated or promised or agreed to create, enter into, adopt, establish, amend, modify or terminate, any bonus, deferred compensation, unit appreciation (or similar Interest-based award program), profit-sharing, incentive, retention or severance benefit plan, program, arrangement, contract or other agreement, program, arrangement, contract or other agreement providing for employee benefits or remuneration of any kind, applicable to Company Employees generally, in each case, whether written, unwritten or otherwise, funded or unfunded, that would be a Company Benefit Plan if in effect on the date hereof, in each case, other than as required by Law and the terms of any Company Benefit Plans existing as of the date of this Agreement, or in the ordinary course of business of the applicable Company Entity or the Business;
provided
that in the case of changes under clause (ii) and (iii), actions taken did not, in the aggregate, materially increase the cost to the Company of operating such Company Benefit Plans, plans and arrangements;
(k) none of the Company Entities has changed any of its methods of accounting, accounting practices or policies in any material respect, other than such changes as required by GAAP or a Governmental Authority;
(l) none of the Company Entities has made any material Tax election;
(m) none of the Company Entities has commenced or settled any Action, other than in connection with routine customer collections matters or other escalated disputes, in each case individually not in excess of $100,000 or in the aggregate not in excess of $200,000; and
(n) none of the Company Entities has agreed to take any of the actions specified in Sections 3.06(c) – (m).
SECTION 3.07
Absence of Undisclosed Material Liabilities
. Except as reflected or reserved against in the Financial Statements or disclosed in the notes thereto, as of the date of this Agreement, there are no Liabilities of, relating to or affecting any Company Entity or any of their respective assets and properties of a nature required to be reserved against or reflected on a balance sheet prepared in accordance with GAAP, other than Liabilities (a) set forth in the Disclosure Schedule, (b) incurred in the ordinary course of business since the Reference Balance Sheet Date or in accordance with or as permitted by the provisions of this Agreement, or (c) which would not, individually or in the aggregate, be materially adverse to the Company Entities or the Business, taken as a whole. Except to the extent (if any) set forth in the Material Contracts on Section 3.15(a)(iv) of the Disclosure Schedule, neither the Closing nor the repayment of the Debt Payoff Amount at the Closing or immediately after the Closing shall result in any prepayment penalties or fees, premiums, breaking amounts, termination amounts, expense reimbursements, indemnities or other amounts payable under any instrument, note, contract or agreement evidencing or governing the Debt Payoff Amount in connection with the prepayment of the Debt Payoff Amount.
SECTION 3.08
Litigation
. As of the date of this Agreement, there is no material Action by or against any Company Entity, pending before any Governmental Authority or, to the Company’s Knowledge, threatened by any Person that would be material to the Company Entities, taken as a whole or would affect the legality, validity or enforceability of this Agreement or any Transaction Document or the consummation of the transactions contemplated hereby or thereby.
SECTION 3.09
Compliance with Laws
. The Company Entities have each conducted the Business in all material respects since January 1, 2010 and as of the date hereof conduct the Business in all material respects in accordance with all material Laws and material Governmental Orders to which they are subject and no Company Entity is in violation in any material respect of any such Law or Governmental Order.
SECTION 3.10
Intellectual Property
.
(a) To the Company’s Knowledge, the use of the Company Intellectual Property and the Licensed Intellectual Property by the Company Entities in the operation of the Business as currently conducted does not infringe or misappropriate any valid, enforceable and unexpired Intellectual Property of any other Person in any material respect and, as of the date of this Agreement, there is no Action initiated by any other Person pending or, to the Company’s Knowledge, any claims threatened in writing, against any Company Entity concerning the foregoing. To the Company’s Knowledge, no Person is engaging in any activity that infringes or misappropriates any Company Intellectual Property in any material respect.
(b) To the Company’s Knowledge, the Company Entities have taken reasonable and customary steps to protect their rights in confidential information and trade secrets, and to protect confidential information provided to them in reasonable and substantial material conformity with the non-disclosure or confidentiality obligations under which such confidential information was provided to them. The Company Entities have used reasonable efforts to obtain from all employees, consultants and contractors of the Company Entities Intellectual Property assignments for the benefit of the Company. To the Company’s Knowledge, no employee of any of the Company Entities is a party to any contract restricting such employee from performing his or her duties for any of the Company Entities. To the Company’s Knowledge, no employee of any of the Company Entities is in breach of any contract with any former employer concerning the Intellectual Property of such former employer due to such employee’s activities for any Company Entity.
(c) Section 3.10(c) of the Disclosure Schedule sets forth a true and complete list (including for any application or registration, the record owner, jurisdiction, registration and application numbers) of all material (i) patents and patent applications, (ii) registered trademarks and trademark applications, and (iii) registered copyrights and copyright applications included in the Company Intellectual Property. Section 3.10(c) of the Disclosure Schedule also sets forth a true and complete list (including the domain name, registrant, and expiration date) for each Company Website that is material to the Business. To the Company’s Knowledge, since March 7, 2007, no current or former partner, officer, director or employee of the Company Entities has any claim, right (whether or not currently exercisable) or interest to or in any Company Intellectual Property other than licenses to any such Company Intellectual Property purchased from the Company Entities in the ordinary course of business. To the Company’s Knowledge, since March 7, 2007, no Company Entity has assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, or granted exclusive licenses to (other than any exclusive licenses granted by any Company Entity in any agreement listed in the Disclosure Schedule), any Company Intellectual Property that is material to the Business as currently conducted to any other Person.
(d) A Company Entity is the owner of all right, title and interest (other than non-exclusive licenses granted by any Company Entity in the ordinary course, and any licenses granted by any Company Entity in any agreement listed in the Disclosure Schedule) in and to each item of Registered Company Intellectual Property that is listed in Section 3.10(c) of the Disclosure Schedule, free and clear of any Encumbrances other than Permitted Encumbrances, and, to the Company’s Knowledge, a Company Entity has a valid license to use the Licensed Intellectual Property that is material to the Business as conducted as of the date of this Agreement, subject only to the terms of the Company IP Agreements. The Company Intellectual Property and the Licensed Intellectual Property include all the material Intellectual Property used in the ordinary day-to-day conduct of the Business as presently conducted, except for any Intellectual Property owned by any third party (i) that any Company Entity is licensed to use pursuant to Shrink-Wrap Agreements, or (ii) for which a license to use such Intellectual Property is not required under applicable Law.
(e) To the Company’s Knowledge, each material item of the Registered Company Intellectual Property is valid and subsisting.
(f) On each website operated by any Company Entity that collects Personal Information from end users and that is material to the Business (each, a “
Company Website
”), the Company Entities have posted a privacy policy governing the collection of Personal Information by or on behalf of any Company Entity through such Company Website. To the Company’s Knowledge, each Company Entity has complied with each such privacy policy in all material respects and the Personal Information processed, collected, stored or disseminated by the Company Entities in connection with the Business does not violate any applicable Law in any material respect. To the Company’s Knowledge, each of the Company Entities has taken commercially reasonable steps in accordance with the standard industry practice to secure each Company Website and such Personal Information and, to the Company’s Knowledge, since January 1, 2011, no Person has claimed in writing that there has been material unauthorized access to any such Company Website.
(g) Since March 7, 2007, none of the Company Intellectual Property that is material to the Business as currently conducted was developed by, or using grants or any subsidies from any Governmental Authority or, to the Company’s Knowledge and excluding any interns, university, college or other educational institution or research center, that would cause the ownership of any such Company Intellectual Property rights to vest in the Governmental Authority, university, college, or other educational institution or research center.
(h) To the Company’s Knowledge, since March 7, 2007, the Company Entities are not subject to any agreement with any standards body or any similar entity that would obligate any of the Company Entities to grant licenses or rights to or otherwise impair its control, enforcement or use of any Company Intellectual Property.
(i) The representations and warranties contained in this Section 3.10 are the only representations and warranties being made by the Company in this Agreement with respect to any activity that constitutes, or otherwise relates to, infringement, misappropriation or other violation of Intellectual Property.
SECTION 3.11
Real Property
.
(a) Neither the Company nor any of its Subsidiaries owns any real property.
(b) Section 3.11(b) of the Disclosure Schedule lists the street address of each parcel of real property leased by any Company Entity as of the date of this Agreement (the “
Leased Real Property
”). Assuming good fee title vested in the applicable landlord, each Company Entity has a valid and binding leasehold interest in the Leased Real Property of which such Company Entity is the lessee, free and clear of all Encumbrances, except Permitted Encumbrances. Except as would not reasonably be expected to have a Material Adverse Effect on the Company, none of the Company Entities is in breach or default under any lease agreement for any Leased Real Property.
SECTION 3.12
Employee Benefit Plans
.
(a) Section 3.12(a) of the Disclosure Schedule sets forth a true and complete list of each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical, surgical, hospitalization, life insurance and other “
welfare” plan, fund or program (within the meaning of section 3(1) of ERISA); each profit-sharing, stock bonus or other “
pension” plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained, contributed to or required to be contributed to by the Company, whether written or oral, for the benefit of any Company Employee (each, a “
Company Benefit Plan
”) or any such plan sponsored or contributed to by any trade or business, whether or not incorporated (an “
ERISA Affiliate
”), that together with the Company would be deemed a “single employer” within the meaning of section 4001(b) of ERISA, or to which any Company Entity or an ERISA Affiliate is party, for the benefit of any Company Employee. Section 3.12(a) of the Disclosure Schedules identifies each Foreign Benefit Plan.
(b) With respect to each Company Benefit Plan, the Company has made available to the Purchaser: (i) an accurate and complete copy of (and, with respect to non-competition agreements, forms of) such Company Benefit Plan (including all amendments thereto); (ii) an accurate and complete copy of the annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code, with respect to such Company Benefit Plan for the three most recent plan years; (iii) if such Company Benefit Plan is subject to the minimum funding standards of ERISA Section 302, the most recent annual and periodic accounting of such Company Benefit Plan’s assets; (iv) an accurate and complete copy of the most recent summary plan description, together with each summary of material modifications, if required under ERISA, with respect to such Company Benefit Plan; (v) if such Company Benefit Plan is funded through a trust or any third party funding vehicle, an accurate and complete copy of the trust or other funding agreement (including all amendments thereto) and accurate and complete copies of the most recent financial statements thereof; (vi) accurate and complete copies of all contracts and agreements relating to such Company Benefit Plan, including service provider agreements, insurance contracts, minimum premium contracts, stop-loss agreements, investment management agreements, subscription and participation agreements and recordkeeping agreements; (vii) all material written materials provided to any Company Employee relating to such Company Benefit Plan and any proposed Company Benefit Plan, in each case relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which could result in any liability to any of the Company Entities; (viii) all material correspondence, if any, to or from any Governmental Authority relating to such Company Benefit Plan; (ix) if such Company Benefit Plan is intended to be qualified under Section 401(a) of the Code, all discrimination tests, if any, required under the Code for such Company Benefit Plan for the three most recent plan years and (x) if such Company Benefit Plan is intended to be qualified under Section 401(a) of the Code, the most recent determination letter (or opinion letter, if applicable) received from the Internal Revenue Service with respect to such Company Benefit Plan.
(c) No Company Benefit Plan or any employee benefit plan sponsored, maintained or contributed to by any ERISA Affiliate is (i) a “defined benefit plan” (as defined in Section 414 of the Code), (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer plan” (as defined in Section 4063 or 4064 of ERISA) (in each case under clause (i), (ii) or (iii) whether or not subject to ERISA) or (iv) subject to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA and, in each case no such plan is or has been sponsored, maintained, contributed to, or been required to be contributed to by a Company Entity or any ERISA Affiliate within the six (6) year period immediately prior to the date of this Agreement.
(d) All material contributions, premiums and expenses to or in respect of each Company Benefit Plan have been paid in full or, to the extent not yet due, have been adequately accrued on the Company Balance Sheet for the period ended June 30, 2011. Each Company Benefit Plan can be amended, terminated or otherwise discontinued with 60 days advance notice after the Closing in accordance with its terms, without material liability to any of the Company Entities (other than ordinary administration expenses). With respect to any self-funded health, medical or other welfare plan, the Company has accrued amounts sufficient to pay any unpaid claims except as would not result in material liability to the Company.
(e) No Company Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Company Entity for periods extending beyond their retirement or other termination of service, other than: (i) coverage mandated by applicable Law; (ii) death benefits under any “pension plan”; or (iii) benefits the full cost of which is borne by the current or former employee (or the employee’s beneficiary).
(f) Each of the Company Benefit Plans has been operated and administered in all material respects in accordance with its terms and with applicable Laws, including ERISA, the Code, applicable U.S. laws and regulations. The Company Entities have performed all material obligations required to be performed by them under the Company Benefit Plans, none of the Company Entities is in material default or violation of any material term of any Company Benefit Plan. To the Company’s Knowledge, there has been no material default or violation by any other party with respect to any material term of any Company Benefit Plan.
(g) Each Company Benefit Plan that is intended to comply with the provisions of Section 401(a) of the Code has been the subject of a determination letter from the Internal Revenue Service or an application therefor with respect to all material and applicable Tax Law changes to the effect that such Company Benefit Plan currently is qualified and exempt from income Taxes under Section 401(a) of the Code and the trust relating to such is exempt from income Taxes under Section 501(a) of the Code, and no such determination letter has been revoked or, to the Company’s Knowledge, threatened, and, to the Company’s Knowledge, no event has occurred since the date of the most recent determination letter or application therefor relating to any such Company Benefit Plan that is reasonably expected to affect the qualification of such Company Benefit Plan adversely.
(h) There are no material claims or Legal Proceedings pending, or to the Company’s Knowledge, threatened or reasonably anticipated (other than routine claims for benefits) against any Company Benefit Plan or against the assets of any Company Benefit Plan. To the Company’s Knowledge, no breach of fiduciary duty has occurred with respect to which any Company Entity or any of its fiduciaries could reasonably be expected to incur a material liability. No Company Benefit Plan is under audit or investigation, or is subject to any other Legal Proceeding commenced by the Internal Revenue Service, the DOL or any other Governmental Authority, nor is any such audit, investigation or other Legal Proceeding pending or, to the Company’s Knowledge, threatened. No “prohibited transaction,” within the meaning of Section 4975 of the Code has occurred with respect to any Company Benefit Plan.
(i) Neither the execution, delivery or performance of this Agreement, nor the consummation of the Purchase (either alone or in combination with another event, whether contingent or otherwise), will (i) result in any bonus, severance or other payment or obligation to any Company Employee (whether or not under any Company Benefit Plan); (ii) materially increase the benefits payable or provided to, or result in a forgiveness of any indebtedness of, any Company Employee; (iii) accelerate the vesting, funding or time of payment of any compensation, equity award or other similar benefit; (iv) result in any “parachute payment” under Section 280G of the Code (whether or not such payment is considered to be reasonable compensation for services rendered); or (v) result in any breach or violation of, or a default under, or trigger any other material obligation pursuant to, or increase the cost of, any Company Benefit Plan.
(j) With respect to each Foreign Benefit Plan:
(i) all employer and employee contributions to each Foreign Benefit Plan required by Law or by the terms of such Foreign Benefit Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices, except as would not reasonably be expected to be Material to the Company;
(ii) the fair market value of the assets of each funded Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan funded through insurance or the book reserve established for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the Closing, with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Benefit Plan and none of the transactions contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations, except as would reasonably be expected to be Material to the Company; and
(iii) each Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities.
SECTION 3.13
Labor and Employment Matters
.
(a) The Company has separately provided to the Purchaser a list which includes, with respect to each employee of each of the Company Entities (including any employee of any of the Company Entities who is on a leave of absence or on layoff status), as of July 1, 2011:
(i) the name of such employee, the Company Entity by which such employee is employed and the date as of which such employee was originally hired by such Company Entity;
(ii) such employee’s title;
(iii) such employee’s annualized compensation as of July 1, 2011; and
(iv) each Company Benefit Plan in which such employee participates or is eligible to participate.
(b) The Company has separately provided to the Purchaser a list that accurately identifies: (i) the number of employees from any of the Company Entities who are not fully available to perform work because they are on leave and the type of leave (e.g. one employee is on FMLA leave, two employees are on workers’ compensation leave, etc.) and (ii) the anticipated dates of return to full service for such employees. For the avoidance of doubt, the Company is not required to provide the names of the listed employees.
(c) The Company has separately provided to the Purchaser a list or copy of the relevant agreement that identifies each former employee of any of the Company Entities who is receiving or is scheduled to receive (or whose spouse or other dependant is receiving or is scheduled to receive) any benefits (whether from any of the Company Entities or otherwise) relating to such former employee’s employment with any Company Entities; and such list accurately and completely describes such benefits.
(d) None of the Company Entities is a party to, or bound by, any collective bargaining agreement or other contract or agreement with a labor organization, trade or labor union, employees’ association or similar organization representing any of its employees, nor is any such agreement presently being negotiated, nor is there any duty on the part of any Company Entity to bargain with any labor organization or representative, and there are no labor organizations representing, purporting to represent or, to the Company’s Knowledge, seeking to represent any employees of any of the Company Entities. Except as would not be materially adverse to the Company Entities, none of the Company Entities is or has in the past three years been engaged in any unfair labor practice of any nature. None of the Company Entities has had any strike, slowdown, work stoppage, boycott, picketing, lockout, job action, labor dispute or threat of any of the foregoing, or union organizing activity (of unrepresented employees) or question concerning representation, by or with respect to any of its employees.
(e) The employment of each of the Companies Entities’ employees is terminable by the applicable Company Entity at will, without payment of severance or other compensation or consideration unless specifically required by any Company Benefit Plan and as disclosed in Section 3.12(a) of the Disclosure Schedule. The Company has made available to the Purchaser accurate and complete copies of all: (i) current employee manuals and handbooks, (ii) current written policies, including but not limited to the ethics policies, and (iii) materials submitted to any Government Authority in response to a disclosure request; any of which relate to the employment of the current and former employees of each of the Company Entities.
(f) To the Company’s Knowledge, no group of key employees of any of the Company Entities has threatened or expressed any intention to terminate employment as a result of the transactions contemplated by this Agreement and each Transaction Document.
(g) Each of the Company Entities: (i) is, and at all times has been, in substantial compliance with all applicable Laws and with any order, ruling, decree, judgment or arbitration award of any arbitrator or any court or other Governmental Authority respecting employment, employment practices, terms and conditions of employment, wages, hours or other labor-related matters, including Laws, orders, rulings, decrees, judgments and awards relating to discrimination, wages and hours, labor relations, leave of absence requirements, occupational health and safety, privacy, harassment, retaliation, immigration, wrongful discharge or violation of the personal rights of employees, former employees or prospective employees; (ii) has withheld and reported all amounts required by any Law or contract to be withheld and reported with respect to wages, salaries and other payments to any Company Employee; (iii) has no liability for any arrears of wages or any Taxes or any penalty for failure to comply with any of the foregoing; and (iv) has no liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for any Company Employee (other than routine payments to be made in the normal course of business and consistent with past practices), in each case, except as would not result in material liability to any Company Entity. Since December 31, 2010, none of the Company Entities has effectuated a “mass layoff,” “plant closing,” partial “plant closing,” “relocation” or “termination” (each as defined in the Worker Adjustment and Retraining Notification Act (the “
WARN Act
”) or any similar Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any of the Company Entities.
(h) There is no material Legal Proceeding, claim, labor dispute, collective bargaining, or grievance pending, or to the Company’s Knowledge, threatened or reasonably anticipated, either by or against any Company Entity, relating to any employment contract, collective bargaining obligation or agreement, wages and hours, leave of absence, plant closing notification, employment statute or regulation, privacy right, labor dispute, workers’ compensation policy, long-term disability policy, safety, retaliation, immigration or discrimination matter involving any Company Employee, including charges of unfair labor practices or harassment complaints.
(i) The Company has separately provided the Purchaser with a list that includes, with respect to each Person who is or was, at any time since December 31, 2010, an independent contractor of any of the Company Entities and who has received or may be entitled to receive in excess of $100,000 from any of the Company Entities:
(i) the name of such independent contractor, the Company Entity with which such independent contractor is or was under contract and the date as of which such independent contractor was originally hired by such Company Entity;
(ii) a description of such independent contractor’s general objectives; and
(iii) the terms of compensation of such independent contractor.
(j) No current or former independent contractor of any of the Company Entities could reasonably be deemed to be a misclassified employee except as would not be reasonably expected to have a Material Adverse Effect on the Company.
SECTION 3.14
Taxes
.
(a) All material Tax Returns required to have been filed by or with respect to the Company Entities have been properly prepared and duly and timely filed (taking into account any extension of time to file granted or obtained) and are true, complete and correct in all material respects.
(b) All material Taxes payable by or with respect to the Company Entities have been paid or will be timely paid.
(c) No deficiency for any amount of Tax has been asserted or assessed by a Taxing Authority in writing against any Company Entity that has not been satisfied by payment, settled or withdrawn.
(d) There are no audits or investigations of any Tax Returns with respect to the Company Entities in progress, nor has any Company Entity received any written notice from any Governmental Authority that it intends to conduct any such audit or investigation.
(e) None of the Company Entities has current liability for the Taxes of another Person (other than another Company Entity) under any written Tax sharing or indemnification agreement (excluding Tax obligations arising under commercial contracts entered into in the ordinary course).
(f) There are no Tax liens on any assets of any Company Entity (other than Permitted Encumbrances).
(g) No Company Entity has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any material Tax (other than extensions of time to file Tax Returns obtained in the ordinary course).
(h) Any material Tax required to have been withheld or collected by the Company Entities has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority.
(i) The unpaid Taxes of the Company Entities do not exceed the reserve for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Financial Statements, and are not reasonably expected to exceed such reserve as adjusted for the passage of time through the Closing Date.
(j) None of the Company Entities 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 there) ending after the Closing Date as a result of any: (i) change in method of accounting for taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (iii) intercompany transactions or any excess loss account described in Treasury Regulations under section 1502 of the Code (or any corresponding or similar provisions of state, local or foreign income Tax law), (iv) installment sale or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount (other than prepaid amounts accruing in the ordinary course of business and accurately reflected on the Financial Statements.
(k) No Company Entity has distributed stock of another Person, or has had its stock distributed by another Person, 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 (i) in the two years prior to the date of this Agreement or (ii) which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.
(l) No claim has ever been made in writing by an authority in a jurisdiction where a Company Entity does not file Tax Returns that such Company Entity is or may be subject to taxation by that jurisdiction.
(m) None of the Company Entities (i) has been a member of an affiliated group of corporations filing a consolidated federal income Tax Return or (ii) has any liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of federal, state, local, or foreign law), or as a transferee or successor or by a contract.
(n) The Company Entities have delivered or made available to Purchaser accurate and complete copies of all material Tax returns of the Company Entities and all material audit reports and similar documents relating to such Tax Returns.
(o) Each Company Benefit Plan that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code or Section 457A of the Code has been operated and documented in all material respects in compliance with or pursuant to an exemption from Section 409A of the Code and Section 457A of the Code, as applicable, and the respective guidance and regulations thereunder.
SECTION 3.15
Material Contracts
.
(a) Section 3.15(a) of the Disclosure Schedule lists each of the following written contracts and agreements to which any Company Entity is a party in effect as of the date of this Agreement (such contracts and agreements being “
Material Contracts
”):
(i) any agreement for the purchase or license of products or for the receipt of services that provides for consideration or payments by any Company Entity in excess of $2,000,000 in the aggregate during the twelve month period ended June 30, 2011;
(ii) any agreement for the furnishing of products or services by any Company Entity to their customers, the performance of which will extend over a period of more than one year and which involved consideration or payments by such customers in excess of $500,000 in the aggregate during the twelve month period ended June 30, 2011;
(iii) any agreement concerning the establishment or operation of any partnership, limited liability company, joint venture or similar entity with any third party that is material to the Business, other than the Company Entities;
(iv) any agreement under which any Company Entity created, incurred, assumed or guaranteed any Indebtedness in excess of $250,000;
(v) any material agreement, other than purchase orders entered into in the ordinary course of business, which provides for any commitment to make any capital expenditures;
(vi) any agreement entered into in the past three years for the disposition of any significant portion of the assets or business of any Company Entity (other than sales of products in the ordinary course of business) or any agreement entered into in the past three years for the acquisition of the assets or business of any other Person (other than purchases of products in the ordinary course of business), in each case pursuant to which such Company Entity has continuing obligations (including indemnification obligations, earn-out payments and potential liability under any purchase price adjustments) involving consideration in excess of $50,000;
(vii) any material agreement that limits or purports to limit the ability of any Company Entity to compete (including any exclusive relationship) in any line of business or with any Person or in any geographic area or during any period of time;
(viii) any written employment agreement, severance agreement and other employee compensation or bonus arrangement that provides for annual compensation or severance benefits in excess of $100,000 (other than offer letters and those set forth on Section 3.12(a) of the Disclosure Schedule); and
(ix) all material contracts and agreements between or among any Company Entity, on the one hand, and any Affiliate of Seller (other than any Company Entity), on the other hand.
(b) Each Material Contract (i) as of the date of this Agreement, is valid and binding on the applicable Company Entity, and, to the Company’s Knowledge, the counterparties thereto (in each case, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law)), and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement, except to the extent that any consents set forth in Section 3.03(c) of the Disclosure Schedule are not obtained, shall continue in full force and effect without penalty or other adverse consequence, subject to the exercise by any counterparty thereto of any right to terminate any such Material Contract without cause in accordance with its terms. As of the date of this Agreement, none of the Company Entities is in material breach or material violation of, or material default under, any Material Contract to which it is a party. Without limiting the preceding sentence, Network Solutions, LLC is not in breach or violation of, or default under, the Registrar Accreditation Agreement dated June 22, 2009, with the Internet Corporation for Assigned Names and Numbers in such a manner as would have a Material Adverse Effect on the Company.
SECTION 3.16
Environmental Matters
. (a) None of the Company Entities is in material violation of any Environmental Law and all past violations, a description of which is set forth in Section 3.16(a) of the Disclosure Schedule, have been resolved without any ongoing or pending costs or obligations that are material to the Business, (b) the Company Entities have obtained and are in material compliance with all Environmental Permits that are material to the operations of the Company, taken as a whole, and any past non compliance, a description of which is set forth in Section 3.16(b) of the Disclosure Schedule, has been resolved without any ongoing or pending costs or obligations that are material to the Company Entities, taken as a whole, (c) there has been no Release of any Hazardous Materials on, beneath or adjacent to any Leased Real Property or any real property formerly owned or leased by any Company Entity that requires, or would reasonably be anticipated to require in the future, any Remedial Action pursuant to Environmental Law that is or that would reasonably be expected to be materially adverse to the operations of the Company Entities, taken as a whole, and (d) there is no written Action pending or, to the Company’s Knowledge, threatened in writing against any Company Entity that relates to any violation or alleged violation of, or any Liability or alleged Liability under, Environmental Law where such violation, alleged violation, Liability or alleged Liability would reasonably be expected to be materially adverse to the operations of the Company Entities, taken as a whole;
provided
, that for purposes of the foregoing clause (d) of this Section 3.16, any Action that has been initiated but with respect to which process or other comparable notice has not been served on or delivered to a Company Entity shall be deemed to be “threatened” rather than “pending.” The representations and warranties contained in this Section 3.16 are the only representations and warranties being made by the Company in this Agreement with respect to compliance with or Liability under Environmental Laws or Environmental Permits or with respect to any environmental, health or safety matter related in any way to this Agreement or its subject matter.
SECTION 3.17
Insurance
. Section 3.17 of the Disclosure Schedule sets forth a true and complete list of all insurance policies covering the Company Entities or the operation of the Business. Except as would not be material to the Company Entities, (a) no Company Entity is in default under any such policy, (b) all premiums due and payable for such policies have been timely paid in all material respects, (c) all claims made thereunder have been properly and timely filed, (d) no written notice of cancellation, termination or reduction of coverage has been received by any Company Entity with respect to any such policy, other than in connection with ordinary renewals, and (e) the types and amount of the coverage provided in such insurance policies are usual and customary in the context of the Business. Each such policy is in full force and effect and, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law), is the valid and binding obligation of the Company Entity named as the insured therein.
SECTION 3.18
Certain Business Relationships with Affiliates
.
(a) Neither Seller nor any Affiliate of Seller (other than a Company Entity) (i) owns any material property or right, tangible or intangible, which is used by the Company or related primarily to the Business, (ii) has any claim or cause of action against any Company Entity or (iii) owes any money to, or is owed any money by, any Company Entity. None of Seller or any manager, general partner, director or officer of Seller or General Atlantic has been a manager, general partner, director or officer (or Person in a similar position), or has had any ownership interest in, any Person which during such period was a party to a Material Contract with the Company or its Subsidiaries set forth on Section 3.15(a)(ii) of the Disclosure Schedule.
(b) Section 3.18(b) of the Disclosure Schedule sets forth any agreements or arrangements between Seller or any Affiliate of Seller (other than a Company Entity), on the one hand, and any Company Entity, on the other hand, which is currently in effect and which shall continue in effect after the Closing.
SECTION 3.19
Brokers
. Except for Goldman Sachs & Co. and Deutsche Bank Securities Inc., no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Transaction Document based upon arrangements made by or on behalf of Seller or the Company.
SECTION 3.20
Disclosure
. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Purchaser’s Registration Statements or any supplement prospectus will, at the time such Registration Statements or any supplement prospectus are filed with the SEC or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Proxy Statement will, at the time the Proxy Statement is mailed to the stockholders of Purchaser or at the time of the Purchaser Stockholder’s Meeting (or any adjournment or postponement thereof), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.
SECTION 3.21
Disclaimer of the Company
. (A) EXCEPT AS SET FORTH IN THIS ARTICLE III, NEITHER THE COMPANY NOR ITS AFFILIATES (OTHER THAN SELLER PURSUANT TO ARTICLE IV) OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AT LAW OR IN EQUITY, IN RESPECT OF THE COMPANY, THE BUSINESS, THE INTERESTS, THE SUBSIDIARY INTERESTS OR ANY OTHER ASSETS, LIABILITIES, OPERATIONS, BUSINESSES, PROSPECTS OR CONDITION (FINANCIAL OR OTHERWISE) OF THE COMPANY, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (II) THE OPERATION OF THE COMPANY OR THE BUSINESS BY THE PURCHASER AFTER THE CLOSING IN ANY MANNER OTHER THAN AS USED AND OPERATED BY SELLER OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE COMPANY OR THE BUSINESS AFTER THE CLOSING, AND NEITHER THE COMPANY NOR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAS ANY AUTHORITY, EXPRESS OR IMPLIED, TO MAKE ANY REPRESENTATIONS OR WARRANTY NOT EXPRESSLY SET FORTH IN THIS AGREEMENT AND SUBJECT TO THE LIMITED REMEDIES HEREIN PROVIDED, AND (B) OTHER THAN THE INDEMNIFICATION OBLIGATIONS OF SELLER SET FORTH IN ARTICLE X (SUBJECT IN ALL CASES TO SECTION 10.05), NO SUCH PERSON WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO THE PURCHASER OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO THE PURCHASER, ITS AFFILIATES OR REPRESENTATIVES OF, OR THE PURCHASER’S USE OF, ANY INFORMATION RELATING TO THE COMPANY OR THE BUSINESS, INCLUDING ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO THE PURCHASER, WHETHER ORALLY OR IN WRITING, IN CERTAIN “DATA ROOMS,” MANAGEMENT PRESENTATIONS, FUNCTIONAL “BREAK-OUT” DISCUSSIONS, CONFIDENTIAL INFORMATION MEMORANDA, RESPONSES TO QUESTIONS SUBMITTED ON BEHALF OF THE PURCHASER OR IN ANY OTHER FORM IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
RELATING TO SELLER
Subject to such exceptions as are disclosed in writing in the Disclosure Schedule, Seller hereby represents and warrants to the Purchaser, as follows:
SECTION 4.01
Organization, Authority and Qualification of Seller
.
(a) Seller is a legal entity duly organized, validly existing and (where applicable) in good standing under the Laws of the jurisdiction of its organization and has all necessary limited liability company power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. Seller is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not have a material adverse effect on Seller’s ability to consummate the transactions contemplated by this Agreement or the Transaction Documents to which Seller is a party.
(b) The execution and delivery by Seller of this Agreement, the performance by Seller of its obligations hereunder and the consummation by Seller of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of Seller. This Agreement has been, and upon their execution each of the Transaction Documents to which Seller is a party shall have been, duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by the other parties hereto) this Agreement constitutes, and upon their execution (assuming due authorization, execution and delivery by the other parties hereto) each of the Transaction Documents to which Seller is a party shall constitute legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).
SECTION 4.02
Capitalization; Ownership of Interests
.
(a) All of the Company Member Interests are owned of record or beneficially, directly or indirectly, by Seller.
(b) Upon the transfer of the Company Member Interests held by Seller to the Purchaser on the Closing Date in accordance with this Agreement, Seller will deliver to the Purchaser good and valid title to such Company Member Interests, free and clear of all Encumbrances other than restrictions imposed by applicable securities Laws.
SECTION 4.03
No Conflict
. Assuming compliance with the pre-merger notification and waiting period requirements of the HSR Act and the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 4.04, and except as may result from any facts or circumstances relating solely to the Purchaser or its Affiliates and assuming the accuracy of the representations and warranties of the Purchaser set forth in Section 5.03, the execution, delivery and performance of this Agreement by Seller, does not and will not (a) violate, conflict with or result in the breach of the certificate of incorporation or bylaws (or similar organizational documents) of Seller or (b) conflict in any material respect with or violate in any material respect any material Law or material Governmental Order applicable to Seller.
SECTION 4.04
Governmental Consents and Approvals
. Assuming the accuracy of the representations and warranties of the Purchaser set forth in Section 5.04, the execution, delivery and performance of this Agreement by Seller, does not and will not require any consent, approval, authorization or other order of, action by, filing with, notification to, any Governmental Authority, other than (a) compliance with, and filings required under, the HSR Act, (b) any additional consents, approvals, authorizations, filings and notifications under any other applicable antitrust, competition, or trade regulation Law, (c) the filing with the SEC of the Proxy Statement and (if the Purchaser exercises its Cash Consideration Election) the Form S-3 Registration Statement, and any other filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Exchange Act, (d) compliance with the rules and regulations of NASDAQ Global Market and (e) any filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under state securities Laws or “blue sky” Laws, except (i) where the failure to obtain any such consent, approval, authorization or action, or to make any such filing or notification, would not have a material adverse effect on Seller’s ability to consummate the transactions contemplated by this Agreement or the Transaction Documents or (ii) as may be necessary as a result of any facts or circumstances relating solely to the Purchaser or any of its Affiliates.
SECTION 4.05
Disclaimer of Seller
. (A) EXCEPT AS SET FORTH IN THIS ARTICLE IV, NEITHER SELLER NOR ANY OF ITS AFFILIATES (OTHER THAN THE COMPANY PURSUANT TO ARTICLE III) OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AT LAW OR IN EQUITY, IN RESPECT OF SELLER, THE COMPANY, THE BUSINESS, THE INTERESTS, ANY SUBSIDIARY INTERESTS OR ANY OTHER ASSETS, LIABILITIES, OPERATIONS, BUSINESSES, PROSPECTS OR CONDITION (FINANCIAL OR OTHERWISE) OF SELLER OR THE COMPANY, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (II) THE OPERATION OF THE COMPANY OR THE BUSINESS BY THE PURCHASER AFTER THE CLOSING IN ANY MANNER OTHER THAN AS USED AND OPERATED BY SELLER OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE COMPANY OR THE BUSINESS AFTER THE CLOSING, AND NONE OF SELLER, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAS ANY AUTHORITY, EXPRESS OR IMPLIED, TO MAKE ANY REPRESENTATION OR WARRANTY NOT EXPRESSLY SET FORTH IN THIS AGREEMENT AND SUBJECT TO THE LIMITED REMEDIES HEREIN PROVIDED AND (B) OTHER THAN THE INDEMNIFICATION OBLIGATIONS OF SELLER SET FORTH IN ARTICLE X (SUBJECT IN ALL CASES TO SECTION 10.05), NO SUCH PERSON WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO THE PURCHASER OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO THE PURCHASER, ITS AFFILIATES OR REPRESENTATIVES OF, OR THE PURCHASER’S USE OF, ANY INFORMATION RELATING TO SELLER, THE COMPANY OR THE BUSINESS, INCLUDING ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO THE PURCHASER, WHETHER ORALLY OR IN WRITING, IN CERTAIN “DATA ROOMS,” MANAGEMENT PRESENTATIONS, FUNCTIONAL “BREAK-OUT” DISCUSSIONS, CONFIDENTIAL INFORMATION MEMORANDA, RESPONSES TO QUESTIONS SUBMITTED ON BEHALF OF THE PURCHASER OR IN ANY OTHER FORM IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
Subject to such exceptions as are disclosed in writing in the Purchaser Disclosure Schedule, the Purchaser hereby represents and warrants to the Company and Seller as follows:
SECTION 5.01
Organization, Authority and Qualification of the Purchaser
.
(a) The Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and the Purchaser has all necessary corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. The Purchaser is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect on Purchaser.
(b) The execution and delivery by the Purchaser of this Agreement and each Transaction Document to which the Purchaser is a party, the performance by the Purchaser of its obligations hereunder and thereunder, and the consummation by the Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Purchaser, and the Purchaser Board at a meeting duly called and held has (i) approved and declared advisable this Agreement, the Purchase, the issuance and sale of the Closing Shares Payment to the Seller and the other transactions contemplated hereby, including for purposes of Section 203 of the Delaware General Corporation Law, (ii) declared that it is in the best interests of the Purchaser’s stockholders that the Purchaser enter into this Agreement and consummate the transactions contemplated hereby, (iii) directed that the approval of the Purchaser Proposal be submitted to a vote at a meeting of the stockholders of the Purchaser and (iv) recommended to the stockholders of the Purchaser that they approve the Purchaser Proposal (clauses (i) through (iv), collectively, the “
Board Transaction Resolutions
”). The Purchaser has all necessary corporate power and authority to enter into this Agreement and each Transaction Document to which the Purchaser is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and upon their execution each of the Transaction Documents to which the Purchaser is a party shall have been, duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and upon their execution (assuming due authorization, execution and delivery by the other parties thereto) each of the Transaction Documents to which the Purchaser is a party shall constitute, legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).
SECTION 5.02
Subsidiaries; Capitalization
.
(a) Each Subsidiary of the Purchaser is a legal entity duly organized, validly existing and (where applicable) in good standing under the Laws of the jurisdiction of its organization. Each Subsidiary of the Purchaser is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect on the Purchaser.
(b) Section 5.02(b) of the Purchaser Disclosure Schedule sets forth a true and complete list of all of the Subsidiaries of the Purchaser, listing for each Subsidiary of Purchaser its name, type of entity, the jurisdiction and date of its incorporation or organization, its authorized capital stock, partnership capital or equivalent, the number and type of its Subsidiary Interests and the current ownership of such Subsidiary Interests. All of the Subsidiary Interests of the Purchaser (i) are owned of record or beneficially, directly or indirectly, by the Purchaser as set forth in Section 5.02(b) of the Purchaser Disclosure Schedule and (ii) have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights. There are no options, warrants, convertible or exchangeable securities, subscriptions, stock appreciation rights, phantom stock rights or stock equivalents, pre-emptive rights, rights of first refusal or other similar rights, agreements, arrangements or commitments relating to the Subsidiary Interests of the Purchaser or obligating the Purchaser or any Subsidiary of the Purchaser to issue or sell any shares of capital stock of, or any other ownership or voting interest in, the Purchaser or any of its Subsidiaries, or that give any Person the right to receive any economic benefit or right based on or derived from the economic benefits and rights accruing to holders of capital stock of, or other equity or voting interests in, Purchaser or any of its Subsidiaries.
(c) Other than the Subsidiaries of the Purchaser, there are no other corporations, partnerships, joint ventures, associations or other entities in which the Purchaser or any of its Subsidiaries owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the same, or through which any part of the Purchaser Business is conducted.
(d) The Purchaser’s authorized capital stock consists solely of (i) 150,000,000 shares of Purchaser Common Stock and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share (the “
Purchaser Preferred Stock
”). As of July 25, 2011, (A) 29,246,886 shares of Purchaser Common Stock were issued and outstanding, (B) 0 shares of Purchaser Common Stock were held in treasury by the Purchaser or any of its Subsidiaries, (C) 18,134,672 shares of Purchaser Common Stock were reserved for issuance upon the exercise of any outstanding options to acquire shares of Purchaser Common Stock under the Purchaser Option Plans (each, a “
Purchaser Option
”), (D) 4,722,501 shares of Purchaser Common Stock were available for future grants of Purchaser Options or Purchaser Common Stock granted under the Purchaser Stock Plans (each, a “
Purchaser Stock Award
”) and (E) no shares of Purchaser Preferred Stock were issued and outstanding. As of July 25, 2011, Purchaser Options to purchase 6,362,070 shares of Purchaser Common Stock granted under the Purchaser Option Plans were outstanding (of which, 2,438,629 were unvested) and Purchaser Stock Awards covering 1,622,850 shares of Purchaser Common Stock granted under the Purchaser Stock Plans were outstanding (of which, 1,562,850 were unvested). Except as set forth above, as of July 25, 2011, there are no options, warrants, convertible or exchangeable securities, subscriptions, stock appreciation rights, phantom stock rights or stock equivalents, preemptive rights, rights of first refusal or other similar rights, agreements, arrangements or commitments relating to the Purchaser or obligating the Purchaser to issue or sell any shares of capital stock of, or any other ownership or voting interest in, the Purchaser, or that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights accruing to holders of capital stock of, or other equity or voting interests in, the Purchaser. All outstanding shares of capital stock of the Purchaser have been, and, upon issuance, the Closing Shares Payment and the Cash Consideration Election Shares (if any) will be, duly authorized and validly issued and are, or upon issuance will be, fully paid and non-assessable and were not issued, or will not be issued, in violation of any preemptive rights. The offer and sale of the Purchaser Common Stock to Seller pursuant to this Agreement shall be qualified or exempt from the registration requirements of the Securities Act, the qualification requirements of the California Corporate Securities Law of 1968, as amended and the registration and/or qualification requirements of all other applicable state securities Laws.
SECTION 5.03
No Conflict
. Assuming compliance with the pre-merger notification and waiting period requirements of the HSR Act and the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 5.04, the execution, delivery and performance by the Purchaser of this Agreement and each Transaction Document to which the Purchaser is a party does not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws (or similar organizational documents) of the Purchaser or any of its Subsidiaries, (b) conflict in any material respect with or violate in any material respect any material Law or material Governmental Order applicable to the Purchaser, any of its Subsidiaries or their respective assets, properties or the Purchaser Business or (c) conflict in any material respect with, result in any material breach of, constitute a material default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchaser or any of its Subsidiaries is a party.
SECTION 5.04
Governmental Consents and Approvals
. The execution, delivery and performance by the Purchaser of this Agreement and each Transaction Document to which the Purchaser is a party does not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, other than (a) compliance with, and filings required under, the HSR Act, (b) any additional consents, approvals, authorizations, filings and notifications under any other applicable antitrust, competition, or trade regulation Law, (c) the filing with the SEC of the Proxy Statement and (if the Purchaser exercises its Cash Consideration Election) the Form S-3 Registration Statement, and any other filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Exchange Act, (d) compliance with the rules and regulations of NASDAQ Global Market and (e) any filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under state securities Laws or “blue sky” Laws, except where the failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not have a Material Adverse Effect on Purchaser.
SECTION 5.05
SEC Filings; Financial Statements
.
(a) Purchaser has made available (or made available on the SEC website) to the Company accurate and complete copies of all registration statements, proxy statements, Purchaser Certifications (as defined below) and other statements, reports, schedules, forms, exhibits and other documents required to be filed by Purchaser with the SEC, including all amendments thereto since January 1, 2008 (collectively, the “
Purchaser SEC Documents
”). All statements, reports, schedules, forms, exhibits and other documents required to have been filed by Purchaser or its officers with the SEC since January 1, 2008 have been so filed on a timely basis. None of the Purchaser’s Subsidiaries is required to file any documents with the SEC. As of the time filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) each of the Purchaser SEC Documents complied, in all material respects with the applicable requirements of the Securities Act, the Exchange Act (as the case may be); and (ii) none of the Purchaser SEC Documents contained, any untrue statement of a material fact or omitted, or will omit, to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the certifications and statements relating to the Purchaser SEC Documents required by: (A) Rule 13a-14 or Rule 15d-14 under the Exchange Act; (B) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act); or (C) any other rule or regulation promulgated by the SEC or applicable to the Purchaser SEC Documents (collectively, the “
Purchaser Certifications
”) is accurate and complete, and complies as to form and content with all applicable Laws. As used in this Section 5.05, the term “file” and variations thereof shall be broadly construed to include any manner in which a document or information is filed, furnished, submitted, supplied or otherwise made available to the SEC or any member of its staff in accordance with the applicable requirements of the Securities Act or the Exchange Act (as the case may be). As of the date hereof, there are no outstanding or unresolved comments in comment letters from the SEC staff with respect to any of the Purchaser SEC Reports. To the Purchaser’s Knowledge, none of the Purchaser SEC Reports is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC investigation.
(b) Purchaser maintains, and at all times since January 1, 2008 has maintained, disclosure controls and procedures as required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that all material information concerning Purchaser or its Subsidiaries required to be disclosed by Purchaser in the reports that it is required to file, submit or furnish under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Purchaser has delivered or made available to the Company accurate and complete copies of all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures. Purchaser is, and has been at all times since January 1, 2008, in compliance in all material respects with the applicable listing requirements and corporate governance rules and regulations of the NASDAQ Global Market, and has not since January 1, 2008 received any notice asserting any non-compliance with the listing requirements of the NASDAQ Global Market.
(c) The financial statements (including any related notes) contained or incorporated by reference in the Purchaser SEC Documents: (i) complied as to form in all material respects with accounting requirements and the rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements or, in the case of unaudited financial statements, as permitted by Form 10-Q, Form 8-K or any successor form under the Exchange Act, and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments, none of which were or will be material); and (iii) fairly present, in all material respects, the consolidated financial position of Purchaser and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of Purchaser and its consolidated Subsidiaries for the periods covered thereby.
(d) Purchaser’s auditor has at all times since the date of enactment of the Sarbanes-Oxley Act been: (i) a registered public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act); (ii) “independent” with respect to Purchaser within the meaning of Regulation S-X under the Exchange Act; and (iii) to the Purchaser’s Knowledge, in compliance with subsections (g) through (l) of Section 10A of the Exchange Act and the rules and regulations promulgated by the SEC and the Public Company Accounting Oversight Board thereunder. All non-audit services performed by Purchaser’s auditors for Purchaser that were required to be approved in accordance with Section 202 of the Sarbanes-Oxley Act were so approved.
(e) Purchaser maintains, and at all times since January 1, 2008 has maintained, a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Purchaser and its Subsidiaries; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of Purchaser and its Subsidiaries; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Purchaser and its Subsidiaries that could have a material effect on the financial statements. Purchaser has delivered or made available to the Company accurate and complete copies of all written descriptions of, and all policies, manuals and other documents promulgating, such internal accounting controls. Purchaser’s management has completed an assessment of the effectiveness of the Purchaser’s system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal years ended December 31, 2009 and December 31, 2010, and, except as set forth in the Purchaser SEC Documents filed prior to the date of this Agreement, such assessment concluded that such controls were effective and Purchaser’s independent registered accountant has issued (and not subsequently withdrawn or qualified) an attestation report concluding that Purchaser maintained effective internal control over financial reporting as of December 31, 2009 and December 31, 2010, respectively. To the Purchaser’s Knowledge, except as set forth in the Purchaser SEC Documents filed prior to the date of this Agreement, since January 1, 2008, neither Purchaser nor any of its Subsidiaries nor Purchaser’s independent registered accountant has identified or been made aware of: (A) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by Purchaser; (B) any illegal act or fraud, whether or not material, that involves Purchaser’s management or other employees; or (C) any claim or allegation regarding any of the foregoing.
SECTION 5.06
Investment Purpose
. The Purchaser is acquiring the Company Member Interests solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof other than in compliance with all applicable Laws, including United States federal securities Laws. The Purchaser agrees that the Company Member Interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and any applicable state securities Laws, except pursuant to an exemption from such registration under the Securities Act and such Laws. The Purchaser is able to bear the economic risk of holding the Company Member Interests for an indefinite period (including total loss of its investment), and (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.
SECTION 5.07
Financing
.
(a) The Purchaser will have, at the Closing, sufficient cash, available lines of credit or other sources of immediately available funds to enable it to pay, in cash, the aggregate Purchase Price and all other amounts payable pursuant to this Agreement and the Transaction Documents or otherwise necessary to consummate all the transactions contemplated hereby and thereby.
(b) The Purchaser has delivered to the Company a true and complete copy of each of (i) the executed commitment letter from JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas, Goldman Sachs Lending Partners LLC, SunTrust Bank and SunTrust Robinson Humphrey Inc. (together, the “
Lenders
”), together with all exhibits, schedules and annexes thereto (the “
Financing Commitment Letter
”) and (ii) the executed fee letters associated with the Financing Commitment Letter (the “
Fee Letter
”), pursuant to which the Lenders have committed to provide the Purchaser with debt financing in an aggregate principal amount of $800,000,000 (the “
New Financing
”). The Financing Commitment Letter, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of the Purchaser and, to the Purchaser’s Knowledge, the other parties thereto as of the date hereof. As of the date of this Agreement, neither the Financing Commitment Letter nor the Fee Letter has been withdrawn, rescinded or terminated or otherwise amended or modified in any respect, and no such withdrawal, rescission, termination, amendment or modification is contemplated. As of the date hereof, subject to the accuracy of the representations and warranties of the Company set forth in Article III, the Purchaser is not in breach of any of the terms or conditions set forth in the Financing Commitment Letter, and no event has occurred which, with or without notice, lapse of time or both, would reasonably be expected to constitute a default or breach on the part of the Purchaser under the Financing Commitment Letter or failure to satisfy any condition precedent applicable to the Purchaser contained therein. As of the date hereof, the Purchaser has no Knowledge that any of the conditions to the Financing Commitment Letter will not be satisfied or that the New Financing will not be available to the Purchaser on the Closing Date;
provided
, that the Purchaser is not making any representation regarding the accuracy of the representations and warranties set forth in Article III, or compliance by the Company with its obligations under this Agreement. As of the date of this Agreement, no Lender has notified the Purchaser of its intention to terminate the Financing Commitment Letter or not to provide the New Financing. The Purchaser has fully paid any and all commitment fees or other fees required by the Financing Commitment Letter to be paid on or before the date of this Agreement. The New Financing, if and when funded in accordance with the Financing Commitment Letter, will provide the Purchaser with financing that, together with any funds (including cash on hand of the Purchaser and its Subsidiaries) otherwise available to the Purchaser, will be sufficient to consummate the transactions contemplated by this Agreement and each Transaction Document upon the terms contemplated hereby and thereby, together with any fees and expenses of or payable by the Purchaser on the Closing Date with respect thereto and with respect to the New Financing.
(c) There are no side letters, understandings or other agreements or arrangements relating to the New Financing to which the Purchaser of any of its Affiliates is a party other than (x) as expressly set forth in the Financing Commitment Letter and delivered to the Seller prior to the date of this Agreement and (y) the Fee Letter. There are no conditions precedent or other contingencies related to the funding of the full amount of the New Financing or the conditions precedent thereto under any agreement relating to the New Financing to which the Purchaser or any of its Affiliates is a party, other than as set forth in the Financing Commitment Letter and the Fee Letter that do not impact the conditionality of the New Financing (the “
Disclosed Conditions
”). No Person has any right to impose, and none of the Purchaser or any Lender has any obligation to accept, any condition precedent to such funding other than the Disclosed Conditions nor any reduction to the aggregate amount available under the Financing Commitment Letter on the Closing Date (nor any term or condition which would have the effect of reducing the aggregate amount available under the Financing Commitment Letter on the Closing Date). As of the date of this Agreement, the Purchaser does not believe that it will be unable to satisfy on a timely basis any conditions to the funding of the full amount of the New Financing, or that the New Financing will not be available to the Purchaser on the Closing Date. For the avoidance of doubt, the Purchaser’s obligations under this Agreement are not subject to any conditions regarding its or any other Person’s ability to obtain financing for the consummation of any transaction contemplated by this Agreement and each Transaction Document.
SECTION 5.08
Absence of Changes
. Since March 31, 2011 to the date of this Agreement:
(a) there has not occurred any Material Adverse Effect on Purchaser and no event has occurred or circumstance arisen that would reasonably be expected to have a Material Adverse Effect on Purchaser;
(b) Purchaser and its Subsidiaries have conducted the Purchaser Business in the ordinary course of business;
(c) neither Purchaser nor any of its Subsidiaries has declared, accrued, set aside or paid any dividend or made any other distribution in respect of any equity interest, other than dividends or distributions from wholly-owned Subsidiaries of Purchaser or any of its Subsidiaries;
(d) neither Purchaser nor any of its Subsidiaries has issued or sold, or authorized the issuance or sale of, any equity interests, phantom equity interests, convertible notes, convertible bonds or other securities convertible into equity interests of the Purchaser or any of its Subsidiaries (or any option, warrant or other right to acquire the same) or repurchased, redeemed or otherwise reacquired any equity interest of the Purchaser or any of its Subsidiaries (in each case, other than pursuant to the vesting or repurchase of any equity-based award pursuant to a Purchaser Benefit Plan in effect as of the date hereof or in connection with new arrangements entered into with new employees hired following the date hereof permitted under clause (j) below);
(e) there has been no amendment or restatement of the certificate of incorporation or bylaws (or similar organizational documents) of Purchaser or any of its Subsidiaries;
(f) neither the Purchaser nor any of its Subsidiaries has effected or been a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(g) neither Purchaser nor any of its Subsidiaries has formed any Subsidiary or acquired (by merger or stock or asset purchase or otherwise) any interest in any corporation, partnership or other business organization or any business or division thereof that is material to the Purchaser and its Subsidiaries, taken as a whole;
(h) neither Purchaser nor any of its Subsidiaries has made any capital expenditure which, together with all other capital expenditures made on behalf of the Purchaser or any of its Subsidiaries between March 31, 2011 and the date of this Agreement, exceeds $500,000 on an aggregate basis;
(i) other than in connection with the Financing, neither Purchaser nor any of its Subsidiaries has incurred, created, assumed or otherwise become liable for any Indebtedness, except for any accrual of unpaid interest on any Indebtedness or any Indebtedness that will be repaid or cancelled prior to the open of business on the Closing Date;
(j) neither Purchaser nor any of its Subsidiaries has (i) materially increased any salaries, wages, commissions, bonuses or other compensation or benefits payable by the Purchaser or any of its Subsidiaries to any Purchaser Employee with an annual base salary, or annualized compensation in excess of $100,000 or to all Purchaser Employees collectively that resulted in an increase of more than $500,000 in the aggregate on an annualized basis, or (ii) created, entered into, adopted, established, amended, modified or terminated, or promise or agreed to create, enter into, adopt, establish, amend, modify or terminate, any bonus, deferred compensation, unit appreciation (or similar Interest-based award program), profit-sharing, incentive, retention or severance benefit plan, program, arrangement, contract or other agreement, or other plan, program, arrangement, contract or other agreement providing for employee benefits or remuneration of any kind, in each case, whether written, unwritten or otherwise, funded or unfunded, including each Purchaser Benefit Plan, in each case other than in the ordinary course of business of Purchaser or any of its Subsidiaries or the Purchaser Business or as required by Law, or (iii) committed to (x) establishing or entering into any new plans, programs or arrangements that would be a Purchaser Benefit Plan if in existence on the date hereof, or (y) modifying any Purchaser Benefit Plan (except to conform any such Purchaser Benefit Plan to the requirements of any applicable Laws as previously disclosed to the Company in writing or which would not result in material liability);
(k) neither Purchaser nor any of its Subsidiaries has changed any of its methods of accounting, accounting practices or policies in any material respect, other than such changes as required by GAAP or a Governmental Authority;
(l) neither Purchaser nor any of its Subsidiaries has made any material Tax election;
(m) neither Purchaser nor any of its Subsidiaries has commenced or settled any Action, other than in connection with routine customer collections matters or other escalated disputes, in each case individually not in excess of $100,000 or in the aggregate not in excess of $200,000; and
(n) none of the Purchaser nor any of its Subsidiaries has agreed to take any of the actions specified in Sections 5.08(c) – (m).
SECTION 5.09
Absence of Undisclosed Material Liabilities
. Except as reflected or reserved against in the financial statements contained or incorporated by reference in the Purchaser SEC Documents or disclosed in the notes thereto, as of the date of this Agreement, there are no Liabilities of, relating to or affecting Purchaser, any of its Subsidiaries or any of their respective assets and properties of a nature required to be reserved against or reflected on a balance sheet prepared in accordance with GAAP, other than Liabilities (a) set forth in the Purchaser Disclosure Schedule, (b) incurred in the ordinary course of business since the March 31, 2011 or in accordance with or as permitted by the provisions of this Agreement, or (c) which would not, individually or in the aggregate, be materially adverse to the Purchaser and its Subsidiaries or the Purchaser Business, taken as a whole.
SECTION 5.10
Litigation
. No material Action by or against the Purchaser or any of its Subsidiaries is pending or, to the Purchaser’s Knowledge, threatened, which would be material to the Purchaser and its Subsidiaries, taken as a whole, or could affect the legality, validity or enforceability of this Agreement or any Transaction Document or the consummation of the transactions contemplated hereby or thereby.
SECTION 5.11
Compliance with Laws
. Purchaser and its Subsidiaries have each conducted the Purchaser Business in all material respects since January 1, 2010 and as of the date hereof conduct the Purchaser Business in all material respects in accordance with all material Laws and material Governmental Orders to which they are subject and neither Purchaser nor any of its Subsidiaries is in violation in any material respect of any such Law or Governmental Order.
SECTION 5.12
Intellectual Property
.
(a) To the Purchaser’s Knowledge, the use of the Purchaser Intellectual Property and the Purchaser Licensed Intellectual Property by the Purchaser and its Subsidiaries in the operation of the Purchaser Business as currently conducted does not infringe or misappropriate any valid, enforceable and unexpired Intellectual Property of any other Person in any material respect and, as of the date of this Agreement, there is no Action initiated by any other Person pending or, to the Purchaser’s Knowledge, any claims threatened in writing against the Purchaser or any of its Subsidiaries concerning the foregoing. To the Purchaser’s Knowledge, no Person is engaging in any activity that infringes or misappropriates any Purchaser Intellectual Property in any material respect.
(b) To the Purchaser’s Knowledge, the Purchaser and its Subsidiaries have taken reasonable and customary steps to protect their rights in confidential information and trade secrets, and to protect confidential information provided to them in reasonable and substantial material conformity with the non-disclosure or confidentiality obligations under which such confidential information was provided to them. The Purchaser and its Subsidiaries have used reasonable efforts to obtain from all employees, consultants and contractors of the Purchaser and its Subsidiaries Intellectual Property assignments for the benefit of the Purchaser. To the Purchaser’s Knowledge, no employee of the Purchaser or any of its Subsidiaries is a party to any contract restricting such employee from performing his or her duties for the Purchaser or any of its Subsidiaries. To the Purchaser’s Knowledge, no employee of Purchaser or any of its Subsidiaries is in breach of any contract with any former employer concerning the Intellectual Property of such former employer due to such employee’s activities for any Company Entity.
(c) Section 5.12(c) of the Purchaser Disclosure Schedule sets forth a true and complete list (including for any application or registration, the record owner, jurisdiction, registration and application numbers) of all material (i) patents and patent applications, (ii) registered trademarks and trademark applications, and (iii) registered copyrights and copyright applications included in the Purchaser Intellectual Property. Section 5.12(c) of the Purchaser Disclosure Schedule also sets forth a true and complete list (including the domain name, registration and expiration date) for each Purchaser Website that is material to the Purchaser Business. To the Purchaser’s Knowledge, no current or former partner, officer, director or employee of the Purchaser or any of its Subsidiaries has any claim, right (whether or not currently exercisable) or interest to or in any Purchaser Intellectual Property other than licenses to any such Purchaser Intellectual Property purchased from the Purchaser or any of its Subsidiaries in the ordinary course of business. To the Purchaser’s Knowledge, since March 7, 2007, none of Purchaser or its Subsidiaries has assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, or granted exclusive licenses to (other than any exclusive licenses granted by Purchaser or any of its Subsidiaries in any agreement listed in the Purchaser Disclosure Schedule), any Purchaser Intellectual Property that is material to the Purchaser Business as currently conducted to any other Person.
(d) Either the Purchaser or one of its Subsidiaries is the owner of all right, title and interest (other than non-exclusive licenses granted by the Purchaser or its Subsidiaries in the ordinary course, and any licenses granted by the Purchaser or any of its Subsidairies in any agreement listed in the Disclosure Schedule) in and to each item of Registered Purchaser Intellectual Property that is listed in Section 5.12(c) of the Purchaser Disclosure Schedule, free and clear of any Encumbrances other than Permitted Encumbrances, and, to the Purchaser’s Knowledge, either the Purchaser or one of its Subsidiaries has a valid license to use the Purchaser Licensed Intellectual Property that is material to the Purchaser Business as conducted as of the date of this Agreement, subject only to the terms of the Purchaser IP Agreements. The Purchaser Intellectual Property and the Purchaser Licensed Intellectual Property include all material Intellectual Property used in the ordinary day-to-day conduct of the Purchaser Business as presently conducted, except for any Intellectual Property owned by any third party (i) that the Purchaser or any of its Subsidiaries is licensed to use pursuant to Shrink-Wrap Agreements, or (ii) for which a license to use such Intellectual Property is not required under applicable Law.
(e) To the Purchaser’s Knowledge, each material item of the Registered Purchaser Intellectual Property is valid and subsisting.
(f) On each website operated by the Purchaser or its Subsidiaries that collects Personal Information from end users and that is material to the Purchaser Business (each, a “
Purchaser Website
”), the Purchaser (or such Subsidiary) has posted a privacy policy governing the collection of Personal Information by or on behalf of the Purchaser or its Subsidiaries through such
Purchaser Website. To the Purchaser’s Knowledge, the Purchaser and each of its Subsidiaries has complied with each such privacy policy in all material respects and the Personal Information processed, collected, stored or disseminated by the Purchaser and its Subsidiaries in connection with the Purchaser Business does not violate any applicable Law in any material respect. To the Purchaser’s Knowledge, each of the Purchaser and its Subsidiaries has taken commercially reasonable steps in accordance with standard industry practice to secure each Purchaser Website and such Personal Information and, to the Purchaser’s Knowledge, since January 1, 2011, no Person has claimed in writing that there has been material unauthorized access to any such Company Website.
(g) Since March 7, 2007, none of the Purchaser Intellectual Property that is material to the Purchaser Business as currently conducted was developed by, or using grants or any subsidies from, any Governmental Authority or, to the Purchaser’s Knowledge and excluding any interns, university, college or other educational institution or research center, that would cause the ownership of any such Purchaser Intellectual Property rights to vest in the Governmental Authority, university, college, or other educational institution or research center.
(h) To the Purchaser’s Knowledge, since March 1, 2007, the Purchaser and its Subsidiaries are not subject to any agreement with any standards body or other similar entity that would obligate the Purchaser or any of its Subsidiaries to grant licenses or rights to or otherwise impair its control, enforcement or use of any Purchaser Intellectual Property.
(i) The representations and warranties contained in this Section 5.12 are the only representations and warranties being made by the Purchaser in this Agreement with respect to any activity that constitutes, or otherwise relates to, infringement, misappropriation or other violation of Intellectual Property.
SECTION 5.13
Real Property
.
(a) Section 5.13(a) of the Purchaser Disclosure Schedule lists each parcel of real property owned by the Purchaser or any of its Subsidiaries (together with the buildings and other improvements located thereon, the “
Purchaser Owned Real Property
”). The Purchaser and its Subsidiaries own all of the Purchaser Owned Real Property free and clear of all Encumbrances, other than Permitted Encumbrances.
(b) Section 5.13(b) of the Purchaser Disclosure Schedule lists the street address of each parcel of real property leased by the Purchaser or any of its Subsidiaries as of the date of this Agreement (the “
Purchaser Leased Real Property
”). Assuming good fee title vested in the applicable landlord, each of the Purchaser and its Subsidiaries has a valid and binding leasehold interest in the Purchaser Leased Real Property of which the Purchaser or its Subsidiaries is the lessee, free and clear of all Encumbrances, except Permitted Encumbrances. Except as would not reasonably be expected to have a Material Adverse Effect on the Purchaser, none of the Purchaser or any of its Subsidiaries is in breach or default under any lease agreement for any Purchaser Leased Real Property.
SECTION 5.14
Employee Benefit Plans
.
(a) Section 5.14(a) of the Purchaser Disclosure Schedule sets forth a true and complete list of each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of section 3(1) of ERISA); each profit-sharing, stock bonus or other “pension” plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained, contributed to or required to be contributed to by the Purchaser, or any Subsidiary of the Purchaser, whether written or oral, for the benefit of any Purchaser Employee (each, a “
Purchaser Benefit Plan
”) or any such plan sponsored or contributed to by any ERISA Affiliate, that together with the Purchaser would be deemed a “single employer” within the meaning of section 4001(b) of ERISA, or to which the Purchaser, any of its Subsidiaries, or an ERISA Affiliate is a party, for the benefit of any Purchaser Employee. Section 5.14(a) of the Purchaser Disclosure Schedule identifies each Purchaser Foreign Benefit Plan.
(b) With respect to each Purchaser Benefit Plan, the Purchaser has made available to the Company: (i) an accurate and complete copy of (and, with respect to non-competition agreements, forms of) such Purchaser Benefit Plan (including all amendments thereto); (ii) an accurate and complete copy of the annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code, with respect to such Purchaser Benefit Plan for the three most recent plan years; (iii) if such Purchaser Benefit Plan is subject to the minimum funding standards of ERISA Section 302, the most recent annual and periodic accounting of such Purchaser Benefit Plan’s assets; (iv) an accurate and complete copy of the most recent summary plan description, together with each summary of material modifications, if required under ERISA, with respect to such Purchaser Benefit Plan; (v) if such Purchaser Benefit Plan is funded through a trust or any third party funding vehicle, an accurate and complete copy of the trust or other funding agreement (including all amendments thereto) and accurate and complete copies of the most recent financial statements thereof; (vi) accurate and complete copies of all contracts and agreements relating to such Purchaser Benefit Plan, including service provider agreements, insurance contracts, minimum premium contracts, stop-loss agreements, investment management agreements, subscription and participation agreements and recordkeeping agreements; (vii) all material written materials provided to any Purchaser Employee relating to such Purchaser Benefit Plan and any proposed Purchaser Benefit Plan, in each case relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which could result in any liability to the Purchaser or any of its Subsidiaries; (viii) all material correspondence, if any, to or from any Governmental Authority relating to such Purchaser Benefit Plan; (ix) if such Purchaser Benefit Plan is intended to be qualified under Section 401(a) of the Code, all discrimination tests, if any, required under the Code for such Purchaser Benefit Plan for the three most recent plan years; and (x) if such Purchaser Benefit Plan is intended to be qualified under Section 401(a) of the Code, the most recent determination letter (or opinion letter, if applicable) received from the Internal Revenue Service with respect to such Purchaser Benefit Plan.
(c) No Purchaser Benefit Plan or any employee benefit plan sponsored, maintained or contributed to by any ERISA Affiliate is (i) a “defined benefit plan” (as defined in Section 414 of the Code), (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer plan” (as defined in Section 4063 or 4064 of ERISA) (in each case under clause (i), (ii) or (iii) whether or not subject to ERISA) or (iv) subject to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA and, in each case no such plan is or has been sponsored, maintained, contributed to, or been required to be contributed to by the Purchaser or any of its Subsidiaries or any ERISA Affiliate within the six (6) year period immediately prior to the date of this Agreement.
(d) All material contributions, premiums and expenses to or in respect of each Purchaser Benefit Plan have been paid in full or, to the extent not yet due, have been adequately accrued on the balance sheets included in the Purchaser SEC Documents. Each Purchaser Benefit Plan can be amended, terminated or otherwise discontinued with 60 days advance notice after the Closing in accordance with its terms, without monetary liability to the Purchaser or any of its Subsidiaries (other than ordinary administration expenses). With respect to any self-funded health, medical or other welfare plan, the Purchaser has accrued amounts sufficient to pay any unpaid claims, except as would not result in material liability to the Purchaser.
(e) No Purchaser Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Purchaser or any of its Subsidiaries for periods extending beyond their retirement or other termination of service, other than: (i) coverage mandated by applicable Law; (ii) death benefits under any “pension plan”; or (iii) benefits the full cost of which is borne by the current or former employee (or the employee’s beneficiary).
(f) Each of the Purchaser Benefit Plans has been operated and administered in all material respects in accordance with its terms and with applicable Laws, including ERISA, the Code, applicable U.S. laws and regulations. The Purchaser and its Subsidiaries have performed all material obligations required to be performed by them under the Purchaser Benefit Plans, none of the Purchaser or its Subsidiaries is in material default or violation of any material term of any Purchaser Benefit Plan. To the Purchaser’s Knowledge, there has been no material default or violation by any other party with respect to any material term of any Purchaser Benefit Plan.
(g) Each Purchaser Benefit Plan that is intended to comply with the provisions of Section 401(a) of the Code has been the subject of a determination letter from the Internal Revenue Service or an application therefor with respect to all material and applicable Tax Law changes to the effect that such Purchaser Benefit Plan currently is qualified and exempt from income Taxes under Section 401(a) of the Code and the trust relating to such is exempt from income Taxes under Section 501(a) of the Code, and no such determination letter has been revoked or, to the Purchaser’s Knowledge, threatened, and, to the Purchaser’s Knowledge, no event has occurred since the date of the most recent determination letter or application therefor relating to any such Purchaser Benefit Plan that is reasonably expected to affect the qualification of such Purchaser Benefit Plan adversely.
(h) There are no material claims or Legal Proceedings pending, or to the Purchaser’s Knowledge, threatened or reasonably anticipated (other than routine claims for benefits) against any Purchaser Benefit Plan or against the assets of any Purchaser Benefit Plan. To the Purchaser’s Knowledge, no breach of fiduciary duty has occurred with respect to which any of the Purchaser or its Subsidiaries or any of its fiduciaries could reasonably be expected to incur a material liability. No Purchaser Benefit Plan is under audit or investigation, or is subject to any other Legal Proceeding commenced by the Internal Revenue Service, the DOL or any other Governmental Authority, nor is any such audit, investigation or other Legal Proceeding pending or, to the Purchaser’s Knowledge, threatened. No “prohibited transaction,” within the meaning of Section 4975 of the Code has occurred with respect to any Purchaser Benefit Plan.
(i) Neither the execution, delivery or performance of this Agreement, nor the consummation of the Purchase (either alone or in combination with another event, whether contingent or otherwise), will (i) result in any bonus, severance or other payment or obligation to any Purchaser Employee (whether or not under any Purchaser Benefit Plan); (ii) materially increase the benefits payable or provided to, or result in a forgiveness of any indebtedness of, any Purchaser Employee; (iii) accelerate the vesting, funding or time of payment of any compensation, equity award or other similar benefit; (iv) result in any “parachute payment” under Section 280G of the Code (whether or not such payment is considered to be reasonable compensation for services rendered); or (v) result in any breach or violation of, or a default under, or trigger any other material obligation pursuant to, or increase the cost of, any Purchaser Benefit Plan.
(j) With respect to each Purchaser Foreign Benefit Plan:
(i) all employer and employee contributions to each Purchaser Foreign Benefit Plan required by Law or by the terms of such Purchaser Foreign Benefit Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices except as would not reasonably be expected to be Material to the Purchaser;
(ii) the fair market value of the assets of each funded Purchaser Foreign Benefit Plan, the liability of each insurer for any Purchaser Foreign Benefit Plan funded through insurance or the book reserve established for any Purchaser Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the Closing, with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Purchaser Foreign Benefit Plan and none of the transactions contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations except as would not reasonably be expected to be Material to the Purchaser; and
(iii) each Purchaser Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities.
SECTION 5.15
Labor and Employment Matters
.
(a) The Purchaser has separately provided to the Company a list which includes, with respect to each employee of the Purchaser and its Subsidiaries (including any employee of the Purchaser or its Subsidiaries who is on a leave of absence or on layoff status):
(i) the name of such employee, the entity by which such employee is employed and the date as of which such employee was originally hired by such entity;
(ii) such employee’s title;
(iii) such employee’s annualized compensation as of the date of this Agreement, and
(iv) the Purchaser Benefit Plan in which such employee participates or is eligible to participate.
(b) The Purchaser has separately provided to the Company a list that accurately identifies: (i) the number of employees from the Purchaser or any of its Subsidiaries who are not fully available to perform work because they are on leave and the type of leave (e.g. one employee is on FMLA leave, two employees are on workers’ compensation leave, etc.) and (ii) the anticipated dates of return to full service for such employees. For the avoidance of doubt, the Purchaser is not required to provide the names of the listed employees.
(c) The Purchaser has separately provided to the Company a list or copy of the relevant agreement that accurately identifies each former employee of the Purchaser or any of its Subsidiaries who is receiving or is scheduled to receive (or whose spouse or other dependant is receiving or is scheduled to receive) any benefits (whether from the Purchaser or any of its Subsidiaries or otherwise) relating to such former employee’s employment with the Purchaser or any of its Subsidiaries; and the list accurately and completely describes such benefits.
(d) None of the Purchaser or any of its Subsidiaries is a party to, or bound by, any collective bargaining agreement or other contracts and agreements with a labor organization, trade or labor union, employees’ association or similar organization representing any of its employees, nor is any such agreement presently being negotiated, nor is there any duty on the part of the Purchaser or any of its Subsidiaries to bargain with any labor organization or representative, and there are no labor organizations representing, purporting to represent or, to the Purchaser’s Knowledge, seeking to represent any employees of the Purchaser or any of its Subsidiaries. Except as would not be materially adverse to the Purchaser and its Subsidiaries, none of the Purchaser or any of its Subsidiaries is or has in the past three years been engaged in any unfair labor practice of any nature. None of the Purchaser or any of its Subsidiaries has had any strike, slowdown, work stoppage, boycott, picketing, lockout, job action, labor dispute or threat of any of the foregoing, or union organizing activity (of unrepresented employees) or question concerning representation, by or with respect to any of its employees.
(e) The employment of each of the employees of the Purchaser and its Subsidiaries is terminable by the applicable entity at will, without payment of severance or other compensation or consideration unless specifically required by any Purchaser Benefit Plan and as disclosed in Section 5.14(a) of the Purchaser Disclosure Schedule. The Purchaser has made available to the Company accurate and complete copies of all: (i) current employee manuals and handbooks, (ii) current written policies, including but not limited to the ethics policies, and (iii) materials submitted to any Government Authority in response to a disclosure request; any of which relate to the employment of the current and former employees of each the Purchaser and its Subsidiaries.
(f) To the Purchaser’s Knowledge, no group of key employees of any of the Purchaser or its Subsidiaries has threatened or expressed any intention to terminate employment as a result of the transactions contemplated by this Agreement and each Transaction Document.
(g) Each of the Purchaser and its Subsidiaries: (i) is, and at all times has been, in substantial compliance with all applicable Laws and with any order, ruling, decree, judgment or arbitration award of any arbitrator or any court or other Governmental Authority respecting employment, employment practices, terms and conditions of employment, wages, hours or other labor-related matters, including Laws, orders, rulings, decrees, judgments and awards relating to discrimination, wages and hours, labor relations, leave of absence requirements, occupational health and safety, privacy, harassment, retaliation, immigration, wrongful discharge or violation of the personal rights of employees, former employees or prospective employees; (ii) has withheld and reported all amounts required by any Law or contract to be withheld and reported with respect to wages, salaries and other payments to any Purchaser Employee; (iii) has no liability for any arrears of wages or any Taxes or any penalty for failure to comply with any of the foregoing; and (iv) has no liability for any payment to any trust or other fund governed or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for any Purchaser Employee (other than routine payments to be made in the normal course of business and consistent with past practice), in each case, except as would not result in material liability to the Purchaser or its Subsidiaries. Since December 31, 2010, the Purchaser has not effectuated a “mass layoff,” “plant closing,” partial “plant closing,” “relocation” or “termination” (each as defined in the WARN Act) or any similar Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Purchaser or any of its Subsidiaries.
(h) There is no material Legal Proceeding, claim, labor dispute, collective bargaining, or grievance pending, or to the Purchaser’s Knowledge, threatened or reasonably anticipated, either by or against the Purchaser or any of its Subsidiaries, relating to any employment contract, collective bargaining obligation or agreement, wages and hours, leave of absence, plant closing notification, employment statute or regulation, privacy right, labor dispute, workers’ compensation policy, long-term disability policy, safety, retaliation, immigration or discrimination matter involving any Purchaser Employee, including charges of unfair labor practices or harassment complaints.
(i) The Purchaser has separately provided the Company with a list that includes, with respect to each Person who is or was, at any time since December 31, 2010, an independent contractor of the Purchaser or any of its Subsidiaries and who has received or may be entitled to receive in excess of $100,000 from the Purchaser or any of its Subsidiaries:
(i) the name of such independent contractor, the entity with which such independent contractor is or was under contract and the date as of which such independent contractor was originally hired by such entity;
(ii) a description of such independent contractor’s general objectives; and
(iii) the terms of compensation of such independent contractor.
(j) No current or former independent contractor of the Purchaser or any of its Subsidiaries could reasonably be deemed to be a misclassified employee except as would not reasonably be expected to have a Material Adverse Effect on the Purchaser.
SECTION 5.16
Taxes
.
(a) All material Tax Returns required to have been filed by or with respect to the Purchaser or any of its Subsidiaries have been properly prepared and duly and timely filed (taking into account any extension of time to file granted or obtained) and are true, complete and correct in all material respects.
(b) All material Taxes payable by or with respect to the Purchaser or any of its Subsidiaries have been paid or will be timely paid.
(c) No deficiency for any amount of Tax has been asserted or assessed by a Taxing Authority in writing against any of the Purchaser or its Subsidiaries that has not been satisfied by payment, settled or withdrawn.
(d) There are no audits or investigations of any Tax Returns with respect to the Purchaser or any of its Subsidiaries in progress, nor has any or the Purchaser or its Subsidiaries received any written notice from any Governmental Authority that it intends to conduct any such audit or investigation.
(e) None of the Purchaser or any of its Subsidiaries has current liability for the Taxes of another Person (other than the Purchaser or any of its Subsidiaries) under any written Tax sharing or indemnification agreement (excluding Tax obligations arising under commercial contracts entered into in the ordinary course).
(f) There are no Tax liens on any assets of the Purchaser or any of its Subsidiaries (other than Permitted Encumbrances).
(g) None of the Purchaser or any of its Subsidiaries has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any material Tax (other than extensions of time to file Tax Returns obtained in the ordinary course).
(h) Any material Tax required to have been withheld or collected by the Purchaser or any of its Subsidiaries has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority.
(i) The unpaid Taxes of the Purchaser or any of its Subsidiaries do not exceed the reserve for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth in the financial statements included in the Purchaser SEC Documents, and are not reasonably expected to exceed such reserve as adjusted for the passage of time through the Closing Date.
(j) None of the Purchaser or any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion there) ending after the Closing Date as a result of any: (i) change in method of accounting for taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (iii) intercompany transactions or any excess loss account described in Treasury Regulations under section 1502 of the Code (or any corresponding or similar provisions of state, local or foreign income Tax law), (iv) installment sale or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount (other than prepaid amounts accruing in the ordinary course of business and accurately reflected in the financial statements included in the Purchaser SEC Documents.
(k) None of the Purchaser or any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, 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 (i) in the two years prior to the date of this Agreement or (ii) which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.
(l) No claim has ever been made in writing by an authority in a jurisdiction where the Purchaser or any of its Subsidiaries does not file Tax Returns that the Purchaser or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.
(m) None of the Purchaser or any of its Subsidiaries (i) has been a member of an affiliated group of corporations filing a consolidated federal income Tax Return or (ii) has any liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of federal, state, local, or foreign law), or as a transferee or successor or by contract.
(n) The Purchaser has delivered or made available to Seller accurate and complete copies of all material Tax Returns of Purchaser and its Subsidiaries and all material audit reports and similar documents relating to such Tax Returns.
(o) Each Purchaser Benefit Plan that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code or Section 457A of the Code has been operated and documented in all material respects in compliance with or pursuant to an exemption from Section 409A of the Code and Section 457A of the Code, as applicable, and the respective guidance and regulations thereunder.
SECTION 5.17
Purchaser Contracts
.
(a) Except as set forth in Section 5.17(a) of the Purchaser Disclosure Schedule, neither the Purchaser nor any of its Subsidiaries is a party to or is bound by:
(i) any agreement, obligation or commitment containing covenants purporting to limit or which effectively limit the Purchaser’s or any of its Subsidiaries’ freedom to compete in any line of business or in any geographic area or granting any exclusive distribution or other exclusive rights;
(ii) any agreement or commitment currently in force relating to the disposition or acquisition by the Purchaser or any of its Subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary course of business, or pursuant to which the Purchaser has any material ownership or participation interest in any corporation, partnership, joint venture, strategic alliance or other business enterprise other than the Purchaser’s Subsidiaries;
(iii) any agreement concerning the establishment or operation of any partnership, limited liability company, joint venture or similar entity with any third party that is material to the Purchaser Business, other than the Subsidiaries of the Purchaser;
(iv) any agreement under which the Purchaser or any of its Subsidiaries created, incurred, assumed or guaranteed any Indebtedness in excess of $250,000;
(v) any agreement entered into in the past three years for the disposition of any significant portion of the assets or business of the Purchaser or any of its Subsidiaries (other than sales of products in the ordinary course of business) or any agreement entered into in the past three years for the acquisition of the assets or business of any other Person (other than purchases of products in the ordinary course of business), in each case pursuant to which the Purchaser or such Subsidiaries has continuing obligations (including indemnification obligations, earn-out payments and potential liability under any purchase price adjustments) involving consideration in excess of $50,000; and
(vi) all material contracts and agreements between or among the Purchaser or any of its Subsidiaries, on the one hand, and any Affiliate of the Purchaser (other than the Purchaser or any of its Subsidiaries), on the other hand.
(b) Each of the agreements required to be disclosed in the Purchaser Disclosure Schedule pursuant to this Section 5.17, pursuant to Section 5.13 of the Purchaser Disclosure Schedule or required to be filed with any Purchaser SEC Document (“
Purchaser Contracts
”) (i) is valid and binding on the Purchaser or the applicable Subsidiary of the Purchaser, and, to the Purchaser’s Knowledge, the counterparties thereto (in each case, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law)), and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement shall continue in full force and effect without penalty or other adverse consequence, subject to the exercise by any counterparty thereto of any right to terminate any such Purchaser Contract without cause in accordance with its terms. Neither the Purchaser nor any of its Subsidiaries, nor to the Purchaser’s Knowledge, any other party thereto, is in material breach, material violation or material default under, and neither the Purchaser nor any of its Subsidiaries has received written notice that it has materially breached, materially violated or materially defaulted, any of the terms or conditions of any Purchaser Contract. Without limiting the preceding sentence, none of the Purchaser or its Subsidiaries is in breach or violation of, or default under, the Registrar Accreditation Agreement dated September 28, 2009 with the Internet Corporation for Assigned Names and Numbers in such a manner as would have a Material Adverse Effect on the Purchaser.
SECTION 5.18
Environmental Matters
. (a) Neither Purchaser nor any of its Subsidiaries is in material violation of any Environmental Law and all past violations, a description of which is set forth in Section 5.18(a) of the Purchaser Disclosure Schedule, have been resolved without any ongoing or pending costs or obligations that are material to the Purchaser or any of its Subsidiaries or the Purchaser Business, (b) Purchaser and its Subsidiaries have obtained and are in material compliance with all Environmental Permits that are material to the operations of Purchaser and its Subsidiaries, taken as a whole, and any past non compliance, a description of which is set forth in Section 5.18(b) of the Purchaser Disclosure Schedule, has been resolved without any ongoing or pending costs or obligations that are material to Purchaser and its Subsidiaries, taken as a whole, (c) there has been no Release of any Hazardous Materials on, beneath or adjacent to any Purchaser Owned Real Property or Purchaser Leased Real Property or any real property formerly owned or leased by Purchaser or any Subsidiary of Purchaser that requires, or would reasonably be anticipated to require in the future, any Remedial Action pursuant to Environmental Law that is or that would reasonably be expected to be materially adverse to the operations of Purchaser and its Subsidiaries, taken as a whole, and (d) there is no written Action pending or, to the Purchaser’s Knowledge, threatened in writing against Purchaser or any Subsidiary of Purchaser that relates to any violation or alleged violation of, or any Liability or alleged Liability under, Environmental Law where such violation, alleged violation, Liability or alleged Liability would reasonably be expected to be materially adverse to the operations of Purchaser and its Subsidiaries, taken as a whole;
provided
, that for purposes of the foregoing clause (d) of this Section 5.18, any Action that has been initiated but with respect to which process or other comparable notice has not been served on or delivered to Purchaser or its Subsidiaries shall be deemed to be “threatened” rather than “pending.” The representations and warranties contained in this Section 5.18 are the only representations and warranties being made by Purchaser in this Agreement with respect to compliance with or Liability under Environmental Laws or Environmental Permits or with respect to any environmental, health or safety matter related in any way to this Agreement or its subject matter.
SECTION 5.19
Insurance
. Section 5.19 of the Purchaser Disclosure Schedule sets forth a true and complete list of all insurance policies covering Purchaser or its Subsidiaries or the operation of the Purchaser Business. Except as would not be material to the Purchaser, (a) neither Purchaser nor any of its Subsidiaries is in default under any such policy, (b) all premiums due and payable for such policies have been timely paid in all material respects, (c) all claims made thereunder have been properly and timely filed, (d) no written notice of cancellation, termination or reduction of coverage has been received by the Purchaser or its Subsidiary with respect to any such policy, other than in connection with ordinary renewals and (e) the types and amount of the coverage provided in such insurance policies are usual and customary in the context of the Purchaser Business. Each such policy is in full force and effect and, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law) is the valid and binding obligation of the Purchaser or its applicable Subsidiary named as the insured therein.
SECTION 5.20
Certain Business Relationships with Affiliates
.
(a) No Affiliate of the Purchaser (other than a Subsidiary of the Purchaser) (i) owns any material property or right, tangible or intangible, which is used by the Purchaser or related primarily to the Purchaser Business, (ii) has any claim or cause of action against the Purchaser or any of its Subsidiaries, or (iii) owes any money to, or is owed any money by, the Purchaser or any of its Subsidiaries. No manager, general partner, director or officer of the Purchaser has been a manager, general partner, director or officer (or Person in a similar position), or has had any ownership interest in, any Person which during such period was a party to an agreement with the Purchaser or its Subsidiaries that involves consideration or payments by such customer in excess of $500,000 in the aggregate during the twelve month period ended June 30, 2011.
(b) Section 5.20(b) of the Purchaser Disclosure Schedule sets forth any agreements or arrangements between any Affiliate of the Purchaser (other than a Subsidiary of the Purchaser), on the one hand, and the Purchaser or any of its Subsidiaries, on the other hand, which is currently in effect and which shall continue in effect after the Closing.
SECTION 5.21
Brokers
. Except for Wells Fargo Securities, LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Transaction Document based upon arrangements made by or on behalf of the Purchaser. The Purchaser shall be solely responsible for payment of the fees and expenses of Wells Fargo Securities, LLC.
SECTION 5.22
Required Vote
. The only vote of Purchaser’s stockholders required to approve the issuance of the Purchaser Common Stock pursuant to this Agreement is the affirmative vote of the holders of a majority of the shares of Purchaser Common Stock voting on such item at the Purchaser Stockholders’ Meeting (the “
Required Purchaser Stockholder Vote
”). The Required Purchaser Stockholder Vote is the only vote of the holders of any class or series of the capital stock of Purchaser necessary to approve this Agreement and the Transaction Documents to which Purchaser is a party, the Purchase and the other transactions contemplated hereby and thereby.
SECTION 5.23
Disclosure
. None of the information supplied or to be supplied by or on behalf of the Purchaser for inclusion or incorporation by reference in the Purchaser’s Registration Statements or any supplement prospectus will, at the time such Registration Statements or any supplement prospectus are filed with the SEC or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of the Purchaser for inclusion or incorporation by reference in the Proxy Statement will, at the time the Proxy Statement is mailed to the stockholders of Purchaser or at the time of the Purchaser Stockholder’s Meeting (or any adjournment or postponement thereof), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated by the SEC thereunder.
SECTION 5.24
Independent Investigation; Representations
. The Purchaser has conducted its own independent investigation, review and analysis of the business, operations, assets, Liabilities, results of operations, financial condition, software, technology and prospects of the Company Entities and the Business, which investigation, review and analysis was done by the Purchaser and its Affiliates and representatives. In entering into this Agreement, the Purchaser acknowledges that it has relied solely upon the aforementioned investigation, review and analysis and not on any factual representations or opinions (whether written or oral) of the Company (except the specific representations and warranties set forth in Article III), or Seller (except the specific representations and warranties set forth in Article IV). The Purchaser hereby acknowledges and agrees that (a) other than the representations and warranties made in Articles III and IV, none of Seller, the Company, their respective Affiliates, or any of their respective officers, directors, employees or representatives makes or has made any representation or warranty, express or implied, written or oral, at law or in equity, in respect of Seller, the Company, the Business, the Interests, the Subsidiary Interests, or any other assets, Liabilities, operations, businesses, prospects or condition (financial or otherwise) of the Company, including as to (i) merchantability or fitness for any particular use or purpose, (ii) the operation of the Company or the Business by the Purchaser after the Closing in any manner other than as used and operated by Seller or (iii) the probable success or profitability of the Company or the Business after the Closing, and none of Seller, their respective Affiliates, or any of their respective officers, directors, employees or representatives has any authority, express or implied, to make any representation or warranty not expressly set forth in this Agreement and subject to the limited remedies herein provided and (b) other than the indemnification obligations of Seller set forth in Article X (subject in all cases to Section 10.05), no such Person will have or be subject to any liability or indemnification obligation to the Purchaser or to any other Person resulting from the distribution to the Purchaser, its Affiliates or representatives of, or the Purchaser’s use of, any information relating to the Company or the Business, including any information, documents or material made available to the Purchaser, whether orally or in writing, in certain “data rooms,” management presentations, functional “break-out” discussions, confidential information memoranda, responses to questions submitted on behalf of the Purchaser or in any other form in expectation of the transactions contemplated by this Agreement. The Purchaser further acknowledges and agrees that any such other representation or warranty has been expressly disclaimed.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01
Seller and Company Conduct of Business Prior to the Closing
. Seller and the Company covenant and agree that, except as described in Section 6.01 of the Disclosure Schedule, as required by applicable Law or contemplated, permitted or required by this Agreement or any Transaction Document, between the date of this Agreement and the Closing, without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned), the Company shall, and shall cause each other Company Entity to (i) conduct its business in the ordinary course in all material respects, and (ii) use its commercially reasonable efforts to preserve intact in all material respects the business organization of such Company Entity, including the Business. Except as described in Section 6.01 of the Disclosure Schedule, required by applicable Law or contemplated, permitted or required by this Agreement, the Company covenants and agrees that, between the date of this Agreement and the Closing, without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned), the Company will not, and shall cause the other Company Entities not to (directly or indirectly, whether by merger, consolidation or otherwise):
(a) issue or sell, or authorize the issuance or sale of, any equity interests, phantom equity interests, convertible notes, convertible bonds or other securities convertible into any equity interests of any Company Entity (or any option, warrant or other right to acquire the same) or repurchase, redeem or otherwise reacquire any of the equity interests or phantom equity interests of any Company Entity (in each case, other than (i) pursuant to the vesting or repurchase of any equity-based award pursuant to a Company Benefit Plan in effect as of the date hereof, (ii) for the avoidance of doubt, issuance by Seller of equity interests in Seller in connection with new arrangements entered into with new employees hired following the date hereof permitted under clause (d) below and provided that such issuance shall not override Section 2.09 of this Agreement, or (iii) pursuant to any contract, agreement, binding commitment or other written arrangement existing as of the date hereof and disclosed in Section 6.01(a) of the Disclosure Schedule);
(b) amend or restate the certificate of incorporation or bylaws (or similar organizational documents) of any Company Entity;
(c) declare, accrue, set aside or pay any dividend or make any other distribution in respect of any equity interest, other than dividends or distributions from a wholly-owned Subsidiary of the Company or a wholly-owned Subsidiary of any Company Entity (but not in respect of any equity interest in the Company);
(d) (i) grant or announce any increase in the salaries, wages, commissions, bonuses or other compensation or benefits payable by any Company Entity to any Company Employee with an annual base salary, or annualized compensation, in excess of $100,000 or to all Company Employees collectively that results in an increase of more than $1,500,000 in the aggregate on an annualized basis (provided that if the Closing does not occur in 2011, beginning on January 1, 2012, these thresholds shall be set at a prorated number equal to 110% of the budgeted amounts for the corresponding quarter of 2011), (ii) amend or waive any of its rights under, or accelerate the vesting under, any provision of any of the Company Benefit Plans (except to conform any such Company Benefit Plan to the requirements of any applicable Laws or as provided in this Agreement), or (iii) except with respect to new arrangements entered into with new employees hired following the date hereof, create, enter into, adopt, establish, amend, modify or terminate or promise or agree to create, enter into, adopt, establish, amend, modify or terminate, any bonus, deferred compensation, unit appreciation (or similar membership interest-based award program), profit-sharing, incentive, retention or severance benefit plan, program, arrangement, contract or other agreement, program, arrangement, contract or other agreement providing for employee benefits or remuneration of any kind, applicable to Company Employees generally, in each case, whether written, unwritten or otherwise, funded or unfunded, that would be a Company Benefit Plan if in effect on the date hereof, in each case, other than as required by Law and the terms of any Company Benefit Plans existing as of the date of this Agreement, or in the ordinary course of business of the applicable Company Entity or the Business;
provided
that in the case of changes under clauses (ii) and (iii), such actions taken have been provided for in the Company’s expense plan as previously provided to the Purchaser and do not, in the aggregate, materially increase the cost to the Company of operating such Company Benefit Plans, plans and arrangements;
(e) change any method of accounting or accounting practice or policy used by any of the Company or the Business, other than such changes as are required by GAAP or a Governmental Authority;
(f) fail to exercise any rights of renewal with respect to any Leased Real Property that by its terms would otherwise expire;
(g) compromise or settle any Action (A) resulting in an obligation of any Company Entity to pay more than $100,000 individually or $200,000 in the aggregate in respect of compromising or settling such Action, (B) in respect of any claim of any Company Entity to receive any payment of more than $100,000 individually or $200,000 in the aggregate in respect of settling any such Action, or (C) involving the entering into a settlement or other agreement that provides for the licensing of Company Intellectual Property to any third party or grants to any third party exclusivity with respect to the operation of the Business;
(h) effect or become a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(i) form any Subsidiary or acquire (by merger or stock or asset purchase or otherwise) any interest in any corporation, partnership, other business organization or any business or division thereof that is material to the Company and its Subsidiaries, taken as a whole;
(j) incur, create, assume or otherwise become liable for any Indebtedness (including drawdowns under any existing revolver facility of the Company or its Subsidiaries), except for any accrual of unpaid interest on any Indebtedness or any Indebtedness that will be repaid or cancelled prior to the open of business on the Closing Date;
(k) abandon, assign or grant any security interest in, to or under any Company Intellectual Property, other than (i) in the ordinary course of business, (ii) transactions among wholly-owned Company Entities or (iii) transfers pursuant to the license of any Company Intellectual Property in the ordinary course of business;
(l) enter into, materially amend, fail to renew, cancel or terminate any Material Contract or agreement which if entered into prior to the date hereof would be a Material Contract, other than customer or supplier contracts in the ordinary course of business;
(m) make any capital expenditure which, together with all other capital expenditures made on behalf of the Company Entities, is in excess of the Company’s capital expenditure plan previously provided to the Purchaser (provided that if the Closing does not occur in 2011, beginning on January 1, 2012, this threshold shall be set at a prorated number equal to 110% of the budgeted amount for the corresponding quarter of 2011);
(n) cancel, terminate or fail to maintain in full force any insurance policy set forth on Section 3.17 of the Disclosure Schedule;
(o) make any material tax election (other than regular, recurring elections made in the ordinary course consistent with past practice), or amend any material Tax Return unless required by Law; or
(p) agree to take any of the actions specified in Sections 6.01(a)-(o).
Any action expressly permitted under any one clause of this Section 6.01 shall be permitted under all other clauses of this Section 6.01 solely to the extent that such other clauses address the same or similar subject matter. Nothing contained in this Agreement shall give the Purchaser, directly or indirectly, rights to control or direct the operations of the Company or its Subsidiaries prior to the Closing. Prior to the Closing, the Company and its Subsidiaries shall, consistent with the terms and conditions of this Agreement, exercise complete control and supervision over the operations of the Company and such Subsidiaries.
SECTION 6.02
Purchaser Conduct of Business Prior to the Closing
. Purchaser covenants and agrees that, except as described in Section 6.02 of the Purchaser Disclosure Schedule, as required by applicable Law or contemplated, permitted or required by this Agreement or any Transaction Document between the date of this Agreement and the Closing, without the prior written consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned), Purchaser shall, and shall cause each of its Subsidiaries to (i) conduct its business in the ordinary course in all material respects, and (ii) use its commercially reasonable efforts to preserve intact in all material respects the business organization of the Purchaser and its Subsidiaries, including the Purchaser Business. Except as described in Section 6.02 of the Purchaser Disclosure Schedule, required by applicable Law or contemplated, permitted or required by this Agreement, Purchaser covenants and agrees that, between the date of this Agreement and the Closing, without the prior written consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned), Purchaser will not, and shall cause its Subsidiaries not to (directly or indirectly, whether by merger, consolidation or otherwise):
(a) issue or sell, or authorize the issuance or sale of, any equity interests, phantom equity interests, convertible notes, convertible bonds or other securities convertible into equity interests of the Purchaser or any of its Subsidiaries (or any option, warrant or other right to acquire the same) or repurchase, other than as contemplated by this Agreement or the transactions related to the Purchase, or redeem or otherwise reacquire any of the equity interests or phantom equity interests of Purchaser or any Subsidiary of Purchaser (in each case, other than (i) pursuant to the vesting or repurchase of any equity-based award pursuant to a Purchaser Benefit Plan in effect as of the date hereof, (ii) issuance by the Purchaser of equity interests in the Purchaser in connection with new arrangements entered into with new employees hired following the date hereof, or (iii) pursuant to any contract, agreement, binding commitment or other written arrangement existing as of the date hereof and disclosed in Section 6.02(a) of the Purchaser Disclosure Schedule);
(b) amend or restate the certificate of incorporation or bylaws (or similar organizational documents) of Purchaser or any of its Subsidiaries;
(c) declare, accrue, set aside or pay any dividend or make any other distribution in respect of any equity interest, other than dividends or distributions from wholly-owned Subsidiaries of Purchaser or its Subsidiaries (but not in respect of any equity interest in the Purchaser);
(d) change any method of accounting or accounting practice or policy used by Purchaser or any of its Subsidiaries or the Purchaser Business, other than such changes as are required by GAAP or a Governmental Authority;
(e) fail to exercise any rights of renewal with respect to any Purchaser Leased Real Property that by its terms would otherwise expire;
(f) effect or become a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(g) form any Subsidiary or acquire (by merger or stock or asset purchase or otherwise) any interest in any corporation, partnership, other business organization or any business or division thereof that is material to the Purchaser and its Subsidiaries, taken as a whole;
(h) other than the Financing, incur, create, assume or otherwise become liable for any Indebtedness in excess of $250,000 in the aggregate, except for any accrual of unpaid interest on any Indebtedness or any Indebtedness that will be repaid or cancelled prior to the open of business on the Closing Date;
(i) make any material tax election (other than regular, recurring elections made in the ordinary course consistent with past practice), or amend any material Tax Return unless required by Law; or
(j) agree to take any of the actions specified in Sections 6.02(a)-(i).
Any action expressly permitted under any one clause of this Section 6.02 shall be permitted under all other clauses of this Section 6.02 solely to the extent that such other clauses address the same or similar subject matter.
SECTION 6.03
Registration Statement; Proxy Statement
.
(a) As promptly as practicable the Purchaser shall prepare and shall use reasonable best efforts to cause the Proxy Statement to be filed with the SEC within ten (10) Business Days after the date of this Agreement. If the Purchaser determines to prepare and file the Form S-3 Registration Statement with the SEC, then the Purchaser shall not file the Form S-3 Registration Statement with the SEC without the consent of Seller, such consent not to be unreasonably withheld or delayed. Prior to the filing of the Proxy Statement or the Form S-3 Registration Statement, the Purchaser shall provide the Company (and its counsel) with a reasonable opportunity to review and comment on such documents in advance of filing and shall incorporate all comments reasonably proposed by the Company (and its counsel). The Purchaser shall use reasonable best efforts: (i) to cause the Proxy Statement and, if applicable, the Form S-3 Registration Statement to comply with the applicable rules and regulations promulgated by the SEC; (ii) to promptly notify the Company of, cooperate with the Company with respect to and respond promptly to any comments of the SEC or its staff; and (iii) to, if the Purchaser has exercised the Cash Consideration Election, have the Form S-3 Registration Statement declared effective under the Securities Act as promptly as practicable after it is filed with the SEC. The Purchaser shall use reasonable best efforts to cause the Proxy Statement to be mailed to the Purchaser’s stockholders as promptly as practicable after the Proxy Statement is declared effective under the Securities Act (but, in any event, within three (3) Business Days following (A) confirmation from the SEC that it has no further comments on the Proxy Statement or (B) confirmation from the SEC that the Proxy Statement is otherwise not to be reviewed). Each of the Purchaser and the Company shall promptly furnish the other party all information concerning such party, its Subsidiaries and stockholders that may be required or reasonably requested in connection with any action contemplated by this Section 6.03. If either the Purchaser or the Company becomes aware of any information that should be disclosed in an amendment or supplement to the Form S-3 Registration Statement or the Proxy Statement, then: (w) such party shall promptly inform the other party thereof; (x) the Purchaser provide the Company (and its counsel) with a reasonable opportunity to review and comment on any amendment or supplement to the Form S-3 Registration Statement or the Proxy Statement and the Purchaser shall incorporate all comments reasonably proposed by the Company (and its counsel) prior to it being filed with the SEC; (y) the Purchaser shall provide the Company with a copy of such amendment or supplement promptly after it is filed with the SEC; and (z) if appropriate, the Purchaser shall cause such amendment or supplement to be mailed to the stockholders of the Purchaser. The Purchaser shall not make or file any amendment or supplement to the Proxy Statement or the Form S-3 Registration Statement without the approval of the Company (which will not be unreasonably withheld, condition or delayed), except to the extent such amendment or supplement is required by applicable Law. For the avoidance of doubt, it is not a condition to Closing under this Agreement, nor to the consummation of the Purchase, for the Form S-3 Registration Statement to be declared effective or for Purchaser to sell any shares of Purchaser Common Stock thereunder.
(b) Prior to the Closing, the Purchaser shall use reasonable best efforts to obtain all regulatory approvals needed to ensure that the Purchaser Common Stock to be issued as partial consideration in exchange for the Company Member Interests will (to the extent required) be qualified or exempt from registration or qualification under all applicable securities Laws.
SECTION 6.04
Purchaser Stockholders’ Meeting
.
(a) Purchaser: (i) shall take all action necessary under all applicable Laws to, as promptly as practicable after the date of this Agreement, call, give notice of and hold a meeting of the holders of Purchaser Common Stock (the “
Purchaser Stockholders’ Meeting
”) to vote on the proposal to approve the issuance of shares of Purchaser Common Stock (the “
Purchaser Proposal
”); and (ii) shall submit such Purchaser Proposal to such holders at the Purchaser Stockholders’ Meeting and, except as otherwise contemplated by this Agreement, shall not submit any other proposal to such holders in connection with the Purchaser Stockholders’ Meeting without the prior written consent of the Company. Purchaser, in consultation with the Company, shall set a record date for Persons entitled to notice of, and to vote at, the Purchaser Stockholders’ Meeting and shall not change such record date without the prior written consent of the Company. Purchaser shall use reasonable best efforts to solicit or cause to be solicited from its stockholders proxies in favor of the Purchaser Proposal, and shall ensure that all proxies solicited in connection with the Purchaser Stockholders’ Meeting are solicited in compliance with all applicable Laws. Notwithstanding anything to the contrary contained in this Agreement, Purchaser may after consultation with the Company, adjourn or postpone the Purchaser Stockholders’ Meeting only: (A) to the extent necessary to ensure that any supplement or amendment to the Proxy Statement that is required by applicable Law is timely provided to Purchaser’s stockholders; (B) if as of the time for which the Purchaser Stockholders’ Meeting is originally scheduled there are insufficient shares of Purchaser Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the Purchaser Stockholders’ Meeting; or (C) if additional time is reasonably required to solicit proxies in favor of the approval of the Purchaser Proposal.
(b) Subject to Section 6.04(c): (i) the Proxy Statement shall include a statement to the effect that the Purchaser Board recommends that Purchaser’s stockholders vote to approve the Purchaser Proposal (the recommendation of the Purchaser Board that Purchaser’s stockholders vote to approve the Purchaser Proposal being referred to as the “
Purchaser Board Recommendation
”); (ii) the Purchaser Board Recommendation shall not, directly or indirectly, be withheld, withdrawn, qualified, modified or amended in a manner adverse to the Company or Seller; (iii) neither the Purchaser Board nor any committee thereof shall: (A) fail to reaffirm the Purchaser Board Recommendation, or fail to publicly state that the Purchase and this Agreement are in the best interest of Purchaser’s stockholders, within ten Business Days after the Company requests in writing that such action be taken; (B) fail to publicly announce, within ten Business Days after a tender offer or exchange offer relating to the securities of Purchaser shall have been commenced or after any material increase in the consideration being offered thereunder, a statement disclosing that the Purchaser Board recommends rejection of such tender or exchange offer (it being understood that taking no position with respect to the acceptance of such tender offer or exchange offer or material increase in consideration thereof by the Purchaser’s stockholders shall constitute a failure to recommend rejection of such tender offer or exchange offer or material increase in consideration thereof); (C) fail to issue, within ten Business Days after a Purchaser Acquisition Proposal is publicly announced, a press release announcing its opposition to such Purchaser Acquisition Proposal; (D) recommend, adopt or approve a Purchaser Acquisition Proposal or (E) make any disclosure that has the intent or direct effect of causing Purchaser’s stockholders not to vote to approve the Purchaser Proposal; and (iv) neither the Purchaser Board nor any committee thereof shall publicly propose or resolve to take any action described in clauses “(ii)” or “(iii)” of this sentence (each of the foregoing actions described in clauses “(ii),” “(iii)” and “(iv)” being referred to as a “
Purchaser Change in Recommendation
”).
(c) Notwithstanding anything to the contrary contained in Section 6.04(b) or elsewhere in this Agreement, at any time prior to the approval of the Purchaser Proposal by the Required Purchaser Stockholder Vote, the Purchaser Board may effect, or cause Purchaser to effect, as the case may be, a Purchaser Change in Recommendation:
(i) if: (A) Purchaser has not breached its obligations under Section 6.10 in connection with the Purchaser Acquisition Proposal referred to in the following clause “(B);” (B) after the date of this Agreement, an unsolicited, bona fide, Purchaser Acquisition Proposal is made to Purchaser and is not withdrawn; (C) the Purchaser Board determines in its good faith judgment, after consulting with a financial advisor of nationally recognized reputation and outside legal counsel, that such Purchaser Acquisition Proposal constitutes a Purchaser Superior Offer; (D) the Purchaser Board does not effect, or cause Purchaser to effect, a Purchaser Change in Recommendation at any time within four Business Days after the Company receives written notice from Purchaser confirming that the Purchaser Board has determined that such Purchaser Acquisition Proposal is a Purchaser Superior Offer; (E) during such four Business Day period, if requested by the Company, Purchaser engages in good faith negotiations with the Company to amend this Agreement in such a manner that the Purchaser Acquisition Proposal that was determined to constitute a Purchaser Superior Offer no longer constitutes a Purchaser Superior Offer; (F) at the end of such four Business Day period, such Purchaser Acquisition Proposal has not been withdrawn and continues to constitute a Purchaser Superior Offer (taking into account any changes to the terms of this Agreement proposed by the Company as a result of the negotiations required by clause “(E)” or otherwise); and (G) at the end of such four Business Day period, the Purchaser Board determines in good faith, after having consulted with its outside legal counsel, that, in light of such Purchaser Superior Offer, a failure to make a Purchaser Change in Recommendation would reasonably be expected to constitute a breach of the fiduciary duties of the Purchaser Board to Purchaser’s stockholders under applicable Law;
provided
, that in the event of any material revisions to the Purchaser Acquisition Proposal, the Purchaser shall be required to deliver a new written notice to the Company and to again comply with the requirements of this Section 6.04(c)(i) with respect to such new written notice (including the four Business Day period referenced above); or
(ii) if: (A) other than the development or circumstances contemplated by clause “(i)” of this Section 6.04(c), a material development or material change in circumstances occurs or arises after the date of this Agreement that was neither known to Purchaser or any Purchaser Representative nor reasonably foreseeable to Purchaser or any Purchaser Representative as of the date of this Agreement (such material development or change in circumstances being referred to as a “
Purchaser Intervening Event
”);
provided, however
, that in no event shall the receipt, existence of or terms of a Purchaser Acquisition Proposal or a Purchaser Superior Offer or any inquiry relating thereto or the consequences thereof constitute a Purchaser Intervening Event; (B) at least four Business Days prior to any meeting of the Purchaser Board at which the Purchaser Board will consider whether such Purchaser Intervening Event requires the Purchaser Board to effect, or cause Purchaser to effect, a Purchaser Change in Recommendation, Purchaser provides the Company with a written notice specifying the date and time of such meeting and the reasons for holding such meeting; (C) during such four Business Day period, if requested by the Company, Purchaser engages in good faith negotiations with the Company to amend this Agreement in such a manner that obviates the need for the Purchaser Board to effect, or cause Purchaser to effect, a Purchaser Change in Recommendation as a result of such Purchaser Intervening Event; and (D) at the end of such four Business Day period, the Purchaser Board determines in good faith, after having consulted with its outside legal counsel, that, in light of such Purchaser Intervening Event, the failure to make a Purchaser Change in Recommendation would reasonably be expected to constitute a breach of the fiduciary duties of the Purchaser Board to Purchaser’s stockholders under applicable Law.
Purchaser shall ensure that any Purchaser Change of Recommendation (1) shall not affect the validity of the original approval of this Agreement as of the date of this Agreement or any other approval of the Purchaser Board; and (2) shall not have the effect of causing any state (including Delaware) corporate takeover statute or other similar statute to be applicable to the Purchase or any of the other transactions contemplated by this Agreement.
(d) Notwithstanding any Purchaser Change in Recommendation, the commencement, disclosure, announcement or submission of any Purchaser Acquisition Proposal or the occurrence of any Purchaser Intervening Event, unless earlier terminated in accordance with Article XI, this Agreement shall be submitted to the holders of Purchaser Common Stock at the Purchaser Stockholders’ Meeting for the purpose of voting on the Purchaser Proposal and nothing contained in this Agreement shall be deemed to relieve Purchaser of such obligations or any of its other obligations under Section 6.04(a).
SECTION 6.05
Access to Information
.
(a) From the date of this Agreement until the Closing, upon reasonable notice, the Company shall, and shall cause each other Company Entity and each of their respective officers, directors and employees to, (i) afford the Purchaser and its authorized representatives reasonable access to the offices, properties and books and records of each Company Entity, (ii) furnish to the officers, employees, and authorized agents and representatives of the Purchaser such additional financial and operating data and other information regarding the Company (or copies thereof) as the Purchaser may from time to time reasonably request, and (iii) provide reasonable access to Purchaser and its authorized representatives to each employee of any Company Entity for the purposes of discussing with any such employee potential employment or transition terms with Purchaser or its Subsidiaries and related matters;
provided, however
, that any such access or furnishing of information shall be conducted at the Purchaser’s expense, during normal business hours, under the supervision of the Company’s personnel and in such a manner as not to interfere with the normal operations of such Company Entity. When accessing any of the Company Entity properties, the Purchaser and its authorized representatives shall comply with all of the Company Entity safety and security requirements for the applicable property. Nothing herein shall require any Company Entity to disclose information to the extent such disclosure (A) may result in a waiver of attorney-client privilege, work product doctrine or similar privilege or (B) may violate any applicable Law or any confidentiality obligation of such party;
provided
that in any such event of this clause (B), the Company shall cooperate to permit disclosure of such information in a manner consistent with the preservation of such confidentiality obligation.
(b) From the date of this Agreement until the Closing, upon reasonable notice, the Purchaser shall, and shall cause each of its Subsidiaries and each of their respective officers, directors and employees to, (i) afford the Company and its authorized representatives reasonable access to the offices, properties and books and records of each of the Purchaser and its Subsidiaries and (ii) furnish to the officers, employees, and authorized agents and representatives of the Company such additional financial and operating data and other information regarding the Purchaser (or copies thereof) as the Company may from time to time reasonably request;
provided, however
, that any such access or furnishing of information shall be conducted at the Company’s expense, during normal business hours, under the supervision of the Purchaser’s personnel and in such a manner as not to interfere with the normal operations of the Purchaser. When accessing any of the properties of the Purchaser or its Subsidiaries, the Company and its authorized representatives shall comply with all of the Purchaser’s and its Subsidiaries’ safety and security requirements for the applicable property. Nothing herein shall require the Purchaser or any of its Subsidiaries to disclose information to the extent such disclosure may result in a waiver of attorney-client privilege, work product doctrine or similar privilege or (B) may violate any applicable Law or any confidentiality obligation of such party;
provided
that in any such event of this clause (B), the Purchaser shall cooperate to permit disclosure of such information in a manner consistent with the preservation of such confidentiality obligation.
(c) In order to facilitate the resolution of any claims made against or incurred by Seller or their respective Affiliates relating to the Company or the Business and for purposes of compliance by Seller and their respective Affiliates with securities, environmental, employment and other Laws, until the later of the seventh anniversary of the Closing or the expiration of the relevant period for the statutes of limitations (including any extensions thereof), the Purchaser shall (i) retain the books and records relating to the Company and the Business for periods prior to the Closing, and (ii) upon reasonable notice, afford the officers, employees, agents and representatives of Seller and its Affiliates reasonable access (including the right to make, at Seller’s or its Affiliate’s expense, copies), during normal business hours, to such books and records. No such books, records or documents shall be destroyed after the seventh anniversary of the Closing Date by the Purchaser, the Company or any of their respective Subsidiaries, without first advising the Seller or its Affiliate in writing and giving the Seller or its Affiliate a reasonable opportunity to obtain possession thereof. Without limiting the foregoing, the Purchaser shall (and shall cause the Company and its other Subsidiaries to) retain all Tax Returns, schedules and work papers, records and other documents in its possession (or in the possession of its Affiliates) relating to Tax matters relevant to the business of the Company and its Subsidiaries for each taxable period first ending after the Closing and for all prior taxable periods until the later of: (A) the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by Seller or its Affiliate in writing of such extensions for the respective Tax periods; and (B) six years following the due date (with extension) for such Tax Returns.
(d) Nothing contained in this Agreement shall give the Company or the Purchaser, directly or indirectly, rights to conduct or cause to be conducted any environmental investigation of the current or former operations or facilities of the other party or any of such other party’s Subsidiaries without the prior written consent of the other party. Notwithstanding anything to the contrary herein, each of the Purchaser and the Company hereby agrees that they are not authorized to and shall not (and shall not permit any of their respective employees, agents, representatives or Affiliates to) contact any employee, customer, landlord, supplier, distributor or other material business relation of the other party or any of its Subsidiaries (in each case, in their capacity as such) prior to the Closing without the prior consent of such party.
SECTION 6.06
Confidentiality
. The terms of the Nondisclosure Agreement, dated as of March 9, 2011, as amended (the “
Confidentiality Agreement
”), between General Atlantic Service Company, LLC and Purchaser are hereby incorporated herein by reference and shall continue in full force and effect following the date hereof;
provided
, that notwithstanding anything to the contrary in the Confidentiality Agreement, the Confidentiality Agreement shall automatically terminate at the Closing without further action by the parties thereto. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall nonetheless continue in full force and effect in accordance with its terms.
SECTION 6.07
Regulatory and Other Authorizations; Notices and Consents
(a) The parties shall use their respective reasonable best efforts to take, or cause to be taken, all actions, to do or cause to be done all things necessary, proper or advisable under applicable Law, and to execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and each Transaction Document and to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable (including the satisfaction, but not waiver, of the closing conditions set forth in Article IX) and each Transaction Document. Without limiting the generality of the foregoing, (i) as soon as reasonably practicable following the execution of this Agreement, and in no event later than ten Business Days after the date hereof, the Company and the Purchaser each shall file and not withdraw with the U.S. Federal Trade Commission (the “
FTC
”) and the Antitrust Division of the U.S. Department of Justice (the “
DOJ
”) any Notification and Report Forms relating to the transactions contemplated herein required by the HSR Act, (ii) to the extent applicable shall file, as soon as reasonably practicable following the execution of this Agreement, and in no event later than fifteen Business Days after the date hereof, with foreign antitrust authorities comparable notification forms and requests for clearances as required by Governmental Authorities to effectuate this Agreement and the transactions contemplated herein and in any Transaction Document and (iii) shall take or cause to be taken all other actions necessary, proper or advisable consistent with this Section 6.07 to cause the expiration of the applicable waiting periods, or receipt of required consents, approvals or authorizations, as applicable, under such Laws as soon as practicable. The parties each shall cooperate and consult with each other in connection with the making of all such filings and promptly (A) supply one another with any information which reasonably may be required in order to effectuate such filings and (B) supply any additional information which reasonably may be required by the FTC, the DOJ or any other Governmental Authority. Notwithstanding the foregoing, the Purchaser shall not consent to any voluntary extension of any statutory deadline or waiting period or to any voluntary delay of the consummation of the transactions contemplated by this Agreement at the behest of any Governmental Authority without the consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned. The Purchaser will pay all filing fees that are required to be submitted to any Governmental Authority by Purchaser to undertake the process of obtaining any such authorizations, consents, orders or approvals with respect to the Purchaser and the Company will pay all filing fees that are required to be submitted to any Governmental Authority by Seller or the Company to undertake the process of obtaining any such authorizations, consents, orders or approvals with respect to Seller or the Company.
(b) Each of the parties shall promptly notify the others upon the receipt of any communication from the FTC, the DOJ or from any other Governmental Authority in connection with efforts to effectuate this Agreement and the transactions contemplated herein and in any Transaction Document. No party shall agree to participate in any meeting or engage in any material substantive conversation with any Governmental Authority relating to efforts to effectuate this Agreement and the transactions contemplated herein unless, except as forbidden by the Governmental Authority, it gives the other party the opportunity to attend and participate at such meeting or conversation. The parties will coordinate and cooperate with each other in connection with making such filings, including by exchanging such information and providing such assistance as another party reasonably requests in connection with the foregoing and in seeking early termination of any applicable waiting periods, including under the HSR Act. The parties will provide one another with unredacted copies of all correspondence, filings or communications between them or any of their representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement
provided, however
, that (i) materials can be redacted with respect to information whose distribution to the other party is clearly prohibited by contract; and (ii) access to unredacted materials may be restricted to a party’s outside counsel as is believed to be necessary in order to address reasonable concerns regarding confidentiality and/or the preservation of legal privilege so long as redacted versions, whose redactions are narrowly tailored to address those concerns, are then also made available to the other parties. In furtherance and not in limitation of the foregoing and subject to Section 6.07(c), the Purchaser and the Company shall use their respective reasonable best efforts to resolve any objections that may be asserted with respect to the transactions contemplated by this Agreement or any Transaction Document under any antitrust, competition or trade regulatory Law as promptly as practicable.
(c) Notwithstanding the foregoing or any other provision of this Agreement or in any Transaction Document to the contrary, in connection with obtaining approval from the FTC, the DOJ or any other Governmental Authority in connection with the efforts to effectuate this Agreement and the transactions contemplated herein and in any Transaction Document, the Purchaser and its Affiliates shall not be required to, and the Seller, the Company Entities and their Affiliates may not, without the prior written consent of the Purchaser, (i) sell, divest, hold separate, transfer or dispose of, before or after the Closing, any material assets, operations, rights, product lines, businesses or interest therein of the Purchaser, any of the Company Entities or of any of their respective Affiliates (or consent to any of the foregoing actions), in each case solely to the extent such sale, divesture, holding separate, transfer, disposition or impairment would be material to the Purchaser and its Subsidiaries, taken as a whole (after giving effect to the Purchase); or (ii) litigate or otherwise formally oppose any determination (whether judicial or administrative in nature) by a Governmental Authority seeking to impose any of the restrictions referenced in clause (i) above (it being understood that nothing in this clause (ii) shall relieve the Purchaser or its Affiliates from its obligations to respond to or comply with a request for additional information and documentary material from the FTC or DOJ, commonly known as a “second request,” or any other Governmental Authority).
(d) The Purchaser shall not, and shall not permit any of its Affiliates to, without the prior written consent of the Company, take any action or enter into any transaction, including any merger, acquisition, joint venture, disposition, license, lease, contract, debt financing or equity financing (including the Cash Consideration Election), if such transaction could reasonably be expected to materially impair, delay or prevent consummation of the Purchase or the other transactions contemplated by this Agreement.
(e) The Company shall submit for approval by Seller the requisite vote (and in a manner reasonably satisfactory to Purchaser), as required by the terms of Section 280G(b)(5)(B) of the Code, any payments and/or benefits that may constitute “parachute payments” and that have an aggregate present value that equals or exceeds three (3) times a “disqualified individual’s” base amount within the meaning of Section 280G(b)(3) of the Code (“
Section 280G Payments
”) (which determination shall be made by the Company and shall be subject to review and approval by Purchaser, which approval shall not unreasonably be withheld, conditioned or delayed), such that all such payments and benefits shall not be deemed to be Section 280G Payments (the “
280G Approval
”). Prior to the Closing, the Company shall deliver to Purchaser either (i) notice that an equityholders vote was not solicited or (ii) evidence satisfactory to Purchaser that an equityholders vote was solicited in conformance with Section 280G and the regulations promulgated thereunder and that (x) such requisite 280G Approval was obtained with respect to any Section 280G Payment, or (y) that the 280G Approval was not obtained with respect to any Section 280G Payment and as a consequence, that Section 280G Payment shall not be made or provided, pursuant to the 280G waivers that were executed by the affected individuals prior to the equityholders vote.
SECTION 6.08
Updates
.
(a) Prior to the Closing, the Company shall promptly notify the Purchaser in writing of (i) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement which could result in any breach of a representation or warranty or covenant of the Company or Seller in this Agreement that would, if occurring or continuing on the Closing Date, cause any of the conditions set forth in Section 9.02(a) or 9.02(b) not to be satisfied, (ii) any material Actions threatened or commenced against or otherwise affecting it or any of its Subsidiaries that are related to the transactions contemplated by the Agreement or (iii) any change that would reasonably be expected to have a Material Adverse Effect on the Company. For the avoidance of doubt, no updated information provided to the Purchaser in accordance with this Section 6.08(a) shall be deemed to cure any breach of representation, warranty or covenant made in this Agreement.
(b) Prior to the Closing, the Purchaser shall promptly notify the Company in writing of (i) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement which could result in any breach of a representation or warranty or covenant of the Purchaser in this Agreement that would, if occurring or continuing on the Closing Date, cause the condition set forth in Section 9.01(a) not to be satisfied, (ii) any material Actions threatened or commenced against or otherwise affecting it or any of its Subsidiaries that are related to the transactions contemplated by the Agreement or (iii) any change that would reasonably be expected to have a Material Adverse Effect on the Purchaser. For the avoidance of doubt, no updated information provided to Company in accordance with this Section 6.08(b) shall be deemed to cure any breach of representation, warranty or covenant made in this Agreement.
SECTION 6.09
Further Action
. From time to time after the Closing, without additional consideration, each party hereto will (or, if appropriate, will cause its Affiliates to) execute and deliver such further instruments and take such other action as may be necessary or reasonably requested by the other party to make effective the transactions contemplated by this Agreement and each Transaction Document.
SECTION 6.10
No Solicitation or Negotiation
.
(a) From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement pursuant to Article XI, neither Seller, the Company, nor any of the Company Entities will, nor will any of them authorize or permit any of their respective officers, directors, Affiliates, stockholders or employees or any investment banker, attorney or other advisor or representative retained by any of them (all of the foregoing collectively being the “
Company Representatives
”) to, directly or indirectly, (i) solicit, initiate, seek, entertain, encourage, facilitate, support or induce the making, submission or announcement of any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Acquisition Proposal (as hereinafter defined), (ii) enter into, participate in, maintain or continue any communications (except solely to provide written notice as to the existence of these provisions) or negotiations regarding, or deliver or make available to any Person any non-public information with respect to, or take any other action regarding, any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Acquisition Proposal, (iii) agree to, accept, approve, endorse or recommend (or publicly propose or announce any intention or desire to agree to, accept, approve, endorse or recommend) any Company Acquisition Proposal, or (iv) enter into any letter of intent or any other contract, agreement, binding commitment or other written arrangement contemplating or otherwise relating to any Company Acquisition Proposal. Each of Seller and the Company Entities will immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the date of this Agreement with respect to any Company Acquisition Proposal. If any Company Representative, whether in his or her capacity as such or in any other capacity, takes any action that any Person is obligated pursuant to this Section 6.10 to cause such Company Representative not to take, then Seller and the Company shall be deemed for all purposes of this Agreement to have breached this Section 6.10(a).
“
Company Acquisition Proposal
” shall mean, with respect to Seller or any Company Entity, any agreement, offer, proposal or indication of interest (other than this Agreement or any other offer, proposal or indication of interest by Purchaser), or any public announcement of intention to enter into any such agreement or of (or intention to make) any offer, proposal or indication of interest, relating to, or involving: (A) any acquisition or purchase from any Company Entity, or from Seller or General Atlantic or any of their Affiliates, by any Person or Group (as hereinafter defined) of more than a 10% interest in the total outstanding voting securities of Seller or any Company Entity; (B) any sale, lease, mortgage, pledge, exchange, transfer, license (other than in the ordinary course of business), acquisition, or disposition of more than 10% of the assets of Seller or any Company Entity; or (C) any liquidation, dissolution, recapitalization or other significant corporate reorganization of Seller or any Company Entity, or any extraordinary dividend, whether of cash or other property, in each case of clauses (A), (B) and (C), whether in any single transaction or series of related transactions or through any merger, consolidation, business combination or similar transaction.
“
Group
” shall have the definition ascribed to such term under Section 13(d) of the Exchange Act, the rules and regulations thereunder and related case law.
(b) From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement pursuant to Article XI, Purchaser will not, nor will Purchaser authorize or permit any of its respective officers, directors, Affiliates, employees or any investment banker, attorney or other advisor or representative retained by any of them (all of the foregoing collectively being the “
Purchaser Representatives
”) to, directly or indirectly, (i) solicit, initiate, seek, entertain, encourage, facilitate, support or induce the making, submission or announcement of any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Purchaser Acquisition Proposal (as hereinafter defined), (ii) enter into, participate in, maintain or continue any communications (except solely to provide written notice as to the existence of these provisions) or negotiations regarding, or deliver or make available to any Person any non-public information with respect to, or take any other action regarding, any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Purchaser Acquisition Proposal, (iii) agree to, accept, approve, endorse or recommend (or publicly propose or announce any intention or desire to agree to, accept, approve, endorse or recommend) any Purchaser Acquisition Proposal, or (iv) enter into any letter of intent or any other contract, agreement, binding commitment or other written arrangement contemplating or otherwise relating to any Purchaser Acquisition Proposal. Purchaser will immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the date of this Agreement with respect to any Purchaser Acquisition Proposal. If any Purchaser Representative, whether in his or her capacity as such or in any other capacity, takes any action that any Person is obligated pursuant to this Section 6.10 to cause such Purchaser Representative not to take, then Purchaser shall be deemed for all purposes of this Agreement to have breached this Section 6.10(b). Notwithstanding the foregoing provisions of this Section 6.10(b), prior to the approval of the Purchaser Proposal by the Required Purchaser Stockholder Vote, this Section 6.10(b) shall not prohibit Purchaser from furnishing information regarding Purchaser to, or entering into discussions and negotiations with, any Person if: (A) Purchaser shall have received from such Person a bona fide Purchaser Acquisition Proposal that, after consultation with a financial advisor of nationally recognized reputation and outside legal counsel, the Purchaser Board determines in good faith is, or would reasonably be expected to result in, a Purchaser Superior Offer (and such proposal has not been withdrawn); (B) such Purchaser Acquisition Proposal did not result from any breach of, or any action inconsistent with, any of the provisions set forth in this Section 6.10; (C) the Purchaser Board concludes in good faith, after having consulted with its outside legal counsel, that failure to take such action would reasonably be expected to constitute a breach of the fiduciary duties of the Purchaser Board to Purchaser’s stockholders under applicable law; (D) at least four Business Days prior to furnishing any information to, or entering into discussions or negotiations with, such Person, Purchaser gives the Company written notice of the identity of such Person and of Purchaser’s intention to furnish information to, or enter into discussions with, such Person, and Purchaser receives from such Person an executed confidentiality agreement containing provisions (including nondisclosure provisions, use restrictions and non-solicitation provisions) at least as favorable to Purchaser as the provisions of the Confidentiality Agreement as in effect immediately prior to the execution of this Agreement; and (E) at least four Business Days prior to furnishing any information to such Person, Purchaser furnishes such information to Seller (to the extent such information has not been previously furnished by Purchaser to Seller or made available to Seller). Without limiting the foregoing, any violation of the restrictions contained in this Section 6.10(b) by any Subsidiary of Purchaser or Purchaser Representative shall be deemed a breach of this Section 6.10(b) by Purchaser.
“
Purchaser Acquisition Proposal
” shall mean, with respect to Purchaser, any agreement, offer, proposal or indication of interest, or any public announcement of intention to enter into any such agreement or of (or intention to make) any offer, proposal or indication of interest, relating to, or involving: (A) any acquisition or purchase from Purchaser or any of its Subsidiaries, by any Person or Group of more than a 10% interest in the total outstanding voting securities of Purchaser or any of its Subsidiaries; (B) any sale, lease, mortgage, pledge, exchange, transfer, license (other than in the ordinary course of business), acquisition, or disposition of more than 10% of the assets of Purchaser or any of its Subsidiaries; or (C) any liquidation, dissolution, recapitalization or other significant corporate reorganization of Purchaser, or any extraordinary dividend, whether of cash or other property, in each case of clauses (A), (B) and (C), whether in any single transaction or series of related transactions or through any merger, consolidation, business combination or similar transaction.
(c) Subject to any confidentiality obligation of the Seller or any of its Subsidiaries in effect as of the date hereof, Seller shall immediately notify Purchaser orally and in writing after receipt by any Company Entity, General Atlantic or Seller or any of their Affiliates (or, to the knowledge of Seller or the Company, by any of the Company Representatives) and Purchaser shall immediately notify Seller orally and in writing after receipt by Purchaser or any of its Affiliates (or, to the knowledge of Purchaser, by any of the Purchaser Representatives), of (i) any Company Acquisition Proposal or Purchaser Acquisition Proposal, as applicable, (ii) any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Acquisition Proposal or Purchaser Acquisition Proposal, as applicable, (iii) any other notice that any Person is considering making a Company Acquisition Proposal or Purchaser Acquisition Proposal, as applicable, or (iv) any request for nonpublic information relating to Seller or any Company Entity or Purchaser or any of its Subsidiaries or for access to any of the properties, books or records of Seller or any Company Entity or Purchaser or any of its Subsidiaries, as applicable, by any Person or Persons. Such notice shall describe (1) the material terms and conditions of such Company Acquisition Proposal or Purchaser Acquisition Proposal, inquiry, expression of interest, proposal, offer, notice or request, and (2) the identity of the Person or Group making any such Company Acquisition Proposal or Purchaser Acquisition Proposal, inquiry, expression of interest, proposal, offer, notice or request. Seller or Purchaser shall keep the other party fully informed of the status and details of, and any modification to, any such inquiry, expression of interest, proposal or offer and any correspondence or communications related thereto and shall provide to the other party a true, correct and complete copy of such inquiry, expression of interest, proposal or offer and any amendments, correspondence and communications related thereto, if it is in writing, or a reasonable written summary thereof, if it is not in writing. Seller or Purchaser shall provide the other party with 48 hours prior notice (or such lesser prior notice as is provided to the attendees) of any meeting of the applicable governing body of Seller, or any Company Entity or Purchaser or any of its Subsidiaries, as applicable, at which such governing body is reasonably expected to discuss any Company Acquisition Proposal or Purchaser Acquisition Proposal.
SECTION 6.11
Intercompany Arrangements
. Prior to the Closing, the Company shall cause any contract or arrangement that is disclosed (or should have been disclosed) in Section 3.18(a) of the Disclosure Schedule, other than those contracts or arrangements set forth in Section 3.18(b) of the Disclosure Schedule, to be terminated or otherwise amended to exclude Seller as a party thereto.
SECTION 6.12
Indemnification; Directors’ and Officers’ Insurance
.
(a) The Purchaser agrees that all rights to indemnification existing as of the date of this Agreement and permissible under applicable Law for acts or omissions occurring prior to the Closing in favor of (i) the Company Employees currently indemnified by the Company or any Subsidiary or (ii) any current or former employee, officer, director, general partner and member of any executive committee of Seller currently indemnified by Seller (clauses (i) and (ii) collectively, the “
Covered Persons
”) as provided in their respective certificates of incorporation or bylaws (or similar organizational documents), individual indemnity agreements or as provided pursuant to a resolution of the Board of Directors (or equivalent governing body) of Seller, the Company or any Subsidiary of the Company, as applicable, shall survive the Closing and shall not be amended, repealed or otherwise modified and shall continue in full force and effect in accordance with their terms for a period of six (6) years from the Closing Date or, if longer, for such period as is set forth in any applicable agreement with a Covered Person in effect on the date of this Agreement. From and after the Closing, the Purchaser shall, to the fullest extent permitted by applicable Law, cause the Company to honor such obligations, including to assume any obligations of Seller in respect of any Covered Persons.
(b) The Purchaser and the Company shall (and, prior to the Closing Date, notwithstanding anything to the contrary in this Agreement, including Section 6.01, the Company shall be permitted to, without affecting any representation, covenant or condition in this Agreement) purchase and maintain in effect, without any lapses in coverage, a prepaid, non-rescindable, stand-alone “tail” policy providing directors’ and officers’ liability insurance coverage for the benefit of those Persons who are covered by Seller’s or the Company Entity’s directors’ and officers’ liability insurance policies as of the date hereof or at the Closing, for a period of six (6) years following the Closing Date with respect to matters occurring prior to the Closing that is at least equal to the coverage provided under such Person’s current directors’ and officers’ liability insurance policies.
(c) The provisions of this Section 6.12 are (i) intended to be for the benefit of, and shall be enforceable by, each Person entitled to indemnification under this Section 6.12, and each such Person’s heirs, legatees, representatives, successors and assigns, it being expressly agreed that such Persons shall be third party beneficiaries of this Section 6.12, and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by contract or otherwise. In furtherance of the foregoing, the Purchaser hereby acknowledges that the Covered Persons may have certain rights to indemnification, advancement of expenses and/or insurance provided by other Persons. The Purchaser hereby agrees that (A) the Purchaser and the Company are the indemnitor of first resort (i.e., their obligations to the Covered Persons are primary and any obligation of such other Persons to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any such Covered Person is secondary), (B) the Purchaser and the Company shall be required to advance the full amount of expenses incurred by any such Covered Person and shall be liable for the full indemnifiable amounts, without regard to any rights any such Covered Person may have against any such other Person and (C) the Purchaser and the Company irrevocably waive, relinquish and release such other Persons from any and all claims against any such other Persons for contribution, subrogation or any other recovery of any kind in respect thereof;
provided
,
however
, that nothing herein shall increase the indemnification or reimbursement rights of any Covered Person beyond that to which such Covered Person is entitled to as of the date of this Agreement (for example, if a Covered Person is not as of the date hereof entitled to advancement of expenses, nothing herein shall create an obligation to advance expenses to such Covered Person), except as may be required by applicable Law in effect from time to time following the date hereof. Each of the Purchaser and the Company further agrees that no advancement or payment by any of such other Persons on behalf of any such Covered Person with respect to any claim for which such Covered Person has sought indemnification from the Company shall affect the foregoing and such other Persons shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Covered Person against the Company.
(d) In the event that all or substantially all of the business or assets of the Purchaser or any of its Subsidiaries (including any Company Entity) is sold, whether by merger, consolidation, sale of assets or securities or otherwise, in one transaction or a series of transactions, then in each such case the Purchaser shall, or shall cause the Company or applicable Company Entity to, take action to ensure that the successors and assigns of the Purchaser or any of its Subsidiaries (including any Company Entity), as applicable, assume the obligations set forth in this Section 6.12. The provisions of this Section 6.12(d) shall apply to all of the successors and assigns of the Company, and the Company’s Subsidiaries, the Purchaser and the Purchaser’s other Subsidiaries as applicable.
SECTION 6.13
Financing
.
(a) The Purchaser shall use its reasonable best efforts to arrange and consummate the New Financing on the Closing Date on the terms and conditions described in the Commitment Letters, which shall include using reasonable best efforts to (i) comply with its obligations under the Financing Commitment Letter and the Fee Letter, (ii) negotiate and execute definitive agreements with respect thereto on terms and conditions (including flex provisions) contained therein or on other terms that are not less favorable to the Purchaser than those contained in the Financing Commitment Letter and the Fee Letter (the “
Financing Agreements
”), and keep the Seller informed on a regular basis and in reasonable detail of the status of its efforts to arrange the New Financing, and if the Financing Agreements are entered into prior to the Closing, deliver to the Seller a copy thereof as promptly as practicable (and no later than one Business Day) after such execution, (iii) satisfy on a timely basis all conditions in the Financing Agreements that are within its control, including the payment of any commitment, engagement or placement fees required as a condition to the New Financing, (iii) enforce its rights under the Financing Commitment Letter and the Financing Agreements and (iv) consummate the New Financing at or prior to the Closing.
(b) In the event all or any portion of the New Financing (or if applicable, any Substitute Financing) becomes unavailable on the terms and conditions contemplated in the Commitment Letter and/or the Financing Agreements (or if applicable, the Substitute Financing Commitment Letter and/or the Substitute Financing Agreements), the Purchaser shall promptly notify the Seller of such development and shall use its reasonable best efforts to obtain, as promptly as practicable, financing from alternative sources (x) on terms and conditions (including the flex provisions) not materially less favorable to the Purchaser than those contained in the Financing Commitment Letter and the Fee Letter as of the date hereof, and (y) in an amount, when added to the portion of the New Financing (or if applicable, any Substitute Financing) that is available (if any), together with funds (including cash on hand of the Purchaser and its Subsidiaries) otherwise available to Purchaser, sufficient to consummate the transactions contemplated by this Agreement and each Transaction Document upon the terms contemplated hereby and thereby, together with any fees and expenses of or payable by the Purchaser on the Closing Date with respect thereto and with respect to the New Financing (or if applicable, any Substitute Financing) (“
Alternative Financing
”). If a new financing commitment letter is entered into in connection with such Alternative Financing (the “
Alternative Financing Commitment Letter
”), the Purchaser shall promptly provide the Company with a copy of such Alternative Financing Commitment Letter and any associated fee letter(s) (the “
Alternative Fee Letter(s)
”) upon the execution by the financing source thereof. To the extent applicable, the Purchaser shall use its reasonable best efforts to arrange and consummate the Alternative Financing on the terms and conditions described in the Alternative Financing Commitment Letter, which shall include using its reasonable best efforts to (i) comply with its obligations under the Alternative Financing Commitment Letter and the Alternative Fee Letter(s), (ii) negotiate and execute definitive agreements with respect thereto on terms and conditions (including flex provisions) contained therein or on other terms that are not less favorable to the Purchaser than those contained in the Financing Commitment Letter and the Fee Letter (the “
Alternative Financing Agreements
”), and keep the Seller informed on a regular basis and in reasonable detail of the status of its efforts to arrange the Alternative Financing, and if the Alternative Financing Agreements are entered into prior to the Closing, deliver to the Seller a copy thereof as promptly as practicable (and no later than one Business Day) after such execution, (iii) satisfy on a timely basis all conditions in the Alternative Financing Agreements that are within its control, including the payment of any commitment, engagement or placement fees required as a condition to the Alternative Financing, (iv) enforce its rights under the Alternative Financing Commitment Letter and the Alternative Financing Agreements and (v) consummate the Alternative Financing at or prior to the Closing. None of the Alternative Financing Commitment Letter, the Alternative Fee Letter(s), or the Alternative Financing Agreements shall (A) contain conditions precedent or contingencies to the funding on the Closing Date of the Alternative Financing, or any other provisions that could reasonably be expected to have the effect of, making it less likely that the Financing will be funded or imposing new or additional conditions or expanding any conditions than those set forth in the Commitment Letter or the Financing Agreements or (B) adversely affect the ability of the Purchaser to timely consummate the transactions contemplated by this Agreement or any Transaction Document.
(c) Notwithstanding anything to the contrary contained in this Agreement, the Purchaser shall have the right to substitute other debt or equity financing for all or any portion of the New Financing (or, if applicable, any Alternative Financing) from the same and/or alternative financing sources (“
Substitute Financing
” and, together with the New Financing and any Alternative Financing, the “
Financing
”);
provided
, in each case, that any such Substitute Financing (1) shall not (A) contain conditions precedent or contingencies to the funding on the Closing Date of the Substitute Financing, or any other provisions that could reasonably be expected to have the effect of, making it less likely the Financing will be funded or imposing new or additional conditions or expanding any conditions than those set forth in the Commitment Letter, the Fee Letter or the Financing Agreements (or if applicable, the Alternative Financing Commitment Letter, the Alternative Fee Letter(s) or the Alternative Financing Agreement), or (B) adversely affect the ability of the Purchaser to timely consummate the transactions contemplated by this Agreement or any Transaction Document, or (C) without the consent of Seller, result in fees and expenses greater than those associated with the New Financing as contemplated by the Financing Agreements, including pursuant to the “
Alternate Transaction Fee
” provisions included in the Fee Letter, and (2) shall be (x) from Lender(s) and/or other financing sources acceptable to the Seller, (y) on terms and conditions (including the flex provisions) not materially less favorable to the Purchaser than those contained in the Financing Commitment Letter and the Fee Letter as of the date hereof, and (z) in an amount, when added to the portion of the New Financing (or if applicable, any Alternative Financing) that is available (if any), together with funds (including cash on hand of the Purchaser and its Subsidiaries) otherwise available to Purchaser, sufficient to consummate the transactions contemplated by this Agreement and each Transaction Document upon the terms contemplated hereby and thereby, together with any fees and expenses of or payable by the Purchaser on the Closing Date with respect thereto and with respect to the New Financing (or if applicable, any Alternative Financing); and
provided
, further, that if a new financing commitment letter is entered into in connection with any such Substitute Financing (the “
Substitute Financing Commitment Letter
”), the Purchaser shall promptly provide the Company with a copy of such Substitute Financing Commitment Letter and any associated fee letter(s) (the “
Substitute Fee Letter(s)
”) upon the execution by the financing source thereof. To the extent applicable, the Purchaser shall use its reasonable best efforts to arrange and consummate the Substitute Financing on the terms and conditions described in the Substitute Financing Commitment Letter, which shall include using its reasonable best efforts to (i) comply with its obligations under the Substitute Financing Commitment Letter, (ii) negotiate and execute definitive agreements with respect thereto on terms and conditions (including flex provisions) contained therein or on other terms that are not less favorable to the Purchaser contained in the Financing Commitment Letter and the Fee Letter (the “
Substitute Financing Agreements
”), and keep the Seller informed on a regular basis and in reasonable detail of the status of its efforts to arrange the Substitute Financing, and if the Substitute Financing Agreements are entered into prior to the Closing, deliver to the Seller a copy thereof as promptly as practicable (and no later than one Business Day) after such execution, (iii) satisfy on a timely basis all conditions in the Substitute Financing Agreements that are within its control, including the payment of any commitment, engagement or placement fees required as a condition to the Substitute Financing, (iv) enforce its rights under the Substitute Financing Commitment Letter and the Substitute Financing Agreements and (v) consummate the Substitute Financing at or prior to the Closing.
(d) The Purchaser shall give the Seller notice promptly upon becoming aware of (i) any material breach or default by any party to the Financing Commitment Letter and/or the Financing Agreements and, if applicable, the Alternative Financing Commitment Letter, the Alternative Financing Agreements, the Substitute Financing Commitment Letter, and/or the Substitute Financing Agreements, (ii) the receipt of (A) any written notice or (B) other written communication, in each case from any Lender with respect to any (1) actual or potential breach, default, termination or repudiation by any party to any of the Financing Commitment Letter, any of the Financing Agreements and, if applicable, the Alternative Financing Commitment Letter, the Alternative Financing Agreements, the Substitute Financing Commitment Letter, and/or the Substitute Financing Agreements or (2) material dispute or disagreement between or among any parties to any of the Financing Commitment Letter, any of the Financing Agreements and, if applicable, the Alternative Financing the Substitute Financing, related to the Financing with respect to the obligation to fund the Financing or the amount of the Financing to be funded at the Closing, and (iii) if any time for any reason the Purchaser believes in good faith that it will not be able to obtain all or any portion of the Financing on the terms and conditions, in the manner or from the sources contemplated by any of the Financing Commitment Letter, any of the Financing Agreements and, if applicable, the Alternative Financing or the Substitute Financing. The Purchaser shall keep the Company informed on a reasonably current basis in reasonable detail of the status of its efforts to arrange the Financing and, if applicable, the Alternative Financing or any Substitute Financing. The Purchaser shall not amend, modify, supplement, restate, substitute or replace the Financing Commitment Letter, any Financing Agreement or, if applicable, any Alternative Financing Commitment Letter or Substitute Financing Commitment Letter, or any Alternative Financing Agreement or Substitute Financing Agreement, in each case except in accordance with the applicable provisions set forth in Section 6.13(b) or Section 6.13(c).
(e) Prior to the Closing, the Company shall provide, and cause the other Company Entities to provide, and shall use reasonable best efforts to cause its and their respective officers, employees, representatives and advisors, including legal and accounting advisors to provide, all reasonable cooperation in connection with the arrangement of the Financing as may be reasonably requested by the Purchaser and that is necessary, customary or advisable in connection with the Purchaser’s efforts to obtain the Financing (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company Entities), including (i) assisting in the preparation for and participation, on reasonable advance notice, in a reasonable number of meetings, road shows, drafting sessions, rating agency presentations and due diligence sessions, (ii) furnishing the Purchaser and its financing sources with customary information regarding the Company as is reasonably requested by the Purchaser for inclusion in bank information memoranda and similar documents;
provided
that any such memoranda or document shall contain disclosure and financial statements with respect to the Purchaser as the obligor of the Financing, (iii) preparing business projections and financial statements (including pro forma financial statements) the receipt of which is contemplated by the Financing Commitment Letter (as in effect on the date of this Agreement), (iv) assisting the Purchaser and its financing sources in the preparation of (A) customary offering documents, information memoranda (including, if applicable, the delivery of one or more customary representation letters) and similar documents required in connection with the Financing and (B) materials for rating agency presentations, (v) using commercially reasonable efforts to ensure that the Debt Financing Sources benefit from the existing lending relationships of the Company and the other Company Entities and (vi) furnishing such documents and other information as may be reasonably requested by the Purchaser in connection with any pledge or security documents associated with the Financing (including a certificate of the chief financial officer of the Company or any Company Subsidiary with respect to solvency matters substantially in the form contemplated by the Financing Commitment Letter (as in effect on the date of this Agreement)) and using commercially reasonable efforts to obtain consents of accountants for use of their reports in any materials relating to the Financing that in each case are reasonably requested by the Purchaser;
provided
that no Company Entity shall be required to pay any commitment or other similar fee or incur any other liability or out-of-pocket cost or expense in connection with the New Financing (or any Substitute Financing or Alternative Financing) prior to the Closing (and the Purchaser shall, promptly upon request by the Company, reimburse the Seller, the Company or any other Company Entity, as applicable, for all reasonable and documented out-of-pocket costs or expenses incurred by the Seller, the Company or any other Company Entity in connection with any cooperation provided pursuant to this Section 6.13(e)); and
provided further
that the effectiveness of any documentation executed by any Company Entity shall be subject to the consummation of the Closing; and
provided further
that no Company Entity shall be required to take any action prior to the Closing in contravention of the terms of any Company Indebtedness. The Purchaser may reasonably use logos of the Company Entities solely in connection with the Financing; provided that (i) such logos are used solely in a manner that is not intended to nor reasonably likely to harm or disparage any of the Company Entities or the reputation or goodwill of any of the Company Entities and its or their Intellectual Property, (ii) the logos shall be used in accordance with any written guidelines provided by the Company to Purchaser; and (iii) Purchaser must immediately terminate use of such logos upon termination of this Agreement, and provided further that the Company shall have an opportunity to review and reasonably object to any use of the Company Entities’ logos prior to the dissemination of any materials in which such logos are used.
SECTION 6.14
Name Changes
. Seller shall, or shall cause its applicable Affiliates to, as promptly as reasonably practicable after Closing, file amended articles of incorporation (or equivalent documents) with the appropriate Governmental Authorities changing its corporate name. The Purchaser shall, or shall cause its applicable Affiliates to, as promptly as reasonably practicable after Closing, file amended articles of incorporation (or equivalent documents) with the appropriate Governmental Authorities changing the Company’s corporate name.
SECTION 6.15
Transaction Litigation
. The Purchaser shall consult with Seller in connection with the defense, settlement or prosecution of any Action threatened or commenced against or otherwise affecting it or any of its Subsidiaries that are related to the transactions contemplated by this Agreement (“
Transaction Litigation
”), and none of the Purchaser or its Subsidiaries shall compromise, settle, come to an arrangement regarding, or offer or agree to compromise, settle or come to an arrangement regarding any Transaction Litigation or consent to the same, unless Seller shall have consented in writing (such consent not to be unreasonably withheld, delayed or conditioned).
SECTION 6.16
Confirmatory Assignment
. Effective prior to the Closing, Seller shall assign to the Company all right, title and interest (if any) in and to all of Seller’s Intellectual Property that is used in the Business.
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.01
Employee Benefits
. Purchaser agrees that with respect to all employees of the Company Entities who continue employment with Purchaser or any subsidiary of Purchaser immediately after the Closing (“
Continuing Employees
”), Purchaser shall, in Purchaser’s sole discretion, either (a) continue (or cause the Company to continue) to maintain the Company Benefit Plans that constitute health, welfare, vacation and Section 401(k) plans of the Company Entities (each a “
Company Welfare Plan
”), (b) arrange for each Continuing Employee and his or her eligible dependents who, as of the Closing, were participating in the Company Welfare Plans (such persons, the “
Company Participants
”) to participate in Purchaser Benefit Plans, as determined on a plan-by-plan or arrangement-for-arrangement basis, that constitute health, welfare, vacation and Section 401(k) plans of Purchaser or its applicable subsidiary (each a “
Purchaser Welfare Plan
”), subject to any reasonably necessary transition period and subject to any applicable plan provisions, contractual requirements and Laws, or (c) arrange for benefits through a combination of clauses (a) and (b), so that each Company Participant shall have benefits under health, welfare, vacation and 401(k) plans. For purposes of determining a Continuing Employee’s eligibility to participate in any Purchaser Welfare Plans, the vesting of benefits under any Purchaser Welfare Plan that is intended to qualify as a qualified cash or deferred arrangement under Section 401(k) of the Code, and the benefit accrual rate under any Purchaser Welfare Plan that is a vacation plan, such Continuing Employee shall receive credit under such plans for his or her years of service with the Company (and, to the extent recognized by the Company, a Company Predecessor Entity) prior to the Closing;
provided, however
, that in no event shall such credit result in the duplication of benefits or the funding thereof or require retroactive contributions to any such plan. In addition, the Purchaser shall use commercially reasonable best efforts to waive, or shall cause to be waived, any limitations as to pre-existing conditions, evidence of insurability, exclusions and waiting periods with respect to participation and coverage requirements for Continuing Employees under Purchaser Welfare Plans (to the same extent recognized under the Plans immediately prior to Closing) and shall use commercially reasonable best efforts to give credit or cause to give credit to Continuing Employees for co-payments and deductibles paid under a Company Welfare Plan during the plan year in which the Closing occurs in satisfying any deductible or out-of-pocket requirements under a comparable Purchaser Welfare Plan in the plan year in which the Closing occurs. Nothing in this Section 7.01 or elsewhere in this Agreement shall be construed to create a right in any Company Employee to employment with Purchaser or any subsidiary of Purchaser. Nothing in this Section 7.01 or elsewhere in this Agreement shall be construed to create an obligation by the Purchaser or any of its subsidiaries to maintain any Purchaser Welfare Plans or to provide any health, welfare, vacation or other benefits to the employees of Purchaser or its subsidiaries. No Continuing Employee, and no other Company Entity Employee, shall be deemed to be a third party beneficiary of this Agreement.
SECTION 7.02
401(k) Plan
. Unless otherwise requested by the Purchaser prior to the Closing, the Company shall take all actions reasonably necessary to terminate any and all plans intended to qualify as a qualified cash or deferred arrangement under Section 401(k) of the Code (each a “
Company 401(k) Plan
”) effective immediately prior to the Closing. At the request of Purchaser, the Company will provide Purchaser with evidence that each such plan has been so terminated. Subject to compliance with the terms of the Company 401(k) Plan (including the Company 401(k) Plan loan policy) and the Purchaser 401(k) Plan, Purchaser agrees to permit each Continuing Employee who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from the Company 401(k) Plan, if any, to rollover such eligible rollover distribution to a tax-qualified cash or deferred arrangement under Section 401(k) of the Code of Purchaser or any of its Affiliates (each a “
Purchaser 401(k) Plan
”) in accordance with Section 401(a)(31) of the Code and other applicable provisions of ERISA and the Code and shall include the opportunity for participants that are Continuing Employees to rollover their participant loan accounts and liabilities under the Company 401(k) Plan. Notwithstanding the preceding sentence, Purchaser shall not be required to permit such rollovers to a Purchaser 401(k) Plan if (a) in its reasonable good faith determination, which shall be made as soon as reasonably practicable but in no event later than 60 days following the date hereof, it determines that such rollover would result in a material increase in the administrative cost to the Purchaser in administering the Purchaser 401(k) Plan, or (b) with respect to rollovers of participant loan accounts and liabilities under the Company 401(k) Plan, Seller or any Company Entity has failed to administer a Company 401(k) loan program in material compliance with applicable Law and the terms of the applicable Company 401(k) Plan or (c) Seller or the Company has failed to take steps that are reasonably requested by Purchaser to maintain the qualified status of a Company 401(k) Plan. The Purchaser further agrees that to the extent permitted by applicable Law and the terms of the Company 401(k) Plan (including the Company 401(k) Plan loan policy), if Purchaser does not allow loan balance rollovers, the Purchaser shall permit any Continuing Employee who is a participant in the terminated Company 401(k) Plan with a loan balance to continue to make payments against such loan balance for a period equal to the lesser of (x) the duration of the term of the applicable loan, (y) nine months following the Closing, and (z) the date of termination of such Continuing Employee.
SECTION 7.03
Employment Arrangements
. The Purchaser agrees that as of the Closing, the Company (and not the Seller) shall become the sole obligor under each of the Transaction Incentive Letter Agreements (other than with respect to amounts payable under Section 3 thereof, which shall be treated in accordance with Section 2.09(b)) and any other Company Benefit Plans listed on Section 3.12(a) of the Disclosure Schedule, and the Purchaser shall, or shall cause the Company, as applicable, to honor all of the obligations arising thereunder on and after the Closing;
provided
that Purchaser shall not be obligated to continue the Company’s general severance policy disclosed to Purchaser in item 11.4.17 of the Data Room or any other general severance policy that may be adopted by the Company prior to the Closing. For the avoidance of doubt, this Section 7.03 shall not override Section 2.09 of this Agreement. The Company shall be permitted to and shall take all steps reasonably necessary prior to the Closing to effectuate the removal of Seller as an obligor under the agreements and plans referred to in the first two sentences of this Section 7.03 effective as of the Closing. Nothing in this Section 7.03 or elsewhere in this Agreement shall be construed to create a right in any Company Employee to continued employment with the Purchaser or any subsidiary of the Purchaser, or to create an obligation by the Purchaser or any of its subsidiaries to maintain any Company Benefit Plan following the Closing (except as provided under the terms of such Company Benefit Plan as of the date hereof). No Continuing Employee, and no other Company Entity Employee, shall be deemed to be a third party beneficiary of this Agreement.
ARTICLE VIII
TAX MATTERS
SECTION 8.01
Tax Cooperation and Exchange of Information
. The Seller and the Purchaser shall provide each other with such cooperation and information as either of them reasonably may request of the other (and the Purchaser shall cause the Company to provide such cooperation and information) in filing any Tax Return, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with related work papers and documents relating to rulings or other determinations by taxing authorities. The Seller and the Purchaser shall make themselves (and their respective employees) reasonably available on a mutually convenient basis to provide explanations of any documents or information provided under this Section 8.01. Notwithstanding anything to the contrary in Section 6.05, the Company and the Purchaser shall retain all Tax Returns, work papers and all material records or other documents in their possession (or in the possession of their Affiliates) relating to Tax matters of the Company for any taxable period that includes the Closing Date and for all prior taxable periods until the later of (a) the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate (without regard to extensions), or (b) six years following the due date (without regard to extensions) for such Tax Returns. Any information obtained under this Section 8.01 shall be kept confidential, except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting an audit or other proceeding.
SECTION 8.02
Conveyance Taxes
. Seller and Purchaser shall bear equally any and all Conveyance Taxes imposed upon, or payable or collectible or incurred in connection with, this Agreement or the transactions contemplated hereby. The Purchaser and the Seller agree to cooperate in the execution and delivery of all instruments and certificates necessary to enable the appropriate party to comply with any pre Closing filing requirements.
SECTION 8.03
Preparation of Tax Returns and Payment of Taxes
.
(a) The Purchaser shall prepare or cause to be prepared and timely file or cause to be filed all Tax Returns for the Company Entities with respect to Pre-Closing Tax Periods that are required to be filed with any Governmental Authority after the Closing Date. Seller shall remit to the relevant Company Entity any Pre-Closing Taxes due in respect of such Tax Returns. The Purchaser shall provide the Seller with a reasonable opportunity to review and comment on such Tax Returns in advance of filing. The Purchaser shall prepare or cause to be prepared and timely file or cause to be filed all Tax Returns that are required to be filed by or with respect to any Company Entity for any taxable periods ending after the Closing Date and shall pay or cause to be paid any Taxes due in respect of such Tax Returns, provided that Seller shall be responsible for and shall remit to the relevant Company Entity any Pre-Closing Taxes due in respect of Tax Returns and are required to be filed by or with respect to any Company Entity for Straddle Periods (“
Straddle Returns
”).
(b) Straddle Returns and the Tax Returns in respect of Pre-Closing Tax Periods referred to in subsection (a) shall be prepared on a basis consistent with past practices of the Company (except to the extent counsel to the Purchaser opines that there is not substantial authority in Law for a particular position). The Purchaser shall deliver any Straddle Return to Seller for its review at least thirty (30) days prior to the date on which such Tax Return is required to be filed. If Seller disputes any item on such Tax Return, it shall notify the Purchaser of such disputed item (or items) and the basis for its objection. The parties shall act in good faith to resolve any such dispute prior to the date on which the relevant Tax Return is required to be filed. If the parties cannot resolve any disputed item, the item in question shall be resolved by an independent accounting firm mutually acceptable to Seller and the Purchaser. The fees and expenses of such accounting firm shall be borne equally by Seller and the Purchaser.
(c) Neither the Purchaser nor any of its Affiliates shall (or shall cause or permit any Company Entity to) amend, re-file or otherwise modify any Tax Return relating in whole or in part to any Company Entity with respect to any Pre-Closing Tax Period (or with respect to any Straddle Period) that would reasonably be expected to result in an indemnification obligation for Seller without the written consent of the Seller, which consent will not be unreasonably withheld. Without limiting the foregoing, in the event a Tax Return is filed while a contest relating to Taxes for which the Seller might have an indemnification obligation pursuant to Section 10.02 is pending, and such Tax Return must be amended as a result of and based upon the resolution of such contest, the Purchaser shall amend such Tax Return solely to reflect the resolution of such contest and the Seller shall not withhold its consent to such amendment.
(d) Prior to the Closing Date, Seller shall timely prepare and file, or cause to be timely prepared and filed, all Tax Returns of the Company that are required to be filed (taking into account valid extensions of time in which to make such filings) on or prior to the Closing Date. Seller shall timely pay (or cause to be paid) all Taxes due with respect to such Tax Returns. Without limiting the generality of the foregoing (or of any other provision of this Agreement), Seller shall (i) timely prepare and file, or cause to be timely prepared and filed, all value-added (and similar) Tax Returns of the Company that are due (whether currently or past due) prior to the Closing Date, (ii) timely pay (or cause to be paid) all Taxes due with respect to such value-added (and similar) Tax Returns and (iii) prior to the Closing Date, provide the Purchaser with evidence that all such value-added (and similar) Tax Returns have been accepted by the applicable Taxing Authority.
SECTION 8.04
Refunds
.
(a) Seller will be entitled to offset any obligation to indemnify for Taxes under this Agreement by the amount of refunds of Taxes (including interest received thereon) actually received by a Company Entity in respect of any Pre-Closing Tax Period prior to the Survival Date. The Purchaser shall cause such refund to be paid to Seller promptly after it is received to the extent Seller previously has made any indemnification payment under this Agreement or shall credit such refund against any then due or future indemnification payment.
(b) Except as provided in Section 8.04(a), the Purchaser or the applicable Company Entity will be entitled to any credits and refunds of Taxes (including any interest received thereon) in respect of any federal, state, local or foreign Tax liability of any Company Entity.
SECTION 8.05
Tax Elections
. The Purchaser shall not, without the prior consent of Seller (which will not be unreasonably withheld), make, or cause to permit to be made, any Tax election, or adopt or change any method of accounting, or undertake any extraordinary action on the Closing Date, that would reasonably be expected to result an indemnification obligation for Seller.
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.01
Conditions to Obligations of the Company and Seller
. The obligations of the Company and Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or written waiver, at or prior to the Closing, of each of the following conditions:
(a)
Representations, Warranties and Covenants
. (i) The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all respects, without regard to any “materiality” or “Material Adverse Effect” qualifications contained therein, as of the Closing, as though made on and as of the Closing, except for such failures to be true and correct in the aggregate as would not have a Material Adverse Effect on the Purchaser (except to the extent such representations and warranties are made as of another date, in which case such representations and warranties shall be true and correct in the manner set forth in this clause (i) as of such other date), (ii) the covenants and agreements contained in this Agreement to be complied with by the Purchaser at or before the Closing shall have been complied with in all material respects and (iii) Seller shall have received a certificate of the Purchaser signed by a duly authorized officer thereof on behalf of the Purchaser (and without personal liability), dated as of the Closing Date and certifying the matters set forth in clauses (i) and (ii) above and Section 9.01(d);
(b)
Governmental Approvals
. Any waiting period (and any extension thereof) under the HSR Act shall have expired or shall have been terminated;
(c)
No Order
. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order (whether temporary, preliminary or permanent) that has the effect of making the Purchase illegal or otherwise prohibiting the consummation of the Purchase;
(d)
No Material Adverse Effect
. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect on Purchaser which has not been cured, and no event shall have occurred or circumstance shall exist that, in combination with any other events or circumstances, would reasonably be expected to result in a Material Adverse Effect on Purchaser and no Material Adverse Effect on the Combined Companies (applied mutatis mutandis) shall have occurred;
(e)
Securities Exemptions
. The offer and sale of the Purchaser Common Stock to Seller pursuant to this Agreement shall be qualified or exempt from the registration requirements of the Securities Act, the qualification requirements of the California Corporate Securities Law of 1968, as amended and the registration and/or qualification requirements of all other applicable state securities laws;
(f)
Purchaser Stockholder Approval
. The Purchaser Proposal shall have been duly approved by the Required Purchaser Stockholder Vote at a duly called Purchaser Stockholders’ Meeting;
(g)
SEC Filings
. Purchaser shall have filed all statements, reports, schedules, forms, exhibits, and other documents required to be filed pursuant to Section 13(a) of the Exchange Act with the SEC since the date of this Agreement; and
(h)
Closing Deliverables
. The Purchaser shall have delivered to Seller, and the Company, as applicable, all items required to be delivered pursuant to Section 2.04(a) and 2.06.
SECTION 9.02
Conditions to Obligations of the Purchaser
. The obligations of the Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or written waiver, at or prior to the Closing, of each of the following conditions:
(a)
Representations, Warranties and Covenants of the Company
. (i) The representations and warranties of the Company contained in this Agreement shall be true and correct, without regard to any “materiality” or “Material Adverse Effect” qualifications contained therein, as of the Closing, as though made on and as of the Closing, except for such failures to be true and correct in the aggregate as would not have a Material Adverse Effect on the Company (except to the extent such representations and warranties are made as of another date, in which case such representations and warranties shall be true and correct in the manner set forth in this clause (i) as of such other date), (ii) the covenants and agreements contained in this Agreement to be complied with by the Company, at or before the Closing shall have been complied with in all material respects and (iii) the Purchaser shall have received a certificate of the Company, signed by a duly authorized officer thereof on behalf of the Company (and without personal liability), dated as of the Closing Date and certifying the matters set forth in clauses (i) and (ii) above and Section 9.02(e);
(b)
Representations, Warranties and Covenants of Seller
. (i) The representations and warranties of Seller contained in this Agreement shall be true and correct in all respects, without regard to any “materiality” or “Material Adverse Effect” qualifications contained therein, as of the Closing, as though made on and as of the Closing, except for such failures to be true and correct in the aggregate as would not have a Material Adverse Effect on the Company (except to the extent such representations and warranties are made as of another date, in which case such representations and warranties shall be true and correct in the manner set forth in this clause (i) as of such other date), (ii) the covenants and agreements contained in this Agreement to be complied with by Seller at or before the Closing shall have been complied with in all material respects and (iii) the Purchaser shall have received a certificate of the Seller, signed by a duly authorized officer thereof on behalf of the Seller (and without personal liability), dated as of the Closing Date and certifying the matters set forth in clauses (i) and (ii) above;
(c)
Governmental Approvals
. Any waiting period (and any extension thereof) under the HSR Act shall have expired or shall have been terminated;
(d)
No Order
. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order (whether temporary, preliminary or permanent) that has the effect of making the Purchase illegal or otherwise prohibiting the consummation of the Purchase;
(e)
No Material Adverse Effect
. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect on the Company which has not been cured, and no event shall have occurred or circumstance shall exist that, in combination with any other events or circumstances, would reasonably be expected to result in a Material Adverse Effect on the Company, and no Material Adverse Effect on the Combined Companies (applied mutatis mutandis) shall have occurred;
(f)
Purchaser Stockholder Approval
. The Purchaser Proposal shall have been duly approved by the Required Purchaser Stockholder Vote at a duly called Purchaser Stockholders’ Meeting;
(g)
Financial Statements
. The Commitment Parties (as defined in the Financing Commitment Letter) shall have received the financial statements of the Company set forth in Section 3 of Exhibit D of the Financing Commitment Letter; and
(h)
Closing Deliverables
. The Seller shall have delivered to the Purchaser all items required to be delivered pursuant to Section 2.05 and the Company shall have delivered to the Purchaser all items required to be delivered pursuant to Section 2.07.
SECTION 9.03
Frustration of Closing Conditions
. No party hereto may rely on the failure of any condition set forth in this Article IX to be satisfied if such failure was caused by such party, including such party’s failure to use reasonable best efforts to consummate the Purchase and the other transactions contemplated by this Agreement and the Transaction Documents.
ARTICLE X
NO SURVIVAL; TAX INDEMNIFICATION
SECTION 10.01
No Survival of Representations, Warranties and Covenants
. The representations, warranties and covenants of Seller, the Company and the Purchaser contained in this Agreement and in any certificate delivered by Seller, the Company or the Purchaser pursuant hereto shall terminate immediately upon the Closing, except for the covenants of the parties hereto that by their express terms are required to be performed after the Closing (“
Post Closing Covenants
”);
provided
, that any claims for Pre-Closing Taxes pursuant to Section 10.02 shall survive the Closing for a period of 15 months after the Closing (the “
Survival Date
”).
SECTION 10.02
Pre-Closing Tax Indemnification by Seller
. The Purchaser and its Affiliates, officers, directors, employees, agents, successors and assigns (each an “
Indemnified Party
”) shall from and after Closing be indemnified and held harmless against all losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including reasonable attorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (hereinafter a “
Loss
”), arising out of or resulting from any Pre-Closing Taxes;
provided
that indemnification pursuant to this Section 10.02 shall apply only with respect to claims made prior to the Survival Date.
SECTION 10.03
Limits on Indemnification
.
(a) No claim may be asserted nor may any Action be commenced against the Indemnifying Party for Losses arising out of or resulting from Pre-Closing Taxes, unless written notice of such claim or Action is received by such party describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or Action on or prior to the Survival Date, irrespective of whether the subject matter of such claim or Action shall have occurred before or after such date.
(b) Amounts in respect of any Losses payable by the Indemnifying Party pursuant to Section 10.02 shall be reduced by (i) any reserves, liability accruals or other provisions specifically for such Losses (x) set forth in the Financial Statements or (y) that would have been so reserved, accrued or provided for specifically in the financial statements of Seller and its Subsidiaries for the period between the Reference Balance Sheet Date and the Closing in the ordinary course of business and consistent with past practice, (ii) any amounts received or reasonably expected to be received from third parties by or on behalf of, and other savings that reduce or are reasonably expected to reduce the overall impact of the Losses upon, the Indemnified Party (including applicable insurance proceeds) and (iii) any Tax benefit actually realized by the Indemnified Party during the period ending on the Survival Date (such provisions for such Losses, amounts and benefits are collectively referred to herein as “
Indemnity Reduction Amounts
”). If any Indemnified Party receives any Indemnity Reduction Amounts in respect of a claim for which indemnification is provided under this Agreement after the full amount of such claim has been paid by the Indemnifying Party or after the Indemnifying Party has made a partial payment of such claim, and such Indemnity Reduction Amounts exceed the remaining unpaid balance of such claim, then the Indemnified Party shall promptly remit to the Indemnifying Party an amount equal to the excess (if any) of (x) the amount theretofore paid by the Indemnifying Party in respect of such claim, less (y) the amount of the indemnity payment that would have been due if such Indemnity Reduction Amounts in respect thereof had been received before the indemnity payment was made. An insurer or other third party who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to any benefit they would not be entitled to receive in the absence of the indemnification provisions by virtue of the indemnification provisions hereof.
(c) Notwithstanding anything to the contrary contained in this Agreement, (i) the Indemnifying Party shall not have any obligation to indemnify any Indemnified Party pursuant to Section 10.02 unless and until the aggregate amount of the indemnifiable Losses which may be recovered from the Indemnifying Party arising out of or resulting from the causes set forth in Section 10.02, taken together, exceeds $3,000,000 (the “
Threshold Amount
”), whereupon the Seller shall be liable for all such Losses (including those in incurred in reaching the Threshold Amount) and (ii) the maximum aggregate amount of indemnifiable Losses which may be recovered from Seller arising out of or resulting from the causes set forth in Section 10.02, taken together, shall be the amount of the Retained Share Fund.
(d) Notwithstanding anything to the contrary contained in this Agreement, except as set forth in Section 11.03 or 12.10(b), none of the parties hereto shall have any liability under any provision of this Agreement or any Transaction Document for any punitive, incidental, consequential, special or indirect damages, including loss of future profits, revenue or income, diminution in value or loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement or any Transaction Document.
(e) For all purposes of this Article X, “
Losses
” shall not include Tax liabilities for taxable periods (or portions of taxable periods) beginning after the Closing Date.
(f) For Tax purposes, the parties hereto agree to treat all payments made pursuant to any indemnification obligation under this Agreement as adjustments to the payment made to Seller at the Closing and to file their Tax Returns accordingly.
SECTION 10.04
Notice of Loss; Third Party Claims
.
(a) An Indemnified Party shall give the Indemnifying Party notice of any matter which an Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement, within 30 days of such determination, stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.
(b) If an Indemnified Party shall receive notice of any Action, audit, claim, demand or assessment against it which may give rise to a claim for Loss under this Article X (each, a “
Third Party Claim
”), within 30 days of the receipt of such notice (or within such shorter period as may be required to permit the Indemnifying Party to respond to any such claim), the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim. Such notice shall identify specifically the basis under which indemnification is sought pursuant to Section 10.02 and, if applicable, enclose true and correct copies of any written document furnished to the Indemnified Party by the Person that instituted the Third Party Claim. The Indemnified Party shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Indemnifying Party. If the Indemnified Party elects to undertake any such defense against a Third Party Claim, the Indemnifying Party may participate in such defense at its own expense. The Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, all witnesses, pertinent records, materials and information in the Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is reasonably required by the Indemnified Party. The Indemnified Party shall not settle any Third Party Claim without the Indemnifying Party’s prior written consent, which will not be unreasonably withheld;
provided
,
however
, that the Indemnified Party shall have the right to settle any Third Party Claim for which it obtains a full release of the Indemnifying Party in respect of such Third Party Claim and any Losses thereunder without the Indemnifying Party’s consent.
SECTION 10.05
Remedies
. The Purchaser and Seller acknowledge and agree that (a) following the Closing, other than with respect to Post-Closing Covenants and other than with respect to any claims for Fraud, the indemnification provisions of Section 10.02 shall be the sole and exclusive remedies of the Indemnified Parties for any breach by the Company or Seller of this Agreement or arising under, out of or in connection with the transactions contemplated by this Agreement, and the parties hereto hereby agree that no party hereto shall have any other remedies or cause of action (whether in contract or in tort, at law or in equity) for any covenants or agreements set forth in this Agreement, or for any statements, communications, disclosures, failures to disclose, representations or warranties (whether written or oral), whether or not set forth in this Agreement, and (b) the Indemnified Parties shall have no right to recover under this Article X for any indemnifiable Losses an amount in excess of the amount then available in the Retained Share Fund. Purchaser (together with any other applicable Indemnified Party) shall not be entitled to any payment, adjustment or indemnification more than once with respect to the same matter. Without limiting the generality of the foregoing, in no event shall any party, its successors or permitted assigns be entitled to claim or seek rescission of the transactions contemplated by this Agreement. All representations and warranties set forth in this Agreement are contractual in nature only and subject to this Section 10.05.
SECTION 10.06
Distributions of Retained Shares
. During the period commencing on the Closing Date and ending on the Survival Date, Seller shall retain 3,310,000 shares of Purchaser Common Stock. To the extent any of such shares are sold, the greater of (x) the proceeds received upon sale of any such shares; and (y) $11.47 multiplied by the number of such shares, shall be retained by the Seller during such period or, at the Purchaser’s request, shall be placed by Seller into an escrow account until the Survival Date (collectively, the “
Retained Share Fund
”). On or prior to the Survival Date, in the event that the Purchaser shall have made a claim for indemnification pursuant to Section 10.02 and either (i) the Seller shall not have objected to the amount claimed by the Purchaser for indemnification with respect to any Loss in accordance with this Article X or (ii) the Seller shall have delivered notice of its disagreement as to the amount of any indemnification requested by the Purchaser and either (1) the Seller and the Purchaser shall have, subsequent to the giving of such notice, mutually agreed that Seller is obligated to indemnify the Purchaser for a specified amount or (2) a final nonappealable judgment shall have been rendered by the court having jurisdiction over the matters relating to such claim by the Purchaser for indemnification from Seller and Seller shall have received a copy of the final nonappealable judgment of the court, Seller shall deliver to the Purchaser the final amount so determined in either shares of Purchaser Common Stock and/or the proceeds thereof, in Seller’s discretion;
provided
, that except as expressly otherwise set forth in this Article X, in no event shall any such payment exceed the amount then available in the Retained Share Fund. For the avoidance of doubt, (i) any amount determined to be owed to the Purchaser under this Article X, unless as a result of any claim arising out of or resulting from Fraud, shall be paid solely from the Retained Share Amount and (ii) on the Survival Date, Seller shall be entitled to transfer, distribute or otherwise sell all or a portion of its shares of Purchaser Common Stock or proceeds remaining in the Retained Share Fund.
ARTICLE XI
TERMINATION
SECTION 11.01
Termination
. This Agreement may be terminated at any time prior to the Closing:
(a) by either the Company, on the one hand, or the Purchaser, on the other hand, if the Closing shall not have occurred by December 22, 2011 (the “
Termination Date
”);
provided
, that (i) if the conditions set forth in Section 9.01(b), 9.01(c) or 9.01(f) have not been satisfied and all conditions in Sections 9.02(a), 9.02(b) and 9.02(e) are satisfied or are capable of being satisfied by such date, then the Company may elect, by notice to the Purchaser, to extend the Termination Date to February 3, 2012 and (ii) if the conditions set forth in Section 9.02(c) or 9.02(d) have not been satisfied and all conditions in Sections 9.01(a), 9.01(d), 9.01(e) and 9.01(g) are satisfied or are capable of being satisfied by such date, then the Purchaser may elect, by notice to the Company, to extend the Termination Date to February 3, 2012;
provided, further
, that the right to terminate this Agreement or extend the Termination Date under this Section 11.01(a) shall not be available to any party hereto whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;
(b) by either the Company, on the one hand, or the Purchaser, on the other hand, in the event that any Governmental Order restraining, enjoining or otherwise prohibiting the Purchase shall have become final and nonappealable;
(c) by the Company if a failure to perform any covenant or agreement on the part of the Purchaser set forth in this Agreement (including an obligation to consummate the Closing) shall have occurred that would, if occurring or continuing on the Closing Date, cause the condition set forth in Section 9.01(a) not to be satisfied, and such condition is not cured, or is incapable of being cured, within 30 days (but not later than the Termination Date) of receipt of written notice thereof by the Company to the Purchaser specifying such breach or failure in reasonable detail;
(d) by the Purchaser if a failure to perform any covenant or agreement on the part of the Company or Seller set forth in this Agreement (including an obligation to consummate the Closing) shall have occurred that would, if occurring or continuing on the Closing Date, cause the conditions set forth in Section 9.02(a) or 9.02(b) not to be satisfied, and such condition is not cured, or is incapable of being cured, within 30 days (but not later than the Termination Date) of receipt of written notice thereof by the Purchaser to the Company specifying such breach or failure in reasonable detail;
(e) by the mutual written consent of the Company and the Purchaser;
(f) by the Company, if the Purchaser Board shall have made a Purchaser Change in Recommendation; or
(g) by either Purchaser or the Company if: (i) the Purchaser Stockholders’ Meeting (including any adjournments and postponements thereof) shall have been held and completed and Purchaser’s stockholders shall have taken a final vote on the Purchaser Proposal; and (ii) the Purchaser Proposal shall not have been approved at the Purchaser Stockholders’ Meeting (and shall not have been approved at any adjournment or postponement thereof) by the Required Purchaser Stockholder Vote;
provided, however
, that a party shall not be permitted to terminate this Agreement pursuant to this Section 11.01(g) if the failure to have the Purchaser Proposal approved by the Required Purchaser Stockholder Vote is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Closing.
SECTION 11.02
Effect of Termination
. In the event of termination of this Agreement as provided in Section 11.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except that (a) Section 6.06, this Section 11.02, Section 11.03 and Article XII shall survive any termination and (b) subject to Section 11.03, nothing herein shall relieve any party from liability for any intentional breach of this Agreement occurring prior to such termination or any other failure to perform hereunder, and such party shall be fully liable for any Losses incurred or suffered by the other parties as a result of such breach or other failure (which, in the case of Losses sought by Seller, can be based on the consideration that would have otherwise been payable to Seller pursuant to this Agreement and distributed to the direct and indirect equity holders of Seller, or based on loss of market value of the Company).
SECTION 11.03
Termination Fees
.
(a) The Purchaser shall pay, or cause to be paid, to the Seller an amount in cash equal to $37,500,000 (the “
Purchaser Termination Fee
”) if:
(i) this Agreement is (A) terminated by the Company pursuant to Section 11.01(f) or (B) terminated by the Company or the Purchaser pursuant to Section 11.01(a) or Section 11.01(g), and at such time of termination the Company would have been entitled to terminate the Agreement pursuant to Section 11.01(f), and in each case of clauses (A) and (B) the Purchaser shall pay to the Seller the Purchaser Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Seller within two (2) Business Days following such termination; or
(ii) (A) this Agreement is validly terminated by the Purchaser or the Company pursuant to Section 11.01(a), Section 11.01(c) or Section 11.01(g), (B) following the execution and delivery of this Agreement and prior to such termination of this Agreement
,
a Purchaser Acquisition Proposal shall have been made public or otherwise disclosed and not publicly withdrawn, and (C) within twelve months following the termination of this Agreement under the foregoing circumstances, the Purchaser consummates a Purchaser Acquisition Proposal or enters into a definitive agreement providing for a transaction with respect to a Purchaser Acquisition Proposal and subsequently consummates a transaction that constitutes a Purchaser Acquisition Proposal, in which case the Purchaser shall pay to the Seller the Purchaser Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by the Seller within two (2) Business Days following consummation of such transaction. For purposes of this Section 11.03(a)(ii)(C) only, references in the definition of the term “Purchaser Acquisition Proposal” to the figure “10%” shall be deemed to be replaced by “50%”.
(b) In the event of payment of the Purchaser Termination Fee to the Seller in accordance with Section 11.03(a), the Seller and the Company agree that the receipt of such payment will be deemed to be liquidated damages for, and will constitute full payment to and the sole and exclusive remedy (whether at law, in equity, in contract, in tor or otherwise) of the Seller, any parent entity of Seller, the Company or any Company Entity with respect to, any and all losses or damages suffered or incurred by the Seller, the Company any Company Entity or any of their respective Affiliates in connection with this Agreement or the Financing Agreements (and the termination thereof) or any matter forming the basis for such termination, and that none of Seller, the Company, any Company Entity or any of their respective Affiliates or any other Person will be entitled to bring or maintain any claim, action or proceeding against the Purchaser or any Debt Financing Source arising out of or in connection with this Agreement, the Financing Agreements, any of the transactions contemplated hereby or thereby (or the abandonment or termination thereof) or any matters forming the basis for such termination;
provided
,
however
, that nothing in this Section 11.03(b) shall limit Section 11.02 with respect to intentional breach of this Agreement occurring prior to termination.
(c) The parties hereto acknowledge that (i) the fees and other provisions of this Section 11.03 are an integral part of the transactions contemplated by this Agreement, (ii) without these agreements, the parties hereto would not enter into this Agreement and (iii) any amount payable pursuant to this Section 11.03 does not constitute a penalty.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01
Expenses
. Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants incurred in connection with this Agreement and the transactions contemplated by this Agreement (collectively, “
Transaction Expenses
”) shall be borne by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
SECTION 12.02
Notices
. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, by registered or certified mail (postage prepaid, return receipt requested) or by electronic communication (including e-mail but excluding Internet or intranet websites) to the respective parties hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12.02):
(a) if to Seller or the Company (prior to the Closing):
1386 Sunrise Valley Dr., Suite 300
Herndon, VA 20171
Facsimile: (703) 668-5959
Attention: Chief Executive Officer
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Matthew W. Abbott
Neil Goldman
Facsimile: (212) 757-3900
(b) if to Seller (following the Closing):
c/o GA-Net Sol Investor LLC
Three Pickwick Plaza
Greenwich, CT 06830
Facsimile: (203) 629-8600
Attention: Christopher G. Lanning
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Matthew W. Abbott
Neil Goldman
Facsimile: (212) 757-3900
Web.com Group, Inc.
12808 Gran Bay Parkway West
Jacksonville, FL 32258
Facsimile: (904) 880-0350
Attention: Chief Executive Officer
with a copy to:
Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304
E-Mail: fultonjf@cooley.com
Facsimile: (650) 849-7400
Attention: James F. Fulton, Jr.
Any notice delivered by personal delivery or by courier service to the party to whom it is addressed as provided above shall be deemed to have been given and received on the day it is so delivered at such address. If such day is not a Business Day, or if the notice is received after 5:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the next Business Day. Any notice sent by prepaid registered or certified mail shall be deemed to have been given and received on the fourth Business Day following the date of its mailing. Any notice transmitted by facsimile shall be deemed to have been given and received on the day in which such transmission is confirmed. If such day is not a Business Day or if the facsimile transmission is received after 5:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the first Business Day after its transmission. Notices sent to an e-mail address shall be deemed to be received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, return e-mail or other written acknowledgement); provided that if such notice is not sent on a Business Day or is sent after 5:00 p.m. (addressee’s local time) on a Business Day, such notice shall be deemed to have been given and received on the first Business Day after its transmission.
SECTION 12.03
Public Announcements
. None of the parties to this Agreement shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement or otherwise communicate with any news media without the prior written consent of the other party unless such press release or public announcement is required by Law or applicable stock exchange regulation, in which case the parties to this Agreement shall provide the other parties with copies of any such press release, public announcement or communication in advance of such issuance and, to the extent practicable, consult with each other as to the timing and contents of any such required press release, public announcement or communication.
SECTION 12.04
Severability
. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to either party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.
SECTION 12.05
Entire Agreement
. This Agreement, the Transaction Documents and the Confidentiality Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, among the parties hereto with respect to the subject matter hereof and thereof. The parties hereto have voluntarily agreed to define their rights, liabilities and obligations with respect to the subject matter hereof exclusively in contract pursuant to the express terms and provisions of this Agreement; and the parties hereto expressly disclaim that they are owed any duties or are entitled to any remedies not expressly set forth in this Agreement. Other than with respect to any claims for Fraud, the sole and exclusive remedies for any breach of the terms and provisions of this Agreement (including any representations and warranties set forth herein, made in connection herewith or as an inducement to enter into this Agreement, whether written or oral) or any claim or cause of action otherwise arising out of or related to the matters set forth herein shall be those remedies available at law or in equity for breach of contract only, including, for the avoidance of doubt, as set forth in Section 12.10 (as such contractual remedies have been further limited or excluded pursuant to the express terms of this Agreement).
SECTION 12.06
Assignment
. This Agreement or any portion of any party’s rights or liabilities under this Agreement may not be assigned or delegated by operation of Law or otherwise without the express written consent of (a) the Company (prior to the Closing) or Seller (on or following the Closing) and (b) the Purchaser (which consent may be granted or withheld in the sole discretion of the Company, Seller or the Purchaser, as applicable), and any such purported assignment in violation of this Section 12.06 shall be void;
provided
, that, on or after the Survival Date, the Seller may assign this Agreement to any Affiliate thereof without the Purchaser’s consent.
SECTION 12.07
Amendment
. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the parties hereto that expressly references the Section(s) of this Agreement to be amended or (b) by a waiver in accordance with Section 12.08.
SECTION 12.08
Waiver
. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties contained herein or in any document delivered by the other parties pursuant hereto or (c) waive compliance with any of the agreements of the other parties or conditions to such parties’ obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of any of such rights.
SECTION 12.09
No Third Party Beneficiaries
. Except as otherwise provided in Sections 6.12, 10.02, 12.13 and 12.14, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, including any right to rely upon the representations and warranties set forth herein or rights of employment for any specified period, under or by reason of this Agreement;
provided
that the Debt Financing Sources and their respective successors, legal representatives and permitted assigns shall be third party beneficiaries with respect to the provisions set forth in Sections 11.03(b), 12.10(c), 12.11, and 12.12.
SECTION 12.10
Specific Performance Remedies
.
(a) The parties hereto acknowledge and agree that the parties would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that any non-performance or breach of this Agreement by any party hereto could not be adequately compensated by monetary damages alone and that the parties hereto would not have any adequate remedy at law. Accordingly, in addition to any other right or remedy to which the Purchaser, the Company or Seller, as the case may be, may be entitled, at law or in equity (including monetary damages), each such party shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement without posting any bond or other undertaking. Each party hereto agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (i) the other party has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or equity.
(b) Except as otherwise expressly provided in this Agreement, including Section 10.05, any and all remedies expressly conferred upon a party to this Agreement shall be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity, and the exercise by a party to this Agreement of any one remedy shall not preclude the exercise by it of any other remedy. In the event of any breach of this Agreement by the Purchaser, the Purchaser hereby agrees that, without limiting Section 12.10(a), the damages of the Seller or the Company, if any, shall not be limited to reimbursement of expenses or out-of-pocket costs, and may include to the extent available under applicable Law and proven as required by applicable Law, the loss of the market value of the Company or the benefit of the bargain lost by the Seller or the direct and indirect equityholders thereof (taking into consideration relevant matters, including the consideration that would have otherwise been payable to the Seller under this Agreement or the distribution of such consideration to such equityholders, other combination opportunities and the time value of money).
(c) Each of Seller and the Company acknowledges and agrees that, with respect to any Losses suffered as a result of the failure of the Purchase to be consummated or for a breach or failure to perform hereunder or otherwise, it has no right of recovery against, and no personal liability shall attach to, any Debt Financing Source, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of the Purchaser against any Debt Financing Source, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise (other than against Purchaser on the terms and subject to the conditions of this Agreement).
SECTION 12.11
Governing Law
. This Agreement 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. All Actions (whether in contract or in tort) based on, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation made in or in connection with this Agreement or as an inducement to enter into this Agreement, whether written or oral), shall be heard and determined exclusively in the Chancery Court of the State of Delaware. Consistent with the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of the Chancery Court of the State of Delaware for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts. Each of the parties hereto agrees 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 Debt Financing Source in any way related to this Agreement or any of the transactions contemplated by this Agreement, including but not limited to any dispute arising out of or relating in any way to the Financing Commitment Letter or the performance thereof, in any forum other than the Chancery Court of the State of Delaware, or, if under applicable Law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof).
SECTION 12.12
Waiver of Jury Trial
. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION OR LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION OR LIABILITY, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.12.
SECTION 12.13
Release
.
(a) Without limiting Seller’s obligations expressly set forth in Section 10.02 or claims for Fraud, theft, misappropriation or embezzlement, effective at the Closing, the Purchaser, on behalf of itself and each of its Subsidiaries (including the Company Entities), and their respective successors and assigns (the “
Releasing Parties
”), releases (subject to the waiver by Seller such release on behalf of any Released Party (as such term is defined below), which shall not be unreasonably withheld or delayed), acquits and forever discharges Seller and its Affiliates, predecessors and successors, as well as each of their respective assigns, equityholders, members, partners, managers, officers and directors in their capacities as such (the “
Released Parties
”)
of and from any and all Losses that any of the Releasing Parties might have because of anything done, omitted, suffered or allowed to be done by any of the Released Parties prior to or at the Closing:
(i) arising out of, or relating to, the organization, management, operation or conduct of the businesses of any Company Entity relating to any matter, occurrence, action or activity;
(ii) relating to this Agreement and the transactions contemplated hereby;
(iii) arising out of or due to any inaccuracy or breach of any representation or warranty or the breach of any covenant, undertaking or other agreement contained in this Agreement, the Schedules and Exhibits hereto or in any certificate contemplated hereby and delivered in connection herewith; or
(iv) resulting from any information (whether written or oral), documents or materials furnished by or on behalf of Seller or any Company Entity, including any Confidential Information (as defined in the Confidentiality Agreement);
in each case, whether heretofore or hereafter accruing, whether foreseen or unforeseen or whether known or unknown to the Releasing Parties or Released Parties, including any claim for indemnification, contribution or other relief pursuant to any organizational documents of the Company and its Subsidiaries (the “
Released Matters
”). Effective at the Closing, the Purchaser, for itself and all of the Releasing Parties, except without the written consent of Seller (which shall not be unreasonably withheld or delayed) further agrees never to commence or participate as a party in any Action based upon the foregoing Released Matters. The Purchaser, the Seller and the Company each acknowledges that this release shall apply to all unknown or unanticipated results of any Action of any Released Party, as well as those known and anticipated. The Purchaser and the Company has each consulted with independent legal counsel prior to making the release in this Section 12.13(a) and provides the release in this Section 12.13(a) voluntarily, with the intention of fully and finally extinguishing all Released Matters. The release contained in this Section 12.13(a) shall also be deemed to be a covenant not to sue without the written consent of Seller (which shall not be unreasonably withheld or delayed). Any breach of this covenant by the Purchaser, the Company or the other Releasing Parties not to sue shall be deemed a breach of this Section 12.13(a). The Releasing Parties hereby explicitly waive all rights with respect to the foregoing release under the provisions of Section 1542 of the California Civil Code (as now worded and as hereafter amended) which section provides in pertinent part: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.” The Releasing Parties agree that no provision of Section 1542 of the California Civil Code shall affect the validity or scope of any other aspect of the foregoing release. The Releasing Parties hereby expressly waive any and all rights which they may have under any other provision of state or federal Law providing the same or similar effect.
(b) From and after the Closing, Purchaser shall indemnify and hold harmless the intended beneficiaries of each of the provisions of this Section 12.13 (each of which is an intended third-party beneficiary of this Section 12.13) from and against all Losses which may be made or brought against such Person or which such Person may suffer or incur as a result of any breach or failure to perform any of the obligations set forth in this Section 12.13.
SECTION 12.14
Waiver of Conflicts (Seller)
. Paul, Weiss, Rifkind, Wharton & Garrison LLP (“
Sellers Counsel
”) has acted as legal counsel to the Company, Seller and their respective Affiliates prior to the Closing in connection with the transactions contemplated by this Agreement. The parties recognize the community of interest that exists and will continue to exist until the Closing, and the parties agree and acknowledge that such community of interest should continue to be recognized after the Closing. Specifically, the parties agree that (a) neither the Purchaser nor the Company shall seek to have any Sellers Counsel disqualified from representing Seller or its Affiliates (or any other equityholder of Seller) in any dispute (whether in contract or tort) that may arise between the Company or its Affiliates formerly represented by Sellers Counsel, on the one hand, and Seller or its Affiliates (or any other equityholder of Seller), on the other hand, based upon, arising out of or related to this Agreement or any of the transactions contemplated by this Agreement in whole or in part and (b) in connection with any dispute that may arise between the Company or its Affiliates formerly represented by Sellers Counsel, on the one hand, and Seller or its Affiliates (or any other equityholder of Seller), on the other hand, Seller and its Affiliates shall have the right to decide whether or not to waive any attorney-client privilege that may apply to any communications between the Company or its Affiliates formerly represented by Sellers Counsel or Seller and its Affiliates, on the one hand, and any Sellers Counsel, on the other hand, that occurred on or prior to the Closing. The covenants contained in this Section 12.13 are intended to be for the benefit of, and shall be enforceable by, Sellers Counsel and its legal representatives and shall not be deemed exclusive of any other rights to which Sellers Counsel is entitled, whether pursuant to law, contract or otherwise.
SECTION 12.15
Waiver of Conflicts (Purchaser)
. Each party to this Agreement acknowledges that Cooley Godward LLP (“
Cooley
”), counsel to the Purchaser, has in the past performed services for and previously represented Network Solutions, LLC or one or more of its Affiliates in matters unrelated to the transactions contemplated by this Agreement. The applicable rules of professional conduct require that Cooley inform the parties hereunder of this representation and obtain their consent. Cooley has served as outside general counsel to the Purchaser and has negotiated the terms of the Purchase, this Agreement and the transactions related thereto solely on behalf of the Purchaser. Seller, the Company and the Purchaser hereby (a) acknowledge that they have had an opportunity to ask for and have obtained information relevant to such representation, including disclosure of the reasonably foreseeable adverse consequences of such representation; (b) acknowledge that with respect to the Purchase, this Agreement and the transactions related thereto, Cooley has represented solely the Purchaser, and not the Company, any other Company Entity, the Seller or any stockholder, director or employee of Seller or any Company Entity; and (c) gives its informed consent to Cooley’s representation of the Purchaser in the Purchase, this Agreement and the transactions related thereto.
SECTION 12.16
Counterparts
. This Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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NET SOL HOLDINGS LLC
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By:
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/s/ Tim Kelly
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Name: Tim Kelly
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Title: President and Chief Executive Officer
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GA-NET SOL PARENT LLC
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By: Net Sol Holdings LLC, its sole member
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By:
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/s/ Tim Kelly
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Name: Tim Kelly
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Title: President and Chief Executive Officer
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WEB.COM GROUP, INC.
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By:
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/s/ David L. Brown
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Name: David L. Brown
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Title: President and Chief Executive Officer
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[
Signature Page to Purchase Agreement
]
STOCKHOLDER AGREEMENT
STOCKHOLDER
AGREEMENT
This
Stockholder Agreement
(the “
Agreement
”) is entered into as of the ____ day of ________________, 2011, by and among Web.com Group, Inc., a Delaware corporation (the “
Company
”), Net Sol Holdings LLC, a Delaware limited liability company (“
Seller
”), and the entities listed on
Exhibit A
hereto (such entities on
Exhibit A
, collectively with the Seller and their respective Permitted Transferees, are referred to hereinafter as the “
Stockholders
” and each individually as a “
Stockholder
”).
WHEREAS,
the Seller and the Company are parties to that certain Purchase Agreement dated August 3, 2011 (the “
Purchase Agreement
”), pursuant to which the Company is acquiring all of the outstanding equity interests of GA-Net Sol Parent LLC, a Delaware limited liability company, from Seller and, as partial consideration therefor and upon the closing thereunder (the “
Closing
”), is issuing to Seller shares of the Company’s Common Stock (the “
Acquisition
”);
WHEREAS, after the closing of the Acquisition, it is anticipated that Seller will distribute to the other Stockholders listed on
Exhibit A
certain shares of the Company’s Common Stock, and, to the extent not retained by Seller, the remaining shares of the Company’s Common Stock will be distributed to the other direct and indirect equityholders of Seller (the “
Other Seller Equityholders
”);
WHEREAS, the obligations to consummate the transactions contemplated by the Purchase Agreement are conditioned upon the execution and delivery of this Agreement; and
WHEREAS, in connection with the consummation of the Acquisition, the parties desire to enter into this Agreement to grant corporate governance and registration rights to, and impose certain restrictions upon, the Stockholders as set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the parties hereto hereby agree as follows:
1.1
Definitions.
(a) As used in this Agreement the following terms shall have the following respective meanings:
(i) “
Disclosure Package
” means (a) the preliminary prospectus, (b) each Free Writing Prospectus and (c) all other information that is deemed, under Rule 159 under the Securities Act, to have been conveyed to purchasers of securities at the time of sale (including a contract of sale).
(ii) “
Exchange Act
”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(iii) “
FINRA
” means the Financial Industry Regulatory Authority, or any successor self-regulatory organization.
(iv) “
Form S-3
”
means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
(v) “
Free Writing Prospectus
” means any “free writing prospectus,” as defined in Rule 405 under the Securities Act.
(vi) “
Holder
”
means any person owning of record Registrable Securities or any assignee of record of such Registrable Securities in accordance with Section 3.10 hereof.
(vii) “
Register
,” “
registered
,” and “
registration
”
refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.
(viii) “
Registrable Securities”
means (a) the Shares and (b) any Common Stock of the Company issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) as a dividend or other distribution with respect to, or in connection with a stock split, combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise with respect to, or in exchange for or in replacement of, such above-described securities. Notwithstanding the foregoing, Registrable Securities shall not include any securities (i) sold by a person to the public either pursuant to a registration statement or Rule 144 or (ii) sold in a private transaction in which the transferor’s rights under Section 3 of this Agreement are not assigned in accordance with Section 3.10 hereof.
(ix) “
Registrable Securities then outstanding
”
shall be the number of shares of the Company’s Common Stock that are Registrable Securities and are then issued and outstanding.
(x) “
Registration Expenses
”
shall mean all expenses incurred by the Company in, or arising from or incident with performing or complying with Sections 3.2, 3.3 and 3.4 hereof, including, without limitation, (a) all registration and filing fees and printing expenses, (b) fees and disbursements of counsel, accountants and any advisors for the Company, (c) reasonable fees and disbursements not to exceed fifty thousand dollars ($50,000) per Shelf Take-Down, or per registration pursuant to Section 3.4, of a single special counsel for the Holders, (d) all expenses in connection with the qualification of the securities to be disposed of for offering and sale under state securities laws, including blue sky fees in connection with such qualification and in connection with any blue sky and legal investment surveys, (e) the expense of any special audits and comfort letters incident to or required by any such registration and (f) all expenses with respect to road shows or marketing activities that the Company is obligated to pay pursuant to Section 3.2(b) (and excluding in all cases the compensation of regular employees of the Company which shall be paid in any event by the Company).
(xi) “
SEC
” means the Securities and Exchange Commission
(xii) “
Securities Act
” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(xiii) “
Selling Expenses
”
shall mean all underwriting discounts and selling commissions applicable to the sale.
(xiv) “
Shares
”
shall mean shares of the Company’s Common Stock issued to the Stockholders pursuant to the Purchase Agreement.
(xv)
“Special Registration Statement”
shall mean (a) a registration statement relating to any employee benefit plan or (b) with respect to any corporate reorganization or transaction under Rule 145 of the Securities Act, any registration statements related to the issuance or resale of securities issued in such a transaction or (c) a registration related to stock issued upon conversion of debt securities.
(b) All capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement.
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SECTION 2.
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CORPORATE GOVERNANCE.
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2.1
Board of Directors
.
(a) The Company and the Company’s Board of Directors (the “
Board
”) shall take, or shall cause to be taken, but subject in each case to compliance with applicable Law and the Board’s fiduciary obligations to the Company and its stockholders, the following actions:
(i) immediately following the Closing:
(1)
increase the authorized size of the Board from six (6) directors to seven (7) directors;
(2)
designate the newly created and vacant seat as part of the class of directors whose term expires in 2014 (the “
Stockholder Class
”); and
(3)
appoint an individual designated in writing by General Atlantic LLC or GA-Net Sol Investor LLC (individually or together, “
GA
”) to fill the vacancy so created (such director, hereafter the “
Stockholder Director
”), to serve as a member of the Board in the Stockholder Class until the term of the Stockholder Class expires, and until such director’s successor is elected and qualified or until the director’s death, resignation or removal;
(ii) at each annual meeting of the Company’s stockholders at which directors in the Stockholder Class are elected:
(1)
nominate an individual designated in writing by GA on or before the date that is thirty (30) days prior to the one (1)-year anniversary of the preceding annual meeting of the Company’s stockholders, to serve on the Board in the Stockholder Class;
provided
, that if GA shall fail to deliver such written notice, GA shall be deemed to have nominated the Stockholder Director previously nominated by GA who is then serving on the Board;
(2)
recommend the election of such nominee to the stockholders of the Company; and
(3)
otherwise use reasonable best efforts to cause such nominee to be elected to the Board; and
(iii) at all times:
(1)
to the extent required by applicable Law (including, without limitation, applicable stock exchange rules), maintain a compensation committee with such duties and responsibilities as are customary for such committee; and
(2)
appoint the Stockholder Director to the compensation committee.
(b) The Company shall reimburse the Stockholder Director for all necessary and proper costs and expenses (including travel expenses) reasonably incurred in connection with the Stockholder Director’s attendance and participation at meetings of the Board, or any committee thereof, to the same extent it reimburses other non-employee directors for such costs and expenses.
(c) The Stockholder Director shall serve until his or her resignation or removal or until his or her successor is nominated;
provided
, that if the Stockholders are no longer entitled to nominate the Stockholder Director pursuant to Section 2.2, then the Stockholders shall, to the extent requested by the Company, promptly cause the Stockholder Director to resign from the Board. Additionally, each Stockholder shall cause the Stockholder Director to resign from the Board, or from service on any committee of the Board, if at any time such Stockholder Director does not satisfy any applicable requirements of applicable Law or the NASDAQ rules for service on the Board or such committee.
(d) If the Stockholder Director dies or is unwilling or unable to serve as such or is otherwise removed or resigns from office, then GA shall promptly nominate a successor to the Stockholder Director. The Company agrees to take such actions as may be reasonably necessary to ensure that such successor is elected to the Board as promptly as practicable.
(e) The Stockholder Director, if any, shall be entitled to enter into with the Company the standard form of indemnification agreement previously approved by the Board, and shall be entitled to indemnification rights and be subject to director and officer insurance protection no less favorable than as other non-employee directors of the Company and in any event no less favorable than as in effect on the date hereof;
provided
, that the Stockholder Director’s indemnification agreement with the Company shall provide that (i) the Company is the indemnitor of first resort with respect to the Stockholder Director (i.e., its obligations to the Stockholder Director are primary and any obligation of other entities and/or organizations to which such Stockholder Director may have rights to indemnification and advancement of expenses (collectively, the “
Fund Indemnitors
”) to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Stockholder Director are secondary), and (ii) the Company irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.
2.2
Termination
. This Section 2 (other than Section 2.1(e)) shall terminate at such time as the Stockholders, together with their respective Affiliates, collectively beneficially own less than ten percent (10%) of the Company’s common stock (calculated on a fully-diluted, as-converted basis).
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SECTION 3.
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RESTRICTIONS ON TRANSFER; REGISTRATION
.
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3.1
Restrictions on Transfer.
(a) Notwithstanding anything in this Agreement to the contrary (including, without limitation, the availability of any effective registration statement pertaining to the resale of the Shares by the Stockholders), but subject to Section 3.1(b) below, each Stockholder hereby agrees that, unless otherwise specifically and expressly consented to in writing by the Company, such Stockholder shall not (i) make any disposition of any of the Shares or Registrable Securities, by any means, until the date that is six (6) months after the date of the Closing, and (ii) during the period from the date that is six (6) months after the date of the Closing until the date that is one (1) year after the date of the Closing, make any disposition of more than an aggregate of twenty-five percent (25%) of the Shares and Registrable Securities held by such Stockholder as of the date hereof;
provided
, that any Stockholder may assign all or a portion of the disposition right set forth in this clause (ii) to any other Stockholder without the consent of the Company. Notwithstanding the foregoing, the foregoing restrictions shall not apply to a disposition to a third party that (x) enters into a definitive written agreement with the Company to consummate a transaction that would result in such third party obtaining a majority of the total outstanding number of the Company’s voting securities (including by means of merger, consolidation, sale of the Company’s equity interests or any combination thereof) or (y) commences a tender offer or an exchange offer for a majority of the total outstanding number of the Company’s voting securities, in each case of clauses (x) and (y) which is approved by the Board. For the avoidance of doubt, at any time following the date that is one (1) year after the date of the Closing, any Stockholder may dispose of its Shares or Registrable Securities without any restrictions under this Section 3.1(a).
(b) Notwithstanding the provisions of Section 3.1(a) above, a Stockholder may, at any time after the date hereof, transfer all or a portion of its Shares or Registrable Securities without the consent of the Company to (i) a partnership transferring to its partners or former partners in accordance with partnership interests, (ii) a corporation transferring to a wholly-owned subsidiary or a parent corporation that owns all of the capital stock of the Stockholder, (iii) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company, (iv) an entity transferring to its Affiliates or any other investment funds or accounts managed by it or its Affiliates that was not formed for the specific purpose of making or facilitating an investment in the Company or (v) an individual transferring to the Stockholder’s family member or trust for the benefit of an individual Stockholder (the transferees in clauses (i) through (v), collectively, “
Permitted Transferees
”);
provided
that in each case, other than transfers to an Other Seller Equityholder, the transferee will agree in writing to be subject to the terms of this Agreement to the same extent as if he were an original Stockholder hereunder.
(c) Each certificate representing Shares or Registrable Securities shall be stamped or otherwise imprinted with legends substantially similar to the following (in addition to any legend required under applicable state securities laws):
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
ACT
”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDER AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE COMPANY, AS AMENDED FROM TIME TO TIME. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
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(d) The Company shall be obligated to reissue promptly unlegended certificates at the request of any Holder thereof if the Holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification and legend,
provided
that the second legend listed above shall be removed only at such time as the Holder of such certificate is no longer subject to any restrictions hereunder. In the event of any transfer of Shares or Registrable Securities, at the request of the Holder thereof, the Company shall be obligated to instruct the transfer agent for its Common Stock to reissue certificates representing ownership of the Shares or Registrable Securities being sold in such denominations as such Holder may request.
(e) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal.
(f) Each Stockholder agrees that, if reasonably requested by the Company in connection with a disposition of Shares or Registrable Securities other than pursuant to an effective registration statement or Rule 144 of the Securities Act, such Holder shall furnish the Company with an opinion of counsel that such disposition does not require registration under the Securities Act.
3.2
Form S-3 Registration.
(a) On or before the ninetieth (90
th
) day following the Closing, the Company shall file a resale registration statement on Form S-3 covering all the Registrable Securities of the Holders and providing for the offer and sale by the Holders of the Registrable Securities in any manner permitted by Form S-3 and applicable Law (a “
Shelf Registration Statement
”), which Shelf Registration Statement shall permit offerings of Registrable Securities on a delayed or continuous basis in accordance with Rule 415 of the Securities Act. Additionally, the Company will use reasonable best efforts to effect, on or before the date that is six (6) months following the date of the Closing, such registration of Registrable Securities on the Shelf Registration Statement and all such qualifications and compliances (including the acceleration of effectiveness of such Shelf Registration Statement) as would permit or facilitate the sale and distribution of the Registrable Securities included in such Shelf Registration Statement. For the avoidance of doubt, if the Company has exercised its Cash Consideration Election, the provisions of this Section 3.2(a) shall be satisfied if all (but not less than all) of the Holders’ Registrable Securities are covered in the related Shelf Registration Statement, and such Shelf Registration Statement remains effective for such period as required under Section 3.7(a).
(b) Following the effectiveness of the Shelf Registration Statement, a majority in interest of the Holders (each, a “
Take-Down Initiating Holder
”) may at any time and from time to time initiate an offering or sale of all or part of the Registrable Securities (a “
Shelf Take-Down
”), subject to the limitations set forth in this Agreement, by delivering notice of such initiation to the Company as set forth herein. If the Take-Down Initiating Holders so elect in a written request delivered to the Company (an “
Underwritten Shelf Take-Down Notice
”), any Shelf Take-Down may be in the form of an underwritten public offering (an “
Underwritten Shelf Take-Down
”) and, in such event, the Company shall file as soon as practicable and in any event not later than ten (10) Business Days after the date of such request and, after such filing, use its reasonable best efforts to effect an amendment or supplement to its registration statement for such purpose. The Take-Down Initiating Holders shall indicate in such Underwritten Shelf Take-Down Notice whether they intend for such Underwritten Shelf Take-Down to involve a customary “road show” (including an “electronic road show”) or other substantial marketing effort by the underwriters (a “
Marketed Underwritten Shelf Take-Down
”). In the event of any Underwritten Shelf Take-Down, the underwriter or underwriters shall be designated by Holders of a majority of the Registrable Securities held by all Holders participating in such underwriting, which underwriter or underwriters shall be reasonably acceptable to the Company.
(c) Notwithstanding the foregoing, the Company shall not be obligated to
(i) effect any Underwritten Shelf Take-Down pursuant to Section 3.2(b):
(1)
at any time during which the Holders beneficially own, in the aggregate, less than five percent (5%) of the Company’s then-outstanding capital stock;
(2)
if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such Underwritten Shelf Take-Down to be effected at such time, in which event the Company shall have the right to defer such Underwritten Shelf Take-Down for a period of not more than sixty (60) days after receipt of the request of the Take-Down Initiating Holder under this Section 3.2;
provided
, that such right to delay a request (together with any similar right set forth in Section 3.2(c)(ii), Section 3.4 or Section 3.7(a)) shall be exercised by the Company not more than three (3) times
in any twelve (12) month period;
(3)
if the aggregate gross proceeds from any particular Underwritten Shelf Take-Down are reasonably anticipated to be less than $35,000,000;
(4)
if the Company has effected two (2) such Underwritten Shelf Take-Downs pursuant to this Section 3.2 in the preceding twelve (12) months;
(5)
in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case, where the Company would not otherwise be required to so qualify or execute a general consent, as applicable, but for such Underwritten Shelf Take-Down; or
(ii) effect any Shelf Take-Down
other
than an Underwritten Shelf Take-Down (each, a “
Non-Underwritten Shelf-Take-Down
”) pursuant to Section 3.2(b):
(1)
if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such Non-Underwritten Shelf Take-Down to be effected at such time, in which event the Company shall have the right to defer such Non-Underwritten Shelf Take-Down for a period of not more than sixty (60) days after receipt of the request of the Take-Down Initiating Holder under this Section 3.2;
provided
, that such right to delay a request (together with any similar right set forth in Section 3.2(c)(i), Section 3.4 or Section 3.7(a)) shall be exercised by the Company not more than three (3) times
in any twelve (12) month period;
(2)
if the Company has effected one (1) such Non-Underwritten Shelf Take-Down pursuant to this Section 3.2 in the preceding thirty (30) days; or
(3)
in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case, where the Company would not otherwise be required to so qualify or execute a general consent, as applicable, but for such Non-Underwritten Shelf Take-Down.
(d) If the Take-Down Initiating Holders desire to effect a Shelf Take-Down that does not constitute a Marketed Underwritten Shelf Take-Down (a “
Non-Marketed Underwritten Shelf Take-Down
”), the Take-Down Initiating Holders shall so indicate in a written request delivered to the Company no later than two (2) Business Days prior to the expected date of such Non-Marketed Underwritten Shelf Take-Down, which request shall include (i) the total number of Registrable Securities expected to be offered and sold in such Non-Marketed Underwritten Shelf Take-Down, (ii) the expected plan of distribution of such Non-Marketed Underwritten Shelf Take-Down and (iii) the action or actions required (including the timing thereof) in connection with such Non-Marketed Underwritten Shelf Take-Down (including the delivery of one or more stock certificates representing shares of Registrable Securities to be sold in such Non-Marketed Underwritten Shelf Take-Down),
and, subject to the limitations set forth in Section 3.2(c) (as applicable), the Company shall file as soon as practicable and in any event not later than five (5) Business Days after the date of such request and use reasonable best efforts thereafter to
effect an amendment or supplement to its registration statement for such purpose.
(e) Subject to the foregoing, the Company shall effect such unlimited number of Shelf Take-Downs as may be requested by a majority in interest of the Holders. The filing of the Shelf Registration Statement, or any amendment or supplement thereto or replacement thereof and any registrations or Shelf Take-Downs effected pursuant to this Section 3.2 shall not be counted as demands for registration or registrations effected pursuant to Section 3.4. Notwithstanding any other provision of this Agreement, if, in the case of an Underwritten Shelf Take-Down, the managing underwriter or underwriters advises the Company and the Holders in writing that in the good faith judgment of such managing underwriter or underwriters the marketing factors relating to the underwriting require a limitation of the number of securities to be included in a particular Underwritten Shelf Take-Down (including Registrable Securities), then the Company shall so advise all Holders of Registrable Securities in writing that would otherwise be included pursuant to the underwriting, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a
pro rata
basis based on the number of Registrable Securities held by all such Holders and no Registrable Securities shall be excluded from such Underwritten Shelf Take-Down unless all other securities of the Company are first excluded.
3.3
Piggyback Registrations.
(a) The Company shall notify all Holders of Registrable Securities in writing at least thirty (30)
days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration Statements), which notice shall specify the number and class or classes (or type or types) of securities to be registered, and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within thirty (30) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.
(b)
Underwriting.
If the registration statement of which the Company gives notice under this Section 3.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities in writing. In such event, the right of any such Holder to include Registrable Securities in a registration pursuant to this Section 3.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriter or underwriters advises the Company and the Holders in writing that in the good faith judgment of such managing underwriter or underwriters the marketing factors relating to the underwriting require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a
pro rata
basis based on the total number of Registrable Securities held by the Holders; and third, to any stockholder of the Company (other than a Holder) on a
pro rata
basis. In no event will shares of any other selling stockholder be included in such registration that would reduce the number of shares which may be included by Holders without the written consent of Holders of not less than a majority of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership, limited liability company or corporation, the partners, retired partners, members, retired members and stockholders of such Holder, or the estates and family members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing person shall be deemed to be a single “Holder,” and any
pro rata
reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence.
(c)
Right to Terminate Registration.
The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3.3 whether or not any Holder has elected to include securities in such registration, without prejudice, however, to the right of the Holders immediately to request that such registration be effected as a registration under Section 3.4 to the extent permitted thereunder. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 3.6 hereof.
3.4
Demand Registration.
(a) Subject to the conditions of this Section 3.4, if the Company shall receive a written request from the Holders of a majority of the Registrable Securities (the “
Initiating Holders
”) that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities then outstanding having reasonably anticipated gross proceeds of at least $35,000,000, then the Company shall, within thirty (30) days after the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 3.4, file and use reasonable best efforts to effect, as expeditiously as possible, the registration under the Securities Act and applicable state securities Laws of all Registrable Securities that all Holders request to be registered.
(b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 3.4 and the Company shall include such information in the written notice referred to in Section 3.4(a). In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities held by all Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 3.4, if the managing underwriter or underwriters advises the Company and the Holders in writing that in the good faith judgment of such managing underwriter or underwriters the marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a
pro rata
basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration pursuant to this Section 3.4:
(i) during any period in which the Company is eligible to use Form S-3 (in which case the Holders shall have the rights to registration and Shelf Take-Downs set forth in, and subject to the limitations of, Section 3.2);
(ii) subject to Section 3.4(d), after the Company has effected two (2)
registrations pursuant to this Section 3.4, and such registrations have been declared or ordered effective;
(iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of the registration statement pertaining to a public offering subject to Section 3.3, other than pursuant to a Special Registration Statement;
provided
that the Company makes reasonable good faith efforts to cause such registration statement to become effective;
(iv) if within thirty (30) days after receipt after a written request from Initiating Holders pursuant to Section 3.4(a), the Company gives notice to the Holders of the Company’s intention to file a registration statement for a public offering subject to Section 3.3, other than pursuant to a Special Registration Statement,
within ninety (90) days;
(v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 3.4 a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of the Initiating Holders;
provided
that such right to delay a request (together with any similar right set forth in Section 3.2 or Section 3.7(a)) shall be exercised by the Company not more than three (3) times in any twelve (12) month period; or
(vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case, where the Company would not otherwise be required to so qualify or execute a general consent, as applicable, but for such registration pursuant to this Section 3.4.
(d) Notwithstanding any other provision of this Agreement, a registration pursuant to Section 3.2 or requested pursuant to this Section 3.4 shall not be deemed to have been effected (i) if the registration statement is withdrawn without becoming effective, (ii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other Governmental Authority for any reason other than a misrepresentation or an omission by an Initiating Holder and, as a result thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration statement;
provided
, that if such registration is a Shelf Registration Statement pursuant to Section 3.2, such registration shall be deemed to have been effected if such Shelf Registration Statement remains effective for the period specified in Section 3.7(a), (iii) if not a Shelf Registration Statement and the registration does not contemplate an underwritten offering, if the applicable registration statement does not remain effective for at least 180 days (or such shorter period as will terminate when all securities covered by such registration statement have been sold or withdrawn); or if not a Shelf Registration Statement and such registration statement contemplates an underwritten offering, if it does not remain effective for at least 180 days plus such longer period as, in the opinion of counsel for the underwriter or underwriters, a prospectus is required by Law to be delivered in connection with the sale of Registrable Securities by an underwriter or dealer or (iv) in the event of an underwritten offering, if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than by reason of some wrongful act or omission by the Initiating Holders.
3.5
Underwritten Offerings
. In the case of an underwritten offering requested
by the Holders pursuant to Section 3.2 or Section 3.4, the price, underwriting discount and other financial terms for the Registrable Securities of the related underwriting agreement shall be determined by the Holders holding a majority of the Registrable Securities to be included in such offering. In the case of any underwritten offering of securities by the Company pursuant to Section 3.3, such price, discount and other terms shall be determined by the Company, subject to the right of Holders to withdraw their Registrable Securities from the registration pursuant to Section 3.6.
3.6
Withdrawal Rights; Expenses of Registration.
(a) A Holder may elect to withdraw all or any part of its Registrable Securities from any registration (including a registration effected pursuant to Section 3.4) by giving written notice to the Company at least ten (10) Business Days prior to the effective date of the registration statement of its request to withdraw at any time. In the case of a withdrawal prior to the effective date of a registration statement, any Registrable Securities so withdrawn shall be reallocated among the remaining participants in accordance with the applicable provisions of this Agreement.
(b) Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 3.2, 3.3 or 3.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered
pro rata
on the basis of the number of shares so registered and sold. The Company shall not, however, be required to pay for expenses of any registration or Shelf Take-Down proceeding begun pursuant to Section 3.2 or 3.4, the request of which has been subsequently withdrawn by the Initiating Holders unless (i) the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were not aware at the time of such request, or (ii) the Holders of a majority of Registrable Securities agree to deem such registration or Shelf Take-Down to have been effected as of the date of such withdrawal for purposes of determining whether the Company shall be obligated pursuant to Section 3.2(c)(i)(D), Section 3.2(c)(ii)(B) or Section 3.4(c)(ii), as applicable, to undertake any subsequent registration or Shelf Take-Down, in which event such right shall be forfeited by all Holders. If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (i) above, then such registration or Shelf Take-Down shall not be deemed to have been effected for purposes of determining whether the Company shall be obligated pursuant to Section 3.2(c)(i)(D), Section 3.2(c)(ii)(B) or Section 3.4(c)(ii), as applicable, to undertake any subsequent registration or Shelf Take-Down.
3.7
Obligations of the Company.
Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as possible and as applicable:
(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective until the Holder or Holders have completed the distribution related thereto;
provided, however
, that at any time, for a period not to exceed sixty (60) days thereafter (the “
Suspension Period
”), the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (and the Initiating Holders hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such registration to be effected at such time;
provided
that such right to suspend a registration statement (together with any similar right set forth in Section 3.2 or Section 3.4) shall be exercised by the Company not more than three (3) times
in any twelve (12) month period. In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. The Company may extend the Suspension Period for an additional consecutive sixty (60) days with the consent of the holders of a majority of the Registrable Securities registered under the applicable registration statement, which consent shall not be unreasonably withheld.
If so directed by the Company, all Holders registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the period in which the delay or suspension is in effect after receiving notice of such delay or suspension; and (ii) use their reasonable best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as (i) reasonably requested by any Holder (to the extent such request related to information relating to such Holder) or (ii) may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in subsection (a) above. The Company will respond promptly to any comments received from the SEC and request acceleration of effectiveness promptly after it learns that the SEC will not review the registration statement or after it has satisfied comments received from the SEC. With respect to each Free Writing Prospectus or other materials to be included in the Disclosure Package, ensure that no Registrable Securities be sold “by means of” (as defined in Rule 159A(b) under the Securities Act) such Free Writing Prospectus or other materials without the prior written consent of the Holders of the Registrable Securities covered by such registration statement, which Free Writing Prospectuses or other materials shall be subject to the review of counsel to such selling Holders, and make all required filings of all Free Writing Prospectuses with the SEC.
(c) Furnish to the Holders and to any underwriter of such Registrable Securities such number of copies of such registration statement and each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement, including a preliminary prospectus, summary prospectus and Free Writing Prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders;
provided
that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, in each case, where the Company would not otherwise be required to so qualify or execute a general consent, as applicable, but for this Section 3.2(c).
(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form (including using commercially reasonable efforts to include (w) indemnification and contribution provisions substantially to the effect and to the extent provided in Section 3.9, and (x) agreements as to the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 3.7(g)), with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement, and the Company shall use commercially reasonable efforts to ensure that (y) the representations and warranties by, and the other agreements on the party of, the Company to and for the benefit of such underwriters, shall also be made to and for the benefit of such Holders and (z) the conditions precedent to the obligations of such underwriters under such underwriting agreement shall also be conditions precedent to the obligations of such Holders to the extent applicable.
(f) Notify each Holder and any underwriter of Registrable Securities covered by such registration statement at any time when (i) a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the registration statement or the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, (ii) any request by the SEC or any other regulatory body or other body having jurisdiction has been made for any amendment of or supplement to any registration statement or other document relating to such offering, and (iii) if for any other reason it shall be necessary to amend or supplement such registration statement or prospectus in order to comply with the Securities Act. The Company will as promptly as reasonably practicable use reasonable best efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing or otherwise effect such compliance.
(g) Use its reasonable best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale (if such securities are being sold through underwriters) or the effective date of the applicable registration statement (in the case of a non-underwritten offering), (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as reasonably satisfactory to the managing underwriters in an underwritten public offering or, the selling Holders in the case of a non-underwritten offering, addressed to the Holders and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings, (ii) a “cold comfort” and “bring-down” letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and (iii) customary certificates executed by authorized officers of the Company as may be requested by any Holder or any underwriter of such Registrable Securities.
(h) To the extent reasonably requested by the lead or managing underwriters in connection with a Marketed Underwritten Shelf Take-Down or an underwritten offering pursuant to Section 3.2(b), send appropriate officers of the Company to attend any “road shows” scheduled in connection with any such underwritten offering, with all out of pocket costs and expenses incurred by the Company or such officers in connection with such attendance to be paid by the Company.
(i) Notify the Holders and the lead underwriter or underwriters, if any, and (if requested) confirm such advice in writing, as promptly as reasonably practicable after notice thereof is received by the Company (i) when the applicable registration statement or any amendment thereto becomes effective and when the applicable prospectus or any amendment or supplement thereto has been filed, and (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or any order preventing or suspending the use of any preliminary or final prospectus or the initiation or threat of any proceedings for such purposes.
(j) Use its reasonable best efforts to obtain as promptly as reasonably practicable the withdrawal of, any stop order with respect to the applicable registration statement or other order suspending the use of any preliminary or final prospectus.
(k) Promptly incorporate in a prospectus supplement or post-effective amendment to the applicable registration statement such information as the lead underwriter or underwriters, if any, and the Holders holding a majority of Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such prospectus supplement or post-effective amendment as promptly as reasonably practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment.
(l) Cooperate with each Holder and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.
(m) Use its reasonable best efforts to cause all such Registrable Securities registered pursuant to such registration to be listed and remain on each securities exchange and automated interdealer quotation system on which identical securities issued by the Company are then listed.
(n) Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration and a CUSIP/ISIN number for all such Registrable Securities, in each case not later than the effective date of the applicable registration statement.
(o) Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to each Holder, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the applicable registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(p) Use its reasonable best efforts to take such other steps necessary to effect the registration of the Registrable Securities contemplated hereby.
3.8
Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 3.
(b) It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.2, 3.3 or 3.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.
(c) The Company shall have no obligation with respect to any Underwritten Shelf Take-Down or registration requested pursuant to Section 3.2 or Section 3.4, respectively, if the anticipated aggregate offering price of the Registrable Securities to be included in such Underwritten Shelf Take-Down or registration, as applicable, does not equal or exceed the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such Underwritten Shelf Take-Down registration as specified in Section 3.2 or Section 3.4, whichever is applicable.
(d) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act pursuant to this Section 3, the Company shall make available upon reasonable notice at reasonable times and for reasonable periods for inspection by each Holder, by any managing underwriter or underwriters participating in any disposition to be effected pursuant to such registration statement, and by any attorney, accountant or other agent retained by any Holder or any managing underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees and the independent public accountants who have certified the Company’s financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Holders, managing underwriters, attorneys, accountants or agents in connection with such registration statement as shall be necessary to enable them to exercise their due diligence responsibility (subject to entry by each party referred to in this clause (d) into customary confidentiality agreements in a form reasonably acceptable to the Company).
3.9
Indemnification.
In the event any Registrable Securities are included in a registration statement under Sections 3.2, 3.3 or 3.4:
(a) To the extent permitted by Law, the Company will indemnify and hold harmless each Holder, its Affiliates, the stockholders, partners, members, officers, directors employees and agents of each Holder or its Affiliate, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Losses (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state Law or otherwise, insofar as such Losses (or actions in respect thereof, whether or not such indemnified person is a party thereto) arise out of or are based upon any of the following statements, omissions or violations (collectively a “
Violation
”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or in any Disclosure Package, or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities prepared by the Company or at its direction, or any amendment thereof or supplement thereto, or in any document incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities Law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities Law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, Affiliate, stockholder, partner, member, officer, director, employee or agent of such Holder or Affiliate, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or action;
provided however
, that the indemnity agreement contained in this Section 3.9(a) shall not apply to amounts paid in settlement of any such Loss or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned, nor shall the Company be liable in any such case for any such Loss or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, Affiliate, stockholder, partner, member, officer, director employee or agent of such Holder or Affiliate, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its Affiliates, the officers, directors, employees and agents of the Company or its Affiliates, and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s Affiliates, partners, members, directors or officers of such Holder or its Affiliates or any Person who controls such Holder, against any Losses (joint or several) to which the Company or any such director, officer, employee, agent, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such Losses (or actions in respect thereto) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or in any Disclosure Package, or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities prepared by the Company or at its direction, or any amendment thereof or supplement thereto, or in any document incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Holder of the Securities Act (collectively, a “
Holder Violation
”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or its Affiliate or any such director, officer, employee, agent, controlling person, underwriter or other Holder, Affiliate or partner, member, officer, director of such other Holder or Affiliate or controlling person of such other Holder in connection with investigating or defending any such Loss or action if it is judicially determined that there was such a Holder Violation;
provided, however,
that the indemnity agreement contained in this Section 3.9(b) shall not apply to amounts paid in settlement of any such Loss or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld, delayed or conditioned;
provided further
, that in no event shall any indemnity under this Section 3.9(b), when taken together with amounts in contribution under Section 3.9(d), exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 3.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 3.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however,
that an indemnified party shall have the right to retain its own counsel, with the fees and expenses thereof to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 3.9 to the extent, and only to the extent, prejudicial to its ability to defend such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 3.9.
(d) If the indemnification provided for in this Section 3.9 shall be unavailable or insufficient to an indemnified party with respect to any Losses referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable Law contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) or Holder Violation(s) that resulted in such Loss, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission;
provided
,
that
in no event shall any contribution by a Holder hereunder, when taken together with any amounts in indemnity under Section 3.9(b), exceed the net proceeds from the offering received by such Holder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.9(d) were determined by
pro rata
allocation or by any other method of allocation which does not take into account the equitable considerations referred to in this Section 3.9(d).
(e) The obligations of the Company and Holders under this Section 3.9 shall survive completion of any offering of Registrable Securities in a registration statement and, with respect to liability arising from an offering to which this Section 3.9 would apply that is covered by a registration filed before termination of this Agreement, such termination. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. The liability of any Holder under this Section 3.9 shall be several and not joint.
3.10
Assignment of Registration Rights.
The rights pursuant to this Section 3 may be assigned by a Holder to a permitted transferee or permitted assignee of Registrable Securities under Section 3.1 (for so long as such shares remain Registrable Securities);
provided, however,
(a) the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (b) such transferee shall agree to be subject to all restrictions set forth in Section 3 (other than Section 3.1, which shall only apply to any transferee that is a Permitted Transferee pursuant to Section 3.1(b)) of this Agreement.
3.11
Limitation on Subsequent Registration Rights.
After the date of this Agreement, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder rights to demand the registration of shares of the Company’s capital stock, or to include such shares in a registration statement that would reduce the number of shares includable by the Holders.
3.12
Rule 144 Reporting.
With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public;
(b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company filed with the SEC; and such other reports and documents as a Holder may reasonably request in connection with availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.
3.13
Termination of Registration Rights.
The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 3.2, Section 3.3, or Section 3.4 hereof shall terminate upon the earlier of: (a) solely in the case of Section 3.3, at such time as the Holders, collectively, beneficially own less than five percent (5%) of the Company’s then-outstanding capital stock, or (b) such time as all Registrable Securities of the Company held by such Holder (and its affiliates) may be sold pursuant to Rule 144 without the volume or manner of sale restrictions thereunder. Upon such termination, such shares shall cease to be “Registrable Securities” hereunder for all purposes.
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SECTION 4.
|
COVENANTS OF STOCKHOLDERS
.
|
4.1
Prohibited Actions.
Each Stockholder, severally and not jointly, hereby covenants and agrees that, until the earlier of (x) the date that is two (2) years after the date of the Closing, or (y) such time as all Stockholders collectively own less than ten percent (10%) of the Company’s capital stock (calculated on a fully-diluted, as-converted basis), unless otherwise specifically consented to in writing by the Company such Stockholder:
(a) Shall not acquire any shares of the Company’s capital stock (other than the Shares and any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in connection with a stock split, combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, or in exchange for or in replacement of, the Shares);
(b) Call any special meetings of the Board or stockholders of the Company;
(c) Solicit proxies with respect to any matter brought before the stockholders of the Company for a vote; or
(d) Make any shareholder proposal for vote by the Company’s stockholders.
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SECTION 5.
|
MISCELLANEOUS
.
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5.1
Governing Law.
This Agreement and all actions (whether in contract or in tort) based on, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, 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. All actions (whether in contract or in tort) based on, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, shall be heard and determined exclusively in the Chancery Court of the State of Delaware. Consistent with the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of the Chancery Court of the State of Delaware for the purpose of any action arising out of or relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts.
5.2
Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION OR LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION OR LIABILITY, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.2.
5.3
Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors, and administrators and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time;
provided, however
, that prior to the receipt by the Company (or its transfer agent) of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price.
5.4
Entire Agreement.
This Agreement, the Exhibits hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.
5.5
Severability.
In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
5.6
Amendment and Waiver.
Except as otherwise expressly provided, this Agreement may be amended or modified, and the obligations of the Company and the rights of the Holders under this Agreement may be waived, only upon the written consent of the Company and the holders of a majority of the then-outstanding Registrable Securities. For the purposes of determining the number of Holders or Stockholders entitled to exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.
5.7
Delays or Omissions.
It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any party’s part of any breach, default or noncompliance under the Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
5.8
Notices.
All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, by registered or certified mail (postage prepaid, return receipt requested) or by electronic communication (including e-mail but excluding Internet or intranet websites) to the respective parties hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 5.8):
(a) if to the Company:
Web.com Group, Inc.
12808 Gran Bay Parkway West
Jacksonville, FL 32258
Facsimile: (904) 880-0350
Attention: Chief Executive Officer
with a copy to:
Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304
E-Mail: fultonjf@cooley.com
Facsimile: (650) 849-7400
Attention: James F. Fulton, Jr
(b) if to any Stockholder or Holder to the address set forth for such Stockholder or Holder on Exhibit A hereto.
Any notice delivered by personal delivery or by courier service to the party to whom it is addressed as provided above shall be deemed to have been given and received on the day it is so delivered at such address. If such day is not a Business Day, or if the notice is received after 5:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the next Business Day. Any notice sent by prepaid registered or certified mail shall be deemed to have been given and received on the fourth Business Day following the date of its mailing. Any notice transmitted by facsimile shall be deemed to have been given and received on the day in which such transmission is confirmed. If such day is not a Business Day or if the facsimile transmission is received after 5:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the first Business Day after its transmission. Notices sent to an e-mail address shall be deemed to be received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, return e-mail or other written acknowledgement);
provided
that if such notice is not sent on a Business Day or is sent after 5:00 p.m. (addressee’s local time) on a Business Day, such notice shall be deemed to have been given and received on the first Business Day after its transmission.
5.9
Attorneys’ Fees.
In the event that any suit or action is instituted under or in relation to this Agreement, including without limitation to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
5.10
Rules of Construction.
The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by competent counsel and embodies the justifiable expectations of sophisticated parties derived from arms’ length negotiations.
5.11
Counterparts.
This Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.
5.12
Aggregation of Stock.
All shares of Registrable Securities held or acquired by affiliated entities or persons or persons or entities under common management or control shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.
5.13
Pronouns.
All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.
5.14
Termination.
This Agreement shall terminate and be of no further force or effect upon the date that the Stockholders and their respective transferee(s) of Registrable Securities to whom registration rights are transferred in accordance with Section 3.10 collectively cease to beneficially own any Shares or Registrable Securities. Notwithstanding anything contained herein to the contrary, the provisions of Section 2.1(e), Section 3.9 and this Section 5 shall survive any termination of any provisions of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
In Witness Whereof,
the parties hereto have executed this
Stockholder Agreement
as of the date set forth in the first paragraph hereof.
COMPANY:
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WEB.COM GROUP, INC.
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BY:
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NAME:
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TITLE:
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Stockholder Agreement
Signature page
In Witness Whereof,
the parties hereto have executed this
Stockholder Agreement
as of the date set forth in the first paragraph hereof.
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SELLER:
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NET SOL HOLDINGS LLC
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BY:
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NAME:
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TITLE:
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Stockholder Agreement
Signature page
In Witness Whereof,
the parties hereto have executed this
Stockholder Agreement
as of the date set forth in the first paragraph hereof.
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STOCKHOLDER:
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GA-NET SOL INVESTOR LLC
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BY:
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NAME:
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TITLE:
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Stockholder Agreement
Signature page
EXHIBIT A
SCHEDULE OF STOCKHOLDERS
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GA-NET SOL INVESTOR LLC
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THREE PICKWICK PLAZA
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GREENWICH, CT 06830
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FACSIMILE: (203) 629-8600
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ATTENTION: CHRISTOPHER G.
LANNING
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[LETTERHEAD OF WELLS FARGO SECURITIES, LLC]
August 3, 2011
Board of Directors
Web.com Group, Inc.
12808 Gran Bay Parkway West
Jacksonville, Florida 32258
Board of Directors:
The Board of Directors of Web.com Group, Inc., a Delaware corporation ("Web.com"), has asked Wells Fargo Securities, LLC ("Wells Fargo Securities") to advise it with respect to the fairness, from a financial point of view, to Web.com of the Purchase Price (as hereinafter defined) to be paid by Web.com pursuant to a Purchase Agreement (the "Agreement") to be entered into among Web.com, Net Sol Holdings LLC ("Net Sol"), a Delaware limited liability company and affiliate of General Atlantic LLC ("General Atlantic"), and GA-Net Sol Parent LLC ("Network Solutions"), a Delaware limited liability company and wholly-owned subsidiary of Net Sol. Pursuant to the Agreement, Web.com will acquire Network Solutions from Net Sol (the "Transaction") for (i) $405.0 million in cash (the "Cash Consideration") and (ii) 18.0 million shares of the common stock, par value $0.001 per share, of Web.com ("Web.com Common Stock" and, such number of shares, the "Stock Consideration") and payment of Network Solutions' net indebtedness and certain other amounts outstanding at closing, which representatives of Web.com have instructed us to assume for purposes of our opinion will be $218.5 million (such net debt and other amounts, together with the Cash Consideration and the Stock Consideration, collectively, the "Purchase Price"), subject to certain adjustments and an election right of Web.com as described in the Agreement. The terms and conditions of the Transaction are more fully set forth in the Agreement.
In arriving at our opinion, we have, among other things:
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Reviewed a draft, provided to us on August 3, 2011, of the Agreement, including the financial terms of the Agreement;
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Reviewed certain business, financial and other historical information regarding Web.com that was publicly available, including annual reports to stockholders and annual reports on Form 10-K of Web.com for the fiscal years ended December 31, 2008, 2009 and 2010, certain interim reports to stockholders and quarterly reports on Form 10-Q of Web.com for the period ended March 31, 2011 and internal draft financial statements of Web.com for the period ended June 30, 2011 prepared by Web.com;
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Reviewed certain business, financial and other historical information regarding Network Solutions furnished to us by Network Solutions, including audited consolidated balance sheets and financial statements for Network Solutions and its subsidiaries for the fiscal years ended December 31, 2008, 2009 and 2010 and unaudited consolidated balance sheets and financial statements of Network Solutions and its subsidiaries for the period ended June 30, 2011;
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Board of Directors
Web.com Group, Inc.
August 3, 2011
Page 2
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Reviewed certain business, financial and other information regarding Web.com and Network Solutions furnished to us by Web.com and Network Solutions, including financial forecasts and estimates for the fiscal years ending December 31, 2011 through 2015 relating to Web.com prepared by the management of Web.com and relating to Network Solutions prepared by the management of Network Solutions as adjusted by the management of Web.com;
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Discussed with the managements of Web.com and Network Solutions the operations and prospects of Web.com and Network Solutions, including the historical financial performance and trends in the results of operations of Web.com and Network Solutions;
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Discussed with the management of Web.com the strategic rationale for the Transaction, including potential cost synergies anticipated by the management of Web.com to result from the Transaction (collectively, the "Synergies");
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Participated in discussions among representatives of Web.com, Network Solutions, General Atlantic and their respective advisors regarding the proposed Transaction;
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Reviewed reported prices and trading activity for Web.com Common Stock;
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Compared certain financial data of Web.com and Network Solutions with each other and similar data of certain publicly traded companies that we deemed relevant;
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Compared the proposed financial terms of the Transaction with the financial terms of certain business combinations and other transactions that we deemed relevant;
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Analyzed the estimated present value of the future cash flows of Web.com and Network Solutions based upon the financial forecasts referred to above, estimates of certain tax assets of Network Solutions and other assumptions relating to Web.com and Network Solutions discussed with and confirmed as reasonable by the managements of Web.com and Network Solutions;
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Reviewed the potential pro forma financial impact of the Transaction on Web.com after giving effect to the Synergies based upon the financial forecasts referred to above, estimates and other assumptions relating to Web.com and Network Solutions and alternative financing terms for the Transaction discussed with and confirmed as reasonable by the managements of Web.com and Network Solutions; and
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Considered other information, such as financial studies, analyses, and investigations, as well as financial, economic and market criteria, that we deemed relevant.
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Board of Directors
Web.com Group, Inc.
August 3, 2011
Page 3
In connection with our review, we have assumed and relied upon the accuracy and completeness of the financial and other information provided or otherwise made available to us and discussed with or reviewed by us, including all accounting, tax and legal information, and we have not made (and have not assumed any responsibility for) any independent verification of such information. We have relied upon assurances of the managements of Web.com and Network Solutions that they are not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial forecasts and estimates (including adjustments thereto) and other information, including the Synergies, utilized in our analyses, we have been advised by the managements of Web.com and Network Solutions and, at the direction of Web.com, have assumed that they have been reasonably prepared and reflect the best currently available estimates, judgments and assumptions of the managements of Web.com and Network Solutions, as the case may be, as to the future financial performance of Web.com and Network Solutions, such Synergies and the other matters covered thereby. We assume no responsibility for, and express no view as to, such forecasts, estimates or other information utilized in our analyses or the judgments or assumptions upon which they are based. We also have assumed that there have been no material changes in the condition (financial or otherwise), results of operations, business or prospects of Web.com and Network Solutions since the respective dates of the most recent financial statements and other information provided to us. In arriving at our opinion, we have not conducted any physical inspection or assessment of the facilities or assets of Web.com or Network Solutions, nor have we made or been provided with any evaluations or appraisals of the assets or liabilities (contingent or otherwise) of Web.com or Network Solutions.
In rendering our opinion, we have assumed, at the direction of Web.com, that the final form of the Agreement, when signed by the parties thereto, will not differ from the draft reviewed by us in any respect material to our opinion, that the Transaction will be consummated in accordance with the terms described in the Agreement and in compliance with all applicable laws, without amendment or waiver of any material terms or conditions, and that in the course of obtaining any necessary legal, regulatory or third party consents, approvals or agreements for the Transaction, no delay, limitation or restriction will be imposed or action will be taken that will have an adverse effect on Web.com, Network Solutions or the contemplated benefits of the Transaction. We further have assumed, at the direction of Web.com, that there will be no adjustments to the Purchase Price (including, without limitation, with respect to Network Solutions' estimated net debt or other amounts payable at closing or as a result of any election made by Web.com) that would be material in any respect relevant to our analyses or opinion. We are not expressing any opinion as to what the value of Web.com Common Stock actually will be when issued pursuant to the Transaction, the price at which Web.com Common Stock will trade at any time or the price at which membership interests in Network Solutions would trade (if a public trading market for such securities existed) or would otherwise be transferable at any time. Our opinion is necessarily based on economic, market, financial and other conditions existing, and information made available to us, as of the date hereof. As Web.com is aware, the credit, financial and stock markets have been experiencing unusual volatility and we express no opinion or view as to any potential effects of such volatility on Web.com, Network Solutions or the contemplated benefits of the Transaction. Although subsequent developments may affect this opinion, we do not have any obligation to update, revise or reaffirm this opinion.
Board of Directors
Web.com Group, Inc.
August 3, 2011
Page 4
Our opinion only addresses the fairness, from a financial point of view, to Web.com of the Purchase Price to be paid by Web.com in the Transaction to the extent expressly specified herein and does not address any other terms, aspects or implications of the Transaction, including, without limitation, the form or structure of the Purchase Price (or any adjustments or election relating thereto) or the Transaction, any terms of Network Solutions' indebtedness or contractual or other arrangements underlying amounts payable pursuant to the Transaction, any tax or accounting matters relating to the Transaction or otherwise, any financings contemplated to be undertaken by Web.com in connection with the Transaction or any terms, aspects or implications of any other agreement, arrangement or understanding entered into in connection with or contemplated by the Transaction or otherwise. In addition, our opinion does not address the fairness of the amount or nature of, or any other aspects relating to, any compensation to be received by any officers, directors or employees of any parties to the Transaction, or class of such persons, relative to the Purchase Price or otherwise. Our opinion also does not address the merits of the underlying decision by Web.com to enter into the Agreement or the relative merits of the Transaction compared with other business strategies or transactions available or that have been or might be considered by the management or the Board of Directors of Web.com.
The issuance of this opinion was approved by an authorized committee of Wells Fargo Securities. Wells Fargo Securities is the trade name for certain capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC. Wells Fargo Securities has been engaged to act as financial advisor to Web.com in connection with the Transaction and will receive a fee for such services, a portion of which will be payable upon delivery of this opinion and the principal portion of which will be payable upon consummation of the Transaction. In addition, in the event that Web.com elects to undertake an equity offering to effect an adjustment to the Purchase Price as contemplated by the Agreement, Wells Fargo Securities may participate in such equity offering and would expect to receive customary fees in connection therewith. Web.com also has agreed to reimburse certain of Wells Fargo Securities' expenses and to indemnify us and certain related parties against certain liabilities that may arise out of our engagement. Wells Fargo Securities and our affiliates provide a full range of investment banking and financial advisory, securities trading, brokerage and lending services in the ordinary course of business, for which we and such affiliates receive customary fees. In connection with unrelated matters, Wells Fargo Securities and our affiliates in the past have provided, currently are providing and in the future may provide banking and financial services to Web.com, for which Wells Fargo Securities and such affiliates have received and expect to receive fees, including in the two-year period prior to the date hereof (i) having acted as a co-financial advisor to Web.com in its acquisition of Register.com in 2010 and (ii) having acted or acting as joint lead arranger, joint bookrunner and syndication agent for, and as a lender under, certain credit facilities of Web.com. In addition, Wells Fargo Securities and our affiliates provide other commercial banking services (such as treasury management, investment and foreign exchange services) to Web.com. In the ordinary course of business, Wells Fargo Securities and our affiliates may actively trade, hold or otherwise effect transactions, in the securities or financial instruments (including bank loans or other obligations) of Web.com, General Atlantic, Network Solutions and their respective affiliates for our and our affiliates' own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities or financial instruments.
Board of Directors
Web.com Group, Inc.
August 3, 2011
Page 5
It is understood that this opinion is for the information and use of the Board of Directors of Web.com (in its capacity as such) in connection with its evaluation of the Transaction. Our opinion does not constitute a recommendation to the Board of Directors or any other persons in respect of the Transaction, including as to how any stockholder of Web.com should vote or act in connection with the Transaction or any other matters.
Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, it is our opinion that, as of the date hereof, the Purchase Price to be paid by Web.com in the Transaction is fair, from a financial point of view, to Web.com.
Very truly yours,
/s/
Wells Fargo Securities, LLC
WELLS FARGO SECURITIES, LLC