|
|
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0259 335
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
|
|
|
|
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Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
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|
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Page
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PART I: FINANCIAL INFORMATION
|
|
|
|
Item 1. Financial Statements
|
|
|
|
|
|
|
April 2,
2016 |
|
January 2,
2016 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
215,990
|
|
|
$
|
179,915
|
|
Short term investments
|
30,746
|
|
|
33,124
|
|
||
Accounts receivable, net of allowance of $29 at April 2, 2016 and $33 at January 2, 2016
|
28,497
|
|
|
104,679
|
|
||
Unbilled revenue
|
139
|
|
|
452
|
|
||
Inventory
|
52,764
|
|
|
61,678
|
|
||
Assets held for sale
|
19,966
|
|
|
—
|
|
||
Other current assets
|
11,770
|
|
|
9,501
|
|
||
Total current assets
|
359,872
|
|
|
389,349
|
|
||
Property and equipment, net
|
25,600
|
|
|
26,850
|
|
||
Deferred tax assets
|
31,849
|
|
|
31,721
|
|
||
Goodwill
|
48,751
|
|
|
48,751
|
|
||
Intangible assets, net
|
14,800
|
|
|
15,664
|
|
||
Other assets
|
9,931
|
|
|
9,408
|
|
||
Total assets
|
$
|
490,803
|
|
|
$
|
521,743
|
|
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
39,015
|
|
|
$
|
61,655
|
|
Accrued expenses
|
12,910
|
|
|
15,954
|
|
||
Accrued compensation
|
11,220
|
|
|
15,752
|
|
||
Deferred revenue and customer advances
|
2,634
|
|
|
3,265
|
|
||
Liabilities held for sale
|
4,609
|
|
|
—
|
|
||
Total current liabilities
|
70,388
|
|
|
96,626
|
|
||
Long term liabilities
|
7,231
|
|
|
7,706
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
|
|
||
Redeemable convertible preferred stock, 5,000,000 shares authorized and none outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 100,000,000 shares authorized; 28,908,411 and 29,091,806 shares issued and outstanding at April 2, 2016 and January 2, 2016, respectively
|
289
|
|
|
291
|
|
||
Additional paid-in capital
|
223,951
|
|
|
232,345
|
|
||
Retained earnings
|
188,943
|
|
|
185,011
|
|
||
Accumulated other comprehensive income (loss)
|
1
|
|
|
(236
|
)
|
||
Total stockholders’ equity
|
413,184
|
|
|
417,411
|
|
||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity
|
$
|
490,803
|
|
|
$
|
521,743
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
Revenue
|
$
|
130,804
|
|
|
$
|
117,961
|
|
Cost of revenue (1)
|
68,843
|
|
|
64,253
|
|
||
Gross margin
|
61,961
|
|
|
53,708
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development (1)
|
19,728
|
|
|
19,032
|
|
||
Selling and marketing (1)
|
19,940
|
|
|
14,188
|
|
||
General and administrative (1)
|
16,764
|
|
|
12,589
|
|
||
Total operating expenses
|
56,432
|
|
|
45,809
|
|
||
Operating income
|
5,529
|
|
|
7,899
|
|
||
Other income (expense), net
|
200
|
|
|
(794
|
)
|
||
Income before income taxes
|
5,729
|
|
|
7,105
|
|
||
Income tax expense
|
1,797
|
|
|
2,351
|
|
||
Net income
|
$
|
3,932
|
|
|
$
|
4,754
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
0.14
|
|
|
$
|
0.16
|
|
Diluted
|
$
|
0.13
|
|
|
$
|
0.16
|
|
Number of weighted average common shares used in calculations per share
|
|
|
|
||||
Basic
|
29,004
|
|
|
29,653
|
|
||
Diluted
|
29,474
|
|
|
30,230
|
|
(1)
|
Total stock-based compensation recorded in the three months ended
April 2, 2016
and
March 28, 2015
included in the above figures breaks down by expense classification as follows:
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
Cost of revenue
|
$
|
221
|
|
|
$
|
215
|
|
Research and development
|
829
|
|
|
832
|
|
||
Selling and marketing
|
485
|
|
|
309
|
|
||
General and administrative
|
2,357
|
|
|
1,751
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
Net income
|
$
|
3,932
|
|
|
$
|
4,754
|
|
Other comprehensive income, net of tax:
|
|
|
|
||||
Unrealized gains on investments, net of tax
|
237
|
|
|
121
|
|
||
Total comprehensive income
|
$
|
4,169
|
|
|
$
|
4,875
|
|
|
Three Months Ended
|
||||||
|
April 2,
2016 |
|
March 28,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
3,932
|
|
|
$
|
4,754
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,375
|
|
|
3,561
|
|
||
Loss on disposal of assets
|
—
|
|
|
22
|
|
||
Stock-based compensation
|
3,892
|
|
|
3,107
|
|
||
Deferred income taxes, net
|
(47
|
)
|
|
(102
|
)
|
||
Tax benefit of excess stock-based compensation deductions
|
(267
|
)
|
|
(560
|
)
|
||
Non-cash director deferred compensation
|
33
|
|
|
38
|
|
||
Changes in operating assets and liabilities — (use) source
|
|
|
|
||||
Accounts receivable
|
69,879
|
|
|
33,351
|
|
||
Unbilled revenue
|
185
|
|
|
1,981
|
|
||
Inventory
|
(3,167
|
)
|
|
(1,998
|
)
|
||
Other assets
|
(2,985
|
)
|
|
203
|
|
||
Accounts payable
|
(20,626
|
)
|
|
(21,835
|
)
|
||
Accrued expenses
|
(2,673
|
)
|
|
(4,374
|
)
|
||
Accrued compensation
|
(4,055
|
)
|
|
(8,430
|
)
|
||
Deferred revenue and customer advances
|
1,144
|
|
|
(2,080
|
)
|
||
Long term liabilities
|
3
|
|
|
83
|
|
||
Net cash provided by operating activities
|
48,623
|
|
|
7,721
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions of property and equipment
|
(2,390
|
)
|
|
(4,445
|
)
|
||
Change in other assets
|
(523
|
)
|
|
(515
|
)
|
||
Purchases of investments
|
—
|
|
|
(3,541
|
)
|
||
Sales of investments
|
2,500
|
|
|
2,500
|
|
||
Net cash used in investing activities
|
(413
|
)
|
|
(6,001
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from stock option exercises
|
837
|
|
|
1,466
|
|
||
Income tax withholding payment associated with restricted stock vesting
|
(1,218
|
)
|
|
(1,118
|
)
|
||
Stock repurchases
|
(12,021
|
)
|
|
(4,924
|
)
|
||
Tax benefit of excess stock-based compensation deductions
|
267
|
|
|
560
|
|
||
Net cash used in financing activities
|
(12,135
|
)
|
|
(4,016
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
36,075
|
|
|
(2,296
|
)
|
||
Cash and cash equivalents, at beginning of period
|
179,915
|
|
|
185,957
|
|
||
Cash and cash equivalents, at end of period
|
$
|
215,990
|
|
|
$
|
183,661
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
4,896
|
|
|
$
|
1,040
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Transfer of inventory to property and equipment
|
$
|
5
|
|
|
$
|
157
|
|
Additions of property and equipment included in accounts payable
|
$
|
413
|
|
|
$
|
480
|
|
|
Three Months Ended
|
||||||
|
(In thousands, except per share amounts)
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
Net income
|
$
|
3,932
|
|
|
$
|
4,754
|
|
Weighted-average shares outstanding
|
29,004
|
|
|
29,653
|
|
||
Dilutive effect of employee stock options and restricted shares
|
470
|
|
|
577
|
|
||
Diluted weighted-average shares outstanding
|
29,474
|
|
|
30,230
|
|
||
Basic income per share
|
$
|
0.14
|
|
|
$
|
0.16
|
|
Diluted income per share
|
$
|
0.13
|
|
|
$
|
0.16
|
|
|
Fair Value Measurements as of
April 2, 2016
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(In thousands)
|
||||||||||
Description
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
||||||
Money market funds
|
$
|
103,470
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short term investments
|
|
|
|
|
|
||||||
Corporate and government bonds (1)
|
—
|
|
|
30,746
|
|
|
—
|
|
|||
Other current assets
|
|
|
|
|
|
||||||
Derivative instruments (Note 6) (2)
|
—
|
|
|
11
|
|
|
—
|
|
|||
Total assets measured at fair value
|
$
|
103,470
|
|
|
$
|
30,757
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of
January 2, 2016 |
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(In thousands)
|
||||||||||
Description
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
||||||
Money market funds
|
$
|
110,817
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short term investments
|
|
|
|
|
|
||||||
Corporate and government bonds (1)
|
—
|
|
|
33,124
|
|
|
—
|
|
|||
Total assets measured at fair value
|
$
|
110,817
|
|
|
$
|
33,124
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Accrued Expenses
|
|
|
|
|
|
||||||
Derivative instruments (Note 6) (2)
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
(1)
|
The bond investments are valued based on observable market values as of the Company’s reporting date. The bond investments are recorded at fair value and marked-to-market at the end of each reporting period. The realized and unrealized gains and losses are included in comprehensive income for that period.
|
(2)
|
Derivative instruments are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.
|
|
April 2, 2016
|
|
January 2, 2016
|
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
7,149
|
|
|
$
|
9,082
|
|
Finished goods
|
45,615
|
|
|
52,596
|
|
||
|
$
|
52,764
|
|
|
$
|
61,678
|
|
|
April 2, 2016
|
|
January 2, 2016
|
||||
|
(In thousands)
|
||||||
Accrued warranty
|
$
|
6,253
|
|
|
$
|
6,907
|
|
Accrued rent
|
535
|
|
|
547
|
|
||
Accrued direct fulfillment costs
|
666
|
|
|
2,030
|
|
||
Accrued customer deposits
|
819
|
|
|
788
|
|
||
Accrued sales tax
|
232
|
|
|
625
|
|
||
Accrued accounting fees
|
508
|
|
|
395
|
|
||
Accrued sales commissions
|
279
|
|
|
465
|
|
||
Accrued other
|
3,618
|
|
|
4,197
|
|
||
|
$
|
12,910
|
|
|
$
|
15,954
|
|
|
|
|
Notional amount
|
|
Fair Value
|
||||||||||||
|
Classification
|
|
April 2, 2016
|
|
January 2, 2016
|
|
April 2, 2016
|
|
January 2, 2016
|
||||||||
|
|
|
(In thousands)
|
||||||||||||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
2,421
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
Accrued expenses
|
|
$
|
—
|
|
|
$
|
6,773
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
|
|
Three Months Ended
|
||||||
|
Classification
|
|
April 2, 2016
|
|
March 28, 2015
|
||||
|
|
|
(In thousands)
|
||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|||||
Loss recognized in income
|
Other income (expense), net
|
|
$
|
(380
|
)
|
|
$
|
—
|
|
|
Operating
Leases
|
||
|
(In thousands)
|
||
Remainder of 2016
|
$
|
2,854
|
|
2017
|
4,188
|
|
|
2018
|
4,038
|
|
|
2019
|
4,040
|
|
|
2020
|
2,126
|
|
|
Thereafter
|
3,228
|
|
|
Total minimum lease payments
|
$
|
20,474
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
|
(In thousands)
|
||||||
Balance at beginning of period
|
$
|
6,907
|
|
|
$
|
7,769
|
|
Provision
|
877
|
|
|
1,250
|
|
||
Warranty usage (1)
|
(1,430
|
)
|
|
(1,445
|
)
|
||
Liability held for sale
|
(101
|
)
|
|
—
|
|
||
Balance at end of period
|
$
|
6,253
|
|
|
$
|
7,574
|
|
(1)
|
Warranty usage includes costs incurred for warranty obligations.
|
|
Three Months Ended
|
||||||
|
(In thousands)
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
||||
Revenue:
|
|
|
|
||||
Home Robots
|
$
|
127,687
|
|
|
$
|
111,085
|
|
Defense & Security (1)
|
3,075
|
|
|
6,526
|
|
||
Other
|
42
|
|
|
350
|
|
||
Total revenue
|
130,804
|
|
|
117,961
|
|
||
Cost of revenue:
|
|
|
|
||||
Home Robots
|
60,590
|
|
|
54,282
|
|
||
Defense & Security (1)
|
2,564
|
|
|
4,358
|
|
||
Other
|
5,689
|
|
|
5,613
|
|
||
Total cost of revenue
|
68,843
|
|
|
64,253
|
|
||
Gross margin:
|
|
|
|
||||
Home Robots
|
67,097
|
|
|
56,803
|
|
||
Defense & Security (1)
|
511
|
|
|
2,168
|
|
||
Other
|
(5,647
|
)
|
|
(5,263
|
)
|
||
Total gross margin
|
61,961
|
|
|
53,708
|
|
||
Research and development
|
19,728
|
|
|
19,032
|
|
||
Selling and marketing
|
19,940
|
|
|
14,188
|
|
||
General and administrative
|
16,764
|
|
|
12,589
|
|
||
Other income (expense), net
|
200
|
|
|
(794
|
)
|
||
Income before income taxes
|
$
|
5,729
|
|
|
$
|
7,105
|
|
(1)
|
The Company completed the sale of its defense and security business unit on April 4, 2016.
|
|
April 2, 2016
|
|
January 2, 2016
|
||||||||||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Completed technology
|
$
|
26,900
|
|
|
$
|
12,100
|
|
|
$
|
14,800
|
|
|
$
|
26,900
|
|
|
$
|
11,236
|
|
|
$
|
15,664
|
|
Tradename
|
100
|
|
|
100
|
|
|
—
|
|
|
100
|
|
|
100
|
|
|
—
|
|
||||||
Total
|
$
|
27,000
|
|
|
$
|
12,200
|
|
|
$
|
14,800
|
|
|
$
|
27,000
|
|
|
$
|
11,336
|
|
|
$
|
15,664
|
|
|
(In thousands)
|
||
Remainder of 2016
|
$
|
2,593
|
|
2017
|
3,457
|
|
|
2018
|
3,457
|
|
|
2019
|
2,818
|
|
|
2020
|
900
|
|
|
Thereafter
|
1,575
|
|
|
Total
|
$
|
14,800
|
|
|
(in thousands)
|
||
Assets held for sale:
|
|
||
Accounts receivable, net
|
$
|
6,303
|
|
Unbilled revenue
|
127
|
|
|
Inventory
|
12,076
|
|
|
Other current assets
|
717
|
|
|
Property and equipment, net
|
743
|
|
|
|
$
|
19,966
|
|
|
|
||
Liabilities held for sale:
|
|
||
Accounts payable
|
$
|
1,579
|
|
Accrued expenses
|
300
|
|
|
Accrued compensation
|
477
|
|
|
Deferred revenue and customer advances
|
1,775
|
|
|
Long term liabilities
|
478
|
|
|
|
$
|
4,609
|
|
|
Three Months Ended
|
||||
|
April 2, 2016
|
|
March 28, 2015
|
||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenue
|
52.6
|
|
|
54.5
|
|
Gross margin
|
47.4
|
|
|
45.5
|
|
Operating expenses
|
|
|
|
||
Research and development
|
15.1
|
|
|
16.1
|
|
Selling and marketing
|
15.2
|
|
|
12.0
|
|
General and administrative
|
12.8
|
|
|
10.7
|
|
Total operating expenses
|
43.1
|
|
|
38.8
|
|
Operating income
|
4.2
|
|
|
6.7
|
|
Other expense, net
|
0.2
|
|
|
(0.7
|
)
|
Income before income taxes
|
4.4
|
|
|
6.0
|
|
Income tax expense
|
1.4
|
|
|
2.0
|
|
Net income
|
3.0
|
%
|
|
4.0
|
%
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
|
|
(In thousands)
|
|
|
||
Total revenue
|
$130,804
|
|
$117,961
|
|
$12,843
|
|
10.9%
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total cost of revenue
|
$68,843
|
|
$64,253
|
|
$4,590
|
|
7.1%
|
As a percentage of total revenue
|
52.6%
|
|
54.5%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total gross margin
|
$61,961
|
|
$53,708
|
|
$8,253
|
|
15.4%
|
As a percentage of total revenue
|
47.4%
|
|
45.5%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total research and development
|
$19,728
|
|
$19,032
|
|
$696
|
|
3.7%
|
As a percentage of total revenue
|
15.1%
|
|
16.1%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total selling and marketing
|
$19,940
|
|
$14,188
|
|
$5,752
|
|
40.5%
|
As a percentage of total revenue
|
15.2%
|
|
12.0%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total general and administrative
|
$16,764
|
|
$12,589
|
|
$4,175
|
|
33.2%
|
As a percentage of total revenue
|
12.8%
|
|
10.7%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total other income (expense), net
|
$200
|
|
$(794)
|
|
$994
|
|
(125.2)%
|
As a percentage of total revenue
|
0.2%
|
|
(0.7)%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
April 2, 2016
|
|
March 28, 2015
|
|
Dollar
Change
|
|
Percent
Change
|
|
(In thousands)
|
||||||
Total income tax expense
|
$1,797
|
|
$2,351
|
|
($554)
|
|
(23.6)%
|
As a percentage of pre-tax income
|
31.4%
|
|
33.1%
|
|
|
|
|
|
(a) Total number of Shares Purchased (1)
|
(b) Average Price Paid per Share
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
|
(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
Period
|
|
|
|
|
||||||
Fiscal month beginning January 3, 2016 and ended January 30, 2016
|
123,718
|
|
|
$32.12
|
|
123,718
|
|
|
$36,000,000
|
|
Fiscal month beginning January 31, 2016 and ended February 27, 2016
|
130,000
|
|
31.36
|
|
130,000
|
|
31,900,000
|
|
||
Fiscal month beginning February 28, 2016 and ended April 2, 2016
|
120,000
|
|
33.03
|
|
120,000
|
|
27,900,000
|
|
||
Total
|
373,718
|
|
|
$32.15
|
|
373,718
|
|
|
$27,900,000
|
|
(1)
|
Consists of shares of our common stock. All repurchases were made in open market transactions and pursuant to our previously-announced stock repurchase program.
|
(2)
|
On December 28, 2015, we announced the adoption of our stock repurchase program which replaced the previously announced program. Under the new program, we may purchase up to 1 million shares or $40 million, whichever occurs first, of our common stock from January 4, 2016 to December 31, 2016.
|
Exhibit
Number
|
|
Description
|
3.1
|
|
Amended and Restated By-Laws of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on March 9, 2016 and incorporated by reference herein)
|
|
|
|
10.1*
|
|
Master Confirmation - Uncollared Accelerated Share Repurchase by and between the Registrant and J.P. Morgan Securities LLC, dated March 1, 2016
|
|
|
|
10.2*
|
|
Form of Performance-Based Restricted Stock Unit Award Agreement under the 2015 Stock Option Incentive Plan
|
|
|
|
31.1*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|
|
|
|
31.2*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|
|
|
|
32.1**
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101*
|
|
The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
|
iROBOT CORPORATION
|
|
|
|
|
Date: May 6, 2016
|
By:
|
/s/ Alison Dean
|
|
|
Alison Dean
|
|
|
Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
|
Exhibit
Number
|
|
Description
|
3.1
|
|
Amended and Restated By-Laws of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on March 9, 2016 and incorporated by reference herein)
|
|
|
|
10.1*
|
|
Master Confirmation - Uncollared Accelerated Share Repurchase by and between the Registrant and J.P. Morgan Securities LLC, dated March 1, 2016
|
|
|
|
10.2*
|
|
Form of Performance-Based Restricted Stock Unit Award Agreement under the 2015 Stock Option Incentive Plan
|
|
|
|
31.1*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|
|
|
|
31.2*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
|
|
|
|
32.1**
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101*
|
|
The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
To:
|
iRobot Corporation
|
1.
|
Each Transaction constitutes a Share Forward Transaction for the purposes of the Equity Definitions. Set forth below are the terms and conditions that, together with the terms and conditions set forth in the Supplemental Confirmation relating to any Transaction, shall govern such Transaction.
|
Trade Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Buyer:
|
Counterparty
|
Seller:
|
JPMorgan
|
Shares:
|
The common stock of Counterparty, par value USD 0.01 per share (Exchange symbol “IRBT”).
|
Exchange:
|
The NASDAQ Global Market
|
Related Exchange(s):
|
All Exchanges.
|
Prepayment/Variable Obligation:
|
Applicable
|
Prepayment Amount:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Prepayment Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Contract Fee:
|
For each Transaction, as set forth in the related Supplemental Confirmation. On the Prepayment Date, Buyer shall pay Seller an amount in USD equal to the Contract Fee in immediately available funds by wire transfer to an account specified by Seller.
|
VWAP Price:
|
For any Exchange Business Day, the volume-weighted average price at which the Shares trade as reported in the composite transactions for United States exchanges and quotation systems, during the regular trading session for the Exchange on such Exchange Business Day, excluding (i) trades that do not settle regular way, (ii) opening (regular way) reported trades in the consolidated system on such Exchange Business Day, (iii) trades that occur in the last ten minutes before the scheduled close of trading on the Exchange on such Exchange Business Day and ten minutes before the scheduled close of the primary trading in the market where the trade is effected, and (iv) trades on such Exchange Business Day that do not satisfy the requirements of Rule 10b-18(b)(3) under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), as published by Bloomberg at 4:15 p.m. New York time (or 15 minutes following the end of any extension of the regular trading session) on such Exchange Business Day, on Bloomberg page “IRBT US <Equity> AQR SEC” (or any successor thereto), or if such price is not so reported on such Exchange Business Day for any reason or is, in the Calculation Agent’s determination, erroneous, such VWAP Price shall be as reasonably determined in good faith and in a commercially reasonable manner determined in good faith by the Calculation Agent (all such trades other than any trades described in clauses (i) to (iv) above, “
Rule 10b-18 Eligible Transactions
”). Counterparty acknowledges that the Calculation Agent may refer to the Bloomberg Page “IRBT US <Equity> AQR SEC” (or any successor thereto), in its judgment, for such Exchange Business Day to determine the VWAP Price.
|
Forward Price:
|
For each Transaction, the arithmetic average of the VWAP Prices for all of the Calculation Dates in the Calculation Period for such Transaction, subject to “Valuation Disruption” below.
|
Forward Price Adjustment Amount:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Calculation Period:
|
For each Transaction, the period from, and including, the Calculation Period Start Date for such Transaction to, and including, the Termination Date for such Transaction.
|
Calculation Period Start Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Termination Date:
|
For each Transaction, the Scheduled Termination Date for such Transaction; provided that JPMorgan shall have the right to designate any Calculation Date on or after the First Acceleration Date to be the Termination Date for all or any part of such Transaction (an “
Accelerated Termination Date
”) by delivering notice (an “
Accelerated Notice
”) to Counterparty of any such designation prior to 6:00 p.m. (New York City time) on the Calculation Date immediately following the designated Accelerated Termination Date. JPMorgan shall specify in each Acceleration Notice the portion of the Prepayment Amount that is subject to acceleration (which may be less than the full Prepayment Amount). If the portion of the Prepayment Amount that is subject to acceleration is less than the full Prepayment Amount, then the Calculation Agent shall adjust the terms of the Transaction as appropriate in order to take into account the occurrence of such Accelerated Termination Date (including cumulative adjustments to take into account all prior Accelerated Termination Dates).
|
Calculation Dates:
|
For each Transaction, any date that is both an Exchange Business Day and is set forth as a Calculation Date in the related Supplemental Confirmation.
|
Scheduled Termination Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation, subject to postponement as provided in “Valuation Disruption” below;
provided
, that in no event shall the Scheduled Termination Date be postponed to a date later than the Final Termination Date.
|
Final Termination Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
First Acceleration Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Valuation Disruption:
|
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and inserting the words “at any time on any Scheduled Trading Day during the Calculation Period or Settlement Valuation Period” after the word “material,” in the third line thereof.
|
Settlement Procedures:
|
For each Transaction:
|
(i)
|
if the Number of Shares to be Delivered for such Transaction is positive, Physical Settlement shall be applicable to such Transaction;
provided
that JPMorgan does not, and shall not, make the agreement or the representations set forth in Section 9.11 of the Equity Definitions related to the restrictions imposed by applicable securities laws with respect to any Shares delivered by JPMorgan to Counterparty under any Transaction; or
|
(ii)
|
if the Number of Shares to be Delivered for such Transaction is negative, then the Counterparty Settlement Provisions in Annex A hereto shall apply to such Transaction.
|
Number of Shares to be Delivered:
|
For each Transaction, a number of Shares (rounded down to the nearest whole number) equal to (a)(i) the Prepayment Amount for such Transaction,
divided by
(ii)(A) the Forward Price for such Transaction
minus
(B) the Forward Price Adjustment Amount for such Transaction,
|
Floor Price:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Excess Dividend Amount:
|
For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.
|
Settlement Date:
|
For each Transaction, if the Number of Shares to be Delivered for all or such portion of such Transaction is positive, the date that is one Settlement Cycle immediately following the Termination Date for all or such portion of such Transaction (the final Settlement Date, the “
Final Settlement Date
”).
|
Settlement Currency:
|
USD
|
Initial Share Delivery:
|
For each Transaction, JPMorgan shall deliver a number of Shares equal to the Initial Shares for such Transaction to Counterparty on the Initial Share Delivery Date for such Transaction in accordance with Section 9.4 of the Equity Definitions, with such Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.
|
Initial Share Delivery Date:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Initial Shares:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Potential Adjustment Event:
|
In addition to the events described in Section 11.2(e) of the Equity Definitions, it shall constitute an additional Potential Adjustment Event if (x) the Scheduled Termination Date for any Transaction is postponed pursuant to “Valuation Disruption” above (including, for the avoidance of doubt, pursuant to Section 7 hereof), (y) a Regulatory Disruption as described in Section 7 occurs or (z) a Disruption Event occurs. In the case of any event described in clause (x), (y) or (z) above occurs, the Calculation Agent may, in its commercially reasonable judgment, adjust any relevant terms of such Transaction as necessary to preserve as nearly as practicable the fair value of such Transaction to JPMorgan prior to such postponement, Regulatory Disruption or Disruption Event, as the case may be.
|
Excess Dividend:
|
Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions or any Extraordinary Dividend). “
Extraordinary Dividend
” means the per Share cash dividend or distribution, or a portion thereof, declared by Counterparty on the Shares that is classified by the board of directors of Counterparty as an “extraordinary” dividend.
|
Consequences of Excess Dividend:
|
The declaration by the Issuer of any Excess Dividend, the ex-dividend date for which occurs or is scheduled to occur during the Relevant Dividend Period for any Transaction, shall, at JPMorgan’s election in its sole discretion, either (x) constitute an Additional Termination Event in respect of such Transaction, with Counterparty as the sole Affected Party and such Transaction as the sole Affected Transaction or (y) result in an adjustment, by the Calculation Agent, to the Floor Price as the Calculation Agent determines appropriate to preserve the fair value of such Transaction after taking into account such Excess Dividend.
|
Method of Adjustment:
|
Calculation Agent Adjustment
|
Relevant Dividend Period:
|
For each Transaction, the period from, and including, the Trade Date for such Transaction to, and including, the Relevant Dividend Period End Date for such Transaction.
|
Relevant Dividend Period End Date:
|
For each Transaction, if the Number of Shares to be Delivered for such Transaction is negative, the last day of the Settlement Valuation Period; otherwise, the Termination Date for such Transaction.
|
(a) Share-for-Share:
|
Modified Calculation Agent Adjustment
|
(b) Share-for-Other:
|
Cancellation and Payment
|
(c) Share-for-Combined:
|
Component Adjustment
|
Tender Offer:
|
Applicable;
provided
that (a) Section 12.1(d) of the Equity Definitions shall be amended by replacing “10%” in the third line thereof with “15%”, (b)Section 12.1(l) of the Equity Definitions shall be amended by (i) deleting the parenthetical in the fifth line thereof, (ii) replacing “that” in the fifth line thereof with “whether or not such announcement” and (iii) adding immediately after the words “Tender Offer” in the fifth line thereof “, and any publicly announced change or amendment to such an announcement (including, without limitation, the announcement of an abandonment of such intention)” and (c) Sections 12.3(a) and 12.3(d) of the Equity Definitions shall each be amended by replacing each occurrence of the words “Tender Offer Date” by “Announcement Date.”
|
(a) Share-for-Share:
|
Modified Calculation Agent Adjustment
|
(b) Share-for-Other:
|
Modified Calculation Agent Adjustment
|
(c) Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Nationalization, Insolvency or Delisting:
|
Cancellation and Payment;
provided
that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.
|
(a) Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal or informal interpretation”, (ii) replacing the word “Shares” where it appears in clause (X) thereof with the words “Hedge Positions” (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date” and (iv) inserting the phrase “for the relevant party” immediately after the word “illegal” in clause (X) thereof;
provided further
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by replacing the parenthetical beginning after the word “regulation” in the second line thereof with the words “(including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute)” Notwithstanding anything to the contrary in the Equity Definitions, a Change in Law described in clause (Y) of Section 12.9(a)(ii) of the Equity Definitions shall not constitute a Change in Law and instead shall constitute an Increased Cost of Hedging as described in Section 12.9(a)(vi) of the Equity Definitions.
|
(b) Failure to Deliver:
|
Applicable
|
(c) Insolvency Filing:
|
Applicable
|
(d) Loss of Stock Borrow:
|
Applicable
|
Maximum Stock Loan Rate:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Hedging Party:
|
JPMorgan
|
Determining Party:
|
JPMorgan
|
(e) Hedging Disruption:
|
Applicable
|
Hedging Party:
|
JPMorgan
|
Determining Party:
|
JPMorgan
|
(f) Increased Cost of Hedging:
|
Applicable
|
Hedging Party:
|
JPMorgan
|
Determining Party:
|
JPMorgan
|
(g) Increased Cost of Stock Borrow:
|
Applicable
|
Initial Stock Loan Rate:
|
For each Transaction, as set forth in the related Supplemental Confirmation.
|
Hedging Party:
|
JPMorgan
|
Determining Party:
|
JPMorgan
|
Hedging Adjustments:
|
For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on JPMorgan, assuming that JPMorgan maintains a commercially reasonable Hedge Position.
|
Acknowledgements:
|
Applicable
|
Determining Party:
|
Following any determination or calculation by the Determining Party hereunder, upon request by Counterparty, the Determining Party will provide to Counterparty by e-mail to the e-mail address provided by Counterparty in such a prior written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any quotations, market data or information from internal or external sources used in making such determination or calculation). The Determining Party shall not be obligated to disclose any proprietary models or proprietary information used by it for such determination or calculation.
|
2.
|
Calculation Agent
.
JPMorgan;
provided
that, following the occurrence and during the continuation of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which JPMorgan is the sole Defaulting Party, Counterparty shall have the right to select a leading dealer in the market for U.S. corporate equity derivatives to replace JPMorgan as Calculation Agent, and the parties shall work in good faith to execute any appropriate documentation required by such replacement Calculation Agent Whenever the Calculation Agent is required to act or to exercise judgment in any way with respect to any Transaction hereunder, it will do so in good faith and in a commercially reasonable manner. Following any calculation by the Calculation Agent hereunder, upon request by Counterparty, the Calculation Agent will promptly provide to Counterparty by e-mail to the e-mail address provided by Counterparty a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such calculation (including any quotations, market data or information from internal or external sources used in making such calculation). Calculation Agent shall not be obligated to disclose any proprietary models or proprietary information used by it for such determination or calculation.
|
3.
|
Account Details
.
|
(a)
|
Account for payments to Counterparty:
|
(b)
|
Account for payments to JPMorgan:
|
(c)
|
|
4.
|
Offices
.
|
(a)
|
The Office of Counterparty for each Transaction is: Inapplicable, Counterparty is not a Multibranch Party.
|
(b)
|
The Office of JPMorgan for each Transaction is: London
|
5.
|
Notices
.
|
6.
|
Representations, Warranties and Agreements
.
|
(a)
|
Additional Representations, Warranties and Covenants of Each Party
. In addition to the representations, warranties and covenants in the Agreement, each party represents, warrants and covenants to the other party that:
|
(i)
|
It is an “eligible contract participant” (as such term is defined in the Commodity Exchange Act, as amended).
|
(ii)
|
Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, each party represents and warrants to the other that (A) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss
|
(b)
|
Additional Representations, Warranties and Covenants of Counterparty
. In addition to the representations, warranties and covenants in the Agreement, Counterparty represents, warrants and covenants to JPMorgan that:
|
(i)
|
As of the Trade Date for each Transaction hereunder, (A) such Transaction is being entered into pursuant to a publicly disclosed Share buy-back program and its Board of Directors has approved the use of derivatives to effect the Share buy-back program, and (B) there is no internal policy of Counterparty, whether written or oral, that would prohibit Counterparty from entering into any aspect of such Transaction, including, without limitation, the purchases of Shares to be made pursuant to such Transaction.
|
(ii)
|
As of the Trade Date for each Transaction hereunder, the purchase or writing of such Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
|
(iii)
|
As of the Trade Date for each Transaction hereunder, it is not entering into such Transaction, and as of the date of any election with respect to any Transaction hereunder, it is not making such election, in each case (A) on the basis of, and is not aware of, any material non-public information regarding Counterparty or the Shares, (B) in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer in violation of the Exchange Act or (C) to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares).
|
(iv)
|
Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least USD 50,000,000 as of the date hereof.
|
(v)
|
As of the Trade Date for each Transaction hereunder, and as of the date of any election with respect to any Transaction hereunder, Counterparty is in compliance with its reporting obligations under the Exchange Act.
|
(vi)
|
Counterparty has made, and will make, all filings (if any and to the extent) required to be made by it with the Securities and Exchange Commission, any securities exchange or any other regulatory body with respect to each Transaction.
|
(vii)
|
The Shares are not, and Counterparty will not cause the Shares to be, subject to a “restricted period” (as defined in Regulation M promulgated under the Exchange Act) at any time during any Regulation M Period (as defined below) for any Transaction unless Counterparty has provided written notice to JPMorgan of such restricted period not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”; Counterparty acknowledges that any such notice may cause a Disrupted Day to occur pursuant to Section 7 below; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 8 below. Counterparty is not currently contemplating any “distribution” (as defined in Regulation M promulgated under the Exchange Act) of Shares, or any security for which Shares are a “reference security” (as defined in Regulation M promulgated under the Exchange Act). “
Regulation M Period
” means, for any Transaction, (A) the Relevant Period (as defined below) for such Transaction, (B) the Settlement Valuation Period, if any, for such Transaction and (C) the Seller Termination Purchase Period (as defined below), if any, for such Transaction. “
Relevant Period
” means, for any Transaction, the period commencing on the Calculation Period Start Date for such Transaction and ending on the later of (1) the earlier of (x) the Scheduled Termination Date and (y) the last Additional Relevant Day (as specified in the related Supplemental Confirmation) for such Transaction, or such earlier day as elected by JPMorgan and communicated to Counterparty on such day (or, if later, the First Acceleration Date without regard to any acceleration thereof pursuant to “Special Provisions for Acquisition Transaction
|
(viii)
|
As of the Trade Date, the Prepayment Date, the Initial Share Delivery Date, the Settlement Date, any Cash Settlement Payment Date and any Settlement Method Election Date for each Transaction, Counterparty is not, and will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase a number of Shares with a value equal to the Prepayment Amount in compliance with the laws of the jurisdiction of Counterparty’s incorporation.
|
(ix)
|
Counterparty is not, and after giving effect to each Transaction will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
|
(x)
|
Counterparty has not entered, and will not enter, into any repurchase transaction (other than repurchases of Shares from employees and executives in connection with equity compensation plans for its employees or executives or related agreements) with respect to the Shares (or any security convertible into or exchangeable for the Shares) (including, without limitation, any agreements similar to the Transactions described herein) where any initial hedge period, calculation period, relevant period, settlement valuation period or seller termination purchase period (each however defined) in such other transaction will overlap at any time (including, without limitation, as a result of extensions in such initial hedge period, calculation period, relevant period, settlement valuation period or seller termination purchase period as provided in the relevant agreements) with any Relevant Period, any Settlement Valuation Period (if applicable) or any Seller Termination Purchase Period (if applicable) under this Master Confirmation. In the event that the initial hedge period, relevant period, calculation period or settlement valuation period in any other transaction overlaps with any Relevant Period, any Settlement Valuation Period (if applicable) or any Seller Termination Purchase Period (if applicable) under this Master Confirmation as a result of any postponement of the Scheduled Termination Date or extension of the Settlement Valuation Period pursuant to “Valuation Disruption” above or any analogous provision in such other transaction, Counterparty shall promptly amend such other transaction to avoid any such overlap.
|
(xi)
|
Counterparty shall, at least one day prior to the first day of the Calculation Period, the Settlement Valuation Period, if any, or the Seller Termination Purchase Period, if any, for any Transaction, notify JPMorgan of the total number of Shares purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception set forth in paragraph (b)(4) of Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”) by or for Counterparty or any of its “affiliated purchasers” (as defined in Rule 10b-18) during each of the four calendar weeks preceding such day and during the calendar week in which such day occurs (“Rule 10b-18 purchase” and “blocks” each being used as defined in Rule 10b-18), which notice shall be substantially in the form set forth in Schedule B hereto.
|
(xii)
|
As of the Trade Date for each Transaction hereunder, and as of the date of any election with respect to any Transaction hereunder, there has not been any Merger Announcement (as defined below).
|
(c)
|
In addition to the representations, warranties and covenants in this Agreement, JPMorgan represents, warrants and covenants to Counterparty that:
|
(i)
|
In addition to the covenants in the Agreement and herein, JPMorgan agrees to use commercially reasonable efforts, during the Calculation Period and any Settlement Valuation Period (as defined in Annex A) for any Transaction, to make all purchases of Shares in connection with such Transaction in a manner that would comply with the limitations set forth in clauses (b)(1), (b)(2), (b)(3) and (b)(4) and (c) of Rule 10b-18, as if such rule were applicable to such purchases and taking into account any applicable Securities and Exchange Commission no-action letters as appropriate, and subject to any delays between the execution and reporting of a trade of the Shares on the Exchange and other circumstances beyond JPMorgan’s control; provided that, during the Calculation Period, the foregoing agreement shall not apply to purchases made to dynamically hedge for JPMorgan’s own account or the account of its affiliate(s) the optionality arising under a Transaction (including, for the avoidance of doubt, timing optionality).
|
(ii)
|
In connection with each Transaction, JPMorgan represents and warrants to Counterparty that it has not, at any time before the Trade Date discussed any offsetting transaction(s) in respect of such Transaction with any third party.
|
(iii)
|
JPMorgan hereby represents and covenants to Counterparty that it has implemented policies and procedures, taking into consideration the nature of its business, reasonably designed to ensure that individuals making investment decisions related to any Transaction do not have access to material nonpublic information regarding Issuer or the Shares.
|
7.
|
Regulatory Disruption
.
In the event that JPMorgan concludes, in a good faith manner based on advice of legal counsel that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures generally applicable in similar situations and applied in a consistent manner in similar transactions (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by JPMorgan), for it to refrain from or decrease any market activity on any Scheduled Trading Day or Days during the Calculation Period or, if applicable, the Settlement Valuation Period, JPMorgan may by written notice to Counterparty, delivered as soon as practicable, elect to deem that a Market Disruption Event (it being understood that any such Market Disruption Event shall only result in a Disrupted Day in full) has occurred and will be continuing on such Scheduled Trading Day or Days. Upon request of the Counterparty, JPMorgan shall provide reasonable detail to the Counterparty of the legal, regulatory, or self-regulatory requirements that necessitated such election.
|
8.
|
10b5-1 Plan
.
Counterparty represents, warrants and covenants to JPMorgan that:
|
(a)
|
Counterparty is entering into this Master Confirmation and each Transaction hereunder in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“
Rule 10b5-1
”) or any other antifraud or anti-manipulation provisions of the federal or applicable state securities laws and that it has not entered into or altered and will not enter into or alter any corresponding or hedging transaction or position with respect to the Shares. Counterparty acknowledges that it is the intent of the parties that each Transaction entered into under this Master Confirmation comply with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 and each Transaction entered into under this Master Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c).
|
(b)
|
During the Calculation Period and the Settlement Valuation Period, if any, for any Transaction and in connection with the delivery of any Alternative Delivery Units for any Transaction, JPMorgan (or its agent or Affiliate) may effect transactions in Shares in connection with such Transaction. The timing of such transactions by JPMorgan, the price paid or received per Share pursuant to such transactions and the manner in which such transactions are made, including, without limitation, whether such transactions are made on any securities exchange or privately, shall be within the sole judgment of JPMorgan. Counterparty acknowledges and agrees that all such transactions shall be made in JPMorgan’s sole judgment and for JPMorgan’s own account.
|
(c)
|
Counterparty does not have, and shall not attempt to exercise, any control or influence over how, when or whether JPMorgan (or its agent or Affiliate) makes any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) in connection with any Transaction, including, without limitation, over how, when or whether JPMorgan (or its agent or Affiliate) enters into any hedging transactions. Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Master Confirmation and each Supplemental Confirmation under Rule 10b5-1.
|
(d)
|
Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of this Master Confirmation or any Supplemental Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer, director, manager or similar person of Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
|
(e)
|
Counterparty shall not, directly or indirectly, communicate any information relating to the Shares or any Transaction (including, without limitation, any notices required by Section 10(a)) to any employee of JPMorgan or JPMS, other than as set forth in the Communications Procedures attached as Annex B hereto.
|
9.
|
Counterparty Purchases
.
Counterparty (or any “affiliate” or “affiliated purchaser” as defined in Rule 10b-18) shall not, without the prior written consent of JPMorgan, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or equivalent interest, including, without limitation, a unit of beneficial interest in a trust or limited partnership or a depository share), listed contracts on the Shares or securities that are convertible into, or exchangeable or exercisable for Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any Relevant Period, any Settlement Valuation Period (if applicable) or any Seller Termination Purchase Period (if applicable), under this Master Confirmation;
provided
, that this Section 9 shall not (i) limit Counterparty’s ability, pursuant to any of its employee incentive plans or dividend reinvestment program, to re-acquire Shares in connection with the related equity transactions, (ii) limit Counterparty’s ability to withhold shares to cover tax liabilities associated with such equity transactions (iii) limit Counterparty’s ability to grant stock and options to “affiliated purchasers” or the ability of such affiliated purchasers to acquire such stock or options, in connection with the Counterparty’s compensation policies for directors, officers and employees or any agreements with respect to the compensation of directors, officers or employees of any entities that are acquisition targets of Counterparty, or (iv) limit Counterparty’s ability to purchase Shares from one or more existing holders of Shares, in bilateral, privately-negotiated transactions that do not involve and could not be expected to result in purchases of Shares on the Exchange.
|
10.
|
Special Provisions for Merger Transactions
.
Notwithstanding anything to the contrary herein or in the Equity Definitions:
|
(a)
|
Counterparty agrees that it:
|
(i)
|
will not during the period commencing on the Trade Date for any Transaction and ending on the last day of the Relevant Period or, if applicable, the later of the last day of the Settlement Valuation Period and the last day of the Seller Termination Purchase Period, for such Transaction make, or permit to be made (to the extent within Counterparty’s commercially reasonable control), any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction (a “
Merger Announcement
”) unless such Merger Announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares;
|
(ii)
|
shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify JPMorgan following any such Merger Announcement that such Merger Announcement has been made; and
|
(iii)
|
shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide JPMorgan with written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date of any Merger Transaction or potential Merger Transaction that were not effected through JPMorgan or its Affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the announcement date of any Merger Transaction or potential Merger Transaction. Such written notice shall be deemed to be a certification by Counterparty to JPMorgan that such information is true and correct in all material respects. In addition, Counterparty shall promptly notify JPMorgan of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.
|
(b)
|
Counterparty acknowledges that any such Merger Announcement or delivery of a notice with respect thereto may cause the terms of any Transaction to be adjusted or such Transaction to be terminated; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 8 above.
|
(c)
|
Upon the occurrence of any Merger Announcement (whether made by Counterparty or a third party), JPMorgan in its commercially reasonable discretion may (i) make commercially reasonable adjustments to the terms of any Transaction, including, without limitation, the Scheduled Termination Date or the Forward Price Adjustment Amount, and/or suspend the Calculation Period and/or any Settlement Valuation Period, to account for the economic effect on such Transaction of such Merger Announcement or (ii) treat the occurrence of such Merger Announcement as an Additional Termination Event with Counterparty as the sole Affected Party and the Transactions hereunder as the Affected Transactions and with the amount under Section 6(e) of the Agreement determined taking into account the fact that the Calculation Period or Settlement Valuation Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated.
|
11.
|
Special Provisions for Acquisition Transaction Announcements
.
Notwithstanding anything to the contrary herein or in the Equity Definitions:
|
(a)
|
If an Acquisition Transaction Announcement occurs on or prior to the Final Settlement Date for any Transaction, then the Calculation Agent shall make such adjustments to the exercise, settlement, payment or any other terms of such Transaction as the Calculation Agent determines appropriate (including, without limitation and for the avoidance of doubt, adjustments that would allow the Number of Shares to be Delivered to be less than zero), at such time or at multiple times as the Calculation Agent determines appropriate, to account for the economic effect on such Transaction of such event (including adjustments to account for changes in volatility, expected dividends, stock loan rate, value of any commercially reasonable Hedge Positions in connection with the Transaction and liquidity relevant to the Shares or to such Transaction). If an Acquisition Transaction Announcement occurs after the Trade Date, but prior to the First Acceleration Date of any Transaction, the First Acceleration Date shall be the date of such Acquisition Transaction Announcement. If the Number of Shares to be Delivered for any settlement of any Transaction is a negative number, then the terms of the Counterparty Settlement Provisions in Annex A hereto shall apply.
|
(b)
|
“
Acquisition Transaction Announcement
” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, (iv) any other announcement that in the reasonable judgment of the Calculation Agent relates to an Acquisition Transaction and has a material economic effect on the theoretical value of the Transaction and/or Shares, or (v) any announcement of any change or amendment to any previous Acquisition Transaction Announcement (including any announcement of the abandonment of any such previously announced Acquisition Transaction, agreement, letter of intent, understanding or intention). For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by the Issuer or a third party.
|
(c)
|
“
Acquisition Transaction
” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “20%” and references to “50%” being replaced by “75%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition), Tender Offer or Merger Transaction or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction with respect to Counterparty, (iv) any acquisition by Counterparty or any of its subsidiaries where the aggregate consideration transferable by Counterparty or its subsidiaries exceeds 20% of the market capitalization of Counterparty, (v) any lease, exchange, transfer, disposition (including, without limitation, by way of spin-off or distribution) of assets (including, without limitation, any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 20% of the market capitalization of Counterparty or (vi) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).
|
12.
|
Acknowledgments
.
|
(a)
|
The parties hereto intend for:
|
(i)
|
each Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code and a “forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 555, 556, 560 and 561 of the Bankruptcy Code;
|
(ii)
|
the Agreement to be a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code;
|
(iii)
|
a party’s right to liquidate, terminate or accelerate any Transaction, net out or offset termination values or payment amounts, and to exercise any other remedies upon the occurrence of any Event of Default or Termination Event under the Agreement with respect to the other party or any Extraordinary Event that results in the termination or cancellation of any Transaction to constitute a “contractual right” (as defined in the Bankruptcy Code); and
|
(iv)
|
all payments for, under or in connection with each Transaction, all payments for the Shares (including, for the avoidance of doubt, payment of the Prepayment Amount) and the transfer of such Shares to constitute “settlement payments” and “transfers” (as defined in the Bankruptcy Code).
|
(b)
|
Counterparty acknowledges that:
|
(i)
|
during the term of any Transaction, JPMorgan and its Affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to such Transaction;
|
(ii)
|
JPMorgan and its Affiliates may also be active in the market for the Shares and Share-linked transactions other than in connection with hedging activities in relation to any Transaction;
|
(iii)
|
JPMorgan shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Forward Price and the VWAP Price;
|
(iv)
|
any market activities of JPMorgan and its Affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the Forward Price, VWAP Price and Settlement Price, each in a manner that may be adverse to Counterparty; and
|
(v)
|
each Transaction is a derivatives transaction in which it has granted JPMorgan an option; JPMorgan may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the related Transaction.
|
13.
|
No Collateral, Netting or Setoff
.
Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral. Obligations under any Transaction shall not be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Master Confirmation or any Supplemental Confirmation, or under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations under any Transaction, whether arising under the Agreement, this Master Confirmation or any Supplemental Confirmation, or under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff, netting or recoupment.
|
14.
|
Delivery of Shares
.
Notwithstanding anything to the contrary herein, JPMorgan may, by prior notice to Counterparty, satisfy its obligation to deliver any Shares or other securities on any date due (an “
Original Delivery Date
”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.
|
15.
|
Alternative Termination Settlement
.
In the event that (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction or (b) any Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Counterparty’s control, or (iii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Counterparty’s
|
16.
|
Calculations and Payment Date upon Early Termination
.
The parties acknowledge and agree that in calculating (a) Loss pursuant to Section 6 of the Agreement and (b) the amount due upon cancellation or termination of any Transaction (whether in whole or in part) pursuant to Article 12 of the Equity Definitions as a result of an Extraordinary Event, JPMorgan may (but need not) determine such amount based on (i) expected losses assuming a commercially reasonable risk bid were used to determine loss or (ii) the price at which one or more market participants would offer to sell to the Seller a block of Shares equal in number to the Seller’s hedge position in relation to the Transaction. Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement or Article 12 of the Equity Definitions, all amounts calculated as being due in respect of an Early Termination Date under Section 6(e) of the Agreement or upon cancellation or termination of the relevant Transaction under Article 12 of the Equity Definitions will be payable on the day that notice of the amount payable is effective;
provided
that if Counterparty elects to receive or deliver Shares or Alternative Delivery Units in accordance with Section 15, such Shares or Alternative Delivery Units shall be delivered on a date selected by JPMorgan as promptly as practicable.
|
17.
|
Limit on Beneficial Ownership
.
Notwithstanding any other provisions hereof, JPMorgan may not be entitled to take delivery of any Shares deliverable hereunder to the extent (but only to the extent) that, after such receipt of any Shares hereunder, the Equity Percentage would exceed 7.5%. Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery the Equity Percentage would exceed 7.5%. If any delivery owed to JPMorgan hereunder is not made, in whole or in part, as a result of this provision, Counterparty’s obligation to make such delivery shall not be extinguished and Counterparty shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, JPMorgan gives notice to Counterparty that, after such delivery, the Equity Percentage would not exceed 7.5%. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that JPMorgan and any of its affiliates or any other person subject to aggregation with JPMorgan for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which JPMorgan is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results
|
18.
|
Maximum Share Delivery
.
Notwithstanding anything to the contrary in this Master Confirmation, in no event shall JPMorgan be required to deliver any Shares, or any Shares or other securities comprising Alternative Delivery Units, in respect of any Transaction in excess of the Maximum Number of Shares set forth in the Supplemental Confirmation for such Transaction.
|
19.
|
Additional Termination Events
.
|
(a)
|
The occurrence of an event described in paragraph III of Annex B hereto will constitute an Additional Termination Event, with Counterparty as the sole Affected Party and the Transactions specified in such paragraph III as the Affected Transactions.
|
(b)
|
Notwithstanding anything to the contrary in Section 6 of the Agreement, if a Termination Price is specified in the Supplemental Confirmation for any Transaction, then an Additional Termination Event will occur without any notice or action by JPMorgan or Counterparty if the price of the Shares on the Exchange falls below such Termination Price for 2 consecutive Exchange Business Days, with Counterparty as the sole Affected Party and such Transaction as the sole Affected Transaction.
|
20.
|
Non-confidentiality
.
JPMorgan and Counterparty hereby acknowledge and agree that, subject to Section 8(e), each is authorized to disclose the tax treatment and tax structure of the Transaction to any and all persons, without limitation of any kind, and there are no express or implied agreements, arrangements or understandings to the contrary.
|
21.
|
Assignment and Transfer
.
Notwithstanding anything to the contrary in the Agreement, JPMorgan may not assign any of its rights or duties hereunder without the prior written consent of Counterparty., except that JPMorgan my transfer or assign all or any part of its rights or obligations under the Transaction to any affiliate of JPMorgan (1) that has a rating for its long term, unsecured and unsubordinated indebtedness that is equal to or better than JPMorgan’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by JPMorgan generally for similar transactions, by JPMorgan; provided, in each case, that if such transfer or assignment would result in any tax withholding obligation of the transferee (that would not have applied to JPMorgan) in respect of any tax that, without application of this sentence, would not be an Indemnifiable Tax, such tax shall be treated as an Indemnifiable Tax. Without limiting the foregoing, no transfer or assignment by Dealer that, at the time of such transfer or assignment, would result in the occurrence of an Event of Default, Potential Event of Default or Termination Event shall be permitted hereunder. Notwithstanding any other provision in this Master Confirmation to the contrary requiring or allowing JPMorgan to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, JPMorgan may designate any of its Affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform JPMorgan’s obligations in respect of any Transaction and any such designee may assume such obligations. JPMorgan may assign the right to receive Settlement Shares to any third party who may legally receive Settlement Shares. JPMorgan shall be discharged of its obligations to Counterparty only to the extent of any such performance. For the avoidance of doubt, JPMorgan hereby acknowledges that notwithstanding any such designation hereunder, to the extent any of JPMorgan’s obligations in respect of any Transaction are not completed by its designee, JPMorgan shall be obligated to continue to perform or to cause any other of its designees to perform in respect of such obligations.
|
22.
|
Amendments to the Equity Definitions
.
|
(a)
|
Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material economic”; and adding the phrase “or such Transaction” at the end of the sentence.
|
(b)
|
Section 11.2(c) of the Equity Definitions is hereby amended by (i) replacing the words “a diluting or concentrative” with “a material economic” in the fifth line thereof, (ii) adding the phrase “or such Transaction” after the words “the relevant Shares” in the same sentence, (iii) deleting the words “dilutive or concentrative” in the sixth to last line thereof, and (iv) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”
|
(c)
|
Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “a material economic”; and adding the phrase “or the relevant Transaction” at the end of the sentence.
|
(d)
|
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (i) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (ii) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at JPMorgan’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”
|
(e)
|
Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:
|
(i)
|
deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and
|
(ii)
|
replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.
|
(f)
|
Section 12.9(b)(v) of the Equity Definitions is hereby amended by:
|
(i)
|
adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and
|
(ii)
|
(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other” and (4) deleting clause (X) in the final sentence.
|
23.
|
Extraordinary Dividend
.
If Counterparty declares any Extraordinary Dividend that has an ex-dividend date during the period commencing on the Trade Date for any Transaction and ending of the last day of the Relevant Period or, if applicable, the later of the last day of the Settlement Valuation Period and the last day of the Seller Termination Purchase Period, for such Transaction, then prior to or on the date on which such Extraordinary Dividend is paid by Counterparty to holders of record, Counterparty shall pay to JPMorgan, for each Transaction under this Master Confirmation, an amount in cash equal to the product of (i) the amount of such Extraordinary Dividend and (ii) the theoretical short delta number of shares as of the opening of business on the related ex-dividend date, as determined by the Calculation Agent, required for JPMorgan to hedge its exposure to such Transaction.
|
24.
|
Status of Claims in Bankruptcy
.
JPMorgan acknowledges and agrees that neither this Master Confirmation nor any Supplemental Confirmation is intended to convey to JPMorgan rights against Counterparty with respect to any Transaction that are senior to the claims of common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty;
provided
that nothing herein shall limit or shall be deemed to limit JPMorgan’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to any Transaction;
provided further
that nothing herein shall limit or shall be deemed to limit JPMorgan’s rights in respect of any transactions other than any Transaction.
|
25.
|
Wall Street Transparency and Accountability Act
.
In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, nor any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the date of this Master Confirmation, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement any Supplemental Confirmation, this Master Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under any Supplemental Confirmation, this Master Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, without limitation, rights arising from Change in Law, Loss of Stock Borrow, Increased Cost of Stock Borrow, Hedging Disruption, Increased Cost of Hedging, or Illegality).
|
26.
|
Role of Agent
.
Each party agrees and acknowledges that (a) JPMS, an Affiliate of JPMorgan, has acted solely as agent and not as principal with respect to this Master Confirmation and each Transaction and (b) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of any Transaction (including, if
|
27.
|
Waiver of Jury Trial
.
EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE AGREEMENT, THIS MASTER CONFIRMATION, EACH SUPPLEMENTAL CONFIRMATION, THE TRANSACTIONS HEREUNDER AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT, THIS MASTER CONFIRMATION AND ANY SUPPLEMENTAL CONFIRMATION AND THE TRANSACTIONS HEREUNDER.
EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.
|
28.
|
Delivery or Receipt of Cash
.
For the avoidance of doubt, other than payment of the Prepayment Amount by Counterparty, nothing in this Master Confirmation shall be interpreted as requiring Counterparty to cash settle any Transaction, except in circumstances where cash settlement is within Counterparty’s control or in those circumstances in which holders of Shares would also receive cash.
|
29.
|
Counterparts
.
This Master Confirmation may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Master Confirmation by signing and delivering one or more counterparts.
|
J.P. MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National Association
|
|
By:
|
/s/ SANJEET DEWAL
|
Authorized Signatory
|
|
Name: Sanjeet Dewal, Executive Director
|
iRobot Corporation
|
|
By:
|
/s/ ALISON DEAN
|
Authorized Signatory
|
|
Name: Alison Dean
|
To:
|
iRobot Corporation
|
Trade Date:
|
[__________], 20[__]
|
Reference Price:
|
The closing price of the Shares on the Exchange Business Day immediately prior to the Calculation Period Start Date.
|
Forward Price Adjustment Amount:
|
JPMorgan shall notify Counterparty of the Forward Price Adjustment Amount (which shall be determined in a good faith commercially reasonable manner) not later than the Exchange Business Day immediately prior to the Calculation Period Start Date. The Forward Price Adjustment Amount shall be binding upon commencement of the Calculation Period.
|
Calculation Period Start Date:
|
[__________], 20[__]
|
Scheduled Termination Date:
|
The [__]th Scheduled Trading Day immediately following the Calculation Period Start Date.
|
Final Termination Date:
|
The [__]th Scheduled Trading Day immediately following the Scheduled Termination Date.
|
First Acceleration Date:
|
The [__]th Scheduled Trading Day immediately following the Calculation Period Start Date.
|
Prepayment Amount:
|
USD [___]
|
Prepayment Date:
|
The [__]th Scheduled Trading Day immediately following the Calculation Period Start Date.
|
Initial Shares:
|
An amount of Shares equal to the
product
of (x) [ ]%
and
(y) the Prepayment Amount
divided by
the Reference Price;
provided
that
|
Initial Share Delivery Date:
|
The [__]th Scheduled Trading Day immediately following the Calculation Period Start Date.
|
Maximum Stock Loan Rate:
|
200 basis points per annum
|
Initial Stock Loan Rate:
|
25 basis points per annum
|
Maximum Number of Shares:
|
[___]
1
Shares
|
Floor Price:
|
USD 0.01 per Share
|
Contract Fee:
|
USD [___]
|
Termination Price:
|
An amount in USD equal to half of the Reference Price.
|
Additional Relevant Days:
|
The [5] Exchange Business Days immediately following the Calculation Period.
|
Reserved Shares:
|
Notwithstanding anything to the contrary in the Master Confirmation, as of the date of this Supplemental Confirmation, the Reserved Shares shall be equal to an amount of Shares equal to the
product
of (x) 3
and
(y) the Prepayment Amount
divided by
the Reference Price.
|
1.
|
|
2.
|
|
3.
|
|
4.
|
|
5.
|
|
6.
|
|
7.
|
|
8.
|
|
9.
|
|
10.
|
|
11.
|
|
12.
|
|
13.
|
|
14.
|
|
15.
|
|
16.
|
|
17.
|
|
18.
|
|
J.P. MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National Association
|
|
By:
|
|
Authorized Signatory
|
|
Name:
|
iRobot Corporation
|
|
By:
|
|
Authorized Signatory
|
|
Name:
|
iRobot Corporation
|
|
By:
|
|
Authorized Signatory
|
|
Name:
|
Settlement Currency:
|
USD
|
Settlement Method Election:
|
Applicable;
provided
that (i) Section 7.1 of the Equity Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and (ii) the Electing Party may make a settlement method election only if the Electing Party represents and warrants to JPMorgan in writing on the date it notifies JPMorgan of its election that, as of such date, the Electing Party is not aware of any material non-public information regarding Counterparty or the Shares and is electing the settlement method in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws.
|
Electing Party:
|
Counterparty
|
Settlement Method Election Date:
|
The earlier of (i) the Scheduled Termination Date and (ii) the second Exchange Business Day immediately following the Accelerated Termination Date (in which case the election under Section 7.1 of the Equity Definitions shall be made no later than 10 minutes prior to the open of trading on the Exchange on such second Exchange Business Day), as the case may be.
|
Default Settlement Method:
|
Cash Settlement
|
Forward Cash Settlement Amount:
|
An amount equal to (a) the Number of Shares to be Delivered,
multiplied by
(b) the Settlement Price.
|
Settlement Price:
|
An amount equal to the average of the VWAP Prices for the Calculation Dates in the Settlement Valuation Period,
plus
USD 0.05, subject to Valuation Disruption as specified in the Master Confirmation (in each case,
plus
interest on such amount during the Settlement Valuation Period at the rate of interest for Counterparty’s long term, unsecured and unsubordinated indebtedness, as determined by the Calculation Agent).
|
Settlement Valuation Period:
|
A number of Scheduled Trading Days selected by JPMorgan in its reasonable discretion, beginning on the Scheduled Trading Day immediately following the earlier of (i) the Scheduled Termination Date or (ii) the Exchange Business Day immediately following the Termination Date.
|
Cash Settlement:
|
If Cash Settlement is applicable, then Buyer shall pay to JPMorgan the absolute value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date.
|
Cash Settlement Payment Date:
|
The Exchange Business Day immediately following the last day of the Settlement Valuation Period.
|
Net Share Settlement Procedures:
|
If Net Share Settlement is applicable, Net Share Settlement shall be made in accordance with paragraphs 2 through 7 below.
|
Where
|
A = the number of authorized but unissued shares of Counterparty that are not reserved for future issuance on the date of the determination of the Capped Number; and
|
1.
|
Definitions
|
iROBOT CORPORATION
|
|
By:
|
|
|
Title:
|
Dated:
|
|
|
|
|
|
|
Grantee's Signature
|
|
|
|
|
|
|
|
Grantee's Name and Address
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
Revenue Threshold
|
Target Operating Income Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of iRobot Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 6, 2016
|
/s/ COLIN M. ANGLE
|
|
Colin M. Angle
Chairman of the Board and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of iRobot Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 6, 2016
|
/s/ ALISON DEAN
|
|
Alison Dean
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 6, 2016
|
/s/ COLIN M. ANGLE
|
|
Colin M. Angle
Chairman of the Board and Chief Executive Officer
|
|
|
Date: May 6, 2016
|
/s/ ALISON DEAN
|
|
Alison Dean
Chief Financial Officer
|